<PAGE>

                                                                    Exhibit 4.12



NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE
HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS.



                             STOCK PURCHASE WARRANT


                  To Purchase 75,000 Shares of Common Stock of

                                 STEMCELLS, INC.

                  THIS CERTIFIES that, for value received, Pacific Crest
Securities, Inc. (the "Holder"), is entitled, upon the terms and subject to
the limitations on exercise and the conditions hereinafter set forth, at any
time on or after May 10, 2001 (the "Initial Exercise Date") and on or prior
to the close of business on May 10, 2004 (the "Termination Date") but not
thereafter, to subscribe for and purchase from StemCells, Inc., a corporation
incorporated in Delaware (the "Company"), up to 75,000 shares (the "Warrant
Shares") of Common Stock, $0.01 par value per share, of the Company (the
"Common Stock"). The purchase price of one share of Common Stock (the
"Exercise Price") under this Warrant shall be $2.3805. The Exercise Price and
the number of Warrant Shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth for such terms in
the Common Stock Purchase Agreement, dated as of May 10, 2001, between the
Company and Sativum Investments Limited (the "Purchase Agreement").


                                      1

<PAGE>

                  1. TITLE TO WARRANT. Prior to the Termination Date and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, subject to Section 7 herein, in whole or in part,
at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.

                  2. AUTHORIZATION OF SHARES. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

                  3. EXERCISE OF WARRANT.

                           (a) Except as provided in Section 4 herein, exercise
         of the purchase rights represented by this Warrant may be made at any
         time or times on or after the Initial Exercise Date and on or before
         the close of business on the Termination Date by the surrender of this
         Warrant and the Notice of Exercise Form annexed hereto duly executed,
         at the office of the Company (or such other office or agency of the
         Company as it may designate by notice in writing to the registered
         Holder at the address of such Holder appearing on the books of the
         Company) and upon payment of the Exercise Price of the shares thereby
         purchased by wire transfer or cashier's check drawn on a United States
         bank, or by means of a cashless exercise as provided in Section 3(c)
         below, the Holder shall be entitled to receive a certificate for the
         number of Warrant Shares so purchased. Certificates for shares
         purchased hereunder shall be delivered to the Holder within three (3)
         Trading Days after the date on which this Warrant shall have been
         exercised as aforesaid. This Warrant shall be deemed to have been
         exercised and such certificate or certificates shall be deemed to have
         been issued, and Holder or any other person so designated to be named
         therein shall be deemed to have become a holder of record of such
         shares for all purposes, as of the date the Warrant has been exercised
         by payment to the Company of the Exercise Price and all taxes required
         to be paid by the Holder, if any, pursuant to Section 5 prior to the
         issuance of such shares, have been paid.

                           (b) If this Warrant shall have been exercised in
         part, the Company shall, at the time of delivery of the certificate or
         certificates representing Warrant Shares, deliver to Holder a new
         Warrant evidencing the rights of Holder to purchase the unpurchased
         Warrant Shares called for by this Warrant, which new Warrant shall in
         all other respects be identical with this Warrant.

                           (c) This Warrant shall also be exercisable by means
         of a "cashless exercise" in which the Holder shall be entitled to
         receive a certificate for the number of Warrant Shares equal to the
         quotient obtained by dividing [(A-B) (X)] by (A), where:


                                      2

<PAGE>

                           (A) = the average of the high and low trading prices
                           per share of Common Stock on the Trading Day
                           preceding the date of such election on the Nasdaq
                           Stock Market, or if the Common Stock is not traded on
                           the Nasdaq Stock Market, then the Principal Market in
                           terms of volume;

                           (B) =  the Exercise Price of this Warrant; and

                           (X) = the number of Warrant Shares issuable upon
                           exercise of this Warrant in accordance with the terms
                           of this Warrant and the Notice of Exercise.

