Unassociated Document


    AMENDMENT
AND EXCHANGE AGREEMENT

     

    AMENDMENT AND EXCHANGE
AGREEMENT (this “Agreement”), dated as of
December 22, 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”), and
_______________________________________ (the “Investor”).

     

    WHEREAS:

     

    A.           The
Company, the Investor and certain other investors (the “Other Investors”, and
collectively with the Investor, the “Investors”) are parties to
that certain (i) Securities Purchase Agreement, dated as of November 29, 2007
(the “Existing Securities
Purchase Agreement”), and (ii) Amendment and Exchange Agreement, dated as
of March 24, 2008 (the “Amendment and Exchange
Agreement”) pursuant to which, among other things, the Investors
purchased from the Company (i) senior secured convertible notes (as amended from
time to time, the “Existing
Notes”), which are convertible into shares of the Company’s common stock,
par value $0.001 per share (the “Common Stock”), in accordance
with the terms thereof, and (ii) warrants (as amended from time to time, the
“Existing Warrants”),
which are exercisable into shares of Common Stock.

     

    B.           As
a consequence of the occurrence of an Event of Default under the Existing Notes
by reason of the occurrence of one or more Financial Covenant Failures (as
defined in the Existing Notes) with respect to the Company’s fiscal quarter
ended June 30, 2008, the Company, each Investor and Richard H. Kall (“Kall”) entered into Note
Purchase Agreements on October 15, 2008 pursuant to which Kall purchased from
the Investors, on a pro rata basis, (i) an aggregate of $350,000 of the unpaid
principal amount of the Existing Notes, (ii) Existing Warrants to purchase an
aggregate of 90,518 shares of the Company’s Common Stock and (iii) an aggregate
of 120,000 shares of Common Stock, in consideration for, among other things,
each Investor’s forbearance from enforcing, for a period of 30 days, any rights
regarding redemption of the Existing Notes that may have arisen by reason of the
aforementioned Financial Covenant Failures.

     

    C.           The
Company and the Investor desire to enter into this Agreement, pursuant to which,
among other things,

     

    (i)                 the
Company shall redeem in cash from the Investor a principal amount of the
Existing Note equal to such Investor’s pro rata portion of $650,000 (such
Investor’s “Redemption Payment
Amount”), as set forth opposite such Investor’s name in column (3) on the
Securities Schedule attached hereto,


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (ii)                 the
Company shall amend and restate a portion of such Investor’s Existing Note for a
note in the form attached hereto as Exhibit A (the “Note”) with a principal amount
to be determined based on when the Second Closing Date occurs (for example
purposes only, the amount set forth opposite the Investor’s name in column (4)
of the Securities Schedule 1 (Exhibit B1)
contemplates a Closing Date of December 22, 2008 and the amount set forth
opposite the Investor’s name in column (4) of the Securities Schedule 2 (Exhibit B2)
contemplates a Second Closing Date of January 30, 2009, which shall be
convertible into Common Stock (the “Conversion Shares”), and which
principal shall also include the interest payable on (i) such Investor’s
Existing Note through the Closing Date and (ii) the principal of such Investor’s
Existing Note to be exchanged for the Note and Common Shares from the Closing
Date through the Second Closing Date (collectively, the “2008 Interest Payment”) in an
amount to be determined based on when the Second Closing Date occurs (for
example purposes only, the amount set forth opposite the Investor’s name in
column (7) of the Securities Schedule 2 contemplates a Second Closing Date of
January 30, 2009),

     

    (iii)                 the
Company shall amend and restate a portion of such Investor’s Existing Note for
that aggregate number of shares of Common Stock, set forth opposite such
Investor’s name in column (5) on the Securities Schedule attached hereto
(collectively, the “Common
Shares”) (which aggregate number for all Investors shall be 5,149,440
(assuming a closing on December 22, 2008) Common Shares and which the parties
shall deem exchanged for a portion of the Existing Note with a principal amount
equal to such Investor’s pro rata portion of $600,000 as set forth opposite such
Investor’s name in column (5) on the Securities Schedule attached hereto),
and

     

    (iv)                 the
Company shall amend and restate a portion of such Investor’s Existing Note
for  that aggregate number of shares of common stock of WoozyFly Inc.
set forth opposite such Investor’s name in column (6) on the Securities Schedule
attached hereto (collectively, the “WoozyFly Shares”) (which
aggregate number for all Investors shall be 5,520,000 WoozyFly Shares and which
the parties shall deem exchanged for a portion of the Existing Note with a
principal amount equal to such Investor’s pro rata portion of $800,000 as set
forth opposite such Investor’s name in column (6) on the Securities Schedule
attached hereto).

