<PAGE>

                          AGREEMENT AND PLAN OF MERGER


                                    BETWEEN


                                INTERIORS, INC.


                                      AND


                               DECOR GROUP, INC.


                           DATED AS OF APRIL 21, 1998




<PAGE>



                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>              <C>                                                                                      <C> 
ARTICLE I - THE MERGER

SECTION 1.1.      The Merger.............................................................................. 1  
SECTION 1.2.      Closing................................................................................. 2  
SECTION 1.3.      Effective Time.......................................................................... 2  
SECTION 1.4.      Effects of the Merger................................................................... 2  
SECTION 1.5.      Certificate of Incorporation and Bylaws................................................. 2
SECTION 1.6.      Boards, Committees and Officers......................................................... 2
SECTION 1.7.      Name of the Surviving Corporation....................................................... 3
SECTION 1.8.      Reservation of Right to Revise Transaction.............................................. 3

ARTICLE II - EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
                  CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

SECTION 2.1.      Effect on Capital Stock................................................................. 3  
SECTION 2.2.      Exchange of Certificates................................................................ 4  
SECTION 2.3.      Certain Adjustments..................................................................... 7  

ARTICLE III - REPRESENTATIONS AND WARRANTIES

SECTION 3.1.      Representations and Warranties of Decor................................................. 7
                  (a) Organization, Standing and Corporate Power.......................................... 7
                  (b) Subsidiaries........................................................................ 8  
                  (c) Capital Structure................................................................... 8  
                  (d) Authority; Noncontravention......................................................... 9
                  (e) SEC Documents; Undisclosed Liabilities..............................................10
                  (f) Information Supplied................................................................11
                  (g) Absence of Certain Changes or Events................................................11
                  (h) Compliance with Applicable Laws; Litigation.........................................12
                  (i) Absence of Changes in Benefit Plans.................................................13 
                  (j) ERISA Compliance....................................................................13 
                  (k) Taxes...............................................................................15 
                  (l) Voting Requirements.................................................................15 
                  (m) State Takeover Statutes.............................................................15 
                  (n) Accounting Matters..................................................................16 
                  (o) Brokers.............................................................................16 
                  (p) Opinion of Financial Advisor........................................................16 
                  (q) Ownership of Interiors Common Stock.................................................16
                  (r) Intellectual Property...............................................................16 
                  (s) Certain Contracts...................................................................17 



                                                         i

<PAGE>

                                                                                                      PAGE

SECTION 3.2.      Representations and Warranties of Interiors..........................................17
                  (a) Organization, Standing and Corporate Power.......................................17
                  (b) Subsidiaries.....................................................................18 
                  (c) Capital Structure................................................................18 
                  (d) Authority; Noncontravention......................................................19 
                  (e) SEC Documents; Undisclosed Liabilities...........................................20
                  (f) Information Supplied.............................................................21 
                  (g) Absence of Certain Changes or Events.............................................21
                  (h) Compliance with Applicable Laws; Litigation..................................... 22
                  (i) Absence of Changes in Benefit Plans..............................................22
                  (j) ERISA Compliance.................................................................23 
                  (k) Taxes............................................................................24 
                  (l) Voting Requirements..............................................................24 
                  (m) State Takeover Statutes..........................................................25 
                  (n) Accounting Matters...............................................................25 
                  (o) Brokers..........................................................................25 
                  (p) Opinion of Financial Advisor.....................................................25 
                  (q) Ownership of Decor Common Stock..................................................26
                  (r) Intellectual Property............................................................26 
                  (s) Certain Contracts................................................................26 

ARTICLE IV - COVENANTS RELATING TO CONDUCT OF BUSINESS

SECTION 4.1.      Conduct of Business..................................................................27 
SECTION 4.2.      No Solicitation by Decor.............................................................30
SECTION 4.3.      No Solicitation by Interiors.........................................................32

ARTICLE V - ADDITIONAL AGREEMENTS

SECTION 5.1.      Preparation of the Form S-4 and the Joint Proxy Statement;
                     Stockholders Meetings.............................................................34
SECTION 5.2.      Letters of Decor's Accountants.......................................................35
SECTION 5.3.      Letters of Interiors's Accountants...................................................35
SECTION 5.4.      Access to Information; Confidentiality...............................................36
SECTION 5.5.      Best Efforts.........................................................................36
SECTION 5.6.      Stock Options........................................................................37
SECTION 5.7.      Decor Stock Plans and Certain Employee Matters.......................................38
SECTION 5.8.      Indemnification, Exculpation and Insurance...........................................38
SECTION 5.9.      Fees and Expenses....................................................................39
SECTION 5.10.     Public Announcements.................................................................40
SECTION 5.11.     Affiliates...........................................................................40  

