<PAGE>   1
                                                                   EXHIBIT 10.16

                            SANGAMO BIOSCIENCES, INC.
                             1995 STOCK OPTION PLAN

                        (As Amended on December 8, 1999)

                                   ARTICLE ONE

                               GENERAL PROVISIONS

        I. PURPOSE OF THE PLAN

            This 1995 Stock Option Plan is intended to promote the interests of
Sangamo BioSciences, Inc., a Delaware corporation, by providing eligible persons
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation.

            Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

        II. ADMINISTRATION OF THE PLAN

            A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

            B. The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the Plan and any
outstanding options as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any option or shares issued thereunder.

        III. ELIGIBILITY

            A. The persons eligible to receive option grants under the Plan are
as follows:

                (i) Employees,

                (ii) non-employee members of the Board or the non-employee
members of the board of directors of any Parent or Subsidiary, and

                (iii) consultants who provide services to the Corporation (or
any Parent or Subsidiary).

<PAGE>   2

            B. The Plan Administrator shall have full authority to determine
which eligible persons are to receive option grants under the Plan, the time or
times when such option grants are to be made, the number of shares to be covered
by each such grant, the status of the granted option as either an Incentive
Option or a Non-Statutory Option, the time or times at which each option is to
become exercisable, the vesting schedule (if any) applicable to the option
shares and the maximum term for which the option is to remain outstanding.

        IV. STOCK SUBJECT TO THE PLAN

            A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed
1,850,000(1) shares.

            B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share, pursuant to
the Corporation's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan.

            C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event shall
any such adjustments be made in connection with the conversion of one or more
outstanding shares of the Corporation's preferred stock into shares of Common
Stock.



--------
        (1) Includes the 500,000 share increase approved by the Board on
December 8, 1999, subject to approval of the Stockholders.


                                       2.
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                                   ARTICLE TWO

                              OPTION GRANT PROGRAM

        I. OPTION TERMS

            Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

            A. EXERCISE PRICE.

                1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:

                   (i) The exercise price per share shall not be less than
        eighty-five percent (85%) of the Fair Market Value per share of Common
        Stock on the option grant date.

                   (ii) If the person to whom the option is granted is a 10%
        Stockholder, then the exercise price per share shall not be less than
        one hundred ten percent (110%) of the Fair Market Value per share of
        Common Stock on the option grant date.

                2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Three
and the documents evidencing the option, be payable in cash or check made
payable to the Corporation. Should the Common Stock be registered under Section
12(g) of the 1934 Act at the time the option is exercised, then the exercise
price may also be paid as follows:

                   (i) in shares of Common Stock held for the requisite period
        necessary to avoid a charge to the Corporation's earnings for financial
        reporting purposes and valued at Fair Market Value on the Exercise Date,
        or

                   (ii) to the extent the option is exercised for vested shares,
        through a special sale and remittance procedure pursuant to which the
        Optionee shall concurrently provide irrevocable written instructions (a)
        to a Corporation-designated brokerage firm to effect the immediate sale
        of the purchased shares and remit to the Corporation, out of the sale
        proceeds available on the settlement date, sufficient funds to cover the
        aggregate exercise price payable for the purchased shares plus all
        applicable Federal, state and local income and employment taxes required
        to be withheld by the Corporation by reason of such exercise and (b) to
        the Corporation to deliver the certificates for the purchased shares
        directly to such brokerage firm in order to complete the sale.

            Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

                                       3.
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            B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.

            C. EFFECT OF TERMINATION OF SERVICE. The following provisions shall
govern the exercise of any options held by the Optionee at the time of cessation
of Service or death:

                   (i) Should the Optionee cease to remain in Service for any
        reason other than Disability, death or Misconduct, then the Optionee
        shall have a period of three (3) months following the date of such
        cessation of Service during which to exercise each outstanding option
        held by such Optionee.

                   (ii) Should such Service terminate by reason of Disability,
        then the Optionee shall have a period of six (6) months following the
        date of such cessation of Service during which to exercise each
        outstanding option held by such Optionee. However, should such
        Disability be deemed to constitute Permanent Disability, then the period
        during which each outstanding option held by the Optionee is to remain
        exercisable shall be extended by an additional six (6) months so that
        the exercise period shall be the twelve (12)-month period following the
        date of the Optionee's cessation of Service by reason of such Permanent
        Disability.

                   (iii) Should the Optionee die while holding one or more
        outstanding options, then the personal representative of the Optionee's
        estate or the person or persons to whom the option is transferred
        pursuant to the Optionee's will or in accordance with the laws of
        descent and distribution shall have a period of twelve (12) months
        following the date of the Optionee's death during which to exercise each
        such option.