     

    D.           The
amendment and restatement of the Existing Note for the Note and the Common
Shares is being made in reliance upon the exemption from registration provided
by Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933 Act”).

     

    E.           To
maintain compliance with listing requirements, the issuance and/or listing of
new shares of Common Stock (as a listed class) by the Company as contemplated by
this Agreement must be pre-approved by the American Stock Exchange (“AMEX”) based on an application
for additional listing (the “AMEX Approval”), and such
application was submitted by counsel to the Company on December 15, 2008 with a
petition for expedited review.

     

    F.           Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Existing Securities Purchase Agreement or the
Amendment and Exchange Agreement, as applicable.

     

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


    
      
         


      

      
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              1.

            	
              REDEMPTION OF EXISTING
      NOTE; INTEREST PAYMENT; AMENDMENT AND RESTATEMENT OF EXISTING NOTE;
      ISSUANCE OF COMMON SHARES; EXCHANGE FOR WOOZYFLY
      SHARES.

            


    

     

    (a)           Redemption.  Subject
to satisfaction (or waiver) of the conditions set forth in Sections 5 and 6
below, at the closing contemplated by this Agreement (the “Closing”), the Company shall
redeem in cash from the Investor an amount equal to the Investor’s Redemption
Payment Amount, as set forth opposite such Investor’s name in column (3) on the
Securities Schedule attached hereto (it being understood and agreed that such
Redemption Payment Amount satisfies the Installment Amounts (as defined in the
Notes) due November 1, 2008 and December 1, 2008).  The Parties hereby
further agree and acknowledge that the Investor’s Redemption Payment Amount
shall not and does not constitute a commission or other remuneration paid or
given, directly or indirectly, in connection with the exchange of the Investor’s
Existing Note for the Note, Common Shares and WoozyFly Shares pursuant to the
terms of Section 1(b).

     

    (b)           Amendment and Restatement of
Existing Note.  Subject to satisfaction (or waiver) of the
conditions set forth in Sections 5 and 6 below, at the Closing or the Second
Closing (as defined below) (as applicable), (i) the Investor shall surrender to
Stubbs (as defined below) its Existing Note, (ii) the Company shall issue and
deliver to the Investor (A) a Note in the principal amount to be determined
based on when the Second Closing Date occurs (for example purposes only, the
amount set forth opposite the Investor’s name in column (4) of the Securities
Schedule 2 contemplates a Second Closing Date of January 30, 2009) and (B)
promptly after (and in no event, later than three (3) business days after)
receipt of the AMEX Approval regarding listing the Common Shares on AMEX, the
number of Common Shares as is set forth opposite the Investor’s name in column
(5) on the Securities Schedule 1 as adjusted and (iii) the Company shall
transfer to the Investor the number of WoozyFly Shares as is set forth opposite
the Investor’s name in column (6) on the Securities Schedule 1, and shall
deliver to the transfer agent of WoozyFly Inc., within three (3) Business Days
of the Closing Date, all documents necessary to enable the transfer agent of
WoozyFly Inc. to deliver to the Investor certificates registered in the
Investor’s name representing number of WoozyFly Shares as is set forth opposite
the Investor’s name in column (6) on the Securities Schedule 1.

     

    (c)           Closing
Date.  The date and time of the Closing (the “Closing Date”) shall be 1:00
p.m., New York Time, on the date hereof, subject to notification of satisfaction
(or waiver) of the conditions to the Closing set forth in Sections 5 and 6 below
(or such other time and date as is mutually agreed to by the Company and the
Investor).

     

    
      	
               
      

            	
              2.

            	
              AMENDMENTS TO
      TRANSACTION DOCUMENTS.

            


    

     

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


    
      
         


      

      
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    (i)           the
Existing Securities Purchase Agreement, 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 Existing Securities Purchase
Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like
import referring to the Securities Purchase Agreement shall mean the Existing
Securities Purchase Agreement as amended by the Amendment and Exchange Agreement
and this Agreement and (ii) all references in the other Transaction Documents to
the “Securities Purchase Agreement”, “thereto”, “thereof”, “thereunder” or words
of like import referring to the Securities Purchase Agreement shall mean the
Existing Securities Purchase Agreement as amended by the Amendment and Exchange
Agreement and this Agreement.  REFERENCES TO NOTES IN ALL TRANSACTION
DOCUMENTS MEANS NOTES UNDER THIS AGREEMENT;

     

    (ii)           to
the extent that the Existing Securities Purchase Agreement, as amended by the
Amendment and Exchange Agreement and this Agreement, 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 Existing 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 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.

     

    (b)           Amendment to Transaction
Documents.  Each of the Transaction Documents is hereby amended
as follows:

     

    (i)           All
references to “Notes” shall be amended to mean the Notes as defined in this
Agreement.

