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                                                                    EXHIBIT 10.1

                              INDEMNITY AGREEMENT

          This Indemnity Agreement is made and entered into as of this _____ day
of ________, 2000 between Active Power, Inc., a Delaware corporation (the
"Corporation"), and _______________________________ ("Indemnitee").
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                           I N T R O D U C T I O N:

          A.  Indemnitee is an executive officer, director and/or agent of the
Corporation (or a subsidiary of the Corporation), as the case may be from time
to time, and performs a valuable service for the Corporation in such capacity
(or capacities); and

          B.  The Certificate of Incorporation (the "Certificate") and the
                                                     -----------
Bylaws (the "Bylaws") of the Corporation contain provisions providing for the
             -----
indemnification of the officers, directors and agents of the Corporation to the
maximum extent authorized by Section 145 of the Delaware General Corporation
Law, as amended ("DGCL"); and
                  ----

          C.  The Certificate, the Bylaws and the DGCL, by their non-exclusive
nature, permit contracts between the Corporation and the members of its Board of
Directors and officers with respect to indemnification of such directors and
officers; and

          D.  In accordance with the authorization as provided by the DGCL, the
Corporation has purchased and presently maintains a policy or policies of
Directors and Officers Liability Insurance ("D & O Insurance"), covering certain
                                             ---------------
liabilities which may be incurred by its directors and officers in the
performance of their duties as directors or officers of the Corporation; and

          E.  As a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded members of the Board of Directors and executive
officers of the Corporation by such D & O Insurance and by statutory and bylaw
indemnification provisions; and

          F.  In order to induce Indemnitee to continue to serve as an executive
officer, director or agent of the Corporation, the Corporation has determined
and agreed to enter into this contract with Indemnitee.


                               A G R E E M E N T:

          Now, Therefore, in consideration of Indemnitee's continued service as
an executive officer and a member of the Board of Directors after the date
hereof, the parties hereto agree as follows:

          1.  Indemnification of Indemnitee.  The Corporation hereby agrees to
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hold harmless and indemnify Indemnitee and any partnership, corporation, trust
or other entity of
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which Indemnitee is or was a partner, shareholder, trustee, director, officer,
employee or agent (Indemnitee and each such partnership, corporation, trust or
other entity being hereinafter referred to collectively as an "Indemnitee") to
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the fullest extent authorized or permitted by the provisions of the DGCL, as may
be amended from time to time.

        2.     Additional Indemnity. Subject only to the exclusions set forth in
               --------------------
Section 3 hereof, the Corporation hereby further agrees to hold harmless and
indemnify Indemnitee:

                (a)     against any and all expenses (including attorney's
        fees), witness fees, judgments, fines and amounts paid in settlement
        actually and reasonably incurred by Indemnitee in connection with any
        threatened, pending or completed action, suit or proceeding, whether
        civil, criminal, administrative or investigative (including an action by
        or in the right of the Corporation) to which Indemnitee is, was or at
        any time becomes a party, or is threatened to be made a party, by reason
        of the fact that Indemnitee is, was or at any time becomes a director,
        officer, employee or agent of the Corporation or any subsidiary of the
        Corporation, or is or was serving or at any time serves at the request
        of the Corporation or any subsidiary of the Corporation as a director,
        officer, employee or agent of another corporation, partnership, joint
        venture, trust, employee benefit plan or other enterprise, if Indemnitee
        acted in good faith and in a manner Indemnitee reasonably believed to be
        in or not opposed to the best interests of the Corporation, and, with
        respect to any criminal action or proceeding, had no reasonable cause to
        believe Indemnitee's conduct was unlawful; and

                (b)     otherwise to the fullest extent as may be provided to
        Indemnitee by the Corporation under the non-exclusivity provisions of
        Article XI of the Corporation's Bylaws (as the same, including such
        article, may be amended, modified or restated from time to time) and the
        DGCL.

