Document:

ex_10-7.htm

    
      

      

    

    EXHIBIT
10.7

     

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of __________, 2008, among Balqon Corporation, a California
corporation (the “Company”), and the
purchasers signatory hereto (each such purchaser is a “Purchaser” and
collectively, the “Purchasers”).

     

    This
Agreement is made pursuant to the Convertible Promissory Notes, dated as of the
date hereof between the Company and the Purchasers (the “Notes”).

     

    The
Company and the Purchasers hereby agree as follows:

     

    1.            
Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Notes shall
have the meanings given such terms in the Notes.  As used in this
Agreement, the following terms shall have the following meanings:

     

    “Advice” shall have
the meaning set forth in Section 6(d).

     

    “Cut-back” and “Cut-back Shares”
shall have the meanings set forth in Section 2(a).

     

    “Effectiveness Period”
shall have the meaning set forth in Section 2(a).

     

     “Filing Date” means,
with respect to the Registration Statement required hereunder, the 60th
calendar day following the effectiveness of the Merger.

     

    “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

     

    “Indemnified Party”
shall have the meaning set forth in Section 5(c).

     

    “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

     

    “Losses” shall have
the meaning set forth in Section 5(a).

     

    “Plan of Distribution”
shall have the meaning set forth in Section 2(a).

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

     

    “Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

     

    
      
        
        

      

      
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    “Registrable
Securities” means all of (i) the Shares issuable pursuant to the Notes,
(ii) the shares of Common Stock issuable upon exercise of the Warrants to
purchase Company Common Stock issued in connection with the Notes (the
“Warrants”), and (iii) any shares of Common Stock issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing.

     

    “Registration
Statement” means the registration statements required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration
statement.

     

    “Rule 415” means Rule
415 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such rule.

     

    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such rule.

     

    “Selling Shareholder
Questionnaire” shall have the meaning set forth in Section
3(a).

     

    2.          
  Shelf
Registration.

     

    (a)           On
or prior to the Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of 100% of the
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415; provided, however, that if the SEC takes the position that the
offering of some or all of the Registrable Securities is not eligible to be made
on a delayed or continuous basis under the provisions of Rule 415, the Company
shall amend the Registration Statement prior to its effectiveness to remove from
the Registration Statement such portion of the Registrable Securities (the
“Cut-back Shares”) and/or agree to such restrictions and limitations on the
registration and resale of the Registrable Securities as the SEC may require to
assure the Company’s compliance with the requirements of Rule 415 (collectively,
the “SEC Restrictions”). Any cut-back (“Cut-back”) of the Registrable Securities
pursuant to this Section 2(a) shall be subject to the priority of registration
for the Registrable Securities covered by that certain Registration Rights
Agreement dated July 11, 2008, as amended (the “Priority Shares”), and any
cut-backs shall be allocated to the Holders of Registrable Securities on a pro
rata basis, unless the SEC Restrictions require otherwise.  In the
event there are holders of securities, other than the Registrable Securities and
the Priority Shares, who are entitled to registration rights (“Other Shares”),
the securities that are entitled to be included in the registration shall first
be allocated to the holders of Priority Shares, next to the Holders of
Registrable Securities and thereafter to the holders of Other Shares, subject to
such allocation priorities as set forth in the registration rights agreements
for such Other Shares.  Such Registration Statement shall contain the
“Plan of
Distribution” section substantially in the form attached hereto as Annex A, with such
changes as are reasonably required to respond to the actual plan of distribution
or any comments to such section by the Commission and to comply with then
applicable securities laws.  Subject to the terms of this Agreement,
the Company shall use its commercially reasonable efforts to cause such
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, and shall use its commercially
reasonable efforts to keep such Registration Statement continuously effective
under the Securities Act until the earlier of (A) the date that is two years
after the date on which all the Shares are issued to the Holders, (B) the date
on which there ceases to be outstanding any Registrable Securities, and (C) the
date on which the Company receives an opinion from its legal counsel to the
effect that all Registrable Securities can be freely traded without the
continued effectiveness of a Registration Statement (the “Effectiveness
Period”).

     

    
      
        
        

      

      
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    (b)           The
parties hereto agree that the Company will not be required to use a Registration
Statement for any registration in which securities of the Company are sold to an
underwriter for reoffering to the public, and the Company will in no event be
required to cooperate with or pay for any such underwritten
offering.

     

    3.           
 Registration
Procedures

     

    In
connection with the Company’s registration obligations hereunder, the Company
shall:

     

    (a)           Not
less than three trading days prior to the filing of each Registration Statement
or any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall, (i) furnish to each Holder copies of the
“Principal and Selling Stockholders” and “Plan of Distribution” sections of such
Registration Statement or other documents proposed to be filed, if such sections
have been revised since the previous filing of such Registration Statement or
any amendment or supplement thereto, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
review of such Holders, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel, to conduct a
reasonable investigation within the meaning of the Securities
Act.  The Company shall not file a Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities included in such Registration Statement
shall reasonably object in good faith, provided that, the Company is notified of
such objection in writing no later than two trading days after the Holders have
been so furnished copies of such documents.  In order to be included
in such registration, each Holder agrees to furnish to the Company a completed
Questionnaire substantially in the form attached to this Agreement as Annex B (a
“Selling
Securityholder Questionnaire”) not less than ten days after written
request therefore has been made by the Company.  Any Holder who fails
to timely forward to the Company the completed Questionnaire shall be excluded
from the registration.

     

    
      
        
        

      

      
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    (b)           (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to a Registration Statement or any amendment thereto
and, upon written request by any Holder of at least 25% of the Registrable
Securities included in such Registration Statement, as promptly as reasonably
possible provide such Holders with true and complete copies of all material
written correspondence from and to the Commission relating to a Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the applicable
period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.

     

    (c)           Use
its commercially reasonable efforts to notify the Holders (which notice shall,
pursuant to clauses (ii) through (vi) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible and (if requested by any Holder of at least
25% of the Registrable Securities included in a Registration Statement) confirm
such notice in writing (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement has been filed; (B) when
the Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus; provided that any and all of such information shall be
kept confidential by each Holder until such information otherwise becomes
public, unless disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.

     

    
      
        
        

      

      
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    (d)           Use
its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

     

    (e)           Furnish
to each Holder, without charge, to the extent requested in writing by such
Holder, at least one conformed copy of each such Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to such Registration Statement (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

     

    (f)           Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Holder may reasonably request in writing in
connection with resales by such Holder.  Subject to the terms of this
Agreement, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving on any notice
pursuant to Section 3(c).

     

    (g)           Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.

     

    
      
        
        

      

      
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    (h)           If
requested by a selling Holder, cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by applicable law, of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holder may
request.

     

    (i)           Upon
the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  If the Company notifies the Holders in accordance
with clauses (ii) through (vi) of Section 3(c) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then
the Holders shall suspend use of such Prospectus.  The Company will
use its commercially reasonable efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable.  The Company shall be
entitled to exercise its right under this Section 3(i) to suspend the
availability of a Registration Statement and Prospectus for a period not to
exceed 40 trading days (which need not be consecutive days) in any 12 month
period.

     

    (j)           Comply
with all applicable rules and regulations of the Commission until the end of the
Effectiveness Period.

     

    (k)           The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and the person who has voting and dispositive control over the such
shares.  The Company shall have no obligation to keep a Prospectus
usable or to give notice that a Prospectus is not usable by a particular Holder,
and the Company will have no liability for, to the extent such Prospectus is not
usable by such Holder because current information with respect to such Holder is
not included therein because such Holder has not provided information to the
Company in accordance with Section 3(a) or this Section
3(k).

     

    (l)           Notwithstanding
any provision of this Agreement to the contrary, it shall not be a breach or
violation of any obligation of the Company hereunder if the Company fails to
take any action otherwise required hereunder because, in its reasonable
determination, such action would require the Company to disclose material,
non-public information that the Company has a bona fide business or legal
reason for not disclosing regardless of whether the Company caused such
material, non-public information to exist.

     

    
      
        
        

      

      
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    4.         
   Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the trading market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws reasonably agreed to by the Company in writing (including without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested in writing by the Holders),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the Holders of a majority of
the Registrable Securities included in a Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any trading market as required hereunder.  In no event
shall the Company be responsible for any broker or similar commissions or,
except to the extent provided for in the Transaction Documents, any legal fees
or other costs of the Holders.

