Document:

Exhibit
      4.1

     

    NOTE
      PURCHASE AGREEMENT

     

    This
      NOTE
      PURCHASE AGREEMENT dated as of April 21, 2008 (this “Agreement”)
      by and
      among Interactive Systems Worldwide Inc., a Delaware corporation (the
“Company”),
      and
      each of the purchasers of the non-negotiable promissory notes of the Company
      whose names are set forth on Exhibit
      A
      attached
      hereto (each a “Purchaser”
and
      collectively, the “Purchasers”).

     

    The
      parties hereto agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF NOTES

     

    Section
      1.1 Purchase
      and Sale of Notes.

     

    (a) Upon
      the
      terms and conditions set forth herein, the Company agrees to issue and sell
      to
      the Purchasers, and the Purchasers, severally but not jointly, agree to purchase
      (in the amounts set forth as Exhibit A
      hereto)
      from the Company, non-negotiable 14% promissory notes due July 31, 2008
      in
      substantially the form attached hereto as Exhibit
      B
      (the
“Notes”),
      in
      the aggregate principal amount of a minimum of Fifty Thousand Dollars ($50,000)
      (the “Minimum”) and a maximum of up to Two Hundred Thirty-One Thousand Dollars
      ($231,000), at a purchase price equal to 100% of the principal amount of the
      Notes being purchased. The Company and the Purchasers are executing and
      delivering this Agreement in accordance with and in reliance upon the exemption
      from securities registration afforded by Section 4(2) of the U.S. Securities
      Act
      of 1933, as amended, and the rules and regulations promulgated thereunder (the
      “Securities
      Act”),
      including Regulation D (“Regulation
      D”),
      and/or upon such other exemption from the registration requirements of the
      Securities Act as may be available with respect to the investments to be made
      hereunder. 

     

    Section
      1.2 Closing.

     

    The
      Notes
      may be sold and funded in separate closings (each a “Closing”),
      provided that each Purchaser executes a signature page hereto and thereby agrees
      to be bound by and subject to the terms and conditions hereof. The initial
      Closing under this Agreement (the “Initial
      Closing”)
      shall
      take place on or about April 21, 2008 (the “Initial
      Closing Date”)
      and
      shall be funded in the amount of at least the Minimum. Each subsequent Closing
      under this Agreement shall take place upon the mutual agreement of the Company
      and such Purchasers, but in no event later than June
      30,
      2008 (each, a “Subsequent
      Closing Date”).
      The
      Initial Closing Date and each Subsequent Closing Date are sometimes referred
      to
      in this Agreement as the “Closing
      Date”.
      Each
      Closing shall take place at the offices of Friedman Kaplan Seiler & Adelman
      LLP (“FKSA”), 1633 Broadway (46th
      Floor),
      New York, New York 10019. At each Closing the Company shall deliver to the
      Purchasers acquiring Notes at such Closing its Notes for the principal amount
      set forth opposite the name of such Purchaser on Exhibit
      A
      hereto,
      against payment of the purchase price therefor by wire transfer to an account
      designated by the Company. The Company shall update Exhibit A hereto to reflect
      all Purchasers who have entered into this Agreement. Each Note shall be dated
      the applicable Closing Date.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
      1.3 Release
      from Escrow.

     

    Each
      Purchaser who has escrowed funds with FKSA pursuant to a letter from FKSA to
      such Purchaser, authorizes and directs FKSA to release from the escrow at the
      Initial Closing such Purchaser’s escrowed funds, for delivery to the
      Company.

     

    ARTICLE
      II

     

    REPRESENTATIONS
      AND WARRANTIES

     

    Section
      2.1 Representations
      and Warranties of the Company.

     

    The
      Company represents and warrants to the Purchasers, as of the date hereof and
      as
      of each Closing Date, that:

     

    (a) Organization,
      Good Standing and Power.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware and has the requisite corporate power
      to
      own, lease and operate its properties and assets and to conduct its business
      as
      it is now being conducted. 

