Document:

Filed by sedaredgar.com - Liberty Star Uranium & Metals Corp. - Exhibit 10.4

SECURITY AGREEMENT 

1.       Identification.

          This
Security Agreement (the “Agreement”), dated as of August 27, 2008, is entered
into by and between Liberty Star Uranium & Metals Corp., a Nevada
corporation (“Parent”), Big Chunk Corp., an Alaska corporation (“Guarantor” and
together with Parent, each a “Debtor” and collectively the “Debtors”), and
Collateral Agents, LLC, as collateral agent acting in the manner and to the
extent described in the Collateral Agent Agreement defined below (the
“Collateral Agent”), for the benefit of the parties identified on Schedule
A hereto (collectively, the “Lenders”). 

          Schedule
A may be amended by the inclusion of additional Lenders who participate in the
Offering pursuant to the Subscription Agreement (defined below). 

2.       Recitals. 

          2.1      At
or about the date hereof, the Lenders are making loans to Parent (“New Notes”).
On May 11, 2007, Parent issued Convertible Promissory Notes to Lenders (“May
Notes”). Collectively, the loans made on May 11, 2007, and at or about the date
hereof are referred to as the “Loans”. It is beneficial to each Debtor that the
Loans were made and are being made. Guarantor has or will deliver a “Guaranty”
of Parents obligations to Lenders. 

          2.2      The
Loans were, are and will be evidenced by certain promissory notes (each a
“Note”) issued by Parent on May 11, 2007 and on or about the date of this
Agreement pursuant to subscription agreements (each a “Subscription Agreement”)
to which Parent and Lenders are parties. The Notes are further identified on
Schedule A hereto and were and will be executed by Parent as “Borrower” or
“Debtor” for the benefit of each Lender as the “Holder” or “Lender” thereof.

          2.3     
In consideration of the Loans made and to be made by Lenders to Parent and for
other good and valuable consideration, and as security for the performance by
Parent of its obligations under the Notes, by Guarantor of its obligations under
the Guaranty, and as security for the repayment of the Loans and all other sums
due from Debtors to Lenders arising under the Transaction Documents (as defined
in the Subscription Agreement) and any other agreement between or among them
(collectively, the “Obligations”), each Debtor, for good and valuable
consideration, receipt of which is acknowledged, has agreed to grant to the
Collateral Agent, for the benefit of the Lenders, a security interest in the
Collateral (as such term is hereinafter defined), on the terms and conditions
hereinafter set forth. Obligations include all future advances by Lenders to
Debtor made pursuant to the Subscription Agreement. 

          2.4      The
Lenders have appointed the Collateral Agent pursuant to that certain Collateral
Agent Agreement dated at or about the date of this Agreement (“Collateral Agent
Agreement”), among the Lenders and Collateral Agent. 

          2.5     
The following defined terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined: Accounts, Chattel Paper, Documents, Equipment, General Intangibles,
Instruments, Inventory and Proceeds. Other capitalized terms employed herein
shall have the meanings attributed to them in the Subscription Agreement. 

3.      Grant of General
Security Interest in Collateral. 

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          3.1      As
security for the Obligations of Debtors, each Debtor hereby grants the
Collateral Agent, for the benefit of the Lenders, a security interest in the
Collateral. 

          3.2      “Collateral”
shall mean all of the following property of Debtors: 

                    (A)      All
now owned and hereafter acquired right, title and interest of Debtors in, to and
in respect of all Accounts, Goods, real or personal property, all present and
future books and records relating to the foregoing and all products and Proceeds
of the foregoing, and as set forth below: 

                                   (i)      All
now owned and hereafter acquired right, title and interest of Debtors in, to and
in respect of all: Accounts, interests in goods represented by Accounts,
returned, reclaimed or repossessed goods with respect thereto and rights as an
unpaid vendor; contract rights; Chattel Paper; investment property; General
Intangibles (including but not limited to, tax and duty claims and refunds,
registered and unregistered patents, trademarks, service marks, certificates,
copyrights trade names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, licenses, whether as licensor
or licensee, choses in action and other claims, and existing and future
leasehold interests and claims in and to equipment, real estate and fixtures);
Documents; Instruments; letters of credit, bankers’ acceptances or guaranties;
cash moneys, deposits; securities, bank accounts, deposit accounts, credits and
other property now or hereafter owned or held in any capacity by Debtors, as
well as agreements or property securing or relating to any of the items referred
to above; 

                                   (ii)      Goods:
All now owned and hereafter acquired right, title and interest of Debtors
in, to and in respect of goods, including, but not limited to: 

                                             (a)      All
Inventory, wherever located, whether now owned or hereafter acquired, of
whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Debtors’ business; finished goods, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, and all names or marks
affixed to or to be affixed thereto for purposes of selling same by the seller,
manufacturer, lessor or licensor thereof and all Inventory which may be returned
to any Debtor by its customers or repossessed by any Debtor and all of Debtors’
right, title and interest in and to the foregoing (including all of a Debtor’s
rights as a seller of goods); 

                                             (b)      All
Equipment and fixtures, wherever located, whether now owned or hereafter
acquired, including, without limitation, all machinery, furniture and fixtures,
and any and all additions, substitutions, replacements (including spare parts),
and accessions thereof and thereto (including, but not limited to Debtors’
rights to acquire any of the foregoing, whether by exercise of a purchase option
or otherwise); 

                                   (iii)     
Property: All now owned and hereafter acquired right, title and interests
of Debtors in, to and in respect of any other personal property in or upon which
a Debtor has or may hereafter have a security interest, lien or right of setoff;

                                   
(iv)      Books and Records: All present
and future books and records relating to any of the above including, without
limitation, all computer programs, printed output and computer readable data in
the possession or control of the Debtors, any computer service bureau or other
third party; and 

                                   
(v)      Products and Proceeds: All
products and Proceeds of the foregoing in whatever form and wherever located,
including, without limitation, all insurance proceeds and all claims against
third parties for loss or destruction of or damage to any of the foregoing. 

