Document:

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                                                                 Exhibit 10.16

         DOUBLETWIST CAT DISTRIBUTION AND VALUE-ADDED RESELLER AGREEMENT

     This Agreement dated the 29th day of September, 2000 ("Effective Date") is
     by and between DoubleTwist, Inc. ("DoubleTwist") having its principal
     offices at 1999 Harrison Street, Suite 1100, Oakland, CA 94612, and
     Hitachi, Ltd., including its subsidiaries and affiliates in which 50% or
     more of the stock is directly or indirectly controlled by Hitachi, Ltd.
     ("Hitachi") having it principal offices at 6, Kanda-Surugadai 4-Chome,
     Chiyoda-ku, Tokyo, 101-8010 Japan. Except for those provisions explicitly
     set out hereinbelow, this Agreement supersedes the DoubleTwist Distribution
     and Value-Added Reseller Agreement, dated March 24, 2000.

1.   PURPOSE. The purpose of this Agreement is to set forth the terms and
     conditions pursuant to which Hitachi will exclusively integrate and
     distribute to its customers in the Region the DoubleTwist software and/or
     database products described on the Product Description (Exhibit A) attached
     hereto and made a part hereof ("Licensed CAT Product" or "Hitachi/DT
     Product")

2.   DEFINITIONS.

    (a) All terms defined in the Product Description shall have the
        meanings therein ascribed to them for purposes of this Agreement.

    (b) "Hitachi Systems" shall be defined as the computer and/or software
        systems created, marketed, distributed, and/or sold by Hitachi to the
        market, with which a Licensed CAT Product will be integrated.

    (c) "End Users" shall be defined as current and future Hitachi
        customers who purchase from Hitachi or a Third Party Distributor a
        Hitachi/DT Product.

    (d) "Updates" shall be defined as generally available revisions to
        Hitachi/DT Products released from time to time by DoubleTwist.

    (e) "Initial Distribution" shall be defined as the initial sale of a
        Hitachi/DT Product to an End User. There will be only one (1) Initial
        Distribution to each End User.

    (f) "Upgrade" shall be defined as the license of a) a more expensive
        Licensed Product, or b) a Licensed Product with additional features, by
        End User following the Initial Distribution.

    (g) "Integration" shall be defined as the programming undertakings to
        be performed by Hitachi which are required to allow End Users functional
        access to Licensed Product features and capabilities from within Hitachi
        Systems and the logically appropriate data sharing between Hitachi/DT
        Products and Hitachi Systems.

    (h) "Hitachi/DT Product" shall be defined as 1) a Licensed CAT Product,
        or 2) a Hitachi System integrated with a Licensed CAT Product.

    (i) "Documentation" shall be defined as the user manuals and similar
        materials customarily supplied by DoubleTwist to end users of the
        Licensed Product.

    (j) "Region" shall be defined as the following countries: Japan, China,
        Nepal, Myanmar, Laos, Thailand, Kampuchea (Cambodia), Vietnam,
        North Korea, South Korea, Malaysia, Philippines, Indonesia, Taiwan,
        Singapore, Bhutan, Mongolia, New Guinea, Australia and New Zealand.

    (k) "Third Party Distributor" shall be defined as an entity selected by
        Hitachi which shall be granted, in a writing signed by DoubleTwist and
        Hitachi containing terms and conditions substantially the same as those

THE SYMBOL "*******" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUETED WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

         in this Agreement, the right to distribute the Hitachi/DT Product, and
         DoubleTwist Documentation or Hitachi Documentation, directly to End
         Users.

3.  GRANT OF RIGHTS.

    (a) Subject to execution of this Agreement on or before September 29,
        2000 and payment of the Distribution Fees by Hitachi to DoubleTwist as
        provided in Exhibit B hereto, DoubleTwist grants to Hitachi a personal,
        exclusive, non-transferable, royalty-free right to market, sublicense to
        Third Party Distributors, and distribute, direct to End Users, and
        install at End User locations in the Region software packages comprising
        the Hitachi/DT Products, subject to the terms and conditions of this
        Agreement. Hitachi shall not transfer any Licensed CAT Product other
        than in the form of a Hitachi/DT Product.

