**SEPARATION
      AGREEMENT AND RELEASE OF ALL CLAIMS**





This
      Separation Agreement and Release of All Claims (this “ ***Agreement*** ”)
      is
      made and entered into by and between Lorne Walker (hereinafter sometimes
      referred to as “ ***Executive*** ”),
      and
      DigitalFX International, Inc., a Florida corporation, and all its subsidiary
      and
      affiliated corporations (hereinaf-ter collectively sometimes referred to as
      the
“ ***Company*** ”).
      Executive and the Company shall be collectively referred to as the “ ***Parties*** .”





**WITNESSETH:**





**WHEREAS,** Executive
      has served as Chief Financial Officer of the Company;





**WHEREAS,** Executive
      desires to confirm her resignation from all executive and employment positions
      at the Company, including, without limitation, her position as Chief Financial
      Officer, effective as of February 1, 2008;





**WHEREAS** ,
      during
      the Consulting Term (as defined below), Executive will serve as a consultant
      to
      the Company, as set forth herein; and





**WHEREAS,** Executive
      and the Company desire to settle fully and finally all separation arrangements
      between them.





**NOW,
      THEREFORE** ,
      in
      consideration of the mutual covenants and promises herein contained and other
      good and valuable consideration, receipt of which is hereby acknowledged, and
      to
      avoid unnecessary litigation, it is hereby agreed by and between the Parties
      as
      follows:





**FIRST** **:** This
      Agreement and compliance with this Agreement shall not be construed as an
      admission by either party to the Agreement of any liability whatsoever, or
      as an
      admission by either party of any violation of the rights of either party or
      any
      person, violation of any order, law, statute, duty, or contract whatsoever
      against either party or any person. Both Parties specifically disclaim any
      liability to the other party or to any other person for any alleged violation
      of
      the rights of either party or any person, or for any alleged violation of any
      order, law, statute, duty, or contract on the part of the Company, its employees
      or agents or related companies or their employees or agents.





**SECOND** **:**  (a)  Executive
      understands and agrees that she has had the opportunity to consider this
      Agreement for a full twenty-one (21) days from its receipt (Executive can
      voluntarily sign earlier) and that she did not execute this Agreement without
      first being advised in writing to consult with an attorney. On the Effective
      Date as defined in paragraph SEVENTH (g) below, so long as Exectuive has not
      exercised her right of revocation, the Parties agree that:





(1)
      Executive shall have resigned from all executive and employment positions with
      the Company, and shall no longer be an active employee of the Company, as of
      February 1, 2008.










(2)
      Within three (3) business days of the Effective Date as defined in paragraph
      SEVENTH (g) below ,
      Executive shall be paid all amounts properly due and owing to Executive as
      a
      result of her employment with Company, and her resignation therefrom, through
      such Effective Date, less required withholdings. Payment shall be by written
      check delivered to Executive’s home address on record with the Company or by
      direct deposit into an account designated by Executive.





(3)
      Executive’s eligibility to participate in all of the Company’s employee benefit
      plans or programs shall cease on February 1, 2008, in accordance with the terms
      of such plans. Thereafter, Executive shall be entitled, to the extent she is
      eligible, to continue such benefit coverage under COBRA. The Company hereby
      agrees to pay its portion of the COBRA premium charged to Executive, consistent
      with the Company’s past practices with respect to benefits payments made for and
      on behalf of Executive, for continuation of benefits under the Company group
      health insurance and other benefit plans until the expiration of the Consulting
      Term, after which time Executive shall be responsible for paying any and all
      premiums for continuation of such benefits.





(4)
      Executive shall have all rights, if any, to exercise any and all existing stock
      options held by Executive, as vested through February 1, 2008, pursuant to
      (i)
      that certain Stock Option Agreement dated December 31, 2005 (the “ ***2005
      Stock Option Agreement*** ”),
      originally issued by VM Direct L.L.C., a Nevada limited liability company and
      wholly owned subsidiary of the Company, and subsequently assigned and assumed
      by
      the Company, and (ii) that certain Stock Option Agreement dated June 29, 2007,
      issued under the DigitalFX International, Inc. 2007 Stock Incentive Plan (the
      “ ***2007
      Stock Option Agreement*** ,”
and
      together with the 2005 Stock Option Agreement, the “ ***Stock
      Option Agreements*** ”).