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                    (B)      All
now owned and hereafter acquired right, title and interest of Debtors in, to and
in respect of the following: 

                                   (i)      the
shares of stock of the Guarantor, which the Debtor represents equal 100% of the
equity ownership interest in the Guarantor, the certificates representing such
shares together with an executed stock power, and other rights, contractual or
otherwise, in respect thereof and all dividends, distributions, cash,
instruments, investment property and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares; 

                                   (ii)      all
additional shares of stock, partnership interests, member interests or other
equity interests from time to time acquired by Debtor, in any Subsidiary (as
defined in the Subscription Agreement) not a Subsidiary of the Debtor on the
date hereof (“Future Subsidiaries”), the certificates representing such
additional shares, and other rights, contractual or otherwise, in respect
thereof and all dividends, distributions, cash, instruments, investment property
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, interests or equity; and

                                   (iii)     
all security entitlements of Debtor in, and all Proceeds of any and all of the
foregoing in each case, whether now owned or hereafter acquired by Debtor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, lien, claim or otherwise). 

          3.3     
The Collateral Agent is hereby specifically authorized, after the Maturity Date
(defined in the Notes) accelerated, or after the occurrence of an Event of
Default (as defined herein) and the expiration of any applicable cure period, to
transfer any Collateral into the name of the Collateral Agent and to take any
and all action deemed advisable to the Collateral Agent to remove any transfer
restrictions affecting the Collateral. 

4.      Perfection of Security
Interest. 

          4.1      Each
Debtor shall prepare, execute and deliver to the Collateral Agent UCC-1
Financing Statements. The Collateral Agent is instructed to prepare and file at
each Debtor’s cost and expense, financing statements in such jurisdictions
deemed advisable to the Collateral Agent, including but not limited to the
States of Delaware and California. The Financing Statements are deemed to have
been filed for the benefit of the Collateral Agent and Lenders identified on
Schedule A hereto. 

          4.2      Upon
the execution of this Agreement, Parent shall deliver to Collateral Agent stock
certificates representing all of the shares of outstanding capital stock of the
Guarantor (the “Securities”). All such certificates shall be held by or on
behalf of Collateral Agent pursuant hereto and shall be delivered in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment or undated stock powers executed in blank,
all in form and substance satisfactory to Collateral Agent.

          4.3      All
other certificates and instruments constituting Collateral from time to time
required to be pledged to Collateral Agent pursuant to the terms hereof (the
“Additional Collateral”) shall be delivered to Collateral Agent promptly upon
receipt thereof by or on behalf of Debtors. All such certificates and
instruments shall be held by or on behalf of Collateral Agent pursuant hereto
and shall be delivered in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment or undated
stock powers executed in blank, all in form and substance satisfactory to
Collateral Agent. If any Collateral consists of uncertificated securities,
unless the immediately following sentence is 

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applicable thereto, Debtors shall cause Collateral Agent (or
its custodian, nominee or other designee) to become the registered holder
thereof, or cause each issuer of such securities to agree that it will comply
with instructions originated by Collateral Agent with respect to such securities
without further consent by Debtors. If any Collateral consists of security
entitlements, Debtors shall transfer such security entitlements to Collateral
Agent (or its custodian, nominee or other designee) or cause the applicable
securities intermediary to agree that it will comply with entitlement orders by
Collateral Agent without further consent by Debtors.

          4.4      Within
five (5) business days after the receipt by a Debtor of any Additional
Collateral, a Pledge Amendment, duly executed by such Debtor, in substantially
the form of Annex I hereto (a “Pledge Amendment”), shall be delivered to
Collateral Agent in respect of the Additional Collateral to be pledged pursuant
to this Agreement. Each Debtor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all certificates or
instruments listed on any Pledge Amendment delivered to Collateral Agent shall
for all purposes hereunder constitute Collateral. 

          4.5     
If Debtor shall receive, by virtue of Debtor being or having been an owner of
any Collateral, any (i) stock certificate (including, without limitation, any
certificate representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be retained
by Debtor pursuant to Section 5.2 hereof) or in securities or other property or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, Debtor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust for
the benefit of Collateral Agent, shall segregate it from Debtor’s other property
and shall deliver it forthwith to Collateral Agent, in the exact form received,
with any necessary endorsement and/or appropriate stock powers duly executed in
blank, to be held by Collateral Agent as Collateral and as further collateral
security for the Obligations. 

5.      Distribution. 

          5.1     
So long as an Event of Default does not exist, Debtors shall be entitled to
exercise all voting power pertaining to any of the Collateral, provided such
exercise is not contrary to the interests of the Lenders and does not materially
impair the Collateral. 

          5.2.      At
any time an Event of Default exists or has occurred and is continuing, all
rights of Debtors, upon notice given by Collateral Agent, to exercise the voting
power and receive payments, which it would otherwise be entitled to pursuant to
Section 5.1, shall cease and all such rights shall thereupon become vested in
Collateral Agent, which shall thereupon have the sole right to exercise such
voting power and receive such payments. 

          5.3      All
dividends, distributions, interest and other payments which are received by
Debtors contrary to the provisions of Section 5.2 shall be received in trust for
the benefit of Collateral Agent as security and Collateral for payment of the
Obligations shall be segregated from other funds of Debtors, and shall be
forthwith paid over to Collateral Agent as Collateral in the exact form received
with any necessary endorsement and/or appropriate stock powers duly executed in
blank, to be held by Collateral Agent as Collateral and as further collateral
security for the Obligations. 

6.      Further Action By Debtors;
Covenants and Warranties. 

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          6.1      Collateral
Agent at all times shall have a perfected security interest in the Collateral.
Each Debtor represents that, other than the security interests described on
Schedule 6.1, it has and will continue to have full title to the
Collateral free from any liens, leases, encumbrances, judgments or other claims.
The Collateral Agent’s security interest in the Collateral constitutes and will
continue to constitute a first, prior and indefeasible security interest in
favor of Collateral Agent, subject only to the security interests described on
Schedule 6.1. Each Debtor will do all acts and things, and will execute
and file all instruments (including, but not limited to, security agreements,
financing statements, continuation statements, etc.) reasonably requested by
Collateral Agent to establish, maintain and continue the perfected security
interest of Collateral Agent in the perfected Collateral, and will promptly on
demand, pay all costs and expenses of filing and recording, including the costs
of any searches reasonably deemed necessary by Collateral Agent from time to
time to establish and determine the validity and the continuing priority of the
security interest of Collateral Agent, and also pay all other claims and charges
that, in the opinion of Collateral Agent, exercised in good faith, are
reasonably likely to materially prejudice, imperil or otherwise affect the
Collateral or Collateral Agent’s or Lenders’ security interests therein. 

