<PAGE>


                                                                     Exhibit 4.2


NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

                                 STEMCELLS, INC.

                                     WARRANT

Warrant No. [_______] Dated: December 4, 2001

     STEMCELLS, INC., a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, RIVERVIEW GROUP, L.L.C., or its registered assigns
("HOLDER"), is entitled, subject to the terms set forth below, to purchase from
the Company a total of 350,877 shares of common stock, $.01 par value per share
(the "COMMON STOCK"), of the Company (each such share, a "Warrant Share" and all
such shares, the "WARRANT SHARES") at an exercise price equal to $3.42 per share
(as adjusted from time to time as provided in Section 9, the "EXERCISE PRICE"),
at any time and from time to time from and after the date hereof and through and
including December 4, 2005 (the "EXPIRATION DATE"), and subject to the following
terms and conditions:

     1. REGISTRATION OF WARRANT. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.

     2. REGISTRATION OF TRANSFERS AND EXCHANGES.

          (a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly completed and signed, to the Transfer Agent
or to the Company at the office specified in or pursuant to Section 3(b). Upon
any such registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "NEW WARRANT"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New


<PAGE>




Warrant by the transferee thereof shall be deemed the acceptance of such
transferee of all of the rights and obligations of a holder of a Warrant.

          (b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company specified in or pursuant to Section 3(b) for
one or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.

     3. DURATION, EXERCISE AND REDEMPTION OF WARRANTS.

          (a) This Warrant shall be exercisable by the registered Holder on any
business day before 5:00 P.M., New York City time, at any time and from time to
time on or after the date hereof to and including the Expiration Date. At 5:00
P.M., New York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value.

          (b) Subject to Sections 5, 10 and 11, upon surrender of this Warrant,
with the Form of Election to Purchase attached hereto duly completed and signed,
to the Company at its address for notice set forth in Section 12 and upon
payment of the Exercise Price multiplied by the number of Warrant Shares that
the Holder intends to purchase hereunder, in the manner provided hereunder, all
as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except either (i) in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective, and the
Warrant Shares are not freely transferable without volume restrictions pursuant
to Rule 144(k) promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or (ii) if this Warrant shall have been issued pursuant to a
written agreement between the original Holder and the Company, as required by
such agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.

     A "DATE OF EXERCISE" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the Form of
Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.

          (c) This Warrant shall be exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. In the event that
the Warrant is not exercised in full, the number of Warrant Shares shall be
reduced by the number of such Warrant Shares for which this Warrant is
exercised, and the Company at its expense, within five (5) business days issue
and deliver to the Holder a New Warrant in the name of the Holder or as the
Holder may request, reflecting such adjusted Warrant Shares.


                                       2
<PAGE>


          (d) In lieu of delivering physical certificates representing the
Warrant Shares issuable upon conversion of this Warrant, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the Holder, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon exercise to the Holder, by crediting
the account of the Holder's prime broker with DTC through its Deposit Withdrawal
Agent Commission ("DWAC") system. The time periods for delivery described above
shall apply to the electronic transmittals through the DWAC system. The Company
agrees to coordinate with DTC to accomplish this objective.

     4. REGISTRATION RIGHTS. This Warrant and the Holder hereof are entitled to
the benefits of, and subject to the terms and condition of and obligations
under, that certain Registration Rights Agreement dated the date hereof between
the Company and the original Holder (the "REGISTRATION RIGHTS AGREEMENT").

     5. FRACTIONAL SHARES. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares which shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of this Warrant so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section, be issuable on
the exercise of this Warrant, the Company shall pay an amount in cash equal to
the fair market value of such share as of the Date of Exercise multiplied by
such fraction.

     6. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.

     7. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

     8. RESERVATION OF WARRANT SHARES. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 9). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in



                                       3
<PAGE>



accordance with the terms hereof, be duly and validly authorized, issued and
fully paid and nonassessable.

     9. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section. Upon each such adjustment of the Exercise
Price pursuant to this Section, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.

          (a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or on any other class of capital stock payable in
shares of Common Stock (except dividends or distributions paid on preferred or
other senior stock), (ii) subdivide outstanding shares of Common Stock into a
larger number of shares, or (iii) combine outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.

          (b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property as such Holder would have been entitled to receive if such Holder had
exercised this Warrant immediately prior to such reclassification or share
exchange (net of the applicable Exercise Price). The terms of any such
reclassification or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 9(b) upon any exercise following any such reclassification or share
exchange.

          (c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
9(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date



                                       4
<PAGE>

less the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Company's independent certified
public accountants that regularly examine the financial statements of the
Company (an "APPRAISER").

