Exhibit 10.1

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “Agreement”) is made as of September 18, 2008,
by and between Avicena Group, Inc., a Delaware corporation (the “Company”), and
the persons or entities executing this agreement on the Signature Pages attached
hereto (the “Subscribers”). For purposes of this Agreement, the Subscriber will
mean each of the Subscribers party to this Agreement.

In consideration of the Company’s agreement to sell the Securities (as defined
below) to the Subscriber, upon the terms and conditions set forth herein, the
Subscriber agrees and represents to the Company as follows:

1. The Subscription. The Subscriber hereby subscribes to purchase the number of
“Units” set forth on its Signature Page, at a price of $5,000 per Unit. Each
Unit shall consist of one share of the Company’s newly designated Series D
Preferred Stock, having a par value of $0.001 and a stated value of $5,000 per
share (the “Series D Stock”), and one (1) warrant (the “Class D Warrant”) to
purchase an additional 650,000 shares of the Company’s Common Stock, par value
$0.001 per share (the “Common Stock”). The Series D Stock and Class D Warrants
subscribed for under this Agreement are referred to collectively as the
“Securities”. The total number of shares of Series D Stock issued pursuant to
this Agreement shall be 200 (two hundred).

2. On the date hereof, each share of Series D Stock shall be convertible into
1,000,000 (one million) shares of the Common Stock, for a total of 200,000,000
(two hundred million) shares of Common Stock upon conversion of all the Series D
Stock issued pursuant to this Agreement, all as more specifically set forth in
Section 5 of the Amended and Restated Certificate of Designation of the Relative
Rights and Preferences (the “CoD”) of the Series D Stock (subject to adjustment
in certain circumstances as set forth in Clause 6.c below). The Series D Stock
shall have the voting rights as set forth in the COD, which includes the right
to a number of votes equal to the number of shares of Common Stock into which
the shares of Series D Stock then held by Subscriber could then be converted;
for greater certainty the Series D Stock will be entitled to vote as if
converted into Common Stock representing 200,000,000 votes from the Closing of
this Agreement. The Series D Stock’s entitlement to vote its 200,000,000 shares
(as reflected on the pro forma capitalization table attached hereto as exhibit
A) will not be impacted on any matter to be voted on if the Company’s total
authorized shares outstanding have not been increased at time the vote occurs
sufficient such to have provisioned for conversion of the Series D Stock. The
Company and its officers will use their best efforts as soon as reasonably
practical following issuance of the Series D stock, to seek stockholder approval
for, among other things, amending the certificate of incorporation to increase
the authorized capital stock to a number sufficient to allow for conversion of
the Series D stock.

3. The Company acknowledges receiving $700,000 for the Units, with an additional
$300,000 to be paid by wire transfer of immediately available funds upon the
execution of this Agreement.

4. The Company will not sell more than 200 Units without the written consent of
Subscribers holding a majority of the Units issued pursuant to this Agreement
(the “Majority Subscribers”).

5. Upon execution of this Agreement, the Majority Subscribers shall designate
one additional member to the Company’s Board of Directors which shall then total
a maximum of 4 board members after the one addition.

6. Representations and Covenants of the Company. The Company represents,
warrants and covenants to the Subscriber as follows:

a. Due Authorization. Upon their delivery to the Subscriber, the Securities will
be duly authorized, validly issued, fully paid and non-assessable.

 

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b. No Breach; No Conflicts. The execution, delivery and performance of this
Agreement, the Class D Warrant and the Series D Certificate of Designations by
the Company, the performance by the Company of its obligations thereunder and
the consummation by the Company of the transactions contemplated herein and
therein do not and will not (i) violate any provision of the Company’s
Certificate or Bylaws, (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of acceleration or redemption of any agreement, note,
bond, instrument or obligation to which the Company is a party or by which it or
its properties or assets are bound, including without limitation the
Certificates of Designations for the Company’s Series A and Series C Preferred
Stock, except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a material adverse effect on the Company or its assets, results
of operations or financial condition.

c. Post-closing Covenant. Until such time as a New Financing has occurred, the
Company covenants that, if any of the conversion prices of its Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock (“Prior Preferred”) are reduced to an amount that is
less than $.05 per share (subject to adjustments for stock splits, combinations
and the like), the Company will reduce the conversion price of the Series D
Stock by an amount such that the Subscribers’ ownership of the Company’s
outstanding capital stock relative to the holders of Prior Preferred as of the
date hereof is not reduced, as reflected on the pro forma capitalization table
attached hereto as Exhibit A. “New Financing” shall mean the Company’s entering
into an agreement with one or more third parties that contemplates the issuance
of at least $10,000,000 of the Company’s equity securities.

