COLLATERAL AGENT AGREEMENT
COLLATERAL AGENT
AGREEMENT (this " Agreement ") dated as of August 27, 2008,
among Collateral Agents, LLC (the " Collateral Agent "), and
the parties identified on Schedule A hereto (each, individually, a
" Lender " and collectively, the " Lenders "), who
hold or will acquire promissory Notes issued or to be issued by
Liberty Star Uranium & Metals Corp., a Nevada corporation
("Parent"), and Big Chunk Corp., an Alaska corporation
("Guarantor"), on the dates set forth on Schedule A hereto and at,
about or after the date of this Agreement as described in the
Security Agreement referred to in Section 1(a) below (collectively
herein the " Notes ").
WHEREAS, the
Lenders have made, are making and will be making loans to Parent to
be secured by certain collateral; and
WHEREAS, it is
desirable to provide for the orderly administration of such
collateral by requiring each Lender to appoint the Collateral
Agent, and the Collateral Agent has agreed to accept such
appointment and to receive, hold and deliver such collateral, all
upon the terms and subject to the conditions hereinafter set forth;
and
WHEREAS, it is
desirable to allocate the enforcement of certain rights of the
Lenders under the Notes for the orderly administration thereof.
NOW, THEREFORE, in
consideration of the premises set forth herein and for other good
and valuable consideration, the parties hereto agree as
follows:
1.
Collateral .
(a)
Prior to or contemporaneously with the execution and delivery of
this Agreement by the Collateral Agent and the Lenders, (i) the
Collateral Agent has or will have entered into a Security Agreement
with Parent and Guarantor (" Security Agreement "),
regarding the grant of a security interest in the assets of Parent
and Guarantor (such assets are referred to herein and in the
Security Agreement as the " Collateral ") to the Collateral
Agent, for the benefit of the Lenders, (ii) Guarantor will have
executed and delivered a "Guaranty" in favor of Lenders in
connection with the Obligations (as defined in the Security
Agreements), and (iii) Parent is issuing the Notes to the Lenders
pursuant to Subscription Agreements dated at or about May 11, 2007
and the date of this Agreement (collectively, each a "Subscription
Agreement"). Collectively, the Security Agreement, the Notes and
Subscription Agreement and other agreements referred to therein are
referred to herein as " Borrower Documents ". All defined
terms not otherwise defined herein shall have the meanings
attributed to them in the Security Agreement.
(b) The
Collateral Agent hereby acknowledges that any Collateral held by
the Collateral Agent is held for the benefit of the Lenders in
accordance with this Agreement and the Borrower Documents. No
reference to the Borrower Documents or any other instrument or
document shall be deemed to incorporate any term or provision
thereof into this Agreement unless expressly so provided.
(c)
The Collateral Agent is to distribute in accordance with the
Borrower Documents any proceeds received from the Collateral which
are distributable to the Lenders as set forth in Section 10.4 of
the Security Agreement.
2.
Appointment of the Collateral Agent .
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The Lenders hereby
appoint the Collateral Agent (and the Collateral Agent hereby
accepts such appointment) to take any action including, without
limitation, the registration of any Collateral in the name of the
Collateral Agent or its nominees prior to or during the continuance
of an Event of Default (as defined in the Borrower Documents), the
exercise of voting rights, if any, upon the occurrence and during
the continuance of an Event of Default, the application of any cash
collateral received by the Collateral Agent to the payment of the
Obligations, the making of any demand under the Borrower Documents,
the exercise of any remedies given to the Collateral Agent pursuant
to the Borrower Documents and the exercise of any authority
pursuant to the appointment of the Collateral Agent as an
attorney-in-fact pursuant to the Security Agreement that the
Collateral Agent deems necessary or proper for the administration
of the Collateral pursuant to the Security Agreement. Upon
disposition of the Collateral in accordance with the Borrower
Documents, the Collateral Agent shall promptly distribute any cash
or Collateral in accordance with Section 10.4 of the Security
Agreement. Parent and Lenders must notify Collateral Agent in
writing of the issuance of Notes to Lenders by Parent. Additional
Lenders may become subject to the rights and benefits of this
Agreement by participating in the Offering and executing and
delivering a copy of this Agreement to the Collateral Agent and
Company. Schedule A may be amended from time to time to include
such additional Lenders. The Collateral Agent will not be required
to act hereunder in connection with Notes the issuance of which was
not disclosed in writing to the Collateral Agent nor will the
Collateral Agent be required to act on behalf of any assignee of
Notes without the written consent of Collateral Agent.
