SECURITIES PURCHASE AGREEMENT



         This Securities Purchase Agreement (this "Agreement") is dated as of

November 12, 2004, among Interactive Systems Worldwide Inc., a Delaware

corporation (the "Company"), and the purchasers identified on the signature

pages hereto (each, including its successors and assigns, a "Purchaser" and

collectively the "Purchasers").



         WHEREAS, subject to the terms and conditions set forth in this

Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended

(the "Securities Act") and Rule 506 promulgated thereunder, the Company desires

to issue and sell to each Purchaser, and each Purchaser, severally and not

jointly, desires to purchase from the Company, securities of the Company as more

fully described in this Agreement.



         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in

this Agreement, and for other good and valuable consideration the receipt and

adequacy of which are hereby acknowledged, the Company and each Purchaser agrees

as follows:



                                   ARTICLE I

                           DEFINITIONS; INTERPRETATION



         1.1 Definitions. In addition to the terms defined elsewhere in this

Agreement: (a) capitalized terms that are not otherwise defined herein have the

meanings given to such terms in the Certificate of Designation (as defined

herein), and (b) the following terms have the meanings indicated in this Section

1.1:



                  "Action" shall have the meaning ascribed to such term in

         Section 3.1(j).



                  "Affiliate" means any Person that, directly or indirectly

         through one or more intermediaries, controls or is controlled by or is

         under common control with a Person, as such terms are used in and

         construed under Rule 144 under the Securities Act.



                  "Capital Shares" means the Common Stock and any shares of any

         other class of common stock or preferred stock, whether now or

         hereafter authorized, having the right to participate in the

         distribution of earnings and assets of the Company.



                  "Capital Shares Equivalents" means any securities, rights or

         obligations that are convertible into or exchangeable for or give any

         right to subscribe for or purchase, directly or indirectly, any Capital

         Shares or any warrants, options or other rights to subscribe for or

         purchase, directly or indirectly, Capital Shares or any such

         convertible or exchangeable securities.





<PAGE>



                  "Certificate of Designation" means the Certificate of

         Designation to be filed prior to the Closing by the Company with the

         Secretary of State of Delaware, in the form of Exhibit A attached

         hereto.



                  "Closing" means the closing of the purchase and sale of the

         Securities pursuant to Section 2.1.



                  "Closing Date" means the date hereof.



                  "Commission" means the Securities and Exchange Commission.



                  "Common Stock" means the common stock of the Company, par

         value $0.001 per share, and any securities into which such common stock

         shall hereinafter have been reclassified into.



                  "Company Counsel" means Friedman Kaplan Seiler & Adelman LLP

         with offices at 1633 Broadway, 46th Floor, New York, New York

         10019-6708.



                  "Conversion Price" shall have the meaning ascribed to such

         term in the Certificate of Designation.



                  "Disclosure Schedules" shall have the meaning ascribed to such

term in Section 3.1 hereof.



                  "Effective Date" means the date that the initial Registration

         Statement filed by the Company pursuant to the Registration Rights

         Agreement is first declared effective by the Commission.



                  "Exchange Act" means the Securities Exchange Act of 1934, as

         amended.



                  "FW" means Feldman Weinstein LLP with offices at 420 Lexington

         Avenue, Suite 2620, New York, New York 10170-0002.



                  "GAAP" shall have the meaning ascribed to such term in Section

         3.1(h) hereof.



                  "Liens" shall have the meaning ascribed to such term in

         Section 3.1(a) hereof.



                  "Losses" means any and all losses, claims, damages,

         liabilities, settlement costs and expenses, including costs of

         preparation and reasonable attorneys' fees.



                  "Market Price" equals $2.923, subject to adjustment for

         reverse and forward stock splits, stock dividends, stock combinations

         and other similar transactions of the Common Stock that occur after the

         date of this Agreement.



                  "Material Adverse Effect" shall have the meaning assigned to

         such term in Section 3.1(b) hereof.





                                       2

<PAGE>



                  "Person" means an individual or corporation, partnership,

         trust, incorporated or unincorporated association, joint venture,

         limited liability company, joint stock company, government (or an

         agency or subdivision thereof) or other entity of any kind.



                  "Preferred Stock" means the up to 3,000 shares of the

         Company's Series B 6% Convertible Preferred Stock issued hereunder

         having the rights, preferences and privileges set forth in the

         Certificate of Designation.



                  "Principal Market" means initially the NASDAQ Small-Cap Market

         and shall also include the American Stock Exchange, the New York Stock

         Exchange, or the NASDAQ National Market, whichever is at the time the

         principal trading exchange or market for the Common Stock, based upon

         share volume.



                  "Proceeding" means an action, claim, suit, investigation or

         proceeding (including an investigation or partial proceeding, such as a

         deposition), whether commenced or threatened.



                  "Registration Rights Agreement" means the Registration Rights

         Agreement, dated the Closing Date, among the Company and the

         Purchasers, in the form of Exhibit B.



