Document:

<PAGE>   1
                                                                   EXHIBIT 10.15

                                  June 1, 1997

Edward O. Lanphier II
16 Oak Way
Ross, CA 94957

        Re: Employment Agreement

Dear Edward:

        Sangamo BioSciences, Inc. proposes to enter into the following
employment agreement ("Agreement") with you.

        I have incorporated the terms we have discussed regarding your
employment into this agreement and the proposed terms and conditions are set
forth below. If the terms of the Agreement are satisfactory, please indicate
your acceptance of the Agreement by executing this letter and returning it to
me.

        1.     Definitions. The terms defined in this section shall have the
               meanings set forth below for purposes of this Agreement.

               a.     "Board of Directors" shall mean the Board of Sangamo
                      BioSciences, Inc.

               b.     "Sangamo" or "Company" shall mean Sangamo BioSciences,
                      Inc.

               c.     "Employee" shall refer to you, Edward O. Lanphier II.

               d.     "Without Cause" shall mean that Sangamo has without
                      "Cause," as defined below, and without the Employee's
                      written consent:

                        (1)     terminated the Employee's services with the
                                Company;

                        (2)     materially reduced the Employee's duties,
                                responsibilities and status with Sangamo;

<PAGE>   2

                        (3)     reduced the Employee's base salary by more than
                                five percent (except pursuant to Company
                                mandated pay cuts or pay reductions which are
                                uniformly applied to the Company's management);
                                or

                        (4)     required that the Employee be based at a
                                location more than 40 miles from the Employee's
                                home location.

               e.     "Cause" shall mean misconduct, including but not limited
                      to the following:

                        (1)     embezzlement, theft, misuse of confidential
                                information or any other illegal or improper act
                                by the Employee against Sangamo;

                        (2)     conduct that constitutes a material breach of
                                Sangamo policy, after thirty (30) days' notice
                                and failure to cure;

                        (3)     unauthorized conduct that causes, or could
                                potentially cause, harm to the health or safety
                                of other Employees; and/or

                        (4)     any other unauthorized conduct that causes, or
                                could potentially cause, material harm to the
                                business or reputation of Sangamo, after thirty
                                (30) days' notice and failure to cure.

               f.     "Change of Control" solely for purposes of this Agreement
                      shall mean any transaction or series of related
                      transactions in which (i) substantially all of the assets
                      of the Company are sold; or (ii) any merger,
                      reorganization or acquisition in which the stockholders of
                      the Company immediately prior to such transaction or
                      series of related transactions hold less than 51% of the
                      equity securities of the surviving entity (or any parent
                      thereof) immediately after such transaction, unless, such
                      surviving entity elects in writing to assume this
                      Agreement and the obligations of the Company hereunder in
                      its entirety.

        2.     Duties and Obligations.

               a.     The Employee shall serve as the Company's President and
                      Chief Executive Officer which title was approved at the
                      Company's Board of Directors (the "Board") meeting on
                      April 5, 1997. Employee's duties shall include overseeing
                      all corporate functions and directing the organization to
                      ensure the attainment of the goals and objectives set
                      forth from time to time by the Board of Directors.

                                       2.
<PAGE>   3

               b.     Employee agrees to abide by the terms and conditions of
                      the Company's standard Proprietary Information and
                      Inventions Agreement between Employee and the Company.
                      Employee further agrees that at all times both during his
                      employment by the Company and after his Termination
                      (hereinafter as defined in Section 6(a)), he will keep in
                      confidence and trust, and will not use or disclose, except
                      as directed by the Company, any confidential or
                      proprietary information of the Company.

               c.     Employee agrees to indemnify and hold the Company harmless
                      against any liability, damage, claims, or suits and
                      related costs and expenses that may arise directly or
                      indirectly out of Employee's Termination of any prior
                      employment relationship or agreement. Further, Employee
                      represents that he has not entered into, and agrees not to
                      enter into, any agreement in conflict with the terms of
                      this Agreement or his employment with the Company.

