Document:

<PAGE>

                                                                   Exhibit 10.20

                                                          [stamp] Certified Copy

Document No.  S 1200/01

Today, the 24th of October 2001,

there appeared before me,
                              FRIEDRICH SCHNEIDER,

                Notary with official residence in Worth am Rhein
                        in the offices in Worth am Rhein,
                        Hanns-Martin-Schleyer-Strasse 4:

1) a)    Mr. Peter Grimm
         born November 4, 1946, commercial employee, with offices at
         Siemensallee 84 in 76187 Karlsruhe

         and

 b)      Mr. Alfons Vielmeier
         born January 6, 1950, commercial employee, with offices at
         St.-Martin-Strasse 76 in 81541 Munich,

both stating that they are acting here exclusively as managing directors with
joint powers of representation for

                SIEMENS INDUSTRIEPARK VERWALTUNGSGESELLSCHAFT MBH
                          WITH HEADQUARTERS IN MUNICH,

entered in the Commercial Register of the Local Court [AMTSGERICHT] of Munich
under No. HR B 115511, this in turn acting as shareholder with sole power of
representation in the firm of

                 SIEMENS INDUSTRIEPARK KARLSRUHE GMBH & CO. OHG
                         WITH HEADQUARTERS IN KARLSRUHE,

entered in the Commercial Register of the Local Court of Karlsruhe under No. HR
A 4326

(Addresses:       Siemens Industriepark Karlsruhe
                  GmbH & Co. OHG
                  Siemensallee 84
                  76187 Karlsruhe)

2)       Dr. Martin Haase
born August 4, 1956, managing director, with offices at Ostliche
Rheinbruckenstrasse 50, 76187 Karlsruhe, as well as Mr. Bernhard Kolodziej, born
March 10, 1966, authorized signatory [PROKURIST], with offices in the same
location, both representing the firm of

                                 BRUKER AXS GMBH
                         WITH HEADQUARTERS IN KARLSRUHE

entered in the Commercial Register of the Local Court of Karlsruhe under No. HRB
7524

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
EXHIBIT, WHICH PORTIONS HAVE BEEN OMITTED AND REPLACED WITH [**] AND FILED
SEPARATELY WITH THE COMMISSION.

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                                      -2-

Addresses:

                  Bruker AXS GmbH
                  Ostliche Rheinbruckenstrasse 50
                  76187 Karlsruhe

         The certificates of authenticity are recorded outside of this
instrument.

Mr. Grimm and Mr. Vielmeier are personally known to me, the Notary. Dr. Haase
and Mr. Kolodziej provided evidence of their identity to the satisfaction of the
Notary by means of valid identity papers.

I, the certifying Notary, have instructed the persons appearing that I could not
inspect the Directory of Building Obligations [BAULASTENVERZEICHNIS]. I also
instructed them that significant facts for the recording of the instrument may
therefore be unavailable for consideration, and that this could result in
additional costs or errors in the Agreement that could eventually lead to
invalidity of the Agreement.

Having inspected the contents of the Land Register, and upon the request of the
persons appearing and pursuant to the concurrent presence before me of their
submitted statements, I hereby certify the following

                               PURCHASE AGREEMENT:

                                       I.
                              LAND REGISTER STATUS

According to the entry in the Karlsruhe Land Register of the Local Court of
Karlsruhe

Page 51357
Serial No. 4/Lot 8260           with a size of          142,049 square meters,

Siemens Industriepark Karlsruhe GmbH & Co. OHG is the sole owner of this
property. Lot 8260 can be seen in Appendix 1.

According to the Land Register, the property has the following encumbrances:

Department II: Appurtenant easement subject to a condition subsequent -
right-of-way for pedestrians and vehicles for the owner of Lot No. 8260/3

Department III: none

THE APPURTENANT EASEMENT DOES NOT INVOLVE THE PARTIAL AREA SOLD. IT SHOULD BE
DELETED IN THE PARTIAL AREA SOLD, WHICH ACTION IS HEREBY AUTHORIZED AND
PETITIONED.

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                                      -3-

                                       II.
                                    PURCHASE

                 SIEMENS INDUSTRIEPARK KARLSRUHE GMBH & CO. OHG
                         with headquarters in Karlsruhe

                                   ("SELLER")

hereby sells to

                                 BRUKER AXS GMBH
                         WITH HEADQUARTERS IN KARLSRUHE

                                    ("BUYER")

with all duties and rights, legal components, and any appurtenances (including
passive data network components), although with the exception of the inventory
listed in APPENDIX 2 - INVENTORY LIST,

from the real property described in greater detail in Section I subject to
official survey, which is included in the attached site plan, which is a
material component of this instrument as APPENDIX 3, the partial area designated
by shaded area A/B/C/D/E/A and outlined in yellow, with dimensions of
approximately 17,000 square meters ("Object of Purchase").

In order to precisely delimit the Object of Purchase, the starting point A shall
be determined by the intersection of the Lots 31040, 42323, and 8260.
Beginning from Point A, the Object of Purchase proceeds along the boundary of
the lot from Lots 31040 and 8260, approximately 115 meters in a northwesterly
direction, to Point B. The course of the boundary from Point B to Point C is
located along a length of approximately 150 meters along the outer edge of the
path of Haselerstrasse; the course from C to D with a length of approximately
120 meters along the inner edge of the path of Carl-Friedrich-Strasse. D to E
runs along the boundary of Lot 8260 and Ostliche Rheinbruckenstrasse. E to A
runs along the boundary of Lots 8260 and 42323.

The congruity or specific degree of approximation to the survey result and
assumed area size do not constitute a basis for this Agreement.

The nature of the Object of Purchase in terms of its position, size, and form,
is precisely known to Buyer and Seller ("Contracting Parties").

Seller shall apply without delay for a survey of the property. The Contracting
Parties agree to acknowledge the survey result in a supplemental document
without delay, upon receipt by the Notary of the excerpt from the proof of
modification intended for the Land Registry Office and payment of the purchase
price based upon the survey, and to declare agreement on the transfer of the
property.

                                      III.
           PRELIMINARY STATEMENT, COMPLETION OF ENTRY IN LAND REGISTER

1)       PRELIMINARY STATEMENT
         In order to secure Buyer's claim to transfer of ownership, Seller
         authorizes and

                                    petitions

         Buyer to enter a preliminary statement pursuant to Section 883 of the
         German Civil Code [BUNDESGESETZBUCH] to the Object of Purchase in the
         Land Register for the benefit of Buyer. The preliminary statement
         should initially be entered for the entire property.

         Buyer today already authorizes and

                                    petitions

<PAGE>
                                      -4-

in turn to cancel this preliminary statement in the Land Register simultaneous
with the transfer of ownership, provided that no intermediate entries have been
made without Buyer's consent.

Buyer today already also irrevocably authorizes and

                                    petitions

to delete this preliminary statement in regard to the portions of the property
not sold following execution of the survey and subdivision of the property in
the Land Register.

The Contracting Parties instruct the Notary to petition the aforementioned
deletions upon fulfillment of the respective prerequisites.

2)       COMPLETION OF ENTRY IN LAND REGISTER
         The acting Notary is given comprehensive and unrestricted authority by
         all parties involved to represent the Contracting Parties in the
         submission of all statements related to the Land Register in
         conjunction with this Agreement.

         The Notary is requested to provide notification of execution for the
         Contracting Parties and the Notary.

                                       IV.
                                 PURCHASE PRICE

1)       The agreed purchase price is

                                DEM 14,950,000.00
          (fourteen million nine hundred fifty thousand deutsche marks)

         Of this total,
         for the land                                         DEM  5,950,000.00
         for buildings 5428 and 5430 included in the sale     DEM  9,000,000.00

2)       The purchase price shall be payable in full two weeks after receipt of
         notification by Buyer from the acting Notary via registered
         letter/return receipt with carbon copy for Seller, wherein it is
         affirmed that

         a)       the preliminary statement authorized for Buyer has been
                  entered in the Land Register ranked only after such
                  encumbrances as cannot be eliminated by Seller according to
                  the content of this Agreement, or in regard to which the
                  acting Notary is in possession of cancellation documents or
                  has ensured their cancellation.

         b)       the Notary has in his possession an unconditional statement by
                  the responsible local authorities in a form suitable for entry
                  into the Land Register in regard to the statutory rights of
                  preemption (e.g. under the Town and Country Planning Code
                  [BAUGESETZBUCH], the environmental protection laws, and the
                  historical landmark protection laws), according to which such
                  rights of preemption do not exist or will not be exercised for
                  the present purchase,

         c)       the approval for subdivision of the property in accordance
                  with section 19 of the Town and Country Planning Code has
                  been issued and the Land Register has been amended, i.e. the
                  lot has been formed,

<PAGE>
                                      -5-

         d)       the Notary has in his possession and free of conditions all
                  official approvals and notices necessary for completion of the
                  Land Register entry (with the exception of the clearance
                  certificate furnished by the Tax Office in regard to the land
                  transfer tax) in a form suitable for entry into the Land
                  Register.