3.
Action by the Majority in Interest .
(a)
Certain Actions . Each of the Lenders covenants and agrees
that only a Majority in Interest shall have the right, but not the
obligation, to undertake the following actions (it being expressly
understood that less than a Majority in Interest hereby expressly
waive the following rights that they may otherwise have under the
Borrower Documents):
(i)
Acceleration . If an Event of Default occurs, after the
applicable cure period, if any, a Majority in Interest may, on
behalf of all the Lenders, instruct the Collateral Agent to provide
to Parent and/or Guarantor notice to cure such default and/or
declare the unpaid principal amount of the Notes to be due and
payable, together with any and all accrued interest thereon and all
costs payable pursuant to such Notes;
(ii)
Enforcement . Upon the occurrence of any Event of Default
after the applicable cure period, if any, a Majority in Interest
may instruct the Collateral Agent to proceed to protect, exercise
and enforce, on behalf of all the Lenders, their rights and
remedies under the Borrower Documents against Parent and/or
Guarantor, and such other rights and remedies as are provided by
law or equity; and
(iii)
Waiver of Past Defaults . A Majority in Interest may
instruct the Collateral Agent to waive any Event of Default by
written notice to Parent and/or Guarantor, and the other Lenders,
but not waive damages accrued or accruing until the effective date
of such waiver.
(b)
Permitted Subordination and Release . A Majority in Interest
may instruct the Collateral Agent to agree to release in whole or
in part or to subordinate any Collateral to any claim or other
actual or proposed security interest and may enter into any
agreement with Parent and/or Guarantor to evidence such
subordination; provided , however , that subsequent
to any such release or subordination, each Note shall remain
pari passu with the other Notes held by the Lenders.
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(c)
Further Actions . A Majority in Interest may instruct the
Collateral Agent to take any other action described in Section
13(h) of the Subscription Agreement and subject to the conditions
described in Section 13(h) of the Subscription Agreement by
instructing the Collateral Agent in writing to take such action on
behalf of all the Lenders.
(d)
Majority in Interest . For so long as any obligations remain
outstanding on the Notes, Majority in Interest for the purposes of
this Agreement and the Borrower Documents shall mean Lenders who
hold not less than seventy percent (70%) of the outstanding
principal amount of the Notes on the date such Majority in Interest
instructs the Collateral Agent.
4.
Power of Attorney .
(a) To
effectuate the terms and provisions hereof, the Lenders hereby
appoint the Collateral Agent as their attorney-in-fact (and the
Collateral Agent hereby accepts such appointment) for the purpose
of carrying out the provisions of this Agreement including, without
limitation, taking any action on behalf of, or at the instruction
of, the Majority in Interest at the written direction of the
Majority in Interest and executing any consent authorized pursuant
to this Agreement and taking any action and executing any
instrument that the Collateral Agent may deem necessary or
advisable (and lawful) to accomplish the purposes hereof.
(b)
All acts done under the foregoing authorization are hereby ratified
and approved and neither the Collateral Agent nor any designee nor
agent thereof shall be liable for any acts of commission or
omission, for any error of judgment, for any mistake of fact or law
except for acts of gross negligence or willful misconduct.
(c) This
power of attorney, being coupled with an interest, is irrevocable
while this Agreement remains in effect.
5.
Expenses of the Collateral Agent . The Lenders shall pay any
and all reasonable costs and expenses incurred by the Collateral
Agent, including, without limitation, reasonable costs and expenses
relating to all waivers, releases, discharges, satisfactions,
modifications and amendments of this Agreement, the administration
and holding of the Collateral, insurance expenses, and the
enforcement, protection and adjudication of the parties’
rights hereunder by the Collateral Agent, including, without
limitation, the reasonable disbursements, expenses and fees of the
attorneys the Collateral Agent may retain, if any, each of the
foregoing in proportion to their holdings of the Notes.
6.
Reliance on Documents and Experts . The Collateral Agent
shall be entitled to rely upon any notice, consent, certificate,
affidavit, statement, paper, document, writing or communication
(which may be by telegram, cable, telex, telecopier, or teleph
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