Filed by sedaredgar.com - Liberty Star Unranium & Metals Corp. - Exhibit 10.2







  
    NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
      BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
      HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
      STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
      TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
      STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
      IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
      SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
      ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
      BY THE SECURITIES. 

  



	Principal Amount: $_________ 	Issue Date: May ___, 2009



SECURED CONVERTIBLE PROMISSORY NOTE 

          FOR
VALUE RECEIVED, LIBERTY STAR URANIUM & METALS CORP., a Nevada corporation
(hereinafter called “Borrower”), hereby promises to pay to ALPHA CAPITAL
ANSTALT, Pradafant 7, 9490 Furstentums, Vaduz, Lichtenstein, Fax:
011-42-32323196, (the “Holder”) or its registered assigns or successors in
interest or order, without demand, the sum of
_________________________________________________ Dollars ($_________)
(“Principal Amount”), on May ___, 2010 (the “Maturity Date”), if not sooner
paid. 

          This
Note has been entered into pursuant to the terms of a subscription agreement
between the Borrower, the Holder and certain other holders (the “Other Holders”)
of convertible promissory notes (the “Other Notes”), dated of even date herewith
(the “Subscription Agreement”), and shall be governed by the terms of such
Subscription Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to this Note:


ARTICLE I 

INTEREST; AMORTIZATION 

          1.1.      Interest
Rate. Subject to Section 6.7 hereof, interest payable on this Note shall
accrue on the outstanding Principal Amount at a rate per annum (the "Interest
Rate") of twelve percent (12%). Interest on the outstanding Principal Amount
shall accrue from the date of this Note and shall be payable in arrears together
with, at the same time and in the same manner as payment of Principal Amount and
on the Maturity Date, whether by acceleration or otherwise. 

          1.2.     
Minimum Monthly Principal Payments. Amortizing payments of the
outstanding Principal Amount of this Note and accrued interest shall commence on
October 15, 2009 and on the same day of each month thereafter (each a “Repayment
Date”) until the Principal Amount has been repaid in full, whether by the
payment of cash or by the conversion of such Principal Amount and interest into


1 




Common Stock pursuant to the terms hereof. Subject to Section
2.1 and Article 3 below, on each Repayment Date, the Borrower shall make
payments to the Holder in an amount equal to 14.28% of the initial Principal
Amount, the amount of accrued but unpaid or unconverted interest on the entire
Principal Amount as of such Repayment Date, and any other amounts which are then
owing under this Note that have not been paid (collectively, the “Monthly
Amount”). Amounts of conversions of Principal Amount made by the Holder or
Borrower pursuant to Section 2.1 or Article III and amounts redeemed pursuant to
Section 2.3 of this Note shall be applied first against outstanding fees and
damages, then outstanding already payable accrued interest and then to Principal
Amounts of not yet due Monthly Amounts commencing with the last Monthly Amount
next payable and thereafter to Monthly Amounts in reverse chronological order.
Any Principal Amount, interest and any other sum arising under this Note and the
Subscription Agreement that remains outstanding on the Maturity Date shall be
due and payable on the Maturity Date. 

          1.3.     
Mandatory Repayment. The entire Principal Interest and all other sums due
under and in connection with this Note and the 2009 Transaction Documents shall
be immediately due and payable upon the Borrower’s receipt of the net proceeds
from the sale and issuance by the Borrower and/or a Subsidiary of Borrower of
Debt and/or Equity for the gross amount of $3,000,000 in a single or series of
offerings of such debt and/or equity. 

          1.4.     
Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default (as defined in Article IV), which, if
susceptible to cure is not cured within twenty (20) days, otherwise then from
the first date of such occurrence, the annual interest rate on this Note shall
(subject to Section 6.7) be fifteen percent (15%). Such interest shall be due
and payable together with regular scheduled Monthly Amounts.

ARTICLE II 

CONVERSION AND REPAYMENT 

          2.1.      Payment
of Monthly Amount in Cash or Common Stock. Subject to Sections 2.3 and 3.2
hereof, the Borrower shall pay the Monthly Amount on the applicable Repayment
Date at the Borrower’s election, in either of the following manners: (i) in cash
equal to 110% of the Principal portion of the Monthly Amount and 100% of all
other components of the Monthly Amount, or (ii) with 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) eighty percent (80%) of the average daily
closing bid prices of the Common Stock as reported by Bloomberg L.P. for the
Principal Market for the five trading days preceding such Repayment Date (as
such amount may be adjusted as described herein). Amounts paid with cash or
shares of Common Stock must be delivered to the Holder not later than three
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 tenth calendar day preceding a Repayment Date 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, to the extent possible, include
supporting calculations. The same election must be made to all Holders and Other
Holders. If such notice is not given, or is not timely given or if the Monthly
Redemption Amount is not timely delivered, then the Holder shall at anytime
thereafter have the right on three business days prior notice to the Borrower to
elect to receive such Monthly Amount in cash or Common Stock as described in
Sections (i) and (ii) above. 

