Exhibit 10.1


 





IDEAL POWER INC.


 


(Formerly known as Ideal Power Converters,
Inc.)


 


AMENDED & RESTATED 2013 EQUITY INCENTIVE
PLAN


 


As Adopted May 17, 2013 and Restated
May 26, 2015, and Amended & Restated on August 27, 2015


 


		1.	PURPOSE.



 


The purpose of this
Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important
to the success of the Company, and its Parent and Subsidiaries (if any), by offering them an opportunity to participate in the
Company’s future performance through awards of Options, the right to purchase Common Stock and Stock Bonuses. Capitalized
terms not defined in the text are defined in Section 2.


 


		2.	DEFINITIONS.



 


As used in this Plan, the following terms
will have the following meanings:


 


“AWARD”
means any award under this Plan, including any Option, Stock Award or Stock Bonus.


 


“AWARD
AGREEMENT” means, with respect to each Award, the signed written agreement between the Company and the Participant
setting forth the terms and conditions of the Award.


 


“BOARD” means
the Board of Directors of the Company.


 


“CAUSE”
means (i) an intentional act of fraud, financial embezzlement, theft or any other material violation of law that occurs during
or in the course of the Participant’s employment with the Company; (ii) intentional damage to the Company’s assets;
(iii) intentional disclosure of the Company’s confidential and/or proprietary secrets and information contrary to the Company’s
policies; (iv) intentional engagement in any competitive activity which would constitute a breach of the Participant’s duty
of loyalty or obligations to the Company; (v) an intentional breach of any of the Company’s policies; (vi) the willful and
continued failure to substantially perform the Participant’s duties for the Company (other than as a result of Disability);
or (vii) willful conduct by the Participant that is materially injurious to the Company, monetarily or otherwise.


 


“CODE” means the
Internal Revenue Code of 1986, as amended.


 


“COMMON
STOCK” means the common stock, $0.001 par value, of the Company or any successor corporation.


 


“COMPANY” means
Ideal Power Inc., a Delaware corporation, formerly known as Ideal Power Converters, Inc., a Texas corporation, or any successor
corporation.


 


“COMMITTEE”
means the Compensation Committee of the Board of Directors which shall administer and interpret the Plan as more particularly described
in Section 5 of the Plan; provided, however, that the term Committee will refer to the Board of Directors during such times
as the Board of Directors has no Compensation Committee.


 






    	 	 	 



     


    

 


“DISABILITY”
means a disability, whether temporary or permanent, partial or total, as determined by the Committee, provided that with respect
to any individual who is an employee or other “service provider”, disability shall be determined in accordance with
Section 409A of the Code and related regulations.


 


“EXCHANGE ACT”
means the Securities Exchange Act of 1934, as amended.


 


“EXERCISE
PRICE” means the price at which a holder of an Option may purchase the Shares issuable upon exercise of the Option.


 


“FAIR MARKET
VALUE” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:


 


		(a)	if such Common Stock is publicly traded and is then listed on a national securities exchange or
on Nasdaq, its official closing price on the date of determination on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or on Nasdaq;



 


		(b)	if such Common Stock is quoted on the Over-the-Counter Bulletin Board, its last sale price on the
Over-the-Counter Bulletin Board on the date of determination, provided, however, if no sale takes place on the date of determination
then the Fair Market Value will be the last sale price on the Over-the-Counter Bulletin Board on the last trading day prior to
the determination date on which a sale was recorded; or



 


		(c)	if neither of the foregoing is applicable, by the Committee in good faith and in accordance with
requirements under Section 409A of the Code and related regulations.



 


“INSIDER” means
an officer or director of the Company or a Ten Percent Shareholder, as defined in Section 6.3.


 


“OPTION” means
an award of an option to purchase Shares pursuant to Section 6.


 


“PARENT”
means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations
other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.


 


“PARTICIPANT”
means a person who receives an Award under this Plan.


