<PAGE>

                                                                     EXHIBIT 4.3

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER
SUCH ACT AND APPLICABLE LAWS, OR IN A TRANSACTION WHICH, IN THE OPINION OF
COUNSEL TO THE HOLDERS OF THIS WARRANT (WHICH COUNSEL SHALL BE SATISFACTORY TO
THE COMPANY), QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE SECURITIES ACT AND
THE RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION THEREUNDER.

THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO
CERTAIN RESTRICTIONS CONTAINED IN AN INVESTORS' RIGHTS AGREEMENT, INCLUDING
MARKET STAND-OFF PROVISIONS AND A SHAREHOLDERS AGREEMENT, BOTH AS AMENDED,
COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.

No. - WC-002 -                                                 November 23, 1999


                              ACTIVE POWER, INC.

                         COMMON STOCK PURCHASE WARRANT

          THIS CERTIFIES THAT, for value received, STEPHENS-GROUP, INC.
("Stephens"), or registered assigns (the "Holder"), during the term of this
  --------                                ------
Warrant as set forth in Section 1, is entitled to purchase from ACTIVE POWER,
INC., a Texas corporation (the "Company"), for value received, up to TWENTY-FIVE
                                -------
THOUSAND (25,000) Warrant Shares (as defined below), upon surrender hereof at
the principal office of the Company referred to below, with a duly executed
Notice of Exercise in the form attached, and simultaneous payment therefor in
lawful money of the United States, at the Exercise Price (as defined in Section
2 below).  The number, character and Exercise Price of such Warrant Shares are
subject to adjustment as provided herein.  The term "Warrant" as used herein
                                                     -------
shall include this Warrant, and any warrants delivered in substitution or
exchange therefor as provided herein.

          "Warrant Shares" shall mean the Company's Common Stock, par value
           --------------
$0.01 per share ("Common Stock").
                  ------------

          1.  Term of Warrant. Subject to the terms and conditions set forth
              ---------------
herein, this Warrant shall be exercisable, in whole or in part, at any time or
from time to time before 5:00 p.m. Austin, Texas time, on the date (the
"Expiration Date") which is seven years after the date hereof. After the
 ---------------
Expiration Date this Warrant shall be void.

                                       1
<PAGE>

          2.  Exercise Price. The purchase price per share for the Common Stock
              --------------
Stock purchased under this Warrant shall be TWENTY-TWO AND 68/100 DOLLARS
($22.68) (the "Exercise Price"), subject to adjustment as provided under Section
               --------------
12 hereof.

          3.  Exercise of Warrant.
              -------------------

                 (a)  Method of Exercise. The purchase rights represented by
                      ------------------
this Warrant are exercisable by the Holder by delivery of a Notice of Exercise,
the form of which is attached hereto as Exhibit A, duly completed and executed
                                        ---------
on behalf of the Holder, at the office of the Company, and upon payment
therewith of the aggregate Exercise Price with respect to such Warrant Shares in
cash or by check payable to the Company.

                 (b)  Other Matters. This Warrant shall be deemed to have been
                      -------------
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
Warrant Shares issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
promptly as practicable on or after such date and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares issued upon such exercise. In the event that this Warrant
is exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the remaining number of shares for which
this Warrant may then be exercised.

          4.  No Fractional Shares or Scrip. No fractional shares or scrip
              -----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.

          5.  Replacement of Warrant. On receipt of evidence reasonably
              ----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.

          6.  No Rights as Stockholders; Notices to Holders. Nothing contained
              ---------------------------------------------
in this Warrant or in any of the Warrants shall be construed as conferring upon
the Holders or their transferees the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of any meeting of
shareholders for the election of directors of the Company or any other matter,
or any rights whatsoever as shareholders of the Company.