          2.2.      Restriction
on Payments in Kind. Notwithstanding anything to the contrary herein, the
Borrower may not exercise its right to pay any portion of the Monthly Amount
with Common Stock without 

2 




the Holder’s consent unless on the day the Common Stock issued
as payment of a Monthly Redemption Amount (a) an exemption from registration of
the resale of shares of Common Stock to be issued in payment of the Monthly
Amount is available to the Holder for the unrestricted public resale of the
Conversion Shares pursuant to Rule 144(b)(1) of the 1933 Act without volume or
manner of sale limitations, or such shares of Common Stock are included for the
unrestricted pubic resale thereof in an effective registration statement filed
with the Commission, (b) an Event of Default (or an event that with the passage
of time or the giving of notice could become an Event of Default) hereunder has
not occurred, (c) the delivery of such Common Stock to Holder is timely made,
(d) the amount of Common Stock (based on the aggregate Conversion Price) that
would be issued in satisfaction of the Monthly Amount may not exceed for the
Holder and Other Holders, in the aggregate, who could receive such Common Stock,
more than 33% of the aggregate daily trading volume of the Common Stock for the
seven trading days preceding such Repayment Date, as reported by Bloomberg L.P.
for the Principal Market, and (e) the Principal Market is either the OTC
Bulletin Board, American Stock Exchange, Nasdaq Capital Market, Nasdaq National
Market, or New York Stock Exchange (“Listing Condition”) from and after thirty
(30) days prior to a Repayment Date. 

          2.3.      Optional
Redemption. Provided an Event of Default or an event which with the passage
of time or the giving of notice would become an Event of Default is not pending,
then the Borrower will have the option of prepaying the unpaid and unconverted
Principal Amount then outstanding under this Note and the Other Notes ("Optional
Redemption"), in whole or in part in increments of not less than $100,000, or
the entire outstanding balance if less than $100,000 in the aggregate on this
Note and the Other Notes, by paying to the Holder a sum of money equal to the
Redemption Amount described below. Borrower’s election to exercise its right to
prepay must be by notice in writing (“Notice of Redemption”). The Redemption
Amount shall equal 125% of the outstanding Principal Amount being redeemed
together with all interest accrued on this Note and all other amounts payable
hereunder or pursuant to the Subscription Agreement. The Notice of Redemption
shall specify the date for such Optional Redemption (the "Redemption Payment
Date"), which date shall be twenty days after the date of the Notice of
Redemption. A Notice of Redemption shall not be effective with respect to any
portion of the principal amount under this Note for which the Holder has a
pending election to convert or for which a Conversion Notice is given prior to
the Redemption Payment Date. On the Redemption Payment Date, the Redemption
Amount, less any portion of the Redemption Amount against which the Holder has
previously exercised its rights pursuant to Section 3.1, shall be paid in good
funds to the Holder. In the event the Borrower fails to pay the Redemption
Amount on the Redemption Payment Date as set forth herein, then (i) at the
Holder’s election, such Notice of Redemption will be null and void or Holder may
enforce the Notice of Redemption, (ii) Borrower will not have the right to
deliver another Notice of Redemption, and (iii) Borrower’s failure may be deemed
by Holder to be a non-curable Event of Default. A Notice of Redemption may be
cancelled at the option of the Holder, if at any time during the Redemption
Period an Event of Default, or an event which with the passage of time or giving
of notice would become an Event of Default (whether or not such Event of Default
has been cured), occurs. Notices of Redemption must be given to the Holder and
all Other Holders with respect to all amounts owed by Borrower to Holder and
Other Holders in proportion to the outstanding Principal Amounts of the Notes
and Other Notes held by the Holder and Other Holders on the date Notice of
Redemption is given. 

