Exhibit 10.20

PROMISSORY NOTE

     
St. Louis, Missouri
  September 1, 2010

For value received, the undersigned, CleanTech Biofuels, Inc. (“Borrower”),
hereby promises to pay to the order of CMS Acquisition, LLC. or its assigns
(“Lender”), One Hundred Thousand Dollars and no cents ($100,000.00) together,
with interest from the date hereof until this Note is fully paid, on the
principal amount hereunder remaining unpaid from time to time, at such rates as
set forth below. All unpaid principal hereof and any unpaid interest accruing
thereon shall be due and payable at the first to occur of (i) the 28th day of
February, 2011 or (ii) the date that Borrower obtains Five Hundred Thousand
Dollars ($500,000.00) in borrowings or new investment (the first to occur is
hereinafter referred to as the “Maturity Date”).

The principal amount outstanding under this Note shall accrue interest daily
(calculated on the basis of the actual number of days elapsed over a year of
365 days) at the rate of six percent (6.00%) per annum. Upon the occurrence of
an Event of Default (as defined in the Security Agreement between Borrower and
Lender of even date herewith), and the expiration of any applicable grace period
and/or if sooner the occurrence of the Maturity Date, the entire unpaid
principal balance of this Note will bear interest at the rate of nine percent
(9.00%) per annum, until such time, if any, as the Event of Default is cured.
The interest payable under this Note shall in no event exceed the maximum rate
permissible under applicable law. All payments on this Note (including, without
limitation, any and all prepayments on this Note, and any and all proceeds
applied to this Note from any foreclosure against the property that has been
pledged as security for this Note) shall be applied in the following order:
(i) first to the accrued and unpaid costs and expenses under the Note, (ii) then
to accrued but unpaid interest, and (iii) lastly to the outstanding principal
hereunder.

This Note is secured with the pledge of certain assets of Borrower pursuant to a
Security Agreement of even date herewith (the “Security Agreement”). Upon the
occurrence of an Event of Default under this Note or the Security Agreement, and
after the lapse of any applicable period of cure, the outstanding principal
balance hereunder, together with any accrued but unpaid interest, shall become
immediately due and payable and without demand or notice of every kind (which
are hereby expressly waived by Borrower). Borrower hereby agrees to pay all
costs of collection, including reasonable attorneys’ fees, if this Note is not
paid when due, whether or not legal proceedings are commenced. Presentment or
other demand for payment, protest, notice of dishonor, notice of protest, notice
of acceleration of maturity, or right to notice of any other kind are expressly
waived by Borrower. The remedies of Lender as provided herein shall be
cumulative and concurrent, and may be pursued singularly, successively or
together, in the sole discretion of Lender, and may be exercised as often as
occasion therefore shall arise.

 

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THIS NOTE HAS BEEN DELIVERED AND ACCEPTED AT AND SHALL BE DEEMED TO HAVE BEEN
MADE AT ST. LOUIS, MISSOURI. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF MISSOURI (WITHOUT REFERENCE TO CONFLICTS OF LAW PRINCIPLES).

Any term of this Note may be amended or modified only with the written consent
of Borrower and Lender. No failure or delay on the part of Lender in exercising
any right, power or privilege hereunder and no course of dealing between Lender
and Borrower shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver of any right under this Note shall be effective against Lender if and
only if such waiver is in writing. Any waiver, express or implied, of any breach
or default shall not be considered a waiver of any subsequent breach or default.
Whenever possible each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be or become prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining provisions
of this Note.

The undersigned, individual by signing this Note represents and warrants that he
has been duly authorized to enter into this Note on behalf of Borrower and that
Borrower has authorized the borrowing evidenced by this Note.

This Note and all other written agreements between the parties hereto constitute
the entire agreement between the parties and there are no oral agreements
between the parties. Said written agreements may only be amended by written
amendments signed by the parties to be bound by such amendments. The following
is added pursuant to Section 432.045, R.S.Mo., and as used below “borrower(s)”
shall mean Maker and “creditor” shall mean Holder:

“Oral agreements or commitments to loan money, extend credit or to forbear from
enforcing repayment of a debt including promises to extend or renew such debt
are not enforceable. To protect you (borrower(s)) and us (creditor) from
misunderstanding or disappointment, any agreements we reach covering such
matters are contained in this writing (and in any other written agreements
between the parties), which is the complete and exclusive statement of the
agreement between us, except as we may later agree in writing to modify it.”

In Witness Whereof, Borrower has caused this Note to be executed and delivered
by its duly authorized officer as of the day and year and at the place set forth
above.

CLEANTECH BIOFUELS, INC.

By:                                                                
Edward P. Hennessey, President

 

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