Exhibit
      10.2

     

    EXHIBIT
      A

    


    THIS
      DEBENTURE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR
      THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THIS DEBENTURE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN SECURED BY THIS DEBENTURE.

     

    Original
      Issue Date: July 25, 2008

     

    $1,125,000.00

    


    $1,125,000
      SECURED ORIGINAL ISSUE DISCOUNT DEBENTURE

    


    THIS
      DEBENTURE is a duly authorized and validly issued Debenture of Syzygy
      Entertainment, Ltd., a Nevada corporation, having its principal place of
      business at The Rotunda, 4201 Congress Street, Suite 145, Charlotte, NC 28209
      (the “Company”),
      designated as its $1,125,000 Secured Original Issue Discount Debenture (the
      “Debenture”).

    


    FOR
      VALUE
      RECEIVED, the Company promises to pay to Shelter Island Opportunity Fund, LLC
      or
      its registered assigns (the “Holder”),
      or
      shall have paid pursuant to the terms hereunder, the principal sum of
      $1,125,000.00 (the “Face
      Value”)
      by the
      Maturity Date, and to pay interest to the Holder on the aggregate outstanding
      principal amount of this Debenture in accordance with the provisions hereof.
      This Debenture is subject to the following additional provisions:

    


    Section
      1. Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this Debenture,
      (a) capitalized terms not otherwise defined herein shall have the meanings
      set
      forth in the Securities Purchase Agreement and (b) the following terms shall
      have the following meanings:

    


    “Bankruptcy
      Event”
means
      any of the following events: (a) the Company or any Significant Subsidiary
      (as
      such term is defined in Rule 1-02(w) of Regulation S-X) of the Company commences
      a case or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Company or any Significant
      Subsidiary thereof; (b) there is commenced against the Company or any
      Significant Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement; (c) the Company or any Significant Subsidiary
      thereof is adjudicated insolvent or bankrupt or any order of relief or other
      order approving any such case or proceeding is entered; (d) the Company or
      any
      Significant Subsidiary thereof suffers any appointment of any custodian or
      the
      like for it or any substantial part of its property that is not discharged
      or
      stayed within 60 calendar days after such appointment; (e) the Company or any
      Significant Subsidiary thereof makes a general assignment for the benefit of
      creditors; (f) the Company or any Significant Subsidiary thereof calls a meeting
      of its creditors with a view to arranging a composition, adjustment or
      restructuring of its debts; or (g) the Company or any Significant Subsidiary
      thereof, by any act or failure to act, expressly indicates its consent in
      writing to, approval of or acquiescence in any of the foregoing or takes any
      corporate or other action for the purpose of effecting any of the
      foregoing.


    
      
        
        

      

      
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    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (i) an acquisition by an
      individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
      promulgated under the Exchange Act), of effective control (whether through
      legal
      or beneficial ownership of capital stock of the Company, by contract or
      otherwise) of in excess of 35% of the voting securities of the Company, or
      (ii)
      the Company merges into or consolidates with any other Person, or any Person
      merges into or consolidates with the Company and, after giving effect to such
      transaction, the stockholders of the Company immediately prior to such
      transaction own less than 50% of the aggregate voting power of the Company
      or
      the successor entity of such transaction, or (iii) the Company sells or
      transfers all or substantially all of its assets to another Person, whether
      in
      one transaction or in a series of related transactions.

    


    “Event
      of Default”
shall
      have the meaning set forth in Section 5.

    


    “Maturity
      Date”
means
      the earlier of (i) July 23, 2009 and (ii) the date this Debenture is permitted
      or required to be paid in accordance with the terms hereof (whether as a result
      of a prepayment, acceleration or otherwise).

    


    “Original
      Issue Date”
means
      the date of the first issuance of this Debenture, regardless of any transfers
      of
      this Debenture and regardless of the number of instruments which may be issued
      to evidence this Debenture.

