Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”), which is dated September 16, 2014 (the
“Effective Date”), is made by and between Ideal Power Inc., a Delaware
corporation, located at 4120 Freidrich Lane, Suite 100, Austin, Texas, 78744 and
hereinafter referred to as “Company”, and Paul A. Bundschuh whose address is
1159 Lost Creek Blvd. Austin, Texas 78669, 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 President and Chief Marketing
Officer;

 

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 its President and Chief Marketing Officer
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 CEO and Board
of Directors (the “Board”) fully informed with regard to critical issues
affecting the value and reputation of Company. Furthermore, in his capacity as
President and Chief Marketing Officer, Executive shall be primarily responsible
for developing and implementing the Company’s marketing strategy, public image
and brand awareness. This includes macroeconomic, political, and tax incentive
analysis, development of a product roadmap substantiated by sound market and
financial analysis, managing brand recognition, market image and public
relations to drive market awareness, business growth, and shareholder value.
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 Chief Executive Officer and Board of Directors. 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.

 

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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.

 

4.COMPLIANCE WITH SECURITIES LAWS.

 

Executive acknowledges that he is 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 that relate to securities laws, as stated from time to
time.

 

5.COMPENSATION.

 

(a) Annual Salary. Company shall pay to Executive an annual base salary in the
amount of $200,000.00. 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 will support a
cash bonus of 50% of Executive’s Annual Salary. The standards and goals and the
bonus targets shall be mutually agreed to by Executive and the CEO as approved
by the Compensation Committee. Nothing in this subsection (b) shall prevent
Executive and the CEO, and approved by 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.

 

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(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,
dental and vision 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.

 

6.EQUITY COMPENSATION.

 

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. Said four weeks leave time includes sick leave time, vacation time
and personal days off.

 

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.

 

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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.

 

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.

 

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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 legally required 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 is scheduled to vest any time after 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.

 

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(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.

 

(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.

 

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(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.

 

(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/ R. Daniel Brdar         Its:
Chief Executive Officer         Executive:         /s/ Paul A. Bundschuh   Paul
A. Bundschuh

 

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