Exhibit 10.1

 
EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”), which is dated December 10, 2013 (the
“Effective Date”), is made by and between Ideal Power Inc., a Delaware
corporation, located at 5004 Bee Creek Road, Suite 600, Spicewood, Texas, 78669
and hereinafter referred to as “Company”, and Timothy W. Burns, whose address is
____________________, hereinafter referred to as “Executive.”  The purpose of
this Agreement is to confirm the terms of the employment relationship between
Company and Executive.

RECITALS

WHEREAS, Company wishes to retain the services of Executive, and Executive
wishes to render services to Company, as its Chief Financial Officer, Secretary
and Treasurer;

WHEREAS, Company and Executive wish to set forth in this Agreement the duties
and responsibilities that Executive has agreed to undertake on behalf of
Company, and the responsibilities that Company will owe to Executive.

THEREFORE, in consideration of the foregoing and of the mutual promises
contained in this Agreement, Company and Executive (who are sometimes
individually referred to as a “Party” and collectively referred to as the
“Parties”) agree as follows:

AGREEMENT

1.           TERM.

Company hereby employs Executive as Company’s Chief Financial Officer, Secretary
and Treasurer pursuant to the terms of this Agreement and Executive hereby
accepts employment with Company pursuant to the terms of this Agreement, which
will continue until terminated pursuant to Section 11 or 12 below.

2.           GENERAL DUTIES.

Executive shall devote his entire productive time, ability, and attention to
Company’s business during Executive’s employment.  Executive shall report to
Company’s Chief Executive Officer and agrees to keep the Company’s Board of
Directors (the “Board”) fully informed with regard to critical issues affecting
the value and reputation of Company.  Furthermore, in his capacity as Chief
Financial Officer, Executive shall be primarily responsible for creating and
overseeing Company’s financial goals and the administrative, financial, and risk
management operations of Company.  This includes the development of a financial
and operational strategy and the ongoing development and monitoring of control
systems designed to preserve Company’s assets and report accurate financial
results.  Executive shall do and perform all services, acts, or things necessary
or advisable to discharge his duties under this Agreement, and such other duties
as are commonly performed by an employee of his rank in a publicly traded
corporation or which may, from time to time, be prescribed by the Company
through the Board.  Executive agrees to cooperate with and work to the best of
his ability with Company’s management team, which includes the Board and the
officers and other employees, to continually improve Company’s reputation in its
industry for quality products and performance.

3.           NONSOLICITATION AND PROPRIETARY PROPERTY AND CONFIDENTIAL
INFORMATION PROVISIONS.

As a condition of his employment with Company, Executive has executed a
Proprietary Information and Inventions Agreement, the terms of which are
included by reference into this Agreement.

 
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        4.           COMPLIANCE WITH SECURITIES LAWS.

Executive acknowledges that, following the initial public offering of Company’s
common stock (the “IPO”), Executive will be subject to the provisions of
Sections 10 and 16 of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder.  Executive acknowledges that Sections 10 and
16 and the rules and regulations promulgated thereunder may prohibit Executive
from selling or transferring his securities in Company.  Executive agrees that
he will comply with Company’s policies, as stated from time to time, relating to
selling or transferring Company’s securities.

5.           COMPENSATION.

(a)           Annual Salary.  From the date of Executive’s employment (October
21, 2013) through December 6, 2013, Company shall pay to Executive an annual
base salary in the amount of $150,000.  From and after December 6, 2013, the
annual base salary will be increased to $200,000.  The salary paid during
Executive’s employment shall be referred to in this Agreement as the “Annual
Salary”.  The Annual Salary shall be subject to any tax withholdings and/or
employee deductions that are applicable.  The Annual Salary shall be paid to
Executive in equal installments in accordance with the periodic payroll
practices of the Company for its employees.  The Annual Salary will be subject
to review and adjustment at the discretion of the Board no less frequently than
annually.