ARTICLE III 

CONVERSION RIGHTS 

          3.1.     
Holder’s Conversion Rights. Subject to Section 3.2, the Holder shall have
the right, but not the obligation, to convert all or any portion of the then
aggregate outstanding Principal Amount of this Note, together with interest and
fees due hereon, and any sum arising under the Subscription 

3 




Agreement, and the 2009 Transaction Documents, including but
not limited to Liquidated Damages, into shares of Common Stock, subject to the
terms and conditions set forth in this Article III, at the rate of $0.005 per
share of Common Stock (“Fixed Conversion Price”), as the same may be adjusted
pursuant to this Note and the Subscription Agreement. The Holder may exercise
such right by delivery to the Borrower of a written Notice of Conversion
pursuant to Section 3.3. Anything to the contrary herein notwithstanding, the
Holder may convert up to one-twelfth (1/12th) of the initial
Principal Amount of this Note, on a cumulative basis, each 30 days during the
initial 180 days after the Issue Date at a conversion price equal to the lesser
of (i) the Fixed Conversion Price, or (ii) eighty percent (80%) of the average
daily closing bid prices of the Common Stock as reported by Bloomberg L.P. for
the Principal Market for the five trading days preceding the date of the Notice
of Conversion (as defined in Section 3.3) is given to the Borrower. 

          3.2.     
Conversion Limitation. Neither Holder nor the Borrower may convert on any
date that amount of the Note Principal or interest in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates on a Conversion Date, Repayment Date, or interest payment date, as
the case may be, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made, which would result in beneficial ownership by
the Holder and its affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Borrower on such Conversion Date. For the purposes of the
provision to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the
Holder shall not be limited to aggregate conversions of only 4.99% and aggregate
conversion by the Holder may exceed 4.99% . The Holder shall have the authority
and obligation to determine whether the restriction contained in this Section
2.3 will limit any conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Holder. The Holder may waive the conversion
limitation described in this Section 2.3, in whole or in part, upon and
effective after 61 days prior written notice to the Borrower to increase such
percentage to up to 9.99% . 

          3.3.     
Mechanics of Holder’s Conversion.

                     
(a)      In the event that the Holder elects to convert
any amounts outstanding under this Note into Common Stock, the Holder shall give
notice of such election by delivering an executed and completed notice of
conversion (a “Notice of Conversion”) to the Borrower, which Notice of
Conversion shall provide a breakdown in reasonable detail of the Principal
Amount, accrued interest and amounts being converted. The original Note is not
required to be surrendered to the Borrower until all sums due under the Note
have been paid. On each Conversion Date (as hereinafter defined) and in
accordance with its Notice of Conversion, the Holder shall make the appropriate
reduction to the Principal Amount, accrued interest and fees as entered in its
records. Each date on which a Notice of Conversion is delivered or telecopied to
the Borrower in accordance with the provisions hereof shall be deemed a
“Conversion Date.” A form of Notice of Conversion to be employed by the Holder
is annexed hereto as Exhibit A. 

                     
(b)      Pursuant to the terms of a Notice of
Conversion, the Borrower will issue instructions to the transfer agent
accompanied by an opinion of counsel (if so required by the Borrower’s transfer
agent), and, except as otherwise provided below, shall cause the transfer agent
to transmit the certificates representing the Conversion Shares to the Holder by
crediting the account of the Holder’s 

4 




designated broker with the Depository Trust Corporation (“DTC”)
through its Deposit Withdrawal Agent Commission (“DWAC”) system within three (3)
business days after receipt by the Borrower of the Notice of Conversion (the
“Delivery Date”). In the case of the exercise of the conversion rights set forth
herein, the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as the beneficial holder of such shares
of Common Stock, or, in the case that Borrower delivers physical certificates as
set forth below, the record holder of such shares of Common Stock, unless the
Holder provides the Borrower written instructions to the contrary.
Notwithstanding the foregoing to the contrary, the Borrower or its transfer
agent shall only be obligated to issue and deliver the shares to the DTC on the
Holder’s behalf via DWAC (or certificates free of restrictive legends) if the
registration statement providing for the resale of the shares of Common Stock
issuable upon the conversion of this Note is effective and the Holder has
complied with all applicable securities laws in connection with the sale of the
Common Stock, including, without limitation, the prospectus delivery
requirements and has provided representations accordingly. In the event that
Conversion Shares cannot be delivered to the Holder via DWAC, the Borrower shall
deliver physical certificates representing the Conversion Shares by the Delivery
Date to an address designated by Holder in the U.S. 