 


“PERFORMANCE
FACTORS” means the factors selected by the Committee, in its sole and absolute discretion, which may be from among,
but are not limited to, the following measures to determine whether the performance goals applicable to Awards have been satisfied:


 


		(a)	Net revenue and/or net revenue growth;



 


		(b)	Earnings before income taxes and amortization and/or earnings before income taxes and amortization
growth;



 


		(c)	Operating income and/or operating income growth;



 






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		(d)	Net income and/or net income growth;



 


		(e)	Earnings per share and/or earnings per share growth;



 


		(f)	Total shareholder return and/or total shareholder return growth;



 


		(g)	Return on equity;



 


		(h)	Operating cash flow return on income;



 


		(i)	Adjusted operating cash flow return on income;



 


		(j)	Economic value added;



 


		(k)	Stock price; and



 


		(l)	Individual business objectives.



 


“PERFORMANCE
PERIOD” means the period of service determined by the Committee, not to exceed five years, during which years of
service or performance is to be measured for Stock Awards or Stock Bonuses, if such Awards are restricted.


 


“PLAN”
means this Amended & Restated Ideal Power Inc. 2013 Equity Incentive Plan, as amended from time to time.


 


“PURCHASE
PRICE” means the price at which the Participant of a Stock Award may purchase the Shares.


 


“SHARES”
means shares of the Company’s Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 3 and
18, and any successor security.


 


“STOCK AWARD”
means an award of Shares pursuant to Section 7.


 


“STOCK BONUS”
means an award of Shares or rights to receive Shares pursuant to Section 8.


 


“SUBSIDIARY”
means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.


 


“TERMINATION”
or “TERMINATED” means, for purposes of this Plan with respect to a Participant, that the Participant
has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor
to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the
case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Company, provided that such leave
is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute
or unless provided otherwise pursuant to a formal policy adopted from time to time by the Company and issued and promulgated to
employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting
suspension of vesting of the Award while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except
that in no event may an Option be exercised after the expiration of the term set forth in the Option agreement. The Committee will
have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant
ceased to provide services (the “Termination Date”).


 






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		3.	SHARES SUBJECT TO THE PLAN.



 


3.1          Number of
Shares Available. Subject to Sections 3.2, 3.3 and 18, the total aggregate number of Shares reserved and available for grant
and issuance pursuant to this Plan, shall be 2,089,983 Shares and will include Shares that are subject to: (a) issuance upon exercise
of an Option but cease to be subject to such Option for any reason other than exercise of such Option; (b) an Award granted hereunder
but forfeited or repurchased by the Company at the original issue price; and (c) an Award that otherwise terminates without Shares
being issued. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy
the requirements of all outstanding Options granted under this Plan and all other outstanding but unvested Awards granted under
this Plan.


 


3.2          [RESERVED]


 


3.3          Adjustment
of Shares. In the event that the number of outstanding shares of Common Stock is changed by a stock dividend, recapitalization,
stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the
Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of
and number of Shares subject to outstanding Options, and (c) the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the shareholders of the Company and compliance with applicable securities
laws; provided, however, that fractions of a Share will not be issued but will either be replaced by a cash payment equal to the
Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as determined by the Committee.


 


		4.	ELIGIBILITY.



 


ISOs (as defined in
Section 6 below) may be granted only to employees (including officers and directors who are also employees) of the Company or of
a Parent or Subsidiary of the Company. All other Awards may be granted to employees, officers, directors, consultants, independent
contractors and advisors of the Company or any Parent or Subsidiary of the Company, provided such consultants, independent contractors
and advisors are natural persons who render bona-fide services not in connection with the offer and sale of securities in a capital-raising
transaction or promotion of the Company’s securities. A person may be granted more than one Award under this Plan.


 


		5.	ADMINISTRATION.



 


		5.1	Committee.



 


(a)          The Plan shall
be administered and interpreted by a Committee consisting of two or more members of the Board. So long as the Company has a class
of its equity securities registered under Section 12 of the Exchange Act, any Committee administering the Plan will consist solely
of two or more members of the Board who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange
Act and, if the Board so determines in its sole discretion, who are “outside directors” within the meaning of Section
162(m) of the Code. To the extent consistent with corporate law, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish;
provided, however, that only the Committee may exercise such duties, power and authority with respect to Participants who are subject
to Section 16 of the Exchange Act.