     

    5.          
  Indemnification

     

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (i) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved or was not objected to in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
each Holder has expressly approved Annex A hereto for this purpose) or (ii) in
the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d).  The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding arising from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware.

     

    
      
        
        

      

      
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    (b)           Indemnification by
Holders.  Each Holder shall, severally and not jointly,
indemnify and hold harmless each other Holder, the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the Securities
Act, or (y) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(vi), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or  defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(d) or (z) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved or was not objected to in
writing by such Holder expressly for use in a Registration Statement (it being
understood that each Holder has expressly approved Annex A hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto.  In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

     

    (c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.

     

    
      
        
        

      

      
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    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall reasonably believe that a material conflict of interest is likely to exist
if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld.  No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such
Proceeding.

     

    Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten trading days following written notice thereof to
the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined based
upon the relative faults of the parties.

     

    (d)           Contribution.  If
the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    
      
        
        

      

      
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    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, except
in the case of fraud by such Holder.

     

    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.

     

    6.       
     Miscellaneous

     

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     

    (b)           No Piggyback on
Registrations.  Except as set forth in Schedule 6(b)
attached hereto, and subject to the cut-back provisions of Section 2(a), neither
the Company nor any of its security holders may include securities of the
Company in the initial Registration Statement other than the Priority Shares,
the Registrable Securities and the Other Shares.

     

    (c)           Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (d)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c), such Holder will
forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.  The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as it practicable.  The Company agrees and acknowledges that
any periods during which the Holder is required to discontinue the disposition
of the Registrable Securities hereunder shall be subject to the provisions of
Section 2(b).

     

    (e)           Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of a majority
of the then outstanding Registrable Securities.  Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.

     

    (f)           Notices. All notices and other communications
required or permitted to be provided to a party hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile
(provided the sender receives a machine-generated confirmation of successful
transmission) or e-mail prior to 5:00 p.m. (Los Angeles, California time) on a
business day, (ii) the next business day after the date of transmission, if such
notice or communication is delivered via facsimile or e-mail on a day that is
not a business day or later than 4:59 p.m. (Los Angeles, California time) on any
business day, (iii) the business day following the date of mailing, if sent
overnight by an overnight courier service nationally recognized in the United
States, or (iv) upon actual receipt by the party to whom such notice is required
to be given. The address for such notices and communications for a party shall
be as set forth on the signature pages to the Notes or such other address as may
be designated in writing hereafter, in the same manner, by such
party.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (g)           Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder.  The Company may not assign its rights or
obligations hereunder without the prior written consent of all of the Holders of
the then-outstanding Registrable Securities except in the case of a merger (or
similar transaction) in which case the surviving entity shall succeed to the
rights and obligations of the Company.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Notes, provided however that at least $100,000 of Registrable Securities are
assigned to an assignee who seeks to assert registration rights under this
agreement.

     

    (h)           No Inconsistent
Agreements.  Except as set forth in Schedule 6(h),
neither the Company nor any of its subsidiaries has entered, as of the date
hereof, nor shall the Company or any of its subsidiaries, during the period
beginning on or after the date of this Agreement and ending at the end of the
Effectiveness Period, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions
hereof.  Except as set forth in Schedule 6(h),
neither the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.

     

    (i)           Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

     

    (j)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined with the
provisions of the Notes.

     

    (k)           Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

     

    (l)           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (m)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    (n)           Independent Nature of
Holders’ Obligations and Rights.  The obligations of each
Holder hereunder are several and not joint with the obligations of any other
Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder.  Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement.  Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any Proceeding for such purpose.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.

    
       

       

      
        
          	 	BALQON
      CORPORATION	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Balwinder
      Samra	 
	 	 	
                  Name:
      B. Samra

                  Title:  President

                	 

        

      

       

    

    

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
PAGE OF HOLDERS]

    

    Name of
Holder: __________________________

    

    Signature of Authorized Signatory of
Holder: __________________________

    

    Name of
Authorized Signatory: _________________________

    

    Title of
Authorized Signatory: __________________________

    

    

    

    [SIGNATURE
PAGES CONTINUE]

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    ANNEX
A

     

    Plan of
Distribution

     

    We are
registering the shares of common stock on behalf of the selling stockholders. A
“selling stockholder” is a person named on page ___ and also includes any donee,
pledgee, transferee, assignee, distributee or other successor-in-interest
selling shares received after the date of this prospectus from a selling
stockholder as a gift, pledge, partnership or limited liability company
distribution or other non-sale related transfer.  The selling
stockholders may offer their shares of common stock at prevailing market prices,
at prices related to the prevailing market prices, at negotiated prices or at
fixed prices or in competitively bid transactions.  Each selling
stockholder reserves the right to accept or reject, in whole or in part, any
proposed purchase of shares, whether the purchase is to be made directly or
through agents.

     

    The
selling stockholders may offer their shares of common stock at various times in
one or more of the following transactions:

     

    
      	
               
      

            	
              ·

            	
              in
      ordinary brokers’ transactions and transactions in which the broker
      solicits purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer for its account pursuant to this
      prospectus;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      transactions involving cross or block
trades;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      transactions “at the market” to or through market makers in the common
      stock or into an existing market for the common
  stock;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      other ways not involving market makers or established trading markets,
      including direct sales of the shares to purchasers or sales of the shares
      effected through agents;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      privately negotiated transactions;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      underwritten transactions; or

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      a combination of any of the foregoing
  transactions.

            

    

     

    The
selling stockholders also may sell all or a portion of their shares in open
market transactions in accordance with Rule 144 under the Securities Act
provided that they meet the criteria and conform to the requirements of that
rule.

     

    From time
to time, one or more of the selling stockholders may pledge or grant a security
interest in some or all of the shares owned by them.  If the selling
stockholders default in performance of their secured obligations, the pledges or
secured parties may offer and sell the shares from time to time by this
prospectus.  The selling stockholders also may transfer and donate
shares in other circumstances.  The number of shares beneficially
owned by selling stockholders will decrease as and when the selling stockholders
transfer or donate their shares or default in performing obligations secured by
their shares.  The plan of distribution for the shares offered and
sold under this prospectus will otherwise remain unchanged, except that the
transferees, donees, pledges, other secured parties or other
successors-in-interest will be selling stockholders for purposes of this
prospectus.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    We have
advised the selling stockholders that during such times as they may be engaged
in a distribution of the shares, they are required to comply with
Regulation M under the Securities Exchange Act. With some exceptions,
Regulation M prohibits any selling stockholder, any affiliated purchasers
and other persons who participate in such a distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase, any
security which is the subject of the distribution until the entire distribution
is complete.

     

    The
selling stockholders may use broker-dealers to sell their shares of common
stock.  If this occurs, broker-dealers will either receive discounts
or commission from the selling stockholders, or they will receive commissions
from the purchasers of shares of common stock for whom they acted as
agents.  These brokers may act as dealers by purchasing any and all of
the shares covered by this prospectus either as agents for others or as
principals for their own accounts and reselling these securities under the
prospectus.

     

    The
selling stockholders and any broker-dealers or other persons acting on behalf of
parties that participate in the distribution of the shares may be considered
underwriters under the Securities Act.  As such, any commissions or
profits they receive on the resale of the shares may be considered underwriting
discounts and commissions under the Securities Act.  Neither we nor
any selling stockholders can presently estimate the amount of such
compensation.

     

    As of the
date of this prospectus, we are not aware of any agreement, arrangement or
understanding between any broker or dealer and any of the selling stockholders
with respect to the offer or sale of the shares under this prospectus. If we
become aware of any agreement, arrangement or understanding, to the extent
required under the Securities Act, we will file a supplemental prospectus to
disclose:

     

    
      	
               
      

            	
              ·

            	
              the
      name of any the broker-dealers;

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      number of shares involved;

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      price at which the shares are to be
sold;

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      number of shares involved;

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      price at which the shares are to be
sold;

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      commissions paid or discounts or concessions allowed to broker-dealers,
      where applicable;

            

    

     

    
      	
               
      

            	
              ·

            	
              that
      the broker-dealers did not conduct any investigation to verify the
      information set out in this prospectus, as supplemented;
    and

            

    

     

    
      	
               
      

            	
              ·

            	
              other
      facts material to the transaction.