          3.4.     
Conversion Mechanics. 

                      
(a)      The number of shares of Common Stock to
be issued upon each conversion of this Note pursuant to this Article III shall
be determined by dividing that portion of the Principal Amount and interest and
fees to be converted, if any, by the then applicable Fixed Conversion Price or
the conversion price described in Section 3.1(ii), as applicable. 

            
          (b)      The
Fixed Conversion Price and number and kind of shares or other securities to be
issued upon conversion shall be subject to adjustment from time to time upon the
happening of certain events while this conversion right remains outstanding, as
follows: 

                                   A.     
Merger, Sale of Assets, etc. If (A) the Borrower effects any merger or
consolidation of the Borrower with or into another entity, (B) the Borrower
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (C) any tender offer or exchange offer (whether by the
Borrower or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, (D) the Borrower consummates a stock purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more persons or
entities whereby such other persons or entities acquire more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by such other persons or entities making or party to, or associated or
affiliated with the other persons or entities making or party to, such stock
purchase agreement or other business combination), (E) any "person" or "group"
(as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934
Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of
the Borrower, or (F) the Borrower effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a "Fundamental Transaction"), this Note, as to the unpaid
principal portion thereof and accrued interest thereon, shall thereafter be
deemed to evidence the right to convert into such number and kind of shares or
other securities and property as would have been issuable or distributable on
account of such Fundamental Transaction, upon or with respect to the securities
subject to the conversion right immediately prior to 

5 




such Fundamental Transaction. The foregoing provision shall
similarly apply to successive Fundamental Transactions of a similar nature by
any such successor or purchaser. Without limiting the generality of the
foregoing, the anti-dilution provisions of this Section shall apply to such
securities of such successor or purchaser after any such Fundamental
Transaction. 

                                   B.      Reclassification,
etc. If the Borrower at any time shall, by reclassification or otherwise,
change the Common Stock into the same or a different number of securities of any
class or classes, this Note, as to the unpaid principal portion hereof and
accrued interest hereon, shall thereafter be deemed to evidence the right to
convert into an adjusted number of such securities and kind of securities as
would have been issuable as the result of such change with respect to the Common
Stock immediately prior to such reclassification or other change. 

                                   C.     
Stock Splits, Combinations and Dividends. If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Fixed Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately increased in the case
of combination of shares, in each such case by the ratio which the total number
of shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event. 

                                   
D.      Share Issuance. So long as this
Note is outstanding, if the Borrower shall issue any Common Stock except for the
Excepted Issuances (as defined in the Subscription Agreement), and except for
payments to other Holders due on a Repayment Date, prior to the complete
conversion or payment of this Note, for a consideration per share that is less
than the Fixed Conversion Price that would be in effect at the time of such
issue, then, and thereafter successively upon each such issuance, the Fixed
Conversion Price shall be reduced to such other lower issue price. For purposes
of this adjustment, the issuance of any security or debt instrument of the
Borrower carrying the right to convert such security or debt instrument into
Common Stock or of any warrant, right or option to purchase Common Stock shall
result in an adjustment to the Fixed Conversion Price upon the issuance of the
above-described security, debt instrument, warrant, right, or option and again
upon the issuance of shares of Common Stock upon exercise of such conversion or
purchase rights if such issuance is at a price lower than the then applicable
Fixed Conversion Price. The reduction of the Fixed Conversion Price described in
this paragraph is in addition to the other rights of the Holder described in the
Subscription Agreement. Common Stock issued or issuable by the Borrower for no
consideration will be deemed issuable or to have been issued for $0.001 per
share of Common Stock. The reduction of the Fixed Conversion Price described in
this paragraph is in addition to the other rights of the Holder described in the
Subscription Agreement. 

                         (c)      Whenever
the Conversion Price is adjusted pursuant to Section 3.4(b) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring such
adjustment. 

          3.5.      Reservation.
During the period the conversion right exists, Borrower will reserve from its
authorized and unissued Common Stock not less than one hundred seventy-five
percent (175%) of the number of shares to provide for the issuance of Common
Stock upon the full conversion of this Note. Borrower represents that upon
issuance, such shares will be duly and validly issued, fully paid and
non-assessable. Borrower agrees that its issuance of this Note shall constitute
full authority to its officers, agents, and transfer agents who are charged with
the duty of executing and issuing stock certificates to 

6 




execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note. 