          6.2      Except
in connection with sales of Collateral, in the ordinary course of business, for
fair value and in cash, and except for Collateral which is substituted by assets
of identical or greater value (subject to the consent of the Collateral Agent)
or which is inconsequential in value, each Debtor will not sell, transfer,
assign or pledge those items of Collateral (or allow any such items to be sold,
transferred, assigned or pledged), without the prior written consent of
Collateral Agent other than a transfer of the Collateral to a wholly-owned
United States formed and located subsidiary or to another Debtor on prior notice
to Collateral Agent, and provided the Collateral remains subject to the security
interest herein described. Although Proceeds of Collateral are covered by this
Agreement, this shall not be construed to mean that Collateral Agent consents to
any sale of the Collateral, except as provided herein. Sales of Collateral in
the ordinary course of business shall be free of the security interest of
Lenders and Collateral Agent and Lenders and Collateral Agent shall promptly
execute such documents (including without limitation releases and termination
statements) as may be required by Debtors to evidence or effectuate the same.

          6.3     
Each Debtor will, at all reasonable times during regular business hours and upon
reasonable notice, allow Collateral Agent or its representatives free and
complete access to the Collateral and all of such Debtor’s records which in any
way relate to the Collateral, for such inspection and examination as Collateral
Agent reasonably deems necessary. 

          6.4      Each
Debtor, at its sole cost and expense, will protect and defend this Security
Agreement, all of the rights of Collateral Agent and Lenders hereunder, and the
Collateral against the claims and demands of all other persons. 

          6.5      Debtors
will promptly notify Collateral Agent of any levy, distraint or other seizure by
legal process or otherwise of any part of the Collateral, and of any threatened
or filed claims or proceedings that are reasonably likely to affect or impair
any of the rights of Collateral Agent under this Security Agreement in any
material respect. 

          6.6     
Each Debtor, at its own expense, will obtain and maintain in force insurance
policies covering losses or damage to those items of Collateral which constitute
physical personal property, which insurance shall be of the types customarily
insured against by companies in the same or similar business, similarly
situated, in such amounts (with such deductible amounts) as is customary for
such companies under the same or similar circumstances, similarly situated.
Debtors shall make the Collateral Agent a loss payee thereon to the extent of
its interest in the Collateral. Collateral Agent is hereby irrevocably (until
the Obligations are paid in full) appointed each Debtor’s attorney-in-fact to
endorse any check or draft that may 

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be payable to such Debtor so that Collateral Agent may collect
the proceeds payable for any loss under such insurance. The proceeds of such
insurance, less any costs and expenses incurred or paid by Collateral Agent in
the collection thereof, shall be applied either toward the cost of the repair or
replacement of the items damaged or destroyed, or on account of any sums secured
hereby, whether or not then due or payable. 

          6.7     
In order to protect the Collateral and Lenders’ interest therein, Collateral
Agent may, at its option, and without any obligation to do so, pay, perform and
discharge any and all amounts, costs, expenses and liabilities herein agreed to
be paid or performed by Debtor upon Debtor’s failure to do so. All amounts
expended by Collateral Agent in so doing shall become part of the Obligations
secured hereby, and shall be immediately due and payable by Debtor to Collateral
Agent upon demand and shall bear interest at the lesser of 15% per annum or the
highest legal amount allowed from the dates of such expenditures until paid.

          6.8     
Upon the request of Collateral Agent, Debtors will furnish to Collateral Agent
within five (5) business days thereafter, or to any proposed assignee of this
Security Agreement, a written statement in form reasonably satisfactory to
Collateral Agent, duly acknowledged, certifying the amount of the principal and
interest and any other sum then owing under the Obligations, whether to its
knowledge any claims, offsets or defenses exist against the Obligations or
against this Security Agreement, or any of the terms and provisions of any other
agreement of Debtors securing the Obligations. In connection with any assignment
by Collateral Agent of this Security Agreement, each Debtor hereby agrees to
cause the insurance policies required hereby to be carried by such Debtor, if
any, to be endorsed in form satisfactory to Collateral Agent or to such
assignee, with loss payable clauses in favor of such assignee, and to cause such
endorsements to be delivered to Collateral Agent within ten (10) calendar days
after request therefor by Collateral Agent. 

          6.9     
Each Debtor will, at its own expense, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other reasonable assurances or instruments and take further steps relating to
the Collateral and other property or rights covered by the security interest
hereby granted, as the Collateral Agent may reasonably require to perfect its
security interest hereunder. 

          6.10      Debtors
represent and warrant that they are the true and lawful exclusive owners of the
Collateral, free and clear of any liens and encumbrances other than those listed
on Schedule 6.1. 

          6.11      Each
Debtor hereby agrees not to divest itself of any right under the Collateral
except as permitted herein absent prior written approval of the Collateral
Agent, except to a subsidiary organized and located in the United States on
prior notice to Collateral Agent provided the Collateral remains subject to the
security interest herein described. 

          6.12      Each
Debtor shall cause each Subsidiary of such Debtor in existence on the date
hereof and each Subsidiary not in existence on the date hereof to execute and
deliver to Collateral Agent promptly and in any event within ten (10) days after
the formation, acquisition or change in status thereof (A) a guaranty
guaranteeing the Obligations and (B) if requested by Collateral Agent, a
security and pledge agreement substantially in the form of this Agreement
together with (x) certificates evidencing all of the capital stock of each
Subsidiary of and any entity owned by such Subsidiary, (y) undated stock powers
executed in blank with signatures guaranteed, and (z) such opinion of counsel
and such approving certificate of such Subsidiary as Collateral Agent may
reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares and (C) such other
agreements, instruments, approvals, legal opinions or other documents reasonably
requested by Collateral Agent in order to create, perfect, establish the first
priority of or otherwise protect any lien purported to be covered by any such
pledge and security agreement or otherwise to effect the intent that all
property and assets of such Subsidiary shall 

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become Collateral for the Obligations. For purposes of this
Agreement, “Subsidiary” means, with respect to any entity at any date,
any corporation, limited or general partnership, limited liability company,
trust, estate, association, joint venture or other business entity) of which
more than 30% of (A) the outstanding capital stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the board of
directors or other managing body of such entity, (B) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (C) in the case of a trust,
estate, association, joint venture or other entity, the beneficial interest in
such trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity. Annex I annexed hereto contains a list of all
Subsidiaries of the Debtors as of the date of this Agreement. 

          6.13      Debtor
will notify Collateral Agent within fifteen days of the occurrence of any change
of Debtor’s name, domicile, address or jurisdiction of incorporation. The timely
giving of this notice is a material obligation of Debtor. 

