EXHIBIT 10.5

[BLACKWATER CAPITAL GROUP LETTERHEAD]

April 10, 2007

Belinda Tsao-Nivaggioli

Avicena Group, Inc.

228 Hamilton Avenue

3rd Floor

Palo Alto, CA 94301

Re: Investment Banking and Financial Advisory Agreement (the “Agreement”)

Dear Belinda:

You have advised us that Avicena Group, Inc. (the “Company” or “Business” or
“Avicena”) is committed to maximizing the value of the Business through listing
on the American Stock Exchange, capital equity deployment, merger and
acquisition strategy, strategic alliances, licensing agreements or increasing
sales. This letter is to confirm our understanding that Blackwater Capital
Group, Inc., and its affiliates and associates (“Blackwater”), has been engaged
as an Investment Banker/Financial Advisor to the Company on a non-exclusive
basis with respect to financial advisory services for capital market activities.

During the term of this agreement, Blackwater in conjunction with its affiliates
and associates shall provide the Company with such regular and customary
investment banking and financial advisory services as are reasonably requested
by the Company, provided that Blackwater shall not be required to undertake
duties not reasonably within the scope of the services in which it is generally
engaged.

In performance of its duties, Blackwater shall provide the Company with the
benefits of its best judgment and efforts. It is understood and acknowledged by
the parties that the value of Blackwater’s advice is not measurable in a
quantitative manner and Blackwater shall be obligated to render advice, upon the
request of the Company, in good faith, as shall be determined by Blackwater.

The Company acknowledges that Blackwater is in the business of providing
financial advisory services (of all types contemplated by this Agreement) to
others. Nothing herein contained shall be construed to limit or restrict
Blackwater or its affiliates and associates in conducting such business with
respect to others or in rendering such advice to others.

This Agreement may be terminated by either the Company or Blackwater upon giving
thirty (30) days prior written notice to that effect to the other party. No such
termination will affect (i) Blackwater’s rights to receive fees accrued prior to
such termination or to receive its reimbursement for expenses as set forth in
subparagraph C below; or (ii) the rights of Blackwater or any other Indemnified
Person (as defined in Schedule A hereto) to indemnification and contribution.

A. Company Responsibilities

In connection with Blackwater’s activities on the Company’s behalf, the Company
agrees to cooperate with Blackwater and will furnish to, or cause to be
furnished to, Blackwater, all information

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and data concerning the Company, any possible transaction and any possible
participant which Blackwater deems appropriate and will provide Blackwater with
access to Company’s officers, directors, employees and advisors.

B. Compensation

In consideration of such financial advisory services, the Company agrees to pay
Blackwater (i) an initial engagement fee of $40,000.00 in cash; and (ii) an
incentive plan consisting of up to 250,000 warrants to purchase Common Stock at
$7.00 per share. The warrants will have a three year term. The warrants will be
held in an escrow account and paid to Blackwater by the Company based on the
Company’s view of Blackwater’s performance. The term of this escrow will be
fifteen months, and the Company will issue a warrant to Blackwater to purchase
up to a maximum of 16,667 shares each month (16,662 for the final month). The
actual amount of warrant shares will be based upon the Company’s evaluation of
Blackwater’s performance for the month. To the extent a monthly warrant does not
contain the full 16,667 shares (16,662 for the final month), the difference
between 16,667 (16,662 for the final month) and the actual number will be
forfeited and extinguished and will not be available for inclusion in any of the
other monthly warrants.

Cash fees are payable as earned via wire transfer to:

[REDACTED]

C. Indemnity

The Company agrees to indemnify Blackwater and related persons in accordance
with the indemnification provisions annexed hereto as Schedule A, the provisions
of which are incorporated herein in their entirety.

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D. Capital Commitment

Blackwater shall sign definitive documents for the purchase of 1,600,000 shares
of Series B Convertible Preferred Stock and warrants to purchase 800,000 shares
of Common Stock for an aggregate price of eight million dollars ($8,000,000
USD). The Company at its sole discretion may reduce the amount purchased by
Blackwater to no less than 400,000 shares of Series B Convertible Preferred
Stock and warrants to purchase 200,000 shares of Common Stock by the settlement
date. Settlement of the purchase will take place May 21, 2007, or such earlier
time as Blackwater may elect. Blackwater’s initial engagement fee in Paragraph B
(i) will be paid at the time of the signing of the definite documentation. It is
agreed that, at the time of funding, Blackwater can have Blackwater Capital
Partners III, L.P. (the “Fund”) purchase the shares of Series B Convertible
Preferred Stock as long as the Fund: (i) is structured as represented in
previous e-mails from Blackwater to the Company, (ii) executes documentation
deemed necessary or advisable by the Company in connection with such purchase
and (iii) is able to give the Company the representations and warranties
contained in the Securities Purchase Agreement as of the date of the purchase.