In addition, the due date for the purchase price shall not occur prior to the
date of December 31, 2001 and the presentation of a positive preliminary
planning decision as defined in Item XI.3. Buyer must inform Seller
immediately in writing upon issuance of a positive preliminary planning
decision. This prerequisite for the due date shall be canceled as of February
28, 2002. The participants shall themselves monitor the existence of this
prerequisite for the due date. Payment of the purchase price, as well as any
resulting subsequent payment, shall be made exclusively by means of funds
transfer to account No. [**] at Deutsche Bank AG Karlsruhe (Bank Routing No.
660 700 04), with specification of "Bruker" in the subject line.

3)       Interest on the purchase price shall be charged following the due date
         without reminder until payment is received by Seller (statement of
         value) at an annual rate of 5% (five percent) above the base lending
         rate pursuant to the Discount Rate Transitional Act
         [DISKONTSATZ-UBERLEITUNGS-GESETZ]; such interest shall be payable
         immediately. The assertion of further claims for damages due to default
         shall remain unaffected thereby. This arrangement does not constitute
         an extension of the term of payment.

4)       If Buyer is in default with payment of the purchase price, in whole or
         in part, for a period longer than three weeks, then Seller may, without
         prejudice to other claims, immediately assert his rights arising from
         section 326 of the German Civil Code (compensation for damages due to
         nonperformance or withdrawal from a purchase agreement governed by the
         law of obligations).

5)       Buyer submits to Seller in the amount of the purchase price of DEM
         14,950,000.00 and due to the interest on arrears in the amount of 5%
         above the base lending rate pursuant to the Discount Rate Transitional
         Act up to a maximum of 18% of the purchase price, no sooner than one
         month following the due date of the purchase price, in regard to the
         immediate enforcement of debt arising from this instrument in his
         entire assets.

         Buyer also submits to Seller in regard to the immediate enforcement of
         debt arising from this instrument in his entire assets due to any
         claims by Seller arising from demands due to the land transfer tax of
         DM 523,250.00 in conjunction with the signing of this Agreement, and
         also due to fees for the Land Register and Notary fees to a maximum of
         DM 210,000.00 incurred in conjunction with the signing of this
         Agreement and its execution in the Land Register, including the
         creation of mortgages on the real property.

         The Notary is irrevocably instructed to issue an official copy to
         Seller only after Seller has submitted the affirmation pursuant to IV
         2, and Seller has demanded this in writing and affirmed to the Notary
         in writing that the purchase price was paid within the agreed time
         period. The Notary must inform Buyer without delay upon issuance of the
         official copy. This arrangement does not change the burden of proof for
         claims to which Seller is entitled or the existence of the facts
         described above.

6)       Should the official survey results show a greater or lesser total area
         than the assumed size of 17,000 square meters, then following
         notification of the official survey results to the Contracting Parties,
         any such deviation must be settled without delay at the previously
         agreed price per square meter of DM 350.00, without interest.

[**] Indicates that information has been omitted and filed separately with
     the Commission pursuant to a request for confidential treatment.

<PAGE>
                                      -6-

                                       V.
                TRANSFER OF OWNERSHIP, BENEFITS, AND ENCUMBRANCES

1)       Ownership, benefits, and encumbrances of the purchased property shall
         devolve to Buyer on the date upon which the purchase price is paid in
         full.

2)       Buyer shall not be entitled to undertake material changes, particularly
         construction measures, without prior written consent of Seller until
         the purchase price has been paid in full.

3)       Buyer shall have no right to assert claims for damages due to
         deterioration in the condition of the Object of Purchase vis-a-vis its
         present condition, unless Seller has caused such damages willfully or
         through gross negligence.

4)       Seller shall maintain the insurance policy for the Object of Purchase
         unaltered until ownership, benefits, and encumbrances are transferred
         pursuant to Item 1) above. Buyer shall be responsible for insurance
         beginning on the aforementioned date.

                                       VI.
                                    WARRANTY

1)       Seller shall be liable for unrestricted transfer of property and
         (in)direct ownership, as well as for the freedom of the Object of
         Purchase from all encumbrances evident from the Land Register, to the
         extent that these are not transferred in this Agreement and with the
         exception of such encumbrances as are entered with Buyer's consent.

         The Object of Purchase shall also be transferred free of public charges
         pursuant to Section 25 Paragraph 6 of the Federal Soil Protection Act
         [BUNDESBODENSCHUTZGESETZ], as well as leasehold rights and/or other
         rights of use by third parties, with the exception of the leases listed
         in APPENDIX 4. As of the contract signing date, Seller is unaware of
         any building obligations.

2)       In addition, Seller offers no warranty unless otherwise stipulated
         below. The Object of Purchase shall be sold "as-is" unless otherwise
         stipulated below.

         Unless otherwise stipulated in this Agreement, Seller is especially not
         liable for the accuracy of the specified area dimensions, suitability
         for building, soil characteristics, and economic utility of the Object
         of Purchase, or for specific structural conditions of existing
         structures or defects of any kind, although Seller declares that he is
         unaware of any hidden material defects that would significantly impair
         the fitness for use of the Object of Purchase.

         Seller does not warrant the freedom of the Object of Purchase from
         easement under old law not entered in the Land Register and from other
         unrecorded encumbrances.

3)       In the event that industrial contamination requiring removal as defined
         in section 2 Paragraph 6 of the Federal Soil Protection Act is found on
         undeveloped land (current parking lot area - see APPENDIX 7 marked in
         yellow - on Ostliche Rheinbruckenstrasse) in the course of excavation
         work or when taking soil samples, and such contamination must be
         removed pursuant to official directives, Seller shall be responsible
         for the additional costs of disposal (e.g. increased landfill costs).

<PAGE>
                                      -7-

         Disposal of the contaminated soil, in particular selection of companies
         to perform the disposal and agreement on the prices for the resulting
         disposal work, shall be specified between the Contracting Parties prior
         to performance of the work. If the disposal procedure cannot be jointly
         specified, then Seller shall dispose of the contaminated soil as he
         sees fit. Seller's liability shall end with completion of the
         excavation, although no later than December 31, 2004. Seller shall not
         be liable for the remaining property.

         The aforementioned conditions shall also apply if hazardous soil
         alterations as defined by Section 2 Paragraph 3 of the Federal Soil
         Protection Act exist on the Object of Purchase, or if other pollution
         of any kind (e.g. caused by substances that pollute water or the
         environment) exists in the soil, buildings, other components of the
         property, or groundwater.

4)       Seller shall not be liable for the building materials used (e.g.
         asbestos), although he affirms that he is unaware of the existence of
         asbestos. Buyer shall be given an excerpt from the [Asbestos Register]
         for the location.

         Buyer is aware that the Object of Purchase was used as an industrial
         site and that hazardous soil alterations may therefore have occurred.

         Seller shall be given an excerpt from the Register of Industrial
         Contamination that relates to the Object of Purchase.

         The following shall apply, unless otherwise agreed in Item 3, in the
         event that industrial contamination, hazardous soil alterations, or
         other pollution must be removed:

         Buyer shall be solely responsible for the costs of removing industrial
         contamination, hazardous soil alterations, or other pollution, with
         simultaneous indemnification of Seller and Siemens AG against all
         public or private claims.

         Should Seller or Siemens AG be called upon for cleanup efforts after
         December 31, 2004 or otherwise charged with costs related to industrial
         contamination, hazardous soil alterations, or other pollution, then
         Buyer must reimburse such costs without delay to Seller or Siemens AG,
         respectively, or must perform the cleanup work at his own expense upon
         demand by Seller or Siemens AG.

         Any and all claims for settlement by Buyer against Seller and Siemens
         AG pursuant to Section 24 Paragraph 2 of the Federal Soil Protection
         Act are hereby expressly precluded. The stipulated exemption from
         liability shall also apply for the benefit of natural persons or legal
         entities representing Seller and Siemens AG under commercial or
         corporate law.

5)       The nature and extent of suitability of the Object of Purchase for
         construction or other possible uses do not constitute a basis for this
         Agreement.

6)       No warranty has been given for specific qualities.