7.      Power of Attorney.

          At
any time an Event of Default has occurred, and only after the applicable cure
period as set forth in this Agreement and the other Transaction Documents, and
is continuing, each Debtor hereby irrevocably constitutes and appoints the
Collateral Agent as the true and lawful attorney of such Debtor, with full power
of substitution, in the place and stead of such Debtor and in the name of such
Debtor or otherwise, at any time or times, in the discretion of the Collateral
Agent, to take any action and to execute any instrument or document which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement. This power of attorney is coupled with an interest and is
irrevocable until the Obligations are satisfied. 

8.      Performance By The
Collateral Agent. 

          If
a Debtor fails to perform any material covenant, agreement, duty or obligation
of such Debtor under this Agreement, the Collateral Agent may, after any
applicable cure period, at any time or times in its discretion, take action to
effect performance of such obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Debtors as provided in Paragraph 12.1 hereof. No discretionary right, remedy
or power granted to the Collateral Agent under any part of this Agreement shall
be deemed to impose any obligation whatsoever on the Collateral Agent with
respect thereto, such rights, remedies and powers being solely for the
protection of the Collateral Agent. 

9.      Event of Default. 

          An
event of default (“Event of Default”) shall be deemed to have occurred hereunder
upon the occurrence of any event of default as defined and described in this
Agreement, in the Notes, the Subscription Agreement, and any other agreement to
which one or more Debtors and a Lender are parties relating to the Offering.
Upon and after any Event of Default, after the applicable cure period, if any,
any or all of the Obligations shall become immediately due and payable at the
option of the Collateral Agent, for the benefit of the Lenders, and the
Collateral Agent may dispose of Collateral as provided below. A default by
Debtor of any of its material obligations pursuant to this Agreement and any of
the Transaction Documents (as defined in the Subscription Agreement) shall be an
Event of Default hereunder and an “Event of Default” as defined in the Notes,
and Subscription Agreement. 

10.     Disposition of
Collateral. 

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          Upon
and after any Event of Default which is then continuing, 

          10.1      The
Collateral Agent may exercise its rights with respect to each and every
component of the Collateral, without regard to the existence of any other
security or source of payment for, in order to satisfy the Obligations. In
addition to other rights and remedies provided for herein or otherwise available
to it, the Collateral Agent shall have all of the rights and remedies of a
lender on default under the Uniform Commercial Code then in effect in the State
of New York. 

          10.2      If
any notice to Debtors of the sale or other disposition of Collateral is required
by then applicable law, five (5) business days prior written notice (which
Debtors agree is reasonable notice within the meaning of Section 9.612(a) of the
Uniform Commercial Code) shall be given to Debtors of the time and place of any
sale of Collateral which Debtors hereby agree may be by private sale. The rights
granted in this Section are in addition to any and all rights available to
Collateral Agent under the Uniform Commercial Code. 

          10.3     
The Collateral Agent is authorized, at any such sale, if the Collateral Agent
deems it advisable to do so, in order to comply with any applicable securities
laws, to restrict the prospective bidders or purchasers to persons who will
represent and agree, among other things, that they are purchasing the Collateral
for their own account for investment, and not with a view to the distribution or
resale thereof, or otherwise to restrict such sale in such other manner as the
Collateral Agent deems advisable to ensure such compliance. Sales made subject
to such restrictions shall be deemed to have been made in a commercially
reasonable manner. 

          10.4      All
proceeds received by the Collateral Agent for the benefit of the Lenders in
respect of any sale, collection or other enforcement or disposition of
Collateral, shall be applied (after deduction of any amounts payable to the
Collateral Agent pursuant to Paragraph 12.1 hereof) first against the
Obligations arising under the New Notes pro rata among the Lenders holding New
Notes in proportion to their interests in the New Notes and then against the all
Obligations pro rata among the Lenders in proportion to the percentages set
forth on Schedule 10.4. Upon payment in full of all Obligations, Debtors shall
be entitled to the return of all Collateral, including cash, which has not been
used or applied toward the payment of Obligations or used or applied to any and
all costs or expenses of the Collateral Agent incurred in connection with the
liquidation of the Collateral (unless another person is legally entitled
thereto). Any assignment of Collateral by the Collateral Agent to Debtors shall
be without representation or warranty of any nature whatsoever and wholly
without recourse. To the extent allowed by law, each Lender may purchase the
Collateral and pay for such purchase by offsetting up to such Lender’s pro rata
portion of the purchase price with sums owed to such Lender by Debtors arising
under the Obligations or any other source. Any payments made by the Company to
the Lenders, whether directly to the Lenders or through the Collateral Agent,
against any Obligations shall be made solely in accordance with the priorities
set forth in this Paragraph 10.4. 

          10.5     
Rights of Lender to Appoint Receiver. Without limiting, and in addition
to, any other rights, options and remedies Lenders have under the Transaction
Documents, the UCC, at law or in equity, or otherwise, upon the occurrence and
continuation of an Event of Default, Lenders shall have the right to apply for
and have a receiver appointed by a court of competent jurisdiction. Debtors
expressly agrees that such a receiver will be able to manage, protect and
preserve the Collateral and continue the operation of the business of Debtors to
the extent necessary to collect all revenues and profits thereof and to apply
the same to the payment of all expenses and other charges of such receivership,
including the compensation of the receiver, until a sale or other disposition of
such Collateral shall be finally made and consummated. Debtors waive any right
to require a bond to be posted by or on behalf of any such receiver. 

8

11.      Waiver of Automatic
Stay. Debtor acknowledges and agrees that should a proceeding under any
bankruptcy or insolvency law be commenced by or against Debtor, or if any of the
Collateral should become the subject of any bankruptcy or insolvency proceeding,
then the Collateral Agent should be entitled to, among other relief to which the
Collateral Agent or Lenders may be entitled under the Note, Subscription
Agreement and any other agreement to which the Debtor, Lenders or Collateral
Agent are parties, (collectively “Loan Documents”) and/or applicable law, an
order from the court granting immediate relief from the automatic stay pursuant
to 11 U.S.C. Section 362 to permit the Collateral Agent to exercise all of its
rights and remedies pursuant to the Loan Documents and/or applicable law. DEBTOR
EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, DEBTOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11
U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE COLLATERAL
AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. Debtor hereby consents to any motion for relief
from stay which may be filed by the Collateral Agent in any bankruptcy or
insolvency proceeding initiated by or against Debtor, and further agrees not to
file any opposition to any motion for relief from stay filed by the Collateral
Agent. Debtor represents, acknowledges and agrees that this provision is a
specific and material aspect of this Agreement, and that the Collateral Agent
would not agree to the terms of this Agreement if this waiver were not a part of
this Agreement. Debtor further represents, acknowledges and agrees that this
waiver is knowingly, intelligently and voluntarily made, that neither the
Collateral Agent nor any person acting on behalf of the Collateral Agent has
made any representations to induce this waiver, that Debtor has been represented
(or has had the opportunity to be represented) in the signing of this Agreement
and in the making of this waiver by independent legal counsel selected by Debtor
and that Debtor has had the opportunity to discuss this waiver with counsel.
Debtor further agrees that any bankruptcy or insolvency proceeding initiated by
Debtor will only be brought in the Federal Court within the Southern District of
New York. 

