NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT

AGREEMENT (this “ Agreement ”), dated as of October 15, 2008, by and among DigitalFX International, Inc., a Florida corporation, with headquarters located at 3035 East Patrick Lane, Suite 9, Las Vegas, NV 89120 (the “ Company ”), Richard H. Kall (the “ New Investor ”) and __________________________________________ (the “ Selling Investor ”).

WHEREAS:

A.   The Company the Selling Investor and certain other investors (the “ Other Investors ” and collectively with the New Investor and the Selling Investor, the “ Investors ”) are parties to that certain Securities Purchase Agreement, dated as of November 29, 2007 (the “ Original Securities Purchase Agreement ”) and that certain Amendment and Exchange Agreement dated as of March 24, 2008 (the “ Amendment and Exchange Agreement ”).

B.   The Company, the New Investor and the Selling Investor desire to enter into this Agreement, pursuant to which, among other things, (i) the New Investor will purchase from the Selling Investor, and the Selling Investor will sell, assign and transfer to the New Investor, (A ) $_____________ of the aggregate unpaid principal amount of the Note held by the Selling Investor (the “ Purchased Principal Amount ”) and (B) such number of Warrants and Common Shares heretofore issued by the Company to the Selling Investor set forth opposite the Selling Investor’s name in columns 4 and 6 on the Securities Schedule attached hereto (collectively, the “ Purchased Warrants and Shares ”); and (ii) the Selling Investor and the New Investor shall forbear, for a period of 30 days from the Closing Date, from seeking to enforce any rights that each may have as a result of the Event of Default that occurred with respect to Company’s failure to satisfy one or more Financial Covenants for the Fiscal Quarter ended June 30, 2008.

C.   Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Original Securities Purchase Agreement, the Amendment and Exchange Agreement or any other Transaction Document, as applicable.

NOW, THEREFORE , in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Company, the New Investor and the Other Investors hereby agree as follows:

(i)   the Selling Investor shall sell, assign and transfer to the New Investor, and the New Investor shall purchase from the Selling Investor the Purchased Principal Amount and the Purchased Warrants and Shares (the “ Sale ”). The Sale shall be consummated, as follows:

(1)   The New Investor shall pay $___________ (the “ Purchase Price ”) to the Selling Investor by payment of such amount by wire transfer of immediately available funds to an account maintained by the Selling Investor, such account to be designated by the Selling Investor by written notice to the New Investor not later than two business days prior to the Closing Date

(2)   the Selling Investor shall deliver its Note to the Company for cancellation, and the Company, pursuant to Section 18(a) of such Note, shall issue and deliver to the Selling Investor and the New Investor Notes which shall be in the principal amount set forth opposite their names in columns (1) and (2) on the Securities Schedule attached hereto;

(3)   the Selling Investor shall deliver its Warrant to the Company for cancellation, and the Company, pursuant to section 7(a) of such Warrant, shall issue and deliver to the Selling Investor and the New Investor Warrants which shall be exercisable to acquire that number of Warrant Shares set forth opposite their names in columns (3) and (4) of the Securities Schedule attached hereto; and

(4)   the Selling Investor shall deliver or cause to be delivered to the Company for cancellation the Common Shares held by it, and the Company shall issue or cause its transfer agent to issue to the Selling Investor and the New Investor such number of Common Shares as is set forth opposite their names in columns (5) and (6) of the Securities Schedule attached hereto.

(b)   Closing Date . The date and time of the Closing (the “ Closing Date ”) shall be 10:00 a.m., New York Time, on October 15, 2008, or such other time and date as is mutually agreed to by the Company and the Investors.

(a)   In consideration for the New Investor’s payment of the Purchase Price, and the Selling Investor’s agreement to sell and transfer the above-mentioned portion of its Note, Warrant and Shares to the New Investor, the New Investor and the Selling Investor hereby covenant and agree that, for a period of 30 days from the Closing Date (the “ First Forbearance Period ”), each of them shall forbear from taking, or causing any other Person to take, any action to enforce any rights that either of them may have, individually or together with the Other Investors, as a result of the Event of Default that occurred with respect to Company’s failure to satisfy one or more Financial Covenants for the Fiscal Quarter ended June 30, 2008.

