Exhibit 10.1

NOTE SUBSCRIPTION AND AMENDMENT AGREEMENT

This NOTE SUBSCRIPTION AND AMENDMENT AGREEMENT is dated as of April 29, 2009
(the “Agreement”), and is entered into in connection with that certain Stock and
Notes Purchase Agreement, dated as of November 16, 2007, as amended April 29,
2008 (the “Purchase Agreement”), by and among China Recycling Energy
Corporation, a Nevada corporation (the “Company”) and Carlyle Asia Growth
Partners III, L.P., a limited partnership organized under the laws of the Cayman
Islands (“CAGP”), and CAGP III Co-Investment, L.P., a limited partnership
organized under the laws of the Cayman Islands (together with CAGP, each, an
“Investor” and collectively, the “Investors”).  All capitalized terms used but
not defined herein shall have the meaning ascribed to them in the Purchase
Agreement.

RECITALS

WHEREAS, the Company and the Investors have agreed (A) that Investors shall
subscribe for an 8% secured convertible promissory note in the principal amount
of $3,000,000 (the “$3,000,000 Note”), in the form attached hereto as Attachment
1 and (B) to amend and restate the 5% secured convertible promissory note in the
principal amount of $5,000,000 issued at the Second Closing under the Purchase
Agreement (the “$5,000,000 Note”) in the form attached hereto as Attachment 2
(the “Amended and Restated Second Note”).  The closing of such subscription and
amendment is hereinafter referred to as the “Subscription and Amendment
Closing”;

WHEREAS, the Company and the Investors have decided to amend the Purchase
Agreement to provide for said transactions; and

WHEREAS, the parties intend for the Subscription and Amendment Closing to take
place simultaneously with the execution and delivery of this Agreement.

WITNESSETH

NOW THEREFORE, in consideration of the above recitals and promises made in this
Agreement, the parties hereby agree as follows:

SECTION 1.  Subscription and Amendment Closing.  At the Subscription and
Amendment Closing:
 
1.1  the Company shall execute and deliver

(A)  the Amended and Restated Second Note;

(B)  the $3,000,000 Note;

 
 

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1.2  the Investors shall

(A)  advance the principal amount of the $3,000,000 Note in immediately
available funds to the Company;

(B)  deliver the original $5,000,000 Note to the Company to be replaced with the
Amended and Restated Second Note;

1.3  At the Subscription and Amendment Closing, the Company shall deliver an
officer’s certificate (“Officer’s Certificate”), together with such other
documentation reasonably requested by the Investors, certifying (A) that the
Company has closed a subscription for $2,000,000 of common shares with Great
Essential Investment, Ltd.; (B) the draw down of RMB 20M loan from 兴业 Bank; and
(C) the construction/operation of the JinYang 声威 project in accordance with
Attachment A to the Officer's Certificate.

SECTION 2.  Status of Notes and Closing.  The parties hereby agree that the
$3,000,000 Note and the Amended and Restated Second Note shall each constitute
one of the “Notes” for all purposes under the Purchase Agreement and the other
Transaction Documents and this Agreement shall constitute a “Transaction
Document” for all purposes under the Purchase Agreement.  Furthermore, the
parties hereby agree that Subscription and Amendment Closing shall be deemed a
“Closing” for all purposes under the Purchase Agreement, including, but not
limited to, Section 3 thereof, and any reference to “Closing” under the Purchase
Agreement shall mean any of the Initial Closing, the Second Closing or
Subscription and Amendment Closing, as the context requires.

SECTION 3.  Representations and Warranties.

3.1  Purchase Agreement Representations.  The Company represents and warrants to
the Investors that the representations and warranties set forth in the Purchase
Agreement (after giving effect to the amendments to the representations and
warranties set forth in Section 3.2, Section 3.3(b), Section 3.10(a) and Section
3.15 of the Purchase Agreement pursuant to Section 3.2, Section 3.3, Section 3.4
and Section 3.5 hereof, and to the Updated Disclosure Schedules in the form
attached hereto as Attachment 3) are true, complete and not misleading as of the
date of the Subscription and Amendment Closing.  For the avoidable of doubt, the
representations and warranties set forth in Section 3.4 and 3.5 of the Purchase
Agreement with respect to the Notes and the Conversion Shares shall apply to the
$3,000,000 Note and the Amended and Restated Second Note (which instruments
shall constitute “Notes” for all purposes under the Purchase Agreement in
accordance with Section 2 above).