     

    (ii)           The
defined term “Transaction Documents” is hereby amended to include this
Agreement.

     

    (iii)           The
defined term “Securities” is hereby amended to include the Common
Shares.

     

    (c)           Amendment to Amendment and
Exchange Agreement.  Each of Section 4(d), Section 4(e) and
Section 4(h) of the Amendment and Exchange Agreement is hereby amended in its
entirety to read as follows:

     

    “Intentionally
omitted.”


    
      
         


      

      
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              3.

            	
              REPRESENTATIONS AND
      WARRANTIES

            


    

     

    (a)           Investor Bring
Down.  The Investor hereby represents and warrants to the
Company with respect to itself only as set forth in Section 2 of the Existing
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)           Company Bring
Down.  Except as set forth in the Disclosure Schedules to the
Existing Securities Purchase Agreement as amended as of the date hereof and
attached as Exhibit
C, the Company hereby represents and warrants to the Investor as set
forth in Section 3 of the Existing 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, references therein to
“Closing Date” being deemed references to the Closing Date as defined in Section
1(c) above, and references to “the date hereof” being deemed references to the
date of this Agreement.

     

    (c)           Title to the WoozyFly
Shares.  The Company hereby represents and warrants to the
Investor that the Company is the lawful owner of the WoozyFly Shares with good
and marketable title thereto, and the Company has the absolute right to sell,
assign, convey, transfer and deliver the WoozyFly Shares, free and clear of all
the following (collectively called “Claims”) of any nature
whatsoever: security interests, liens, pledges, claims (pending or threatened),
charges, escrows, encumbrances, lock-up arrangements, options, rights of first
offer or refusal, community property rights, mortgages, indentures, security
agreements or other agreements, arrangements, contracts, commitments,
understandings or obligations, whether written or oral and whether or not
relating in any way to credit or the borrowing of money.  Delivery to
the Investor of the WoozyFly Shares will (i) pass good and marketable title to
the WoozyFly Shares to the Investor, free and clear of all Claims (assuming that
the Investor is a bona fide purchaser within the meaning of Section 8-302 of the
New York Uniform Commercial Code), and (ii) convey, free and clear of all
Claims, any and all rights and benefits incident to the ownership of such
WoozyFly Shares.

     

    (d)           No Event of
Default.  The Company represents and warrants to the Investor
that after giving effect to the terms of this Agreement, the Kall Agreement (as
defined below) and the Other Agreements (as defined below), no Event of Default
(as defined in the Note) shall have occurred and be continuing as of the Second
Closing Date (as defined below).

     

    
      
         


      

      
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    (e)           Holding
Period.  For the purposes of Rule 144, the Company acknowledges
that the holding period of (i) the Notes (including the corresponding Conversion
Shares) may be tacked onto the holding period of the Existing Notes and (ii) the
Common Shares may
be tacked onto the holding period of the Existing Notes, and the Company agrees
not to take a position contrary to this Section 3(e).  The Company
agrees to take all actions, including, without limitation, the issuance by its
legal counsel of any necessary legal opinions, necessary to issue to the
Investor Conversion Shares and Common Shares that are freely tradable on an
Eligible Market without restriction and not containing any restrictive legend
without the need for any action by the Investor; provided, however, that to the
extent the representation and warranty of the Investor in Section 3(g) of this
Agreement does not continue to be accurate on the date of such issuance and
during the preceding three-month period (except for purposes of this proviso,
references in Section 3(g) to “the date hereof” shall be deemed to be references
to “the date of such issuance”), the trading of such shares shall be subject to
compliance with Rule 144.

     

    (f)           Investor
Status.  As of the date hereof (immediately prior to giving
effect to the transactions contemplated by this Agreement) and during the
preceding three-month period, such Investor, together with any other person with
whom such Investor must aggregate sales under Rule 144, does not, and has not,
(i) beneficially owned in excess of 10% of the Common Stock, (ii) appointed any
member to the board of directors of the Company or (iii) participated in the
management or daily operations of the Company.

     

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

     

    
      	
               
      

            	
              4.

            	
              CERTAIN COVENANTS AND
      AGREEMENTS; WAIVER

            


    

     

     

    (a)           Best
Efforts.  Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 5
and 6 of this Agreement.

