ex_10-19.htm


    
      

      

    

    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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