Exhibit 10.1

June 1, 2007

Avigen, Inc.
1301 Harbor Bay Parkway
Alameda, CA 94501

Gentlemen:

     This letter is to confirm that AVIGEN, INC. (“Borrower”) has requested that
WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") extend or continue credit to
Borrower as described below, and that Bank has agreed to provide such credit to
Borrower subject to all of the terms and conditions contained herein. For
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Borrower agree as follows.

I. CREDIT TERMS:

     1 LOAN COMMITMENT.

     (a) Loan Commitment. Bank hereby agrees to make advances to Borrower from
time to time up to and including November 30, 2009, not to exceed the aggregate
principal amount of Eight Million Dollars ($8,000,000.00) ("Loan Commitment"),
the proceeds of which shall be used first, to refinance Borrower’s outstanding
credit accommodations from Bank, and second, to finance Borrower’s working
capital requirements. Borrower's obligation to repay advances under the Loan
Commitment shall be evidenced by a promissory note dated as of June 1, 2007
("Loan Commitment Note"), all terms of which are incorporated herein by this
reference.

     (b) Borrowing and Repayment. Borrower may from time to time during the term
of the Loan Commitment borrow and partially or wholly repay its outstanding
borrowings, provided that amounts repaid may not be reborrowed, subject to all
the limitations, terms and conditions contained herein; provided however, that
the total outstanding borrowings under the Loan Commitment shall not exceed the
maximum principal amount available thereunder, as set forth above. The
outstanding principal balance of the Loan Commitment shall be due and payable in
full on November 30, 2009.

     (c) Prepayment. Borrower may prepay principal on the Loan Commitment solely
in accordance with the provisions of the Loan Commitment Note.

     2. STANDBY LETTER OF CREDIT A.

     (a) Standby Letter of Credit A. Bank has issued or caused an affiliate to
issue a standby letter of credit for the account of Borrower and for the benefit
of ARE 1201 Harbor Bay, LLC to guarantee performance under the lease at 1201
Harbor Bay Pkwy, Alameda, CA ("Standby Letter of Credit A") in the principal
amount of Four Hundred Twenty-Seven Thousand Six Hundred Seventy Dollars
($427,670.00) . Standby Letter of Credit A has an expiration date of November
30, 2007, and is subject to the additional terms of the Letter of Credit
agreement, application and any related documents required by Bank in connection
with the issuance thereof (the "Letter of Credit Agreement"). Subject to the
terms and conditions of this letter, Bank hereby confirms that Standby Letter of
Credit A remains in full force and effect.

     (b) Repayment of Drafts. Each drawing paid under Standby Letter of Credit A
shall be repaid by Borrower in accordance with the provisions of the Letter of
Credit Agreement.

--------------------------------------------------------------------------------

     3. STANDBY LETTER OF CREDIT B.

     (a) Standby Letter of Credit B. Bank has issued or caused an affiliate to
issue a standby letter of credit for the account of Borrower and for the benefit
of Lincoln RECP Empire OPCO, LLC to guarantee performance under a lease at 1301
Harbor Bay Pkwy, Alameda, CA ("Standby Letter of Credit B") in the principal
amount of Two Million Dollars ($2,000,000.00) . Standby Letter of Credit B has
an expiration date of November 30, 2007, and is subject to the additional terms
of the Letter of Credit agreement, application and any related documents
required by Bank in connection with the issuance thereof (the "Letter of Credit
Agreement"). Subject to the terms and conditions of this letter, Bank hereby
confirms that Standby Letter of Credit B remains in full force and effect.

     (b) Repayment of Drafts. Each drawing paid under Standby Letter of Credit B
shall be repaid by Borrower in accordance with the provisions of the Letter of
Credit Agreement.

     4. INTEREST/FEES.

     (a) Interest. The outstanding principal balance of each credit subject
hereto, shall bear interest, and the amount of each drawing paid under Standby
Letter of Credit A and Standby Letter of Credit B shall bear interest from the
date such drawing is paid to the date such amount is fully repaid by Borrower,
at the rate of interest set forth in each promissory note or other instrument or
document executed in connection therewith.

     (b) Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.

     (c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
one-eighth percent (0.125%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the Loan Commitment,
which fee shall be calculated on a calendar quarter basis by Bank and shall be
due and payable by Borrower in arrears on each September 30, December 31, March
31, June 30.

     (d) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the
issuance of each Letter of Credit equal to three-eighths percent (0.375%) per
annum (computed on the basis of a 360-day year, actual days elapsed) of the face
amount thereof, and (ii) fees upon the payment or negotiation of each drawing
under any Letter of Credit and fees upon the occurrence of any other activity
with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.