 






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(b)          Members of the
Committee may resign at any time by delivering written notice to the Board. The Board shall fill vacancies in the Committee. The
Committee shall act by a majority of its members in office. The Committee may act either by vote at a meeting or by a memorandum
or other written instrument signed by a majority of the Committee.


 


(c)          If the Board,
in its discretion, does not appoint a Committee, the Board itself will administer and interpret the Plan and take such other actions
as the Committee is authorized to take hereunder; provided that the Board may take such actions hereunder in the same manner as
the Board may take other actions under the Certificate of Formation and bylaws of the Company generally.


 


5.2          Committee Authority. Without limitation, the Committee will have the authority to:


 


		(a)	construe and interpret this Plan, any Award Agreement
and any other agreement or document



 


		(b)	executed pursuant to this Plan;



 


		(c)	prescribe, amend and rescind rules and regulations relating
to this Plan or any Award;



 


		(d)	select persons to receive Awards;



 


		(e)	determine the form and terms of Awards;



 


		(f)	determine the number of Shares or other consideration
subject to Awards;



 


		(g)	determine whether Awards will be granted singly, in combination
with, in tandem with, in



 


		(h)	replacement of, or as alternatives to, other Awards under
this Plan or any other incentive or compensation plan of the



 


		(i)	Company or any Parent or Subsidiary of the Company;



 


		(j)	grant waivers of Plan or Award conditions;



 


		(k)	determine the vesting, exercisability and payment of
Awards;



 


		(l)	correct any defect, supply any omission or reconcile
any inconsistency in this Plan, any Award or



 


		(m)	approve, amend or terminate any Award Agreement;



 


		(n)	determine whether an Award has been earned; and



 


		(o)	make all other determinations necessary or advisable
for the administration of this Plan.



 


5.3          Committee Discretion. Any
determination made by the Committee with respect to any Award will be made at the time of grant of the Award or, unless in contravention
of any express term of this Plan or Award, at any later time, and such determination will be final and binding on the Company and
on all persons having an interest in any Award under this Plan. The Committee may delegate to one or more officers of the Company
the authority to grant an Award under this Plan to Participants who are not Insiders of the Company. No member of the Committee
shall be personally liable for any action taken or decision made in good faith relating to this Plan, and all members of the Committee
shall be fully protected and indemnified to the fullest extent permitted under applicable law by the Company in respect to any
such action, determination, or interpretation.


 






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		6.	OPTIONS.



 


The Committee may grant
Options to eligible persons and will determine whether such Options will be Incentive Stock Options within the meaning of the Code
(“ISO”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise
Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject
to the following:


 


6.1           Form of Option
Grant. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO (hereinafter referred to as the “Stock Option Agreement”), and will be in such form and contain
such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.


 


6.2           Date of Grant.
The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless otherwise
specified by the Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable
time after the granting of the Option.


 


6.3           Exercise
Period. Options may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of 10 years
from the date the Option is granted; and provided further that no ISO granted to a person who directly or by attribution owns more
than 10% of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company
(“Ten Percent Shareholder”) will be exercisable after the expiration of five years from the date the ISO is granted.
The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in
such number of Shares or percentage of Shares as the Committee determines, provided, however, that in all events a Participant
will be entitled to exercise an Option at the rate of at least 20% of the full number of shares of the grant per year over five
years from the date of grant, subject to reasonable conditions such as continued employment; and further provided that an Option
granted to a Participant who is an officer or director may become fully exercisable, subject to reasonable conditions such as continued
employment, at any time or during any period established by the Company.


 


6.4           Exercise
Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted and may be not less than
100% of the Fair Market Value of the Shares on the date of grant; provided that the Exercise Price of an ISO granted to a Ten Percent
Shareholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased
may be made in accordance with Section 9 of this Plan.


 


6.5           Method of
Exercise. Options may be exercised only by delivery to the Company of a written stock option exercise notice (the “Exercise
Notice”) in a form approved by the Committee, (which need not be the same for each Participant), stating the number of Shares
being purchased, the restrictions imposed on the Shares purchased under such Exercise Notice, if any, and such representations
and agreements regarding the Participant’s investment intent and access to information and other matters, if any, as may
be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the Exercise
Price for the number of Shares being purchased.