        3.     Devotion of Time to the Company's Business.

               a.     Employee shall devote substantially all of his business
                      time, attention, knowledge, skills and interests to the
                      business of the Company and the Company shall be entitled
                      to all of the benefits and profits arising from or
                      incident to such work, services and advice of Employee.

               b.     During the term of this Agreement, Employee shall not,
                      whether directly or indirectly, render any services of a
                      commercial or professional nature to any other person or
                      organization, whether for compensation or otherwise,
                      without the prior consent of the Board of Directors.

               c.     During the term of this Agreement, Employee shall not,
                      directly or indirectly, engage or participate in any
                      business that is in competition with the business of the
                      Company.

        4.     Compensation and Benefits.

               a.     Base Compensation. Beginning June 1, 1997, the Company
                      shall pay to Employee an annual salary of one hundred
                      seventy-five thousand dollars ($175,000), less all
                      applicable withholdings, prorated for any partial
                      employment period and payable in equal monthly
                      installments in accordance with the Company's payroll
                      schedule. The Compensation Committee of the Board shall
                      annually review the then-current level of Employee's
                      salary to determine the amount, if any, of salary change,
                      provided that the foregoing shall not serve to exempt
                      Employee from any Company mandated pay cuts or pay
                      reductions which are uniformly applied to the Company's
                      management, any pay increase or pay cut will be effective
                      as of December 31 of the year such adjustment is made and
                      the Board shall advise Employee of such adjustment, if
                      any.

                                       3.
<PAGE>   4

               b.     Bonus. The Employee will be eligible to receive a cash
                      bonus in addition to the Employee's current base salary.
                      The Compensation Committee of the Board shall annually
                      review the contributions of the Employee to the Company
                      and determine the appropriate bonus, with the initial
                      bonus target being 50% of the Employee's base salary. The
                      actual bonus may be more or less than the target amount
                      based upon the Employee's achievements over the year,
                      provided that in no event shall the actual bonus be less
                      than $43,750 during the first year of this Agreement.

               c.     Long Term Loan. In lieu of any relocation or recruiting
                      expenses, the Employee will receive a loan of two hundred
                      fifty thousand dollars ($250,000). This loan shall be
                      forgiven annually on a pro-rated basis over a four-year
                      period beginning January 1, 1999 and shall bear interest
                      at the minimum rate otherwise imputed thereto by the
                      Internal Revenue Service. Upon any Termination of Employee
                      other than for Cause, the Company agrees to forgive any
                      remaining amount of the loan payoff made as part of this
                      Agreement. Should the Employee resign without cause, the
                      remaining balance will be due and payable within ninety
                      (90) days.

               d.     Benefits. At the time of this Agreement or for such time
                      as otherwise provided in this Agreement, Employee shall be
                      entitled to participate in such fringe benefits that are
                      available to employees of the Company at that time,
                      including: family health insurance, dental insurance,
                      group term life insurance, short-term disability
                      insurance, long-term disability insurance, vacation pay,
                      sick pay, 401(k) and other benefits that may be added to
                      the Company's benefit program from time to time.

                        (1)     Life Insurance. In addition to the group term
                                life insurance coverage provided to all
                                employees of the Company, the Company will
                                assist you in providing additional life
                                insurance protection through the establishment
                                of a split-dollar life insurance program, as
                                detailed in the Split-Dollar Life Insurance
                                Agreement included as Attachment A.

                        (2)     Disability Insurance. In addition to the
                                short-term and long-term disability insurance
                                coverage provided to all employees of the
                                Company, the Company will assist you in
                                providing additional long-term disability
                                insurance protection through the purchase of an
                                individual policy that will, without offsets for
                                social security, workers' compensation or other
                                disability benefits, provide insurance coverage
                                in the amount of $3,500 per year. Upon your
                                resignation or Termination from employment, this
                                disability insurance policy and any dividends
                                accrued thereon shall be released to you or your
                                successor employer upon written request.

               e.     Stock Options. Upon entering this Agreement, the Employee
                      shall receive stock options totalling Two Hundred Thousand
                      (200,000) shares of the Company's Common Stock (the
                      "Option Shares") under the Company's 1996 Stock Option
                      Plan (the "Plan"), which options shall have an exercise
                      price of $0.10 per share,

                                       4.
<PAGE>   5

                      and from time to time may be granted additional stock
                      options. If there is a Change of Control all unvested
                      stock options will vest and Employee will have up to three
                      years to exercise the stock options.

               f.     Stock Bonus. Upon completion of a financing or financings
                      totalling at least $7,000,000 on terms and conditions
                      acceptable to the Board of Directors, the Employee shall
                      receive a one-time stock bonus of One Hundred Fifty
                      Thousand (150,000) shares of the Company's Common Stock.