E. General

Blackwater represents, warrants and agrees it will comply with all securities
laws, including Regulation D and applicable state securities laws. The services
to be provided by Blackwater hereunder do not include the giving of tax, legal,
regulatory, valuation, actuarial or other specialist advice or the provision of
any other services unless Blackwater specifically agrees in writing to provide
such services. Blackwater will have no liability in respect of any services or
advice provided to the Company by persons other than Blackwater (including
accountants, legal advisers and other specialist advisers) other than Blackwater
and persons employed by Blackwater and the degree to which Blackwater may rely
on the work of such other persons shall not be affected by any limitation of
liability for such work agreed between them and the Company.

Blackwater will not have any responsibility for due diligence which would
normally be carried out by outside specialist advisers (such as accountancy,
tax, legal or valuation advisers) notwithstanding that any information or advice
from these advisers may be passed on to Blackwater or passed on by Blackwater to
the Company. It is solely the Company’s responsibility to ensure that the
information and advice relating to such due diligence is received and considered
by the Company and is adequate for the purposes of the transaction.

Notwithstanding that Blackwater is not held responsible or liable for due
diligence, Blackwater reserves the right at its absolute discretion and for its
own purposes to take whatever steps it may consider appropriate to satisfy
itself as to the accuracy and completeness of information provided by Company in
connection with any transaction and the Company agrees to cooperate fully with
Blackwater in the taking of such steps. If Blackwater thinks it necessary or
desirable, it may delegate the performance of any of the services set out in
this letter to any of its affiliated parties, subject to written approval of the
Company.

It is understood and agreed between the parties that the Company’s counsel will
draft all legal documents required in connection with these financings or
acquisition transaction and that Company will pay those fees. In addition to all
other charges payable to Blackwater as per the terms hereof, the Company agrees
to reimburse Blackwater, upon requests made from time to time, for all of its
reasonable out-of-pocket expenses incurred in connection with its activities
under this agreement.

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All unpaid balances due Blackwater are to accrue interest at 2% per month
beginning immediately after due date of said balances. In addition, payments
received more than 10 business days after due date will constitute, at
Blackwater’s option, the right to terminate the contract.

This letter agreement, including Schedule A, constitutes the entire
understanding of the parties with respect to the subject matter hereof and may
not be altered or amended except in a writing signed by both parties. This
agreement shall be governed by and construed under the laws of the State of
Illinois without regard to principles of conflicts of law thereof. Neither the
execution and delivery of this letter by the Company nor the consummation of the
transactions contemplated hereby will, directly or indirectly, with or without
the giving of notice or lapse of time, or both: (i) violate any provisions of
the Certificate of Incorporation or By-laws of the Company; provided, however,
that this letter is subject to approval and ratification by the Company’s Board
of Directors, or (ii) violate, or be in conflict with, or constitute a default
under, any agreement, lease, mortgage, debt or obligation of the Company or
require the payment, any pre-payment or other penalty with respect thereto;
provided, however, that the grant of the warrants will be subject to the prior
written approval of the Required Holders, as such term is defined in the
Securities Purchase Agreement by and between the Company and the buyers of the
Company’s Series B Preferred Stock.

All disputes between the parties shall be resolved by confidential arbitration
before a single arbitrator in Chicago, Illinois in accordance with the
commercial arbitration rules of the American Arbitration Association. Any action
to compel, stay, modify, confirm or vacate an arbitration award shall be
governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. The parties agree
to the exclusive jurisdiction and venue of the federal and state courts whose
districts embrace Cook County, Illinois as the forum for any such action, and
the parties agree that such forum constitutes the most convenient forum for any
such litigation.

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If the foregoing correctly sets forth the terms of our agreement, kindly so
indicate by signing and returning the enclosed copy of this letter along with,
at the time definitive documentation as provided under Part D. is signed, a wire
transfer payable to Blackwater Capital Group, Inc. in the appropriate amount as
per the terms of this letter.