 






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6.6           Termination.
Notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the
following:


 


(a)           If the Participant’s
service is Terminated for any reason except death or Disability, then the Participant may exercise such Participant’s Options
only to the extent that such Options would have been exercisable upon the Termination Date no later than 3 months after the Termination
Date (or such longer time period not exceeding five years as may be determined by the Committee, with any exercise beyond three
months after the Termination Date deemed to be an NQSO). Notwithstanding the foregoing, Participants who are members of the Board,
but not employees of the Company may exercise any of such Participant’s Options after such Participant’s Termination
Date, provided that such Options have not otherwise expired pursuant to the Stock Option Agreement governing such Option.


 


(b)           If the Participant’s
service is Terminated because of the Participant’s death or Disability (or the Participant dies within three months after
a Termination other than for Cause or because of Participant’s Disability), then the Participant’s Options may be exercised
only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised
by the Participant (or the Participant’s legal representative) no later than 12 months after the Termination Date (or such
longer time period not exceeding five years as may be determined by the Committee, with any such exercise beyond (i) three months
after the Termination Date when the Termination is for any reason other than the Participant’s death or Disability, or (ii)
12 months after the Termination Date when the Termination is for Participant’s death or Disability, deemed to be an NQSO).


 


(c)           Notwithstanding
the provisions in Section 6.6(a) above, if the Participant’s service is Terminated for Cause, neither the Participant, the
Participant’s estate nor such other person who may then hold the Option shall be entitled to exercise any Option with respect
to any Shares whatsoever, after Termination, whether or not after Termination the Participant may receive payment from the Company
or a Subsidiary for vacation pay, for services rendered prior to Termination, for services rendered for the day on which Termination
occurs, for salary in lieu of notice, or for any other benefits. For the purpose of this paragraph, Termination shall be deemed
to occur on the date when the Company dispatches notice or advice to the Participant that his service is Terminated for Cause.


 


6.7           Limitations
on Exercise. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent the Participant from exercising the Option for the full number of Shares for
which it is then exercisable.


 


6.8           Limitations
on ISO. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISO are exercisable
for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of
the Company, Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value of Shares on the date of grant
with respect to which ISO are exercisable for the first time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such calendar year will be ISO and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date of this Plan to provide for a different limit on the Fair Market Value
of Shares permitted to be subject to ISO, such different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.


 






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6.9           Modification,
Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options
in substitution therefore, provided that any such action may not, without the written consent of a Participant, impair any of such
Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise
altered will be treated in accordance with Section 424(h) of the Code. The Committee may reduce the Exercise Price of outstanding
Options without the consent of Participants affected by a written notice to them; provided, however, that the Exercise Price may
not be reduced below the minimum Exercise Price that would be permitted under Section 6.4 of this Plan for Options granted on the
date the action is taken to reduce the Exercise Price.


 


6.10         No Disqualification.
Notwithstanding any other provision in this Plan, no term of this Plan relating to ISO will be interpreted, amended or altered,
nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the
Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.


 


		7.	STOCK AWARD.



 


A Stock Award is an
offer by the Company to sell to an eligible person Shares that may or may not be subject to restrictions. The Committee will determine
to whom an offer will be made, the number of Shares the person may purchase, the price to be paid (the “Purchase Price”),
the restrictions to which the Shares will be subject, if any, and all other terms and conditions of the Stock Award, subject to
the following:


 


7.1           Form of Stock
Award. All purchases under a Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (the “Stock
Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and conditions of this Plan. The offer of a Stock Award
will be accepted by the Participant’s execution and delivery of the Stock Purchase Agreement and payment for the Shares to
the Company in accordance with the Stock Purchase Agreement.


 


7.2           Purchase
Price. The Purchase Price of Shares sold pursuant to a Stock Award will be determined by the Committee on the date the Stock
Award is granted and may not be less than 100% of the Fair Market Value of the Shares on the grant date, except in the case of
a sale to a Ten Percent Shareholder, in which case the Purchase Price will be 110% of the Fair Market Value. Payment of the Purchase
Price must be made in accordance with Section 9 of this Plan.


