8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 20, 2006

Avigen, Inc.
(Exact name of Registrant as specified in its charter)

Delaware	000-28272	13-3647113
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1301 Harbor Bay Parkway, Alameda, California	94502
(Address of principal executive offices)	(Zip Code)

(510) 7487150
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

          On March 21, 2006, Avigen, Inc. received an executed copy of its offer letter to Mr. Richard J. Wallace in connection with Mr. Wallace’s becoming a member of Avigen’s Board of Directors (although the date of Mr. Wallace’s signature on the offer letter was March 17, 2006, it was not delivered until March 31, 2006).  The terms of the offer letter are more fully described below in Item 5.02 of this Current Report on Form 10-K, which description is incorporated into this Item 1.01 by reference.     A copy of Mr. Wallace’s offer letter is filed as Exhibit 10.1 to this Form 8-K, which is also incorporated into this Item 1.01 by reference.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

          Effective on March 20, 2006, the date Richard J. Wallace informed Avigen that he had accepted Avigen’s offer to become a member of its Board of Directors, Mr. Wallace became a member of Avigen’s Board of Directors.  Pursuant to the terms of the offer letter between Avigen and Mr. Wallace:

1.       Mr. Wallace was granted stock options to purchase an aggregate of 30,000 shares of Avigen’s common stock, with an exercise price equal to the fair market value on the date of grant, vesting over three years in three equal annual installments;

2.       Mr. Wallace will receive an option to purchase an additional 20,000 shares at each annual meeting of Avigen’s stockholders (with respect to the first such grant, the option will be pro rated such that the fraction of such 20,000 shares shall equal the fraction of the year that he serves until the 2006 annual meeting), with an exercise price equal to the fair market value on the date of grant, vesting over three years in three equal annual installments; and

3.       Mr. Wallace will receive an annual retainer of $28,000.

          At the time of the filing of this Form 8-K, Avigen expects that Mr. Wallace will serve on one or more committees of the Board, but has not made a determination as to which committee or committees. 

          Mr. Wallace is Senior Vice President of Global Commercial Strategy at GlaxoSmithKline (GSK) and a member of their Research and Development Executive, Commercial Operations Committee and Product Management Board. Since joining GSK in 1992, Mr. Wallace has performed a number of roles from Vice President Commercial (Canadian Pharmaceuticals), Vice President US Business Development, and Vice President Sales & Marketing ( US Oncology and HIV). Mr. Wallace has over the past six years in R&D led Global Clinical Development and Product Strategy roles in Neurosciences expanding to all therapeutic areas of the GSK portfolio. Mr. Wallace’s experience prior to joining GSK includes eight years with Bristol Myers Squibb and seven years at Johnson & Johnson (in assignments spanning marketing, sales, manufacturing and general management). Mr. Wallace received B.Commerce and B.Com. Honors degrees from Rhodes University, South Africa.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.	Description
10.1	Offer Letter, dated March 17, 2006, between Avigen, Inc. and Richard J. Wallace

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  March 21, 2006	By:	/s/ M. Christina Thomson
		M. Christina Thomson
		Vice President, Corporate Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.1	Offer Letter, dated March 17, 2006, between Avigen, Inc. and Richard J. Wallace

EX-10.1

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
	Kenneth Chahine
	President and Chief Executive Officer

Accepted:

/s/ Richard Wallace	3/17/06
Richard Wallace	Date