    


    Permitted
      Lien”
means
      the individual and collective reference to the following: (a) Liens for taxes,
      assessments and other governmental charges or levies not yet due or Liens for
      taxes, assessments and other governmental charges or levies being contested
      in
      good faith and by appropriate proceedings for which adequate reserves (in the
      good faith judgment of the management of the Company) have been established
      in
      accordance with GAAP; (b) Liens on property that was purchased with the proceeds
      of, and that secures only, indebtedness in an aggregate principal amount not
      to
      exceed $50,000 that was incurred solely to purchase such property; and (c)
      Liens
      imposed by law which were incurred in the ordinary course of the Company’s
      business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory
      landlords’ Liens, and other similar Liens arising in the ordinary course of the
      Company’s business, and which (x) do not individually or in the aggregate
      materially detract from the value of such property or assets or materially
      impair the use thereof in the operation of the business of the Company or (y)
      are being contested in good faith by appropriate proceedings, which proceedings
      have the effect of preventing for the foreseeable future the forfeiture or
      sale
      of the property or asset subject to such Lien.

     

    
      
        
        

      

      
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    “Securities
      Purchase Agreement”
means
      the Securities Purchase Agreement between the Company and the original Holder,
      dated as of the Original Issue Date, as amended, modified or supplemented from
      time to time in accordance with its terms.

    


    Section
      2. Interest
      and Payments.

     

    a) Interest
      Rate.
      Interest shall accrue each day on the aggregate outstanding Face Value at the
      rate per annum equal to 13.00%.

    


    b) Payments
      of Principal and Interest.
      The
      outstanding Face Value, and all accrued interest thereon, will be payable in
      14
      equal monthly installments, each in the amount of $75,000, commencing on October
      15, 2008 and
      continuing on the last day of each month thereafter until the Maturity Date.
      The
      unpaid Face Value, and all accrued interest thereon, will be paid in full on
      the
      Maturity Date.

    


    c) Method
      of Payment.
      All
      payments hereunder shall be made in immediately available funds on the date
      the
      same is due in such manner as directed by the Holder, including by direct debit
      from the Company’s checking account.

    


    d) Interest
      Calculations.
      Interest shall be calculated on the basis of a 360-day year and shall accrue
      daily commencing on the Original Issue Date until payment in full of the Face
      Value, together with all accrued and unpaid interest and other amounts which
      may
      become due hereunder, has been made. 

    


    e) Prepayment.
      The
      Company may prepay all or any portion of the Face Value upon at least two
      Trading Days’ notice to the Holder by paying the amount desired to be prepaid
      together with a payment equal to 10% of the amount being prepaid. All
      prepayments of Face Value hereunder shall be applied to the payment obligation
      of the Company under Section 2(b) in inverse order of maturity. At the option
      of
      the Holder upon notice to the Company, the Face Value and all accrued and unpaid
      interest thereon, shall become due and payable on the date on which a Change
      of
      Control Transaction shall have been consummated. 

    


    


    Section
      3.  Registration
      of Transfers and Exchanges.
      

     

    a) Different
      Denominations.
      This
      Debenture is exchangeable for an equal aggregate principal amount of Debenture
      of different authorized denominations, as requested by the Holder surrendering
      the same. No service charge will be payable for such registration of transfer
      or
      exchange.

     

    b) Investment
      Representations.
      This
      Debenture has been issued subject to certain investment representations of
      the
      original Holder set forth in the Securities Purchase Agreement and may be
      transferred or exchanged only in compliance with the Securities Purchase
      Agreement and applicable federal and state securities laws and regulations.
      


    
      
        
        

      

      
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    c) Reliance
      on Debenture Register.
      Prior
      to due presentment for transfer to the Company of this Debenture, the Company
      and any agent of the Company may treat the Person in whose name this Debenture
      is duly registered on the Debenture Register as the owner hereof for the purpose
      of receiving payment as herein provided and for all other purposes, whether
      or
      not this Debenture is overdue, and neither the Company nor any such agent shall
      be affected by notice to the contrary.