 

Blackwater Capital Group, Inc. By:  

/s/ Steven Green

Steven Green, Senior Managing Director

ACCEPTED AND AGREED TO

this 10th day of April, 2007:

 

Avicena Group, Inc. By:  

/s/ Michael J. Sullivan

Michael J. Sullivan, Vice President of Finance and

Acting Chief Financial Officer

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SCHEDULE A: INDEMNIFICATION

The Company agrees that it will indemnify and hold harmless Blackwater, its
affiliates, and their respective directors, officers, employees, agents,
representatives and controlling persons (Blackwater and each such entity or
person being an “Indemnified Party”) from and against any and all losses,
claims, damages and liabilities, joint or several, as incurred, to which such
Indemnified Party may become subject, and related to or arising out of
activities performed by or on behalf of an Indemnified Party pursuant to this
Agreement, the Transactions contemplated thereby or Blackwater’s role in
connection therewith; provided that the Company will not be liable to the extent
that any loss, claim, damage or liability is found in a final judgment by a
court to have resulted primarily from actions taken or omitted to be taken by
Blackwater or the Indemnified Party in breach of this Agreement or in bad faith
or from Blackwater’s or such Indemnified Party’s negligence or willful
misconduct in performing the services described above. The Company also agrees
to reimburse any Indemnified Party for all expenses (including reasonable
counsel fees and disbursements) in connection with the investigation of,
preparation for or defense of any pending or threatened claim, or any action,
investigation, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party and whether or not such claim, action or proceeding
is initiated or brought by or on behalf of the Company. The Company also agrees
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to the Company or its security holders or
creditors related to or arising out of the engagement of Blackwater pursuant to,
or the performance by Blackwater of the services contemplated by, this Agreement
except to the extent that any loss, claim, damage or liability is found in a
final judgment by a court to have resulted primarily from actions taken or
omitted to be taken by Blackwater or the Indemnified Party in breach of this
Agreement or in bad faith or from Blackwater’s or such Indemnified Party’s
negligence or willful misconduct.

If the indemnification provided for in this Agreement is for any reason held
unenforceable, the Company agrees to contribute to the losses, claims, damages
and liabilities, as incurred by any Indemnified Person, for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and Blackwater,
on the other hand, of the particular transaction (whether or not the transaction
is consummated). The Company agrees that for the purposes of this paragraph the
relative benefits to the Company and Blackwater of the transaction shall be
deemed to be in the same proportion that the total value of the transaction or
contemplated transaction by the Company as a result of or in connection with the
proposed transaction bears to the Fee paid or to be paid to Blackwater under
this Agreement; provided that, to the extent permitted by applicable law, in no
event shall the Indemnified Parties be required to contribute an aggregate
amount in excess of the aggregate fees actually paid to Blackwater under this
Agreement.

Promptly after receipt by an Indemnified Party of notice of any claim or the
commencement of any action, suit or proceeding with respect to which an
Indemnified Party may be entitled to indemnity hereunder, the Indemnified Party
will notify the Company in writing of such claim or of the commencement of such
action or proceeding, and the Company will assume the defense of such action,
suit or proceeding and will employ counsel reasonably satisfactory to the
Indemnified Party and will pay the fees and disbursements of such counsel, as
incurred. Notwithstanding the preceding sentence, any Indemnified Party will be
entitled to employ counsel separate from counsel for the Company and from any
other party in such action if such Indemnified Party reasonably determines that
a conflict of interest exists which makes representation by counsel chosen by
the Company not advisable. In such event, the

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fees and disbursements of such separate counsel will be paid by the Company, but
in no event shall the Company be liable for the fees and disbursements of more
than one counsel (in addition to local counsel) for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.

The Company agrees that, without Blackwater’s prior written consent, it will not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification could
be sought under the indemnification provision of this Agreement (whether or not
Blackwater or any other Indemnified Party is an actual or potential party to
such claim, action, or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding. Blackwater agrees
that, without the Company’s prior written consent, it will not settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which indemnification could be sought
under the indemnification provision of this Agreement (whether or not the
Company is an actual or potential party to such claim, action or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action
or proceeding.

In the event any Indemnified Party is requested or required to appear as a
witness in any action, suit or proceeding brought by or on behalf of or against
the Company or any affiliate or any participant in a Transaction covered hereby
in which such Indemnified Party is not named as a defendant, the Company agrees
to reimburse Blackwater for all reasonable disbursements incurred by it in
connection with such Indemnified Party’s appearing and preparing to appear as a
witness, including, without limitation, the fees and disbursements of it’s legal
counsel, and to compensate Blackwater in an amount to be mutually agreed upon.

The provisions of Schedule A shall be in addition to any liability which the
Company may otherwise have. These provisions shall be governed by the law of the
State of Illinois and shall be operative, in full force and in full effect
regardless of any termination or expiration of this agreement.