        5.     Eligibility for Severance Benefits.

               a.     General Rule. Except as otherwise provided in this
                      Agreement, should the employment of the Employee be
                      terminated Without Cause, the Employee shall be entitled
                      to Severance Benefits as set forth in Section 6. A Change
                      of Control shall be deemed to be a Termination Without
                      Cause.

               b.     Death or Disability. If the Employee dies after he has
                      ceased to be an Employee but prior to receiving full
                      payment of his Severance Benefits (as defined in Section
                      6(a)(i), if any, any portion of the Severance Benefits
                      that remains to be paid shall be paid to the surviving
                      spouse of the Employee, or, if there is no surviving
                      spouse, to the Employee's estate.

        6.     Termination of Employment.

               a.     The Company may terminate Employee's employment under this
                      Agreement at any time, for any reason, with or Without
                      Cause by giving written notice of its intent to terminate
                      the employment (a "Termination").

                      (1)    Should the Employee be terminated Without Cause,
                             the Company will thereafter pay twelve (12) months
                             base salary and a pro-rated bonus to the Employee
                             (the "Severance Benefits").

               b.     Continue Insurance Coverage. Sangamo shall continue to
                      provide the Employee and his family with medical and
                      dental insurance coverage by paying the COBRA payments for
                      a period equal to twelve (12) months. Notwithstanding the
                      foregoing, to the maximum extent permitted by law, the
                      number of months of continued insurance coverage provided
                      to the Employee under this section shall reduce the number
                      of months of continued coverage that must be made
                      available to the Employee (and his dependents, if
                      applicable) under COBRA.

               c.     Time and Form of Payment. The Employee shall not be
                      entitled to receive Severance Benefits during any period
                      in which he remains an Employee. The Employee must elect
                      to have his Severance Benefits paid in one of the
                      following ways:

                                       5.
<PAGE>   6

                      (1)    A single lump sum distribution paid upon, or as
                             soon as reasonably practicable after the
                             Termination of his employment; or

                      (2)    A deferred lump sum distribution paid in January of
                             the year following the year his employment
                             terminates; or

                      (3)    Two installments, which do not have to be of equal
                             amounts, with the first paid upon, or as soon as
                             reasonably practicable after, the Termination of
                             his employment and the second paid in January of
                             the year following the year his employment
                             terminates.

                             Election of one of the above methods is
                      accomplished by providing written notice to the Company of
                      such election within fifteen calendar days of the
                      Employee's Termination. If no election is made within that
                      period, the Severance Benefits will automatically be paid
                      pursuant to Section 6(e)(1). Without regard to the payment
                      method elected, no interest shall accrue or be paid with
                      respect to the amount of the Employee's Severance
                      Benefits.

                      d.     Reductions. The Severance Benefits paid to the
                             Employee shall be reduced to the extent legally
                             permissible by any amount that the Employee owes to
                             the he Company on the date he ceases to be an
                             Employee.

                             Except for any payments for earned salary, accrued
                      but unused vacation, 401(k) Plan distributions, and the
                      above mentioned Severance Benefits, if applicable, neither
                      party will be obligated to pay the other any payment as a
                      result of, or in connection with, the Termination of
                      Employee's employment with Sangamo (including but not
                      limited to any salary or benefits following the date of
                      Termination).

        7.     Miscellaneous.

               a.     Governing Law. This Agreement shall be interpreted,
                      construed, governed and enforced according to the laws of
                      the State of California.

               b.     Attorneys' Fees. In the event of any controversy, claim or
                      dispute between the parties, arising out of or relating to
                      this Agreement or the breach hereof, or the interpretation
                      hereof, each party shall bear its own legal fees and
                      expenses. Notwithstanding the foregoing, in the event of a
                      finding by any court having jurisdiction over such matter
                      that any party initiating an action under this Agreement
                      failed to have a reasonable prospect of prevailing on its
                      claim, the court shall have discretion to award the
                      prevailing party attorneys' fees and costs incurred by it
                      with respect to such claim or action. The "prevailing
                      party" means the party determined by the court to have
                      most nearly prevailed, even if such party did not prevail
                      in all matters, not necessarily the one in whose favor a
                      judgment is rendered.