          7.  Transfer; Issuance of Stock Certificates; Restrictive Legends.
              -------------------------------------------------------------

                 (a)  Transfer.  Subject to compliance with the restrictions on
                      --------
     transfer set forth in this Section 7, each transfer of this Warrant and all
     rights hereunder, in whole or in part, shall be registered on the books of
     the Company to be maintained for such purpose, upon surrender of this
     Warrant to the Company, together with a written assignment of this Warrant
     in

                                       2
<PAGE>

     the form of Exhibit B hereto duly executed by the Holder or its agent or
                 ---------
     attorney.  Upon such surrender and delivery, the Company shall execute and
     deliver a new Warrant or Warrants in the name of the assignee or assignees
     and in the denominations specified in such instrument of assignment.  A
     Warrant, if properly assigned in compliance with the provisions hereof, may
     be exercised by the new holder for the purchase of Warrant Shares without
     having a new Warrant issued.  Prior to presentment for registration or
     transfer thereof, the Company may deem and treat the registered holder of
     this Warrant as the absolute owner hereof (notwithstanding any notations of
     ownership or writing thereon made by anyone other than a duly authorized
     officer of the Company) for all purposes and shall not be affected by any
     notice to the contrary.  All Warrants issued upon assignment of Warrants
     shall be the valid obligations of the Company, evidencing the same rights
     and entitled to the same benefits as the Warrants surrendered upon such
     registration of transfer or exchange.  Notwithstanding the foregoing, the
     Holder hereof may not transfer this Warrant to any subsequent transferees
     (other than to transferees who are affiliates of the Holder) unless the
     Holder transfers all shares of Series E Preferred Stock or Common Stock or
     rights to acquire shares of Common Stock then held by the Holder (including
     those held by affiliates of the Holder) to such subsequent transferees.

               (b)   Stock Certificates.  Certificates for the Warrant Shares
                     ------------------
shall be delivered to the Holder within a reasonable time after the rights
represented by this Warrant shall have been exercised pursuant to Section 1, and
a new Warrant representing the shares of Common Stock, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such time. The issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the Holder
including, without limitation, any documentary, stamp or similar tax that may be
payable in respect thereof; provided, however, that the Company shall not be
                            -----------------
required to pay any income tax to which the holder hereof may be subject in
connection with the issuance of this Warrant or the Warrant Shares; and provided
                                                                        --------
further, that if Warrant Shares are to be delivered in a name other than the
-------
name of the Holder representing any Warrant being exercised, then no such
delivery shall be made unless the person requiring the same has paid to the
Company the amount of transfer taxes or charges incident thereto, if any.

               (c)   Restrictive Legends.
                     -------------------

                     (i)    Except as otherwise provided in this Section 7, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW.  NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL
BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH PROPOSED TRANSFER IS EXEMPT FROM THE

                                       3
<PAGE>

REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS."

                    (ii)    Except as otherwise provided in this Section 7, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:

"NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER
SUCH ACT AND APPLICABLE LAWS, OR IN A TRANSACTION WHICH, IN THE OPINION OF
COUNSEL TO THE HOLDERS OF THIS WARRANT (WHICH COUNSEL SHALL BE SATISFACTORY TO
THE COMPANY), QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE SECURITIES ACT AND
THE RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION THEREUNDER."

                    (iii)   Notwithstanding the foregoing, the legend
requirements of this Section 7 shall terminate as to any particular Warrant or
Warrant Share when the Company shall have received from the Holder an opinion of
counsel in form and substance reasonably acceptable to the Company that such
legend is not required in order to ensure compliance with the Securities Act.
Whenever the restrictions imposed by this Section 7 shall terminate, the Holder
hereof or of the Warrant Shares, as the case may be, shall be entitled to
receive from the Company without cost to Holder a new Warrant or certificate for
Warrant Shares of like tenor, as the case may be, without such restrictive
legend.

               (d)  Compliance with Securities Laws.
                    -------------------------------

                    (i)     The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon exercise
hereof are being acquired solely for the Holder's own account for investment,
and that the Holder will not offer, sell or otherwise dispose of this Warrant or
any Warrant Shares to be issued upon exercise hereof or except under
circumstances that will not result in a violation of the Securities Act or any
state securities laws. Upon exercise of this Warrant, the Holder shall, if
requested by the Company, confirm in writing, by executing the form attached as
Schedule 1 to Exhibit A hereto, that the Warrant Shares so purchased are being
              ---------
acquired for investment, and not with a view toward distribution or resale in
violation of applicable securities laws.

