ADDENDUM TO STOCK PURCHASE WARRANT (Series B)

THIS ADDENDUM TO STOCK PURCHASE WARRANT (the “Addendum”) is issued by Ideal Power Inc., a Delaware corporation (the “Company”) to _______________, (the “Holder”), effective as of October 25, 2013.

WHEREAS, the Company issued the Holder a Common Stock Purchase Warrant (the “Warrant”), B-, dated November 21, 2012, in conjunction with the offer and sale by the Company of senior secured convertible promissory notes dated November 21, 2012 (the “Notes”); and

WHEREAS, the Company now desires to clarify certain ambiguities contained in the Warrant relating to time period that the Holder may exercise its right to purchase the shares of the Company’s common stock underlying the Warrant.

NOW THEREFORE, the Warrant is hereby amended as follows:

1.           The first paragraph of the Warrant beginning with the phrase “THIS CERTIFIES that” is hereby amended by inserting the phrase “in Section 2” after the words “applicable event specified” and before the word “below” and then again by inserting the phrase “setting forth the Exercise Price” immediately after the word “below” and before the phrase “and on or prior to the Expiration Date.”

2.           Section 1.1 of the Warrant is hereby amended by deleting the phrase “be a date that is 12 months from the closing date of the Offering” and by adding after the word “shall” the phrase “mean January 6, 2014.”

3.           Section 2(i) of the Warrant is hereby amended by adding the phrase “in which case this Warrant will become exercisable, in whole or in part,” immediately after the phrase “while the per-share exercise price shall be equal to the lower of 0.70 times the IPO Price or $1.46.”

3.           Section 2(ii) of the Warrant is hereby amended by adding the phrase “in which case this Warrant will become exercisable, in whole or in part, on the Calendar Due Date” after the phrase “Private Equity Financing Price or $1.46” and before the phrase “provided however that” and then again by adding the phrase “and the period of exercisability” after the phrase “per share exercise price” and before the phrase “shall be adjusted” and then again by deleting the word “and” after the phrase “Common Stock” and before the phrase “the exercise price” and thereafter inserting the phrase “and the time period in which this Warrant may be exercised” after the phrase “the exercise price” and before the phrase “calculated in accordance with subsection (i) above.”

4.           Section 2(iii) of the Warrant is hereby amended by adding the phrase “in which case this Warrant shall become exercisable, in whole or in part, on the Calendar Due Date, provided however, that if, and for so long as, the Company has on file on the Calendar Due Date a registration statement undertaking an IPO that has not yet become effective, then the Calendar Due Date shall be deemed to have occurred on the earlier of (a) the date the undertaken IPO has been abandoned; or (b) after the completion of the IPO as the case may be” at the end of the sentence immediately before the phrase “and the exercise price shall be $1.46 per share”.