VU1 CORPORATION
 
AND
 
Milan Gottwald
 

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DEED OF GUARANTEE
 

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CONTENTS
 
Clause
   
Page
       
1.
DEFINITIONS AND INTERPRETATION
 
1
2.
GUARANTEE AND INDEMNITY
 
2
3.
CONTINUING GUARANTEE
 
2
4.
ADDITIONAL SECURITY
 
3
5.
PRESERVATION OF RIGHTS
 
3
6.
IMMEDIATE RECOURSE
 
4
7.
REINSTATEMENT
 
4
8.
DEFERRAL OF GUARANTOR'S RIGHTS
 
5
9.
REPRESENTATIONS
 
5
10.
TAX GROSS-UP
 
6
11.
NOTICES
 
6
12.
PARTIAL INVALIDITY
 
7
13.
LAW
 
7
14.
JURISDICTION
 
7
15.
AMENDMENTS
 
7
16.
COUNTERPARTS
 
7

 
 
 

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This Deed of Guarantee ("Guarantee") is made on   [●], 2008 between:
 
(1)
VU1 Corporation, a company organised and existing under the laws of the State of
California, whose registered office is at 557 Roy Street, Suite 125, Seattle, WA
98109, , USA (the "Guarantor"), and

 
(2)
Milan Gottwald, birth identification number 750219/5327, residing at: Náklo 334,
Postal Code: 783 32, Czech Republic (the “Beneficiary”).

 
WHEREAS:
 
(A)
The Beneficiary shall in November 25, 2008 enter into a purchase agreement with
SENDIO s.r.o., a company organised and existing under the laws of the Czech
Republic, Id. No.: 281 64 440, whose registered office is at Olomouc, Holická
156/49, PSČ 77900, Czech Republic (“SENDIO”), whereby SENDIO is obliged, among
others, to pay into the Escrow Account the advance payments of the Purchase
Price pursuant to Art. III (2) (i) and (ii) thereof in the total amount of CZK
13,500,000 (thirteen million and five hundred thousand Czech crowns) (the
“Purchase Agreement”).

 
(B)
The Guarantor is the sole shareholder in SENDIO.

 
(C)
According to Art. VI (2) of the Purchase Agreement SENDIO agrees to submit to
the Beneficiary, on the date of conclusion thereof, a valid and binding
guarantor’s declaration issued by the Guarantor, in order to secure the SENDIO’s
obligations following from Art. III (2) (i) and (ii) of the Purchase Agreement.

 
NOW THIS DEED WITNESSES:
 
 
1.
DEFINITIONS AND INTERPRETATION

 
 
(a)
Unless otherwise defined in this Guarantee terms defined in the Purchase
Agreement shall have the same meaning when used in this Guarantee.

 
 
(b)
Any reference to a Clause shall mean a Clause of this Guarantee unless otherwise
stated.

 
 
(c)
Titles and headings of Clauses in this Guarantee are for reference only and
shall not affect its interpretation or construction.

 
 
(d)
Words importing persons shall include firms, companies and corporations and vice
versa.

 
 
(e)
For the purposes of this Guarantee the “Finance Documents” mean Purchase
Agreement and this Guarantee.

 
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2.
GUARANTEE AND INDEMNITY

 
The Guarantor hereby irrevocably and unconditionally:
 
 
(a)
guarantees to the Beneficiary punctual performance by SENDIO of the SENDIO’s
obligations under Art. III (2) (i) and (ii) of the Purchase Agreement;

 
 
(b)
undertakes with the Beneficiary that whenever SENDIO does not pay any amount
when due under Art. III (2) (i) and (ii) of the Purchase Agreement, the
Guarantor shall within 5 business days from receipt of a written demand pay that
amount into the Escrow Account as if it was the principal obligor;

 
The written demand shall be delivered personally or sent by registered post,
telex or facsimile. The demand shall state the date of this Guarantee and that
the amount set out in the demand is due and payable under Art. III (2) (i) and
(ii) of the Purchase Agreement and has remained unpaid for a continuous period
of 5 (five) business days after demand having been made on SENDIO.
 
 
3.
CONTINUING GUARANTEE

 
This Guarantee is a continuing guarantee and will extend to the maximum amount
of CZK 13,500,000 (thirteen million and five hundred thousand Czech crowns)
(hereinafter the "Total Guaranteed Amount") as payable by SENDIO under Art. III
(2) (i) and (ii) of the Purchase Agreement. The Total Guaranteed Amount shall be
gradually automatically reduced by the individual advance payments on the
Purchase Price paid by SENDIO pursuant to Art. III (2) (i) and (ii) of the
Purchase Agreement.
 
This Guarantee shall expire upon the full payment of the individual advance
payments on the Purchase Price by SENDIO pursuant to Art. III (2) (i) and (ii)
of the Purchase Agreement.
 