        3.     Limitations on Additional Indemnity.  No indemnity pursuant to
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Section 2 hereof shall be paid by the Corporation:

                (a)     except to the extent the aggregate of losses to be
        indemnified thereunder exceeds the sum of such losses for which the
        Indemnitee is indemnified pursuant to Section 1 hereof or pursuant to
        any D & O Insurance purchased and maintained by the Corporation;

                (b)     in respect to remuneration paid to Indemnitee if it
        shall be determined by a final judgment or other final adjudication that
        such remuneration was in violation of law ;

                (c)     on account of any suit in which judgment is rendered
        against Indemnitee for an accounting of profits made from the purchase
        or sale by Indemnitee of securities of the Corporation pursuant to the
        provisions of Section 16(b) of the Securities Exchange Act of 1934 and
        amendments thereto or similar provisions of any federal, state or local
        statutory law;

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                (d)     on account of Indemnitee's conduct which is finally
        adjudged to have been knowingly fraudulent or deliberately dishonest, or
        to constitute willful misconduct;

                (e)     on account of Indemnitee's conduct which is the subject
        of an action, suit or proceeding described in Section 7(c)(ii) hereof;

                (f)     on account of any action, claim or proceeding (other
        than a proceeding referred to in Section 8(b) hereof) initiated by the
        Indemnitee unless such action, claim or proceeding was authorized in the
        specific case by action of the Board of Directors; and

                (g)     if a final decision by a Court having jurisdiction in
        the matter shall determine that such indemnification is not lawful (and,
        in this respect, both the Corporation and Indemnitee have been advised
        that the Securities and Exchange Commission believes that
        indemnification for liabilities arising under the federal securities
        laws is against public policy and is, therefore, unenforceable and that
        claims for indemnification should be submitted to appropriate courts for
        adjudication).

           4.   Contribution.  If the indemnification provided in Sections 1
                ------------
and 2 hereof is unavailable by reason of a Court decision described in Section
3(g) hereof based on grounds other than any of those set forth in paragraphs (b)
through (f) of Section 3 hereof, then in respect of any threatened, pending or
completed action, suit or proceeding in which the Corporation is jointly liable
with Indemnitee (or would be if joined in such action, suit or proceeding), the
Corporation shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Indemnitee in such proportion as is appropriate
to reflect (a) the relative benefits received by the Corporation on the one hand
and Indemnitee on the other hand from the transaction from which such action,
suit or proceeding arose, and (b) the relative fault of the Corporation on the
one hand and of Indemnitee on the other in connection with the events which
resulted in such expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations.  The relative fault of the
Corporation on the one hand and of Indemnitee on the other shall be determined
by reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such expenses, judgments, fines or settlement amounts.  The
Corporation agrees that it would not be just and equitable if contribution
pursuant to this Section 4 were determined by pro rata allocation or any other
method of allocation that does not take account of the foregoing equitable
considerations.

        5.      Continuation of Obligations.  All agreements and obligations of
                ---------------------------
the Corporation contained herein shall continue during the period Indemnitee is
a director, officer or agent of the Corporation or any subsidiary of the
Corporation (or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Corporation unless

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and only to the extent that the Court of Chancery of the State of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery of the State of Delaware
or such other court shall deem proper and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that Indemnitee was an officer of the Corporation or
serving in any other capacity referred to herein.

        6.     Notification and Defense of Claim.  Not later than thirty days
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after receipt by Indemnitee of notice of the commencement of any action, suit or
proceeding, Indemnitee will, if a claim in respect thereof is to be made against
the Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Indemnitee otherwise than under this
Agreement.  With respect to any such action, suit or proceeding as to which
Indemnitee notifies the Corporation of the commencement thereof:

                (a)     the Corporation will be entitled to participate therein
        at its own expense;