                                       6.
<PAGE>   7

               c.     Amendments. No amendment or modification of the terms or
                      conditions of this Agreement shall be valid unless in
                      writing and signed by the parties hereto.

               d.     Severability. All agreements and covenants contained
                      herein are severable, and in the event any of the above
                      shall be held to be invalid or unenforceable, this
                      Agreement shall be interpreted as if such invalid
                      agreements or covenants were not contained herein.

               e.     Successors and Assigns. The rights and obligations of the
                      Company under this Agreement shall inure to the benefit of
                      and shall be binding upon the successors and assigns of
                      the Company. The Employee shall not be entitled to assign
                      any of his rights or obligations under this Agreement.

               f.     Entire Agreement. This Agreement, along with any other
                      Agreements set forth herein, including without limitation,
                      the Proprietary Information and Inventions Agreement,
                      constitutes the entire agreement between the parties with
                      respect to the employment of Employee.

        If you have any questions, please do not hesitate to call me at (415)
442-1123.

                                            Very truly yours,

                                            SANGAMO BIOSCIENCES, INC.

                                            By: /s/ JOHN W. LARSON
                                                --------------------------------
                                                John W. Larson
                                                Board of Directors

AGREED TO AND ACCEPTED BY:

/s/ EDWARD O. LANPHIER II
--------------------------------------
Edward O. Lanphier II
Employee
Date:
      --------------------------------

                                       7.
<PAGE>   8

                                  ATTACHMENT A

                      SPLIT-DOLLAR LIFE INSURANCE AGREEMENT

            This agreement, made and entered into this 1st day of June, 1997 by
and between Sangamo BioSciences, Inc., a Delaware corporation, hereinafter
referred to as the "Company," and Edward O. Lanphier II, hereinafter referred to
as the "Executive" and "Insured."

            Whereas the Executive has been a trusted and valued employee of the
Company for a number of years and the Company highly values the efforts,
abilities and accomplishments of the Executive; and

            Whereas the Company is concerned with the welfare of its employees
and their families and believes it is meritorious to assist them in providing
for their financial security; and

            Whereas the Board of Directors of the Company has determined that it
would be in the Company's best interest to participate in a Split-Dollar
Insurance Plan with the Executive; and

            Whereas the Executive has acquired a life insurance policy with a
face amount of $2,000,000; and

            Whereas, the Company and the Executive desire to make said insurance
policy subject to a Split-Dollar arrangement;

            Now therefore, the parties hereto mutually agree as follows:

I. Title to Policy and Incidents of Ownership

            The Executive shall be the owner of the policy and shall have all
incidents of ownership except those assigned pursuant to the provisions of
Article III for security purposes only, including but not limited to:

        A. The right to designate and to change the beneficiary.

        B. The right to receive and to have his successor or assigns receive any
amount in excess of the amount payable to the Company as hereinafter provided in
Article IV at the time of the death of the insured; and

        C. The right, at any time, to repay the amounts hereinafter described in
Article II, thereby releasing any claim which the Company might have against
such contract.

<PAGE>   9

            The intention of the parties is that the Company possess no policy
rights or incidents of ownership, other than those assigned as security for the
indebtedness, which will permit the Company to unilaterally impair the right or
interests of the Executive, or his designee or assignee in any way.

            The Executive hereby agrees, however, that while this agreement is
in effect, he shall notify the Company of any intent to exercise any right of
ownership in the policy other than the right to change the beneficiary at least
thirty (30) days prior to the exercise of such right of ownership.

II. Premium Payments

        A. The Company will pay the premium of the policy. The Company's portion
for this premium will be a minimum of $12,000 annually for split-dollar life.
Such premium may be paid annually or more frequently as the Company may elect.
The Company's premium payments shall be remitted to the insurer before the
expiration of the grace period for premium payments. The Executive may repay any
amount of such premiums advanced for his benefit at any time.