     

    (b)           Disclosure of Transactions
and Other Material Information.  On or before 8:30 a.m., New
York City time, on the first Business Day following the date of this Agreement,
the Company shall issue a press release and file a Current Report on Form 8-K,
which the Collateral Agent shall have approved prior to its release and filing,
describing the terms of the transactions contemplated by this Agreement in the
form required by the 1934 Act and attaching the material Transaction Documents
not previously filed (including, without limitation, the form of this Agreement,
the Kall Agreement (as defined below), the form of the Notes (and the schedules
thereto) and the Kall Note (as defined below)) (including all attachments, the
“8-K
Filing”).  From and after the filing of the 8-K Filing with the
SEC, the Investor shall not be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its or
their respective officers, directors, employees or agents that is not disclosed
in the 8-K Filing.  The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide the Investor with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing with the SEC without the express written consent of the
Investor.  If the Investor has, or believes it has, received any such
material, nonpublic information regarding the Company or any of its
Subsidiaries, it shall provide the Company with written notice
thereof.  The Company shall, within five (5) Trading Days (as defined
in the Notes) of receipt of such notice, make public disclosure of such
material, nonpublic information.  In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to any
other remedy provided herein or in the Transaction Documents, the Investor shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees or agents.  The
Investor shall not have any liability to the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees, stockholders or
agents for any such disclosure.  Subject to the foregoing, neither the
Company, its Subsidiaries nor the Investor shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of  the Investor, to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith and (ii) as is required by
applicable law and regulations (provided that in the case of clause (i) the
Investor shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release).  Without the
prior written consent of the Investor, neither the Company nor any of its
Subsidiaries or affiliates shall disclose the name of the Investor in any filing
(other than as is required by applicable law or regulations), announcement,
release or otherwise.


    
      
         


      

      
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    (c)           Waiver.  Effective
as of the Second Closing, the Investor hereby irrevocably waives forever any
past, present and future claims it might be entitled to against the Company as a
result of a failure to meet any and/or all of the Financial Covenants (as
defined in the Existing Note) prior to the Second Closing.  For the
avoidance of doubt, the Investor does not waive any rights it has under the Note
being issued pursuant to this Agreement.

     

    (d)           Right of
Repurchase.

     

    (i)           For
the one-year period commencing on the Closing Date and ending at 5:00 p.m., New
York City time, on the date immediately prior to the first anniversary thereof
(the “Repurchase
Period”), the Company shall have the right (but not the obligation) to
repurchase, at a per share price of $0.1747 (900,000/5,149,440) (the “Repurchase Price”), any or all
of the Common Shares issued to the Investor (the “Repurchase Right”); provided
that the Repurchase Right shall not (i) restrict in any way the Investor’s right
or ability to transact in, sell or dispose of the Common Shares at any time or
(ii) apply to any Common Shares sold by the Investor prior to the Investor
receiving the notice described in Section 4(d)(ii) below.  Each
exercise of the Repurchase Right shall be done pro rata among the Investors
based on the number of Common Shares issued by the Company; provided that if any
Investor has less than its pro rata share of Common Shares available for
repurchase, the shortfall shall be made up by the other Investors pro rata based
on the number of Common Shares issued to such remaining Investors by the Company
(subject again to this proviso, if necessary).

     

    (ii)           The
Company shall exercise the Repurchase Right by written notice delivered to the
Investor prior to the expiration of the Repurchase Period, which notice shall
set forth the date on which the repurchase is to be effected (which date shall
be at least five Business Days, but no more than ten Business Days, from the
date notice is delivered).  The Company may not deliver more than one
such notice to the Investor in any 30-day period.  The Investor shall
deliver the certificate(s) representing the Common Shares to be repurchased,
properly endorsed for transfer, to the Company prior to the close of business on
the date specified for the repurchase.  The Company shall,
concurrently with the receipt of such certificate(s), pay to the Investor the
aggregate Repurchase Price for the Common Shares repurchased.  Payment
shall be made via wire transfer of immediately available funds to an account
designated by the Investor.


    
      
         


      

      
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    (e)           Fees and
Expenses.  [The Company shall reimburse the Investor, in the
maximum aggregate amount of $5,000 for its legal and due diligence fees and
expenses in connection with the preparation and negotiation of this Agreement
and the transactions contemplated thereby by paying any such amount to Schulte
Roth & Zabel LLP (the “Investor Counsel
Expense”).  The Investor Counsel Expense shall be paid by the
Company whether or not the transactions contemplated by this Agreement are
consummated.]  Except as otherwise set forth in this Agreement, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement.

     

    (f)           The
Company shall deliver to the Company’s transfer agent, with a copy to the
Investor, promptly after (and in no event, later than three (3) Business Days
after) the earlier of (i) the Company’s receipt of the AMEX Approval and (ii)
the Company’s Common Stock being listed on the OTC Bulletin Board, Irrevocable
Transfer Agent Instructions in the form of Exhibit G attached
hereto.

     

    (g)           The
Company shall not take the position that the Investor is an affiliate of the
Company for purposes of the 1933 Act or the rules promulgated thereunder as a
result of the transactions contemplated by this Agreement.