    (b) DoubleTwist grants Hitachi a non-exclusive, non-transferable,
        royalty-free right (i) to use and make copies of the Documentation for
        back-up and archival purposes, marketing, distribution, service and
        support of Hitachi/DT Products and (ii) to furnish such documentation
        to End Users in connection with Hitachi's distribution of Hitachi/DT
        Products, and maintenance and support thereof.

    (c) DoubleTwist reserves all other rights to the Licensed CAT Products
        which are not expressly specified in this Agreement.

4.   DUTIES OF DOUBLETWIST

    (a) Upon execution of this Agreement, DoubleTwist shall transmit to
        Hitachi ******* copies of the Licensed CAT Product and associated
        Documentation. The Licensed CAT Product shall be deemed accepted when
        received by Hitachi ("Acceptance Date").

    (b) DoubleTwist shall, without charge and during DoubleTwist's regular
        business hours, reply to questions asked by Hitachi regarding the
        operation and maintenance of the Licensed CAT Product, by telephone,
        mail and E-mail, necessary for Hitachi's distribution, installation,
        maintenance, and support of the Hitachi/DT Product.

    (c) DoubleTwist will be responsible for providing to Hitachi and
        maintaining Updates to the Licensed CAT Product without charge. The
        frequency of Updates will be determined solely by DoubleTwist.

    (d) DoubleTwist will provide, without charge, back-up support of
        Licensed CAT Product to Hitachi related to the appropriate use, error
        correction, and contents of the Licensed CAT Product to the same extent
        that DoubleTwist provides such support for its Licensed CAT Product
        generally under its Clustering and Alignment Tool Product Maintenance
        and Support Plan for July 2000.

5.   DUTIES OF HITACHI

    (a) Hitachi will be responsible for Integration of Licensed CAT Products
        with Hitachi Systems to product Hitachi/DT Products and for all costs
        and customer support related to or as a result of such Integration.

    (b) Integration of the Licensed CAT Product will include development by
        Hitachi of programs that allow for proper operation of the Licensed CAT
        Product within Hitachi Systems.

    (c) Hitachi will be responsible for installation and on-going support of
        Hitachi/DT Product for End Users. Hitachi shall be solely responsible
        for maintenance of Hitachi/DT Product.

    (d) Hitachi will be responsible for notifying DoubleTwist in writing of
        orders it receives for Hitachi/DT Product, per Section 7(a).

    (e) Hitachi will use best efforts to market the Hitachi/DT Product.

<PAGE>

    (f) Hitachi will provide to DoubleTwist, and update in a timely manner,
        a listing of Hitachi/DT Productcustomers including the contact name,
        organization name, address, phone number, and type of Hitachi System.
        DoubleTwist's use of Hitachi customer information will be strictly
        limited to DoubleTwist's marketing and support activities. Such
        information shall constitute "Confidential Information" for purposes of
        Section 8, hereinbelow.

    (g) During the Term of this Agreement and, in the event of any breach or
        termination of this Agreement by Hitachi for ******* after such breach
        or termination, Hitachi agrees not to *******, directly or indirectly 1)
        any product capable of clustering or aligning *******, or 2) any
        database of sequence clusters that contains *******.

6.   LICENSE TERMS

    (a) Hitachi agrees that the use of the Hitachi/DT Product by End Users
        will be subject to the terms and conditions of the applicable
        DoubleTwist Software License Agreement.

    (b) Hitachi agrees to pay DoubleTwist the Distribution Fees set forth in
        the Distribution Fee Schedule of Exhibit B, attached hereto and made a
        part hereof.

    (c) In addition to the above, DoubleTwist will charge standard fees for
        shipping and handling the Licensed CAT Product as set forth in the
        Pricing Schedule.

    (d) DoubleTwist shall, after the first anniversary of the Effective
        Date, have the right, at its sole discretion, to increase the license
        fees for the Licensed CAT Product. DoubleTwist shall notify Hitachi
        within thirty (30) days of any such change, and Hitachi shall have and
        additional sixty (60) days from such notification to institute such
        price change within Region.