     

    (b) Authorization
      and Power; Enforcement.
      The
      Company has the requisite power and authority to enter into and perform its
      obligations under this Agreement and the Notes (the “Transaction Documents”).
      The execution, delivery and performance of the Transaction Documents by the
      Company have been duly and validly authorized by all necessary corporate action.
      When executed and delivered by the Company, each of the Transaction Documents
      shall constitute valid and binding obligations of the Company enforceable
      against the Company in accordance with their terms, except as such
      enforceability may be limited by applicable bankruptcy, reorganization,
      moratorium, liquidation, conservatorship, receivership or similar laws relating
      to, or affecting generally the enforcement of, creditor's rights and remedies
      or
      by other equitable principles of general application.

     

    Section
      2.2 Representations
      and Warranties of the Purchasers.

     

    Each
      of
      the Purchasers represents and warrants to the Company with respect solely to
      itself and not with respect to any other Purchaser as of the date hereof and
      as
      of each Closing Date on which it purchases Notes, that:

     

    (a) Organization
      and Standing of the Purchasers.
      If the
      Purchaser is an entity, such Purchaser is a corporation, limited liability
      company or partnership duly incorporated or organized, validly existing and
      in
      good standing under the laws of the jurisdiction of its incorporation or
      organization and has not been organized for the specific purposes of purchasing
      the Notes and is not prohibited from doing so.

     

    (b) Authorization
      and Power; Enforcement.
      Such
      Purchaser has the requisite power and authority to enter into and perform its
      obligations under this Agreement and to purchase the Notes being sold to it
      hereunder. The execution, delivery and performance of this Agreement by such
      Purchaser has been duly authorized by all necessary corporate, partnership
      or
      limited liability company action. When executed and delivered by such Purchaser,
      this Agreement shall constitute valid and binding obligations of such Purchaser
      enforceable against such Purchaser in accordance with its terms, except as
      such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor's
      rights and remedies or by other equitable principles of general
      application.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (c) Investment
      Purpose.
      Such
      Purchaser is acquiring the Notes as principal for its own account for investment
      only and not with a view toward, or for resale in connection with, the public
      sale or distribution thereof. 

     

    (d) Accredited
      Investor Status.
      Such
      Purchaser is an “Accredited Investor” as that term is defined in Rule 501(a)(3)
      of Regulation D, as further indicated by his or its responses to the Purchaser
      Questionnaire which it has submitted to the Company.

     

    (e) Reliance
      on Exemptions.
      Such
      Purchaser understands that the Notes are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying upon
      the truth and accuracy of, and such Purchaser’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Purchaser set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Purchaser to acquire the
      Notes.

     

    (f) Information;
      Able to Bear Risk.
      Such
      Purchaser specifically acknowledges that it has read the Company’s Annual Report
      on Form 10-KSB for the year ended September 30, 2007, including without
      limitation the Risk Factors section set forth and therein, and all Current
      Reports on Form 8-K since the filing of its Annual Report on Form 10-KSB for
      the
      year ended September 30, 2007. Such Purchaser and its advisors (and/or its
      counsel, if any) have been furnished with all materials relating to the
      business, finances and operations of the Company and information which it deemed
      material to making an informed investment decision regarding its purchase of
      the
      Notes, which have been requested by such Purchaser. Such Purchaser and its
      advisors, if any, have been afforded the opportunity to ask questions of the
      Company and its management. Such Purchaser is not relying (for purposes of
      making any investment decision or otherwise) upon any advice, information,
      or
      representations from the Company, written or oral, other than the
      representations set forth in this Agreement. Such Purchaser is fully aware
      of
      the precarious financial condition of the Company and understands that such
      Purchaser’s investment in the Notes is speculative and involves an extremely
      high degree of risk, and that the Company does not currently have the financial
      resources to repay the Notes. Such Purchaser, either alone or with its
      representatives, has such knowledge, sophistication and experience in business
      and financial matters so as to be capable of evaluating the merits and risks
      of
      the prospective investment hereunder and such Purchaser is able to bear the
      economic risk of such investment, and is able to afford a complete loss of
      such
      investment. Such Purchaser is in a position regarding the Company, based upon
      employment, directorship, family relationship or economic bargaining power,
      which enabled and enables such Purchaser to obtain information from the Company
      in order to evaluate the merits and risks of this investment. Such Purchaser
      has
      sought such accounting, legal and tax advice, as it has considered necessary
      to
      make an informed investment decision with respect to its acquisition of the
      Notes. Such Purchaser is not making the investment as a result of any
      advertisement, article, notice or other communication published or broadcast
      in
      any media or any general solicitation or advertising.