<PAGE>
                                      -8-

                                      VII.
                                     LEASES

1)       On the day that ownership is transferred, Buyer shall replace Seller in
         the leases listed in APPENDIX 4 and whose content is known to Buyer.
         Buyer is aware that the rented areas and the rent in the lease signed
         between Seller and Siemens AG on November 27, 1997 in the version of
         supplements on August 23, 1998 and September 12, 2000 do not yet
         correspond to the information in APPENDIX 4. Seller shall enter into a
         further supplemental agreement to the lease with Siemens AG, which
         shall record the conditions specified in APPENDIX 4.

         In this context, the Notary advised the Contracting Parties of the
         provisions of Section 566 of the German Civil Code.

         The tenants [SIC] have provided no security deposits.

2)       Claims against the tenant for rent and ancillary costs as well as for
         other payments for the period until the transfer of ownership shall
         remain with Seller, who shall likewise remain obligated to fulfill any
         claims by the tenant until this date. Beginning with the date of
         transfer of ownership, Buyer shall be obligated to fulfill all duties
         arising from the leases. Buyer accordingly indemnifies Seller against
         any claims by the tenant.

3)       Seller agrees to refrain from entering into any lease or other usage
         agreements and/or changes to contracts concerning the Object of
         Purchase and extending beyond the date of transfer of ownership,
         without Buyer's consent.

                                      VIII.
                                   DEVELOPMENT

Seller shall be responsible for local improvement assessments as defined by
Section 127 I of the Town and Country Planning Code, taxes pursuant to Section
127 Paragraph 4 of the Town and Country Planning Code, and other assessments,
including cost reimbursements under the Local Taxes Act [KOMMUNALABGABENGESETZ]
and the corresponding municipal ordinances, for which a notice was provided
prior to the end of yesterday. The Contracting Parties are aware that the
obligation to pay assessments exists independent of the delivery of a notice.

Buyer shall be responsible for all other local improvement assessments and other
public taxes and assessments. Buyer is aware that such decisions may also be
issued for expenses from previous periods subject to reapportionment.

                                       IX.
             GRANTING OF RIGHTS OF USE, EASEMENTS, OTHER OBLIGATIONS

GENERAL STATEMENTS
Buyer is aware that the Object of Purchase is equipped with technical
infrastructure (electricity, heating, water supply and wastewater disposal,
pressurized air, etc.) and computer infrastructure (telecommunications, data
networks, etc.) by Siemens AG A&D AS EWK BB. In order to ensure the technical
infrastructure of the Object of Purchase, Buyer shall enter into a corresponding
service agreement with Siemens AG A&D AS EWK BB following transfer of ownership.
Buyer is aware that in order to provide the technical and computer
infrastructure to the buildings, the service provider has installed technical
equipment that is listed in APPENDIX 2 and which will remain the property of
Siemens AG A&D AS EWK BB.

<PAGE>
                                      -9-

In addition, the Contracting Parties shall agree upon the following arrangements
in principle, wherein the issue of usage free of charge is not the object of an
easement, but rather has significance only under the law of obligations:

1)       TEMPORARY PROVISION OF ELECTRICITY, HEATING, AND WATER TO THE OBJECT OF
         PURCHASE

         Seller shall grant to Buyer the right to joint usage of the
         transmission lines for electricity, heat, and water as necessary to
         supply the Object of Purchase. Buyer is aware of the course and/or
         location of the technical equipment necessary for this purpose.

         All costs for utilities, including costs for maintenance, metering,
         upkeep, inspection, etc. shall be borne by Buyer in accordance with the
         services he uses.

         The right is limited by the Seller's joint usage.

         Buyer agrees to provide an independent electricity supply to the Object
         of Purchase no later than May 31, 2005.

         Buyer must also ensure an independent supply of heat and water, as
         described above, no later than May 31, 2005.

         On the aforementioned date, Buyer must separate and seal the
         transmission lines at his own expense at the boundaries of the Object
         of Purchase. Should Buyer fail to fulfill this obligation, Seller shall
         have the right to undertake these measures at Buyer's expense following
         an appropriate period of notice with a threat of refusal.

         Should interruptions in supply occur, Buyer may assert claims against
         Seller for resulting damages only if Seller has caused this malfunction
         willfully or through gross negligence.

2)       PERMANENT WASTEWATER DISPOSAL FOR OBJECT OF PURCHASE AND CREATION OF AN
         EASEMENT

         Seller shall grant to Buyer the right to joint usage of the wastewater
         disposal line marked in yellow in APPENDIX 5 D. Seller shall be
         responsible for maintenance and repair as well as any necessary
         modernization measures. Buyer shall pay a proportional share of the
         costs for such measures upon receipt of an invoice. The share to be
         borne by Buyer shall correspond to the share of the net commercial
         space (pursuant to DIN 277) of the buildings standing on the Object of
         Purchase in relation to the net commercial space of all buildings
         standing on Lot 8260/3 recorded in the Land Register of the Local Court
         of Karlsruhe in Karlsruhe, Page 64224, as well as on the Object of
         Purchase, the unsold residual area of Lot 8260 recorded in the Land
         Register of the Local Court of Karlsruhe in Karlsruhe, Page 51357, and
         Lots 8260/1, 8260/2, and 8260/3 recorded in the aforementioned Land
         Register and served by the wastewater disposal line marked in yellow in
         APPENDIX 5 D.

         In the event that pollution occurs in the disposed wastewater or the
         wastewater disposal line, Buyer agrees to assume all costs caused by
         the pollution (particularly costs for measures necessary to remove the
         pollution), unless Buyer can prove that this pollution was not caused
         by him, his suppliers, or his agents. Buyer shall equip the feeder line
         from the purchased property to the main line with a monitoring device.

         Should interruptions occur in wastewater disposal, Buyer may assert
         claims against Seller for resulting damages only if Seller has caused
         this malfunction willfully or through gross negligence.

<PAGE>
                                      -10-

Seller
                                   authorizes

and Buyer petitions the entry in the Land Register of a corresponding
appurtenant easement for the benefit of the respective owner of the Object of
Purchase to the unsold residual area of Lot 8260 and 8260/1.

3)       UTILITY LINES TEMPORARILY REMAINING IN THE OBJECT OF PURCHASE

         Buyer shall grant to Seller the right to joint usage of the electrical
         transmission lines marked in red in APPENDIX 5 E as well as transformer
         U 28, which are necessary to supply electricity to buildings 5429 and
         5431 adjoining the Object of Purchase.

         All costs for utilities, including costs for maintenance, metering,
         upkeep, inspection, etc. shall be borne by Seller in accordance with
         the services he uses. Buyer shall enter into a special service
         agreement with Siemens AG A & D AS EWK BB for maintenance, inspection,
         and repair.

         The right to usage of the lines as well as the transformer is limited
         by Buyer's joint usage. Seller agrees to provide an independent
         electricity supply to buildings 5429 and 5431 no later than May 31,
         2005.

         On the aforementioned date, Seller must separate and seal the
         transmission lines at his own expense at the boundaries of the Object
         of Purchase. Should Seller fail to fulfill this obligation, Buyer shall
         have the right to undertake these measures at Buyer's expense following
         an appropriate period of notice with a threat of refusal.

4)       UTILITY LINES PERMANENTLY REMAINING IN THE OBJECT OF PURCHASE AND
         CREATION OF AN EASEMENT

         The residual area of Lot 8260 recorded in the Land Register of the
         Local Court of Karlsruhe in Karlsruhe, Page 51357, as well as the Lots
         8260/1 and 8260/2 recorded in the aforementioned Land Register and Lot
         8260/3 recorded in the Land Register of the Local Court of Karlsruhe in
         Karlsruhe, Page 64224, are served by water supply lines and
         wastewater/rainwater disposal lines as well as electrical transmission
         lines running through the Object of Purchase. The water supply line is
         shown in red in APPENDIX 5A, the wastewater/rainwater line is shown in
         blue in APPENDIX 5B, and electrical transmission line is shown in green
         in APPENDIX 5C. The unsold residual area of Lot 8260 as well as the
         Lots 8260/1, 8260/2, and 8260/3 are hereafter referred to as the
         "Beneficiary Lots." Buyer shall permit the respective owners of the
         Beneficiary Lots to have joint usage of these lines free of charge.

         Seller shall be responsible for maintenance and repair as well as any
         necessary modernization measures. Buyer shall pay a proportional share
         of the costs for such measures upon receipt of an invoice, to the
         extent that he makes joint use of the lines. The share to be borne by
         Buyer shall correspond to the share of the net commercial space
         (pursuant to DIN 277) of the buildings standing on the Object of
         Purchase in relation to the net commercial space of all buildings
         served by the lines marked in APPENDICES 5 A-C.