    (e) Hitachi shall, in addition to the other amounts payable under this
        Agreement, pay all sales and other taxes, federal, state, or otherwise,
        however designated, which are levied or imposed by reason of the
        transactions contemplated by this Agreement, except taxes related to the
        income of or the employees of DoubleTwist.

    (f) Hitachi agrees to notify End Users of the requirement to license
        third party coding systems or other components ("Third Party Software")
        for use in the Hitachi/DT Product. Notwithstanding any other provision
        of this Agreement, DoubleTwist shall have no liability and makes no
        warranty with regard to any such Third Party Software, and shall have no
        responsibility to procure or otherwise make available to End User such
        Third Party Software.

7.   PAYMENT TERMS AND RECORD KEEPING

     (a) Within thirty (30) days of the end of each calendar quarter, Hitachi
         will provide DoubleTwist with a report, which contains the following
         items:

         i.   A listing of the number and type of Initial Distributions of
              Hitachi/DT Product made by Hitachi during the previous calendar
              quarter;

         ii.  A listing of the number of Upgrade and Renewal sales made by
              Hitachi during the previous calendar quarter; and

         iii. The number of returns or rejections, if any, of the Hitachi/DT
              Product that occurred during the previous calendar quarter.

         Included with the report will be payment to DoubleTwist by Hitachi for
         amounts currently due, adjusted for returns and rejections. For
         purposes of illustration, Hitachi shall submit a report to DoubleTwist
         along with
<PAGE>

        payment no later than July 31, 2000 for Initial Distributions, Upgrades
        sales and Renewal sales made by Hitachi in the second quarter, 2000.

    (b) The report described in Section 7 (a) shall be certified as correct
        by an officer of Hitachi. Hitachi shall keep accurate and correct
        records of Initial Distributions, Upgrade sales and Renewal sales in a
        form as is appropriate to determining the amount due DoubleTwist under
        this Agreement. Copies of these records shall be retained by Hitachi
        ("Hitachi Records") for at least three (3) years following a given
        quarter and shall be made available at Hitachi's principal office during
        normal business hours for inspection once each calendar year by
        DoubleTwist or its authorized representative, for the sole purpose of
        verifying reports and payments made under this Agreement. DoubleTwist
        shall notify Hitachi in writing more than sixty (60) days prior to the
        date of such inspection.

    (c) In the event that it is determined that Hitachi has inadvertently
        underreported in excess of five percent (5%) of the amounts due
        DoubleTwist over a twelve (12) month period, then in addition to the
        amount due DoubleTwist by Hitachi from such under-reporting, Hitachi
        shall also reimburse DoubleTwist the reasonable cost of such inspection
        of Hitachi's records. Following such underreporting, DoubleTwist shall
        have the right to inspect Hitachi Records once every six (6) months
        during the term of the Agreement, and in the event a subsequent
        underreporting in excess of five percent (5%) is discovered, Hitachi
        shall reimburse DoubleTwist the reasonable cost of each such inspection.

8.   CONFIDENTIALITY

    (a) For the purposes of this Agreement, "Confidential Information" means
        that information disclosed by each party to the other party, that is
        related to, but is not limited to, the terms and conditions of this
        Agreement, the existence of the discussions between the parties, trade
        secrets of each party, any nonpublic information relating to each
        party's product plans, designs, ideas, concepts, costs, prices,
        finances, marketing plans, business opportunities, personnel, research,
        development or know-how and any other nonpublic technical or business
        information of each party. Confidential Information does not, however,
        include information that: (a) is now or subsequently becomes generally
        available to the public through no fault or breach on the part of the
        receiving party; (b) the receiving party can demonstrate to have had
        rightfully in its possession without an obligation of confidentiality
        prior to disclosure hereunder; (c) is independently developed by the
        receiving party without the use of any Confidential Information of the
        disclosing party as evidenced by written documentation; or (d) the
        receiving party rightfully obtains from a third party who has the right
        to transfer or disclose it and who provides it without a confidentiality
        obligation.