                           (d) Notwithstanding anything herein to the contrary,
         in no event shall the Holder be permitted to exercise this Warrant for
         Warrant Shares to the extent that (i) the number of shares of Common
         Stock owned by such Holder (other than Warrant Shares issuable upon
         exercise of this Warrant) plus (ii) the number of Warrant Shares
         issuable upon exercise of this Warrant, would be equal to or exceed
         9.9% of the number of shares of Common Stock then issued and
         outstanding, including shares issuable upon exercise of this Warrant
         held by such Holder after application of this Section 3(d). As used
         herein, beneficial ownership shall be determined in accordance with
         Section 13(d) of the Exchange Act. To the extent that the limitation
         contained in this Section 3(d) applies, the determination of whether
         this Warrant is exercisable (in relation to other securities owned by
         the Holder) and of which a portion of this Warrant is exercisable shall
         be in the sole discretion of such Holder, and the submission of a
         Notice of Exercise shall be deemed to be such Holder's determination of
         whether this Warrant is exercisable (in relation to other securities
         owned by such Holder) and of which portion of this Warrant is
         exercisable, in each case subject to such aggregate percentage
         limitation, and the Company shall have no obligation to verify or
         confirm the accuracy of such determination. Nothing contained herein
         shall be deemed to restrict the right of a Holder to exercise this
         Warrant into Warrant Shares at such time as such exercise will not
         violate the provisions of this Section 3(d). The provisions of this
         Section 3(d) may be waived by the Holder upon, at the election of the
         Holder, with not less than 61 days' prior notice to the Company, and
         the provisions of this Section 3(d) shall continue to apply until such
         61st day (or such later date as may be specified in such notice of
         waiver). No exercise of this Warrant in violation of this Section 3(d)
         but otherwise in accordance with this Warrant shall affect the status
         of the Warrant Shares as validly issued, fully-paid and nonassessable.


                  4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Exercise Price.

                  5. CHARGES, TAXES AND EXPENSES. Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for any issue
or transfer tax or other incidental expense in respect of the issuance of
such certificate, all of which taxes and expenses shall be


                                      3

<PAGE>

paid by the Company, and such certificates shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder; PROVIDED,
HOWEVER, that in the event certificates for Warrant Shares are to be issued
in a name other than the name of the Holder, this Warrant when surrendered
for exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder; and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

                  6. CLOSING OF BOOKS. The Company will not close its
stockholder books or records in any manner which prevents the timely exercise
of this Warrant.

                  7. TRANSFER, DIVISION AND COMBINATION.

                           (a) Subject to compliance with any applicable
         securities laws, transfer of this Warrant and all rights hereunder, in
         whole and not in part, shall be registered on the books of the Company
         to be maintained for such purpose, upon surrender of this Warrant at
         the principal office of the Company, together with a written assignment
         of this Warrant substantially in the form attached hereto duly executed
         by the Holder or its agent or attorney and funds sufficient to pay any
         transfer taxes payable upon the making of such transfer. Upon such
         surrender and, if required, such payment, the Company shall execute and
         deliver a new Warrant or Warrants in the name of the assignee or
         assignees and in the denomination or denominations specified in such
         instrument of assignment, and shall issue to the assignor a new Warrant
         evidencing the portion of this Warrant not so assigned, and this
         Warrant shall promptly be cancelled. A Warrant, if properly assigned,
         may be exercised by a new holder for the purchase of Warrant Shares
         without having a new Warrant issued.

                           (b) This Warrant may be divided or combined with
         other Warrants upon presentation hereof at the aforesaid office of the
         Company, together with a written notice specifying the names and
         denominations in which new Warrants are to be issued, signed by the
         Holder or its agent or attorney. Subject to compliance with Section
         7(a), as to any transfer which may be involved in such division or
         combination, the Company shall execute and deliver a new Warrant or
         Warrants in exchange for the Warrant or Warrants to be divided or
         combined in accordance with such notice.

                           (c) The Company shall prepare, issue and deliver at
         its own expense (other than transfer taxes) the new Warrant or Warrants
         under this Section 7.

                           (d) The Company agrees to maintain, at its aforesaid
         office, books for the registration and the registration of transfer of
         the Warrants.

                  8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant
does not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the surrender
of this Warrant and the payment of the aggregate Exercise Price or by means
of a cashless exercise, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of
the close of business on the later of the date of such surrender or payment.


                                      4

<PAGE>

                  9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which shall not include the posting of any bond), and
upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.

                  10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.

                  11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. STOCK SPLITS, ETC. The number and kind of securities purchasable upon
the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following. In
case the Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, then the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and
number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the Holder shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment. An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if
any, for such event.

                  12. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of the
Company) and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of
any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by or
distributed to the holders of Common Stock of the Company, then the Holder
shall have the right thereafter to receive, upon exercise of this Warrant,
the number of shares of Common Stock of the successor or acquiring
corporation


                                      5

<PAGE>

or of the Company, if it is the surviving corporation, and Other Property
receivable upon or as a result of such reorganization, reclassification,
merger, or consolidation by a Holder of the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to such event. In
case of any such reorganization, reclassification, merger or, consolidation,
the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined in good faith
by resolution of the Board of Directors of the Company) in order to provide
for adjustments of Warrant Shares for which this Warrant is exercisable which
shall be as nearly equivalent as practicable to the adjustments provided for
in this Section 12. For purposes of this Section 12, "common stock of the
successor or acquiring corporation" shall include stock of such corporation
of any class which is not preferred as to dividends or assets over any other
class of stock of such corporation and which is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock,
either immediately or upon the arrival of a specified date or the happening
of a specified event and any warrants or other rights to subscribe for or
purchase any such stock. The foregoing provisions of this Section 12 shall
similarly apply to successive reorganizations, reclassifications, mergers, or
consolidations.