                    (ii)    In connection with the issuance of this Warrant, the
Holder specifically represents to the Company by acceptance of this Warrant as
follows:

                            (A)  The Holder has had an opportunity to discuss
the Company's business with the management of the Company, is aware of the
Company's business affairs and financial condition, has had access to the
Company's books and records, and has been afforded the opportunity to ask
questions of and receive answers from officers of the Company. The Holder has
substantial experience in evaluating the merits and risks of its investment in
the

                                       4
<PAGE>

Company. The Purchaser is an "accredited investor" within the meaning of Rule
501 of Regulation D of the Securities Act as presently in effect.

                            (B)  The Holder understands that this Warrant has
not been, and upon exercise hereof the Warrant Shares will not be, registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.

                            (C)  The Holder further understands that this
Warrant, and upon exercise the Warrant Shares, must be held indefinitely unless
subsequently registered under the Securities Act and any applicable state
securities laws, or unless exemptions from registration are otherwise available.

          8.  Reservation of Stock.  The Company covenants that during the term
              --------------------
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of Warrant Shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, from time to
time, will take all steps necessary to amend its corporate charter, if
necessary, to provide sufficient reserves of Warrant Shares issuable upon
exercise of the Warrant. The Company further covenants that all Warrant Shares
that may be issued upon the exercise of this Warrant will be free from all
taxes, liens and charges except for restrictions on transfer and any taxes,
liens and charges imposed on the Holder unrelated to the Company's issuance of
Warrant Shares upon exercise of the Warrant.

          9.  Representations and Warranties. The Company represents and
              ------------------------------
warrants to the Holder as follows:

                (a)   Authorization.  This Warrant has been duly authorized and
                      -------------
executed by Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and the rules of
law or principles at equity governing specific performance, injunctive and other
equitable remedies;

                (b)   Reservation; Issuance.  The Warrant Shares have been duly
                      ---------------------
authorized and reserved for issuance by the Company and, when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable;

                (c)   No Conflicts.  The execution and delivery of this Warrant
                      ------------
are not, and the issuance of the Warrant Shares upon exercise of this Warrant in
accordance with the terms hereof will not be, inconsistent with the Company's
charter or bylaws; do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company; and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby,
and

                                       5
<PAGE>

the filing of any registration statements required to be filed by the Company
pursuant to any registration rights granted to Holder by the Company.

               (d)   No Litigation.  There are no actions, suits, audits,
                     -------------
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.

          10.  Notices.  All notices, requests and other communications with
               -------
respect to the Warrants shall be in writing. Communications may be made by
telecopy or similar writing. Each communication shall be given to the Holder at
the address in the warrant register and the Company at its offices in Austin,
Texas, or at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective (1) if given by
telecopy, when the telecopy is transmitted to the proper address and the receipt
of the transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.

          11.  Amendments.  Any term of this Warrant may be amended with the
               ----------
written consent of the Company and the Holder of this Warrant.

          12.  Adjustments.  The Exercise Price and the number of shares
               -----------
purchasable hereunder are subject to adjustment from time to time as follows:

               (a)   Adjustment for Dividends in Other Stock, Property, etc.;
                     --------------------------------------------------------
Reclassification, etc.  In case at any time while this Warrant is outstanding
----------------------
and unexpired, the holders of Warrant Shares shall have received, or (on or
after the record date fixed for the determination of stockholders eligible to
receive) shall have become entitled to receive, without payment therefor, (i)
other or additional stock or other securities or property (other than cash) by
way of dividend; or (ii) other or additional stock or other securities or
property by way of stock-split, spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement; then
and in each such case the Holder, upon the exercise hereof, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the original issue date he had
been the holder of record of the number of Warrant Shares called for on the face
of this Warrant and had thereafter, during the period from the original issue
date to and including the date of such exercise, retained such shares and all
such other or additional stock and other securities and properties receivable by
him as aforesaid during such period, giving effect to all adjustments called for
during such period by this Section 12.