     

    (h)           The
Company acknowledges and agrees that the Exercise Price (as defined in the
Existing Warrants) of the Existing Warrants will, by the terms thereof, be
reduced to $0.24 as a result of the transactions contemplated by this
Agreement.

     

    (i)           Listing.  If the
Common Stock is suspended from trading or fails to be listed on the Principal
Market for a period of five consecutive Trading Days, the Company shall use its
best efforts to list the Common Stock on an Eligible Market as soon as
practicable thereafter.

     

    (j)           AMEX
Approval.  The Company shall use its best efforts to obtain the
AMEX Approval no later than January 30, 2009.  In the event that the
AMEX Approval is not obtained by such date, the Company shall use its best
efforts to have the Common Stock listed on the OTC Bulletin Board and consummate
the Second Closing as soon as practicable thereafter, but in no event later than
the close of business (PST) on February 13, 2009.

     

    (k)           Forbearance.  The
Investor hereby covenants and agrees that, until the close of business (PST) on
February 13, 2009, it 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 any Event of
Default that has occurred or may occur prior to such date with respect to
Company’s failure to satisfy one or more Financial Covenants set forth in the
Existing Notes.

     

    (l)           Standstill.  The
Company shall not issue or commit to issue any shares of Common Stock or
securities convertible into or exchangeable for shares of Common Stock (other
than those set forth in the Disclosure Schedules attached as Exhibit C) to any
third party until after the Second Closing.

     

    
      
         


      

      
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              5.

            	
              CONDITIONS TO
      COMPANY’S OBLIGATIONS
HEREUNDER.

            


    

     

    The
obligations of the Company to the Investor hereunder are subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion by providing the Investor with prior written notice
thereof:

    


    (a)           The
Investor shall have executed this Agreement and delivered the same to the
Company.

     

    (b)           The
Investor shall have delivered to Stubbs, Alderton & Marlikes LLP, the
Company’s counsel (“Stubbs”), the Investor’s
Existing Note to Stubbs to be held in escrow pending the Second Closing, at
which time it shall be delivered to the Company for cancellation.

     

    (c)           The
representations and warranties of the Investor shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date) and the Investor shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Investor at or
prior to the Closing Date.

     

    
      	
               
      

            	
              6.

            	
              CONDITIONS TO
      INVESTOR’S OBLIGATIONS
HEREUNDER.

            


    

     

    The
obligations of the Investor hereunder are subject to the satisfaction of each of
the following conditions, provided that these conditions are for the Investor’s
sole benefit and may be waived by the Investor at any time in its sole
discretion by providing the Company with prior written notice
thereof:

    


    (a)           The
Company shall have executed this Agreement and delivered the same to the
Investor.

     

    (b)           The
Company shall have delivered to the Investor its Redemption Payment Amount
(plus, in the case of Portside Growth and Opportunity Fund, the amounts due
pursuant to Section 4(e) hereof).

     

    (c)           The
Company shall have delivered to the Investor the WoozyFly Shares being
transferred to such Investor at the Closing.

     

    (d)           Each
of the Other Investors shall have (i) executed agreements identical to this
Agreement (the “Other
Agreements”) (other than proportional changes (the “Proportionate Changes”) in the
numbers reflecting the different dollar amount of such Investor’s Notes, the
number of Common Shares being issued to such Investor and the number of WoozyFly
Shares being issued to such Investor and Section 4(e)), (ii) satisfied or waived
all conditions to the closings contemplated by such agreements and (iii)
surrendered their Existing Notes to Stubbs to be held in escrow pending the
Second Closing, at which time it shall be delivered to the Company for
cancellation.


    
      
         


      

      
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    (e)           Kall
shall have (i) executed an agreement in the form attached hereto as Exhibit D (the “Kall Agreement”), (ii)
satisfied or waived all conditions to the closing contemplated by the Kall
Agreement and (iii) surrendered his Existing Notes to Stubbs to be held in
escrow pending the Second Closing, at which time it shall be delivered to the
Company for cancellation in exchange for a new note in the form attached hereto
as Exhibit E
(the “Kall
Note”).

     

    (f)           WoozyFly
Inc. shall have executed the Registration Rights Agreement relating to the
WoozyFly Shares, in the form attached hereto as Exhibit F, and
delivered the same to the Investor.

     

    (g)           The
Company shall have delivered to the Investor a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to the resolutions
approving the transactions contemplated hereby as adopted by the Board in a form
reasonably acceptable to the Investor.

     

    (h)           The
representations and warranties of the Company hereunder shall be true and
correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the date when made and as of
the Closing Date (except as set forth in the Disclosure Schedules to the
Existing Securities Purchase Agreement as amended as of the date hereof) as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date) and the Company shall have performed, satisfied and complied in all
respects with the covenants, agreements and conditions required by this
Agreement and the other Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing Date and after giving
effect to the terms of this Agreement and the Other Agreements, no default or
Event of Default shall have occurred and be continuing as of the Closing
Date.  The Investor shall have received a certificate, executed by the
President of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Investor in
the form attached hereto as  Exhibit
H.