        B. The total amount of such payments by the Company, less the total
amount of any repayments by the Executive shall constitute an indebtedness to
the Company.

III. Security

        A. In order to secure the repayment of the indebtedness, the Executive
agrees to execute a Collateral Assignment of the insurance policy in a form
approved by the insurance company and shall deliver physical custody of the
policy to the Company.

        B. In the event of the termination of this agreement, pursuant to the
provisions of Article V hereof, the Company shall, upon receipt of an amount
equal to the total amount of the indebtedness then due to the Company, cancel
and release the Collateral Assignment of the insurance policy and redeliver
physical custody thereof to the Executive.

            In the event the Executive does not satisfy the indebtedness to the
Company within thirty (30) of the termination of this agreement, the Company
shall have the right, without further notice to the Executive, to exercise its
right as Collateral Assignee to obtain a cash loan from the Insurer in
accordance with the loan provisions of the policy, provided, however, that the
total amount of any cash loan or loans so obtained shall not exceed the total
amount of the indebtedness of the Executive then due under the terms of this
agreement.

IV. Death Benefits

        A. The portion of the death benefit to be paid to the Company shall be
the amount equal to the net cash surrender value of the policy up to, but not
exceeding, the then remaining balance of any indebtedness incurred for the
purposes of paying premiums under the policy. Such value shall be determined as
of the end of the period for which premiums have been paid.

        B. The portion of the death benefit payable to the beneficiary or
beneficiaries designated by the Executive shall be the balance of the proceeds,
if any as provided in the policy.

                                       2.
<PAGE>   10

V. Term

            This agreement shall be effective as of the date of this agreement
and shall continue until terminated by the death of the insured or mutual
agreement of the parties hereto.

VI. Amendment

            This agreement may be amended at any time by the mutual consent of
the parties hereto.

VII. Applicable Law

            This agreement shall be governed by the laws of the State of
California.

VIII. Benefit

            This agreement shall be binding upon the parties hereto, the
Executive's heirs, executors and administrators, and either party's successors
or assigns. The parties hereto hereby agree for themselves, their heirs,
executors, administrators, successors or assigns to execute any and all
instruments and to perform all acts which may be necessary and proper to carry
out the purposes of this agreement.

IX. Administrator

            Cameron M. Lanphier shall serve as the administrator of this plan.

                                       3.
<PAGE>   11

            IN WITNESS WHEREOF, the parties have executed this agreement on the
date indicated.

                                     Company

                                     SANGAMO BIOSCIENCES, INC.

                                     By:
                                         ---------------------------------------
                              Witness
                                         ---------------------------------------

                                     Executive

                                     -------------------------------------------
                                     Edward O. Lanphier II

                              Witness
                                         ---------------------------------------

                                       4.
<PAGE>   12

                                  ATTACHMENT B

             PREMIUM SCHEDULE FOR SPLIT-DOLLAR LIFE INSURANCE POLICY

                     Royal Maccabees Life Insurance Company

                                  Diplomat MFC
                                    FPAL-892
                AN ILLUSTRATION OF PROJECTED VALUES AND BENEFITS

Insured:              Edward O. Lanphier II          Agent:      Brian L. Dunn
                      Male, Age 40

Rating Class:         Preferred Non-Smoker

Mode of Premium Payment:  Annual

<TABLE>
<CAPTION>
           End Year                Age                 Premium            Death Benefit
<S>                                <C>                 <C>               <C>
               1                   41                   12,000              2,000,000
               2                   42                   12,000              2,000,000
               3                   43                   12,000              2,000,000
               4                   44                   12,000              2,000,000
               5                   45                   12,000              2,000,000
               6                   46                   12,000              2,000,000
               7                   47                   12,000              2,000,000
               8                   48                   12,000              2,000,000
               9                   49                   12,000              2,000,000
              10                   50                   12,000              2,000,000
</TABLE><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.
<PAGE>   3

                                   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.
<PAGE>   4

            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.
<PAGE>   5

            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.
<PAGE>   6

            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.
<PAGE>   7

                                  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.
<PAGE>   8

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.
<PAGE>   9

        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.
<PAGE>   10

                                    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.
<PAGE>   11

        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.

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