(b)   In the event that, on or before the last day of the First Forbearance Period, the Selling Investor and the Other Investors receive payment in the aggregate amount of $250,000, which such amount shall be applied pro rata in payment of the Company’s obligations under the Notes held by the Selling Investor and the Other Investors, each of the New Investor and the Selling Investor further covenants and agrees that, for a period of 30 days from the end of the First Forbearance Period (the “ Second Forbearance Period ”), each of them shall forbear from taking, or causing any other Person to take, any action to enforce any rights that either of them may have, individually or together with the Other Investors, as a result of the Event of Default that occurred with respect to Company’s failure to satisfy one or more Financial Covenants for the Fiscal Quarter ended June 30, 2008 or any Event of Default that may occur with respect to the Company’s failure to satisfy one or more Financial Covenants for the Fiscal Quarter ending September 30, 2008.

(c)   In the event that, on or before the last day of the Second Forbearance Period, the Selling Investor and the Other Investors receive payment in the aggregate amount of $250,000, which such amount shall be applied pro rata in payment of the Company’s obligations under the Notes held by the Selling Investor and the Other Investors, each of the New Investor and the Selling Investor further covenants and agrees that, for a period of 30 days from the end of the Second Forbearance Period, each of them shall forbear from taking, or causing any other Person to take, any action to enforce any rights that either of them may have, individually or together with the Other Investors, as a result of the Event of Default that occurred with respect to Company’s failure to satisfy one or more Financial Covenants for the Fiscal Quarter ended June 30, 2008 or any Event of Default that may occur with respect to the Company’s failure to satisfy one or more Financial Covenants for the Fiscal Quarter ending September 30, 2008.

(d)   For the avoidance of doubt, the Company, the Selling Investor and the New Investor agree that the agreement of the Selling Investor and the New Investor to forbear hereunder shall not toll the application of the default interest rate to which they are entitled under the Notes.

(a)   The Company hereby agrees to prepare and file a post-effective amendment to the Registration Statement on SEC Form S-3 (Commission File No. 333-150191), or it shall prepare and file a new Registration Statement on an appropriate SEC form, reflecting the changes made, as a result of the transactions contemplated by this Agreement, to the ownership by the New Investor and the Selling Investor of the Common Shares, the Convertible Shares issuable upon conversion of the Notes and the Warrant Shares issuable upon exercise of the Warrants that are currently held by the Selling Investor. All costs associated with the preparation and filing of such post-effective amendment or new registration statement shall be borne by the Company.

(a)   Reaffirmation . The Company hereby confirms and agrees that, except as otherwise expressly provided herein:

(i)   the Original Securities Purchase Agreement, as amended by the Amendment and Exchange Agreement, and each other Transaction Document is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Closing Date (i) all references in the Original Securities Purchase Agreement to “this Agreement,” “hereto,” “hereof,” “hereunder” or words of like import referring to the Original Securities Purchase Agreement shall mean the Original Securities Purchase Agreement, as amended by the Amendment and Exchange Agreement, after taking into account the transactions contemplated herein and hereby, (ii) all references in the other Transaction Documents to the “Original Securities Purchase Agreement” “thereto,” “thereof,” “thereunder” or words of like import referring to the Original Securities Purchase Agreement, shall mean the Original Securities Purchase Agreement, as amended by the Amendment and Exchange Agreement, after taking into account the transactions contemplated herein and hereby, and (iii) all references in the other Transaction Documents to the “Registration Rights Agreement,” “thereto,” “thereof,” “thereunder” or words of like import referring to the Registration Rights Agreement shall mean the Registration Rights Agreement, after taking into account the transactions contemplated herein and hereby. REFERENCES TO NOTES AND WARRANTS IN ALL TRANSACTION DOCUMENTS MEANS NOTES AND WARRANTS AFTER TAKING INTO CONSIDERATION THE TRANSACTIONS CONTEMPLATED HEREIN AND HEREBY;

(ii)   to the extent that the Original Securities Purchase Agreement, as amended by the Amendment and Exchange Agreement, after taking into account the transactions contemplated herein and hereby, or any other Transaction Document purports to assign or pledge to the Collateral Agent for the Buyers and the holders of the Securities, or to grant to the Collateral Agent a security interest in or lien on, any collateral as security for the obligations of the Company from time to time existing in respect of the Notes and any other existing Transaction Document, such pledge, assignment and/or grant of the security interest or lien is hereby ratified and confirmed in all respects, and shall apply with respect to the obligations under the Notes held by all Investors after taking into account the transactions contemplated herein and hereby, and no additional filing is required to be made in order to maintain the perfection of the security interest in, or lien, on such collateral; and

(iii)   the execution, delivery and effectiveness of this Agreement shall not operate as an amendment of any right, power or remedy of the Collateral Agent or the Investors under any Transaction Document, nor constitute an amendment of any provision of any Transaction Document.