7. Representations of the Subscriber. The Subscriber hereby represents and
warrants to the Company as indicated below, understanding that the Company will
rely on such representations in issuing the Securities to the Subscriber:

a. Due Authorization. The Subscriber has full legal capacity to execute and
deliver this Agreement and to carry out fully and perform his, her or its
obligations hereunder. If the Subscriber is an entity, (i) such Subscriber is
duly organized, validly existing and in good standing in its jurisdiction of
incorporation or organization; and (ii) such Subscriber has taken all necessary
corporate or limited liability company action (a) to duly approve the execution,
delivery, and performance of this Agreement and (b) to consummate the
transactions contemplated under this Agreement and pursuant to such action has
duly executed and delivered this Agreement. This Agreement has been duly
executed by the Subscriber, and constitutes the valid and legally binding
obligation of the Subscriber, enforceable against him, her or it in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws or equitable principals relating to the availability of
specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited by
applicable law.

b. No Conflicts. None of the execution and delivery of this Agreement, the
consummation of any of the transactions contemplated hereby, compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof will:

i. conflict with, violate, result (with the giving of notice or passage of time
or both) in a breach of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under:

A. any agreement to which the Subscriber is a party or any of his, her or its
assets or properties is subject or by which the Subscriber is bound,

 

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B. any court order to which the Subscriber is a party or any of his, her or its
assets or properties is subject or by which the Subscriber is bound, or

C. any requirements of law materially affecting the Subscriber or any of his,
her or its assets or properties; or

D. any term or provision of the organizational and governing documents of the
Subscriber or any other instrument or agreement to which it is subject; or

ii. require the approval, consent, authorization or act of any person or the
making by the Subscriber of any declaration, filing or registration with any
other person.

c. Investment Intent. The Subscriber understands that the Securities are
“restricted securities” and have not been registered under the U.S. Securities
Act of 1933, as amended (the “Securities Act”), or any applicable state
securities law. The Subscriber understands and acknowledges that neither the
Securities nor the Common Stock issuable upon conversion of the Series D Stock
or upon exercise of the Class D Warrants have been registered, and that the
Company has no present intention of registering the same, under the Securities
Act, or applicable state or foreign securities laws, and that the Securities are
being issued in reliance on (i) an exemption from registration for private
offerings contained in Section 4(2) of the Securities Act and Regulation D
promulgated under such Section, and (ii) exemptions from the registration
requirements of certain state and foreign securities laws, which exemptions
depend upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Subscriber’s representations in this Agreement, upon
which representations the Company is relying. The Subscriber represents that
(i) he, she or it is able to bear the economic risk of an investment in the
Securities for an indefinite period, (ii) at the present time, he, she or it is
able to afford a complete loss of such investment, (iii) he, she or it has
adequate means of providing for his, her or its current needs and possible
personal contingencies and (iv) he, she or it has no need for liquidity in this
investment.

d. Own Account; No Distribution. The Subscriber is acquiring the Securities as
principal for his, her or its own account and not as a nominee, agent or
representative of any other person or entity, nor with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law. The Subscriber has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of the Securities in violation of the Securities Act
or any applicable state securities law. After the Securities are issued to the
Subscriber, no other person shall have any right to control or direct the voting
or disposition of the Securities.

e. Accredited Investor Status. At the time the Subscriber was offered the
Securities, he, she or it was, and at the date hereof he, she or it is, and on
each date on which he, she or it converts any Series D Stock or exercises any
Class D Warrants he, she or it will be, either: (i) an “accredited Investor” as
defined in one or more of the subsections of Rule 501(a) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. The Subscriber is not required to be registered as a
broker-dealer under Section 15 of the U.S. Securities and Exchange Act of 1934,
as amended.

f. Investment Experience and Sophistication; Subscriber’s Investigation; No
Other Representations. The Subscriber has such knowledge, sophistication and
experience in business and financial matters (including private securities
issued by public companies) so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities. The Subscriber has in
fact conducted such an evaluation. In making its evaluation, the Subscriber has
not been furnished with or relied upon any representations, warranties or other
information (whether oral or written) from the Company, or from any of its
directors, officers or stockholders, or from any other persons purporting to

 

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represent or act on behalf of the Company, other than (i) the representations
contained in this Agreement and (ii) information regarding the Company and its
operations contained in the Company’s public securities filings or otherwise
generally available to the public. The Subscriber is aware that an investment in
the Securities is subject to a high degree of risk, and has reviewed the “Risk
Factors” set forth in the Company’s recent securities filings.

g. No General Solicitation. The Subscriber is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

h. No Short Selling. The Subscriber has not directly or indirectly, nor has any
person acting on behalf of or pursuant to any understanding with the Subscriber,
executed any purchases or sales, including short sales, of the securities of the
Company during the period commencing from the time that the Subscriber first
received from the Company or any other person representing the Company (i) a
term sheet (written or oral) or (ii) a draft of this Agreement, in each case
setting forth the material terms of the transactions contemplated hereunder,
until the date hereof. The Subscriber has maintained the confidentiality of all
disclosures made to him in connection with the transactions contemplated hereby
(including the existence and terms of this transaction).

i. Residency. The Subscriber is a non-resident of the Unites States of America.
The Subscriber agrees that, if he, she or it changes its principal residence
prior to the issuance of the Securities, he, she or it will promptly notify the
Company.