    


    Section
      4. Covenants.
      As long
      as any portion of this Debenture remains outstanding, the Company agrees as
      follows:

    


    a) it
      shall
      not (and shall cause each Subsidiary not to) enter
      into, create incur,
      assume, guarantee or suffer to exist any indebtedness for borrowed money of
      any
      kind (other than as contemplated in clause (b) of the definition of “Permitted
      Lien” contained in this Debenture), including but not limited to, a guarantee,
      unless the obligations of the Company (or such Subsidiary) with respect thereto
      are not secured, directly or indirectly, by any assets of the Company (or such
      Subsidiary) or are subordinated to the obligations of the Company hereunder
      and
      under any Additional Debenture on terms satisfactory to the Holder;

     

    b) other
      than Permitted Liens or as permitted by Section 4(a), it shall not enter into,
      create, incur, assume or suffer to exist any Liens of any kind, on or with
      respect to any of its (or any Subsidiary’s) property or assets now owned or
      hereafter acquired or any interest therein or any income or profits
      therefrom;

    


    c) it
      shall
      not amend its (or any Subsidiary’s) charter documents, including without
      limitation, the certificate of incorporation and bylaws, in any manner that
      materially and adversely affects any rights of the Holder;

    


    d) it
      and
      the Subsidiaries shall not engage in any business that is materially different
      from that described in its SEC Reports filed with the Commission prior to the
      Original Issue Date and all activities related thereto; 

    


    e) it
      shall
      not enter into any agreement with respect to any of the foregoing;
      

    


    f) it
      shall
      permit the Holder, or its representative, at the Company’s expense, to review
      and inspect the Company’s and each Subsidiary’s books, records, assets and
      operations; and

    


    g) it
      shall
      retain and utilize the services of two investor relations firms satisfactory
      to
      the Holder.

     

    
      
        
        

      

      
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    Section
      5. Events
      of Default.
      

    


    a) “Event
      of Default”
means,
      wherever used herein, any of the following events (whatever the reason for
      such
      event and whether such event shall be voluntary or involuntary or effected
      by
      operation of law or pursuant to any judgment, decree or order of any court,
      or
      any order, rule or regulation of any administrative or governmental
      body):

    


    i. any
      default in the payment of (A) the principal amount of this Debenture or (B)
      interest or other amounts owing to the Holder on this Debenture within one
      Trading Day as and when the same shall become due and payable (whether on the
      Maturity Date or by acceleration or otherwise);

     

    ii. the
      Company or any Subsidiary shall fail to observe or perform any other covenant
      or
      agreement contained in this Debenture or any other Transaction Document to
      which
      it is a party which failure is not cured, if possible to cure, within the
      earlier to occur of (A)
      two
Trading
      Days after notice of such failure sent by the Holder
      and
      (B) three Trading Days after the Company has become or should have become aware
      of such failure;

    


    iii. a
      default
      or event of default (subject to any grace or cure period provided in the
      applicable agreement, document or instrument) shall occur under (A) any of
      the
      Transaction Documents or (B) any other material agreement, lease, document
      or
      instrument to which the Company or any Subsidiary is obligated (and not covered
      by clause (vi) below);

    


    iv. any
      representation
      or warranty made in this Debenture, any other Transaction Documents, any written
      statement pursuant hereto or thereto or any other report, financial statement
      or
      certificate made or delivered to the Holder or any other Holder shall
      be
      untrue or incorrect in any material respect as of the date when made or deemed
      made;

    


    v. the
      Company or any Significant Subsidiary shall be subject to a Bankruptcy
      Event;

     

    vi. the
      Company or any Subsidiary shall default on any of its obligations under any
      mortgage, credit agreement or other facility, indenture agreement, factoring
      agreement or other instrument under which there may be issued, or by which
      there
      may be secured or evidenced, any indebtedness for borrowed money or money due
      under any long term leasing or factoring arrangement that involves an obligation
      greater than $50,000, whether such indebtedness now exists or shall hereafter
      be
      created; or

    


    vii. any
      monetary judgment, writ or similar final process shall be entered or filed
      against the Company, any Subsidiary or any of their respective property or
      other
      assets for more than $50,000, and such judgment, writ or similar final process
      shall remain unvacated, unbonded or unstayed for a period of 45 calendar
      days.