          3.6     
Issuance of Replacement Note. Upon any partial conversion of this Note, a
replacement Note containing the same date and provisions of this Note shall, at
the written request of the Holder, be issued by the Borrower to the Holder for
the outstanding Principal Amount of this Note and accrued interest which shall
not have been converted or paid, provided Holder has surrendered an original
Note to the Borrower. In the event that the Holder elects not to surrender a
Note for reissuance upon partial payment or conversion, the Holder hereby
indemnifies the Borrower against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due under the
Note, and the Borrower is hereby expressly authorized to offset any such amounts
mutually agreed upon by Borrower and Holder or pursuant to a judgment in
Borrower’s favor against amounts then due under the Note. 

ARTICLE IV 

EVENTS OF DEFAULT 

          The
occurrence of any of the following events of default (“Event of Default”) shall,
at the option of the Holder hereof, make all sums of principal and interest then
remaining unpaid hereon and all other amounts payable hereunder immediately due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below: 

          4.1     
Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of Principal Amount, interest or other sum due under this Note or
any Transaction Document when due and such failure continues for a period of
five (5) business days after the due date. 

          4.2     
Breach of Covenant. The Borrower breaches any material covenant or other
term or condition of the Subscription Agreement, this Note or Transaction
Document in any material respect and such breach, if subject to cure, continues
for a period of ten (10) business days after written notice to the Borrower from
the Holder. 

          4.3     
Breach of Representations and Warranties. Any material representation or
warranty of the Borrower made herein, in the Subscription Agreement, Transaction
Document or in any agreement, statement or certificate given in writing pursuant
hereto or in connection herewith or therewith shall be false or misleading in
any material respect as of the date made and the Closing Date. 

          4.4      Receiver
or Trustee. The Borrower or any Subsidiary of Borrower shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for them or for a substantial part of their
property or business; or such a receiver or trustee shall otherwise be
appointed. 

          4.5      Judgments.
Any money judgment, writ or similar final process shall be entered or filed
against Borrower or any subsidiary of Borrower or any of their property or other
assets for more than $50,000, and shall remain unvacated, unbonded, unappealed,
unsatisfied, or unstayed for a period of forty-five (45) days. 

7 




          4.6      Non-Payment.
A default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $100,000 for more than twenty (20) days after the
due date, unless the Borrower is contesting the validity of such obligation in
good faith. 

          4.7      Bankruptcy.
Bankruptcy, insolvency, reorganization, or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law, or the issuance of
any notice in relation to such event, for the relief of debtors shall be
instituted by or against the Borrower or any Subsidiary of Borrower. 

          4.8     
Delisting. Delisting of the Common Stock from any Principal Market for a
period of seven consecutive trading days; or notification from a Principal
Market that the Borrower is not in compliance with the conditions for such
continued listing on such Principal Market. 

          4.9     
Stop Trade. An SEC or judicial stop trade order or Principal Market
trading suspension with respect to Borrower’s Common Stock that lasts for five
or more consecutive trading days. 

          4.10    Failure
to Deliver Common Stock or Replacement Note. Borrower’s failure to timely
deliver Common Stock to the Holder pursuant to and in the form required by this
Note or the Subscription Agreement, or if required, a replacement Note. 

          4.11  
 Reverse Splits. The Borrower effectuates a reverse split of its
Common Stock without twenty days prior written notice to the Holder. 

          4.12  
 Cross Default. A default by the Borrower of a material term,
covenant, warranty or undertaking of any Transaction Document or other agreement
to which the Borrower and Holder are parties, or the occurrence of a material
event of default under any such other agreement which is not cured after any
required notice and/or cure period. 

          4.13  
 Reservation Default. Failure by the Borrower to have authorized and
reserved for issuance upon conversion of the Note the amount of Common Stock as
set forth in this Note and the Subscription Agreement. 

          4.14   
Financial Statement Restatement. The restatement of any financial
statements filed by the Borrower for any date or period from two years prior to
the Issue Date of this Note and until this Note is no longer outstanding, if the
result of such restatement would, by comparison to the unrestated financial
statements, have constituted a Material Adverse Effect. 

          4.15   
Event Described in Subscription Agreement. The occurrence of an Event of
Default as described in the Subscription Agreement that, if susceptible to cure,
is not cured during any designated cure period. 

          4.16  
 Other Note Default. The occurrence of any Event of Default under
any Other Note that endures for longer than any applicable cure period in such
Other Note. 

ARTICLE V 

PRIORITY 

8 




          5.      Priority.
The holder of this Note has been granted rights and benefits senior and superior
to the rights granted to or held by other creditors and equity holders of the
Borrower. These rights are described in the Subscription Agreement and the 2009
Transaction Documents. 