(b)           Bonus.   At least annually, Executive and the Compensation
Committee of the Board of Directors shall meet to establish (i) performance
standards and goals to be met by Executive and (ii) cash bonus targets based on
the performance standards and goals that are achieved.  The standards and goals
and the bonus targets shall be mutually agreed to by Executive and the
Compensation Committee.  For the year 2014, Executive and the Compensation
Committee have agreed that performance standards and goals, which have not yet
been finally determined, will support a cash bonus target of $50,000.  Nothing
in this subsection (b) shall prevent Executive and the Compensation Committee
from mutually agreeing to alternatives to the computation of the bonus to be
paid to Executive in accordance with this subsection (b) (the “Bonus”), which
may be implemented and paid to Executive in place of the Bonus described
herein.  The Bonus shall be subject to any applicable tax withholdings and/or
employee deductions.

(c)           Cost of Living Adjustment.  Commencing as of January 1, 2015, and
on each January 1st thereafter, the then effective Annual Salary shall be
increased (but not decreased) by an amount which shall reflect the increase, if
any, in the cost of living during the previous 12 months by adding to the Annual
Salary an amount computed by multiplying the Annual Salary by the percentage by
which the level of the Consumer Price Index for the Austin Metropolitan Area, as
reported on January 1st of the new year by the Bureau of Labor Statistics of the
United States Department of Labor has increased over its level as of January 1st
of the prior year.

(d)           Participation In Employee Benefit Plans.  Executive shall have the
same rights, privileges, benefits and opportunities to participate in any of
Company’s employee benefit plans which may now or hereafter be in effect on a
general basis for executive officers or employees.  During Executive’s
employment, the Company shall provide, at Company’s sole expense, medical and
dental benefits for Executive, his spouse and children.  At the discretion of
the Board, Company may also provide, at its sole expense (i) disability
insurance which, in the event of Executive’s disability, will replace no less
than 60% of the Annual Salary being paid to Executive at the time the disability
occurred and (ii) life insurance in an amount to be agreed upon by the Board and
Executive.  Irrespective of the foregoing, Company may change any benefits
contractor, or discontinue any benefit without replacement, in its sole
discretion, and any such change or discontinuance will not be a breach of this
Agreement.  In the event Executive receives payments from the disability
insurer, Company shall have the right to offset such payments against the Annual
Salary otherwise payable to Executive during the period for which such payments
are made.

 
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6.           EQUITY COMPENSATION.

In accordance with that certain offer letter dated October 15, 2013, Company has
issued to Executive an option to purchase 30,000 post-reverse-split shares of
Company’s common stock from Company’s 2013 Equity Incentive Plan.  The per share
exercise price is equal to the price of Company’s common stock sold to the
public in the IPO.  The right to purchase the common stock will vest in equal
increments over 4 years, on the anniversary of the grant date, which was
November 21, 2013.  The term of the option is 10 years.  The terms of the option
will be governed by the 2013 Equity Incentive Plan and the award
agreement.  During Executive’s employment and subject always to the discretion
of the Compensation Committee of the Board, Executive will be eligible to
receive additional awards from the 2013 Equity Incentive Plan (or any other
equity incentive plan adopted by the Board).

7.           REIMBURSEMENT OF BUSINESS EXPENSES.

Company shall promptly reimburse Executive for all reasonable business expenses
incurred by Executive in connection with the business of Company.  However, each
such expenditure shall be reimbursable only if Executive furnishes to Company
adequate records and other documentary evidence required by federal and state
statutes and regulations issued by the appropriate taxing authorities for the
substantiation of each such expenditure as an income tax deduction.

8.           PAID TIME OFF.

Executive shall be entitled to four weeks of paid time off each year; provided,
however, failure to use paid time off by the end of the year in which it is
earned will prevent the accumulation of additional paid time off in excess of
four weeks.

9.           INDEMNIFICATION OF LOSSES.

So long as Executive’s actions were taken in good faith and in furtherance of
Company’s business and within the scope of Executive’s duties and authority,
Company shall indemnify and hold Executive harmless to the full extent of the
law from any and all claims, losses and expenses sustained by Executive as a
result of any action taken by him to discharge his duties under this Agreement,
and Company shall defend Executive, at Company’s expense, in connection with any
and all claims by stockholders or third parties.

