THIRD MODIFICATION, WAIVER AND ACKNOWLEDGEMENT AGREEMENT

Waiver Agreement

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This Waiver Agreement involves

LIBERTY STAR URANIUM & METALS CORP.

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Title: THIRD MODIFICATION, WAIVER AND ACKNOWLEDGEMENT AGREEMENT
Date: 9/3/2008
Industry: METALS Sector: BASICM

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THIRD MODIFICATION, WAIVER AND ACKNOWLEDGEMENT AGREEMENT

This Third Modification, Waiver and Acknowledgement Agreement ("Agreement") dated as of August 27, 2008 is entered into by and among Liberty Star Uranium & Metals Corp., a Nevada corporation (the "Company") and the subscribers identified on the signature page hereto (each herein a "Subscriber" and collectively "Subscribers" or the "Parties").

WHEREAS, the Company and the Subscribers are parties to a Subscription Agreement ("Subscription Agreement") and other Transaction Documents dated at and about May 11, 2007 as amended on or about February 12, 2008 and May 12, 2008, respectively, relating to an aggregate purchase by Subscribers of $4,400,000 of principal amount of promissory notes (the "Notes") of the Company convertible into shares of the Company’s $.001 par value common stock and Warrants exercisable for Common Stock; and

WHEREAS, the Company is in default of material terms of the Transaction Documents and the Subscribers may elect to exercise their rights to accelerate the Maturity Date of the Notes; and

WHEREAS, the Company is contemplating an offering of $500,000 of Convertible Notes of the Company ("New Offering"), to the Subscribers which New Offering will result in the activation of Subscribers’ rights under the Transaction Documents, including but not limited to Section 12(b) of the Subscription Agreement, Section 3.4D of the Notes and Section 3.4 of the Warrants; and

WHEREAS, the Company and Subscribers desire to further restructure the terms of the Transaction Documents to their mutual benefit.

NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and the Subscribers hereby agree as follows:

1. Capitalized terms employed herein shall have the meanings attributed to them in the Transaction Documents.

2. Effective as of the date of this Agreement, Section 2.1 of the Notes is deleted and replaced with the following:

"2.1. Payment of Monthly Amount in Cash or Common Stock . Subject to Section 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 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. Anything to the contrary herein notwithstanding in addition to any other rights of the Holder, the Holder may convert up to one-twelfth (1/12 ^th ) of the initial Principal Amount of this Note, on a cumulative basis, each 30 days for a period of 180 days commencing August 30, 2008, at a conversion price equal to the lesser of (i) the Fixed Conversion Price, or (ii) eighty percent (80%)