12.      Miscellaneous.

          12.1     
Expenses. Debtors shall pay to the Collateral Agent, on demand, the
amount of any and all reasonable expenses, including, without limitation,
attorneys’ fees, legal expenses and brokers’ fees, which the Collateral Agent
may incur in connection with (a) sale, collection or other enforcement or
disposition of Collateral; (b) exercise or enforcement of any the rights,
remedies or powers of the Collateral Agent hereunder or with respect to any or
all of the Obligations upon breach or threatened breach; or (c) failure by
Debtors to perform and observe any agreements of Debtors contained herein which
are performed by the Collateral Agent. 

          12.2      Waivers,
Amendment and Remedies. No course of dealing by the Collateral Agent and no
failure by the Collateral Agent to exercise, or delay by the Collateral Agent in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
the Collateral Agent. No amendment, modification or waiver of any provision of
this Agreement and no consent to any departure by Debtors therefrom, shall, in
any event, be effective unless contained in a writing signed by the Collateral
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. The rights, remedies and
powers of the Collateral Agent, not only hereunder, but also under any
instruments and agreements evidencing or securing the Obligations and under
applicable law are cumulative, and may be exercised by the Collateral Agent from
time to time in such order as the Collateral Agent may elect. 

9

          12.3      Notices.
All notices or other communications given or made hereunder shall be in writing
and shall be personally delivered or deemed delivered the first business day
after being faxed (provided that a copy is delivered by first class mail) to the
party to receive the same at its address set forth below or to such other
address as either party shall hereafter give to the other by notice duly made
under this Section: 

	 	To Debtors: 	Liberty Star Uranium & Metals Corp. 
	 	  	3024 E. Fort Lowell Road 
	 	  	Tucson, Arizona 85716-1572 
	 	  	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 
	 	  	  
	 	To Lenders: 	To the addresses and telecopier numbers set
      forth 
	 	 	on Schedule A 
	 	  	  
	 	  	  
	 	To the Collateral Agent: 	Collateral Agents, LLC 
	 	  	111 West 57th Street, Suite 1416
  
	 	  	New York, NY 10019 
	 	  	Attn: General Counsel 
	 	  	Fax: (212) 245-9101 
	 	  	  
	 	If to Debtor, Lender or Collateral Agent, 	 
	 	with a copy by telecopier only to: 	 
	 	  	  
	 	  	Grushko & Mittman, P.C. 
	 	  	551 Fifth Avenue, Suite 1601 
	 	  	New York, New York 10176 
	 	  	Fax: (212) 697-3575 

Any party may change its address by written notice in
accordance with this paragraph. 

          12.4      Term;
Binding Effect. This Agreement shall (a) remain in full force and effect
until payment and satisfaction in full of all of the Obligations; (b) be binding
upon each Debtor, and its successors and permitted assigns; and (c) inure to the
benefit of the Collateral Agent, for the benefit of the Lenders and their
respective successors and assigns.

          12.5     
Captions. The captions of Paragraphs, Articles and Sections in this
Agreement have been included for convenience of reference only, and shall not
define or limit the provisions hereof and have no legal or other significance
whatsoever. 

          12.6      Governing
Law; Venue; Severability. 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 

10

would result in the application of the substantive laws of
another jurisdiction, except to the extent that the perfection of the security
interest granted hereby in respect of any item of Collateral may be governed by
the law of another jurisdiction. Any legal action or proceeding against a Debtor
with respect to this Agreement must be brought only in the courts in the State
of New York or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, each Debtor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Debtor hereby
irrevocably waives any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Agreement brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum. If any provision of this Agreement, or the application
thereof to any person or circumstance, is held invalid, such invalidity shall
not affect any other provisions which can be given effect without the invalid
provision or application, and to this end the provisions hereof shall be
severable and the remaining, valid provisions shall remain of full force and
effect. 

     12.7      Entire
Agreement. This Agreement contains the entire agreement of the parties and
supersedes all other agreements and understandings, oral or written, with
respect to the matters contained herein. 

     12.8     
Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by the 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 signature and delivered by facsimile transmission.

13.      Intercreditor Terms.
As between the Lenders, any distribution under paragraph 10.4 shall be made
proportionately based upon the remaining principal amount (plus accrued and
unpaid interest) to each as to the total amount then owed to the Lenders as a
whole. The rights of each Lender hereunder are pari passu to the rights
of the other Lenders hereunder. Any recovery hereunder shall be shared ratably
among the Lenders according to the then remaining principal amount owed to each
(plus accrued and unpaid interest) as to the total amount then owed to the
Lenders as a whole.

14.      Termination;
Release. When the Obligations have been indefeasibly paid and performed in
full or all outstanding Convertible Notes have been converted to common stock
pursuant to the terms of the Convertible Notes and the Subscription Agreements,
this Agreement shall terminated, and the Collateral Agent, at the request and
sole expense of the Debtors, will execute and deliver to the Debtors the proper
instruments (including UCC termination statements) acknowledging the termination
of the Security Agreement, and duly assign, transfer and deliver to the Debtors,
without recourse, representation or warranty of any kind whatsoever, such of the
Collateral, including, without limitation, Securities and any Additional
Collateral, as may be in the possession of the Collateral Agent. 

15.      Collateral Agent.

          15.1      Collateral
Agent Powers. The powers conferred on the Collateral Agent hereunder are
solely to protect its interest (on behalf of the Lenders) in the Collateral and
shall not impose any duty on it to exercise any such powers. 

          15.2      Reasonable
Care. The Collateral Agent is required to exercise reasonable care in the
custody and preservation of any Collateral in its possession; provided, however,
that the Collateral Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any of the Collateral if it takes such action
for that purposes as any owner thereof reasonably requests in writing at times
other than 

11

upon the occurrence and during the continuance of any Event of
Default, but failure of the Collateral Agent, to comply with any such request at
any time shall not in itself be deemed a failure to exercise reasonable care.