    
      
         

      

      
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    (g) No
      Governmental Review.
      Such
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Notes, or the fairness or suitability of an investment in
      the
      Notes, nor have such authorities passed upon or endorsed the merits of the
      offering of the Notes.

     

    (h) Transfer
      or Resale.
      Such
      Purchaser understands that: (i) the Notes are non-negotiable and (without the
      consent of the Company) non-transferable; (ii) the Notes have not been and
      are
      not being registered under the Securities Act or any state securities laws,
      and
      (even if the Company were to consent to a transfer of the Notes) may not be
      offered for sale, sold, assigned or transferred by Purchaser unless (A)
      subsequently registered for resale thereunder, or (B) such Purchaser shall
      have
      delivered to the Company an opinion of counsel, in form, substance and scope
      acceptable to the Company, to the effect that the Notes to be sold, assigned
      or
      transferred may be sold, assigned or transferred pursuant to a specified
      exemption from such registration requirements; and (iii) neither the Company
      nor
      any other person is under any obligation to register the Notes under the
      Securities Act or any state securities laws or to comply with the terms and
      conditions of any exemption thereunder. Such Purchaser acknowledges that it
      is
      familiar with Rule 144 of the rules and regulations of the Commission, as
      amended, promulgated pursuant to the Securities Act (“Rule
      144”),
      and
      that such Purchaser has been advised that Rule 144 permits resales only under
      certain circumstances. Such Purchaser understands that to the extent that Rule
      144 is not available, such Purchaser will be unable to sell the Notes without
      either registration under the Securities Act or the existence of another
      exemption from such registration requirement. Such Purchaser understands that
      no
      public market exists or will exist for the Notes.

     

    (i) Legends.
      Such
      Purchaser understands that the Notes shall bear a restrictive legend in
      substantially the following form:

     

    THIS
      NOTE
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED
      FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF IN
      THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE NOTES UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
      AND SCOPE SATISFACTORY TO THE ISSUER OF THIS NOTE, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT.

     

    (j) Receipt
      of Documents.
      Such
      Purchaser and his or its counsel has received and read in their entirety: (i)
      the Transaction Documents; (ii) all due diligence and other information which
      it
      has requested; and (iii) answers to all questions such Purchaser submitted
      to
      the Company regarding an investment in the Company; and such Purchaser [has
      not
      been furnished any other documents, literature, memorandum or prospectus and]
      has relied only on the representations set forth in the Transaction Documents
      and on the Company’s filings with the Securities and Exchange
      Commission.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (k) No
      Legal Advice From either Company.
      Such
      Purchaser acknowledges that it had the opportunity to review this Agreement
      and
      the transactions contemplated by this Agreement with his or its own legal
      counsel and investment and tax advisors. Such Purchaser is relying solely on
      such counsel and advisors and not on any statements or representations of the
      Company or any of its representatives or agents for legal, tax or investment
      advice with respect to this investment, the transactions contemplated by this
      Agreement or the securities laws of any jurisdiction. 

     

    (l) Use
      of
      Proceeds.
      Such
      Purchaser acknowledges that it knows that a substantial portion of the proceeds
      of the sale of the Notes will be used to pay past due and current accounts
      payable of the Company.

     

    ARTICLE
      III

     

    COVENANTS

     

    The
      Company covenants with each Purchaser that:

     

    Section
      3.1 Use
      of
      Proceeds.

     

    The
      net
      proceeds from the sale of the Notes (after payment of expenses of the offering
      of the Notes, including but not limited to the Company’s legal fees) shall be
      used by the Company for working capital and general corporate purposes,
      including but not limited to payment of past due and current accounts payable
      of
      the Company.

     

    Section
      3.2 Distributions.

     

    Until
      the
      earlier of (a) payment of all principal and accrued interest on the Notes,
      or
      (b) August 1, 2008, the Company agrees that it shall not (i) declare or pay
      any
      cash dividends or make any cash distributions on its common stock or preferred
      stock or (ii) purchase or otherwise acquire for value, directly or indirectly,
      any of its outstanding common stock or preferred stock.