         The respective owner of the Beneficiary Lots, as well as persons
         appointed by him, shall be authorized to enter the Object of Purchase
         for the purpose of inspecting the lines, and to travel on the Object of
         Purchase with vehicles of all kinds. This shall also apply for any
         maintenance, repair, and modernization measures that may occur.

<PAGE>
                                      -11-

         The owner of the servient property must maintain access to a strip two
         meters in width running along the water supply and wastewater/rainwater
         disposal lines, as well as the electrical transmission line. The
         portion of the electrical transmission line marked in green as well as
         the water supply and wastewater/rainwater disposal lines may be moved
         by Buyer at his own expense if he creates easements for the owners of
         the Beneficiary Lots in accordance with the aforementioned arrangement
         to ensure the new line, and reconnects the lines at the respective
         property boundary of the Object of Purchase to the original point at
         which the continuation of the respective line is located beyond the
         Object of Purchase.

         The owner of the servient property is further authorized to build over
         the lines. In this case, however, he must bear all costs for any
         maintenance, inspection, repair, and modernization measures
         additionally incurred due to the building-over of the lines. In the
         event of the building-over of lines, the owner of the servient property
         shall tolerate without compensation all actions performed in the
         building standing over the respective transmission line as may be
         required for the maintenance, inspection, repair, and modernization of
         the respective line.

         The owner of the Object of Purchase must refrain from all measures that
         could have a damaging effect on the line.

         Buyer

                                   authorizes

         and Seller petitions the entry in the Land Register of a corresponding
         appurtenant easement for the benefit of the respective owner of the
         unsold residual area of Lot 8260, as well as Lots No. 8260/1 and 8260/2
         to the Object of Purchase.

5)       RIGHT-OF-WAY FOR PEDESTRIANS AND VEHICLES

         Seller shall grant to Buyer, his employees, suppliers, tradesmen, and
         other agents use of the land area shown shaded and outlined in yellow
         on the site plan attached as APPENDIX 6 as an access point and entrance
         to the Object of Purchase for vehicles of all kinds, so long as Buyer's
         property is not publicly or otherwise developed (right-of-way for
         pedestrians and vehicles).

         In regard to the shaded land area outlined in yellow and marked in
         green, the Contracting Parties agree that Seller may change the
         entrance area to the industrial park at any time, so long as access and
         entry for Buyer are ensured in the same scope as previously while the
         changes are taking place and after their completion.

         The right-of-way for pedestrians and vehicles shall not authorize
         Buyer, his employees, suppliers, tradesmen, and other agents to place
         vehicles, equipment/goods, and similar items in the areas shaded in
         yellow. Vehicles, goods, and other objects of any kind placed in this
         area in violation of the Agreement shall be removed at Buyer's expense.
         The regulations for the industrial park shall apply in each case for
         those areas designated as rights-of-way for pedestrians and vehicles.

         Traffic regulations must be applied appropriately when exercising the
         right-of-way for pedestrians and vehicles. Usage of the right-of-way
         must occur in such a way as to avoid excessive traffic burdens.

<PAGE>
                                      -12-

         Costs for maintenance, traffic safety measures, and appropriate
         insurance policies, as well as for lighting and drainage of the road
         services shall be determined by Seller and assessed upon Buyer on a
         basis proportional to the share of the shaded road surface in relation
         to the total road surface of the Siemens Industriepark Karlsruhe. The
         Contracting Parties shall come to a mutual agreement regarding the
         billing period and the applicable cost allocation base.

         In order to ensure the aforementioned right-of-way for pedestrians and
         vehicles, Seller authorizes and the Contracting Parties

                                    petition

         the entry in the Land Register of a corresponding appurtenant easement
         for the benefit of the respective owner of the Object of Purchase to
         the unsold residual area of Lot 8260 remaining in Seller's possession.
         The easements should be recorded without preference.

5)       TELECOMMUNICATIONS/DATA NETWORK, PRESSURIZED AIR SUPPLY

         Seller notes that the telecommunications/data network and pressurized
         air supply systems are the property of Siemens AG A&D AS EWK BB. Buyer
         waives the demand that Siemens AG A&D AS EWK BB must remove these
         systems from the Object of Purchase.

6)       CENTRAL FIRE ALARM SYSTEM

         The buildings standing on the Object of Purchase are equipped with fire
         alarms connected to Seller's central fire alarm system. Buyer shall be
         granted a time-limited use of this central control system by Seller
         until September 30, 2004. Buyer shall be obligated to provide an
         independent fire alarm system no later than September 30, 2004. Should
         Buyer suffer damages because the central fire alarm system is not
         functional, then Buyer may assert claims against Seller only if Seller
         has caused this circumstance willfully or through gross negligence.

         Buyer shall be obligated to stipulate the aforementioned agreements
         with a third party (future Buyer) with a duty to subcontract even in
         the event of a further sale of the Object of Purchase. Should this not
         occur, and should claims therefore be asserted against Seller contrary
         to the aforementioned agreement, then Buyer agrees to indemnify Seller
         against all claims.

7)       TOLERANCE OF POLLUTION

         Buyer is aware that the areas remaining in Seller's possession are used
         for commercial purposes. Buyer shall tolerate without compensation all
         legally permissible effects (particularly noise, dust, vibrations)
         caused by commercial usage, including usage by future tenants or
         buyers, within the scope of the respective permissible use.

         Buyer shall be obligated to stipulate the aforementioned agreements
         with a third party (future Buyer) with a duty to subcontract even in
         the event of a further sale of the Object of Purchase. Should this not
         occur, and should claims therefore be asserted against Seller contrary
         to the aforementioned Agreement, then Buyer agrees to indemnify Seller
         against all claims.

8)       PARKING LOTS/BICYCLE GARAGE

         Buyer shall grant to Seller use of the parking lots/bicycle garage
         located on the Object of Purchase (APPENDIX 7) free of charge until
         June 30, 2002.

<PAGE>
                                      -13-

         Upon expiration of the period of use and three months after demand by
         Buyer, to the extent legally permissible, although not before September
         30, 2002, Seller shall be obligated to remove the bicycle garage at his
         own expense down to the upper edge of the foundation.

9)       ARRANGEMENT CONCERNING DISTANCE SPACES

         To the extent that distance spaces must be assumed by Buyer or Seller
         to the benefit of the other Contracting Party's property in order to
         obtain a required approval of property subdivision, the Contracting
         Parties agree to submit the necessary declarations for this purpose.

                                       X.
                             AUTHORIZATION OF NOTARY

The Notary is hereby instructed to obtain all approvals, including approvals by
third parties. The approvals should be effective vis-a-vis the Contracting
Parties upon their receipt by the acting Notary.

The Contracting Parties instruct and authorize the acting Notary to obtain all
official rulings, particularly a permit in accordance with Section 19 of the
Town and Country Planning Code for a corresponding negative certificate and
negative clearance or non-user declarations due to rights of preemption under
public Law. [illegible] notices, however, must be delivered to the Contracting
Parties themselves.

The aforementioned authorization issued to the Notary also does not include the
authority to file an advertisement of sale pursuant to Section 510 of the German
Civil Code.

The power of agency also includes the right, in the event of reversal of the
Agreement, to issue and file applications for deletion and authorizations for
recorded rights, including the caution of notarially executed conveyance to be
entered in the Land Register, and also includes all applications to be filed for
an eventual required reverse transaction. This power of agency shall expire upon
transfer of ownership to Buyer in the Land Register.

                                       XI.
                  WITHDRAWAL FROM AGREEMENT/RIGHT OF PREEMPTION

1)       Should the official permits or declarations necessary for the
         enforcement of this Agreement be unobtainable, Seller may withdraw from
         the Agreement. Buyer may demand only repayment of the purchase price.
         Further claims by Buyer are precluded.

2)       Should a right of preemption be exercised, Buyer shall have no right to
         assert claims for damages.

3)       Buyer has the right to withdraw from this Agreement until February 28,
         2002, if by this date he has not received a positive response to his
         preliminary planning application, to be submitted without delay, for
         the intended construction of an office/laboratory building on the
         Object of Purchase.

         The withdrawal may be declared no earlier than February 15, 2002 (date
         of postmark) by means of a registered letter with return receipt. The
         declaration of withdrawal must contain credible documentation by Buyer
         that the preliminary planning application had been submitted by
         November 15, 2001, and that all necessary actions had been taken to
         obtain approval as quickly as possible.

<PAGE>
                                      -14-

                                      XII.
                                  DUTY TO OFFER

1)       Should Buyer intend to sell the property outlined in red ("Additional
         Area") in APPENDIX 8, then he shall offer the Additional Area to Buyer
         for purchase after receiving purchase inquiries from third parties.
         With this offer, Seller shall inform Buyer in writing of the conditions
         presented in the purchase inquiry submitted by the prospective buyer
         preferred by Seller.

