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                                                     525 Del Rey Avenue, Suite ^
                                                             Sunnyvale, CA 94086

CytoTherapeutics

                                                                   EXHIBIT 10.96
                                                               November 17, 1999

Dr. Kenneth D. Coleman
President/CEO
Mr. David Powell
Chairman
iCEO, L.L.C.

      Re: Mr. George Dunbar

Dear Ken and David:

CTI would very much like to engage George Dunbar to serve as Acting President of
StemCells, Inc., a subsidiary of CTI, on the following terms:

1.    We would expect George to sign our normal Employment Offer letter and
      Employment Agreement, substantially in the form attached.
2.    The Acting President's responsibilities will be to perform such services
      as are customarily performed by the President of a biotechnology company,
      as requested by the Board from time to time. Specific responsibilities
      will be to provide the management and leadership role on behalf of the
      Board to accelerate the timely and cost effective exit from its parent's
      Rhode Island operations, and to consolidate corporate headquarters around
      the existing Sunnyvale, California facility. The priorities in Rhode
      Island include the early sale and disposition of the Lincoln, Rhode Island
      ECT pilot plant, leasing the existing science and administration facility,
      appropriate partnering of the ECT technology, and the sorting out with the
      State of Rhode Island any dispute that might exist regarding their initial
      "seed loan" to CTI. The corporate relocation priorities are to initiate
      the minimum infrastructure necessary to manage the ongoing scientific and
      medical infrastructure necessary to manage the ongoing scientific and
      medical activities with limited disruption and to ensure all CTI's public
      company obligations are being met. Attention to other business development
      and shareholder drivers will be discussed and reviewed at the discretion
      of the Board. CTI acknowledges and understands that iCEO, L.L.C. cannot
      and does not guarantee that CTI will obtain funding that it deems
      acceptable or adequate as a result of the Acting President's performance
      of services.

3.    George would begin as of November 7, 1999, and, of course, would commit to
      the time necessary to carry out his responsibilities, as you said. We
      would, as you also note, want to meet with you and George as necessary to
      discuss any issues that arise in connection with this appointment.
      George's employment will


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Dr. Kenneth D. Coleman                                      CONFIDENTIAL
November 1, 1999
Page 2 of 3


      be at will, continuing until terminated by either him or us, neither party
      having any obligation to give the other party advance notice, as reflected
      in the enclosed engagement letter.
4.    We will pay at the total annual rate of $250,000 so long as George is in
      our employ as Acting President. We will pay iCEO, L.L.C. that part of the
      total rate that you direct. The remainder will constitute George's salary;
      we will also pay the employer's share of payroll taxes, and withhold taxes
      and other amounts as appropriate, on the amounts paid to George. George
      will be paid on the same schedule as all CTI employees, which is currently
      every two weeks, and iCEO will bill us for its share on the 15th and the
      last day of the month for the prior period, amounts to be due on receipt.
5.    We will grant options to purchase a total of 8,000 shares of CTI stock
      every month; every three months, the CTI Board of Directors will also
      consider an additional grant of up to a total of 6,000 additional options
      if, in its absolute discretion, it deems the services provided by George
      are truly outstanding. The shares will be divided between George and iCEO
      as you direct in your reply to this letter. The strike price for all
      options will be the price of the shares at the close of business on the
      date of grant, which will occur at CTI's first Board meeting in November,
      1999.
6.    We will reimburse George promptly for his reasonable expenses incurred on
      behalf of StemCells. We will, of course, require that he follow normal
      business practices with respect to receipts and advance authorization
      where required.
7.    I have left space below for you to let us know how the monetary payment
      and the options should be divided up. We will use that information to
      complete the engagement letter, and send you a copy of the completed
      package once the remaining documents are fully executed.
8.    CTI agrees that if, within 120 days following the termination of George's
      employment as Acting President of StemCells, it or StemCells should engage
      George on a permanent basis rather than as Acting President, it will pay
      iCEO, L.L.C. an amount equal to one third of his first year's targeted
      cash compensation, including base salary and bonus, in such permanent
      position.
9.    It is understood by all parties that the terms of this agreement, as well
      as the Employment Offer letter and Employment Agreement, all have to do
      with an interim position, and that if George were to become CEO of CTI on
      a permanent basis the terms and conditions would first be renegotiated. It
      is further understood that George has certain consulting agreements which
      have been disclosed and which are listed in Exhibit B to the Employment
      Agreement, and it is agreed that in light of the interim nature of this
      appointment, he is entitled to continue to provide services under those
      agreements so long as their performance does not interfere in any way with
      his carrying out of his responsibilities toward StemCells or its parent.
      It is also understood and agreed that George is free to interview with
      other companies during his appointment as Acting President, again so long
      as this does not interfere in any way with his


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Dr. Kenneth D. Coleman                                      CONFIDENTIAL
November 1, 1999
Page 3 of 3


      carrying out of his responsibilities toward StemCells or its parent.
      Moreover, if at any time during the duration of his appointment as Acting
      President of StemCells George should be dissatisfied with his compensation
      because he finds his responsibilities significantly different from what he
      now believes they will be, he and you should feel free to meet with the
      Chairman of the Board of CTI to discuss the problem and how it could be
      ameliorated.

I believe this obviates the need for Exhibit A to your letter, but if I have
omitted anything of importance, please let me know.

Sincerely,


John Schwartz
Chairman of the Board

Enclosures

Accepted, with the condition that $6,250 per month of the annual amount of
$250,000 referred to in paragraph 4 (i.e., thirty percent) above be paid to
iCEO, L.L.C., and fifty percent of the options for 8,000 shares of CTI stock
(i.e., 4,000 shares) per month and fifty percent of any additional options
granted as set out in paragraph 5 above, be granted to iCEO Diversified Stock
Fund.


____________________________
by:
iCEO, L.L.C.