     

    Section
      3.3 Salary
      Increases.

     

    Until
      the
      earlier of (a) payment of all principal and accrued interest on the Notes,
      or
      (b) August 1, 2008, the Company agrees that it shall not increase the salary
      of
      any Company officer above the salary which such officer is being paid as of
      the
      date of this Agreement.

     

    Section
      3.4 Stay,
      Extension and Usury Laws.

     

    It
      shall
      not at any time insist upon, plead, or in any manner whatsoever claim or take
      the benefit or advantage of, any stay, extension or usury law or other law
      wherever enacted, now or at any time hereafter in force, that may affect the
      performance of its obligations under the Transaction Documents; and the Company
      hereby expressly (a) waives to the extent that it may lawfully do so, all
      benefit or advantage of any such law and (b) covenants that it shall not, by
      resort to any such law, hinder, delay or impede the execution of any power
      granted herein or under the Notes to the Purchasers, but shall suffer and permit
      the execution of every such power as though no such law has been
      enacted.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    ARTICLE
      IV

     

    MISCELLANEOUS

     

    Section
      4.1 Fees
      and Expenses.

     

    Each
      party shall pay the fees and expenses of its advisors, 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 and the Notes.

     

    Section
      4.2 Confidentiality
      Agreement.

     

    Each
      Purchaser agrees with the Company that any Confidentiality Agreement, previously
      signed by such Purchaser and the Company, remains in full force and effect
      and
      shall survive the Closings.

     

    Section
      4.3 Entire
      Agreement; Amendment.

     

    This
      Agreement and the Notes contain the entire understanding and agreement of the
      parties with respect to the matters covered hereby and, except as specifically
      set forth in the Transaction Documents, neither the Company nor any Purchaser
      make any representation, warranty, covenant or undertaking with respect to
      such
      matters and the Transaction Documents supersede all prior understandings and
      agreements with respect to said subject matter, all of which are merged herein.
      Any provision of this Agreement or the Notes may be waived or amended by a
      written instrument signed by the Company and Purchasers holding not less than
      662⁄3% of the aggregate principal amount of the Notes then outstanding;
provided
      that the
      maturity date and interest rate on a Note may not be changed as to a Purchaser
      without the written consent of such Purchaser. Subject to the immediately
      preceding proviso, any amendment or waiver effected in accordance with this
      Section 4.3 shall be binding upon each Noteholder and the Company. 

     

    Section
      4.4 Notices.

     

    Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      or
      express courier service delivery or by telecopy or facsimile at the address
      or
      number designated below (if delivered on a business day during normal business
      hours where such notice is to be received), or the first business day following
      such delivery (if delivered other than on a business day during normal business
      hours where such notice is to be received) or (b) on the fifth business day
      following the date of mailing, addressed to such address, or upon actual receipt
      of such mailing, whichever shall first occur. The addresses for such
      communications shall be:

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
              If
                to the Company:

               

            	
              Interactive
                Systems Worldwide Inc.

              2
                Andrews Drive

              West
                Paterson, NJ 07424

              Attention:
                Bernard Albanese

              Tel.
                No.: (973) 256-8181

              Fax
                No.: (973) 256-8211

            
	 	 
	
              With
                a copy (which copy shall not constitute notice to the Company)
                to:

            	 
	 	 
	
            	
              Friedman
                Kaplan Seiler & Adelman LLP

              1633
                Broadway

              New
                York, NY 10019

              Attention:
                Richard M. Hoffman, Esq.

              Tel.
                No.: (212) 833-1116

              Fax
                No.: (212) 833-1250

            
	 	 
	
              If
                to any Purchaser:

            	
              At
                the address or number of such Purchaser set forth on Exhibit
                A
                to
                this Agreement.

            

    

     

    Any
      party
      hereto may from time to time change its address for notices by giving written
      notice of such changed address to the other party hereto pursuant to the
      provisions of this Section 4.4.

     

    Section
      4.5 Waivers.

