UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 28, 2015

SMARTHEAT INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
001-34246
 
98-0514768
(State or other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
A-1, 10, Street 7
Shenyang Economic and Technological Development Zone
Shenyang, China
 
110141
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (86) 24-2519-7699

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 1.01 Entry into a Material Definitive Agreement

On December 28, 2015, SmartHeat Inc., a Nevada corporation (the “Company”), entered into the Fourth Amendment (the “Amendment”) to the Credit and Security Agreement dated July 27, 2012, as first amended on December 21, 2012 and subsequently amended on August 23, 2013, and July 14, 2014 (the “Credit Agreement”), between the Company and Northtech Holdings Inc., a British Virgin Islands business corporation (“Northtech”). Northtech is owned by certain members of the Company’s former management, Jun Wang, Xudong Wang, and Wen Sha. Huajun Ai, the Company’s Corporate Secretary is also a part owner of Northtech.

The Amendment provides that SmartHeat will repay $1,600,000 of the outstanding principal and Northtech will extend the maturity date to July 31, 2016 for an extension fee of $100,000 in exchange for 1,500,000 shares of common stock of SmartHeat, par value $.001 per share, which shall be restricted stock and issuing a 10% Convertible Preferred Stock of its wholly owned subsidiary Heat HP, Inc. (“Heat HP”) representing 20% of the voting power of Heat HP, having a conversion, redemption and liquidation value of $1,000,000 and a 10% cumulative dividend accruing and payable quarterly ($25,000 per quarter).  In addition, the parties agreed to adjust the minimum conversion/exchange price in the Amendment from $.40 to $.20 per share and the maximum conversion/exchange price from $2.80 to $1.40 to reflect the current market conditions of the stock.  The new maximum credit line was reduced to $2,500,000.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is attached as Exhibit 10.13 hereto and is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities

The text set forth above under Item 1.01 is incorporated into this Item by reference.

Item 9.01 Financial Statements and Exhibits
 
(d)           Exhibits

Exhibit
Description
10.19
 
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
SMARTHEAT INC.
 
(Registrant)
Date:
December 28, 2015
 
By:
/s/ Oliver Bialowons
 
 
Name:
Oliver Bialowons
 
Title:
President

 
 
 
Exhibit 10.16
 
 
AMENDMENT No. 4 TO THE CREDIT AND SECURITY AGREEMENT

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.

WITNESSETH

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:

1.  
Amendments to the Credit Agreement . The Credit Agreement shall hereby be amended as follows:

a.  
The definition of “Maximum Line” under Section 1.1 of the Credit Agreement shall be deleted in its entirety and replaced by the following:

““ 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.”
 
 
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b.  
The definition of “Average Share Price” under Section 1.1 of the Credit Agreement shall be deleted in its entirety and replaced by the following:

““ 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.”

2.  
Loan Extension .    The Lender hereby agrees to extend the Maturity Date to July 31, 2016.

3.  
Fees . Upon the execution of this Amendment, and in consideration therefor, the Company shall pay to Northtech:
 
a.  
 an extension fee of $100,000 and a loan re-payment of $500,000 of outstanding principal (for a total payment of $600,000), represented by the delivery by the Company of 1,500,000 restricted shares of Common Stock at a price of $0.40 per share;

b.  
Loan repayment of $1,000,000, represented by such number of shares of Series A Preferred Stock of Heat HP convertible into 20% of the issued and outstanding Common Stock of Heat HP on fully diluted basis, with a dividend rate of $25,000 per quarter and a conversion, redemption and liquidation value of $1,000,000.

4.  
Company Actions.

a.  
 Shareholder Vote .     The Company hereby agrees that it will submit this Amendment to its shareholders for approval in its proxy solicitation for the Company’s next annual meeting of shareholders, which the Company hereby agrees to hold no later than 12 months from the date hereof.  The parties further agree that an Event of Default shall occur if the Company’s shareholders do not approve this Amendment in accordance with this Section 3 by the requisite vote required to approve such proposal.

b.  
Certificate of Designation .  The Company shall cause its subsidiary Heat HP, Inc. to file a Certificate of Amendment with the Secretary of State of the State of Nevada establishing a class of preferred stock to be issued to Northtech.

5.  
Miscellaneous .
 
a.  
Full Force and Effect . Except as expressly set forth in this Amendment, no other provision of the Credit Agreement shall be changed, altered or modified and the Credit Agreement, except as amended, shall remain in full force and effect.
 
 
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b.  
Authority . Each party represents and warrants to the other party that this Amendment is being executed by the authorized representatives of each respective party.

c.  
Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Amendment may also be executed via facsimile, which shall be deemed an original.

d.  
Headings . The titles and subtitles used in this Amendment are used for convenience only and are not to be considered in construing or interpreting this Amendment.
 
 
e.  
Notices . Unless otherwise provided, any notice required or permitted under this Amendment shall be given in accordance with Section 8.3 of the Credit Agreement.

f.  
Severability . Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

  g. 
All Amendments in Writing . No supplement, modification, or amendment to this Amendment shall be binding, unless executed in writing by a duly authorized representative of each party to this Amendment.

 
h. 
Entire Agreement . This Amendment and the Credit Agreement, including the prior amendments thereto, the Exhibits and the Schedules, constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

i.  
Governing Law . This Amendment shall be governed by, and construed in accordance with the substantive laws (other than conflict laws) of the State of New York.
 
 
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j.  
Mandatory Mediation . This Amendment shall be governed by procedures other than litigation for settling all claims and dispute as set forth in Section 8.23 of the Credit Agreement.
 

 
[Signature Page Follows]
 
 

 
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IN WITNESS WHEREOF , the parties hereto have executed this agreement as of the date first above written.

SMARTHEAT, INC.

 

By: /s/Oliver Bialowons                                                       
       Name: Mr. Oliver Bialowons
       Title: President
             



NORTHTECH HOLDINGS, INC.



By: /s/ Jun Wang                                                       
     Name: Mr. Jun Wang
     Title: Authorized Signatory

 
 
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