    (b) The Confidential Information is provided for the purposes of
        facilitating the distribution of DoubleTwist's bioinformatics products
        or projects (the "Business Purpose"). The receiving party will not
        disclose, publish or disseminate Confidential Information to anyone
        other than those of its employees who need to know for the Business
        Purpose, and the receiving party will take reasonable precautions to
        prevent any unauthorized use, disclosure, publication or dissemination
        of Confidential Information. The receiving party accepts Confidential
        Information for the Business Purpose and in connection with the business
        discussions regarding the Business Purpose hereunder. The receiving
        party will not use Confidential Information other than for the Business
        Purpose for its own or any third party's benefit without the prior
        written approval of an authorized representative of the disclosing party
        in each instance. If the receiving party receives notice that it may be
        required or ordered by any judicial or governmental entity to disclose
        Confidential Information of the disclosing party, it will take all
        necessary steps to give the disclosing party sufficient prior notice in
        order to contest such requirement or order.

9.   INDEMNIFICATION.

     (a) DoubleTwist represents and warrants to Hitachi that the Licensed CAT
         Product was developed or licensed by DoubleTwist and, *******.

     (b) DoubleTwist shall indemnify, defend and hold harmless Hitachi from all
         costs, damages or expenses (including attorney's fees) which may be
         finally assessed in any action resulting from a claim that *******;
<PAGE>

         provided that (1) Hitachi shall give DoubleTwist prompt written notice
         of any such action, claim or threat of suit (2) DoubleTwist shall take
         over, settle or defend such action, claim or suit through counsel of
         DoubleTwist's choice and under DoubleTwist's sole direction, and 3)
         Hitachi shall cooperate fully with DoubleTwist in connection with such
         action, claim or suit.

     (c) Hitachi shall indemnify, defend and hold harmless DoubleTwist from all
         costs, damages or expenses (including attorney's fees) which may be
         finally assessed in any action resulting from a claim that any
         statement made by Hitachi in advertising, licensing or promoting the
         Hitachi/DT Product is false or misleading or for any material breach by
         Hitachi of its obligations hereunder, provided that (1) DoubleTwist
         shall give Hitachi prompt written notice of any such action, claim or
         threat of suit; (2) Hitachi shall take over, settle or defend such
         action, claim or suit through counsel of Hitachi's choice and under
         Hitachi's sole direction and at Hitachi's expense; and (3) DoubleTwist
         shall cooperate fully with Hitachi in connection with such action.

     (d) The foregoing provisions shall not apply to ******* not expressly
         authorized in writing by DoubleTwist herein.

     (e) Except for ******* covered by part Section 9 (a) and (b), Hitachi shall
         indemnify and hold DoubleTwist harmless against any liability, or any
         litigation cost or expense (including attorney's fees), arising out of
         third party claims against DoubleTwist as a result of Hitachi's use or
         distribution of the Hitachi/DT Product or Documentation.

10.   WARRANTY

     (a) DoubleTwist represents and warrants that the computer programs,
         databases and/or other reports included in the Licensed CAT Product
         will, for one (1) year from the Acceptance Date, conform to their
         then-current Documentation.

     (b) If defects in the Licensed CAT Product are discovered by Hitachi,
         DoubleTwist agrees *******. After correction of the such defects,
         Hitachi will inspect such Licensed CAT Product as provided in Paragraph
         4 (a) of this Agreement.

     (c) EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO WARRANTIES,
         EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
         WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

11.   LIMITATION OF LIABILITY.

     (a) DoubleTwist's sole liability to Hitachi for any claims,
         notwithstanding the form of such claims (e.g., contract, negligence or
         otherwise), arising out of errors or omissions in the Licensed CAT
         Product shall be to furnish the correct information as soon as
         reasonably practicable.

     (b) DoubleTwist's sole liability for claims, notwithstanding the form of
         such claims (e.g., contract, negligence or otherwise), arising out of
         unavailability of support or the unusability of the Licensed CAT
         Product shall be to use reasonable efforts to correct the Licensed
         CAT Product as soon as reasonably practicable.