                  "Registration Statement" means a registration statement

         meeting the requirements set forth in the Registration Rights Agreement

         and covering, among other things, the resale of the Underlying Shares

         by each Purchaser as provided for in the Registration Rights Agreement.



                  "Required Approvals" shall have the meaning ascribed to such

         term in Section 3.1(e) hereof.



                  "Required Minimum" means, as of any date, the maximum

         aggregate number of shares of Common Stock then issued or potentially

         issuable in the future pursuant to the Transaction Documents, including

         any Underlying Shares issuable upon exercise or conversion in full of

         all Warrants and shares of Preferred Stock, ignoring any conversion or

         exercise limits set forth therein, and assuming that any previously

         unconverted shares of Preferred Stock are held until the third

         anniversary of the Closing Date and all dividends are paid in shares of

         Common Stock until such third anniversary, subject to the limitation on

         the number of shares of Common Stock issuable hereunder set forth in

         Section 6(d) of the Certificate of Designation.



                  "Rule 144" means Rule 144 promulgated by the Commission

         pursuant to the Securities Act, as such Rule may be amended from time

         to time, or any similar rule or regulation hereafter adopted by the

         Commission having substantially the same effect as such Rule.



                  "SEC Reports" shall have the meaning ascribed to such term in

         Section 3.1(h) hereof.





                                       3

<PAGE>



                  "Securities" means the Preferred Stock, the Warrants and the

         Underlying Shares.



                  "Securities Act" means the Securities Act of 1933, as amended.



                  "Shareholder Approval" means such approval as may be required

         by the applicable rules and regulations of the Principal Market (or any

         successor entity) from the shareholders of the Company with respect to

         the transactions contemplated by the Transaction Documents, including

         the issuance of all of the Underlying Shares in excess of 19.9% of the

         Company's issued and outstanding Common Stock on the Closing Date.



                  "Stated Value" means $1,000 per share of Preferred Stock.



                  "Subscription Amount" means, as to each Purchaser, the

         aggregate amount to be paid for the Preferred Stock and Warrants

         purchased hereunder at the Closing as specified below such Purchaser's

         name on the signature page of this Agreement and next to the heading

         "Subscription Amount", in United States Dollars and in immediately

         available funds; but excluding the exercise price of the Warrants.



                  "Subsidiary" means the subsidiaries of the Company as set

         forth on Schedule 3.1(a) attached hereto, excluding the subsidiaries on

         such Schedule which have been designated as "inactive"; provided that,

         in the event they become active in the business or finances of the

         Company, they shall thereafter be included as a Subsidiary with respect

         to any provision where applicable.



                  "Trading Day" means any day during which the Principal Market

         shall be open for business.



                  "Transaction Documents" means this Agreement, the Certificate

         of Designation, the Warrants, the Registration Rights Agreement and any

         other documents or agreements executed in connection with the

         transactions contemplated hereunder.



                  "Underlying Shares" means the shares of Common Stock issuable

         upon conversion of the Preferred Stock and upon exercise of the

         Warrants and issued and issuable in lieu of cash payment of dividends

         on the Preferred Stock.



                  "VWAP" means, for any date, the price determined by the first

         of the following clauses that applies: (a) if the Common Stock is then

         listed or quoted on a Principal Market, the daily volume weighted

         average price of the Common Stock for such date (or the nearest

         preceding date) on the Principal Market on which the Common Stock is

         then listed or quoted as reported by Bloomberg Financial L.P. (based on

         a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time);

         (b) if the Common Stock is not then listed or quoted on a Trading

         Market and if prices for the Common Stock are then quoted on the OTC

         Bulletin Board, the volume weighted average price of the Common Stock

         for such date (or the nearest preceding date) on the OTC Bulletin

         Board; (c) if the Common Stock is not then listed or quoted on the OTC

         Bulletin Board and if prices for the Common Stock are then reported in

         the "Pink Sheets" published by the National Quotation Bureau

         Incorporated (or a similar organization or agency succeeding to its

         functions of reporting prices), the most recent bid price per share of

         the Common Stock so reported prior to the day in question; or (d) in

         all other cases, the fair market value of a share of Common Stock as

         determined by an independent appraiser selected in good faith by the

         Purchasers and reasonably acceptable to the Company.





                                       4

<PAGE>



                  "Warrants" means collectively the Common Stock purchase

         warrants, in the form of Exhibit C delivered to the Purchasers at the

         Closing in accordance with Section 2.2 hereof.



                  "Warrant Shares" means the shares of Common Stock issuable

         upon exercise of the Warrants.



         1.2 Interpretation. Unless the context otherwise requires, the terms

defined in this Article 1 shall have the meanings herein specified for all

purposes of this Agreement, applicable to both the singular and plural forms of

any of the terms defined herein. When a reference is made in this Agreement to a

Section, such reference shall be to a Section of this Agreement unless otherwise

indicated. Whenever the words "include," "includes" or "including" are used in

this Agreement, they shall be deemed to be followed by the words "without

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