                  13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
any time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the
Board of Directors of the Company.

                  14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein
provided, the Company shall promptly mail by registered or certified mail,
return receipt requested, to the Holder notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities
or property) purchasable upon the exercise of this Warrant and the Exercise
Price of such Warrant Shares (and other securities or property) after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made. Such notice, in the absence of manifest error, shall be conclusive
evidence of the correctness of such adjustment.

                  15. NOTICE OF CORPORATE ACTION. If at any time:

                                    (a) the Company shall take a record of the
         holders of its Common Stock for the purpose of entitling them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property, or to receive any other
         right, or

                                    (b) there shall be any capital
         reorganization of the Company, any reclassification or recapitalization
         of the capital stock of the Company or any consolidation or merger of
         the Company with, or any sale, transfer or other disposition of


                                      6

<PAGE>

         all or substantially all the property, assets or business of the
         Company to, another corporation or,

                                    (c) there shall be a voluntary or
         involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i)
at least 10 days' prior written notice of the date on which a record date
shall be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution, liquidation
or winding up, at least 10 days' prior written notice of the date when the
same shall take place. Such notice in accordance with the foregoing clause
also shall specify (i) the date on which any such record is to be taken for
the purpose of such dividend, distribution or right, the date on which the
holders of Common Stock shall be entitled to any such dividend, distribution
or right, and the amount and character thereof, and (ii) the date on which
any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is to take
place and the time, if any such time is to be fixed, as of which the holders
of Common Stock shall be entitled to exchange their Warrant Shares for
securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently
given if addressed to Holder at the last address of Holder appearing on the
books of the Company and delivered in accordance with Section 17(d).

                  16. AUTHORIZED SHARES. The Company covenants that during
the period the Warrant is outstanding, it will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase rights under
this Warrant. The Company further covenants that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty
of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may
be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Principal Market upon which the Common Stock may be
listed.

                           The Company shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer 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 carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value
of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise
of this Warrant, and (c) use commercially reasonable efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction


                                      7

<PAGE>

thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.

                           Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction
thereof.

                  17. MISCELLANEOUS.

                           (a) JURISDICTION. This Warrant shall constitute a
         contract under the laws of New York, without regard to its conflict of
         law, principles or rules, and be subject to arbitration pursuant to the
         terms set forth in the Purchase Agreement.

                           (b) RESTRICTIONS. The Holder acknowledges that the
         Warrant Shares acquired upon the exercise of this Warrant, if not
         registered, will have restrictions upon resale imposed by state and
         federal securities laws.

                           (c) NONWAIVER AND EXPENSES. No course of dealing or
         any delay or failure to exercise any right hereunder on the part of
         Holder shall operate as a waiver of such right or otherwise prejudice
         Holder's rights, powers or remedies, notwithstanding all rights
         hereunder terminate on the Termination Date. If there is a final
         judgment finding that the Company willfully and knowingly fails to
         comply with any provision of this Warrant, which results in any
         material damages to the Holder, the Company shall pay to Holder such
         amounts as shall be sufficient to cover any costs and expenses
         including, but not limited to, reasonable attorneys' fees, including
         those of appellate proceedings, incurred by Holder in collecting any
         amounts due pursuant hereto or in otherwise enforcing any of its
         rights, powers or remedies hereunder.

                           (d) NOTICES. Any notice, request or other document
         required or permitted to be given or delivered to the Holder by the
         Company shall be delivered to the last address on the records of the
         Company.

                           (e) LIMITATION OF LIABILITY. No provision hereof, in
         the absence of affirmative action by Holder to purchase Warrant Shares,
         and no enumeration herein of the rights or privileges of Holder, shall
         give rise to any liability of Holder for the purchase price of any
         Common Stock or as a stockholder of the Company, whether such liability
         is asserted by the Company or by creditors of the Company.

                           (f) REMEDIES. Holder, in addition to being entitled
         to exercise all rights granted by law, including recovery of damages,
         will be entitled to specific performance of its rights under this
         Warrant. The Company agrees that monetary damages would not be adequate
         compensation for any loss incurred by reason of a breach by it of the
         provisions of this Warrant and hereby agrees to waive the defense in
         any action for specific performance that a remedy at law would be
         adequate.