     

    (i)           The
Common Stock (I) shall be designated for quotation or listed on the Principal
Market and (II) shall not have been suspended, as of the Closing Date, by the
SEC or the Principal Market from trading on the Principal Market.

     

    (j)           The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.

     

    (k)           The
Company shall have delivered to the Investor such other documents relating to
the transactions contemplated by this Agreement as the Investor or its counsel
may reasonably request.

     

    
      
         


      

      
        10

        
          

        

      

      
         


      

    

     

    
      	
               
      

            	
              7.

            	
              TERMINATION.

            


    

     

    In the
event that the Closing does not occur on or before five (5) Business Days from
the date hereof, due to the Company’s or the Investor’s failure to satisfy the
conditions set forth in Sections 5 and 6 hereof (and the nonbreaching party’s
failure to waive such unsatisfied conditions(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party[; provided, however, if this
Agreement is terminated pursuant to this Section 7, the Company shall remain
obligated to reimburse the Investor for the expenses described in Section 4(e)
above].  Upon such termination, the terms hereof shall be null and
void and the parties shall continue to comply with all terms and conditions of
the Transaction Documents, as in effect prior to the execution of this
Agreement.

    


    8.           SECOND
CLOSING.

    


    No more
than three (3) Business Days following the earlier of (i) the Company’s receipt
of the AMEX Approval and (ii) the Company’s Common Stock being listed on the OTC
Bulletin Board (such date being the “Second Closing Date”), and
only if the AMEX Approval or OTC Bulletin Board listing has been completed, a
second Closing (the “Second
Closing”) shall be held at which:

    


    (a)           The
Company shall execute and deliver to the Investor the Investor’s Note and Common
Shares.

    


    (b)           The
Company shall execute and deliver to each Other Investor such Other Investor’s
Notes and Common Shares.

    


    (c)           The
Company shall execute and deliver to Kall the Kall Note.

    


    (d)           The
Company shall cancel the Existing Notes of the Investor, the Other Investors and
Kall.

    


    If the
Second Closing has not occurred by the close of business (PST) on February 13,
2009, the Company shall cause Stubbs to return to the Investor its Existing Note
in principal amount equal to the principal of the Investor’s Existing Note that
was to be exchanged for the Note and Common Shares at the Second
Closing.

    


    The Company shall file a Current Report
on Form 8-K announcing the Second Closing on or before 8:30 a.m., New York City
time, on the first Business Day following the Second Closing.

    


    Notwithstanding anything to the
contrary set forth in this Agreement, the Existing Note shall be deemed to be
outstanding for all purposes with respect to the principal amount to be
exchanged for the Note and the Common Shares until the Second Closing shall have
occurred.


    
      
         


      

      
        11

        
          

        

      

      
         


      

    

    


    9.           MISCELLANEOUS.

     

    (a)           Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.

     

    (b)           Headings.  The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.

     

    (c)           Severability.  If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

     

    (d)           Governing Law; Jurisdiction;
Jury Trial.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by
law.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

     

    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

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

     

    (f)           Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     

    (g)           No Strict
Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.

     

    (h)           Entire Agreement; Effect on
Prior Agreements; Amendments.  Except for the Transaction
Documents in effect prior to this Agreement (to the extent any such Transaction
Document is not amended by this Agreement), this Agreement supersedes all other
prior oral or written agreements between the Investor, the Company, their
affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters.  No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Investor.  No provision hereof
may be waived other than by an instrument in writing signed by the party against
whom enforcement is sought.  No consideration shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, holders of Notes or
holders of the Existing Warrants, as the case may be.  The Company has
not, directly or indirectly, made any agreements with any of the Investors
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents, including through any agreement that is not identical to
this Agreement, except as set forth in the Transaction Documents.  In
the event that the Company enters into any such agreement with more favorable
terms than those set forth in this Agreement and the documents contemplated
hereby, the Investor shall be granted the benefit of such more beneficial
terms.

     

    (i)           Notices.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with an overnight courier
service, in each case properly addressed to the party to receive the
same.  The addresses and facsimile numbers for such communications
shall be:

     

    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    If to the
Company:

     

    DigitalFX
International, Inc.

    3035 East
Patrick Lane, Suite 9

    Las
Vegas, Nevada 89120

    Facsimile:(702)
938-4052

    Attention:  Abraham
Sofer, Esq.