     

    No
      waiver
      by a party of any default with respect to any provision, condition or
      requirement of this Agreement or the Notes shall be deemed to be a continuing
      waiver in the future or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of any party to exercise
      any
      right hereunder or thereunder in any manner impair the exercise of any such
      right accruing to it thereafter.

     

    Section
      4.6 Headings.

     

    The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    Section
      4.7 Successors
      and Assigns.

     

    This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The rights and obligations under this
      Agreement may not be assigned by a Purchaser.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    Section
      4.8 No
      Third Party Beneficiaries.

     

    This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    Section
      4.9 Governing
      Law.

     

    This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be
      drafted.

     

    Section
      4.10 Survival.

     

    The
      representations and warranties of the Company and the Purchasers hereunder
      shall
      survive the Closings.

     

    Section
      4.11 Counterparts.

     

    This
      Agreement may be executed in any number of counterparts and by facsimile, all
      of
      which taken together shall constitute one and the same instrument and shall
      become effective as to the Company and a Purchaser when counterparts have been
      signed by the Company and such Purchaser and delivered by the one to the other,
      it being understood that all parties need not sign the same
      counterpart.

     

    Section
      4.12 Severability.

     

    The
      provisions of the Transaction Documents are severable and, in the event that
      any
      court of competent jurisdiction shall determine that any one or more of the
      provisions or part of the provisions contained in the Transaction Documents
      shall, for any reason, be held to be invalid, illegal or unenforceable in any
      respect, such invalidity, illegality or unenforceability shall not affect any
      other provision or part of a provision of the Transaction Documents and the
      Transaction Documents shall be reformed and construed as if such invalid or
      illegal or unenforceable provision, or part of such provision, had never been
      contained herein, so that such provisions would be valid, legal and enforceable
      to the maximum extent possible.

     

    Section
      4.13 Further
      Assurances.

     

    From
      and
      after the date of this Agreement, upon the request of the Purchasers or the
      Company, the Company and each Purchaser shall execute and deliver such
      instruments, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement and the Notes.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement
      to
      be duly executed as of the date first above written.

     

    
      	
              INTERACTIVE
                SYSTEMS WORLDWIDE INC.

            
	 
	 
	
              By:

            	
                  

            
	
            	
              Name:   
                Bernard Albanese

            
	 	
              Title:     
                Chairman of the Board, 

            
	 	
                
                President and Chief Executive Officer

            
	 
	 
	
              PURCHASER:

            
	 
	
              By:

            	
                 

            
	 	
              Name:

            
	 	
              Title: 

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      A

     

    LIST
      OF
      PURCHASERS

     

    
      	
              Names
                and Addresses (including Fax No. 
or E-Mail Address) of
                Purchasers

            	 	
              Principal
                Amount of 
Notes
                Purchased

            	 	
              Closing
                DateExhibit
      4.2

     

    THIS
      NOTE
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED
      FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF IN
      THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE NOTES UNDER THE
      SECURITIES ACT OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
      SATISFACTORY TO THE ISSUER OF THIS NOTE, THAT REGISTRATION IS NOT REQUIRED
      UNDER
      SAID ACT.

     

    INTERACTIVE
      SYSTEMS WORLDWIDE INC.

    14%
      Non-Negotiable Promissory Note

    Due
      July
      31, 2008

     

    
      	
              $______

            	
              _________,
                2008

            

    

     

    FOR
      VALUE
      RECEIVED, the undersigned, Interactive Systems Worldwide Inc., a Delaware
      corporation (the “Company”), promises to pay to __________________ (the
“Purchaser”) on July 31, 2008, the principal sum of Fifty Thousand Dollars
      ($50,000), together with accrued interest from the date hereof on the unpaid
      principal balance of this Note, at a rate per annum equal to 14%; provided
      that
      during the continuance of an Event of Default (as hereinafter defined) interest
      shall accrue on this Note at a rate per annum equal to the highest rate
      permitted by applicable law (but no more than 28% per annum).

     

    All
      payments of principal and interest shall be made by wire transfer to an account
      designated by the Purchaser to the Company in writing.