 


7.3           Terms of
Stock Awards. Stock Awards may, but need not be, subject to such restrictions as the Committee may impose. These restrictions
may be based upon completion of a specified number of years of service with the Company or upon completion of Performance Factors
set out in advance in the Participant’s individual Stock Purchase Agreement. Stock Awards may vary from Participant to Participant
and between groups of Participants. Prior to the grant of a Stock Award subject to restrictions, the Committee shall: (a) determine
the nature, length and starting date of any Performance Period for the Stock Award; (b) select from among the Performance Factors
to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant.
Prior to the transfer of any Stock Award, the Committee shall determine the extent to which such Stock Award has been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect to Stock Awards that are subject to different
Performance Periods and have different performance goals and other criteria.


 






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7.4           Termination
During Performance Period. If a Participant is Terminated during a Performance Period for any reason, then any Stock Awards
then held by the Participant that have not vested will be terminated and forfeited.


 


		8.	STOCK BONUSES.



 


8.1           Awards of
Stock Bonuses. A Stock Bonus is an award of Shares for services rendered to the Company or any Parent or Subsidiary of the
Company or an award of rights to receive shares upon one or more future dates or the occurrence of one or more future events. A
Stock Bonus will be awarded pursuant to an Award Agreement (the “Stock Bonus Agreement”) that will be in such form
(which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be
subject to the terms and conditions of this Plan. A Stock Bonus or rights to receive Shares may be awarded for general excellence
of service or may, in the case of rights to receive Shares, vest and settle in Shares in connection with the future performance
of services or achievement of such Performance Factors as are set out in advance in the Participant’s individual Award Agreement
that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and
will comply with and be subject to the terms and conditions of this Plan. Stock Bonuses or rights to receive Shares may vary from
Participant to Participant and between groups of Participants, and may be based upon the achievement of the Company, Parent or
Subsidiary and/or individual Performance Factors or upon such other criteria as the Committee may determine.


 


8.2           Terms of
Stock Bonuses. The Committee will determine the number of Shares to be awarded to the Participant. The Committee will: (a)
determine the nature, length and starting date of any Performance Period for each Stock Bonus; (b) select from among the Performance
Factors to be used to measure the performance, if any; and (c) determine the number of Shares that may be awarded to the Participant.
Prior to the payment of any Stock Bonus, the Committee shall determine the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously with respect to Stock Bonuses that are subject
to different Performance Periods and different performance goals and other criteria. The number of Shares may be fixed or may vary
in accordance with such performance goals and criteria as may be determined by the Committee. The Committee may adjust the performance
goals applicable to the Stock Bonuses to take into account changes in law and accounting or tax rules and to make such adjustments
as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances
to avoid windfalls or hardships.


 


8.3           Form of Payment.
The earned portion of a Stock Bonus may be paid to the Participant by the Company either currently or on a deferred basis, with
such interest or dividend equivalent, if any, as the Committee may determine. Payment of an interest or dividend equivalent (if
any) may be made in the form of cash or whole Shares or a combination thereof, either in a lump sum payment or in installments,
all as the Committee will determine.


 


		9.	PAYMENT FOR SHARE PURCHASES.



 


Payment for Shares
purchased pursuant to this Plan (including Shares issued from the exercise of an Option) may be made in cash (by check or wire
transfer) or, where expressly approved for the Participant by the Committee and where permitted by law:


 


(a)           by cancellation of indebtedness of
the Company to the Participant;


 






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(b)           by surrender of
shares that either: (1) have been owned by the Participant for more than six months and have been paid for within the meaning of
Securities and Exchange Commission Rule 144; or (2) were obtained by the Participant in the public market;


 


(c)           by waiver of compensation
due or accrued to the Participant for services rendered;


 


(d)           with respect only
to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists:


 


(1)           through a “same
day sale” commitment from the Participant and a broker-dealer that is a member of the Financial Industry Regulatory Authority
(a “FINRA Dealer”) whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or


 


(2)           through a “margin”
commitment from the Participant and a FINRA Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge
the Shares so purchased to the FINRA Dealer in a margin account as security for a loan from the FINRA Dealer in the amount of the
Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly
to the Company; or


 


(e)           by any combination
of the foregoing.