8. Subscriber Acknowledgements. The Subscriber is aware of, and acknowledges,
the following:

a. Except as provided under applicable state securities laws, this Subscription
Agreement is and shall be binding and irrevocable, except that the Subscriber
shall have no obligations hereunder if this Subscription Agreement is for any
reason rejected. This Subscription Agreement may not be cancelled, revoked or
withdrawn by the Subscriber. This Subscription Agreement and any documents
submitted herewith shall survive the death or disability of an individual
Subscriber; and

b. At any time after the Subscriber executes this Agreement, the Subscriber may
become a stockholder of the Company. The Company will promptly hereafter issue
the Securities purchased pursuant hereto in the name of the Subscriber as
indicated on the Signature Page.

9. Waiver of Participation Rights; April 2008 Letter. In connection with the
issuance of the Securities and any securities issued in the New Financing, the
Subscriber hereby agrees and acknowledges, on behalf of itself and its
affiliates, that to the extent it (or any of its affiliates) has any
participation right, right of first refusal, right of first offer or similar
rights (including without limitation any related notice rights) under previously
existing agreements between the undersigned (or its affiliates) and the Company,
including without limitation Section 4(e) of that certain Series B Securities
Purchase Agreement dated as of March 30, 2007, by and between the Company and
the other parties thereto, that it waives any and all such rights on behalf of
itself and its affiliates. Each Subscriber agrees and acknowledges that that
certain letter dated April 9, 2008 from the Company to 2141610 Ontario Limited
regarding a $6,000,000 equity funding facility for the Company, shall be deemed
void and of no force or effect.

10. Miscellaneous Provisions.

a. Applicable Law. This Agreement shall be deemed to be a contract made under
the laws of the State of Delaware, and for all purposes shall be governed by and
construed in accordance with the laws of said State, without regard to conflicts
of law principles thereof.

 

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b. Arbitration; Construction. Any dispute, controversy, or claim arising out of
or relating to this Agreement, the performance of the parties of its provisions,
or the enforcement of the rights of the parties hereunder shall be determined by
arbitration to be conducted in New York, New York, before a single arbitrator.
The prior sentence shall not, however, preclude the parties from seeking
provisional remedies in aid of arbitration from a court of appropriate
jurisdiction. The arbitration shall be administered by JAMS pursuant to its
Streamlined Arbitration Rules and Procedures. Each party hereto irrevocably
consents to personal jurisdiction of the arbitrator chosen pursuant to such
Rules and Procedures (the “Arbitrator”). The Arbitrator may, in the arbitration
award he or she renders (the “Award”), allocate all or part of the costs of the
arbitration, including the fees of the arbitrator and the reasonable attorneys’
fees of the prevailing party. The parties further agree that any federal or
state court sitting in New York, New York, shall be authorized to enter a
judgment upon the Award. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.

c. Entire and Binding Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into this
Agreement. This Agreement and the rights, powers and duties set forth herein
shall be binding upon the Subscriber, the Subscriber’s heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the
Company, its successors and assigns.

d. Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Subscriber or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

e. Brokers and Finders. Other than the fee of $100,000 which has been paid to
Ethos, the Company and the Subscriber hereby represent to each other that
neither of them, nor any person acting on behalf of either of them, has employed
any broker, agent or finder or incurred any liability for any brokerage fees,
agents’ commissions or finders’ fees in connection with the transactions
contemplated herein.

f. Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

g. No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

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IN WITNESS WHEREOF, the undersigned Subscriber has caused this Subscription
Agreement to be duly executed by his, her or its authorized signatories as of
the date first indicated above.

Name of the Subscriber:

Number of Units being Purchased:

Dollar Amount of Subscription ($5,000.00 per Unit): $

Signature of Subscriber (or, if Subscriber is an entity,

Authorized Signatory of the Subscriber):

If Subscriber is an entity, type of

entity and jurisdiction of organization:

Name of Authorized Signatory:

Title of Authorized Signatory:

Email Address of the Subscriber:

Fax Number of the Subscriber:

Address for Notice of the Subscriber:

Address for Delivery of Securities for the Subscriber (if not same as address
for notice):

 

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Accepted this      day of                     , 2008

 

Avicena Group, Inc. By: Print Name: Title:

 

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