     

    The
      Company may prepay this Note, in whole or in part, at any time and from time
      to
      time, without penalty or premium, provided that (i) each such prepayment is
      accompanied by accrued interest on the amount of principal prepaid calculated
      to
      the date of such prepayment, and (ii) all Notes issued pursuant to the NPA
      (as
      hereinafter defined) are proportionately prepaid.

     

    The
      Company shall pay, on demand, all expenses, including reasonable costs of
      collection and reasonable attorneys’ fees and costs, incurred or sustained by
      the Purchaser in connection with the enforcement or protection of its rights
      under this Note.

     

    This
      Note
      is one of the Company’s Notes, which have been and are to be issued pursuant to
      the Note Purchase Agreement dated as of April 21, 2008 (the “NPA”) between the
      Company, the Purchaser and the other purchasers party thereto and is subject
      to
      the terms and conditions of, and shall be construed in accordance with the
      provisions of, the Agreement. All capitalized terms not defined herein shall
      have the meanings given to them in the Agreement.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    If
      any of
      the following events (each an “Event of Default”) shall occur and be
      continuing:

     

    (a)  the
      Company shall fail to pay when due any principal amount of or interest on the
      Notes; or

     

    (b)  the
      Company shall fail to perform or observe any obligation or covenant or term
      contained in Sections 3.1, 3.2 or 3.3 of the Agreement; or 

     

    (c)  (i)
      an
      involuntary case under any applicable bankruptcy, insolvency or other similar
      law now or hereafter in effect shall be commenced against the Company or its
      subsidiary, Global Interactive Gaming Limited (“GIG”), or a court shall enter a
      decree or order appointing a receiver, liquidator, assignee, custodian, trustee,
      sequestrator (or other similar official) of the Company or GIG, or for any
      substantial part of any of its properties, or ordering the winding-up or
      liquidation of any of its affairs, and such case shall not be dismissed in
      60
      days, or such decree or order shall remain unstayed and in effect for a period
      of 30 consecutive days; or (ii) the Company or GIG shall commence a voluntary
      case under any applicable bankruptcy, insolvency or other similar law now or
      hereafter in effect, shall consent to the entry of an order for relief in an
      involuntary case under any such law, or shall consent to the appointment of
      or
      taking possession by a receiver, liquidator, assignee, trustee, custodian,
      sequestrator (or other similar official) of the Company or GIG, or for all
      or
      any substantial part of its properties, or shall make any general assignment
      for
      the benefit of creditors, or shall fail generally to pay its debts as they
      become due, or shall take any action in furtherance of any of the
      foregoing;

     

    then
      the
      holders of not less than a majority in aggregate principal amount of the Notes
      then outstanding may by notice to the Company declare the entire outstanding
      principal of all the Notes, and all accrued and unpaid interest thereon, to
      be
      immediately due and payable, whereupon the same shall become forthwith due
      and
      payable without presentment, demand, protest or further notice of any kind,
      all
      of which are hereby expressly waived by the Company, provided
      that if
      an event described in the preceding subparagraph (c) shall occur, the
      result which would otherwise occur only upon giving of notice by Noteholders
      to
      the Company as specified in this sentence shall occur automatically, without
      the
      giving of any such notice. Additionally, the Noteholders may exercise any or
      all
      of their rights and remedies available to them under applicable
      law.

     

    The
      Company waives diligence, presentment, demand, notice of dishonor, protest
      and
      any other demands and notices in connection with the delivery, acceptance,
      performance and enforcement of this Note. The non-exercise by the Purchaser
      of
      any of its rights hereunder in any particular instance shall not constitute
      a
      waiver thereof in that or any subsequent instance.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    This
      Note
      shall be governed by, and interpreted and construed in accordance with, the
      laws
      of the State of New York (without regard to the choice of law provisions
      thereof).

     

    This
      Note
      shall not be assigned, transferred or pledged by the Purchaser without the
      express prior written consent of the Company.

     

    IN
      WITNESS WHEREOF,
      the
      Company has duly executed this Note the day and year first above
      written.

     

    
      	
              INTERACTIVE
                SYSTEMS WORLDWIDE INC.

            
	 
	 
	 
	
              By:

            	      

	 	
              Name:   
                Bernard Albanese

            
	 	
              Title:     
                Chairman of the Board,

            
	 	
                    
                President and Chief Executive
                Officer

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