 


		10.	WITHHOLDING TAXES.



 


10.1        Withholding
Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior
to the delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of Awards
are to be made in cash, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements.


 


10.2        Stock Withholding.
When, under applicable tax laws, a participant incurs tax liability in connection with the exercise or vesting of any Award that
is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee
may allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares
to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on
the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for
this purpose will be made in accordance with the requirements established by the Committee and will be in writing in a form acceptable
to the Committee.


 


		11.	PRIVILEGES OF STOCK OWNERSHIP.



 


No Participant will
have any of the rights of a shareholder with respect to any Shares until the Shares are issued to the Participant. After Shares
are issued to the Participant, the Participant will be a shareholder and will have all the rights of a shareholder with respect
to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such
Shares; provided, that if such Shares are issued pursuant to a Stock Award with restrictions, then any new, additional or different
securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split
or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Stock
Award.


 






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		12.	NON-TRANSFERABILITY.



 


Awards of Shares granted
under this Plan, and any interest therein, will not be transferable or assignable by the Participant, and may not be made subject
to execution, attachment or similar process, other than by will or by the laws of descent and distribution. Awards of Options granted
under this Plan, and any interest therein, will not be transferable or assignable by the Participant, and may not be made subject
to execution, attachment or similar process, other than by will or by the laws of descent and distribution. During the lifetime
of the Participant an Award will be exercisable only by the Participant. During the lifetime of the Participant, any elections
with respect to an Award may be made only by the Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.


 


		13.	CERTIFICATES.



 


All certificates for
Shares or other securities delivered under this Plan will be subject to such stop transfer orders, legends and other restrictions
as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the Securities and Exchange Commission or any stock exchange or automated
quotation system upon which the Shares may be listed or quoted.


 


		14.	ESCROW; PLEDGE OF SHARES.



 


To enforce any restrictions
on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together
with stock powers or other instruments of transfer approved by the Committee appropriately endorsed in blank, with the Company
or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the certificates.


 


		15.	EXCHANGE AND BUYOUT OF AWARDS.



 


The Committee may,
at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in
exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may at any time buy from a Participant
an Award previously granted with payment in cash, Shares or other consideration, based on such terms and conditions as the Committee
and the Participant may agree.


 


		16.	SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.



 


16.1       Compliance
with Securities Laws in Conjunction with Grants of Awards. An Award will not be effective unless such Award is in compliance
with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of
any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan,
the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or
other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines
to be necessary or advisable. The Company will be under no obligation to register the Shares with the Securities and Exchange Commission
or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange
or automated quotation system, and the Company will have no liability for any inability or failure to do so.


 






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16.2       Compliance
with Securities Laws in Conjunction with Exercise, Sale or Disposition of Award Securities. Participants understand that the
sale or disposition (including through exercise) of Options, the Shares acquired by exercise of the Options and the Shares granted
as Stock Awards and Stock Bonuses (collectively, the “Award Securities”) are subject to federal and state securities
laws. As such, the sale or disposition (including through the exercise of Options) of Award Securities may be restricted during
certain periods (“Blackout Period”). Participants agree that they will promptly notify the Company’s Chief Financial
Officer or the Chairperson of the Committee of an intent to exercise an Option or to sell or otherwise dispose of Award Securities
and will not engage in the exercise, sale or other disposition of Award Securities unless such exercise, sale or other disposition
is approved in writing by the Company. If the Company is unable to approve the exercise of an Option, and the Participant’s
right to exercise the Option will expire or terminate during the Blackout Period, the Committee will, in good faith, review the
circumstances relating to the Option exercise and, in its discretion, may extend the exercise period.


 


		17.	NO OBLIGATION TO EMPLOY.



 


Nothing in this Plan
or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ
of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the
right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship
at any time, with or without cause.