            

    

     

    In
addition, when we are notified by a selling stockholder that a donee, pledgee,
transferee, assignee, distributee or other successor-in-interest intends to sell
more than 500 shares of common stock, we will file a supplement to this
prospectus.

     

    Certain
of the agreements with the selling stockholders contain reciprocal
indemnification provisions between us and the selling stockholders to indemnify
each other against certain liabilities, including liabilities under the
Securities Act, which may be based upon, among other things, any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    We have
agreed to pay substantially all of the expenses incidental to the registration,
offering and sale to the public of the shares of common stock covered by this
prospectus, other than commissions, fees and discounts of underwriters, brokers,
dealers and agents, if any.

     

    It is
possible that a significant number of shares could be sold at the same
time.  Such sales, or the perception that such sales could occur, may
adversely affect prevailing market prices for the common stock.

     

    This
offering by any selling stockholder will terminate on the date on which the
selling stockholder has sold all of such selling stockholder’s
shares.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      Schedule
6(b)

      Schedule
6(h)

       

      The
Company has entered into the following agreements concerning the registration of
securities:

       

      1.           Registration
Rights Agreement dated July 11, 2008, by and among Balqon and Anderson Hirsch,
Tom Chen, Ryan Nelly and Michael Muellerleile, as amended by the Amended and
Restated Registration Rights Agreement between the parties dated September,
2008.

       

      2.           The
Registration Rights Agreement dated September, 2008 for the shares of common
stock and warrants issuable pursuant to the Convertible Promissory Note
financing (the “Bridge Financing”).

       

      3.           The
Company intends to offer registration rights to investors pursuant to the terms
of a private placement (”Private Placement”) of up to 3,000,000 Shares of
Company Common Stock and Warrants to purchase up to 3,000,000 Shares of Company
Common Stock.ex_10-11.htm

    
      

    

    
      

    

    EXHIBIT
10.11

     

     

    
      
        
          	
                  

                	
                  South
      Coast

                  Air
      Quality Management District

                	
                  Contract
      No. 08294

                   Standard

                

        

      

    

     

    This
Contract consists of 18 pages.

    
      	 
      	 
      
	
              1.

            	
              PARTIES - The
      parties to this Contract are the South Coast Air Quality Management
      District (referred to here as “AQMD”) whose address is 21865 Copley Drive,
      Diamond Bar, California 91765-4178, and Balqon Corporation (referred to
      here as “CONTRACTOR”) whose address is 1701 East Edinger Avenue, Unit E-3,
      Santa Ana, California 92705.

            
	 
      	 
      
	
              2.

            	
              RECITALS

            

    

    
      	 
      	 
      	 
      
	 
      	
              A.

            	
              AQMD
      is the local agency with primary responsibility for regulating stationary
      source air pollution in the South Coast Air Basin in the State of
      California. AQMD is authorized to enter into this Contract under
      California Health and Safety Code Section 40489. AQMD desires to contract
      with CONTRACTOR for services described in Attachment 1 - Statement of
      Work, attached here and made a part here by this reference. CONTRACTOR
      warrants that it is well-qualified and has the experience to provide such
      services on the terms set forth here.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              CONTRACTOR
      is authorized to do business in the State of California and attests that
      it is in good tax standing with the California Franchise Tax
      Board.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              All
      parties to this Contract have had the opportunity to have this Contract
      reviewed by their attorney.

            
	 
      	
              .

            	 
      
	 
      	
              D.

            	
              CONTRACTOR
      agrees to obtain the required licenses, permits, and all other appropriate
      legal authorizations from all applicable federal, state and local
      jurisdictions and pay all applicable
fees.

            

    

    
      	 
      	 
      
	
              3.

            	
              PERFORMANCE
      REQUIREMENTS

            

    

    
      	 
      	 
      	 
      
	 
      	
              A.

            	
              CONTRACTOR
      warrants that it holds all necessary and required licenses and permits to
      provide these services. CONTRACTOR further agrees to immediately notify
      AQMD in writing of any change in its licensing status.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              CONTRACTOR
      shall submit reports to AQMD as outlined in Attachment 1 - Statement of
      Work. All reports shall be submitted in an environmentally friendly
      format: recycled paper; stapled, not bound; black and white, double-sided
      print; and no three-ring, spiral, or plastic binders or cardstock covers.
      AQMD reserves the right to review, comment, and request changes to any
      report produced as a result of this Contract.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              CONTRACTOR
      shall perform all tasks set forth in Attachment 1 - Statement of Work, and
      shall not engage, during the term of this Contract, in any performance of
      work that is in direct or indirect conflict with duties and
      responsibilities set forth in Attachment 1 - Statement of
      Work.

            
	 
      	 
      	 
      
	 
      	
              D.

            	
              CONTRACTOR
      shall be responsible for exercising the degree of skill and care
      customarily required by accepted professional practices and procedures
      subject to AQMD’s final approval which AQMD will not unreasonably
      withhold. Any costs incurred due to the failure to meet the foregoing
      standards, or otherwise defective services which require re-performance,
      as directed by AQMD, shall be the responsibility of CONTRACTOR.
      CONTRACTOR’S failure to achieve the performance goals and objectives
      stated in Attachment 1- Statement of Work, is not a basis for requesting
      re-performance unless work conducted by CONTRACTOR is deemed by AQMD to
      have failed the foregoing standards of
  performance.

            

    

    
      
        	 
      	 
      	 
      
	 
      	
                E.

              	
                CONTRACTOR
      shall ensure, through its contracts with any subcontractor(s) that
      employees and agents performing under this Contract shall abide by the
      requirements set forth in this
clause.

              

      

       

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Contract
No. 08294

    Standard

    
      	 
      	 
      
	
              4.

            	
              TERM - The term
      of this Contract is from the date of execution by both parties to May 31,
      2010, unless further extended by amendment of this Contract in writing. No
      work shall commence until this Contract is fully executed by all
      parties.

            
	 
      	 
      
	
              5.

            	
              TERMINATION

            

    

    
      	 
      	 
      	 
      
	 
      	
              A.

            	
              In
      the event any party fails to comply with any term or condition of this
      Contract, or fails to provide services in the manner agreed upon by the
      parties, including, but not limited to, the requirements of Attachment 1 -
      Statement of Work, this failure shall constitute a breach of this
      Contract. The non-breaching party shall notify the breaching party that it
      must cure this breach or provide written notification of its intention to
      terminate this contract. Notification shall be provided in the manner set
      forth in Clause 10. The non-breaching party reserves all rights under law
      and equity to enforce this contract and recover
damages.

            
	 
      	
               

            	 
      
	 
      	
              B.

            	
              AQMD
      reserves the right to terminate this Contract, in whole or in part,
      without cause, upon thirty (30) days’ written notice. Once such notice has
      been given, CONTRACTOR shall, except as and to the extent or directed
      otherwise by AQMD, discontinue any Work being performed under this
      Contract and cancel any of CONTRACTOR’S orders for materials, facilities,
      and supplies in connection with such Work, and shall use its best efforts
      to procure termination of existing subcontracts upon terms satisfactory to
      AQMD. Thereafter, CONTRACTOR shall perform only such services as may be
      necessary to preserve and protect any Work already in progress and to
      dispose of any property as requested by AQMD.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              CONTRACTOR
      shall be paid in accordance with this Contract for all Work performed
      before the effective date of termination under Clause 5.B. Before
      expiration of the thirty (30) days’ written notice, CONTRACTOR shall
      promptly deliver to AQMD all copies of documents and other Information and
      data prepared or developed by CONTRACTOR under this Contract with the
      exception of a record copy of such materials, which may be retained by
      CONTRACTOR.

            

    

    
      	 
      	 
      
	
              6.

            	
              INSURANCE

            

    

    
      	 
      	 
      	 
      
	 
      	
              A.