                (b)     except as otherwise provided below, to the extent that
        it may wish, the Corporation jointly with any other indemnifying party
        similarly notified will be entitled to assume the defense thereof, with
        counsel reasonably satisfactory to Indemnitee. After notice from the
        Corporation to Indemnitee of its election so as to assume the defense
        thereof, the Corporation will not be liable to Indemnitee under this
        Agreement for any legal or other expenses subsequently incurred by
        Indemnitee in connection with the defense thereof other than reasonable
        costs of investigation or as otherwise provided below. Indemnitee shall
        have the right to employ its counsel in such action, suit or proceeding
        but the fees and expenses of such counsel incurred after notice from the
        Corporation of its assumption of the defense thereof shall be at the
        expense of Indemnitee unless (i) the employment of counsel by Indemnitee
        has been authorized by the Corporation, (ii) Indemnitee shall have
        reasonably concluded that there may be a conflict of interest between
        the Corporation and Indemnitee in the conduct of the defense of such
        action or (iii) the Corporation shall not in fact have employed counsel
        to assume the defense of such action, in each of which cases the fees
        and expenses of Indemnitee's separate counsel shall be at the expense of
        the Corporation. The Corporation shall not be entitled to assume the
        defense of any action, suit or proceeding brought by or on behalf of the
        Corporation or as to which Indemnitee shall have made the conclusion
        provided for in (ii) above; and

                (c)     the Corporation shall not be liable to indemnify
        Indemnitee under this Agreement for any amounts paid in settlement of
        any action or claim effected without its written consent. The
        Corporation shall be permitted to settle any action except that it shall
        not settle any action or claim in any manner which would impose any
        penalty or limitation on Indemnitee without Indemnitee's written
        consent. Neither the Corporation nor Indemnitee will unreasonably
        withhold its consent to any proposed settlement.

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        7.    Advancement and Repayment of Expenses.
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                (a)     In the event that Indemnitee employs his own counsel
        pursuant to Section 6(b)(i) through (iii) above, the Corporation shall
        advance to Indemnitee, prior to any final disposition of any threatened
        or pending action, suit or proceeding, whether civil, criminal,
        administrative or investigative, any and all reasonable expenses
        (including legal fees and expenses) incurred in investigating or
        defending any such action, suit or proceeding within ten days after
        receiving copies of invoices presented to Indemnitee for such expenses;

                (b)     Indemnitee agrees that Indemnitee will reimburse the
        Corporation for all reasonable expenses paid by the Corporation in
        defending any civil or criminal action, suit or proceeding against
        Indemnitee in the event and only to the extent it shall be ultimately
        determined by a final judicial decision (from which there is no right of
        appeal) that Indemnitee is not entitled, under the provisions of the
        DGCL, the Certificate, the Bylaws, this Agreement or otherwise, to be
        indemnified by the Corporation for such expenses; and

                (c)     Notwithstanding the foregoing, the Corporation shall
        not be required to advance such expenses to Indemnitee if Indemnitee (i)
        commences any action, suit or proceeding as a plaintiff unless such
        advance is specifically approved by a majority of the Board of Directors
        or (ii) is a party to an action, suit or proceeding brought by the
        Corporation and approved by a majority of the Board which alleges
        willful misappropriation of corporate assets by Indemnitee, disclosure
        of confidential information in violation of Indemnitee's fiduciary or
        contractual obligations to the Corporation, or any other willful and
        deliberate breach in bad faith of Indemnitee's duty to the Corporation
        or its shareholders.

            8.      Procedure.  Any indemnification and advances provided for in
                    ---------
Section 1 and Section 2 shall be made no later than 45 days after receipt of the
written request of Indemnitee.  If a claim under this Agreement, under any
statute, or under any provision of the Corporation's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Corporation within 45 days after a written request for payment thereof has
first been received by the Corporation, Indemnitee may, but need not, at any
time thereafter bring an action against the Corporation to recover the unpaid
amount of the claim and, subject to Section 12 of this Agreement, Indemnitee
shall also be entitled to be paid for the expenses (including attorneys' fees)
of bringing such action.  It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in connection with
any action, suit or proceeding in advance of its final disposition) that
Indemnitee has not met the standards of conduct which make it permissible under
applicable law for the Corporation to indemnify Indemnitee for the amount
claimed, but the burden of proving such defense shall be on the Corporation and
Indemnitee shall be entitled to receive interim payments of expenses pursuant to
Subsection 2(a) unless and until such defense may be finally adjudicated by
court order or judgment from which no further right of appeal exists.  It is the
parties' intention that if the Corporation contests Indemnitee's right to
indemnification, the question of Indemnitee's right to indemnification shall be
for the court to decide, and neither the failure of the Corporation (including
its Board of Directors, any committee or subgroup of the Board of Directors,