    
      
        
        

      

      
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    b) Remedies
      Upon Event of Default.
      If any
      Event of Default hereunder occurs, the outstanding Face Value plus accrued
      but
      unpaid interest and other amounts owing in respect thereof through the date
      of
      acceleration, shall become, at the Holder’s election, immediately due and
      payable. Commencing after the occurrence of any Event of Default hereunder
      and
      during its continuance, the interest rate on this Debenture shall accrue at
      an
      interest rate equal to 18.00% per annum. In connection with such acceleration
      described herein, the Holder need not provide, and the Company hereby waives,
      any presentment, demand, protest or other notice of any kind, and the Holder
      may
      immediately and without expiration of any grace period enforce any and all
      of
      its rights and remedies hereunder and all other remedies available to it under
      applicable law and the Transaction Documents. Such acceleration may be rescinded
      and annulled by Holder at any time prior to payment hereunder and the Holder
      shall have all rights as a holder of the Debenture until such time, if any,
      as
      the Holder receives full payment pursuant to this Section 5(b). No such
      rescission or annulment shall affect any subsequent Event of Default or impair
      any right consequent thereon.

    


    Section
      6. Miscellaneous.
      

    


    a) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder shall be delivered as set forth in the Securities Purchase Agreement.
      

    


    b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Debenture shall alter or
      impair the obligation of the Company, which is absolute and unconditional,
      to
      pay the principal of, and accrued interest, as applicable, on this Debenture
      at
      the time, place, and rate, and in the coin or currency, herein prescribed.
      This
      Debenture is a direct, unconditional and secured debt obligation of the Company.
      

     

    c) Lost
      or Mutilated Debenture.
      If this
      Debenture shall be mutilated, lost, stolen or destroyed, the Company shall
      execute and deliver, in exchange and substitution for and upon cancellation
      of a
      mutilated Debenture, or in lieu of or in substitution for a lost, stolen or
      destroyed Debenture, a new Debenture for the principal amount of this Debenture
      so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
      of
      such loss, theft or destruction of such Debenture, and of the ownership hereof,
      reasonably satisfactory to the Company.

    


    d) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Debenture shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflict of laws thereof. 

    


    e) Waiver.
      Any
      waiver by the Holder of a breach of any provision of this Debenture shall not
      operate as or be construed to be a waiver of any other breach of such provision
      or of any breach of any other provision of this Debenture. The failure of the
      Holder to insist upon strict adherence to any term of this Debenture on one
      or
      more occasions shall not be considered a waiver or deprive that party of the
      right thereafter to insist upon strict adherence to that term or any other
      term
      of this Debenture. Any waiver by the Holder must be in writing.


    
      
        
        

      

      
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    f) Severability.
      If any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any Person or circumstance, it shall nevertheless remain applicable to all
      other
      Persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder violates the applicable law governing
      usury, the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum rate of interest permitted under applicable law.
      

    


    g) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

    


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

    


    (Signature
      Page Follows)


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company has caused this Debenture to be duly executed
      by a
      duly authorized officer as of the date first above indicated.

     

    
      	
              SYZYGY
                ENTERTAINMENT, LTD.

            
	 	 	 
	
              By:

            	
              Sean
                Sullivan

            
	 	
              Name:

            	
              Sean
                Sullivan

            
	 	
              Title:

            	
              President

            


    

     

    
      
        
        

      

      
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