ARTICLE VI 

MISCELLANEOUS 

          6.1     
  Failure or Indulgence Not Waiver. No failure or delay on the part of
  Holder hereof in the exercise of any power, right or privilege hereunder shall
  operate as a waiver thereof, nor shall any single or partial exercise of any
  such power, right or privilege preclude other or further exercise thereof or
  of any other right, power or privilege. All rights and remedies existing hereunder
  are cumulative to, and not exclusive of, any rights or remedies otherwise available.


          6.2      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: (i) if to the Borrower to: Liberty Star Uranium &
Metals Corp., 5610 E. Sutler Lane, Tucson, Arizona 85712, Attn: James A.
Briscoe, President, telecopier: (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., telecopier: (604) 687-6314, and (ii) if to the Holder, to
the name, address and telecopy number set forth on the front page of this Note,
with a copy by telecopier only to Grushko & Mittman, P.C., 551 Fifth Avenue,
Suite 1601, New York, New York 10176, telecopier number: (212) 697-3575. 

          6.3      Amendment
Provision. The term “Note” and all reference thereto, as used throughout
this instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented. 

          6.4     
Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns. 

          6.5      Cost
of Collection. If default is made in the payment of this Note, Borrower
shall pay the Holder hereof reasonable costs of collection, including reasonable
attorneys’ fees. 

          6.6     
Governing Law. This Note 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 civil or state courts of New York or in the federal courts located in the
State and county of New York. Both 

9 




parties and the individual signing this Agreement on behalf of
the Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note 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 unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other decision in favor of the Holder. This Note shall
be deemed an unconditional obligation of Borrower for the payment of money and,
without limitation to any other remedies of Holder, may be enforced against
Borrower by summary proceeding pursuant to New York Civil Procedure Law and
Rules Section 3213 or any similar rule or statute in the jurisdiction where
enforcement is sought. For purposes of such rule or statute, any other document
or agreement to which Holder and Borrower are parties or which Borrower
delivered to Holder, which may be convenient or necessary to determine Holder’s
rights hereunder or Borrower’s obligations to Holder are deemed a part of this
Note, whether or not such other document or agreement was delivered together
herewith or was executed apart from this Note. 

          6.7      Maximum
Payments. Nothing contained herein shall be deemed to establish or require
the payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest required to
be paid or other charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum shall be credited against amounts owed by the
Borrower to the Holder and thus refunded to the Borrower. 

          6.8.     
Construction. Each party acknowledges that its legal counsel participated
in the preparation of this Note and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Note to favor any party
against the other. 

          6.9      Redemption.
This Note may not be redeemed or called without the consent of the Holder except
as described in this Note or the Subscription Agreement. 

          6.10   
Shareholder Status. The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this Note. However, the
Holder will have the rights of a shareholder of the Borrower with respect to the
Shares of Common Stock to be received after delivery by the Holder of a
Conversion Notice to the Borrower. 

          6.11  
 Non-Business Days. Whenever any payment or any action to be
made shall be due on a Saturday, Sunday or a public holiday under the laws of
the State of New York, such payment may be due or action shall be required on
the next succeeding business day and, for such payment, such next succeeding day
shall be included in the calculation of the amount of accrued interest payable
on such date. 

          6.12  
 Modification. The terms, provisions, convertability, enforcement
and other matters relating to this Note may be modified, amended and controlled
by a Majority in Interest as defined in the Subscription Agreement. 

10 




          IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by
an authorized officer as of the ____ day of May, 2009. 


LIBERTY STAR URANIUM & METALS
CORP. 


By:________________________________
               Name: 
               Title:

WITNESS: 

 

______________________________________ 

 

11 




NOTICE OF CONVERSION 

(To be executed by the Registered Holder in order to convert
the Note) 

          The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by Liberty Star Uranium & Metals
Corp. on May ___, 2009 into Shares of Common Stock of Liberty Star Uranium &
Metals Corp. (the “Borrower”) according to the conditions set forth in such
Note, as of the date written below. 

 

Date of
Conversion:____________________________________________________________________


Conversion
Price:______________________________________________________________________


Number of Shares of Common Stock Beneficially Owned on the
Conversion Date: Less than 5% of the outstanding Common Stock of Liberty Star
Uranium & Metals Corp. 

Shares To Be Delivered:
_________________________________________________________________


Signature
:____________________________________________________________________________

 

Print Name:   
__________________________________________________________________________

 

Address: 
_____________________________________________________________________________


                  
_____________________________________________________________________________


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