     5. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all interest
and fees due under each credit subject hereto by charging Borrower's deposit
account number 4142-059070 with Bank, or any other deposit account maintained by
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such deposit account to pay all such sums when due, the full amount
of such deficiency shall be immediately due and payable by Borrower.

--------------------------------------------------------------------------------

     6. COLLATERAL:

     As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower hereby grants to Bank security interests of first
priority in all Borrower's Investment Management account number 358-146238
maintained at Bank.

     All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the
full amount of all charges, costs and expenses (to include fees paid to third
parties and all allocated costs of Bank personnel), expended or incurred by Bank
in connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.

II. REPRESENTATIONS AND WARRANTIES:

     Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this letter and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this letter.

     1. LEGAL STATUS. Borrower is a corporation, duly organized and existing and
in good standing under the laws of Delaware, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on Borrower.

     2. AUTHORIZATION AND VALIDITY. This letter and each promissory note,
contract, instrument and other document required hereby or at any time hereafter
delivered to Bank in connection herewith (collectively, the "Loan Documents")
have been duly authorized, and upon their execution and delivery in accordance
with the provisions hereof will constitute legal, valid and binding agreements
and obligations of Borrower or the party which executes the same, enforceable in
accordance with their respective terms.

     3. NO VIOLATION. The execution, delivery and performance by Borrower of
each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.

     4. LITIGATION. There are no pending, or to the best of Borrower's knowledge
threatened, actions, claims, investigations, suits or proceedings by or before
any governmental authority, arbitrator, court or administrative agency which
could have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior to the
date hereof.

     5. CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement of
Borrower dated December 31, 2006, and all interim financial statements delivered
to Bank since said date, true copies of which have been delivered by Borrower to
Bank prior to the date hereof, (a) are complete and correct and present fairly
the financial condition of Borrower, (b) disclose all liabilities of Borrower
that are required to be reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) have been prepared in accordance with generally accepted accounting
principles consistently applied. Since the dates of such financial statements
there has been no material adverse change in the financial condition of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its assets or properties except in favor of Bank or
as otherwise permitted by Bank in writing.

--------------------------------------------------------------------------------

     6. INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments
or adjustments of its income tax payable with respect to any year.

     7. NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this letter to any other obligation of Borrower.

     8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and all rights to
trademarks, trade names, patents and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance with
applicable law.

     9. ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event,
as defined in ERISA, has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.

     10. OTHER OBLIGATIONS. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

     11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

III. CONDITIONS:

     1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to
extend any credit contemplated by this letter is subject to fulfillment to
Bank's satisfaction of all of the following conditions:

--------------------------------------------------------------------------------

     (a) Documentation. Bank shall have received each of the Loan Documents,
duly executed and in form and substance satisfactory to Bank.

     (b) Financial Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower, nor
any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the assets
of Borrower.

     2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make
each extension of credit requested by Borrower hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following conditions:

     (a) Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true on and as of the date of the
signing of this letter and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
default hereunder, and no condition, event or act which with the giving of
notice or the passage of time or both would constitute such a default, shall
have occurred and be continuing or shall exist.

     (b) Documentation. Bank shall have received all additional documents which
may be required in connection with such extension of credit.

IV. COVENANTS:

     Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

     1. PUNCTUAL PAYMENT. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein.

     2. ACCOUNTING RECORDS. Maintain adequate books and records in accordance
with generally accepted accounting principles consistently applied, and permit
any representative of Bank, at any reasonable time, to inspect, audit and
examine such books and records, to make copies of the same and inspect the
properties of Borrower.

     3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and
detail satisfactory to Bank:

     (a) not later than 120 days after and as of the end of each fiscal year, a
copy of 10K report filed with the Securities Exchange Commission, prepared by a
certified public accountant acceptable to Bank, to include balance sheet, income
statement, statement of cash flow and footnotes;

     (b) not later than 60 days after and as of the end of each fiscal quarter,
a copy of 10Q report filed with the Securities Exchange Commission, prepared by
a certified public accountant acceptable to Bank, to include balance sheet,
income statement, statement of cash flow and footnotes;

     (c) not later than 30 days after and as of the end of each month, a copy of
Borrower’s securities portfolio or brokerage statement;

     (d) from time to time such other information as Bank may reasonably
request. 

--------------------------------------------------------------------------------

     4. COMPLIANCE. Preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; and comply with the provisions of all documents pursuant to which
Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to Borrower and/or its business.

     5. INSURANCE. Maintain and keep in force, for each business in which
Borrower is engaged, insurance of the types and in amounts customarily carried
in similar lines of business, including but not limited to fire, extended
coverage, public liability, flood, property damage and workers' compensation,
with all such insurance carried with companies and in amounts satisfactory to
Bank, and deliver to Bank from time to time at Bank's request schedules setting
forth all insurance then in effect.

