AMENDMENT NO. 1 TO IDEAL POWER CONVERTERS, INC. CONVERTIBLE PROMISSORY NOTE

This AMENDMENT NO. 1 is an amendment (this “Amendment”) to the convertible promissory notes issued by Ideal Power Converters, Inc., a Texas corporation (the “Company”), to the holders whose names are set forth on Schedule A attached hereto (each, a “Holder” and collectively, the “Holders”) (collectively the “Notes”, and each individually, a “Note”).

A. The Company contemplates a new offering (“Bridge Financing”) consisting of its senior secured convertible promissory notes in a one or more tranches or series, initially in the amount of $750,000.

B. As a condition to closing the Bridge Financing, the Notes must be converted into shares of the Company's common stock in the event that the Company closes a firm commitment underwritten initial public offering of the Company's common stock that raises at least $10 million ("IPO").

NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, the parties agree as follows:

1. Revision to Definition of Maturity. The definition of "Maturity" in the first paragraph of the Notes shall be revised to state, "All unpaid principal, together with any then accrued but unpaid interest and any other amounts payable hereunder, shall be due and payable on the earliest to occur of (i) December 31, 2013, (ii) the closing of a firm commitment underwritten initial public offering of the Company's Common Stock that raises at least $10 million ("IPO") (iii) the closing of a Qualified Financing (as defined below) and (iv) the occurrence of an Event of Default (as defined below) (the earlier of (i), (ii), (iii) or (iv) is hereinafter referred to as "Maturity").

2. Amendment to Section 5. Section 5 of the Notes shall be amended by adding the following Section 5.3 and by renumbering the current Section 5.3 as Section 5.4:

5.3 Upon an IPO. In the event that the Company consummates an IPO, the entire outstanding principal amount of this Note, any accrued but unpaid interest and any other amounts payable under this Note shall be converted automatically into the Company's Common Stock at the price per share of the Company's Common Stock offered to public investors in such IPO (the "IPO Price"). In the event of an automatic conversion, this Note shall be converted into that number of shares of Common Stock determined by dividing (i) the aggregate outstanding principal amount of this Note, any accrued but unpaid interest, and any other amounts payable under this Note by (ii) the IPO Price.

3. Miscellaneous

3.1 Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Amendment are for convenience of reference only and are not to be considered in construing this Amendment or the Notes.