         Buyer may inform Seller in writing within four weeks after receipt of
         the aforementioned correspondence from Seller that he wishes to
         purchase the Additional Area under the conditions contained in the
         correspondence from Seller. If the Contracting Parties agree within a
         further six weeks on the final text of a purchase agreement, then
         Seller shall sell the Additional Area to Buyer.

2)       The duty pursuant to the aforementioned Item 1) shall end seven years
         after the recording of this Agreement. The duty in accordance with
         aforementioned Item 1) shall not apply to sales of the Additional Area
         to Siemens Aktiengesellschaft or to companies in which Siemens
         Aktiengesellschaft or Seller hold an interest. The same applies for the
         incorporation of the Additional Area into such companies or withdrawals
         [SIC] by Siemens Aktiengesellschaft.

                                      XIII.
                                COSTS AND COPIES

1)       Buyer shall bear all costs associated with this Agreement and its
         performance, including the required official approvals and
         supplementary recording, as well as the applicable land transfer tax.
         Seller shall bear the costs for surveying, demarcation, and subdivision
         of the property in the Land Register.

         If the purchase agreement cannot be enforced due to a denial of
         official approvals (except for the preliminary planning application),
         then the Contracting Parties shall each bear one-half of the
         aforementioned costs.

         Seller shall be responsible for the costs involved in freeing the
         property from any encumbrances.

2)       The Contracting Parties shall receive copies of this instrument as
         follows:

a.       Each Contracting Party shall receive one official copy preceded by a
         notarized photocopy;

b.       The Land Registry Office shall receive one official copy,

c.       Siemens Aktiengesellschaft - ZFB 2 Steuern - in 91052 Erlangen,
         Werner-von-Siemens-Strasse 50, one notarized photocopy,

d.       The advisory committee and

e.       the Tax Office - Land Transfer Tax Department - one simple copy each.

                                       XIV.
                                      NOTES

The contracting parties acknowledge that they have been specifically instructed
by the Notary that

1)       ownership of the Object of Purchase shall transfer to Buyer only upon
         change of the entry in the Land Register, and enforcement in accordance
         with the Agreement can occur only after all consent [...]

<PAGE>
                                      -15-

Read aloud, approved,
and signed in their own hand

[signatures]

[stamp]
Friedrich Schneider
Notary in Worth am Rhein

<PAGE>

                                   Appendix 1

                 Industrial park site plan with building numbers

                                    [Diagram]

                            [Site Plan of Lot 8260]

<PAGE>

                                   Appendix 2

                                   Inventory

                                ROOMS 5428 AND 30

<Table>
<Caption>
OBJECT                                               ROOM
<S>                                                  <C>
DATA AND COMMUNICATION
Video Conference Room                                5428.0253
Lock System                                          5428.0224
Remote-controlled Cameras                            5428
                                                     5430
Network Equipment                                    5428.02
                                                     5428.03
                                                     5430
</Table>

<PAGE>

                                   Appendix 3

                                    [Diagram]

                       [Site Plan of Object of Purchase]

<PAGE>

                                   Appendix 4

                                 List of Tenants

<TABLE>
<CAPTION>
----------- --------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
Contract    Room      Square    Start     End of    Rent     Over-     Tax       Total     Date      Supple-  Supple-
Partner               Meters    of Lease  Lease     (DEM)    head                                    ment     ment #2
----------- --------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
<S>         <C>       <C>       <C>       <C>       <C>      <C>       <C>       <C>       <C>       <C>      <C>
Siemens     5428 02   23.66     10/1/97   9/30/03   120.31   93.94     34.28     248.53    11/27/97  8/23/98  9/12/00
AG          53 00
A&D
AS
EWK
----------- --------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
            5428 02   63.48     10/1/97   9/30/03   348.23   271.89    99.22     719.34    11/27/97  8/23/98  9/12/00
            53 10
----------- --------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
                      92.14                         468.55   365.83    133.50    967.87
----------- --------- --------- --------- --------- -------- --------- --------- --------- --------- -------- ---------
</TABLE>

<PAGE>

                                   Appendix 5

                                    [Diagram]

    [Diagram of Waste Water Lines, Water Supply Lines and Electrical Lines]

<PAGE>

                                   Appendix 6

                                    [Diagram]

                                  Right of way

<PAGE>

                                   Appendix 7

                                    [Diagram]

                         [Site Plan of the Parking Lot]

<PAGE>

                                   Appendix 8

                                    [Diagram]

                       [Site Plan of the Additional Area]

<PAGE>
                                      -16-

                          ACKNOWLEDGMENT OF TRANSLATION

                                 November 9, 2001

         The undersigned officer of the Registrant hereby acknowledges on
behalf of the Registrant that the foregoing translation of the Purchase
Agreement between Bruker AXS GmbH and Siemens Industriepark Karlsruhe GmbH &
Co. OHG is a fair and accurate English translation from German of the
original executed agreement.

                                       BRUKER AXS INC.

                                       By: /s/ Martin Haase
                                           -----------------------
                                           Martin Haase, President
                                           and Chief Executive Officer<PAGE>

                                                                     EXHIBIT 4.1

CERTIFICATE OF DESIGNATIONS OF THE POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF

                                       OF

                   3% CUMULATIVE CONVERTIBLE PREFERRED STOCK

                                      FOR

                                STEMCELLS, INC.

     STEMCELLS, INC., a Delaware corporation (the "CORPORATION"), pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, does hereby make this Certificate of Designations and does hereby
state and certify that pursuant to the authority expressly vested in the Board
of Directors of the Corporation by the Certificate of Incorporation of the
Corporation, the Board of Directors duly adopted the following resolutions,
which resolutions remain in full force and effect as of the date hereof:

     RESOLVED, that, pursuant to Article Fourth of the Certificate of
Incorporation of the Corporation, the Board of Directors hereby authorizes the
issuance of, and fixes the designation and preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions, of a series of Preferred Stock consisting of 5,000
shares, par value $.01, to be designated "3% Cumulative Convertible Preferred
Stock" (the "PREFERRED SHARES"); and

     RESOLVED, that each of the Preferred Shares shall rank equally in all
respects and shall be subject to the following terms and provisions.

     1. DESIGNATION. There is hereby created out of the authorized and unissued
shares of preferred stock of the Corporation a series of preferred stock
designated as the "3% Cumulative Convertible Preferred Stock". The number of
shares constituting such series shall be 5,000.

     2. DIVIDENDS.

          (a) CUMULATIVE. The holders of the Preferred Shares shall be entitled
to receive cumulative dividends, to the extent permitted by law, at the per
share rate of three percent (3%) of the Liquidation Preference (as defined
below) of each Preferred Share, per annum accruing daily and compounded
semi-annually on June 30 and December 31 of each year (each a "DIVIDEND PAYMENT
DATE") commencing with the first Dividend Payment Date occurring after the
original issuance date of such share, (x) at least on a PARI PASSU basis with
any payment of any dividends on the 6% Cumulative Convertible Preferred Stock of
the Corporation (the "6% PREFERRED STOCK") and/or any class or series of
preferred stock of the Corporation authorized after the date hereof and (y) in
preference and priority to any payment of any dividend on the Common Stock (as
defined below) and/or any other class or series of equity security of the
Corporation. Such dividends shall accrue on any given share from the most recent
date on which

<PAGE>

a dividend has been paid with respect to such share, or if no dividends have
been paid, from the date of the original issuance of such share, and such
dividends shall accrue from day to day whether or not declared, based on the
actual number of days elapsed. If at any time dividends on the outstanding
Preferred Shares at the rate set forth above shall not have been paid or
declared and set apart for payment with respect to all preceding periods, the
amount of the deficiency shall be fully paid or declared and set apart for
payment, but without interest, before any distribution, whether by way of
dividend or otherwise, shall be declared or paid upon or set apart for the
shares of any other class or series of equity security of the Corporation (other
than the 6% Preferred Stock and/or any preferred stock of the Corporation
authorized after the date hereof which shall be treated PARI PASSU with the
Preferred Shares). For purposes of computing any per diem accrual, calculations
shall be made using a 360-day year.

          (b) STOCK PAYMENT OR CASH PAYMENT.