     

    If to the
Investor, to its address and facsimile number set forth in the Securities
Schedule attached hereto, or to such other address and/or facsimile number
and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

     

    (j)           Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of the Notes.  The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Investor, including by way of a Fundamental Transaction (unless
the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes).  The Investor may
assign some or all of its rights hereunder without the consent of the Company,
in which event such assignee shall be deemed to be an Investor hereunder with
respect to such assigned rights.

     

    (k)           Survival.  Unless
this Agreement is terminated under Section 7, the representations and warranties
of the Company and the Investor contained herein and the agreements and
covenants set forth herein shall survive the Closing.

     

    (l)           Remedies.  The
Investor and each holder of the Securities shall have all rights and remedies
set forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law.  Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law.  Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge any
or all of its obligations under this Agreement, any remedy at law may prove to
be inadequate relief to the Investor.  The Company therefore agrees
that the Investor shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and
without posting a bond or other security.

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

    (m)           Indemnification.  In
consideration of the Investor’s execution and delivery of the Transaction
Documents, acquiring the Securities thereunder and entering into this Agreement
and in addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless the
Investor and each other holder of the Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by the Investor pursuant to Section 4(b), or (iv) the status of
the Investor or holder of the Securities as an investor in the Company pursuant
to the transactions contemplated by the Transaction Documents.  To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.  Except as otherwise set forth herein, the mechanics
and procedures with respect to the rights and obligations under this Section
9(m) shall be the same as those set forth in Section 6 of the Registration
Rights Agreement.

     

    (n)           Independent Nature of
Investor’s Obligations and Rights.  The obligations of the
Investor under any Transaction Document (including this Agreement) are several
and not joint with the obligations of any Other Investor, and the Investor shall
not be responsible in any way for the performance of the obligations of any
Other Investor under any Transaction Document.  Nothing contained
herein or in any other Transaction Document, and no action taken by the Investor
pursuant hereto, shall be deemed to constitute the Investor and Other Investors
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Investor and Other Investors are in any way
acting in concert or as a group, and the Company will not assert any such claim
with respect to the obligations or the transactions contemplated by the
Transaction Documents and the Company acknowledges that the Investor and Other
Investors are not acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents.  The Company acknowledges and the Investor confirms that
the Investor has independently participated in the negotiation of the
transactions contemplated hereby with the advice of its own counsel and
advisors.  The Investor shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any Other Investor to be joined as an additional party in any
proceeding for such purpose.

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    [Signature
Page Follows]


    
      
         


      

      
        16

        
          

        

      

      
         


      

    

    


    IN WITNESS WHEREOF, the
Investor and the Company have caused their respective signature pages to this
Agreement to be duly executed as of the date first written above.

     

    
      
        
          
            	
                    COMPANY:

                  
	 
      
	
                    DIGITALFX
      INTERNATIONAL, INC.

                  
	 
      
	 
      
	
                    By:

                  	   
      
	 
      	
                    Name:  Abraham
      Sofer

                    Title:  President

                  


          

        

      

    

     

    
      [Signature
Page to Amendment and Exchange Agreement]

       

    

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    IN WITNESS WHEREOF, the
Investor and the Company have caused their respective signature pages to this
Agreement to be duly executed as of the date first written above.

     

    
      
        
          
            
              	
                      INVESTOR:

                       

                       

                            
                        
      

                    
	 
      	 
      
	 
      	 
      
	
                      By:

                    	   
      
	 
      	
                      Name:

                      Title:

                    


            

          

        

      

    

    
       

      [Signature
Page to Amendment and Exchange Agreement]

       

    

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
A

     

    FORM
OF SECOND AMENDED AND RESTATED NOTE

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
B1

    SECURITIES
SCHEDULE 1

    


    
      
        
          
            
              
                	
                        (1)

                      	 	 	
                        (2)

                      	 	 	
                        (3)

                      	 	 	
                        (4)

                      	 	 	
                        (5)

                      	 	 	
                        (6)

                      	 	 	
                        (7)

                      	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                        Investor

                      	 	 	
                        Address
      and

                        Facsimile
      Number

                      	 	 	
                        Redemption
      Payment 

                        Amount

                      	 	 	
                        Aggregate

                        Principal

                        Amount
      of Second 

                        Amended
      and 

                        Restated

                        Notes

                      	 	 	
                        Number
      of Common 

                        Shares

                      	 	 	
                        Number
      of

                        WoozyFly
      Shares

                      	 	 	
                        2008
      Interest Payment

                      	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                        Portside
      Growth and Opportunity Fund