     (c) DoubleTwist shall not be liable or deemed to be in default for any
         delay or failure to perform under this Agreement resulting directly or
         indirectly from any cause beyond DoubleTwist's reasonable control such
         as acts of Gods, act of any governmental authority, riot, revolution,
         fires or war.

     (d) EXCEPT ANY CAUSE COVERED BY PARAGRAPH 9, IN NO EVENT WILL
         DoubleTwist BE RESPONSIBLE FOR SPECIAL, INDIRECT, INCIDENTAL OR
         CONSEQUENTIAL DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
         DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION LOSS
         OF BUSINESS INFORMATION, OR ANY OTHER

<PAGE>

         PECUNIARY LOSS) ARISING OUT OF THE SALE, USE OR INABILITY TO USE THE
         LICENSED CAT PRODUCT, EVEN IF DoubleTwist HAS BEEN ADVISED OF THE
         POSSIBILITY OF SUCH DAMAGES.

12.  TERM. Except as otherwise provided herein, this Agreement shall be
     effective as of September 29, 2000 ("Effective Date") and shall terminate
     on September 30, 2001 (the "Term"). The Term of this Agreement shall be
     automatically extended for consecutive one (1) year periods unless a
     party's written notice of intent to terminate is received by the other
     party no later than Sixty (60) days before the end of the then-current
     Term. Upon any termination of this Agreement, Hitachi shall not have, and
     shall not contact or represent to any entity in any manner that it does
     have, the right to provide any information, data, software, or any other
     subject matter related to Licensed Product or any other product or service
     of DoubleTwist.

13.   TERMINATION.

     (a) Notwithstanding anything to the contrary contained herein, either
         party may terminate this Agreement (1) upon any material breach by the
         other of its obligations under this Agreement, or (2) if the other
         party shall commit an act of bankruptcy or become insolvent, by
         sending such party written notice of termination which shall state
         the nature of the breach. Such notice shall be effective thirty (30)
         days following the date thereof, unless such breach shall have been
         remedied during such thirty-day period.

     (b) In addition, DoubleTwist may terminate this Agreement, and any
         license granted to an End User for whom the Distribution Fee has not
         been paid if Hitachi fails to pay DoubleTwist any Distribution Fees or
         taxes due hereunder.

     (c) The foregoing rights and remedies shall be cumulative and in
         addition to all other rights and remedies available to each party in
         law and in equity.

     (d) All licenses with End Users which are entered into due to Hitachi's
         distribution of the Hitachi/DT Product will continue in accordance with
         the terms and applicable period as provided in the applicable
         DoubleTwist Software License Agreement.

     (e) Notwithstanding anything to the contrary contained herein, the rights
         and obligations set forth in Paragraphs 5(g), 8,9 and 11 shall survive
         termination of this Agreement.

14.  MISCELLANEOUS TERMS.

     (a) Each party represents to the other that this Agreement has been
         exhausted and delivered by an authorized representative of such signing
         party.

     (b) The headings and captions to this Agreement are for reference only
         and are not to be construed in any way as terms hereof.

     (c) Unless otherwise stated, all notices required under this Agreement
         shall be in writing and served by Certified mail or Registered mail,
         return receipt requested, with a copy by first class mail or by
         personal services and shall be deemed to have been duly given when sent
         if mailed to the addressee or when received if hand delivered at the
         address designated below or such subsequent address as may be
         designated in writing by the respective party:

                  if  to DoubleTwist:

                  DoubleTwist, Inc.
                  1999 Harrison Street, Suite 1100
                  Oakland, CA 94612
                  Attn: Legal Counsel

<PAGE>

                  if to Hitachi:

                  [Contract]
                  Software & Alliance Business Center, Procurement Division
                  Hitachi Ltd.,
                  6, Kanda-Surugadai 4-Chome, Chiyoda-ku, Tokyo, 101-8010 Japan
                  Attn: Senior Manager, Software & Alliance Business Center