In
      consideration of the above, Executive hereby releases all existing claims
      against Company, as specified in Paragraph FIFTH.





(b)  The
      above
      stated consideration shall be paid to Executive as severance and will also
      serve
      to constitute full and complete settlement of all claims and potential claims
      against the Company.





(c)  Executive
      agrees that the foregoing payments shall constitute the entire amount of
      consideration (monetary or otherwise) provided to her under this Agreement
      (except as described in Paragraph SECOND (d) below) and that she will not seek
      any further compensation for any other claimed damage, costs, or attorneys'
      fees
      in connection with the matters encompassed in this Agreement.




2





(d)  Executive
      agrees that from February 1, 2008 until May 31, 2008, she will make herself
      available to respond to and assist with all reasonable Company requests for
      information and consultation to the Company relating to all projects with which
      she is familiar and for which she had duties and or responsibilities as of
      the
      date of resignation. In the event Executive is unavailable, the Company and
      Executive will agree upon a mutually convenient time. The Company shall
      reimburse Executive for all Company prior-approved, out of pocket expenses
      incurred while providing such services. Without limiting, and notwithstanding,
      the generality of the foregoing, d uring
      the
      period commencing on February 1, 2008 and ending on May 31, 2008 (or such later
      date as the parties may mutually agree) (the “ ***Consulting
      Term*** ”),
      Executive shall make herself available from time to time to consult with the
      Company under the direction of the Company’s Chief Executive Officer, Chief
      Operating Officer, and/or other personnel of the Company identified by the
      Company’s Chief Executive Officer from time to time, for the purpose of
      assisting the Company with the preparation and reporting of the Company’s
      quarter and year-ended December 31, 2007 financial statements and year-end
      report(s), assisting with the preparation and filing of any amendments to the
      Company’s existing Registration Statement on Form S-3, as amended (File No.
      333-148033) (or any subsequently filed registration statements relating to
      the
      securities registered for resale thereunder)(collectively, the “ ***Registration
      Statements*** ”),
      assisting with the preparation and filing of any responses to comments or
      inquiries of the Securities and Exchange Commission (or its staff) relating
      to
      or arising from the Registration Statements, and assisting with the preparation
      and filing of any other applicable filings with the Securities and Exchange
      Commission. Executive’s consulting duties shall include, but not be limited to,
      assisting the Company with the following activities: (i) the preparation of
      the
      Company’s quarter and fiscal year ended December 31, 2007 financial statements;
      (ii) the Company’s quarter and fiscal year ended December 31, 2007 independent
      audit process; (iii) the preparation and filing with the Securities and Exchange
      Commission of the Company’s Annual Report on Form 10-KSB for the quarter and
      fiscal year ended December 31, 2007; (iv) the preparation and release of the
      Company’s quarter and fiscal year ended December 31, 2007 financial results; (v)
      the preparation and filing of the Registrations Statements or any amendments
      thereto; (vi) the preparation of responses to comments or inquiries of the
      Securities and Exchange Commission (or its staff) relating to or arising from
      the Registration Statements; and (vii) the preparation and filing of any other
      applicable filings with the Securities and Exchange Commission. As consideration
      for the consulting services to be provided by Executive hereunder, the Company
      will pay Executive a consulting fee of $10,416.67 per month (the “ ***Monthly
      Consulting Fee*** ”).
      Executive shall deliver an invoice to the Company, with respect to the Monthly
      Consulting Fee then due and owing, on the last day of each calendar month during
      the Consulting Term (and such invoice shall apply to services provided during
      that calendar month). The Monthly Consulting Fee shall be paid on or before
      the
      15 th calendar
      day (or the immediately following business day) of the month immediately
      following the calendar month for which the relevant invoice is provided by
      Executive.




