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EXHIBIT 10.19
 
 
BALQON CORPORATION
PROMISSORY NOTE
$100,000
Santa Ana, California
 
Dated as of September 9, 2008

 
           Balqon Corporation, a California corporation (the “Company”), for
value received, hereby promises to pay to ELECTRIC MOTORSPORTS, LLC or its
registered assigns (“Holder”), the sum of One Hundred Thousand Dollars ($
100,000) on the terms and conditions set forth hereinafter. Payment for all
amounts due hereunder shall be made by mail to the registered address of Holder.
 
           This Note has been issued to Holder in connection with an asset
purchase agreement (the “APA”), pursuant to which the Company is purchasing the
assets of ELECTRIC MOTORSPORTS, LLC. This Note is the note referenced therein
and is subject to the provisions of that agreement, including, without
limitation, the provisions related to holdback rights in the APA.
 
    The following is a statement of the rights of Holder of this Promissory Note
(the “Note”) and the conditions to which this Note is subject, and to which
Holder hereof, by the acceptance of this Note, agrees:
 
   1. Maturity; Partial Prepayment. The principal hereof and any unpaid accrued
interest hereon, as set forth below, shall be due and payable on the earlier to
occur of: (i) Six Months (“Maturity Date”); and (iii) when declared due and
payable by Holder upon the occurrence of an Event of Default (as defined below).
 
   2. Interest. The Company shall pay interest at the rate of the lower of (i)
the Prime Rate published in the Wall Street Journal on the date closest to the
date of this Note; or (ii) the maximum allowable rate under applicable laws
(such rate, the “Interest Rate”) on the principal of this Note outstanding
during the period beginning on the date of this Note and ending on the date that
the principal amount of this Note is repaid in full. Interest shall be
calculated on the basis of a 360-day year for the actual number of days elapsed.
Interest accruing on this Note shall be due and payable at the Maturity Date or
upon the occurrence of an Event of Default. The Company shall pay the interest
due on this Note by delivering to Holder cash equal to the outstanding principal
amount of the Note plus any due and unpaid interest. If there occurs an
acceleration or prepayment of the Note prior to the Maturity Date in accordance
with the terms hereof, all interest due and payable at such time on the
principal amount due shall be paid in full. All payments hereunder are to be
applied first to reasonable costs and fees referred to herein, second to the
payment of accrued interest, and the remaining balance to the payment of
principal.
 
3. Events of Default. If any of the events specified in this Section 3 shall
occur (herein individually referred to as an “Event of Default”), Holder may, so
long as such condition exists, declare the entire principal and unpaid accrued
interest hereon immediately due and payable, by notice in writing to the
Company:
 
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               (a) Default in the payment of the principal or unpaid accrued
interest of this Note when due and payable after written notice and an
opportunity to cure such breach; or
 
               (b) The institution by the Company of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to institution of
bankruptcy or insolvency proceedings against it or the filing by it of a
petition or answer or consent seeking reorganization or release under the
Federal Bankruptcy Act, or any other applicable Federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the
Company, or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate action by
the Company in furtherance of any such action; or
 
               (c) If, within sixty (60) calendar days after the commencement of
an action against the Company, without the consent or acquiescence of the
Company (and service of process in connection therewith on the Company) seeking
any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company stayed, or if
the stay of any such order or proceeding shall thereafter be set aside, or if,
within sixty (60) calendar days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated; or
 
           4. Holder’s Rights Upon Event of Default. Upon the occurrence and
continuance of any Event of Default, Holder in his sole and absolute discretion
shall have the right to declare all unpaid interest and principal immediately
due and payable and exercise all other legal rights in connection therewith.
 
           5. Prepayment. Upon five (5) calendar days’ prior written notice to
Holder, the Company may at any time prepay in whole or in part, the principal
sum, plus accrued interest to date of such prepayment, of this Note; provided
that, after the date of such notice and prior to the proposed prepayment date,
Holder may elect to convert such amounts into Common Stock securities of the
Company at the Conversion Price.
 
           6. Representations and Warranties. The Company hereby represents and
warrants:
 
               (a) Due Organization and Qualification. The Company is an entity
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company is in no violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. The Company is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
this Note, or (ii) a material adverse effect on the results of operations,
assets, business, prospects or condition (financial or otherwise) of the
Company, (any of (i) or (ii), a “Material Adverse Effect”) and to the Company’s
knowledge no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
 
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               (b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by the Note and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of the Note by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, its board of directors or its shareholders in
connection therewith. The Note has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
 
               (c) No Conflicts. The execution, delivery and performance of the
Note by the Company, the issuance and sale of the Note and the consummation by
the Company of the other transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the Company’s articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected.
 
               (d) Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of the
Note or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.
 
           7. Successors and Assigns; Assignment. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto. Nothing in this Note, express or implied, is intended to
confer upon any party, other than the parties hereto and their successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Note, except as expressly provided herein. The Company may not assign this
Note or any of the rights or obligations referenced herein without the prior
written consent of Holder.
 
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           8. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and Holder.
 
           9. Waiver of Notice.   The Company hereby waives notice, presentment,
demand, protest and notice of dishonor.
 
           10. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with Federal, state or local tax authorities.
 
           11. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if sent by nationally recognized courier
service or mailed by registered or certified mail, postage prepaid, to the
respective addresses of the parties as set forth on the signature page hereof or
if sent by facsimile to the respective facsimile numbers of the parties set
forth on the signature page hereof. Any party hereto may by notice so given
change its address for future notice hereunder. Notice shall conclusively be
deemed to have been given and received when personally delivered or three (3)
business days after deposited in the mail or one business day after sent by
courier or upon confirmation of facsimile delivery in the manner set forth
above.
 
           12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, excluding that body of
law relating to conflict of laws.
 
           13. Heading; References. All headings used herein are used for
convenience only and shall not be used to construe or interpret this Note.
Except as otherwise indicated, all references herein to Sections refer to
Sections hereof.
 
(signature page follows)
 
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    IN WITNESS WHEREOF, the Company has caused this Note to be issued as of date
first written above.
 

 
BALQON CORPORATION,
 
a California corporation
       
By:
/s/ Balwinder Samra
   
Balwinder Samra, President

 
Name of Holder:
ELECTRIC MOTORSPORTS, LLC
Address:
2072 Greenpine Drive
Cincinnati, Ohio 45231
Attn: Bob Gruenwald
   
Telephone:
(513)851-3748
Facsimile:
(775)201-1362

 
 
 
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