                  [Delivery]
                  Bioinformatic, Life Science Grp.
                  Hitachi, Ltd.
                  1-3-1 Minamidai,
                  Kawagoe-shi, Saitama, 350-1165 Japan
                  Attn: Manager, Bioinformatics

                  [Technical]
                  Bio Informatic. Life Science Gr.
                  Hitachi, ltd.
                  1-3-1 Minamidai,
                  Kawagoe-shi, Saitama, 350-1165 Japan
                  Attn: Manager, Bioinformatics

     (d) If any of the provisions of this Agreement are invalid, illegal or
         unenforceable under any applicable statute or rule of law, the
         validity, legality or enforceability of the remaining provisions shall
         not be affected or impaired thereby.

     (e) This Agreement shall be interpreted in accordance with the laws of
         the State of California, USA, as if entered into by California
         residents, without regard to its conflict of laws rules.

     (f) Except for assignment in conjunction with a change of control, this
         Agreement shall not be assigned by either party without the written
         consent of the other party. In event of assignment in conjunction with
         change of control, this Agreement will bind and insure to benefit of
         each party's permitted successors and assigns.

     (g) DoubleTwist shall obtain any and all export licenses and/or
         governmental approvals that may be required to export the Licensed CAT
         Product to Japan. Hitachi agrees that the Licensed CAT Product may be
         subject to restrictions under the export control laws and regulations
         of the United States of America, including but not limited to the U.S.
         Export Administration Act and the U.S. Export Administration
         Regulations. Hitachi agrees not to export or re-export, directly or
         indirectly, the Licensed CAT Product in whole or in part without first
         obtaining any required license or other approval from the U.S.
         Department of Commerce or any other agency or department of the United
         States Government.

     (h) This Agreement is the entire agreement between the parties relating
         to the subject matter hereof and supersedes all prior understanding,
         writings, proposals, representations or communications, oral or
         written, of either party. This Agreement may be amended only by an
         instrument executed by the authorized representatives of both parties.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
     the date first written above.

     DoubleTwist, Inc.                          Hitachi, Ltd.

     By:_____________________                   By:_____________________
     Title:____________________                 Title:____________________
     Date:____________________                  Date:____________________

<PAGE>

                                    EXHIBIT A

                       DESCRIPTION OF LICENSED CAT PRODUCT

         Includes the Clustering and Alignment Tools (CAT), version 4.0,
         including Serial d2, Serial d2_cluster, CRAW and MAP, in object code
         form only, and current Documentation.

         Following is the Standard List Price for the Licensed CAT Product,
         based on a one (1) year term:

<TABLE>
<CAPTION>
                                            STANDARD LIST PRICE
                                            -------------------
        <S>                                 <C>

        Licensed CAT Product                US*******   *

</TABLE>
        * Includes one (1) year of maintenance at US$25,000.

<PAGE>

                                    EXHIBIT B

                            DISTRIBUTION FEE SCHEDULE

1.Upon execution of this Agreement, Hitachi shall receive: 1) ******* software
packages comprising Licensed CAT Product and Documentation for distribution to
End Users in the Region, and 2) the right to continue distribution in the Region
of any Licensed Product Hitachi may possess by virtue of the DoubleTwist
Distribution and Value-Added Reseller Agreement, dated March 24, 2000. A
Distribution Fee of ******* shall be due and payable to DoubleTwist within
fifteen (15) days of the Effective Date, based on the rates described in
paragraph 2.

     2. Based on the Standard List Price of the Licensed CAT Product stated in
     Exhibit A, licenses to the Licensed CAT Product in Year One shall be
     discounted by X percent (X%) to Hitachi under the following schedule:

         X = ******* for licenses to Licensed CAT Product *******
         X = ******* for licenses to Licensed CAT Product *******

     For clarity, and by example only, for each Licensed CAT Product license
     ******* in Year One, ******* shall be counted against the Distribution Fee.