          (d) If at any time the Company or any subsidiary thereof shall issue
shares of Common Stock or rights, warrants, options or other securities or debt
that is convertible into or exchangeable for shares of Common Stock ("COMMON
STOCK EQUIVALENTS"), entitling any person or entity to acquire shares of Common
Stock at a price per share less than the market price of the Common Stock at the
time of issuance, forthwith upon such issue or sale, the Exercise Price shall be
reduced to the price (calculated to the nearest cent) determined by multiplying
the Exercise Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the sum of (i) the number of shares of Common Stock
outstanding immediately prior to such issuance, and (ii) the number of shares of
Common Stock which the aggregate consideration received (or to be received,
assuming exercise or conversion in full of such Common Stock Equivalents) for
the issuance of such additional shares of Common Stock would purchase at the
Exercise Price, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately after the issuance of such
additional shares. For purposes hereof, all shares of Common Stock that are
issuable upon conversion, exercise or exchange of Common Stock Equivalents shall
be deemed outstanding immediately after the issuance of such Common Stock
Equivalents. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. However, upon the expiration of any Common Stock
Equivalents the issuance of which resulted in an adjustment in the Exercise
Price pursuant to this Section, the Exercise Price shall immediately upon such
expiration be recomputed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Exercise Price made pursuant to the provisions of this
Section after the issuance of such Common Stock Equivalents) had the adjustment
of the Exercise Price made upon the issuance of such Common Stock Equivalents
been made on the basis of offering for subscription or purchase only that number
of shares of the Common Stock actually purchased upon the exercise of such
Common Stock Equivalents actually exercised. Notwithstanding anything herein to
the contrary, (x) issuances of any stock or stock options under any bona fide
employee benefit plan or compensation arrangement of the Company and (y)
issuances of shares of Common Stock or Common Stock Equivalents with respect to
a Board Approved Transaction (as defined herein), shall not be subject to the
provisions of this Section.

     A "BOARD APPROVED TRANSACTION" is a transaction involving a strategic
alliance, acquisition of stock or assets, merger, collaboration, joint venture,
partnership or similar arrangement of the Company with another corporation,
partnership or other business entity (A) which is engaged in a business similar
complementary or related to the business of the Company or (B) pursuant to which
the Company issues securities with the primary purpose to directly or indirectly
acquire, license or otherwise become entitled to use technology relevant to or
useful in the Company's business, so long as the Company's Board of Directors by
resolution duly adopted approves such transaction in accordance with its duties
under applicable law.

          (e) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company


                                       5
<PAGE>

(on a market value basis) in one or a series of related transactions, or (3)
tender or other offer or exchange (whether by the Company or another Person)
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, stock, cash or property of the Company or
another Person; then the Holder shall have the right, upon or after such
transfer, merger, consolidation, sale, offer or exchange, to (A) exercise this
Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and the Holder shall be entitled to receive such
amount of securities, cash and property as the Common Stock for which this
Warrant could have been exercised immediately prior to such merger,
consolidation or sales would have been entitled, (B) in the case of a merger or
consolidation, require the surviving entity to issue to the Holder a warrant
entitling the Holder to acquire shares of such entity's common stock, which
warrant shall have terms identical MUTATIS MUTANDIS (including with respect to
exercise) to the terms of this Warrant and shall entitle the holder thereof to
all of the rights and privileges set forth herein and in the agreements pursuant
to which this Warrant was issued (including, without limitation, as such rights
relate to the acquisition, transferability, registration and listing of such
shares of stock or other securities issuable upon exercise thereof) MUTATIS
MUTANDIS, or (C) in the event of an exchange or tender offer or other
transaction contemplated by clause (3) of this Section 9(e), tender or exchange
this Warrant for such securities, stock, cash and other property receivable upon
or deemed to be held by holders of Common Stock that have tendered or exchanged
their shares of Common Stock following such tender or exchange, and the Holder
shall be entitled upon such exchange or tender to receive such amount of
securities, cash and property as the shares of Common Stock for which this
Warrant could have been exercised immediately prior to such tender or exchange
would have been entitled (net of the applicable Exercise Price). In the case of
clause (B), the exercise price applicable for the newly issued warrant shall be
based upon the amount of securities, cash and property that each share of Common
Stock would receive in such transaction and the Exercise Price immediately prior
to the effectiveness or closing date for such transaction. The terms of any such
merger, sale, consolidation, tender or exchange shall include such terms so as
to continue to give the Holder the right to receive the securities, cash and
property set forth in this Section upon any conversion or exercise following
such event. This provision shall similarly apply to successive such events.

          (f) For the purposes of this Section 9, the following clauses shall
also be applicable:

               (i) RECORD DATE. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to subscribe for
or purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the
case may be.

               (ii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company.



                                       6
<PAGE>


          (g) All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.

          (h) If (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or (ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or (iii) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; or (iv) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to each Holder at their last addresses as they
shall appear upon the Warrant Register, at least 30 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, grant of rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

     10. PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise Price in
one of the following manners:

          (a) CASH EXERCISE. The Holder may deliver immediately available funds;
or

          (b) CASHLESS EXERCISE. At any time after the earlier to occur of the
SEC Effective Date or the Effectiveness Required Date (as such terms are defined
in the Registration Rights Agreement), when a registration statement covering
the resale of the Warrant Shares and naming the Holder as a selling stockholder
thereunder is not then effective or sales may not be effected for any reason
pursuant to such registration statement and related prospectus, the Holder may
surrender this Warrant to the Company together with a notice of cashless
exercise, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

                           X = Y [(A-B)/A]
                  where:

                           X = the number of Warrant Shares to be issued
                  to the Holder.