            	
              CONTRACTOR
      shall furnish evidence to AQMD of workers’ compensation insurance for each
      of its employees, in accordance with either California or other states’
      applicable statutory requirements prior to commencement of any work on
      this Contract.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              CONTRACTOR
      shall furnish evidence to AQMD of general liability insurance with a limit
      of at least $1,000,000 per occurrence, and $2,000,000 in a general
      aggregate prior to delivery of vehicle included in this Contract. AQMD
      shall be named as an additional insured on any such liability policy, and
      thirty (30) days written notice prior to cancellation of any such
      insurance shall be given by CONTRACTOR to AQMD.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              CONTRACTOR
      shall furnish evidence to AQMD of automobile liability insurance with
      limits of at least $100,000 per person and $300,000 per accident for
      bodily injuries, and $50,000 in property damage, or $1,000,000 combined
      single limit for bodily injury or property damage, prior to commencement
      of any work on this Contract.

            
	 
      	 
      	 
      
	 
      	
              D.

            	
              If
      CONTRACTOR fails to maintain the required insurance coverage set forth
      above, AQMD reserves the right either to purchase such additional
      insurance and to deduct the cost thereof from any payments owed to
      CONTRACTOR or terminate this Contract for
  breach.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Contract
No. 08294

    Standard

    
      	 
      	 
      	 
      
	 
      	
              E.

            	
              All
      insurance certificates should be mailed to: AQMD Risk Management, 21865
      Copley Drive, Diamond Bar, CA 91765-4178. The AQMD Contract Number must
      be included on the face of the
      certificate.

            
	 
      	 
      	 
      
	 
      	
              F.

            	
              CONTRACTOR
      must provide updates on the insurance coverage throughout the term of the
      Contract to ensure that there is no break in coverage during the period of
      contract performance. Failure to provide evidence of current coverage
      shall be grounds for termination for breach of
  Contract.

            

    

    
      	 
      	 
      
	
              7.

            	
              INDEMNIFICATION
      - CONTRACTOR agrees to hold harmless, indemnify, and defend AQMD, its
      officers, employees, agents, representatives, and successors-in-interest
      against any and all loss, damage, cost, or expenses which AQMD, its
      officers, employees, agents, representatives, and successors-in-interest
      may incur or be required to pay by reason of any injury or property damage
      caused or incurred by CONTRACTOR, its employees, subcontractors, or agents
      as a result of the performance of this Contract.

            
	 
      	 
      
	
              8.

            	
              PAYMENT

            

    

    
      	 
      	 
      	 
      
	 
      	
              A.

            	
              AQMD
      shall pay CONTRACTOR a not-to-exceed fixed price amount of Three Hundred
      Thousand Dollars ($300,000) for work performed under this Contract in
      accordance with Attachment 2 - Payment Schedule, attached here and
      included here by reference. Payment shall be made by AQMD to CONTRACTOR
      within thirty (30) days after approval by AQMD of an invoice prepared and
      furnished by CONTRACTOR showing services performed and referencing tasks
      and deliverables as shown in Attachment 1 - Statement of Work, and the
      amount of charge claimed. Each invoice must be prepared in duplicate, on
      company letterhead, and list AQMD’s Contract number, period covered by
      invoice, and CONTRACTOR’S social security number or Employer
      Identification Number and submitted to: South Coast Air Quality Management
      District, Attn: Naveen Berry.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              AQMD
      reserves the right to disallow charges when the invoiced services are not
      performed satisfactorily in AQMD sole judgment.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              Upon
      AQMD Governing Board approval, CONTRACTOR shall have first right of
      refusal to purchase the Electric Yard Hostler at fair market value through
      the AQMD surplused equipment
process.

            

    

    
      	 
      	 
      
	
              9.

            	
              RIGHT TO
      PUBLISH REPORT AND DOCUMENTS - Title and full ownership
      rights to any documents or reports developed under this Contract, as
      contained in Task 3 of the Statement of Work, shall at all times remain
      with AQMD.

            
	 
      	 
      
	 
      	
              A.

            	
              Rights
      of Technical Data - AQMD shall have the unlimited right to use technical
      data, including material designated as a trade secret, resulting from the
      performance of services by CONTRACTOR under this Contract. AQMD agrees to
      not disseminate proprietary technical data outside the AQMD without
      CONTRACTOR’S written consent. CONTRACTOR shall have the right to use
      technical data for its own benefit.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              Copyright
      - CONTRACTOR agrees to grant AQMD a royalty-free, nonexclusive,
      irrevocable license to produce, translate, publish, use, and dispose of
      all copyrightable material.

            
	 
      	 
      	 
      
	
              10.

            	
              NOTICES - Any
      notices from either party to the other shall be given in writing to the
      attention of the persons listed below, or to other such addresses or
      addressees as may hereafter be designated in writing for notices by either
      party to the other. Notice shall be given by certified, express, or
      registered mail, return receipt requested, and shall be effective as of
      the date of receipt indicated on the return receipt
  card.

            

    

     

    
      
        
        

      

      
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              AQMD:

            	
              South
      Coast Air Quality Management District

              21865
      Copley Drive

              Diamond
      Bar, CA 91765-4178

              Attn:
      Naveen Berry

            
	 	 
      	 
      
	 	
              CONTRACTOR:

            	
              Balqon
      Corporation

              1701
      East Edinger Avenue, Unit E-3

              Santa
      Ana, California 92705

              Attn:
      B. Samra

            

    

    

    
      	 
      	 
      
	
              11.

            	
              EMPLOYEES OF
      CONTRACTOR

            
	 	 
	 
      	
              A.

            	
              CONTRACTOR,
      its officers, employees, agents, representatives or subcontractors shall
      in no sense be considered employees or agents of AQMD, nor shall
      CONTRACTOR, its officers, employees, agents, representatives or
      subcontractors be entitled to or eligible to participate in any benefits,
      privileges, or plans, given or extended by AQMD to its
      employees.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              AQMD
      requires CONTRACTOR to be in compliance with all state and federal laws
      and regulations with respect to CONTRACTOR’S employees throughout the term
      of this Contract, including state minimum wage laws and OSHA
      requirements.

            
	 
      	 
      	 
      
	
              12.

            	CONFIDENTIALITY
      - It is expressly understood and agreed that AQMD may designate in a
      conspicuous manner the information which CONTRACTOR obtains from AQMD as
      confidential. CONTRACTOR agrees to:
	 	 	 
	
              .

            	
              A

            	
              Observe
      complete confidentiality with respect to such information, including
      without limitation, agreeing not to disclose or otherwise permit access to
      such information by any other person or entity in any manner whatsoever,
      except that such disclosure or access shall be permitted to employees or
      subcontractors of CONTRACTOR requiring access in fulfillment of the
      services provided under this Contract.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              Ensure
      that CONTRACTOR’S officers, employees, agents, representatives, and
      independent contractors are informed of the confidential nature of such
      information and to assure by agreement or otherwise that they are
      prohibited from copying or revealing, for any purpose whatsoever, the
      contents of such information or any part thereof, or from taking any
      action otherwise prohibited under this clause.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              Not
      use such information or any part thereof in the performance of services to
      others or for the benefit of others in any form whatsoever whether
      gratuitously or for valuable consideration, except as permitted under this
      Contract.

            
	 
      	 
      	 
      
	 
      	
              D.

            	
              Notify
      AQMD promptly and in writing of the circumstances surrounding any
      possession, use, or knowledge of such information or any part thereof by
      any person or entity other than those authorized by this
      clause.

            
	 
      	 
      	 
      
	 
      	
              E.

            	
              Take
      at CONTRACTOR expense, but at AQMD’s option and in any event under AQMD’s
      control, any legal action necessary to prevent unauthorized use of such
      information by any third party or entity which has gained access to such
      information at least in part due to the fault of
    CONTRACTOR.

            

    

     

    
      
        
        

      

      
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              F.

            	
              Take
      any and all other actions necessary or desirable to assure such continued
      confidentiality and protection of such information.

            
	 
      	 
      	 
      	 
      
	 
      	
              G.

            	
              Prevent
      access to such information by any person or entity not authorized under
      this Contract. 

            
	 	 	 
	 	H.
      	Establish
      specific procedures in order to fulfill the obligations of this
      clause.
	 
      	 
      	 
      	 
      
	 
      	
              I.

            	
              Notwithstanding
      the above, nothing herein is intended to abrogate or modify the provisions
      of Government Code Section 6250 et.seq. (Public Records
    Act).