               (i) The Corporation shall pay the dividends payable on the
outstanding Preferred Shares on each Dividend Payment Date, to the extent
permitted by law, either in cash or in shares of Common Stock, at the
Corporation's option (subject to the terms hereof), provided that accrued but
unpaid dividends on any Preferred Shares which are redeemed or repurchased
hereunder or otherwise shall be paid in cash concurrently with such redemption
or repurchase. Unless the Corporation shall deliver to all holders of Preferred
Shares an irrevocable written notice (the "DIVIDEND NOTICE") on or before 4:30
p.m., New York time, on any Dividend Payment Date electing to pay dividends on
the Preferred Shares in shares of Common Stock as of such Dividend Payment Date,
the Corporation shall pay dividends on the Preferred Shares in cash. If the
Corporation timely elects to so pay dividends in Common Stock, then the number
of such shares to be issued on such Dividend Payment Date shall be the number
determined by dividing (x) the dollar amount of dividends due by (y) the daily
volume-weighted average sale price for the Common Stock on the Principal Market
(as defined in the last sentence of this Section 2(b)) as reported by the AQR
function on Bloomberg Financial Market ("VWAP") on the Dividend Payment Date.

               (ii) The Corporation shall use its best efforts to issue and
deliver such shares within three (3) Trading Days (as defined in the last
sentence of this Section 2(b)(ii)) following the applicable Dividend Payment
Date and, upon delivery, such shares shall be duly authorized, validly issued,
fully paid, non-assessable and free and clear of all encumbrances, restrictions
and legends. If the Corporation fails to issue such shares of Common Stock in
such manner within five (5) Trading Days following the Dividend Payment Date,
then the holders of Preferred Shares shall have the right, until such time as
the shares are issued and only to the extent that such payment is permitted by
law, to elect whether to receive such dividends (i) in cash or (ii) Common
Stock. Until such election is made and the dividends are paid in accordance
therewith, the amount of such dividends shall be deemed added to the Liquidation
Preference. The term "TRADING DAY" means a day in which there is trading on the
Nasdaq National Market or such other market or exchange on which the Common
Stock is then principally traded (hereinafter referred to as the "PRINCIPAL
MARKET"). If the Corporation is unable to pay dividends in either cash or Common
Stock pursuant to this Section 2(b) as a matter of law, then the Corporation
shall pay the dividends as soon as the Corporation is legally permitted to do
so.

                                       2
<PAGE>

          (c) Notwithstanding anything to the contrary contained herein, the
Corporation may not pay dividends hereunder in shares of Common Stock (and must
deliver cash in respect thereof) if, as of the Dividend Payment Date:

               (i) assuming that such dividends were paid in shares of Common
Stock, the number of shares of Common Stock at the time authorized, unissued and
unreserved for all purposes, or held as treasury stock, would be insufficient to
issue the number of shares issuable upon conversion of all Preferred Shares at
the Conversion Price at such time;

               (ii) such shares have not been listed on the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange or the American
Stock Exchange (or the Common Stock is suspended from trading on any such market
or exchange) for more than 5 Trading Days (which need not be consecutive) since
the immediately preceding Dividend Payment Date; provided, however, that this
Section 2(c)(ii) shall not apply to suspensions of trading resulting from
general suspensions of trading on such market or exchange;

               (iii) the Corporation shall have failed to pay any dividend
payments (to the extent such payments were permitted by law) when due on more
than two occasions; or

               (iv) such issuance would cause the ownership limitations
contained in Section 5(i) below to be violated.

     3. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, the holders
of the Preferred Shares shall be entitled to receive, out of the assets of the
Corporation available for distribution to stockholders, at least on a PARI PASSU
basis with distributions to the holders of 6% Preferred Stock and any class or
series of preferred stock of the Corporation authorized after the date hereof
and in preference and priority to any distributions to the holders of the Common
Stock and/or any other class or series of equity security of the Corporation,
the greater of (x) the amount of $1,000 per share plus (i) dividends added to
the Liquidation Preference in accordance with Section 2(b)(ii) above; (ii) all
accrued but unpaid dividends; and (iii) all accrued but unpaid Delay Payments
(as defined in the Registration Rights Agreement) payable pursuant to the
Registration Rights Agreement (as defined below) (such aggregate dollar amount
per share being referred to as the "LIQUIDATION PREFERENCE") and (y) an amount
determined by the following calculation: R x P, where "R" refers to the
percentage of shares of Common Stock which the holders of Preferred Shares would
have held if all of the Preferred Shares outstanding immediately prior to
liquidation had been converted immediately prior to the liquidation and "P"
refers to the total assets of the Corporation available for distribution to
stockholders (other than to the holders of the 6% Preferred Stock (as such
preferred stock is constituted on the date hereof)) if the aggregate Liquidation
Preference is not paid.

          (b) A Change of Control Transaction shall be deemed a liquidation,
dissolution or winding up of the Corporation for purposes of this Section 3
unless the holders of a majority of the then outstanding Preferred Shares elect
not to treat such Change of Control Transaction as a liquidation, dissolution or
winding up by giving written notice thereof to the Corporation. A

                                       3
<PAGE>

"CHANGE IN CONTROL TRANSACTION" will be deemed to exist if (i) there occurs any
consolidation, merger or other business combination of the Corporation with or
into any other corporation or other entity or person (whether or not the
Corporation is the surviving corporation), or any other corporate reorganization
or transaction or series of related transactions in which in any of such events
the voting stockholders of the Corporation prior to such event cease to own 50%
or more of the voting stock, or corresponding voting equity interests, of the
surviving corporation after such event (including without limitation any "going
private" transaction under Rule 13e-3 promulgated pursuant to the Exchange Act
or tender offer by the Corporation under Rule 13e-4 promulgated pursuant to the
Exchange Act for 50% or more of the Corporation's Common Stock), (ii) any person
(as defined in Section 13(d) of the Exchange Act), together with its affiliates
and associates (as such terms are defined in Rule 405 under the Act), acquires
or is deemed to acquire beneficial ownership (as described in Rule 13d-3 under
the Exchange Act in excess of 50% of the Corporation's voting power, (iii) there
is a replacement of more than one-half of the members of the Corporation's Board
of Directors which is not approved by those individuals who are members of the
Corporation's Board of Directors on the date thereof, (iv) in one or a series of
related transactions, there is a sale or transfer of all or substantially all of
the assets of the Corporation, determined on a consolidated basis, or (v) the
execution by the Corporation of an agreement to which the Corporation is a party
or which it is bound providing for an event set forth in (i), (ii), (iii) or
(iv) above, pursuant to which the Common Stock is converted or reclassified into
other securities, cash or property.

     4. ISSUANCE OF PREFERRED SHARES. The Preferred Shares shall be issued by
the Corporation pursuant to a Subscription Agreement, dated on or about the date
hereof ("SUBSCRIPTION AGREEMENT") between the Corporation and the initial
subscribers for the Preferred Shares thereunder (the "SUBSCRIBERS"), and holders
of Preferred Shares shall enjoy the benefits of the Registration Rights
Agreement, dated the date hereof ("REGISTRATION RIGHTS AGREEMENT") between such
parties in connection with the Subscription Agreement.

     5. CONVERSION. Each holder of the Preferred Shares shall have the right at
any time and from time to time, at the option of such holder, to convert some or
all Preferred Shares held by such holder, into such number of fully paid,
validly issued and nonassessable shares ("COMMON SHARES") of common stock, par
value $0.01 of the Corporation ("COMMON STOCK"), free and clear of any liens,
claims or encumbrances, as is determined by dividing (i) the Liquidation
Preference times the number of Preferred Shares being converted (the "CONVERSION
AMOUNT"), by (ii) the applicable Conversion Price determined as hereinafter
provided in effect on the Conversion Date. Immediately following such
conversion, the rights of the holders of converted Preferred Shares shall cease
(other than the right to receive Common Stock upon conversion) and the persons
entitled to receive the Common Shares upon the conversion of Preferred Shares
shall be treated for all purposes as having become the owners of such Common
Shares, subject to the rights provided herein to holders.

          (a) MECHANICS OF CONVERSION.

               (i) To convert Preferred Shares into Common Shares, the holder
shall give written notice ("CONVERSION NOTICE") to the Corporation (via
facsimile transmission on or before the Conversion Date (as defined in the next
sentence) and overnight delivery no later than one Trading Day after the
Conversion Date) in the form of EXHIBIT A hereto

                                       4
<PAGE>

stating (A) that such holder elects to convert Preferred Shares, (B) the number
of Preferred Shares to be converted, (C) the number of and denomination of
certificates for Common Shares that such holder wishes to be issued, (D) the
name or names in which such holder wishes the certificate or certificates for
Common Shares to be issued, (E) the number of and denomination of certificates
for unconverted Preferred Shares to be issued to the holder, and (F) the date on
which such conversion is to be effected, which date may not be prior to the date
such Conversion Notice is received by the Corporation (the "CONVERSION DATE").
For the sake of clarity, a Conversion Notice shall be deemed received by the
Corporation once the holder shall have received electronic confirmation of the
Corporation's receipt thereof by facsimile transmission.

