Amendment No. 4 to the Credit and Security Agreement between SmartHeat Inc. and Northtech Holdings Inc., dated December 28, 2015

This fourth amendment (the “Fourth Amendment” or “Amendment”), dated December 28, 2015 and effective as of October 31, 2015 is being entered into between SmartHeat Inc., a Nevada corporation (including any successor or permitted assignee thereof, the “Company”), having an address at 1802 North Carson Street, Suite 212, Carson City, NV 89701, and Northtech Holdings Inc., a British Virgin Islands business company (including any successor, assignee or transferee thereof, “Northtech”), having an address at Mill Mall, Suite 6, Wickhams Cay 1, P.O. Box 3085, Road Town, Tortola, British Virgin Islands, and amends the Credit and Security Agreement, dated July 27, 2012, as first amended on December 21, 2012 and subsequently amended on August 23, 2013, with the third amendment taking place on July 14, 2014 between the Company and Northtech (the “Credit Agreement”). Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Credit Agreement.

WHEREAS, the Company and Northtech entered into the Credit Agreement on July 27, 2012, which was subsequently amended on December 21, 2012, August 23, 2013 and July 14, 2014;

WHEREAS, the Company desires to extend the maturity date of the Credit Agreement to July 31, 2016;

WHEREAS, Northtech is willing to extend the maturity date of the Credit Agreement provided that the Company reduce the outstanding principal amount of debt under the Line of Credit to $2,000,000 by issuing shares of the Company and Heat HP, Inc. as provided herein;

WHEREAS, Northtech is willing to extend the maturity date of the Credit Agreement provided that the minimum conversion price is reduced to a minimum of $.20  and a maximum of $1.40 per share of SmartHeat’s common stock, par value $.001 per share,

WHEREAS, Northtech is willing to extend the maturity date of the Credit Agreement provided that the maximum credit line is reduced to $2,500,000 ; and,

WHEREAS, the Company and Northtech desire to amend accordingly certain provisions of the Credit Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:

““Maximum Line” means $2,500,000 which amount shall automatically be reduced by any amount of indebtedness repaid by the Company by issuance of its Common Stock at any time after July 1, 2014.”

““Average Share Price” means the average of the opening and closing price for each share of Borrower’s common stock (HEAT) on a trading day, or the average of the bid and ask prices if no share of the Borrower’s common stock is traded on such a trading day; provided that in no event shall the Average Share Price be lower than $0.20 or higher than $1.40.”