            
	 
      	 
      	 
      	 
      
	
              13.

            	
              PUBLICATION

            
	 
      	 
      	 
      	 
      
	 
      	
              A.

            	
              AQMD
      shall have the right of prior written approval of any document which shall
      be disseminated to the public by CONTRACTOR in which CONTRACTOR utilized
      information obtained from AQMD in connection with performance under this
      Contract.

            
	 
      	 
      	 
      	 
      
	 
      	
              B.

            	
              Information,
      data, documents, or reports developed by CONTRACTOR for AQMD, pursuant to
      this Contract, shall be part of AQMD public record unless otherwise
      indicated. CONTRACTOR may use or publish, at its own expense, such
      information provided to AQMD. The following acknowledgment of support and
      disclaimer must appear in each publication of materials, whether
      copyrighted or not, based upon or developed under this
      Contract.

            

    

     

    
      	 
      	 
      	This
      report was prepared as a result of work sponsored, paid for, in whole or
      in part, by the South Coast Air Quality Management District (AQMD). The
      opinions, findings, conclusions, and recommendations are those of the
      author and do not necessarily represent the views of AQMD. AQMD, its
      officers, employees, contractors, and subcontractors make no warranty,
      expressed or implied, and assume no legal liability for the information in
      this report. AQMD has not approved or disapproved this report, nor has
      AQMD passed upon the accuracy or adequacy of the information contained
      herein.	
               

            

    

     

    
      	 
      	
              C.

            	
              CONTRACTOR
      shall Inform its officers, employees, and subcontractors involved in the
      performance of this Contract of the restrictions contained herein and
      require compliance with the above.

            
	 
      	 
      	 
      	 
      
	
              14.

            	
              NON-DISCRIMINATION
      - In the performance of this Contract, CONTRACTOR shall not discriminate
      in recruiting, hiring, promotion, demotion, or termination practices on
      the basis of race, religious creed, color, national origin, ancestry, sex,
      age, or physical or mental disability and shall comply with the provisions
      of the California Fair Employment & Housing Act (Government Code
      Section 12900 et seq.), the Federal Civil Rights Act of 1964 (P.L. 88-352)
      and all amendments thereto, Executive Order No. 11246 (30 Federal Register
      12319), and all administrative rules and regulations issued pursuant to
      said Acts and Order. CONTRACTOR shall likewise require each subcontractor
      to comply with this clause and shall include in each such subcontract
      language similar to this clause.

            
	 
      	 
      	 
      	 
      
	
              15.

            	
              SOLICITATION OF
      EMPLOYEES - CONTRACTOR expressly agrees that CONTRACTOR shall
      not, during the term of this Contract, nor for a period of six months
      after termination, solicit for employment, whether as an employee or
      independent contractor, any person who is or has been employed by AQMD
      during the term of this Contract without the consent of
    AQMD.

            

    

     

    
      
        
        

      

      
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              16.

            	
              PROPERTY AND
      SECURITY - Without limiting CONTRACTOR obligations with regard to
      security, CONTRACTOR shall comply with all the rules and regulations
      established by AQMD for access to and activity in and around AQMD
      premises.

            
	 
      	 
      	 
      
	
              17.

            	
              ASSIGNMENT -
      The lights granted hereby may not be assigned, sold, licensed, or
      otherwise transferred by either party without the prior written consent of
      the other, and any attempt by either party to do so shall be void upon
      inception.

            
	 
      	 
      	 
      
	
              18.

            	
              NON-EFFECT OF
      WAIVER - The failure of CONTRACTOR or AQMD to insist upon the
      performance of any or all of the terms, covenants, or conditions of this
      Contract, or failure to exercise any rights or remedies hereunder, shall
      not be construed as a waiver or relinquishment of the future performance
      of any such terms, covenants, or conditions, or of the future exercise of
      such rights or remedies, unless otherwise provided for
    herein.

            
	 
      	 
      	 
      
	
              19.

            	
              ATTORNEYS’ FEES
      - In the event any action is filed in connection with the enforcement or
      interpretation of this Contract, each party shall bear its own attorneys’
      fees and costs.

            
	 
      	 
      	 
      
	
              20.

            	
              FORCE MAJEURE -
      Neither AQMD nor CONTRACTOR shall be liable or deemed to be in default for
      any delay or failure in performance under this Contract or interruption of
      services resulting, directly or indirectly, from acts of God, civil or
      military authority, acts of public enemy, war, strikes, labor disputes,
      shortages of suitable parts, materials, labor or transportation, or any
      similar cause beyond the reasonable control of AQMD or
      CONTRACTOR.

            
	 
      	 
      	 
      
	
              21.

            	
              SEVERABILITY -
      In the event that any one or more of the provisions contained in this
      Contract shall for any reason be held to be unenforceable in any respect
      by a court of competent jurisdiction, such holding shall not affect any
      other provisions of this Contract, and the Contract shall then be
      construed as if such unenforceable provisions are not a part
      hereof.

            
	 
      	 
      	 
      
	
              22.

            	
              HEADINGS -
      Headings on the clauses of this Contract are for convenience and reference
      only, and the words contained therein shall in no way be held to explain,
      modify, amplify, or aid in the interpretation, construction, or meaning of
      the provisions of this Contract.

            
	 
      	 
      	 
      
	
              23.

            	
              DUPLICATE
      EXECUTION - This Contract is executed in duplicate. Each signed
      copy shall have the force and effect of an original.

            
	 
      	 
      	 
      
	
              24.

            	
              GOVERNING
      LAW - This Contract shall be construed and interpreted and the
      legal relations created thereby shall be determined in accordance with the
      laws of the State of California. Venue for resolution of any disputes
      under this Contract shall be Los Angeles County,
    California.

            
	 
      	 
      	 
      
	
              25.

            	
              ROYALTY
    FEE

            
	 
      	 
      	 
      
	 
      	
              A.

            	
              In
      partial consideration of AQMD’s issuance of this Contract, and its
      inducement for future sales of Yard Hostlers and Electric Trucks (defined
      as United States Department of Transportation Class 8 heavy duty trucks
      with Gross Vehicle Weights equal to or greater than 33,000 pounds) for
      general commercial sates and use (“Electric Vehicles”), following the
      effective date of this Contract, CONTRACTOR (which for purposes of this
      Paragraph 25 shall include any successor by sale or merger to CONTRACTOR
      and any assignee or licensee of its technology for Electric Vehicles)
      shall pay to AQMD a royalty fee of One Thousand Dollars ($1,000) per
      Electric Vehicle sold or leased by CONTRACTOR (“Royalty Fee”) to a
      purchaser or lessee other than the AQMD and the City of Los Angeles.
      Within sixty (60) days after the end of each 12 month period from the date
      of execution of this CONTRACT, CONTRACTOR shall submit to AQMD a written
      statement identifying each sale or lease of an Electric Vehicle during the
      previous calendar year, the purchaser/lessee and status of payment or
      lease. For purposes of this clause, “sale” shall mean an agreement to
      purchase with or without payment being made therefore and “lease” shall
      mean an agreement to lease with or without payment being made therefore.
      AQMD may audit such written statements upon ten (10) days’ written notice
      to CONTRACTOR.

            

    

     

    
      
        
        

      

      
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              B.

            	
              The
      amount of the Royalty Fee shall, at the end of each five (5) year period
      after CONTRACTOR’S delivery of the Electric Trucks possessing
      specifications and features in accordance with Attachment 1 - Statement of
      Work and approved in writing by AQMD (the “First Production Date”), be
      adjusted up or down based on the inflation or deflation rate for that
      five-year period, as measured by the change in the Producer Price Index
      during that five-year period. The Producer Price Index shall mean and
      refer to that table in the Producer Price Index published by the United
      States Department of Labor, Bureau of Labor Statistics (Index 2007 = 100).
      If such index is discontinued, then any successor Producer Price Index of
      the United States Bureau of Labor Statistics, or successor agency thereto,
      shall be used, and if there is no successor Producer Price Index, the
      parties shall designate a substitute index or formula. In addition, AQMD
      agrees to meet and confer with CONTRACTOR at the end of each such
      five-year period regarding whether downward adjustments to the Royalty Fee
      are warranted in light of circumstances at the time if the Royalty Fee is
      at a level that makes the sale of Electric Vehicles or the license of
      electric vehicle technology by CONTRACTOR not commercially
      feasible.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              CONTRACTOR
      shall use its best efforts to market Electric Vehicles itself or through
      third parties retained by or on its behalf or to make the technology
      available through licensees through the end of the aforementioned royalty
      period. It is the intent of the AQMD and CONTRACTOR that commercially
      feasible Electric Vehicles be available for use in Southern
      California.