               (ii) Upon or as soon as possible after delivery of the Conversion
Notice, such holder shall surrender the certificate or certificates representing
the Preferred Shares being converted, duly endorsed, at the office of the
Corporation or, if identified in writing to all the holders by the Corporation,
at the offices of any transfer agent for such shares. The date that the
Preferred Shares being converted are received by the Corporation shall be
referred to as the "SURRENDER DATE". Notwithstanding anything herein to the
contrary, a holder of the Preferred Shares shall be entitled to deliver to the
Corporation an affidavit of lost certificate in lieu of any certificate of
Preferred Shares.

               (iii) Except as provided in Section 5(a)(v) below, the
Corporation shall, upon receipt of such Conversion Notice and in accordance
therewith, issue and deliver to or upon the order of such holder, against
delivery of the certificates representing the Preferred Shares which have been
converted, (A) a certificate or certificates (with the number of and
denomination of such certificates designated by such holder) for the number of
Common Shares to which such holder shall be entitled, and (B) if less than all
of such holder's Preferred Shares are being converted, issue and deliver to such
holder a certificate or certificates (with the number of and denomination of
such certificates designated by such holder) for the number of Preferred Shares
(including any fractional shares) which such holder has not yet elected to
convert hereunder but which are evidenced in part by the certificate(s)
delivered to the Corporation in connection with such Conversion Notice. The
Corporation shall (x) effect such issuance of Common Shares (and certificates
for unconverted Preferred Shares) within three (3) Trading Days of the Surrender
Date and (y) deliver the certificate(s) representing the Common Shares (and
certificates for unconverted Preferred Shares) by messenger or overnight
delivery service to reach the address designated by such holder within five (5)
Trading Days after the Surrender Date.

               (iv) A Conversion Notice shall be irrevocable, except that, if
certificates evidencing the Common Shares (and certificates for unconverted
Preferred Shares) are not issued by the Corporation within five (5) Trading Days
of the Surrender Date or received by the holder within six (6) Trading Days of
the Surrender Date, then the holder will be entitled to revoke and withdraw its
Conversion Notice, in whole or in part, at any time prior to its receipt of
those certificates, provided, however, that this Section 5(a)(iv) shall not
apply if the Corporation has arranged for the delivery of such shares pursuant
to Section 5(a)(v).

                                       5
<PAGE>

               (v) In lieu of delivering physical certificates representing the
Common Shares issuable upon conversion of Preferred Shares, provided the
Corporation's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the
holder, the Corporation shall use its best efforts to cause its transfer agent
to electronically transmit the Common Shares issuable upon conversion or
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 parties agree to coordinate with DTC
to accomplish this objective.

               (vi) INTENTIONALLY OMITTED.

               (vii) The conversion pursuant to this Section 5 shall be deemed
to have been made immediately prior to the close of business on the Conversion
Date. The person or persons entitled to receive the Common Shares issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Common Shares at the close of business on the Conversion Date.

               (viii) The Corporation's obligation to issue Common Shares upon
conversion of Preferred Shares shall, except as set forth below in this Section
5(a)(viii), be absolute, is independent of any covenant of any holder of
Preferred Shares, and shall not be subject to: (A) any offset or defense; or (B)
any claims against the holders of Preferred Shares whether pursuant to this
Certificate, the Subscription Agreement, the Registration Rights Agreement or
otherwise, including, without limitation, any claims arising out of any selling
or short-selling activity by holders of Preferred Shares. Notwithstanding the
foregoing, such obligation shall be subject to the holder's compliance with the
notice and delivery requirements set forth above in this Section 5(a).

          (b) Determination of Conversion Price. The Conversion Price applicable
with respect to the Preferred Shares (the "CONVERSION PRICE"), shall be $2.00,
as may be adjusted in accordance herewith.

          (c) Stock Splits; Dividends; Adjustments.

               (i) If the Corporation, at any time while the Preferred Shares
are outstanding, (A) shall pay a stock dividend or otherwise make a distribution
or distributions on any equity securities (including instruments or securities
convertible into or exchangeable for such equity securities) in shares of Common
Stock, (B) subdivide outstanding shares of Common Stock into a larger number of
shares, or (C) combine outstanding Common Stock into a smaller number of shares,
then the Conversion Price shall be multiplied by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding before such
event and the denominator of which shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this Section
5(c)(i) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and

                                       6
<PAGE>

shall become effective immediately after the effective date in the case of a
subdivision or combination.

               (ii) INTENTIONALLY OMITTED.

               (iii) If the Corporation, at any time while the Preferred Shares
are outstanding, shall distribute to all holders of Common Stock evidences of
its indebtedness or assets or cash or rights or warrants to subscribe for or
purchase any security (excluding those referred to in Section 5(c)(i) above) of
the Corporation or any of its subsidiaries, then concurrently with such
distributions to holder of Common Stock, the Corporation shall distribute to
holders of the Preferred Shares, the amount of such indebtedness, assets, cash
or rights or warrants which the holders of Preferred Shares would have received
had they converted their Preferred Shares (without regard to the limitation set
forth in Section 5(i) below) into Common Shares immediately prior to the record
date for such distribution.

               (iv) Whenever the Conversion Price is adjusted pursuant to
Section 5(c)(i) or (iii), the Corporation shall promptly mail to each holder of
the Preferred Shares a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

               (v) All calculations under this Section 5(c) shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.

               (vi) No adjustment in the Conversion Price shall reduce the
Conversion Price below the par value of the Common Stock on the date hereof.

               (vii) The Corporation from time to time in its sole discretion
may reduce the Conversion Price by any amount for any period of time if the
period is at least 20 Trading Days and if the reduction is irrevocable during
the period. Whenever the Conversion Price is reduced, the Corporation shall
(unless waived by two-thirds in interest of the holders of Preferred Shares)
mail to the holders of Preferred Shares a notice of the reduction. The
Corporation shall mail, first class, postage prepaid, the notice at least 10
days before the date that the reduced Conversion Price shall take effect. The
notice shall state the reduced Conversion Price and the period it will be in
effect. A reduction of the Conversion Price does not change or adjust the
Conversion Price otherwise in effect for purposes of Section 5(c)(i) or (iii).

          (d) NOTICE OF RECORD DATE. In the event of any taking by the
Corporation of a record date of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any security or right convertible into or
entitling the holder thereof to receive additional Common Shares, 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, the
Corporation shall deliver to each holder of Preferred Shares at least 20 days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution,
security or right and the amount and character of such dividend, distribution,
security or right.

                                       7
<PAGE>

          (e) ISSUE TAXES. The Corporation shall pay any and all documentary or
stamp or similar issue or transfer taxes, excluding any income, franchise or
similar taxes, that may be payable in respect of any issue or delivery of Common
Shares on conversion of Preferred Shares pursuant hereto. However, the holder of
any Preferred Shares shall pay any tax that is due because the Common Shares
issuable upon conversion thereof are issued in a name other than such holder's
name.

          (f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
Common Stock, solely for the purposes of effecting the conversion of the
Preferred Shares, an amount of Common Shares equal to 150% of the number of
shares issuable upon conversion of the Preferred Shares at the then applicable
Conversion Price. The Corporation promptly will take such corporate action as
may, in the opinion of its outside counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose, including without limitation engaging in best
efforts to obtain the requisite stockholder approval.

          (g) FRACTIONAL SHARES. No fractional shares shall be issued upon the
conversion of any Preferred Shares. All Common Shares (including fractions
thereof) issuable upon conversion of more than one Preferred Share by a holder
thereof and all Preferred Shares issuable upon the purchase thereof shall be
aggregated for purposes of determining whether the conversion and/or purchase
would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion and/or purchase would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, either round up the number of shares to
the next highest whole number or, at the Corporation's option, pay the holder
otherwise entitled to such fraction a sum in cash equal to the fair market value
of such fraction on the Conversion Date (as determined in good faith by the
Board of Directors of the Corporation based upon the VWAP on the Conversion Date
or, if such date was not a Trading Day, on the next Trading Day thereafter).