3.2  Amendment to Section 3.2. The parties hereby agree that Section 3.2(a) and
Section 3.2(b) of the Purchase Agreement is deleted in its entirety and replaced
with the following:

“3.2  Capitalization and Voting Rights.

(a)  As of the date of this Agreement, the authorized capital of the Company
consists of 100,000,000 shares of Common Stock, of which (i) 38,778,035 shares
of Common Stock are currently issued and outstanding, (ii) 3,000,000 shares of
Common Stock are subject to Management Stock Options under the Management
Incentive Plan, and (iii) there are no other capital stock issued or
authorized.”
 
 
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Sections 3.2(c), (d) and (e) of the Purchase Agreement shall be renumbered
accordingly.

3.3  Amendment to Section 3.3. The parties hereby agree that Section 3.3(b) is
deleted in its entirety and replaced with “Intentionally Omitted”.

3.4  Amendment to Section 3.10(a).  The parties hereby agree that the first
sentence of Section 3.10(a) of the Purchase Agreement is deleted in its entirety
and replaced with the following:

“(a)  The Company has delivered to the Investors and/or filed with the SEC, the
audited consolidated balance sheet, and consolidated statements of operations
and cash flows of the Company Group for (i) the year ended December 31, 2006,
December 31, 2007, and December 31, 2008 (ii) the unaudited monthly financial
statements of TCH for the nine (9)-month period ended September 30, 2007, and
(iii) quarterly financial statements of the remaining members of the Company
Group for the nine (9)-month period ended September 30, 2007 (collectively, the
financial statements referred to in clauses (i), (ii) and (iii), the “Financial
Statements”).”

3.5  Amendment to Section 3.15.  The parties hereby agree that Section 3.15 of
the Purchase Agreement is deleted in its entirety and replaced with the
following:

“Indebtedness.  All Indebtedness represented by the Notes is being incurred for
proper purposes and in good faith.  Based on the financial condition of the
Company as of the date of this Agreement, and after giving effect to the
transactions contemplated by this Agreement and the Transaction Documents, (a)
the fair saleable value of the Company Group’s assets taken as a whole exceeds
the amount that will be required to be paid on or in respect of the Company
Group’s existing debts and other liabilities (including contingent liabilities)
as they mature; (b) the present fair saleable value of the assets of the Company
Group taken as a whole is greater than the amount that will be required to pay
the probable liabilities of the Company Group on their respective debt as they
become absolute and mature, and (c) the Company Group taken as a whole are able
to realize upon their assets and pay their debt and other liabilities
 (including contingent obligations) as they mature; (d) the Company Group’s
assets taken as a whole do not constitute unreasonably small capital to carry on
their respective businesses as now conducted and as proposed to be conducted
including their respective capital needs taking into account the particular
capital requirements of the business conducted by the Company Group, and
projected capital requirements and capital availability thereof; and (e) the
current cash flow of each of member of the Company Group, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are
required to be paid.  No member of the Company Group intends to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt).  No
member of the Company Group is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Indebtedness of such member of the
Company Group, or any other agreement (including, but not limited to, its
Charter Documents) which limits the amount of, or otherwise imposes restrictions
on the incurring of, Indebtedness by such member of the Company Group.  The SEC
Reports sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments.  None of the Company Group is, or has reason to
believe it is likely to be, in default with respect to such Indebtedness and no
waiver of default is currently in effect.  The Company Group has no Knowledge of
any facts or circumstances which lead it to believe that any member of the
Company Group will file for reorganization or liquidation under the bankruptcy
or reorganization laws of any jurisdiction within one year from the Closing.”
 
 
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SECTION 4.  Miscellaneous.

4.1  Further Assurances.  Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to
give such further written assurances, as may be reasonably requested by any
other party to evidence and reflect the transactions described herein and
contemplated hereby, including, without limitation, amending the other
Transaction Documents, and to carry into effect the intents and purposes of this
Agreement.