10.           PERSONAL CONDUCT.

Executive agrees promptly and faithfully to comply with all present and future
policies, requirements, directions, requests and rules and regulations of
Company in connection with Company’s business.  Executive further agrees to
conform to all laws and regulations and not at any time to commit any act or
become involved in any situation or occurrence tending to bring Company into
public scandal, ridicule or which will reflect unfavorably on the reputation of
Company.

11.           TERMINATION FOR CAUSE.

The Board may terminate Executive for cause immediately, without notice, if
Company reasonably concludes that Executive has committed fraud, theft,
embezzlement, misappropriation of Company funds or other property, or any
felony.  The Board may also terminate Executive for cause for any of the
following:

(a)           Breach by Executive of any material provision of this Agreement;

(b)           Violation by Executive of any statutory or common law duty of
loyalty to Company; or

 (c)           A material violation by Executive of Company's employment
policies; or

(d)           Commission of such acts of dishonesty, gross negligence, or
willful misconduct as would prevent the effective performance of Executive’s
duties or which result in material harm to Company or its business.

 
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The Board may terminate this Agreement for cause by giving written notice of
termination to Executive, provided, however, if the Board declares Executive to
be in default of this Agreement under subsection (a) above because Executive
fails to substantially perform his material duties and responsibilities under
this Agreement, the Board shall deliver a written demand for substantial
performance of such duties and responsibilities to Executive.  Such demand must
identify the manner in which the Board believes that Executive has not
substantially performed his duties, and Executive shall have a period of 30 days
to correct the deficient performance.  Upon termination for cause, the
obligations of Executive and Company under this Agreement shall immediately
cease.  Such termination shall be without prejudice to any other remedy to which
Company may be entitled either at law, in equity, or under this Agreement.  If
Executive’s employment is terminated pursuant to this Section 11, Company shall
pay to Executive (i) Executive’s accrued but unpaid Annual Salary and the value
of unused paid time off through the effective date of the termination; (ii)
Executive’s accrued but unpaid Bonus, if any; and (iii) business expenses
incurred prior to the effective date of termination.  Executive shall not be
entitled to continue to participate in any employee benefit plans except to the
extent provided in such plans for terminated participants, or as may be required
by applicable law.

12.           TERMINATION WITHOUT CAUSE.

(a)           Death.  Executive’s employment shall terminate upon the death of
Executive.  Upon such termination, the obligations of Executive and Company
under this Agreement shall immediately cease.

(b)           Disability.  The Board reserves the right to terminate Executive’s
employment upon 30 days written notice if, for a period of 90 days, Executive is
prevented from discharging his substantial or material duties due to any
physical or mental disability.

(c)           Election By Executive.  Executive’s employment may be terminated
at any time by Executive upon not less than 30 days written notice by Executive
to the Board.

(d)           Election By Company.  Executive’s employment may be terminated at
any time by Company upon not less than 30 days written notice by the Board to
Executive.

(e)           Termination Due to a Change in Control.  Executive’s employment
may be terminated upon a Change in Control.  For purposes of this Agreement, the
term “Change in Control” shall mean the sale or disposition by Company to an
unrelated third party of substantially all of its business or assets, or the
sale of the capital stock of Company in connection with the sale or transfer of
a Controlling Interest in Company to an unrelated third party, or the merger or
consolidation of Company with another corporation as part of a sale or transfer
of a Controlling Interest in Company to an unrelated third party.  For purposes
of this definition, the term “Controlling Interest” means the sale or transfer
of Company’s securities representing at least 50.1% of the voting power.  It
will be presumed that a termination is a termination under this subsection (e)
rather than a termination under subsection (d) (Election by Company) if
Executive’s employment is terminated during the period that begins when
negotiations for the Change in Control begin and ends on the six month
anniversary of the closing of the Change in Control transaction and such
termination is not a termination for cause pursuant to Section 11 or a
termination resulting from Executive’s death, disability or election pursuant to
subsections (a), (b) or (c) of this Section 12.