     6. FACILITIES. Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.

     7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.

     8. LITIGATION. Promptly give notice in writing to Bank of any litigation
pending or threatened against Borrower.

     9. OTHER INDEBTEDNESS. Not create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, and (b) any
other liabilities of Borrower existing as of, and disclosed to Bank prior to, in
an amount not to exceed $2,000,000.00 in the aggregate at any one time.

     10. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Not merge into or
consolidate with any other entity; nor make any substantial change in the nature
of Borrower's business as conducted as of the date hereof; nor acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.

     11. GUARANTIES. Not guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity, except any of the
foregoing in favor of Bank.

     12. PLEDGE OF ASSETS. Not mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's assets now
owned or hereafter acquired, except (a) any of the foregoing in favor of Bank or
which are existing as of, and disclosed to Bank in writing prior to, the date
hereof and (b) liens to the extent they secure other liabilities permitted
hereunder.  

--------------------------------------------------------------------------------

V. DEFAULT, REMEDIES:

     1. DEFAULT, REMEDIES. Upon the violation of any term or condition of any of
the Loan Documents, or upon the occurrence of any default or defined event of
default under any of the Loan Documents: (a) all indebtedness of Borrower under
each of the Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank's option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any credit subject
hereto and to exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the occurrence of any
such breach or default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law or equity.

     2. NO WAIVER. No delay, failure or discontinuance of Bank in exercising any
right, power or remedy under any of the Loan Documents shall affect or operate
as a waiver of such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power
or remedy. Any waiver, permit, consent or approval of any kind by Bank of any
breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.

VI. MISCELLANEOUS:

     1. NOTICES. All notices, requests and demands which any party is required
or may desire to give to any other party under any provision of this letter must
be in writing delivered to each party at its address first set forth above, or
to such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or three (3) days after deposit in the U.S.
mail, first class and postage prepaid; and (c) if sent by telecopy, upon
receipt.

     2. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
letter and the other Loan Documents, Bank's continued administration hereof and
thereof, and the preparation of amendments and waivers hereto and thereto, (b)
the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to Borrower or
any other person or entity.  

--------------------------------------------------------------------------------

     3. SUCCESSORS, ASSIGNMENT. This letter shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interests or rights hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or hereafter may
acquire relating to any credit subject hereto, Borrower or its business, or any
collateral required hereunder.

     4. ENTIRE AGREEMENT; AMENDMENT. This letter and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each
credit subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This letter
may be amended or modified only in writing signed by each party hereto.

     5. NO THIRD PARTY BENEFICIARIES. This letter is made and entered into for
the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is
not a party.

     6. SEVERABILITY OF PROVISIONS. If any provision of this letter shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
letter.

     7. GOVERNING LAW. This letter shall be governed by and construed in
accordance with the laws of the State of California.

     8. ARBITRATION.

     (a) Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise in any way arising out of
or relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.

     (b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in California selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law. 

--------------------------------------------------------------------------------

     (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

     (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

     (e) Discovery. In any arbitration proceeding, discovery will be permitted
in accordance with the Rules. All discovery shall be expressly limited to
matters directly relevant to the dispute being arbitrated and must be completed
no later than 20 days before the hearing date. Any requests for an extension of
the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.

--------------------------------------------------------------------------------

     (f) Class Proceedings and Consolidations. No party hereto shall be entitled
to join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration
any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney
general capacity.

     (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all
costs and expenses of the arbitration proceeding.

     (h) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no dispute shall be submitted to arbitration if the
dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA’s selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

     (i) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

     (j) Small Claims Court. Notwithstanding anything herein to the contrary,
each party retains the right to pursue in Small Claims Court any dispute within
that court’s jurisdiction. Further, this arbitration provision shall apply only
to disputes in which either party seeks to recover an amount of money (excluding
attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small
Claims Court.

--------------------------------------------------------------------------------

     Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions. Bank's commitment to extend any credit to
Borrower pursuant to the terms of this letter shall terminate on July 1, 2007,
unless this letter is acknowledged by Borrower and returned to Bank on or before
that date.

  Sincerely,  WELLS FARGO BANK, NATIONAL ASSOCIATION       By:       /s/
CHRISTOPHER B. WAGNER   

    Christopher B. Wagner 

 

    Relationship Manager 

 

Acknowledged and accepted as of  May 29, 2007 :  

AVIGEN, INC.

By:      /s/ ANDREW A. SAUTER          Andrew A. Sauter        Vice President,
Finance 

--------------------------------------------------------------------------------