3





(e)  Executive
      agrees that from February 1, 2008 until February 1, 2009, she shall not, except
      with the written consent of the Company, solicit or attempt to solicit any
      employee or prospective employees of the Company to terminate and/or leave
      the
      employment of the Company for Executive’s own behalf or on behalf of any person,
      firm, partnership, association, corporation, business organization, entity,
      or
      enterprise.





(f)  Executive
      agrees to deliver, to be effective on and as of the date hereof, the letter
      agreement attached hereto as Exhibit
      A ,
      which
      Executive acknowledges and agrees will continue in full force and effect
      hereafter in accordance with its terms.





(g)  Executive
      understands, acknowledges and agrees that in the course of employment with
      the
      Company, she has acquired confidential information and trade secrets concerning
      the Company’s past, present or future clients, operations, plans, methods of
      doing business (including, without limitation, customer lists), projected and
      historical revenues, sales, marketing, costs, production, growth and
      distribution, and confidential business strategies (“ ***Confidential
      Information*** ”).
      Executive understands, acknowledges and agrees that it would be extremely
      damaging to the Company if such information were disclosed to a competitor
      or
      made available to any other person or entity. Executive understands and agrees
      that such Confidential Information has been disclosed to Executive in
      confidence, that she will keep such information secret and confidential and
      that
      she will not in any way use, distribute or disclose such information. In
      view
      of the nature of Executive’s employment and the Confidential Information and
      trade secrets that Executive has received during the course of her employment,
      and without limiting the generality of any other provision of this Agreement,
      Executive also agrees that the Company would be irreparably harmed by any
      violation or threatened violation of this Agreement and that, therefore, Company
      shall be entitled to an injunction prohibiting the Executive from any violation
      or threatened violation of this Agreement, in addition to any other relief,
      including monetary damages, to which the Company may be entitled.





(h)  The
      Parties agree that Executive’s future employment shall not affect Executive’s
      ability to receive payments under this Agreement.





**THIRD** **:**  Executive
      represents that she has not filed any complaints, claims, or actions against
      the
      Company, its officers, agents, directors, supervisors, employees, or
      representatives with any state, federal, or local agency or court and that
      she
      will not do so at any time hereafter. PROVIDED, however, that Executive is
      not
      prohibited from challenging the validity of this Agreement with the EEOC, and/or
      cooperating with the EEOC regarding claims of harassment, retaliation or
      discrimination. Nonetheless, Executive is hereby waiving any private cause
      of
      action of claim that might be covered in any right to sue letter issued by
      the
      EEOC.





**FOURTH** **:**  (a)  The
      Parties agree to refrain from any publication, oral or written, of any
      defamatory, disparaging or otherwise derogatory information pertaining to each
      other or their prior employment relationship.




4





(b)  The
      Parties agree to keep the fact, terms, and amount of this Agreement completely
      confidential and not hereafter disclose any information concerning this
      Agreement to anyone, provided that the Parties may make such disclosures as
      are
      required by law, rule or regulation (including, without limitation, applicable
      securities laws and the rules and regulations promulgated thereunder) and as
      are
      necessary for legitimate law enforcement or compliance purposes. The Parties
      may
      also disclose this Agreement to its attorneys and accountants who have a need
      to
      know the contents of this Agreement.





**FIFTH** **:**  (a)  Executive
      hereby irrevocably and unconditionally releases and forever discharges the
      Company and each and all of its officers, agents, directors, supervisors,
      employees, representatives, and their successors and assigns and all persons
      acting by, through, under, or in concert with any of them from any and all
      charges, com-plaints, claims, and liabilities of any kind or nature whatso-ever,
      known or unknown, suspected or unsuspected (hereinafter referred to as “claim”
or “claims”) which Executive at any time heretofore had or claimed to have or
      which Executive may have or claim to have regarding events that have occurred
      as
      of the date of this Agreement, including, without limita-tion, any and all
      claims related or in any manner incidental to Executive’s employment with the
      Company, termination of or resignation from the employment relationship, or
      the
      Stock Option Agreements. It is expressly understood by Executive that among
      the
      various rights and claims being waived in this release are those arising under
      the Age Discrimination in Employment Act of 1967 (29 U.S.C. § 621, et
      seq .).





