PURCHASE AGREEMENT PURCHASE AGREEMENT (the Agreement ), dated as of

PURCHASE AGREEMENT (the

Agreement ), dated as of June 3, 2013, by and between STEMCELLS, INC., a Delaware corporation, (the Company ), and LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the

Subject to the terms and conditions set forth in this Agreement, the Company wishes to sell to the Investor, and the Investor wishes to buy from the Company, up to Thirty Million Dollars ($30,000,000) of

the Company s common stock, $0.01 par value (the Common Stock ). The shares of Common Stock to be purchased hereunder (including, without limitation, the Initial Purchase Shares (as defined herein)) are referred to herein as

the Purchase Shares.

NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other

good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

purposes of this Agreement, the following terms shall have the following meanings:

(a) Accelerated Purchase

Date means, with respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, the Business Day immediately following the applicable Purchase Date with respect to the corresponding Regular Purchase referred to in

Section 2(b) hereof.

(b) Accelerated Purchase Notice means, with respect to any Accelerated Purchase

made pursuant to Section 2(b) hereof, an irrevocable written notice from the Company to the Investor directing the Investor to buy a specified Accelerated Purchase Share Amount on the applicable Accelerated Purchase Date pursuant to

Section 2(b) hereof at the applicable Accelerated Purchase Price.

(c) Accelerated Purchase Price

means, with respect to any particular Accelerated Purchase made pursuant to Section 2(b) hereof, the lower of (i) ninety-seven percent (97%) of the VWAP during (A) the entire trading day on the Accelerated Purchase Date, if the

volume of shares of Common Stock traded on the Principal Market on the Accelerated Purchase Date has not exceeded the Accelerated Purchase Share Volume Maximum, or (B) the portion of the trading day of the Accelerated Purchase Date (calculated

starting at the beginning of normal trading hours) until such time at which the volume of shares of Common Stock traded on the Principal Market has exceeded the Accelerated Purchase Share Volume Maximum or (ii) the Closing Sale Price on the

Accelerated Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).

(d) Accelerated Purchase Share Amount means, with respect to any Accelerated Purchase made pursuant to

Section 2(b) hereof, the number of Purchase Shares directed by the Company to be purchased by the Investor on an Accelerated Purchase Notice, which number of Purchase Shares shall not exceed the lesser of (i) 200% of the number of Purchase

Shares directed by the Company to be purchased by the Investor pursuant to the corresponding Regular Purchase Notice for the corresponding Regular Purchase referred to in Section 2(b) hereof (subject to the Purchase Share limitations contained

in Section 2(a) hereof) and (ii) the Accelerated Purchase Share Percentage multiplied by the trading volume of the Common Stock on the Principal Market during normal trading hours on the Accelerated Purchase Date.

(e) Accelerated Purchase Share Percentage means, with respect to any

Accelerated Purchase made pursuant to Section 2(b) hereof, a specified percentage as set forth in the Accelerated Purchase Notice, which percentage shall not exceed 0.30.

(f) Accelerated Purchase Share Volume Maximum means the number of shares of Common Stock traded on the Principal Market during normal trading hours on the Accelerated Purchase Date

equal to (i) the amount of shares of Common Stock properly directed by the Company to be purchased on the Accelerated Purchase Notice, divided by (ii) the Accelerated Purchase Share Percentage (to be appropriately adjusted for any

reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).

Available Amount means initially Thirty Million Dollars ($30,000,000) in the aggregate, which amount shall be reduced by the Purchase Amount each time the Investor purchases shares of Common Stock pursuant to Section 2

hereof, including, without limitation, the Initial Purchase pursuant to Section 2(a) hereof.

Price means a price per Purchase Share (rounded to the nearest tenth of a cent) equal to the quotient obtained by dividing (i) the aggregate gross purchase price paid by the Investor for all Purchase Shares purchased pursuant to this

Agreement, by (ii) the aggregate number of Purchase Shares issued pursuant to this Agreement.

Law means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

Price means a price per Purchase Share equal to the sum of (i) the Signing Market Price and (ii) $0.077 (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other

similar transaction that occurs on or after the date of this Agreement).

(k) Base Prospectus means the

Company s final base prospectus, dated November 16, 2010, a preliminary form of which is included in the Registration Statement, including the documents incorporated by reference therein, or any final base prospectus in any Registration

Statement filed after the date hereof to cover the sales of the Securities.

(l) Business Day means any day

on which the Principal Market is open for trading, including any day on which the Principal Market is open for trading for a period of time less than the customary time.

(m) Closing Sale Price means, for any security as of any date, the last closing sale price for such security on the Principal Market as reported by the Principal Market, or, if the

Principal Market is not the principal securities exchange or trading market for such security, the last closing sale price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by

such principal securities exchange or trading market.

(n) Confidential Information means any information

disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which is designated as

Confidential, Proprietary or some similar designation. Information communicated orally shall be considered Confidential Information if such information is confirmed in writing as being Confidential Information within ten

(10) Business Days after the initial disclosure. Confidential Information may also

include information disclosed to a disclosing party by third parties. Confidential Information shall not, however, include any information which (i) was publicly known and made generally

available in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party, other than as a result of action

or inaction of the receiving party; (iii) is already in the possession of the receiving party on a non-confidential basis at the time of disclosure by the disclosing party as shown by the receiving party s files and records immediately

prior to the time of disclosure; (iv) is obtained by the receiving party from a third party without a breach of such third party s obligations of confidentiality; or (v) is independently developed by the receiving party without use of

or reference to the disclosing party s Confidential Information, as shown by documents and other competent evidence in the receiving party s possession.