                                      8

<PAGE>

                           (g) SUCCESSORS AND ASSIGNS. Subject to applicable
         securities laws, this Warrant and the rights and obligations evidenced
         hereby shall inure to the benefit of and be binding upon the successors
         of the Company and the successors and permitted assigns of Holder. 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 or holder of Warrant Shares.

                           (h) AMENDMENT. This Warrant may be modified or
         amended or the provisions hereof waived with the written consent of the
         Company and the Holder.

                           (i) SEVERABILITY. Wherever possible, each provision
         of this Warrant shall be interpreted in such manner as to be effective
         and valid under applicable law, but if any provision of this Warrant
         shall be prohibited by or invalid under applicable law, such provision
         shall be ineffective to the extent of such prohibition or invalidity,
         without invalidating the remainder of such provisions or the remaining
         provisions of this Warrant.

                           (j) HEADINGS. The headings used in this Warrant are
         for the convenience of reference only and shall not, for any purpose,
         be deemed a part of this Warrant.










                                      9

<PAGE>

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


Dated:  May 10, 2001
                                      STEMCELLS, INC.


                                      By:  /s/ Martin McGlynn
                                         -------------------------------------
                                           Martin McGlynn, President & CEO










                                      10

<PAGE>

                               NOTICE OF EXERCISE

To:      StemCells, Inc.


(1)  The undersigned hereby elects to purchase ________ Warrant Shares
(the "Common Stock"), of StemCells, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

(2)  Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:


             ----------------------------------------

The Warrant Shares shall be delivered to the following:


             ----------------------------------------

             ----------------------------------------

             ----------------------------------------




                                      PACIFIC CREST SECURITIES, INC.


                                      By: ______________________________
                                            Name:
                                            Title:

                                      Dated:  ________________________

<PAGE>



                   NOTICE OF EXERCISE OF COMMON STOCK WARRANT
                    PURSUANT TO CASHLESS EXERCISE PROVISIONS



To: StemCells, Inc.

Aggregate Price of Warrant Before Exercise:  $______
Aggregate Price Being Exercised:  $______
Exercise Price:  $______ per share
Number of Shares of Common Stock to be Issued Under this Notice:  ________
Remaining Aggregate Price (if any) After Issuance:  $_______


Gentlemen:

                  The undersigned, registered Holder of the Warrant delivered
herewith, hereby irrevocably exercises such Warrant for, and purchases
thereunder, shares of the Common Stock of StemCells, Inc., a Delaware
corporation, as provided below. Capitalized terms used herein, unless otherwise
defined herein, shall have the meanings given in the Warrant. The portion of the
Exercise Price (as defined in the Warrant) to be applied toward the purchase of
Common Stock pursuant to this Notice of Exercise is $_______, thereby leaving a
remaining Exercise Price (if any) equal to $________. Such exercise shall be
pursuant to the cashless exercise provisions of Section 3 of the Warrant;
therefore, Holder makes no payment with this Notice of Exercise. The number of
shares to be issued pursuant to this exercise shall be determined by reference
to the formula in Section 3 of the Warrant which, by reference to Section 3,
requires the use of the high and low trading price of the Company's Common Stock
on the Trading Day preceding the date of such election. The high and low trading
price of the Company's Common Stock has been determined by Holder to be $______
and $_________, respectively, which figure is acceptable to Holder for
calculations of the number of shares of Common Stock issuable pursuant to this
Notice of Exercise. Holder requests that the certificates for the purchased
shares of Common Stock be issued in the name of _________________________ and
delivered to ______________________________________________. To the extent the
foregoing exercise is for less than the full Aggregate Price of the Warrant, a
replacement Warrant representing the remainder of the Aggregate Price (and
otherwise of like form, tenor and effect) shall be delivered










                                      2

<PAGE>

to Holder along with the share certificate evidencing the Common Stock issued
in response to this Notice of Exercise.

                                      Pacific Crest Securities, Inc.


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

                                      Date:

                                      NOTE
                  The execution to the foregoing Notice of Exercise must
exactly correspond to the name of the Holder on the Warrant.










                                      3

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)



                  FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to


_______________________________________________ whose address is

__________________________________________________________________.


__________________________________________________________________

                                            Dated:  ______________, _______


                Holder's Signature:  _____________________________

                Holder's Address:    _____________________________

                                     _____________________________



Signature Guaranteed:  ___________________________________________




NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or
any change whatsoever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in an fiduciary or other
representative capacity should file proper evidence of authority to assign
the foregoing Warrant.