AMENDED AND RESTATED 5% SECURED CONVERTIBLE PROMISSORY NOTE

Exhibit 10.3

AMENDED AND RESTATED

5% SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED,  CHINA RECYCLING ENERGY CORPORATION, a Nevada corporation (hereinafter called “ Borrower ”), hereby promises to pay to 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, a “ Holder ”) or its registered assigns or successors in interest or order, without demand, the sum of Five Million U.S. Dollars (US$5,000,000) (“ Principal Amount ”), plus accrued interest thereon, on April 29, 2011 (the “ Maturity Date ”). The percentage ownership interest of each Holder in this Amended and Restated 5% Secured Convertible Promissory Note (“ Note ”) is set forth in Schedule A attached hereto.

This Note has been entered into pursuant to, and is subject to, a Stock and Notes Purchase Agreement dated as of November 16, 2007, as amended April 29, 2008 and April 29, 2009, by and among Borrower and the Holder, among others (as it may be amended, restated, supplemented or otherwise modified from time to time, the “ Purchase Agreement ”), and shall be governed by the terms of such Purchase Agreement. Unless otherwise separately defined herein, all capitalized terms used in this Note shall have the same meaning as is set forth in the Purchase Agreement.

This Note shall constitute an amendment and restatement of the original Note executed and delivered as of April 29, 2008 and not an extinguishment, discharge, satisfaction or novation of any indebtedness, liabilities and/or obligations evidenced by the original Note.

This securities represented by this Note is also subject to a (i) Registration Rights Agreement, and a (ii) Shareholders Agreement.  This Note is secured by a security interest granted to the Holder pursuant to a Share Pledge Agreement.

The following terms shall apply to this Note:

ARTICLE I

INTEREST

1.1   Interest Rate .  Interest on the outstanding Principal Amount shall accrue from April 29, 2008 and shall be payable:

(a)  annually, in arrears on the 29 ^th day of April, provided that the Holder has delivered written notice to the Borrower not less than thirty (30) days prior to such anniversary date stating that Holder requires the annual payment of such interest (for the avoidance of doubt, payment of interest under this clause (a) shall include all previously accrued and unpaid interest on this Note, regardless of whether the Holder has made a written request with respect to such amounts in the applicable written notice); or

(b)  to the extent interest is not payable pursuant to clause (a) above, in arrears together with, at the same time and in the same manner as payment of Principal Amount and on the Maturity Date, whether by acceleration or otherwise.

Interest on the outstanding principal balance of this Note shall accrue at 5.0% per annum (the “ Interest Rate ”).  Interest on the outstanding principal balance of the Note shall be computed on the basis of the actual number of days elapsed and a year of three hundred and sixty (360) days. The Holder and the Borrower acknowledge that the Holder shall be deemed to have timely made written notice to Borrower pursuant Section 1.1(a) with respect to the payment on April 29, 2009 of interest accrued on this Note.