          (h) REORGANIZATION, MERGER OR GOING PRIVATE. At any time which the
Preferred Shares are outstanding, in case of any reorganization or any
reclassification of the capital stock of the Corporation or any consolidation or
merger of the Corporation with or into any other corporation or corporations or
a sale or transfer of all or substantially all of the assets of the Corporation
to any other person or a "going private" transaction under Rule 13e-3
promulgated pursuant to the Exchange Act, then, as part of such reorganization,
consolidation, merger, or transfer if the holders of shares of Common Stock
receive any publicly traded securities as part or all of the consideration for
such reorganization, consolidation, merger or sale, it shall be a condition
precedent of any such event or transaction that provision shall be made such
that each Preferred Share shall thereafter be convertible into such new
securities at a conversion price and pricing formula which places the holders of
Preferred Shares in an economically equivalent position as they would have been
if not for such event. In addition to the foregoing, if the holders of shares of
Common Stock receive any non-publicly traded securities or other property or
cash as part or all of the consideration for such reorganization, consolidation,
merger or sale, then such distribution shall be treated to the extent thereof as
a distribution under Section 5(c)(iii) above and such Section shall also apply
to such distribution.

          (i) LIMITATIONS ON HOLDER'S RIGHT TO CONVERT.

                                       8
<PAGE>

               (i) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by a holder at any
time upon conversion of Preferred Shares 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 at such time (other than by virtue of
the ownership of securities or rights to acquire securities (including the
Preferred Shares and Warrants) that have limitations on the holder's right to
convert, exercise or purchase similar to the limitation set forth in this
Section 5(i)), 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 limitations on the right to convert, exercise or purchase
similar to the 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 Exchange Act, 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 (x) at any time and from time to time to reduce its
Restricted Ownership Percentage immediately upon notice to the Corporation and
(y) (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 Change in Control Transaction (as defined below). The
Corporation's obligation to issue Common Stock which would exceed such limits
referred to in this Section 5(i) shall be suspended to the extent necessary
until such time, if any, as shares of Common Stock may be issued in compliance
herewith.

               (ii) Notwithstanding anything contained herein, in no event shall
the Corporation issue shares of Common Stock hereunder to the extent that the
total number of shares issued or deemed issued to a holder under the
Subscription Agreement would exceed such holder's pro rata share (in the event
that there is more than one holder) of 19.99% of the Corporation's issued and
outstanding shares of Common Stock on the date of issuance hereof, unless
otherwise approved by the Corporation's stockholders. If the Corporation has not
obtained stockholder approval on or before the date that delivery of the shares
is required, the Corporation shall redeem such holder's Preferred Shares to the
extent the conversion thereof would exceed the 19.99% limit. The redemption
price shall be the price determined under Section 5(k) below.

          (j) CERTIFICATE FOR CONVERSION PRICE ADJUSTMENT. The Corporation shall
promptly furnish or cause to be furnished to each holder a certificate prepared
by the Corporation setting forth any adjustments or readjustments of the
Conversion Price pursuant to this Section 5.

          (k) MANDATORY REPURCHASE. If a "Registration Failure" (as defined in
the next sentence) shall occur, each holder shall have the unilateral option and
right to compel the Corporation to repurchase, to the extent permitted by law,
any or all of such holder's Preferred Shares within 3 days of a written notice
requiring such repurchase ("T+3"), at a price per Preferred Share equal to the
greater of (A) 100% of the Liquidation Preference then in effect and (B) the
amount determined by the following calculation: (LP/CP) x VWAP, where "LP"
refers to the Liquidation Preference, "CP" refers to the Conversion Price in
effect on the date used to determine "VWAP" and, for the purposes of this
Section 5(k), "VWAP" refers to the greater of (x) the VWAP on the Trading Day
immediately preceding the day constituting T+3 and (y) the

                                       9
<PAGE>

VWAP on the closing date of the repurchase of such holder's Preferred Shares. A
"REGISTRATION FAILURE" shall be deemed to occur in the event that a Registration
Statement covering the Registrable Securities (as defined in the Registration
Rights Agreement) shall not have been declared effective by the Securities
Exchange Commission at any time on or prior to the nine (9) month anniversary of
the Closing Date. If the Corporation is unable to repurchase all of a holder's
Preferred Shares pursuant to this Section 5(k) as a matter of law (the
"MANDATORY REPURCHASE OBLIGATION"), the Mandatory Repurchase Obligation shall be
discharged as soon as the Corporation has funds legally available to discharge
such Mandatory Repurchase Obligation.

          (l) MANDATORY CONVERSION. If more than 75% of the Preferred Shares
originally issued under the Subscription Agreement are no longer outstanding,
the remaining Preferred Shares shall automatically convert into shares of Common
Stock at the then-existing Conversion Price, provided, that such mandatory
conversion shall not occur unless and until the shares of Common Stock issuable
upon such conversion are subject to Effective Registration. For the purposes
hereof, "EFFECTIVE REGISTRATION" shall mean: (i) the resale of Registrable
Securities (as defined in the Registration Rights Agreement) is covered by an
effective registration statement and such registration statement is not subject
to any suspension or stop orders; (ii) the resale of such securities may be
effected pursuant to a current and deliverable prospectus that is not subject to
any blackout or similar circumstance; (iii) the securities are listed on an
Approved Market and are not subject to any trading suspension; and (iv) none of
the Corporation or any direct or indirect subsidiary of the Corporation is
subject to any bankruptcy, insolvency or similar proceeding.

     6. REDEMPTION. On the second anniversary of the date hereof (the
"REDEMPTION DATE"), the Corporation shall redeem all outstanding Preferred
Shares for cash, to the extent the Corporation has funds legally available
therefor, at a redemption price per share equal to the Liquidation Preference.
If the Corporation is unable or shall fail to discharge its obligation to redeem
all outstanding Preferred Shares pursuant to this Section 6 (the "MANDATORY
REDEMPTION OBLIGATION"), the Mandatory Redemption Obligation shall be discharged
as soon as the Corporation has funds legally available to discharge such
Mandatory Redemption Obligation.

     7. VOTING RIGHTS. In addition to all other requirements imposed by Delaware
law, and all other voting rights granted under the Corporation's Certificate of
Incorporation, the affirmative vote of two-thirds in interest of the
Corporation's outstanding Preferred Shares shall be necessary for (i) any
amendment, modification or repeal of this Certificate of Designations (whether
by merger, consolidation or otherwise) or (ii) any amendment to the Certificate
of Incorporation or by-laws of the Corporation that may amend or change or
adversely affect any of the rights, preferences, or privileges of the Preferred
Shares, provided, however, that holders of Preferred Shares that are affiliates
of the Corporation (and the Corporation itself) shall not participate in such
vote and the Preferred Shares of such holders shall be disregarded and deemed
not to be outstanding for purposes of such vote.

     8. NOTICES. The Corporation shall distribute to the holders of Preferred
Shares copies of all notices, materials, annual and quarterly reports, proxy
statements, information statements and any other documents distributed generally
to the holders of shares of Common Stock of the

                                       10
<PAGE>

Corporation, at such times and by such method as such documents are distributed
to such holders of such Common Stock.

     9. REPLACEMENT CERTIFICATES. The certificate(s) representing the Preferred
Shares held by any holder of Preferred Shares may be exchanged by such holder at
any time and from time to time for certificates with different denominations
representing an equal aggregate number of Preferred Shares, as reasonably
requested by such holder, upon surrendering the same. No service charge will be
made for such registration or transfer or exchange.

     10. NO REISSUANCE. No Preferred Shares acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued.

     11. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Preferred Shares set forth in this Certificate of Designations (as this
Certificate of Designations may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule or law or public
policy, all other rights, preferences and limitations set forth in this
Certificate of Designations, which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall nevertheless
remain in full force and effect, and no right, preference or limitation herein
set forth be deemed dependent upon any such other right, preference or
limitation unless so expressed herein.

     12. LIMITATIONS. Except as may otherwise be required by law and as are set
forth in the Subscription Agreement and the Registration Rights Agreement, the
Preferred Shares shall not have any powers, preference or relative
participating, optional or other special rights other than those specifically
set forth in this Certificate of Designation (as may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Corporation.

     13. SPECIFIC PERFORMANCE. The Corporation acknowledges and agrees that
irreparable damage would occur in the event that the Corporation failed to
perform any of the provisions of this Certificate in accordance with its
specific terms. It is accordingly agreed that each holder of Preferred Shares
shall be entitled to specific performance, injunctive relief or other equitable
remedies to prevent or cure breaches of the provisions of this Certificate and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which such holder may be entitled under agreement, at law
or equity.

     14. WAIVERS. The holders of 75% of the outstanding Preferred Shares may
waive compliance by the Corporation with any provision of, or a breach by the
Corporation of any provision of, this Certificate of Designations, and any such
waiver shall be binding upon all holders of the Preferred Shares.

Signed on December 4, 2001
                                       STEMCELLS, INC.

                                       By:  /s/ Martin McGlynn
                                          ------------------------------------
                                          Name: Martin McGlynn
                                          Title: President and CEO

                                       11

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