4.2  Rights Cumulative.  Each and all of the various rights, powers and remedies
of the parties hereto shall be considered to be cumulative with and in addition
to any other rights, powers and remedies which such parties may have at law or
in equity in the event of the breach of any of the terms of this Agreement.  The
exercise or partial exercise of any right, power or remedy shall neither
constitute the exclusive election thereof nor the waiver of any other right,
power or remedy available to such party.

4.3  Number and Gender.  All words and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require or as otherwise
appropriate in view of their context.

4.4  Captions.  Captions are provided herein for convenience only and they are
not to serve as a basis for interpretation or construction of this Agreement,
nor as evidence of the intention of the parties hereto.

4.5  Severability.  The provisions of this Agreement are severable.  The
invalidity, in whole or in part, of any provision of this Agreement shall not
affect the validity or enforceability of any other of its provisions.  If one or
more provisions hereof shall be declared invalid or unenforceable, the remaining
provisions shall remain in full force and effect and shall be construed in the
broadest possible manner to effectuate the purposes hereof.  The parties further
agree to replace such void or unenforceable provisions of this Agreement with
valid and enforceable provisions that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provisions.

4.6  Attorneys’ Fees.  In any action at law or in equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in a final judgment or decree, shall pay
the successful party all costs, expenses and reasonable attorney’s fees, as set
by the court and not by a jury, incurred by the successful party (including,
without limitation, costs, expenses and fees on any appeal).
 
 
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4.7  Counterparts.  This Agreement may be executed in separate counterparts,
each of which shall be deemed as an original; when executed, separately or
together, all of such counterparts shall constitute a single original
instrument, effective in the same manner as if all parties hereto had executed
one and the same instrument.

4.8  Entire Agreement.  This Agreement together with the Purchase Agreement and
the other Transaction Documents are intended by the parties hereto to be the
final expression of their agreement and constitutes and embodies the entire
agreement and understanding between the parties hereto with regard to the
subject matter hereof and is a complete and exclusive statement of the terms and
conditions thereof, and shall supersede any and all prior oral and written
correspondences, conversations, negotiations, agreements and understandings
relating to the same subject matter.

4.9  Amendment.  Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investors.  Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each of the parties hereto.

4.10  Delays or Omissions.  No delay or omission to exercise any right, power or
remedy accruing to any party under this Agreement, upon any breach or default of
any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.  Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing.  All
remedies under this Agreement or by law or otherwise afforded to any party,
shall be cumulative and not alternative.

4.11  Waiver and Extension of Time.  Any party hereto may by a writing signed by
an authorized representative of such party: (i) extend the time for the
performance of any of the obligations of another party; (ii) waive any
inaccuracies in representations and warranties made by another party contained
in this Agreement or in any documents delivered pursuant hereto; (iii) waive
compliance by another party with any of the covenants contained in this
Agreement or the performance of any obligations of such other party; or (iv)
waive the fulfillment of any condition that is precedent to the performance by
such party of any of its obligations under this Agreement.  No waiver of any
term, provision or condition of this Agreement, in any one or more instances,
shall be deemed to be, or be construed as, a further or continuing waiver of any
such term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
 
 
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4.12  Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

4.13  United States Dollars.  All references to “$” or dollars in this Agreement
shall refer to the currency of the United States.

4.14  Successors and Assigns.  Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto whose rights or
obligations hereunder are affected by such terms and conditions.  This
Agreement, and the rights and obligations hereunder, shall not be assigned
without the mutual written consent of the parties hereto, provided that each
Investor may assign its rights and obligations to an Affiliate of such Investor
without consent of the other parties under this Agreement.  Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement with the
intent and agreement that the same shall be effective as of the day and year
first above written.

THE COMPANY:

  CHINA RECYCLING ENERGY CORPORATION                    
By:
        
Name:
     
Title:
 

Signature page continued on next page
 
 
 

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THE INVESTORS:
For and on behalf of:
           
CARLYLE ASIA GROWTH PARTNERS III, L.P.
                   
By:
        
Name:
     
Title:
           
For and on behalf of:
           
CAGP III CO-INVESTMENT, L.P.
                   
By:
        
Name:
     
Title:
 

 
 
 

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