The original Deed of the Guarantee has to be returned to the Guarantor at the
expiry of the Guarantee. However, should this Deed of the Guarantee not be
returned to the Guarantor, this shall not affect in any manner the expiry terms
of the Guarantee set out under this Clause.
 
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4.
ADDITIONAL SECURITY

 
This Guarantee shall be in addition to and shall not be in any way prejudiced or
affected by any collateral or other security hereafter held by the Beneficiary
for any or all the moneys payable or expressed to be payable by SENDIO under the
Finance Documents nor shall such collateral or other security or any lien to
which the Beneficiary may be otherwise entitled or the liability of any person
or persons for all or any part of such moneys be in any manner prejudiced or
affected by this Guarantee.
 
 
5.
PRESERVATION OF RIGHTS

 
The obligations of the Guarantor hereunder will not be affected by any act,
omission, matter or thing which, but for this Clause, would reduce, release or
prejudice any of its obligations hereunder (without limitation and whether or
not known to it) including:
 
 
(a)
any time, waiver or consent granted to, or composition with, SENDIO or other
person;

 
 
(b)
the release of SENDIO or any other person under the terms of any composition or
arrangement with any creditor of SENDIO;

 
 
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal
or neglect to perfect, take up or enforce, any rights against, or security over
assets of, SENDIO or other person or any non-presentation or non-observance of
any formality or other requirement in respect of any instrument or any failure
to realise the full value of any security;

 
 
(d)
any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of SENDIO or any other person;

 
 
(e)
any unenforceability, illegality or invalidity of any obligation of any person
under the Purchase Agreement or any other document or security;

 
 
(f)
the amalgamation or reorganisation of the Guarantor.

 
 
(g)
the bankruptcy, insolvency, liquidation, reorganisation, dissolution,
amalgamation, reconstruction or any analogous proceeding relating to SENDIO or
any other person or any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or status function
control or ownership of SENDIO or any other person; or

 
 
(h)
any amendment to or variation or replacement of the Purchase Agreement (whether
or not such amendment or variation shall increase the liabilities of SENDIO
thereunder or the Guarantor hereunder) or by anything that SENDIO or the
Beneficiary may do or omit or neglect to do (including but without limitation
the assertion or failure or delay to assert any right or remedy of the
Beneficiary or the pursuit of any rights or remedies by the Beneficiary or the
giving by SENDIO of any security or the release, modification, failure, delay or
forbearance in enforcing or exchange of any such security) which but for this
provision might exonerate the Guarantor.

 
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In case of the Guarantor’s bankruptcy, insolvency, composition, liquidation,
reorganisation, dissolution, amalgamation, reconstruction or any analogous
proceeding relating thereto the Guarantor shall be obliged to take any and all
actions, to the maximum extent allowed by the applicable law, to avoid any
adverse effect of such proceeding on the obligations of the Guarantor hereunder.
 
 
6.
IMMEDIATE RECOURSE

 
The Guarantor shall make payment under this Guarantee on first written demand of
the Beneficiary and the Beneficiary shall not be obliged before enforcing any of
its rights or remedies conferred upon it by this Guarantee or by law:
 
 
(a)
to grant any time or indulgence to SENDIO;

 
 
(b)
to take any legal proceedings or action or obtain any judgment against SENDIO in
any Court;

 
 
(c)
to make or file any claim in any bankruptcy, liquidation, winding-up or
dissolution of SENDIO; or

 
 
(d)
to pursue or exhaust any other right or remedy against SENDIO, and the
liabilities of the Guarantor under this Agreement may be enforced irrespective
of whether any legal proceedings are being or have been taken against SENDIO.

 
 
7.
REINSTATEMENT

 
If any payment by SENDIO or any discharge given by the Beneficiary (whether in
respect of the obligations of SENDIO or any security for those obligations or
otherwise) is avoided or reduced as a result of insolvency or any similar event:
 
 
(a)
the liability of SENDIO shall continue as if the payment, discharge, avoidance
or reduction had not occurred; and

 
 
(b)
the Beneficiary shall be entitled to recover the value or amount of that
security or payment from SENDIO, as if the payment, discharge, avoidance or
reduction had not occurred.

 
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8.
DEFERRAL OF GUARANTOR'S RIGHTS

 
Until all amounts which may be or become payable by SENDIO under or in
connection with Art. III (2) (i) and (ii) of the Purchase Agreement have been
irrevocably paid in full, the Guarantor will not exercise any rights whatsoever
which it may have by reason of performance by it of its obligations hereunder,
including any right:
 
 
(a)
to be indemnified by SENDIO;

 
 
(b)
to claim any contribution from any other guarantor of SENDIO’s obligations under
the Purchase Agreement; and/or

 
 
(c)
to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Beneficiary under the Purchase Agreement or of
any other guarantee or security taken pursuant to, or in connection with, the
Purchase Agreement.

