Exhibit 10.1

[Avigen, Inc. Letterhead]

March 6, 2006

Richard Wallace

Re:   Position on the Board of Directors of Avigen, Inc.

Dear Richard:

We are pleased that you have expressed the desire to become a member of the
Board of Directors of Avigen, Inc.  This is an exciting time for Avigen, and we
believe that your skills and experience can greatly assist in moving Avigen
forward. We would like to provide you with further information regarding your
compensation as a member of the Board of Directors, should you decide to accept.

          1. Stock Option Grants. Upon your election to the Board of Directors,
and in consideration of your services to Avigen as a director, you will be
granted non-statutory stock options to purchase an aggregate of 30,000 shares of
Avigen’s Common Stock (15,000 shares under Avigen’s 2000 Equity Incentive Plan
and 15,000 shares under Avigen’s 1996 Non-Employee Directors’ Stock Option
Plan). As a non-employee director, you will also be granted an option to
purchase an additional 20,000 shares at each annual meeting of Avigen’s
stockholders (with respect to the first such grant, your option will be pro
rated such that the fraction of such 20,000 shares shall equal the fraction of
the year that you serve until the 2006 annual meeting). All such options shall
have an exercise price equal to the fair market value of Avigen’s Common Stock
on the date of grant and shall vest over three years, with 33% vesting after the
first year of grant, 34% after the second year of grant and the remaining 33%
vesting after the third year of grant.  The options shall be subject to vesting
restrictions and other standard provisions set forth in Avigen’s stock option
documentation.

          2. Reimbursement for Board Duties. As a non-employee director of
Avigen, you will receive an annual retainer of $28,000, payable in quarterly
installments. In addition, you will also be reimbursed for your expenses in
attending Board of Directors and committee meetings.

          3. Indemnity Agreement. Avigen enters into a standard form of
indemnity agreement with each of its directors. Such agreements require Avigen
to indemnify its directors to the fullest extent permitted by law.

          4. Proprietary Information. In your role as a director of Avigen, you
will be expected not to use or disclose any confidential information, including
trade secrets, of any former employer or other person to whom you have an
obligation of confidentiality. Additionally, you will receive confidential and
proprietary information belonging to Avigen, which you will have a duty of care
and a duty of loyalty to protect.

          5. Nature of Relationship. Your relationship with Avigen will be as a
member of the Board of Directors and will not involve an employment or
consulting relationship. In your role as a Director you will be asked to attend
four formal Board meetings (two on the East Coast and two on the West Coast) and
4-6 formal Committee meetings per year, as well as special meetings via
teleconference to address business matters requiring Board action on an
as-needed basis.  This letter, together with the indemnity agreement and
documents relating to your option grant, forms the complete and exclusive
statement of our understanding with respect to your service on Avigen’s Board of
Directors. The terms in this letter supersede any other agreements or promises
made to you by anyone, whether oral or written.

This offer is contingent upon clearance with our Directors & Officers Insurance
carrier, and confirmation that you will be considered an “independent director”
for purposes of the Nasdaq Stock Market rules and regulations.

Please sign and date this letter and return it to me to confirm that you wish to
accept membership on the Board of Directors under the terms described above.

 

Very truly yours,

 

 

 

AVIGEN, INC.

 

 

 

 

 

By:

/s/ Kenneth Chahine

 

 

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Kenneth Chahine

 

 

President and Chief Executive Officer

Accepted:

/s/ Richard Wallace

 

3/17/06

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Richard Wallace

 

Date