If Executive’s employment is terminated pursuant to subsections (a), (b), or (c)
of this Section 12, Company shall pay to Executive (i) Executive’s accrued but
unpaid Annual Salary and the value of unused paid time off through the effective
date of the termination; (ii) Executive’s accrued but unpaid Bonus, if any; and
(iii) business expenses incurred prior to the effective date of
termination.  Executive shall not be entitled to continue to participate in any
employee benefit plans except to the extent provided in such plans for
terminated participants, or as may be required by applicable law.

If Executive’s employment is terminated pursuant to subsection (d) of this
Section 12, Company shall pay to Executive (i) Executive’s accrued but unpaid
Annual Salary and the value of unused paid time off through the effective date
of the termination; (ii) Executive’s accrued but unpaid Bonus, if any; (iii)
business expenses incurred prior to the effective date of termination; and (iv)
severance (the “Severance Payment”) consisting of six months of the Annual
Salary, less legal deductions.  Company may elect in its sole discretion whether
to pay the Severance Payment in one lump sum or on regular pay days for the six
months following termination of Executive’s employment.  For a termination under
subsection (d), Executive shall be entitled to continue to participate in
employee benefit plans described in Section 5(d), at Company’s sole expense, for
six months following termination of Executive’s employment.

 
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If Executive’s employment is terminated pursuant to subsection (e) of this
Section 12, Executive shall be entitled to receive (i) Executive’s accrued but
unpaid Annual Salary and the value of unused paid time off through the effective
date of the termination; (ii) Executive’s accrued but unpaid Bonus, if any;
(iii) business expenses incurred prior to the effective date of termination; and
(iv) an amount equal to one-half the Annual Salary.  In addition, any equity
award that was scheduled to vest during the two year period following the
termination of Executive’s employment will vest immediately upon the termination
of Executive’s employment pursuant to subsection (e).

In the event of a termination of Executive’s employment pursuant to subsections
(a), (b), (c) and (d) above, all other rights Executive has under any benefit or
stock option plans and programs shall be determined in accordance with the terms
and conditions of such plans and programs.

With the exception of the terms of this Section 12 and any obligations, duties
and responsibilities Executive has under the Proprietary Information and
Inventions Agreement, upon termination of Executive’s employment the obligations
of Executive and Company under this Agreement shall immediately cease.

13.           MISCELLANEOUS.

(a)           Preparation of Agreement.  It is acknowledged by each Party that
such Party either had separate and independent advice of counsel or the
opportunity to avail itself or himself of same.  In light of these facts it is
acknowledged that no Party shall be construed to be solely responsible for the
drafting hereof, and therefore any ambiguity shall not be construed against any
Party as the alleged draftsman of this Agreement.

(b)           Cooperation.  Each Party agrees, without further consideration, to
cooperate and diligently perform any further acts, deeds and things and to
execute and deliver any documents that may from time to time be reasonably
necessary or otherwise reasonably required to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay or expense.

(c)           Interpretation.

(i)           Entire Agreement/No Collateral Representations.  Each Party
expressly acknowledges and agrees that this Agreement, including all exhibits
attached hereto: (1) is the final, complete and exclusive statement of the
agreement of the Parties with respect to the subject matter hereof; (2)
supersedes any prior or contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of
any kind, oral or written (collectively and severally, the “Prior Agreements”),
and that any such prior agreements are of no force or effect except as expressly
set forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of Prior Agreements, or by evidence of subsequent oral agreements.  Any
agreement hereafter made shall be ineffective to modify, supplement or discharge
the terms of this Agreement, in whole or in part, unless such agreement is in
writing and signed by the Party against whom enforcement of the modification or
supplement is sought.

(ii)           Waiver.  No breach of any agreement or provision herein
contained, or of any obligation under this Agreement, may be waived, nor shall
any extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the Party to be charged or as
otherwise expressly authorized herein.  No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.