[THIS SPACE INTENTIONALLY LEFT BLANK] 

12

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

	“DEBTOR” 	 	“THE COLLATERAL AGENT” 
	LIBERTY STAR URANIUM & METALS CORP. 	 	COLLATERAL AGENTS, LLC 
	a Nevada corporation 	 	  
	 	  	 	  
	By: 	/s/ James A. Briscoe	 	/s/ Robert Schechter 
	Its: 		 	  
	 	  	 	  
	“SUBSIDIARY” 	 	  
	BIG CHUNK CORP. 	 	  
	an Alaska corporation 	 	  
	 	  	 	  
	By: 	/s/ James A. Briscoe	 	  
	Its: 		 	  

This Security Agreement may be signed by facsimile signature
and
delivered by confirmed facsimile transmission. 

13

SCHEDULE A TO SECURITY AGREEMENT

	LENDERS 

	INITIAL MAY NOTES 
PRINCIPAL
      
AMOUNT 	NEW NOTES 
PRINCIPAL AMOUNT
      

	ALPHA CAPITAL ANSTALT 
Pradafant 7
      
9490 Furstentums 
Vaduz, Lichtenstein 
Fax: 011-42-32323196 	$650,000.00 

	$90,830.15 

	HARBORVIEW MASTER FUND L.P. 
Harbor House,
      2nd Floor 
Waterfront Drive, Road Town 
Tortola, BVI
      
Fax: (284) 494-4771 	$500,000.00 

	$50,055.88 

	PLATINUM PARTNERS LONG TERM GROWTH VI 
152
      West 57th Street 
New York, NY 10019 
Attn: Mark
      Nordlicht 
Fax: (212) 	$750,000.00 

	$61,472.12 

	BRIDGEPOINTE MASTER FUND, LTD. 
1120
      Sanctuary Parkway-Suite 325 
Alpharetta, GA 30004 
Fax: (770)
      777-5844 	$900,000.00 

	$75,874.18 

	BRIO CAPITAL LP 
401 E. 34th
      St.-Suite South 33C 
New York, NY 10016 
Fax: (646) 390-2158
    	$150,000.00 

	$18,487.31 

	IROQUOIS MASTER FUND LTD. 
c/o Iroquois
      Capital Management, LLC 
641 Lexington Avenue, 26th Floor
      
New York, NY 10022 
Fax: (212) 207-3452 	$250,000.00 

	$25,027.94 

	ENABLE GROWTH PARTNERS LP 
One Ferry
      Building, Suite 255 
San Francisco, CA 94111 
Fax: (415) 677-1580
	$637,500.00 

	$78,571.18 

	ENABLE OPPORTUNITY PARTNERS LP 
One Ferry
      Building, Suite 255 
San Francisco, CA 94111 
Fax: (415) 677-1580
	$112,500.00 

	$13,865.52 

	TOTAL 	 
    	$414,184.29 

14

ANNEX I 

TO 

SECURITY AGREEMENT 

PLEDGE AMENDMENT 

          This
Pledge Amendment, dated _________ __ 200_, is delivered pursuant to Section 4.3
of the Security Agreement referred to below. The undersigned hereby agrees that
this Pledge Amendment may be attached to the Security Agreement, dated August
___, 2008, as it may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time and that the shares listed
on this Pledge Amendment shall be hereby pledged and assigned to Collateral
Agent and become part of the Collateral referred to in such Security Agreement
and shall secure all of the Obligations referred to in such Security Agreement.

	Subsidiary 	Shares Issued 	%
      Owned 
	
Big Chunk Corp. 	 
    	 
    

LIBERTY STAR URANIUM & METALS
CORP. 

 

By:
_____________________________________

15

SCHEDULE 6.1  

Liens or other Charges on Collateral

	 	Purchase Price 	Balance due 
	2002 Toyota Tundra 	Loan$22,075 	       
                       $13,075
  
	2004 F350 Ford 	Loan$39,478 	           
                   $29,216 
	2006 Chevy Silverado 	Loan$31,974 	       
                       $23,172
  
	2007 Dodge Ram 2500 	$44,063 	           
                   $31,964 
	 	  	  
	Redwall Drilling Inc. 	  	  
	CS3001 Drill Rig 	Loan amount 	$123,511 
	 	 $170,962  	 

16

Schedule 10.4* 

	Alpha Capital
      Anstalt 	24.16% 
	Harborview Master
      Fund LP 	13.31% 
	Platinum Partners
      Long Term Growth VI 	10.94% 
	Bridgepointe
      Master Fund, Ltd. 	15.43% 
	Brio Capital LP
	4.92% 
	Iroquois Master
      Fund Ltd. 	6.66% 
	Enable Growth
      Partners LP 	20.90% 
	Enable Opportunity
      Partners LP 	3.69% 
	Total 	100% 

 

 

* The Parties acknowledge that the percentages set forth in
this Schedule 10.4 are different from and not based on the amounts invested or
outstanding from the May 11, 2007, transaction, rather they were set pursuant to
agreement between the Parties

17Filed by sedaredgar.com - Liberty Star Uranium & Metals Corp. - Exhibit 10.5

GUARANTY 

1.      Identification.

     This Guaranty (the “Guaranty”),
dated as of August 27, 2008, is entered into by Big Chunk Corp., an Alaska
corporation (“Guarantor”), for the benefit of the Collateral Agent identified
below and the parties identified on Schedule A hereto (each a “Lender” and
collectively, the “Lenders”).

2.      Recitals.

     2.1      Guarantor
is a direct subsidiary of Liberty Star Uranium & Metals Corp., a Nevada
corporation (“Parent”). The Lenders have made and/or are making loans to Parent
(the “Loans”). Guarantor has and will obtain substantial benefit from the
proceeds of the Loans.

     2.2      The
Loans are and will be evidenced by certain secured promissory Notes issued by
Parent on May 11, 2007 (“May Notes”) and at or about the date of this Guaranty
(“New Notes”) as described on Schedule A hereto pursuant to subscription
agreements dated at or about the date hereof (“Subscription Agreements”).
Collectively, the May Notes and New Notes are referred to as “Note” or “Notes”.
The Notes are further identified on Schedule A hereto and were and will be
executed by Parent as “Borrower” or “Debtor” for the benefit of each Lender as
the “Holder” or “Lender” thereof.

     2.3      In
consideration of the Loans made, being made, and to be made by Lenders to Parent
and for other good and valuable consideration, and as security for the
performance by Parent of its obligations under the Notes and as security for the
repayment of the Loans and all other sums due from Parent to Lenders arising
under the Notes (collectively, the “Obligations”), Guarantor, for good and
valuable consideration, receipt of which is acknowledged, has agreed to enter
into this Guaranty.