            
	 
      	 
      	 
      
	 
      	
              D.

            	
              This
      Agreement is intended to be interpreted in a commercially reasonable way
      so as to (i) enhance the availability of commercially feasible Electric
      Vehicles in Southern California, (ii) facilitate profitable business
      opportunities for CONTRACTOR, and (iii) continue royalty income to
      AQMD.

            
	 
      	 
      	 
      
	 
      	
              E.

            	
              AQMD
      and CONTRACTOR expressly agree that this clause and the rights and
      obligations comprising such provision, including but not limited to
      CONTRACTOR’s obligations to pay Royalty Fees to AQMD, including Paragraph
      25B, above, shall survive the expiration of this Agreement and that
      CONTRACTOR shall have a continuing obligation to pay such Royalty
      Fees.

            
	 
      	 
      	 
      
	
              26.

            	
              CITIZENSHIP AND ALIEN
      STATUS

            
	 
      	 
      	 
      
	 
      	
              A.

            	
              CONTRACTOR
      warrants that it fully complies with all laws regarding the employment of
      aliens and others, and that its employees performing services hereunder
      meet the citizenship or alien status requirements contained in federal and
      state statutes and regulations including, but not limited to, the
      immigration Reform and Control Act of 1986 (P.L. 99-603). CONTRACTOR shall
      obtain from all covered employees performing services hereunder all
      verification and other documentation of employees’ eligibility status
      required by federal statutes and regulations as they currently exist and
      as they may be hereafter amended. CONTRACTOR shall have a continuing
      obligation to verify and document the continuing employment authorization
      and authorized alien status of employees performing services under this
      Contract to insure continued compliance with all federal statutes and
      regulations.

            

    

     

    
      
        
        

      

      
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              B.

            	
              Notwithstanding
      paragraph A above, CONTRACTOR, in the performance of this Contract, shall
      not discriminate against any person in violation of 8 USC Section
      1324b.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              CONTRACTOR
      shall retain such documentation for all covered employees for the period
      described by law. CONTRACTOR shall indemnify, defend, and hold harmless
      AQMD, its officers and employees from employer sanctions and other
      liability which may be assessed against CONTRACTOR or AQMD, or both in
      connection with any alleged violation of federal statutes or regulations
      pertaining to the eligibility for employment of persons performing
      services under this Contract.

            
	 
      	 
      	 
      
	
              27.

            	
              APPROVAL OF
      SUBCONTRACT

            
	 
      	 
      	 
      
	 
      	
              A.

            	
              If
      CONTRACTOR intends to subcontract a portion of the work under this
      Contract, written approval of the terms of the proposed subcontract(s)
      shall be obtained from AQMD’s Executive Officer or designee prior to
      execution of the subcontract. No subcontract charges will be reimbursed
      unless such approval has been obtained.

            
	 
      	 
      	 
      
	 
      	
              B.

            	
              Any
      material changes to the subcontract(s) that affect the scope of work,
      deliverable schedule, and/or cost schedule shall also require the written
      approval of the Executive Officer or designee prior to
      execution.

            
	 
      	 
      	 
      
	 
      	
              C.

            	
              The
      sole purpose of AQMD’s review is to insure that AQMD’s contract rights
      have not been diminished in the subcontractor agreement. AQMD shall not
      supervise, direct, or have control over, or be responsible for,
      subcontractor’s means, methods, techniques, work  sequences or
      procedures or for the safety precautions and programs incident thereto, or
      for any failure of subcontractor to comply with any local, state, or
      federal laws, or rules or regulations.

            
	 
      	 
      	 
      
	
              28.

            	
              ENTIRE CONTRACT - This Contract represents
      the entire agreement between the parties hereto related to CONTRACTOR
      providing services to AQMD and there are no understandings,
      representations, or warranties of any kind except as expressly set forth
      herein. No waiver, alteration, or modification of any of the provisions
      herein shall be binding on any party unless in writing and signed by the
      party against whom enforcement of such waiver, alteration, or modification
      is sought.

            

    

     

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    IN
WITNESS WHEREOF, the parties to this Contract have caused this Contract to be
duly executed on their behalf by their authorized representatives.

    
      	 
      	 
      	 
      	 
      	 
      
	
              SOUTH
      COAST AIR QUALITY MANAGEMENT DISTRICT

            	 
      	
              BALQON
      CORPORATION

            
	 
      	 
      	 
      	 
      
	
              By:

            	
              

            	 
      	
              By:

            	
              

            
	 
      	 
      	 
      	
              Name:

            	
              BALWINDER
      SAHRA

            
	 
      	
              Dr.
      William A. Burke, Chairman, Governing Board

            	 
      	
              Title:

            	
              PRESIDENT/CEO

            
	 
      	 
      	 
      	 
      	 
      
	
              Date:

            	
              5/15/08

            	 
      	
              Date:

            	
              MAY
      14TH, 2008

            
	 
      	 
      	 
      	 
      	 
      
	
              ATTEST:

            	 
      	 
      	 
      
	
              Saundra
      McDaniel, Clerk of the Board

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
              

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              APPROVED
      AS TO FORM:

            	 
      	 
      	 
      
	
              Kurt
      R. Wiese, District Counsel

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
              

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              //
      Standard Boilerplate

            	 
      	 
      	 
      
	
              Last
      Updated: 5 September 2006

            	 
      	 
      	 
      

    

     

    
      
        
        

      

      
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    ATTACHMENT
1

    STATEMENT
OF WORK FOR

    BALQON
CORPORATION

    YARD
HOSTLER

     

    In
December 2006, the Governing Board awarded a contract to co-sponsor with POLA
the development and demonstration of an electric tow tractor for container
movement within and around the Port. Based on the original scope of work, an
on-road truck chassis with a longer wheelbase was developed and is currently
undergoing rigorous testing. Testing completed to date clearly shows that the
vehicle is able to tow up to 68,000 pounds and is capable of achieving 35 mph
top speed. On-road testing has not yet been initiated, since an experimental
permit has not yet been issued by the Department of Transportation. However, as
anticipated by staff, the design of the tow tractor, with consideration for the
electric components, is well suited for a yard hostler application, but will
require a shorter wheelbase. Testing completed to date has verified that the
performance capabilities exceed the typical duty-cycle requirements of a yard
hostler, but in-use testing is required to determine the effect of operation and
recharge cycles on battery life.

     

    This
project is to purchase an electric yard hostler that can replace existing diesel
trucks to transport containers within marine terminals and other off-port
warehousing applications. The vehicle will be used to establish a “loaner”
program to allow multiple terminal operators to test the vehicle in anticipation
of a purchase. The proposed hostler is expected to have fast-charging, a maximum
speed of 35 mph, and a range of 40 miles per charge. The design of the hostler
will provide sufficient torque and power required to tow up to a 60,000 lb cargo
container. The design goals are well in excess of typical yard hostlers that
have an average use of less than 15 miles per day and a top speed of less than
20 miles per hour. The proposal includes installation of a fast charger that can
be moved to numerous sites, as well as maintenance for the electric hostler. The
purchase of the electric yard hostler to initiate a demonstration/“loaner”
program will enable additional cargo handling entities to experience an electric
yard hostler in actual operation. These include other terminal locations within
the two ports as well as off-port warehousing operations. Such a “loaner”
program will provide owner/operators with “hands-on” exposure to a fully
functional electric yard hostler, as well as the recharging protocol prior to
any purchase. Specifically, fleet operators will gain experience regarding the
performance of electric yard hostler in terms of drivability, range, fuel and
maintenance cost savings, and overall comfort as compared to corresponding
diesel yard hostlers. Each participant in the demonstration program could have
use of the electric yard hostler for a 30- to 45-day period.

     

    The
following tasks will be completed during the 24 month project:

    
      	 
      	 
      	 
      
	
              1.