                   (iv) Under no circumstances, however, shall any such option
        be exercisable after the specified expiration of the option term.

                   (v) During the applicable post-Service exercise period, the
        option may not be exercised in the aggregate for more than the number of
        vested shares for which the option is exercisable on the date of the
        Optionee's cessation of Service. Upon the expiration of the applicable
        exercise period or (if earlier) upon the expiration of the option term,
        the option shall terminate and cease to be outstanding for any vested
        shares for which the option has not been exercised. However, the option
        shall, immediately upon the Optionee's cessation of Service, terminate
        and cease to be outstanding to the extent it is not exercisable for
        vested shares on the date of such cessation of Service.

                   (vi) Should the Optionee's Service be terminated for
        Misconduct, then all outstanding options at the time held by the
        Optionee shall immediately terminate and cease to be outstanding.

                                       4.
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            D. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

            E. UNVESTED SHARES. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested shares of Common Stock under
the Plan. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, all or (at the discretion of the Corporation and with the consent of
the Optionee) any of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right. The Plan Administrator may not impose a vesting schedule upon
any option grant or any shares of Common Stock subject to the option which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur one (1) year after the option grant date. However, this minimum
vesting requirement shall not be applicable with respect to any option granted
to a director, officer or consultant. All of the outstanding repurchase rights
under the Plan shall be assignable to the successor corporation in any Corporate
Transaction and shall terminate upon the occurrence of such Corporate
Transaction to the extent the successor corporation does not accept such
assignment.

            F. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is
first registered under Section 12(g) of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Optionee (or any successor in interest) of any shares of Common Stock issued
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms established by the Plan Administrator and set forth in the
document evidencing such right.

            G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.

            H. WITHHOLDING. The Corporation's obligation to deliver shares of
Common Stock upon the exercise of any options granted under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

        II. INCENTIVE OPTIONS

            The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of the Plan shall be applicable to Incentive Options. Options which
are specifically designated as Non-Statutory Options shall not be subject to the
terms of Section II.

            A. ELIGIBILITY. Incentive Options may only be granted to Employees.

            B. EXERCISE PRICE. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

                                       5.
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            C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

            D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the option term shall not exceed five (5)
years measured from the option grant date.

        III. CORPORATE TRANSACTION

            A. Each outstanding option shall be assumable by the successor
corporation (or parent thereof) in any Corporate Transaction and shall, to the
extent not so assumed, terminate and cease to be outstanding on the effective
date of such Corporate Transaction.

            B. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in the consummation of such Corporate Transaction,
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.

            C. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

        IV. CANCELLATION AND REGRANT OF OPTIONS

            The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.

                                       6.
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                                  ARTICLE Three

                                  MISCELLANEOUS

        I. FINANCING

            The Plan Administrator may permit any Optionee to pay the option
exercise price by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. Promissory notes may be authorized with or without security
or collateral. In all events, the maximum credit available to the Optionee may
not exceed the sum of (i) the aggregate option exercise price payable for the
purchased shares (less the par value of such shares) plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee in
connection with the option exercise.

        II. ADDITIONAL AUTHORITY

            The Plan Administrator shall have the discretion, exercisable either
at the time an option is granted or at any time while the option remains
outstanding, to (i) extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and (ii) permit the option to be exercised,
during the applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to one or
more additional installments in which the Optionee would have vested had the
Optionee continued in Service.

        III. EFFECTIVE DATE AND TERM OF THE PLAN

            A. The Plan became effective when adopted by the Board on June 30,
1995 and was approved by the Corporation's stockholders on June 30, 1995. The
Plan was restated and amended on February 10, 1998 to increase the number of
shares issuable thereunder (the "1998 Restatement"). The 1998 Restatement was
adopted by the Board of February 10, 1998 and approved by the Corporation's
stockholders on July 13, 1998. The Plan was amended on December 8, 1999 to
increase the number of shares issuable thereunder by an additional 500,000
shares of Common Stock (the "1999 Amendment"), but no option granted under the
Plan on the basis of any such increase shall become exercisable unless and until
such increase shall have been approved by the Corporation's stockholders. If
such stockholder approval is not obtained within twelve (12) months after the
date of the adoption of the increase, then all options previously granted under
the Plan on the basis of such increase shall terminate and cease to be
outstanding, and no further options shall be granted. Subject to such
limitation, the Plan Administrator may grant options under the Plan at any time
after the effective date of the Plan and before the date fixed herein for
termination of the Plan.

            B. The Plan shall terminate upon the earliest of (i) June 29, 2005,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued or (iii) the

                                       7.
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termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options and unvested stock
issuances outstanding under the Plan shall continue to have full force and
effect in accordance with the provisions of the documents evidencing such
options or issuances.

