EXHIBIT 10.19
BALQON CORPORATION
PROMISSORY NOTE
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$100,000
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Santa Ana, California
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Dated as of September 9,
2008
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Balqon Corporation, a California corporation (the “
Company” ), for value received, hereby promises to pay
to ELECTRIC MOTORSPORTS, LLC or its registered assigns (“
Holder ”), the sum of One Hundred Thousand Dollars ($
100,000) on the terms and conditions set forth hereinafter. Payment
for all amounts due hereunder shall be made by mail to the
registered address of Holder.
This Note has been issued to Holder in connection with an
asset purchase agreement (the “ APA ”), pursuant
to which the Company is purchasing the assets of ELECTRIC
MOTORSPORTS, LLC. This Note is the note referenced therein and is
subject to the provisions of that agreement, including, without
limitation, the provisions related to holdback rights in the
APA.
The following is a statement
of the rights of Holder of this Promissory Note (the “
Note ”) and the conditions to which this Note is
subject, and to which Holder hereof, by the acceptance of this
Note, agrees:
1. Maturity; Partial
Prepayment . The principal hereof and any unpaid accrued
interest hereon, as set forth below, shall be due and payable on
the earlier to occur of: (i) Six Months (“ Maturity
Date” ); and (iii) when declared due and payable by
Holder upon the occurrence of an Event of Default (as defined
below).
2. Interest . The Company
shall pay interest at the rate of the lower of (i)
the Prime Rate published in the Wall Street Journal on the date
closest to the date of this Note; or (ii) the maximum allowable
rate under applicable laws (such rate, the “ Interest
Rate ”) on the principal of this Note outstanding during
the period beginning on the date of this Note and ending on the
date that the principal amount of this Note is repaid in full.
Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. Interest accruing on this Note shall
be due and payable at the Maturity Date or upon the occurrence of
an Event of Default. The Company shall pay the interest due on this
Note by delivering to Holder cash equal to the outstanding
principal amount of the Note plus any due and unpaid interest. If
there occurs an acceleration or prepayment of the Note prior to the
Maturity Date in accordance with the terms hereof, all interest due
and payable at such time on the principal amount due shall be paid
in full. All payments hereunder are to be applied first to
reasonable costs and fees referred to herein, second to the payment
of accrued interest, and the remaining balance to the payment of
principal.
3. Events of Default . If any of the
events specified in this Section 3 shall occur (herein individually
referred to as an “ Event of Default ”), Holder
may, so long as such condition exists, declare the entire principal
and unpaid accrued interest hereon immediately due and payable, by
notice in writing to the Company:
(a)
Default in the payment of the principal or unpaid accrued interest
of this Note when due and payable after written notice and an
opportunity to cure such breach; or
(b)
The institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to institution of
bankruptcy or insolvency proceedings against it or the filing by it
of a petition or answer or consent seeking reorganization or
release under the Federal Bankruptcy Act, or any other applicable
Federal or state law, or the consent by it to the filing of any
such petition or the appointment of a receiver, liquidator,
assignee, trustee or other similar official of the Company, or of
any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate
action by the Company in furtherance of any such action;
or
(c)
If, within sixty (60) calendar days after the commencement of an
action against the Company, without the consent or acquiescence of
the Company (and service of process in connection therewith on the
Company) seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such action shall not have been
resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within sixty (60) calendar days
after the appointment without the consent or acquiescence of the
Company of any trustee, receiver or liquidator of the Company or of
all or any substantial part of the properties of the Company, such
appointment shall not have been vacated; or
4. Holder’s Rights Upon Event of Default . Upon
the occurrence and continuance of any Event of Default, Holder in
his sole and absolute discretion shall have the ri