     2.4      The
Lenders have appointed Collateral Agents, LLC as Collateral Agent pursuant to
that certain Collateral Agent Agreement dated at or about the date of this
Agreement (“Collateral Agent Agreement”), among the Lenders and Collateral
Agent.

3.      Guaranty.

     3.1      Guaranty.
Guarantor hereby unconditionally and irrevocably guarantees, jointly and
severally with any other Guarantor, the punctual payment, performance and
observance when due, whether at stated maturity, by acceleration or otherwise,
of all of the Obligations now or hereafter existing, whether for principal,
interest (including, without limitation, all interest that accrues after the
commencement of any insolvency, bankruptcy or reorganization of Parent, whether
or not constituting an allowed claim in such proceeding), fees, commissions,
expense reimbursements, liquidated damages, indemnifications or otherwise (such
obligations, to the extent not paid by Parent being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable costs, fees and expenses
(including reasonable counsel fees and expenses) incurred by Collateral Agent
and the Lenders in enforcing any rights under the guaranty set forth herein.
Without limiting the generality of the foregoing, Guarantor’s liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by Parent to Collateral Agent and the Lenders, but for the fact
that they are unenforceable or not allowable due to the existence of an
insolvency, bankruptcy or reorganization involving Parent.

     3.2      Guaranty
Absolute. Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Notes, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of Collateral Agent or the Lenders with 

1

respect thereto. The obligations of Guarantor under this
Guaranty are independent of the Guaranteed Obligations, and a separate action or
actions may be brought and prosecuted against Guarantor to enforce such
obligations, irrespective of whether any action is brought against Parent or any
other Guarantor or whether Parent or any other Guarantor is joined in any such
action or actions. The liability of Guarantor under this Guaranty constitutes a
primary obligation, and not a contract of surety, and to the extent permitted by
law, shall be irrevocable, absolute and unconditional irrespective of, and
Guarantor hereby irrevocably waives any defenses it may now or hereafter have in
any way relating to, any or all of the following:

          (a)      any
lack of validity of the Notes or any agreement or instrument relating
thereto;

          (b)      any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Notes, including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional credit
to Parent or otherwise;

          (c)      any
taking, exchange, release, subordination or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;

          (d)      any
change, restructuring or termination of the corporate, limited liability company
or partnership structure or existence of Parent; or

          (e)      any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by Collateral Agent or the
Lenders that might otherwise constitute a defense available to, or a discharge
of, Parent or any other guarantor or surety.

     This Guaranty shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
Collateral Agent, the Lenders or any other entity upon the insolvency,
bankruptcy or reorganization of the Parent or otherwise (and whether as a result
of any demand, settlement, litigation or otherwise), all as though such payment
had not been made.

     3.3      Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Guaranty
and any requirement that Collateral Agent or the Lenders exhaust any right or
take any action against any Borrower or any other person or entity or any
Collateral. Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and that the waiver
set forth in this Section 3.3 is knowingly made in contemplation of such
benefits. Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

     3.4      Continuing
Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a)
remain in full force and effect until the later of the indefeasible cash payment
in full of the Guaranteed Obligations and all other amounts payable under this
Guaranty, the Subscription Agreements and the Notes, (b) be binding upon
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Lenders and their successors, pledgees, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this Guaranty (including, without limitation, all or any
portion of its Notes owing to it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
such Collateral Agent or Lender herein or otherwise.

2

     3.5      Subrogation.
Guarantor will not exercise any rights that it may now or hereafter acquire
against the Collateral Agent or any Lender or other Guarantor (if any) that
arise from the existence, payment, performance or enforcement of such
Guarantor’s obligations under this Guaranty, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without limitation, the right
to take or receive from the Collateral Agent or any Lender or other Guarantor
(if any), directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security solely on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been indefeasibly paid in full.

     3.6      Maximum
Obligations. Notwithstanding any provision herein contained to the contrary,
Guarantor’s liability with respect to the Obligations shall be limited to an
amount not to exceed, as of any date of determination, the amount that could be
claimed by Lenders from Guarantor without rendering such claim voidable or
avoidable under Section 548 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law.

4.      Miscellaneous.

     4.1     
Expenses. Guarantor shall pay to the Lenders, on demand, the amount of
any and all reasonable expenses, including, without limitation, attorneys’ fees,
legal expenses and brokers’ fees, which the Lenders may incur in connection with
exercise or enforcement of any the rights, remedies or powers of the Lenders
hereunder or with respect to any or all of the Obligations.

     4.2     
Waivers, Amendment and Remedies. No course of dealing by the Lenders and
no failure by the Lenders to exercise, or delay by the Lender in exercising, any
right, remedy or power hereunder shall operate as a waiver thereof, and no
single or partial exercise thereof shall preclude any other or further exercise
thereof or the exercise of any other right, remedy or power of the Lenders. No
amendment, modification or waiver of any provision of this Guaranty and no
consent to any departure by Guarantor therefrom, shall, in any event, be
effective unless contained in a writing signed by the Majority in Interest (as
such term is defined in the Collateral Agent Agreement) or the Lender or Lenders
against whom such amendment, modification or waiver is sought, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. The rights, remedies and powers of the
Lenders, not only hereunder, but also under any instruments and agreements
evidencing or securing the Obligations and under applicable law are cumulative,
and may be exercised by the Lenders from time to time in such order as the
Lenders may elect.

     4.3      Notices.
All notices or other communications given or made hereunder shall be given in
the same manner as set forth in Section 13(b) of the Subscription Agreement to
the party to receive the same at its address set forth below or to such other
address as either party shall hereafter give to the other by notice duly made
under this Section:

	 	To Guarantor, to: 	Liberty Star Uranium & Metals Corp. 
	 	  	3024 E. Fort Lowell Road 
	 	  	Tucson, Arizona 85716-1572 
	 	  	Attn: James A. Briscoe, President 
	 	  	Fax: (520) 844-1118 
	 	  	  
	 	With a copy by telecopier only to: 
	 	  	  
	 	  	Clark Wilson LLP 

3

	 	  	800-885 West Georgia Street 
	 	  	Vancouver, B.C. Canada 
	 	  	Attn: Bernard Pinsky, Esq. 
	 	  	Fax: (604) 687-6314 
	 	  	  
	 	To Lenders: 	To the addresses and telecopier numbers set
  
	 	  	Forth on Schedule A 
	 	  	  
	 	To the Collateral Agent: 	Collateral Agents, LLC 
	 	  	111 West 57th Street, Suite 1416
  
	 	  	New York, NY 10019 
	 	  	Attn: General Counsel 
	 	  	Fax: (212) 245-9101 
	 	  	  
	 	  	  
	 	If to Guarantor, Lender or 	  
	 	Collateral Agent, with a copy by telecopier only
      to: 
	 	  	  
	 	  	Grushko & Mittman, P.C. 
	 	  	551 Fifth Avenue, Suite 1601 
	 	  	New York, New York 10176 
	 	  	Fax: (212) 697-3575 

Any party may change its address by written notice in
accordance with this paragraph.