                                       7
<PAGE>


                           Y = the number of Warrant Shares with respect to
                           which this Warrant is being exercised.

                           A = the average of the closing sale prices of the
                           Common Stock for the five (5) trading days
                           immediately prior to (but not including) the Date of
                           Exercise.

                           B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date of this Warrant.

     11. CERTAIN EXERCISE RESTRICTIONS.

          (a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
Holder (other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the Holder's right to convert, exercise or
purchase similar to the limitation set forth herein), together with all shares
of Common Stock deemed beneficially owned (other than by virtue of the ownership
of securities or rights to acquire securities that have limitation set forth
herein) by the Holder's "affiliates" (as defined in Rule 144 of the Securities
Act) ("AGGREGATION PARTIES"), that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities Exchange Act
of 1934, as amended, exists would exceed 9.99% of the total issued and
outstanding shares of the Common Stock (the "RESTRICTED OWNERSHIP PERCENTAGE").
Each Holder shall have the right (w) at any time and from time to time to reduce
its Restricted Ownership Percentage immediately upon notice to the Company and
(x) (subject to waiver) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the announcement as
pending or planned, of a merger or consolidation of the Company, a sale of all
or substantially all of the assets of the Company or the acquisition by any
third party (and/or such party's Aggregation Parties) of at least 51% of the
Company's outstanding Common Stock. The Company's obligation to issue shares of
Common Stock which would exceed such limited shall be suspended to the extent
necessary until such time, if any, as shares of Common Stock may be issued in
compliance with such restrictions.

     12. NOTICES. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required



                                       8
<PAGE>


to be given. The addresses for such communications shall be: (i) if to the
Company, 3155 Porter Drive, Palo Alto, California 94086, with a copy to Ropes &
Gray, One International Place, Boston, Massachusetts, 02110, Attention: Geoffrey
B. Davis, Esq., (facsimile number (617) 951-7050), or (ii) if to the Holder, to
the Holder at the address or facsimile number appearing on the Warrant Register
or such other address or facsimile number as the Holder may provide to the
Company in accordance with this Section, with a copy to Kleinberg, Kaplan, Wolff
& Cohen, P.C., 551 Fifth Avenue, New York, New York 10176, Attention: Stephen M.
Schultz, Esq., (facsimile number (212) 986-8866).

     13. WARRANT AGENT. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

     14. MISCELLANEOUS.

          (a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
Subscription Agreement entered into between the Company and the Holder on the
date hereof and applicable securities laws, this Warrant shall be freely
transferable. This Warrant may be amended only in writing signed by the Company
and the Holder and their successors and assigns.

          (b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.

          (c) The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by certified mail, return receipt
requested, and agrees that such service shall



                                       9
<PAGE>


constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

          (d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

          (e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.

                              STEMCELLS, INC.

                              By: /s/ Martin McGlynn
                                  -----------------------------

                              Name: Martin McGlynn
                                  -----------------------------

                              Title: President and CEO
                                  -----------------------------




                                       10
<PAGE>


                          FORM OF ELECTION TO PURCHASE

To: STEMCELLS, INC.


(1) The undersigned hereby elects to exercise its Warrant for and to purchase
thereunder, ______ shares of Common Stock, [AND HEREWITH MAKES PAYMENT THEREFOR
OF $_______] [OR] [AND ELECTS TO UTILIZE THE CASHLESS EXERCISE PROVISIONS OF
SECTION 10(b) OF THIS WARRANT, RESULTING IN ______ SHARES OF COMMON STOCK
ISSUABLE HEREUNDER].

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

                           -------------------------------
                           (Name)

                           -------------------------------
                           (Address)
                           -------------------------------

                           -------------------------------
                           (Tax Identification or Social Security #)

(3) Please issue a New Warrant (as defined in the Warrant) for the unexercised
portion of the attached Warrant in the name of the undersigned or in such other
name as is specified below:

                                     -----------------------------------
                                     (NAME)

                                     -----------------------------------
                                     (SIGNATURE)

                                     -----------------------------------
                                     (DATE)

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

                                     -----------------------------------
                                     (ADDRESS)]





Dated:

------------------------------
Signature



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<PAGE>



                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant]

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of StemCells, Inc. to
which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of StemCells, Inc. with full power of
substitution in the premises.



Dated:

---------------, ----



                             ---------------------------------------
                             (Signature must conform in all respects to name of
                             holder as specified on the face of the Warrant)


                             ---------------------------------------
                             Address of Transferee

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

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



In the presence of:

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



                                       12