               (b)   Merger, Consolidation or Disposition of Assets. In the
                     ----------------------------------------------
event of any capital reorganization or any reclassification (other than a change
in par value) of the capital stock of the Company, or of any exchange or
conversion of the Warrant Shares for or into securities of another corporation,
or in the event of the consolidation or merger of the Company with or into any
other person (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock) or
in case of any

                                       6
<PAGE>

sale or conveyance of all or substantially all of the assets of the Company
including intellectual property rights which, in the aggregate constitute
substantially all of the Company's material assets, the person formed by such
consolidation or resulting from such capital reorganization, reclassification or
merger or which acquires such assets, as the case may be, shall make provision
such that this Warrant shall thereafter be exercisable for the kind and amount
of shares of stock, other securities, cash and other property receivable upon
such capital reorganization, reclassification of capital stock, consolidation,
merger, sale or conveyance, as the case may be, by a holder of the shares of
Common Stock equal to the number of Warrant Shares issuable upon exercise of
this Warrant immediately prior to the effective date of such capital
reorganization, reclassification of capital stock, consolidation, merger, sale
or conveyance, assuming (i) such holder of Common Stock of the Company is not a
person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made as the
case may be (each, a "constituent entity"), or an affiliate of a constituent
entity, and (ii) such person failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such capital reorganization, reclassification of capital stock, consolidation,
merger, sale or conveyance and, in any case appropriate adjustment shall be made
in the application of the provisions herein set forth with respect to rights and
interests thereafter of the Holder, to the end that the provisions set forth
herein (including the specified changes in and other adjustments to the Exercise
Price and the number of Warrant Shares issuable upon exercise of this Warrant)
shall thereafter be applicable, as near as reasonably may be, in relating to any
shares of stock or other securities or other property thereafter deliverable
upon exercise of this Warrant.

               (c)   Time of Adjustments.  Each adjustment required by this
                     -------------------
Section 12 shall be effective as and when the event requiring such
adjustment occurs.

               (d)    Notice of Adjustment.  Whenever the Exercise Price and the
                      --------------------
number of Warrant Shares purchasable upon the exercise of each Warrant is
adjusted as herein provided, the Company shall promptly provide each Holder a
certificate setting forth the Exercise Price and the number of Warrant Shares
purchasable upon the exercise of each Warrant after such adjustment, setting
forth a brief statement of the facts requiring such adjustments and setting
forth the computation by which such adjustments were made. Such certificate
shall be conclusive evidence of the correctness of such adjustments.

               (e)    No Adjustment for Cash Dividends.  Except as provided in
                      --------------------------------
this Section 12, no adjustment in respect of any cash dividends shall be made
during the term of a Warrant or upon the exercise of a Warrant.

               (f)    Statement on Warrants.  Irrespective of any adjustments in
                      ---------------------
the number or kind of shares purchasable upon the exercise of the Warrant, the
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the initial Warrant.

               (g)    No Dilution or Impairment.  The Company will not, by
                      -------------------------
amendment to its charter or through any reorganization, sale of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the

                                       7
<PAGE>

carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of the
Warrant. Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any shares of stock receivable upon the exercise
of the Warrant above the amount payable therefor upon such exercise; and (ii)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
stock upon the full exercise of the Warrant.

               (h)   Notices of Record Date, etc.  In the event of:
                     ----------------------------

                     (i)   any taking by the Company of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a cash dividend) or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right;

                     (ii)  any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
conveyance of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other corporation; or

                    (iii)  any voluntary or involuntary dissolution, liquidation
or winding up of the Company;

then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (A) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right; (B) the date on which any
such reorganization, reclassification, conveyance, consolidation, merger,
dissolution, liquidation, or winding up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Warrant Shares (or other
securities) shall be entitled to exchange their Warrant Shares (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, conveyance, consolidation,
merger, dissolution, liquidation, or winding up; and (C) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made.  Such notice shall be mailed at least 15 days prior to
the date therein specified.