     3. Unless this Agreement is terminated before the end of the Term, all
     Licensed CAT Product licensed in the Region during the Term shall be
     attributable to Hitachi, and to the extent Hitachi is asked by DoubleTwist
     to participate and does participate in any license of a Licensed CAT
     Product outside of the Region, Hitachi and DoubleTwist shall confer and
     agree on the portion of the license fee actually received by DoubleTwist
     that shall be allotted to Hitachi based on such participation.

     4. For each Licensed CAT Product distributed by Hitachi after distribution
     of the Licensed CAT Product to which it is entitled by payment of the
     Distribution Fee described in paragraph 1, above, Hitachi shall pay to
     DoubleTwist a Distribution Fee equal to the then-current Standard List
     Price minus the discount rate as specified in paragraph 2, above, which
     amount shall be due and payable to DoubleTwist within thirty (30) days of
     distribution of Licensed Product to End User.

     5. Additionally, for each Licensed CAT Product distributed to an End User
     by Hitachi, in the event such End User desires to receive, and Hitachi
     agrees to perform, maintenance for such Licensed CAT Product for any term
     beyond one (1) year from the Effective Date of the license between
     DoubleTwist and End User ("Extended Maintenance"), such Extended
     Maintenance shall be performed by Hitachi on an annual basis ("Extended
     Maintenance Period"), and for each such Extended Maintenance Period Hitachi
     shall pay to DoubleTwist, within thirty (30) days of the first day of any
     such Extended Maintenance Period Twenty Five Thousand Dollars (US$25,000).

     6. Hitachi America, Ltd. ("HAL") will act as a disbursement agent of
     Hitachi. Notices and invoices to HAL shall be delivered or addressed to:

         Hitachi America, Ltd.
         Procurement and Technical Service Division
         2000 Sierra Point Parkway
         Brisbane, CA 94005-1835
         Attn:    Purchasing Manager<PAGE>

                                                                     Exhibit 4.2

                                  H POWER CORP.
                             STOCK OPTION AGREEMENT

         AGREEMENT,  made as of the __ day of __________, by and between H Power
Corp., a Delaware corporation (the "Company"), and _______ (the "Optionee").

                                  WITNESSETH:

         WHEREAS,  the  Company  desires to grant to the  Optionee  an option
to purchase  shares of common stock,  $.001 par value,  of the Company (the
"Common Stock") upon the terms and conditions set forth in this Agreement.

         NOW, THEREFORE, the parties hereto agree as follows:

1. GRANT

     The Company  hereby  grants to the  Optionee  an option to  purchase
_____ shares of Common  Stock,  at a  purchase  price per share  equal to the
 initial public  offering  price of the  Common  Stock  (the  "Option").
This  Option is intended  qualify as an "incentive  stock option"  within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").

2. VESTING

     Except as specifically  provided herein,  during the Optionee's
continuous employment with the Company or any Parent or Subsidiary, the
Option shall become exercisable, in cumulative increments, on the following
vesting dates:

                          Incremental     Cumulative
                          Percentage      Percentage
          Vesting Date    Exercisable     Exercisable

     Unless sooner terminated, the Option will expire if and to the extent it is
not exercised within ten (10) years from the date hereof.

<PAGE>

3.  METHODS OF EXERCISE.

         The Option may be exercised form time to time by delivering to the
Secretary of the Company: (a) a written notice specifying the number of shares
to be purchased, and (b) payment in full of the exercise price together with the
amount, if any, deemed necessary by the Company to enable it to satisfy any
income tax withholding obligations with respect to the exercise (unless other
arrangements acceptable to the Company are made for the satisfaction of such
withholding obligations). The exercise price shall be payable in cash or by
personal or certified check or in shares of Common Stock (which have been owned
by the Optionee (free and clear of any liens or encumbrances) for at
least six (6) months) with a fair market value equal to the exercise price for
each Option share to be purchased or pursuant to such other methods approved
by the Committee from time to time or a combination of the foregoing methods.

