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
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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.
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3.5
Subrogation . Guarantor will not ex
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