ARTICLE II

CONVERSION RIGHTS

2.1   Conversion Right and Conversion Price .

(a)  The Holder shall have the right, but not the obligation, to convert all or any part of the aggregate outstanding Principal Amount of this Note, together with interest, if any, into shares of Common Stock, at any time on or after March 30, 2010 (or such earlier date if the audited consolidated financial statements of the Borrower for the fiscal year ending December 31, 2009 are available on a date prior to March 30, 2010) and prior to the Maturity Date (or such later date on which this Note is paid in full), subject to the terms and conditions set forth in this Article II, at a conversion price per share of Common Stock calculated as follows: (a) an amount equal to (i) the Actual Borrower Net Profit, multiplied by (ii) 5.5, and less (iii) the Principal Amount of this Note, together with accrued interest, divided by (b) the then total shares of Common Stock outstanding on a fully-diluted basis (for the avoidance of doubt, including securities which may be exercised, converted or exchanged for Common Stock issued under the Management Incentive Plan, but excluding the shares of the Common Stock to be issued upon conversion of this Note (such result, the “ Conversion Price ”, as the same may be adjusted from time to time in accordance with this Note).  For purposes of this Note, “ Actual Borrower Net Profit ” shall mean an amount equal to the consolidated after-tax net profit of the Borrower and its Subsidiaries for the fiscal year ending December 31, 2009 (in U.S. Dollars) after paying all relevant taxes and after eliminating all offsetting debits and credits between the Borrower and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Borrower and its Subsidiaries in accordance with U.S. GAAP, calculated in accordance with U.S. GAAP, but excluding for purposes of this calculation any non-cash redemption amortization charges in respect of this Note and any gains or losses arising from (a) the write-back of provisions and other non-recurring non-cash adjustments, and (b) any events or transactions which possess a significant degree of abnormality, are of a type not expected to recur in successive accounting periods or are unrelated or only incidentally related to the ordinary and typical activities of the Company Group, as shall be determined based on the audited consolidated financial statements of the Borrower for the fiscal year ending December 31, 2009, which shall be prepared by any of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, or KPMG (each, a “ Qualified Accounting Firm ”) no later than three months following the end of December 31, 2009.  Such Actual Borrower Net Profit shall be calculated using the foreign exchange rate in effect as of April 29, 2008. Notwithstanding anything herein to the contrary, if the Actual Borrower Net Profit as finally determined is less than US$0.01, then for the purposes of this Section 2.1(a), the Actual Borrower Net Profit shall be deemed to be US$0.01

(b)  The number of shares of Common Stock to be issued upon each conversion of this Note pursuant to this Article II shall be determined by dividing the then applicable Conversion Price by the Principal Amount and accrued interest to be converted.

(c)  The Holder may exercise such right by delivery to the Borrower of a written Notice of Conversion pursuant to Section 2.2.

(d)  Upon any conversion of this Note, the number of shares of Common Stock allocable among each Holder shall be in accordance with their percentage interest set forth in Schedule A attached to this Note.  As between the Holders, any partial interest in one whole share of Common Stock held by the Holders should be allocated to the Holder with the greater partial interest such that only one Holder will be entitled to receive such whole share of Common Stock.  After giving effect to the foregoing, in lieu of the Borrower issuing any fractional shares to the Holders upon conversion of this Note, the Borrower shall make an adjustment and payment in cash to the Holders.

2.2   Mechanics of Holder’s Conversion .

(a)  In the event that the Holder elects to convert this Note into Common Stock, the Holder shall give notice of such election by delivering an executed and completed notice of conversion (a “ Notice of Conversion ”) to the Borrower, which Notice of Conversion shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest and amounts being converted.  The date specified in the Notice of Conversion, or if no date is specified, then the date of the delivery of the Notice of Conversion, shall be referred to as the “ Conversion Date .”  A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A .

(b)  Pursuant to the terms of the Notice of Conversion, the Borrower shall deliver, or cause to be delivered, such number of Conversion Shares as determined pursuant to this Note via, at the Holder’s election, (i) physical certificates, or (ii) electronically through the Depository Trust Borrower or other established clearing corporation performing similar functions. In the case of the exercise of the conversion rights set forth herein, the conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the Conversion Date.  The Holder shall be treated for all purposes as the beneficial holder of such shares of Common Stock, unless the Holder provides the Borrower written instructions to the contrary.

2.3   Adjustment Events .

(a)  The Conversion Price and number and kind of shares or other securities to be issued upon conversion shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:

(i)   Merger, Sale of Assets, etc .  If (A) the Borrower effects any merger or consolidation of the Borrower with or into another entity, (B) the Borrower effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Borrower or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Borrower consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), or (E) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of the Borrower (in any such case, a “ Fundamental Transaction ”), this Note, as to the Principal Amount hereof and accrued interest hereon, shall thereafter be deemed to evidence the right to convert into such number and kind of shares or other securities and property as would have been issuable or distributable on account of such Fundamental Transaction, upon or with respect to the securities subject to the conversion right immediately prior to such Fundamental Transaction.  The foregoing provision shall similarly apply to successive Fundamental Transactions of a similar nature by any such successor or purchaser. Without limiting the generality of the foregoing, the anti-dilution provisions of this Section shall apply to such securities of such successor or purchaser after any such Fundamental Transaction.

(ii)   Reclassification, etc .  If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Note, as to the Principal Amount hereof and accrued interest hereon, shall thereafter be deemed to evidence the right to convert into an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.