            	
              Delivery
      of a Completed Electric Yard Hostler

            	
              Duration
      180 Days

            
	 
      	 
      	 
      
	 
      	
              CONTRACTOR
      will provide a fully operation yard hostler, known as Balqon’s Nautilus
      E-20 Model, which has the following
  specifications:

            

    

     

    
      
        
        

      

      
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                          Max
      Speed

                        	
                          30
      Miles

                        	 
      	 
      
	
                          Turning
      Radius

                        	
                          21
      Feet

                        	 
      	 
      
	
                          Braking

                        	
                          Air
      Brakes

                        	 
      	 
      
	
                          Gradeability

                        	
                          10%
      No Load

                        	 
      	 
      
	
                          Tow
      Capacity

                        	
                          60,000
      lbs

                        	 
      	 
      
	
                          Range

                        	
                          30
      miles between charges

                        	 
      	 
      
	
                          Battery

                        	
                          Lead
      Acid - Deep Cycle traction; 140 Kwhr

                        	 
      	
                          5
      Year Warranty; Forced Air Cooling; Single Point Battery Watering System;
      Additional Replacement Battery Pack

                        
	
                          Charger

                        	
                          Off
      Board - 80 KW; 4 Port; Max Port Output-100 amps

                        	 
      	
                          Includes
      Power Station Stand and Charging Cables

                        
	
                          Charge
      Time

                        	
                          6-8
      Hours

                        	 
      	
                          1
      Hour Fast Charge - 60% Capacity

                        
	
                          Controller

                        	
                          240
      KW AC Traction; 230 VAC output; 336 VDC Input

                        	 
      	
                          Liquid
      Cooled; Remote Data Acquisition

                        
	
                          Motor

                        	
                          230
      VAC; 100 hp continuous duty traction

                        	 
      	 
      
	
                          Drive
      Assembly

                        	
                          Dual
      Planetary Reduction; 70,000 lbs terminal rating; Split Brake Automatic, 4
      speed, electronically controlled heavy duty transmission couple to
      electric motor

                        	 
      	
                          Dual
      Rear Wheel; 275/70R22.5 LRJ
Tires

                        

                

              

            

          

        

      

    

     

    
      	 
      	
              The
      vehicle shall have a 2 year warranty on the vehicle and accessories, and a
      5 year prorated warranty on the batteries, including the replacement
      battery. Upon receipt of a fully operation yard hostler, AQMD will take
      title and ownership of the yard hostler.

            
	 	 
	
              2.

            	
              Maintenance
      & Charger Installation

            	
              Duration
      24 months

            

    

     

    CONTRACTOR
shall provide maintenance/service that includes all preventative maintenance,
including labor and material for a 24 month period after delivery of the
vehicle. CONTRACTOR shall also conduct charger removal and installation for a
minimum of 5 times at different demonstration sites. CONTRACTOR shall not be
responsible for bringing appropriate utilities sufficient to operate the fast
charger at the demonstration sites.

    
      	 
      	 
      
	
              3.

            	
              Data
      Collection and Reporting

            

    

     

    CONTRACTOR
shall collect information on the yard hostler, including use (hours of usage and
mileage daily, weekly and monthly; usage of replacement battery pack) charging
(time and frequency, including opportunity charges) and maintenance/service
(including regular maintenance of battery and other components, service calls
and repairs, and log of upgrades/software changes to optimize operation). These
reports should be submitted on a monthly basis for the term of the contract, as
required by AQMD.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    DELIVERABLES

    
      	 
      	 
      
	
              1.

            	
              Updates

            

    

     

    CONTRACTOR
shall update AQMD Project Officer by voice or email weekly or as desired.
Additionally, CONTRACTOR should schedule on a quarterly basis, face-to-face
meetings of the project partners.

    
      	 
      	 
      
	
              2.

            	
              Progress
      Reports

            
	 
      	 
      

    

    CONTRACTOR
shall provide progress reports, to AQMD for review, comment, and approval. Two
stapled copies of each progress reports due by the 10th of each reporting period and
once a year, a 2 page summary report noted in item (5) below. CONTRACTOR shall
submit one copy of each progress report to AQMD’s Project Officer and one copy
to AQMD’s Contracts Administrator - Technology Advancement in conjunction with
the invoice for the same period if applicable. Each progress report shall
include, but not be limited to, the following:

    
      	 
      	 
      	 
      
	 
      	
              a)

            	
              Reference
      to AQMD contract number, title of project and reporting time period, and
      the following subheadings and description thereof.

            
	 
      	 
      	 
      
	 
      	
              b)

            	
              Description
      of work completed during the reporting period, including a discussion of
      problems encountered and how those problems were resolved; and other
      relevant activities.

            
	 
      	 
      	 
      
	 
      	
              c)

            	
              When
      available, color photographs of the yard hostler in operation and any
      results that can be better transmitted
  photographically.

            

    

     

    
      
        	
                3.

              	
                Draft
      Report

              
	 
      	 
      

      

    

    Three
stapled copies of draft final report shall be submitted for review, comment, and
approval by the date specified in Attachment 2 - Payment Schedule. CONTRACTOR
shall submit three copies of the draft final report to AQMD’s Program Officer,
as well as an electronic copy in Microsoft Word format. This document shall be
considered in the public domain, in conformance with the California Public
Records Act (Government Code Section 6250 et seq.). Any trade secret information
may be submitted to AQMD in a separate report in which the trade secret
information is specifically identified. AQMD agrees to treat such trade secret
information in accordance with its Public Records Act guidelines relating to
trade secret information. AQMD shall complete its review of the draft final
report within two months of its receipt from CONTRACTOR, through CONTRACTOR’S
representative. The draft final report shall include, but not be limited to, the
following:

    
      	 
      	 
      	 
      
	 
      	
              a)

            	
              Reference
      to AQMD contract number, title of project and project
    period.

            
	 
      	 
      	 
      
	 
      	
              b)

            	
              Project
      background and objectives.

            
	 
      	 
      	 
      
	 
      	
              c)

            	
              An
      executive summary up to three pages in length to
  include:

            

    

     

    
      
        
          	 
      	
                  •

                	
                  a
      short, definitive statement of the problem/project;

                
	 
      	
                  •

                	
                  objective
      of the project, including emission control objectives or
      goals;

                

        

      

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    
      
        
          
            
              	 
      	
                      •

                    	
                      reference
      to AQMD Rules if applicable;

                    
	 
      	
                      •

                    	
                      subject
      of the project including the technology;

                    
	 
      	
                      •

                    	
                      conclusions
      (potential emissions impact, cost implications, and other
      implications);

                    
	 
      	
                      •

                    	
                      recommendations
      (design changes/optimization, other applications of the technology, and
      commercialization paths); and acknowledgment of all project
      sponsors.

                    
	 
      	 
      	 
      
	 
      	
                      d)

                    	
                      A
      detailed description of the scope of work. A copy of the statement of work
      should be attached as an Appendix.

                    
	 
      	 
      	 
      
	 
      	
                      e)

                    	
                      Analysis
      of data from testing and measurement of emissions, performance,
      durability, etc. should be in the main body of the report. The graphical
      presentation of the data analysis, particularly bar graphs, is
      recommended. The actual data and the testing protocols used should be
      attached as Appendices.

                    
	 
      	 
      	 
      
	 
      	
                      f)

                    	
                      Each
      Task proposed in the Statement of Work should have its own chapter.
      Findings or results of each task should be discussed in these chapters,
      and should include the
following:

                    

            

          

        

      

    

     

    
      
        
          	 
      	
                  •

                	
                  Discussion
      of actions completed

                
	 
      	
                  •

                	
                  Discussion
      of risks and corrective actions

                
	 
      	
                  •

                	
                  Task
      Performance

                

        

      

    

     

    
      
        	 
      	
                g)

              	
                Problems
      - A discussion of significant problems encountered during the contract and
      how they were resolved. If a problem is not resolved within 30 days and
      the converted vehicle is removed, a detailed explanation of issues and
      their subsequent resolution shall be included in the reports. If a problem
      was not resolved, the report shall contain an explanation of the
      technology’s shortcomings and the specific needs for technology
      advancement. Furthermore, CONTRACTOR shall specifically discuss the
      condition of the batteries, and overall utility of the vehicle by terminal
      operators.