4. TERMINATION OF EMPLOYMENT.

         (a) If the Optionee's employment with the Company and its Parents and
Subsidiaries terminates by reason of death or "permanent and total disability"
(as defined In section 22(e)(3) of the Code), then: (i) that portion of the
Option which is not vested on the date of termination shall thereupon terminate,
and (ii) that portion of the Option which is vested on the date of termination
shall remain exercisable by the Optionee (or the deceased Optionee's
beneficiary) for the twelve (12) month period following such termination or, if
sooner, until the expiration of the stated term of the Option, and, to the
extent it is not exercised within such period, shall thereupon terminate.

          (b) Notwithstanding anything herein to the contrary, if the Optionee's
employment is terminated by the Company or its Parents or Subsidiaries for Cause
(as defined in the Plan) or if, at the time of the Optionee's termination,
grounds for termination for Cause exist, then the Option (whether or not then
vested or exercisable ) shall immediately terminate and cease to be exercisable.

          (c) If the Optionee's employment with the Company and its Parents
and Subsidiaries terminates for any reason (other than death, "permanent and
total disability" or Cause or at a time when Cause exists) or no reason,
then: (i) that portion of the Option that is not vested on the date of
termination shall thereupon terminate, and (ii) that portion of the Option
that is vested on the date of termination shall remain exercisable during the
three (3) month period (or, if the Optionee shall die during the three-month
period ,the twelve (12) month period) following such termination or, if
sooner, until the expiration of the stated term of the Option and, to the
extent not exercised within such period, shall thereupon terminate.

5. ADJUSTMENTS

          The provisions of section 9 of the Plan shall apply.

                                       2

<PAGE>

6. NON-TRANSFERABILITY.

         The Option is not assignable or transferable by the Optionee, either
voluntarily or by operation of law, otherwise than by will or by the laws of
descent and distribution, and is exercisable, during the Optionee's lifetime,
only by the Optionee.

7.  RIGHTS AS A STOCKHOLDER.

         The Optionee (or other person entitled to exercise the Option) shall
have no rights as a stockholder of the Company with respect to any shares
subject to the Option until the Optionee (or such person) has become the holder
of record of such shares and no adjustment shall be made for dividends or
distributions of rights in respect of such shares for which the record date is
prior to the date which the Optionee (or such person) becomes the holder of
record.

8. LOCK-UP.

         The Optionee hereby agrees that the Optionee shall not, without the
prior written consent of the managing underwriter for the Company's initial
public offering, during the period commencing on the date of the final
prospectus relating to the Company's initial public offering and ending on the
date specified by the Company and the managing underwriter (such period not to
exceed one hundred eighty (180) days) (a) lend, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(whether such shares or any such securities are then owned by the Optionee or
are thereafter acquired), or (b) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (a) or (b) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing provisions of this
Section shall apply only to the Company's initial public offering of equity
securities and shall not apply to the sale of any shares to an underwriter
pursuant to an underwriting agreement. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to
the securities of the Optionee (and the shares or securities or every other
person subject to the foregoing restriction) until the end of such period.

9. MISCELLANEOUS.

         (a) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.

         (b) The Company may affix to certificates representing shares issued
pursuant to this Agreement any legend that the Company determines to be
necessary or advisable to reflect any restrictions to which the shares may be
subject, whether by agreement or otherwise. The Company may advise the transfer
agent to place a stop order against any legended shares.

                                        3
<PAGE>

         (c) Nothing in this Agreement shall give the Optionee a right to
continue in the employment of the Company or its Parents or Subsidiaries or
interfere in any way with the right of the Company or its Parents or
Subsidiaries to terminate the employment of the Optionee.

         (d) This Agreement is subject to all the terms, conditions and
provisions of the Plan and to such rules, regulations and interpretations as may
be established or made by the Committee acting within the scope of its authority
and responsibility under the Plan. The Optionee acknowledges receipt of a copy
of the Plan prior to execution of this Agreement. Capitalized terms that are not
otherwise defined herein shall have the meanings ascribed thereto in the Plan.

         (e) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law. This Agreement and the Plan constitute the entire agreement
between the parties with respect to the subject matter hereof.

         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

                                            H. POWER CORP.

                                            By:
                                               --------------------------------
                                                H. Frank Gibbard
                                                Chief Executive Officer

                                               --------------------------------
                                               Optionee

                                       4

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