        IV. AMENDMENT OF THE PLAN

            A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall, without the consent of the Optionees, adversely affect
their rights and obligations under their outstanding options. In addition, the
Board shall not, without the approval of the Corporation's stockholders, (i)
increase the maximum number of shares issuable under the Plan, except for
permissible adjustments in the event of certain changes in the Corporation's
capitalization, (ii) materially modify the eligibility requirements for Plan
participation or (iii) materially increase the benefits accruing to Plan
participants.

            B. Options may be granted under the Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance under
the Plan, provided any such options actually granted may not be exercised until
there is obtained stockholder approval of an amendment sufficiently increasing
the number of shares of Common Stock available for issuance under the Plan. If
such stockholder approval is not obtained within twelve (12) months after the
date the excess grants are first made, then any options granted on the basis of
such excess shares shall terminate and cease to be outstanding.

        V. USE OF PROCEEDS

            Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

        VI. REGULATORY APPROVALS

            The implementation of the Plan, the granting of any options under
the Plan and the issuance of any shares of Common Stock upon the exercise of any
option shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the shares of Common Stock issued pursuant to
it.

        VII. NO EMPLOYMENT OR SERVICE RIGHTS

            Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of the Optionee, which rights are
hereby expressly reserved by each, to terminate the Optionee's Service at any
time for any reason, with or without cause.


                                       8.
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        VIII. FINANCIAL REPORTS

            The Corporation shall deliver a balance sheet and an income
statement at least annually to each individual holding an outstanding option
under the Plan, unless such individual is a key Employee whose duties in
connection with the Corporation (or any Parent or Subsidiary) assure such
individual access to equivalent information.


                                       9.
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                                    APPENDIX



            The following definitions shall be in effect under the Plan:

        A. BOARD shall mean the Corporation's Board of Directors.

        B. CODE shall mean the Internal Revenue Code of 1986, as amended.

        C. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

        D. COMMON STOCK shall mean the Corporation's common stock.

        E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

               (i) a merger or consolidation in which securities possessing more
        than fifty percent (50%) of the total combined voting power of the
        Corporation's outstanding securities are transferred to a person or
        persons different from the persons holding those securities immediately
        prior to such transaction, or

               (ii) the sale, transfer or other disposition of all or
        substantially all of the Corporation's assets in complete liquidation or
        dissolution of the Corporation.

        F. CORPORATION shall mean Sangamo BioSciences, Inc., a Delaware
corporation.

        G. DISABILITY shall mean the inability of the Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

        H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

        I. EXERCISE DATE shall mean the date on which the Corporation shall have
received written notice of the option exercise.

        J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

               (i) If the Common Stock is at the time traded on the Nasdaq
        National Market, then the Fair Market Value shall be the closing selling
        price per share of Common Stock on the date in question, as such price
        is reported by the National

                                      A-1.
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        Association of Securities Dealers on the Nasdaq National Market or any
        successor system. If there is no closing selling price for the Common
        Stock on the date in question, then the Fair Market Value shall be the
        closing selling price on the last preceding date for which such
        quotation exists.

               (ii) If the Common Stock is at the time listed on any Stock
        Exchange, then the Fair Market Value shall be the closing selling price
        per share of Common Stock on the date in question on the Stock Exchange
        determined by the Plan Administrator to be the primary market for the
        Common Stock, as such price is officially quoted in the composite tape
        of transactions on such exchange. If there is no closing selling price
        for the Common Stock on the date in question, then the Fair Market Value
        shall be the closing selling price on the last preceding date for which
        such quotation exists.

               (iii) If the Common Stock is at the time neither listed on any
        Stock Exchange nor traded on the Nasdaq National Market, then the Fair
        Market Value shall be determined by the Plan Administrator after taking
        into account such factors as the Plan Administrator shall deem
        appropriate.

        K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

        L. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by Optionee of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by Optionee
adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other person in the Service of the Corporation (or any Parent or
Subsidiary).

        M. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

        N. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

        O. OPTIONEE shall mean any person to whom an option is granted under the
Plan.

        P. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

        Q. PLAN shall mean the Corporation's 1995 Stock Option Plan, as set
forth in this document.

        R. PLAN ADMINISTRATOR shall mean either the Board or the Committee, to
the extent the Committee is at the time responsible for the administration of
the Plan.

                                      A-2.
<PAGE>   12

        S. SERVICE shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant, except to the
extent otherwise specifically provided in the documents evidencing the option
grant.

        T. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

        U. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

        V. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).


                                      A-3.