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independent legal counsel, or its stockholders) to have made a determination
that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Corporation (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.

        9.      Enforcement.
                -----------

                (a)     The Corporation expressly confirms and agrees that it
        has entered into this Agreement and assumed the obligations imposed on
        the Corporation hereby in order to induce Indemnitee to continue as an
        executive officer, director or agent of the Corporation, and
        acknowledges that Indemnitee is relying upon this Agreement in
        continuing in such capacity; and

                (b)     In the event Indemnitee is required to bring any action
        to enforce rights or to collect moneys due under this Agreement and is
        successful in such action, the Corporation shall reimburse Indemnitee
        for all Indemnitee's reasonable fees and expenses in bringing and
        pursuing such action.

        10.     Subrogation.  In the event of payment under this agreement,
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the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.

        11.     Non-Exclusivity of Rights.  The rights conferred on Indemnitee
                -------------------------
by this Agreement shall not be exclusive of any other right which Indemnitee may
have or hereafter acquire under any statute, provisions of the Corporation's
Certificate of Incorporation or Bylaws, agreement, vote of stockholders or
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office.

        12.     Partial Indemnification.  If Indemnitee is entitled under any
                -----------------------
provision of this Agreement to indemnification by the Corporation for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by Indemnitee in the investigation, defense, appeal or settlement of
any civil or criminal action, suit or proceeding, but not, however, for the
total amount thereof, the Corporation shall nevertheless indemnify Indemnitee
for the portion of such expenses, judgments, fines or penalties to which
Indemnitee is entitled.

        13.     Survival of Rights.  The rights conferred on Indemnitee by this
                ------------------
Agreement shall continue after Indemnitee has ceased to be a director, officer,
employee or other agent of the Corporation and shall inure to the benefit of
Indemnitee's heirs, executors and administrators.

        14.     Separability.  Each of the provisions of this Agreement is a
                ------------
separate and distinct agreement and independent of the others, so that if any or
all of the provisions hereof shall be held to be invalid or unenforceable for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof or the obligation of

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the Corporation to indemnify the Indemnitee to the full extent provided by the
Certificate, Bylaws or the DGCL.

        15.     Governing Law; Consent to Jurisdiction. This Agreement shall be
                --------------------------------------
interpreted and enforced in accordance with the laws of the State of Delaware.
The Corporation and Indemnitee each hereby irrevocably consent to the
jurisdiction of the courts of the State of Delaware for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
brought only in the state courts of the State of Delaware.

        16.     Binding Effect.  This Agreement shall be binding upon Indemnitee
                --------------
and upon the Corporation, its successors and assigns, and shall inure to the
benefit of Indemnitee, his heirs, personal representatives and assigns and to
the benefit of the Corporation, its successors and assigns.

        17.     Amendment and Termination.  No amendment, modification,
                -------------------------
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.

        18.     Counterparts.  This Agreement may be executed in one or more
                ------------
counterparts, each of which shall constitute an original.


                           [Signature Page Follows]

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          In Witness Whereof, the parties hereto have executed this Indemnity
Agreement on and as of the day and year first above written.


                                 Active Power, Inc.


                                 By:
                                    ---------------------------------
                                 Name:
                                      -------------------------------

                                 Title:
                                        -----------------------------


                                 Indemnitee


                                 ------------------------------------
                                 Print Name:
                                            -------------------------




                    [Signature Page to Indemnity Agreement]