              
	 
      	 
      	 
      
	 
      	
                h)

              	
                Results
      - A discussion of the expected project results versus what was actually
      achieved.

              
	 
      	 
      	 
      
	 
      	
                i)

              	
                Costs
      - A comparison and discussion of expected versus actual AQMD contract
      costs.

              
	 
      	 
      	 
      
	 
      	
                j)

              	
                Copies
      of news releases, media and technical articles on the
    project.

              
	 
      	 
      	 
      
	 
      	
                k)

              	
                Discussion
      of commercial feasibility of the technology including a (quantitative)
      cost comparison of the proposed technology with competing technologies.
      Key cost elements need to be identified

              
	 
      	 
      	 
      
	 
      	
                l)

              	
                Recommendations,
      including design and engineering requirements for the yard hostler to be
      further optimized.

              

      

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    
      
        	
                4.

              	
                Final
      Report

              

      

    

     

    CONTRACTOR
shall submit three stapled originals as well as an electronic copy in Microsoft
Word format of the final report incorporating AQMD’s comments, no later than the
date specified in Attachment 2-Payment Schedule. This document shall be
considered in the public domain, in conformance with the California Public
Records Act (Government Code Section 6250 et seq.). Any trade secret information
may be submitted to AQMD in a separate report in which the trade secret
information is specifically identified. AQMD agrees to treat trade secret
information in accordance with its Public Records Act guidelines relating to
trade secret information.

    
      	 
      	 
      
	
              5.

            	
              Two-Page
      Project Synopsis

            

    

     

    CONTRACTOR
shall submit a 2-page project synopsis, along with the final report. Attachment
3 to this contract provides the format and content to be used for this synopsis.
In addition to a hard copy, CONTRACTOR shall provide the synopsis in an
electronic version, using Microsoft WORD. All color photographs and images shall
be embedded within the synopsis AND provided separately in digital format, such
as .ppt, .tif. or .jpg, on a CD or sent electronically.

    
      	 
      	 
      
	
              6.

            	
              Photo
      Documentation

            

    

     

    CONTRACTOR shall provide
to the AQMD a set of color photographs, documenting the entire
project.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    ATTACHMENT
2

    PAYMENT
SCHEDULE FOR

    BALQON
CORPORATION

    YARD
HOSTLER

     

    The total
amount of AQMD funding for this project shall not exceed $300,000.

     

    
      
        
          	 
      	
                  TASK

                	
                  Scheduled

                  Completion
      Date

                  (From
      Contract

                  Execution)

                	 
      	
                  AQMD

                  ($)

                
	
                  0.0

                	
                  Contract
      Execution

                	
                  0

                	 
      	 
      
	
                  1.0

                	
                  Deliver

                	
                  180
      Days

                	 
      	
                  280,000

                
	 
      	
                  -
      Fully Operational Yard Hostler

                	 
      	 
      	 
      
	 
      	
                  -
      Replacement Battery Pack

                	 
      	 
      	 
      
	 
      	
                  -
      Fast Charger

                	 
      	 
      	 
      
	
                  2.0

                	
                  Maintenance
      & Charger Installations

                	
                  24
      Months

                	 
      	
                  15,000

                
	
                  3.0

                	
                  Data
      Collection and Reporting, including

                	 
      	 
      	
                  5,000

                
	 
      	
                  -
      Draft Final Report

                	
                  22
      Months

                	 
      	 
      
	 
      	
                  -
      Final Report

                	
                  24
      Months

                	 
      	 
      
	 
      	
                  -
      2-Page Project Synopsis

                	
                  24
      Months

                	 
      	 
      
	 
      	
                  TOTAL

                	 
      	
                  $

                	
                  300,000

                

        

      

    

     

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    
      	
              Attachment
      3

            

    

    
      
        	
                AQMD
      Contract #

              	
                Date
      of Publication (as month
year)

              

      

    

     

    Project
Title

     

    
      Contractor

      Prime
contractor and significant subcontractors.

       

      Cosponsors

      List
cosponsors from highest contributor to lowest.

       

      Project
Officer

      AQMD
project manager name.

       

      Background

      This
section is a brief introduction describing the need for the technology and/or
clean fuel, as defined by rules and regulations / mandates of AQMD, ARB, EPA,
DOE, etc. If applicable, describe other relevant factors, such as economic
issues, energy savings, etc.

       

      Project
Objective

      This
section should briefly describe the project objectives as originally stated in
the Board (or EO) letter. If the objective evolved significantly during the
contracting procedure, it should be noted how and why.

       

      Technology
Description

      This
section describes the general principles of operation and emissions control
approach of the technology and/or clean fuel involved in the
project.

       

      If
applicable, discuss how the principle of operation differs from other, currently
available equipment. This includes describing what the “advancement” actually is
over currently available technologies.

       

      Status

      This
section describes the status or progress of the project. If the project was
completed, provide the date of completion and note that the final report is on
file with complete technical details of the project. Describe major project
events, such as the development / testing / delivery of hardware (if
applicable). If the project was terminated or ended prematurely you still need
to file this report. Regardless of how it ended, per SB 199 you must describe
any unanticipated problems that were encountered during the project, and how
they were (or were not) resolved. If “fatal” problems were encountered, this
section will be the heart of the report, since it would be unlikely that major
benefits or emissions reductions were realized in a terminated
project.

       

      Picture
of technology that has been supported with AQMD/Technology Advancement
cosponsorship, if applicable. The picture, preferably a photograph, should
clearly illustrate the technology. The size of the image should be about 3x3 to
fit this two column format. The picture of the technology should be positioned
on the front page

       

      Results

      This
section summarizes all available emissions results and key performance
characteristics. Performance is meant in the broadest terms, including (as
applicable) emissions, energy efficiency, operation and maintenance
requirements, overall environmental impacts, and performance tradeoffs. The
primary emphasis of this section is the presentation of project
data.

       

      Performance
results should be summarized using clear, graphical depictions whenever
possible:

       

      Graph
or table summarizing key performance characteristics. Graphs are preferred over
tables when possible. Graphical data presented should show the most
representative data of the project‘s/technology’s performance. One graph would
be preferred, but no more than two data presentations in this
document

       

      Measured
performance is to be compared with the objectives/goals set for the project.
Comparisons should focus on targeted emissions reductions and/or other key
performance goals (e.g. range for electric vehicles).

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      There
should also be a brief discussion of performance tradeoffs. That is, did
achieving one performance characteristic goal, such as missions, compromise
another performance characteristic, such as efficiency.

       

      Benefits

      This
section crystallizes the above-noted performance characteristics into project
benefits, e.g., reduced emissions, increased efficiency, reduced global warming
gases, or other environmental benefits. The potential emissions inventory impact
of this technology applied in the South Coast Air Basin must be estimated based
on performance results of this project and some estimate of market penetration
(concisely State assumptions).

       

      It
clearly describes how those actual benefits compare with the benefits that were
anticipated at the project’s start. Be as detailed as possible, including
discussion of overall environmental impacts and benefits. Address the question
of whether the technology may reduce an air pollutant while improving (or
worsening) problems with water pollution, solid waste, global warming, toxic
emissions, etc.

       

      Project
Costs

      This
brief section describes the actual costs of the program (AQMD’s funding
contribution as well as the overall cost sharing) and how they compare with the
originally projected costs of the project as stated in the Board (or EO) letter.
Cost information can be presented graphically, in a table, or in paragraph form.
This section does not address cost effectiveness or cost of
commercialization.

       

      Commercialization
and Applications

      This
section describes the anticipated or potential applications of the demonstrated
technology and/or clean fuel. If applicable, discuss follow on projects to
further improve the technology. If available or applicable, discuss expected
costs of control and cost-effectiveness in the context of currently available
technologies. Cost data should be noted as estimates or projections, especially
since TA projects are often “first of a kind.”

       

      Prospects
for commercialization should include a discussion of the potential size of the
target or primary market, and if there is another market segment or application
that could use the technology. Discussion of the commercial status of the
technology should address questions such as: (1) how close to a commercial
product is it; (2) what work remains to bring it to market; (3) when could it be
made commercially available and competitive; and (4) what barriers remain before
the technology can be commercialized.

       

       

      17

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