(iii)           Remedies Cumulative.  The remedies of each Party under this
Agreement are cumulative and shall not exclude any other remedies to which such
Party may be lawfully entitled.

 
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(iv)           Severability.  If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the term of this Agreement, then and, in that event: (A) the
performance of the offending term or provision (but only to the extent its
application is invalid, illegal or unenforceable) shall be excused as if it had
never been incorporated into this Agreement, and, in lieu of such excused
provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable,
and (B) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable) shall not be affected
thereby and shall continue in full force and effect to the fullest extent
provided by law.

(v)           No Third Party Beneficiary.  Notwithstanding anything else herein
to the contrary, the parties specifically disavow any desire or intention to
create any third party beneficiary obligations, and specifically declare that no
person or entity, other than as set forth in this Agreement, shall have any
rights hereunder or any right of enforcement hereof.

(vi)           Headings; References; Incorporation; Gender.  The headings used
in this Agreement are for convenience and reference purposes only, and shall not
be used in construing or interpreting the scope or intent of this Agreement or
any provision hereof.  References to this Agreement shall include all amendments
or renewals thereof.  Any exhibit referenced in this Agreement shall be
construed to be incorporated in this Agreement.  As used in this Agreement, each
gender shall be deemed to include the other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.

(d)           Enforcement.

(i)           Applicable Law.  This Agreement and the rights and remedies of
each Party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of Texas, as if this agreement
were made, and as if its obligations are to be performed, wholly within the
State of Texas.

(ii)           Consent to Jurisdiction and Venue.  Any action or proceeding
arising out of or relating to this Agreement shall be filed in and heard and
litigated solely before the state courts of Texas within Travis County.

(iii)           Attorneys’ Fees.  If court proceedings are required to enforce
any provision of this Agreement, the substantially prevailing or successful
Party shall be entitled to an award of the reasonable and necessary expenses of
litigation, including reasonable attorneys’ fees.

(e)           No Assignment of Rights or Delegation of Duties by
Executive.  Executive’s rights and benefits under this Agreement are personal to
him and therefore (i) no such right or benefit shall be subject to voluntary or
involuntary alienation, assignment or transfer; and (ii) Executive may not
delegate his duties or obligations hereunder.

(f)           Notices.  Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called “Notices”) required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (A) personal delivery
(which form of Notice shall be deemed to have been given upon delivery), (B) by
private overnight delivery service (which forms of Notice shall be deemed to
have been given upon confirmed delivery by the delivery agency), or (C) by
mailing in the United States mail by registered or certified mail, return
receipt requested, postage prepaid (which forms of Notice shall be deemed to
have been given upon the 5th business day following the date mailed).  Notices
shall be addressed to the address hereinabove set forth in the introductory
paragraph of this Agreement, or to such other address as the receiving Party
shall have specified most recently by like Notice, with a copy to the other
Parties hereto.  Any Notice given to the estate of a Party shall be sufficient
if addressed to the party as provided in this subsection.

 
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(g)           Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument, binding on all parties hereto.  Any
signature page of this Agreement may be detached from any counterpart of this
Agreement and reattached to any other counterpart of this Agreement identical in
form hereto by having attached to it one or more additional signature pages.

(h)           Execution by All Parties Required to be Binding; Electronically
Transmitted Documents.  This Agreement shall not be construed to be an offer and
shall have no force and effect until this Agreement is fully executed by all
Parties hereto.  If a copy or counterpart of this Agreement is originally
executed and such copy or counterpart is thereafter transmitted electronically
by facsimile or similar device, such facsimile document shall for all purposes
be treated as if manually signed by the Party whose facsimile signature appears.

 
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IN WITNESS WHEREOF, the parties have executed this Agreement.

Company:
IDEAL POWER INC.
 
By:   /s/ Paul Bundschuh

Its: CEO

Executive:

/s/ Timothy W. Burns                                                      
Timothy W. Burns