(o) Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

(p) DTC means The Depository Trust Company, or any successor performing substantially the same function for the Company.

(q) DWAC Shares means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable

and transferable and without restriction on resale and (iii) timely credited by the Company to the Investor s or its designee s specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities

Transfer (FAST) Program or any similar program hereafter adopted by DTC performing substantially the same function.

Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(s) Initial Prospectus Supplement means the prospectus supplement to the Base Prospectus complying with Rule 424(b) under the Securities Act that is filed with the SEC and delivered by

the Company to the Investor upon the execution and delivery of this Agreement in accordance with Section 5(a), including the documents incorporated by reference therein.

(t) Material Adverse Effect means any material adverse effect on (i) the enforceability of any Transaction Document, (ii) the results of operations, assets, business or

financial condition of the Company and its Subsidiaries, taken as a whole, other than any material adverse effect that resulted primarily from (A) any change in the United States or foreign economies or securities or financial markets in

general that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (B) any change that generally affects the industry in which the Company and its Subsidiaries operate that does not have a

disproportionate effect on the Company and its Subsidiaries, taken as a whole, (C) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of

any such hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof, (D) any action taken by the Investor, its affiliates or its or their successors and assigns with respect to the transactions

contemplated by this Agreement, (E) the effect of any change in applicable laws or accounting rules that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, or (F) any change resulting from

compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement, or (iii) the Company s ability to perform in any material respect on a timely basis its obligations under any Transaction

Document to be performed as of the date of determination.

(u) Maturity Date means the first day of the month immediately following

the thirty-six (36) month anniversary of the Commencement Date.

(v) Person means an individual or

entity including but not limited to any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

(w) Principal Market means The NASDAQ Capital Market; provided however, that in the event the Company s Common

Stock is listed or traded on The NASDAQ Global Market, The NASDAQ Global Select Market, the New York Stock Exchange, the NYSE MKT, the NYSE Arca or the OTC Bulletin Board (it being understood that as used herein OTC Bulletin Board shall

also mean any successor or comparable market quotation system or exchange to the OTC Bulletin Board such as the OTCQB operated by the OTC Markets Group, Inc.), then the Principal Market shall mean such other market or exchange on which

the Company s Common Stock is then listed or traded.

(x) Prospectus means the Base Prospectus, as

supplemented by any Prospectus Supplement (including the Initial Prospectus Supplement), including the documents incorporated by reference therein.

(y) Prospectus Supplement means any prospectus supplement to the Base Prospectus (including the Initial Prospectus Supplement) filed with the SEC pursuant to Rule 424(b) under the

Securities Act in connection with the transactions contemplated by this Agreement, including the documents incorporated by reference therein.

(z) Purchase Amount means, with respect to the Initial Purchase, any Regular Purchase or any Accelerated Purchase made hereunder, the portion of the Available Amount to be purchased by

the Investor pursuant to Section 2 hereof.

(aa) Purchase Date means, with respect to any Regular

Purchase made pursuant to Section 2(a) hereof, the Business Day on which the Investor receives by 5:00 p.m., Eastern time, of such Business Day a valid Regular Purchase Notice that the Investor is to buy Purchase Shares pursuant to

Section 2(a) hereof.

(bb) Purchase Price means, with respect to any Regular Purchase made pursuant to

Section 2(a) hereof, the lower of (A) the lowest Sale Price of the Common Stock on the Purchase Date and (B) the arithmetic average of the three (3) lowest Closing Sale Prices for the Common Stock during the ten

(10) consecutive Business Days ending on the Business Day immediately preceding such Purchase Date (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar

(cc) Registration Statement means the effective registration statement on Form S-3

(Commission File No. 333-170300) filed by the Company with the SEC pursuant to the Securities Act for the registration of shares of its Common Stock, including the Securities, and certain other securities, as such Registration Statement has

been or may be amended and supplemented from time to time, including all documents filed as part thereof or incorporated by reference therein, and including all information deemed to be a part thereof at the time of effectiveness pursuant to Rule

430B of the Securities Act, including any comparable successor registration statement filed by the Company with the SEC pursuant to the Securities Act for the registration of shares of its Common Stock, including the Securities.

(dd) Regular Purchase Notice means, with respect to any Regular Purchase pursuant to Section 2(a) hereof, an

irrevocable written notice from the Company to the Investor directing the Investor to buy such applicable amount of Purchase Shares at the applicable Purchase Price as specified by the Company therein on the Purchase Date.

(ee) Sale Price means any sale price for the shares of Common Stock on

the Principal Market as reported by the Principal Market.

(ff) SEC means the U.S. Securities and Exchange

(gg) Securities means, collectively, the Purchase Shares and the Commitment Shares.

(hh) Securities Act means the Securities Act of 1933, as amended, and the rules and regulations

promulgated thereunder.