(b)  The
      Parties understand the word “claims” to include all actions, claims, and
      grievances, whether actual or potential, known or unknown, and specifically
      but
      not exclusively all claims arising out of Executive’s employment with the
      Company and the termination or resignation thereof. All such claims (including
      related attorneys' fees and costs) are forever barred by this Agreement, without
      regard to whether those claims are based on any alleged breach of a duty arising
      in a statute, contract, or tort; any alleged unlawful act, including, without
      limitation, the
      Age
      Discrimination in Employment Act of 1967; the Older Workers Benefit Protection
      Act; Title
      VII
      of the Civil Rights Act of 1964; the Family Medical Leave Act; or the Americans
      With Disabilities Act. Executive, with full understanding of the rights afforded
      to Executive under each of these Acts, statutes and claims for relief, hereby
      waives any right to assert a claim for any relief available under these Acts,
      statutes or claims (including but not limited to back pay, severance, attorneys'
      fees, damages, reinstatement and/or other injunctive relief) that Executive
      may
      otherwise recover based upon any alleged violation(s) of these Acts, or any
      other claim or cause of action regardless of the forum in which it might be
      brought. ****




(c)  Executive expressly
      waives all rights under Section 17.245 of the Nevada Revised Statutes
      (hereinafter referred to as “Section 17.245”), understanding and acknowledging
      the significance of such specific waiver of Section 17.245, which reads as
      follows:




When
      a
      release or a covenant not to sue or not to enforce judgment is given in good
      faith to one of two or more persons liable in tort for the same injury (a)
      It
      does not discharge any of the other tortfeasors from liability for the
      injury...unless its terms so provide, but it reduces the claim against the others
      to the extent of any amount stipulated by the release or the covenant, or in
      the
      amount of the consideration paid for it, whichever is the greater . .
      .




5




Notwithstanding
      the provisions of Section 17.245, for the purpose of implementing a full and
      complete release and discharge of each and all of the releasees and alleged
      tortfeasors, Executive expressly acknowledges that this Agreement is intended
      to
      include and does include in its effect, without limitation, all claims which
      Executive does not know or suspect to exist in her favor at the time she signs
      this Agreement and that this Agreement expressly contemplates the extinguishment
      of all such known or unknown claims against all known and unknown tortfeasors
      associated with Executive’s employment with and separation from the Company.
      This Paragraph FIFTH (c) applies only to the Company, its officers,
      agents, directors, supervisors, employees, representatives, and their successors
      and assigns and all persons acting by, through, under, or in concert with the
      same and is not intended to benefit any unrelated third party.




**SIXTH** **:** Company
      hereby irrevocably and unconditionally releases and forever discharges Executive
      and her successors and assigns, from any and all charges, complaints, claims
      and
      liabilities of any kind or nature (excluding criminal and regulatory charges
      or
      liabilities), known or unknown, suspected or unsuspected which Company at any
      time heretofore had or claimed to have related or in any manner incidental
      to
      Executive’s employment with the Company, termination of or resignation from the
      employment relationship, or the Stock Option Agreements.




**SEVENTH** **:**  Executive
      understands and agrees that she:





(a)  Has
      had a
      full twenty-one (21) days **** within
      which to consider this Agreement before executing it.





(b)  Has
      carefully read and fully understands all of the provisions of this
      Agreement.





(c)  Is,
      through this Agreement, releasing the Company from any and all claims she may
      have against the Company. The term “claim” is specifically defined in Paragraph
      FIFTH (a) and (b) above.





(d)  Knowingly
      and voluntarily agrees to all of the terms set forth in this
      Agreement.





(e)  Knowingly
      and voluntarily intends to be legally bound by the same.





(f)  Was
      advised and hereby is advised in writing to consider the terms of this Agreement
      and consult with an attorney of her choice prior to executing this
      Agreement.