     4.4      Term;
Binding Effect. This Guaranty shall (a) remain in full force and effect
until payment and satisfaction in full of all of the Obligations; (b) be binding
upon Guarantor and its successors and permitted assigns; and (c) inure to the
benefit of the Lenders and their respective successors and assigns. All the
rights and benefits granted by Guarantor to the Collateral Agent and Lenders
hereunder and other agreements and documents delivered in connection therewith
are deemed granted to both the Collateral Agent and Lenders. Upon the payment in
full of the Obligations, (i) this Guaranty shall terminate and (ii) the Lenders
will, upon Guarantor’s request and at Guarantor’s expense, execute and deliver
to Guarantor such documents as Guarantor shall reasonably request to evidence
such termination, all without any representation, warranty or recourse
whatsoever.

     4.5      Captions.
The captions of Paragraphs, Articles and Sections in this Guaranty have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance whatsoever.

     4.6     
Governing Law; Venue; Severability. This Guaranty shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts or choice of law. Any legal action or
proceeding against Guarantor with respect to this Guaranty must be brought only
in the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Guaranty, Guarantor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Guarantor hereby
irrevocably waives any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Guaranty brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum. If any provision 

4

of this Guaranty, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect. This
Guaranty shall be deemed an unconditional obligation of Guarantor for the
payment of money and, without limitation to any other remedies of Lenders, may
be enforced against Guarantor 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 Lenders and Guarantor are parties or
which Guarantor delivered to Lenders, which may be convenient or necessary to
determine Lenders’ rights hereunder or Guarantor’s obligations to Lenders are
deemed a part of this Guaranty, whether or not such other document or agreement
was delivered together herewith or was executed apart from this Guaranty.
Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection
with this Agreement or any other Transaction Document by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by
law. Each Guarantor irrevocably appoints Parent its true and lawful agent for
service of process upon whom all processes of law and notices may be served and
given in the manner described above; and such service and notice shall be deemed
valid personal service and notice upon each such Guarantor with the same force
and validity as if served upon such Guarantor.

     4.7      Alaska
Acknowledgement. For the purpose of complying with Alaska Statute
34.20.160 for the benefit of Collateral Agent and the Lenders, Guarantor
acknowledges and agrees as follows: GUARANTOR IS PERSONALLY OBLIGATED AND FULLY
LIABLE FOR THE AMOUNTS DUE UNDER THIS GUARANTY. EACH OF THE LENDERS AND THE
COLLATERAL AGENT SEVERALLY HAS THE RIGHT TO SUE ON THIS GUARANTY AND TO OBTAIN A
PERSONAL JUDGMENT AGAINST GUARANTOR FOR SATISFACTION OF THE AMOUNTS DUE UNDER
THIS GUARANTY EITHER BEFORE OR AFTER A JUDICIAL FORECLOSURE UNDER ALASKA
STATUTES 09.45.170 -09.45.220 OF ANY MORTGAGE OR DEED OF TRUST GIVEN BY
GUARANTOR TO SECURE PAYMENT OF THE AMOUNTS DUE UNDER THIS GUARANTY.

     4.8      Satisfaction
of Obligations. For all purposes of this Guaranty, the payment in full of
the Obligations shall be conclusively deemed to have occurred when either the
Obligations have been indefeasibly paid or all outstanding Notes have been
converted to common stock pursuant to the terms of the Notes and the
Subscription Agreements.

     4.9      Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the
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 signature and delivered by facsimile transmission.

[THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

5

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

“GUARANTOR”
BIG CHUNK CORP. 
an Alaska
corporation

	By: 	/s/
      James A. Briscoe 	 
	 	 	 
	Its: 		 

This Guaranty Agreement may be signed by facsimile signature
and 
delivered by confirmed facsimile transmission.

6

SCHEDULE A TO GUARANTY

	LENDERS 

	INITIAL MAY 
NOTES
      PRINCIPAL 
AMOUNT 	NEW NOTES 
PRINCIPAL
      AMOUNT 

	ALPHA CAPITAL ANSTALT 
Pradafant 7 
9490 Furstentums
      
Vaduz, Lichtenstein 
Fax: 011-42-32323196 	$650,000.00 

	$90,830.15 

	HARBORVIEW MASTER FUND L.P. 
Harbor House, 2nd
      Floor 
Waterfront Drive, Road Town 
Tortola, BVI 
Fax:
      (284) 494-4771 	$500,000.00 

	$50,055.88 

	PLATINUM PARTNERS LONG TERM GROWTH VI 
152 West
      57th Street 
New York, NY 10019 
Attn: Mark Nordlicht
      
Fax: (212) 	$750,000.00 

	$61,472.12 

	BRIDGEPOINTE MASTER FUND, LTD. 
1120 Sanctuary
      Parkway-Suite 325 
Alpharetta, GA 30004 
Fax: (770) 777-5844 	$900,000.00 

	$75,874.18 

	BRIO CAPITAL LP 
401 E. 34th St.-Suite South
      33C 
New York, NY 10016 
Fax: (646) 390-2158 	$150,000.00 

	$18,487.31 

	IROQUOIS MASTER FUND LTD. 
c/o Iroquois Capital
      Management, LLC 
641 Lexington Avenue, 26th Floor 
New
      York, NY 10022 
Fax: (212) 207-3452 	$250,000.00 

	$25,027.94 

	ENABLE GROWTH PARTNERS LP 
One Ferry Building, Suite 255
      
San Francisco, CA 94111 
Fax: (415) 677-1580 	$637,500.00 

	$78,571.18 

	ENABLE OPPORTUNITY PARTNERS LP 
One Ferry Building,
      Suite 255 
San Francisco, CA 94111 
Fax: (415) 677-1580 	$112,500.00 

	$13,865.52 

	TOTAL 	  	$414,184.29 

7

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