                      	 	 	
                        c/o
      Ramius LLC

                        599
      Lexington Ave., 20th Floor

                        New
      York, New York 10022

                        Attention: Jeffrey
      Smith

                                         
       Owen Littman

                        Facsimile: (212)
      201-4802

                                        
       (212) 845-7986

                        Telephone:
      (212) 845-7955

                                           
       (212) 201-4841

                        Residence: Cayman
      Islands

                      	 	 	$	464,285.71
      	 	 	$	408,767.15
      	 	 	 	3,678,172	 	 	 	3,942,857
      	 	 	$	51,624.30
      	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                        Highbridge
      International LLC

                      	 	 	
                        c/o
      Highbridge Capital Management, LLC

                        9
      West 57th St, 27th Floor

                        New
      York, NY 10019

                        Attn:
      Ari J. Storch /

                        Adam
      J. Chill

                        Tel:
      212-287-4720

                        Fax:
      212-751-0755

                        Residence:
      Cayman Islands

                      	 	 	$	139,285.71
      	 	 	$	122,630.15
      	 	 	 	1,103,451
      	 	 	 	1,182,857
      	 	 	$	15,487.29
      	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                        Iroquois
      Master Fund, Ltd.

                      	 	 	
                        641
      Lexington Avenue

                         26th
      Floor

                        New
      York, New York 10022

                        Attention: Joshua
      Silverman

                        Facsimile: (212)
      207-3452

                        Telephone:
      (212) 974-3070

                        Residence: Cayman
      Islands

                      	 	 	$	46,428.57
      	 	 	$	40,876.72
      	 	 	 	367,817
      	 	 	 	394,286
      	 	 	$	5,162.43
      	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                        TOTAL

                      	 	 	 	 	 	$	650,000.00	 	 	$	572,274.02
      	 	 	 	5,147,440
      	 	 	 	5,520,000
      	 	 	$	72,274.02
      	 


              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      
        	
                EXHIBIT B2

                SECURITIES
      SCHEDULE 2

              


      

    

    


    
      
        	
                 (1)

              	 	 	
                 (2)

              	 	 	
                 (3)

              	 	 	
                 (4)

              	 	 	
                 (5)

              	 	 	
                 (6)

              	 	 	
                 (7)

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                
                  Investor

                

              	 	 	
                
                  Address
      and

                  Facsimile
      Number

                

              	 	 	
                
                  Redemption
      Payment 

                  Amount

                

              	 	 	
                
                  Aggregate

                  Principal

                  Amount
      of Second 

                  Amended
      and 

                  Restated

                  Notes

                

              	 	 	
                
                  Number
      of Common 

                  Shares

                

              	 	 	
                
                  Number
      of

                  WoozyFly
      Shares

                

              	 	 	
                
                  2008
      Interest Payment

                

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Portside
      Growth and Opportunity Fund

              	 	 	
                c/o
      Ramius LLC

                599
      Lexington Ave., 20th Floor

                New
      York, New York 10022

                Attention: Jeffrey
      Smith

                 Owen
      Littman

                Facsimile: (212)
      201-4802

                               
       (212) 845-7986

                Telephone:
      (212) 845-7955

                                 
       (212) 201-4841

                Residence: Cayman
      Islands

              	 	 	$	464,285.71	 	 	$	432,678.63	 	 	 	3,690,748	 	 	 	3,942,857	 	 	$	75,535.77	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Highbridge
      International LLC

              	 	 	
                c/o
      Highbridge Capital Management, LLC

                9
      West 57th St, 27th Floor

                New
      York, NY 10019

                Attn:
      Ari J. Storch /

                Adam
      J. Chill

                Tel:
      212-287-4720

                Fax:
      212-751-0755

                Residence:
      Cayman Islands

              	 	 	$	139,285.71	 	 	$	129,803.59	 	 	 	1,107,224	 	 	 	1,182,857	 	 	$	22,660.73	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Iroquois
      Master Fund, Ltd.

              	 	 	
                641
      Lexington Avenue

                 26th
      Floor

                New
      York, New York 10022

                Attention: Joshua
      Silverman

                Facsimile: (212)
      207-3452

                Telephone:
      (212) 974-3070

                Residence: Cayman
      Islands

              	 	 	$	46,428.58	 	 	$	43,267.86	 	 	 	369,074	 	 	 	394,286	 	 	$	7,553.58	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                TOTAL

              	 	 	 	 	 	$	650,000.00	 	 	$	605,750.08	 	 	 	5,167,046	 	 	 	5,520,000	 	 	$	105,750.08	 


      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
C

     

    DISCLOSURE
SCHEDULE


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
D

     

    FORM
OF KALL AGREEMENT


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
E

     

    FORM
OF KALL SECOND AMENDED AND RESTATED NOTE


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
F

     

    FORM
OF WOOZYFLY INC. REGISTRATION RIGHTS AGREEMENT


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
G

     

    FORM
OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
H

     

    FORM
OF OFFICER’S CERTIFICATE