 
 
9.
REPRESENTATIONS

 
The Guarantor hereby warrants and represents that:
 
 
(a)
it is a company incorporated in the State of California with power to enter into
this Guarantee and to exercise its rights and perform its obligations hereunder
and all corporate and other action required to authorise its execution of this
Guarantee has been duly taken;

 
 
(b)
the obligations expressed to be assumed by it in this Guarantee are legal and
valid obligations binding on it in accordance with the terms hereof;

 
 
(c)
all acts, conditions and things required to be done fulfilled and performed in
order (a) to enable it lawfully to enter into, exercise its rights under and
perform and comply with the obligations expressed to be assumed by it hereunder
and (b) to ensure that the obligations expressed to be assumed by it hereunder
are legal, valid and binding have been done, fulfilled and performed;

 
 
(d)
the entry into and performance by it of  this Guarantee do not and will not
conflict in any material respect with:

 
  any law or regulation applicable to it;
 
  its constitutional documents; or
 
  any agreement or instrument binding upon it or any of its assets.
 
 
(e)
it has not taken any corporate action or have any other steps been taken or
legal proceedings been started against it for its winding-up, dissolution,
administration, or re-organisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer.

 
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10.
TAX GROSS-UP

 
 
(a)
The Guarantor shall make all payments to be made by it without any deduction or
withholding for or on account of any tax, levy, impost, duty or other charge or
withholding of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the same) (the
“Tax Deduction”), unless a Tax Deduction is required by law.

 
 
(b)
If a Tax Deduction is required by law to be made by the Guarantor, the amount of
the payment due from the Guarantor shall be increased to an amount which (after
making any Tax Deduction) leaves an amount equal to the payment which would have
been due if no Tax Deduction had been required.

 
 
(c)
If the Guarantor is required to make a Tax Deduction, it shall make that Tax
Deduction and any payment required in connection with that Tax Deduction within
the time allowed and in the minimum amount required by law.

 
 
(d)
Within 30 days of making either a Tax Deduction or any payment required in
connection with that Tax Deduction, the Guarantor shall deliver to the
Beneficiary evidence reasonably satisfactory to the Beneficiary that the Tax
Deduction has been made or (as applicable) any appropriate payment paid to the
relevant taxing authority.

 
 
(e)
The Guarantor shall, promptly upon becoming aware of the same, notify the
Beneficiary of any Tax Deduction which would be required to be made from any
payment to be made by it under any Finance Document.

 
 
11.
NOTICES

 
Any notice, request or other communication required to be given under or in
connection with this Guarantee (a "Notice"):
 
 
(a)
shall be in writing;

 
 
(b)
shall be in the English language; and

 
 
(c)
shall be delivered personally or sent by facsimile, established courier service
or telex to the party to which it is required or permitted to be given or made
at the address specified below or at such other address as such party shall have
designated by Notice to the party giving or making such Notice:

 
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VU1 Corporation
557 Roy Street, Suite 125, Seattle,
WA 98109, USA

Facsimile: ___________________
Attention: ___________________
 
Milan Gottwald
Náklo 334, Postal Code: 783 32
Czech Republic
 
Facsimile: +420587436124
Attention: Milan Gottwald
 

 
12.
PARTIAL INVALIDITY

 
If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction neither the
legality validity or enforceability of the remaining provisions hereof nor the
legality validity or enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
 
 
13.
LAW

 
This Guarantee shall be governed by and construed in accordance with the laws of
the State of Washington.
 
 
14.
JURISDICTION

 
14.1
The parties hereto expressly agree that all disputes arising out of or in
connection with the present Guarantee shall be finally settled under the Rules
of Arbitration of the International Chamber of Commerce by three arbitrators
appointed in accordance with the said Rules. The governing law of the
arbitration shall be the law of the State of Washington (USA). The arbitration
shall take place in Vienna. The language of the arbitration shall be English.

 
14.2
This Clause 14 is for a benefit of the Beneficiary only. As a result, the
Beneficiary shall not be prevented from taking proceedings relating to this
Guarantee in any other courts with jurisdiction. To the extent allowed by law,
the Beneficiary may take concurrent proceedings in any number of jurisdictions.

 
 
15.
AMENDMENTS

 
No variation of this Guarantee is valid unless it is in writing and signed by or
on behalf of each party.
 
16.           COUNTERPARTS
 
This Guarantee may be executed in two counterparts. Each party shall receive one
counterpart.

 
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EXECUTED AND DELIVERED as a Deed on the date set out above.
 
Executed as a Deed on behalf of
VU1 Corporation

 
Signed by  ___________________
 
_________________________
 
 
Signed by ___________________
 
________________________
 
Executed as a Deed on behalf of
Milan Gottwald
 
Signed by Milan Gottwald
 
________________________

 
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