          13.   Miscellaneous.
                -------------

                (a)    Successors and Assigns.  This Warrant and the rights
                       ----------------------
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the Holder and their respective permitted assigns.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant, and shall be enforceable by any such Holder.

                (b)    Headings.  The headings of the Sections of this Warrant
                       --------
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.

                                       8
<PAGE>

               (c)     Choice of Law.  This Warrant and the performance or
                       -------------
breach thereof shall be governed by and interpreted as to substantive matters in
accordance with the applicable laws of the State of Texas (excluding its choice
of law rules), except that upon the Company's reincorporation as a Delaware
corporation, if effected, the Warrant shall be governed under Delaware law.

                              *     *     *     *

                                       9
<PAGE>

          IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
executed by its officers thereunto duly authorized.


Dated: November 23, 1999           ACTIVE POWER, INC.


                                   By: /s/
                                      -------------------------
                                   Name:_______________________
                                   Title:______________________

                                   Address:   11525 Stonehollow Drive, Suite 135
                                              Austin, Texas 78758


<PAGE>

                                   EXHIBIT A


                              NOTICE OF EXERCISE
                              ------------------

          (1)   The undersigned hereby irrevocably elects to purchase ________
     shares of Common Stock of Active Power, Inc., pursuant to the terms of the
     attached Warrant, and tenders herewith payment in full of the aggregate
     purchase price of $_________ for such shares.

          (2)   In exercising this Warrant, the undersigned hereby confirms and
     acknowledges that the shares of Common Stock are being acquired for
     investment and not with a view to, or for resale in connection with, the
     distribution thereof and that the undersigned has no present intention of
     distributing or reselling such shares. In support thereof, the undersigned
     has executed an Investment Representation Statement attached hereto as
     Schedule 1.

          (3)   Please issue a certificate or certificates representing said
     shares of Common Stock in the name of the undersigned or in such other name
     or names as are specified below:

                                           _____________________________________
                                           (Name)

                                           _____________________________________
                                           _____________________________________
                                           (address)


          (4)   Please issue a new Warrant for the unexercised portion of the
     attached Warrant in the name of the undersigned.

STEPHENS GROUP, INC.


By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________


<PAGE>

                                  Schedule 1
                                  ----------

                      INVESTMENT REPRESENTATION STATEMENT



To:        Active Power, Inc.

Security:  Common Stock issuable upon exercise of Common Stock Purchase Warrant
           dated November 23, 1999.



     In connection with the purchase of the above-listed securities (the

"Securities"), the undersigned (the "Purchaser") represents to the Company as
 ----------                          ---------
follows:

     (a)   The Purchaser is aware of the Company business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities.  The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
                                                                     ----------
Act").
---

     (b)   The Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may be
                      ---
unavailable if the Purchaser's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.

     (c)   The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. In addition, the
Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.

     (d)   The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions, if applicable, including,
among other things: The availability of certain public information about the
Company, the resale occurring not less than one year after the party has
purchased and paid for the securities to be sold; the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the


<PAGE>

Securities Exchange Act of 1934, as amended) and the amount of securities being
sold during any three-month period not exceeding the specified limitations
stated therein.

     (e)   The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the two-year minimum holding period had been
satisfied.

     (f)   The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.

                                            Purchaser:

                                            _____________________________

                                            Date:________________________


<PAGE>

                                                                       Exhibit B

                                ASSIGNMENT FORM
                                ---------------
                    (Subject to compliance with Section 7)

     FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of Warrant
Shares set forth below:

Name of Assignee      Address        No. of Shares
----------------      -------        -------------



and does hereby irrevocably constitute and appoint ____________________ to make
such transfer on the books of Active Power, Inc., maintained for the purpose,
with full power of substitution in the premises.

     The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except in compliance with Securities Act of 1933, as
amended, or any state securities laws. Further, the Assignee has acknowledged
that upon exercise of this Warrant, the Assignee shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or resale.


Signature:__________________________________________
Name of Holder:_____________________________________
Name of Authorized Representative,
 if a legal entity:_________________________________
Title of Representative:____________________________
Date:_______________________________________________