(a)   Selling Investor’s Bring Down . The Selling Investor hereby represents and warrants to the Company and the New Investor with respect to itself only as set forth in Section 2 of the Original Securities Purchase Agreement as if such representations and warranties were made as of the date hereof and set forth in their entirety in this Agreement. Such representations and warranties to the transactions thereunder and the securities issued thereby are hereby deemed for purposes of this Agreement to be references to the transactions hereunder and the issuance of the securities hereby.

(b)   No Event of Default . The Company represents and warrants to the Selling Investor and the New Investor that after giving effect to the terms of this Agreement and the Other Agreements, no Event of Default (as defined in the Note) shall have occurred and be continuing as of the date hereof, except for the Event of Default or Events of Default which have occurred or may occur by reason of one or more of Financial Covenant Failures with respect to the Company’s Fiscal Quarter ended June 30, 2008 and the Company’s Fiscal Quarter ending on September 30, 2008, as the case may be.

(c)   Investor Status . As of the date hereof and during the preceding three-month period,

(i)   the Selling Investor, together with any other Person with whom the Selling Investor must aggregate sales under Rule 144, (A) does not beneficially own, and has not beneficially owned, in excess of 10% of the Common Stock, (B) has not appointed any member to the board of directors of the Company or (C) has not participated in the management or daily operations of the Company; and

(ii)   the New Investor, together with any other Person with whom the New Investor must aggregate sales under Rule 144, has beneficially owned in excess of 10% of the Common Stock, but has not (A) appointed any member to the board of directors of the Company or (B) participated in the management or daily operations of the Company.

(d)   Shell Company Status . The Company has complied with all of the requirements set forth in Rule 144(i)(2).

(e)   New Investor Representations and Warranties . The New Investor represents and warrants to the Selling Investor and to the Company as follows:

(i)   Enforceability . This Agreement, when executed and delivered by the New Investor, will constitute a valid and legally binding obligation of the New Investor, enforceable against the New Investor in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, or (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

(ii)   Investment Experience; Access to Information . The New Investor (a) either alone or together with his representatives, but without reliance upon the Selling Investor, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of this investment and make an informed decision to so invest, and has so evaluated the risks and merits of such investment, (b) has the ability to bear the economic risks of this investment and can afford a complete loss of such investment, (c) understands the terms of and risks associated with the acquisition of the Purchased Principal Amount and the Purchased Warrants and Shares, including, without limitation, a lack of liquidity, price transparency or pricing availability and risks associated with the industry in which the Company operates, (d) has had the opportunity to review such disclosure regarding the Company, its business, its financial condition and its prospects as the New Investor has determined to be necessary in connection with the purchase of the Purchased Principal Amount and the Purchased Warrants and Shares, including, without limitation, the Company’s Annual Report on Form 10-K (or substantially equivalent form) for its most recently completed fiscal year, the Company's Quarterly Reports on Form 10-Q (or substantially equivalent form) for the fiscal quarters since the end of such completed fiscal year, and the Company’s Current Reports on Form 8-K (or substantially equivalent form) since the end of such completed fiscal year, each as amended, and (e) has had an opportunity to ask such questions and make such inquiries concerning the Company, its business, its financial condition and its prospects as the New Investor has deemed appropriate in connection with such purchase and to receive satisfactory answers to such questions and inquiries. The New Investor acknowledges that the Selling Investor has not given the New Investor any investment advice, credit information or opinion on whether the purchase of the Notes, Common Shares and Warrants is prudent.

(iii)   No Conflicts; Advice . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, or court to which the New Investor is subject, or conflict with, violate or constitute a default under any agreement, credit facility, debt or other instrument or understanding to which the New Investor is a party. The New Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Notes, Common Shares and Warrants.

(iv)   No Litigation . There is no action, suit, proceeding, judgment, claim or investigation pending, or to the knowledge of the New Investor, threatened against the New I