 


		18.	CORPORATE TRANSACTIONS.



 


18.1       Assumption
or Replacement of Awards by Successor. Unless an Award Agreement provides otherwise, in the event of (a) a dissolution or liquidation
of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation
with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there
is no substantial change in the shareholders of the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all Participants), (c)
a merger in which the Company is the surviving corporation but after which the shareholders of the Company immediately prior to
such merger (other than any shareholder that merges, or which owns or controls another corporation that merges, with the Company
in such merger) cease to own their shares or other equity interest in the Company, (d) the sale of substantially all of the assets
of the Company, or (e) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer
or similar transaction, any or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all Participants. In the alternative, the successor corporation
may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to shareholders
(after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions
no less favorable to the Participant. In the event such successor corporation (if any) refuses to assume or substitute Awards,
as provided above, pursuant to a transaction described in this Subsection 18.1, (i) the vesting of any or all Awards granted pursuant
to this Plan will accelerate upon a transaction described in this Section 18 and (ii) any or all Options granted pursuant to this
Plan will become exercisable in full prior to the consummation of such event at such time and on such conditions as the Committee
determines. If such Options are not exercised prior to the consummation of the corporate transaction, they shall terminate at such
time as determined by the Committee. Notwithstanding anything to the contrary herein or in any Award Agreement, in any assumptions
or replacements of Stock Options, Stock Awards or Stock Bonuses that are subject to Section 409A of the Code, the determination
of equal or equivalent value shall be made in accordance with the provisions of Section 409A and related regulations. Similarly,
in any assumptions or replacements of ISOs, the determination of equal or equivalent value shall be made in accordance with Section
424 of the Code and related regulations.


 






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18.2       Other Treatment
of Awards. Subject to any greater rights granted to Participants under the foregoing provisions of this Section 18, in the
event of the occurrence of any transaction described in Section 18.1, any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.


 


18.3       Assumption
of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this
Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan
if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if
the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another
company, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature
of Shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In
the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with
a similarly adjusted Exercise Price.


 


		19.	ADOPTION AND SHAREHOLDER APPROVAL.



 


This Plan became effective
on the date on which it was adopted by the Board, which was May 17, 2013 (the “Effective Date”). Upon the Effective
Date, the Committee may grant Awards pursuant to this Plan. The Company sought and obtained shareholder approval of the Plan within
12 months after the date this Plan was adopted by the Board; provided, however, if the Company had failed to obtain shareholder
approval of the Plan during such 12-month period, pursuant to Section 422 of the Code, any Option granted as an ISO at any time
under the Plan would not qualify as an ISO within the meaning of the Code and would be deemed to be an NQSO.


 


		20.	TERM OF PLAN/GOVERNING LAW.



 


Unless earlier terminated
as provided herein, this Plan will terminate 10 years from the date this Plan is adopted by the Board or, if earlier, the date
of shareholder approval. This Plan and all agreements thereunder shall be governed by and construed in accordance with the laws
of the State of Texas.


 


		21.	AMENDMENT OR TERMINATION OF PLAN.



 


The Board may at any
time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument
to be executed pursuant to this Plan; provided, however, that no amendments to the Plan will be effective without approval of the
shareholders of the Company if shareholder approval of the amendment is then required pursuant to Section 422 of the Code or the
rules of any stock exchange or quotation system on which the Common Stock is listed.


 






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		22.	NONEXCLUSIVITY OF THE PLAN.



 


Neither the adoption
of this Plan by the Board, the submission of this Plan to the shareholders of the Company for approval, nor any provision of this
Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements
as it may deem desirable, including, without limitation, the granting of stock options and bonuses otherwise than under this Plan,
and such arrangements may be either generally applicable or applicable only in specific cases.


 


		23.	ACTION BY COMMITTEE.



 


Any action permitted
or required to be taken by the Committee or any decision or determination permitted or required to be made by the Committee pursuant
to this Plan shall be taken or made in the Committee’s sole and absolute discretion.


 


WHEREFORE, this
Ideal Power Inc. Amended & Restated 2013 Equity Incentive Plan has been adopted by the Board on the 27th day of August 2015.


 


	 	IDEAL POWER INC.
	 	 	 	 
	 	 	 	 
	 	By:	/s/ R. Daniel Brdar	 
	 	 	R. Daniel Brdar, Chief Executive Officer




 






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