(g)  Has
      a
      full seven (7) days following the execution of this Agreement to revoke this
      Agreement and has been and hereby is advised in writing that this Agreement
      shall not become effective or enforceable until the revocation period has
      expired (the
      “ ***Effective
      Date*** ”) .
      Executive acknowledges
      and agrees that such revocation must be received via hand delivery, facsimile,
      or overnight express delivery to Mickey Elfenbein, Chief Operating Officer
      of
      the Company.





(h)  Understands
      that rights or claims under the Age Discrimination in Employment Act of 1967
      (29
      U.S.C. § 621, et
      seq .)
      that
      may arise after the date this Agreement is executed are not waived.




6




**EIGHTH** **:** The
      Parties hereto represent and acknowl-edge that in executing this Agreement
      they
      do not rely and have not relied upon any representation or statement made by
      any
      of the Parties or by any of the Parties' agents, attorneys, or repre-sentatives
      with regard to the subject matter, basis, or effect of this Agreement or
      otherwise, other than those specifi-cally stated in this written
      Agreement.





**NINTH** **:** This
      Agreement shall be binding upon the Parties hereto and upon their heirs,
      administrators, representatives, executors, successors, and assigns, and shall
      inure to the benefit of said Parties and each of them and to their heirs,
      administrators, representatives, executors, successors, and assigns. Executive
      expressly warrants that she has not transferred to any person or entity any
      rights, causes of action, or claims released in this Agreement.





**TENTH** **:**  Should
      any provision of this Agreement be declared or be determined by any court of
      competent jurisdic-tion to be wholly or partially illegal, invalid, or
      unenforceable, the legality, validity, and enforceability of the remaining
      parts, terms, or provisions shall not be affected thereby, and said illegal,
      unenforceable, or invalid part, term, or provision shall be deemed not to be
      a
      part of this Agreement.





**ELEVENTH** **:**  This
      Agreement sets forth the entire agreement between the Parties hereto and with
      the exception of the Stock Option Agreements and the letter agreement attached
      hereto as Exhibit A, this Agreement fully supersedes any and all prior
      agreements, discussions, notices, electronic mail or other communications or
      understandings, written or oral, between the Parties hereto pertaining to the
      subject matter hereof. T he Stock
      Option Agreements shall
      remain in full force and effect in
      accordance with their terms except
      to
      the extent that they conflicts with this Agreement, in which case this Agreement
      will govern





**TWELFTH** **:** This
      Agreement shall be interpreted in accordance with the plain meaning of its
      terms
      and not strictly for or against any of the Parties hereto.





**THIRTEENTH** **:** Without
      limiting the provisions of Paragraph SECOND (g), **** it
      is
      further understood and agreed that if, at any time, a violation of any term
      of
      this Agreement is asserted by any party hereto, that party shall have the right
      to seek specific performance of that term and/or any other necessary and proper
      relief, including but not limited to damages, from any court of competent
      jurisdiction, and the prevailing party shall be entitled to recover its
      reasonable costs and attorneys' fees.




7





**FOURTEENTH:** The
      Parties agree to indemnify, defend and hold the other harmless from and against
      any and all loss, cost, damage, liability, or expense, as a result of any breach
      of this Agreement.





**FIFTEENTH** : This
      Agreement shall be interpreted in accordance with the plain meaning of its
      terms
      and not strictly for or against any of the Parties hereto. This Agreement shall
      be governed by, and construed and enforced in accordance with the laws of the
      State of Nevada applicable to contracts made and to be performed
      therein.





**SIXTEENTH** : This
      Agreement may be executed in counterparts with the same force and effect as
      if
      all signatures were set forth in a single instrument. This Agreement may be
      executed on facsimile copies with the same force and effect as an executed
      original of the same.




**EXECUTIVE:**Dated:
              February
              
              4
              ,
                2008
              
              /s/
                Lorne Walker**COMPANY:****DIGITALFX
                  INTERNATIONAL, INC.**Dated:
              February
              
              4
              ,
                    2008
              By:
              /s/ Mickey
                  Elfenbein




8


**EXHIBIT
      A**





**LOCK-UP
      LETTER**




9