Exhibit 10.1


 


IDEAL POWER INC.


 


(Formerly known as Ideal Power Converters,
Inc.)


 


RESTATED 2013 EQUITY INCENTIVE PLAN


 


As Adopted May 17, 2013 and Restated May
26, 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;


  


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


 






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(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; and


 


(k)           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 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 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)           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. 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 may be awarded for general excellence of service or upon
satisfaction of such Performance Factors as are set out in advance in the Participant’s individual Award Agreement (the “Performance
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. Stock Bonuses 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. If the Stock Bonus is
being earned upon the satisfaction of performance goals pursuant to a Performance Stock Bonus Agreement, then 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;


 


(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;


 




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(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
Restated Ideal Power Inc. 2013 Equity Incentive Plan has been adopted by the Board on the 26th day of May 2015.


 


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


 








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