                                                        ii

<PAGE>




                                                                                                         PAGE

SECTION 5.12.     Nasdaq Listing..........................................................................40  
SECTION 5.13.     Stockholder Litigation..................................................................41  
SECTION 5.14.     Tax Treatment...........................................................................41  
SECTION 5.15.     Purchase Method of Accounting...........................................................41
SECTION 5.16.     Standstill Agreements; Confidentiality Agreement........................................41
SECTION 5.17.     Company Officers; Employment Contracts; Equity Awards...................................41
SECTION 5.18.     Post-Merger Operations..................................................................42  
SECTION 5.19.     Conveyance Taxes........................................................................42  
SECTION 5.20.     Transition Planning.....................................................................42  

ARTICLE VI - CONDITIONS PRECEDENT

SECTION 6.1.      Conditions to Each Party's Obligation to Effect the Merger .............................43
SECTION 6.2.      Conditions to Obligations of Interiors..................................................44
SECTION 6.3.      Conditions to Obligations of Decor......................................................45
SECTION 6.4.      Frustration of Closing Conditions.......................................................46

ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER

SECTION 7.1.      Termination.............................................................................46  
SECTION 7.2.      Effect of Termination...................................................................47  
SECTION 7.3.      Amendment...............................................................................47  
SECTION 7.4.      Extension; Waiver.......................................................................47  
SECTION 7.5.      Procedure for Termination, Amendment, Extension or Waiver ..............................48

ARTICLE VIII - GENERAL PROVISIONS

SECTION 8.1.      Nonsurvival of Representations and Warranties...........................................48
SECTION 8.2.      Notices.................................................................................48  
SECTION 8.3.      Definitions.............................................................................49  
SECTION 8.4.      Interpretation..........................................................................50  
SECTION 8.5.      Counterparts............................................................................50  
SECTION 8.6.      Entire Agreement; No Third-Party Beneficiaries..........................................50
SECTION 8.7.      Governing Law...........................................................................50  
SECTION 8.8.      Assignment..............................................................................50  
SECTION 8.9.      Consent to Jurisdiction.................................................................50  
SECTION 8.10.     Headings................................................................................51  
SECTION 8.11.     Severability............................................................................51  

EXHIBITS

Exhibit A- Form of Corporate Resolutions
</TABLE>


                                                        iii

<PAGE>




         AGREEMENT AND PLAN OF MERGER dated as of April 21, 1998, between
INTERIORS, INC., a Delaware corporation ("Interiors"), and DECOR GROUP, INC., a
Delaware corporation ("Decor").

         WHEREAS, the respective Boards of Directors of Interiors and Decor
have each approved the merger of Decor with and into Interiors (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $.0001 per
share, of Decor ("Decor Common Stock"), other than shares owned by Interiors or
Decor, will be converted into the right to receive the Merger Consideration (as
defined in Section 1.8); and

         WHEREAS, the respective Boards of Directors of Interiors and Decor
have each determined that the Merger and the other transactions contemplated
hereby are consistent with, and in furtherance of, their respective business
strategies and goals and are in the best interests of their respective
stockholders; and

         WHEREAS, Interiors and Decor desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and

         WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").

         NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:


                                   ARTICLE I

                                   THE MERGER

SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Decor shall be merged with and into Interiors at the Effective
Time (as defined in Section 1.3). Following the Effective Time, Interiors shall
be the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Decor in accordance with the DGCL.

SECTION 1.2. CLOSING. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date to be specified by the parties (the "Closing Date"),
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VI, unless

                                       1

<PAGE>



another time or date is agreed to by the parties hereto. The Closing will be
held at such location in the City of New York as is agreed to by the parties
hereto.

SECTION 1.3. EFFECTIVE TIME. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the parties shall cause the Merger to
be consummated by filing a certificate of merger or other appropriate documents
(in any such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of Delaware, or
at such subsequent date or time as Interiors and Decor shall agree and specify
in the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").

SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 259 of the DGCL.

SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. The Certificate of Incorporation of Interiors, as amended in
accordance with the terms of the Merger and the transactions contemplated
thereby which shall be in effect immediately prior to the Effective Time, shall
be the Certificate of Incorporation of the Surviving Corporation (the
"Surviving Certificate of Incorporation" or the "Certificate of Amendment").
The bylaws of Interiors, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation (the "Surviving Bylaws").

SECTION 1.6. BOARDS, COMMITTEES AND OFFICERS. Prior to the Effective Time,
Interiors shall adopt resolutions in the form attached hereto as part of
Exhibit A, establishing the Board of Interiors and committees thereof from and
after the Effective Time. From and after the Effective Time, the members of the
Board of Directors, the committees of the Board of Directors, the composition
of such committees (including chairmen thereof) and the officers of the
Surviving Corporation shall be as set forth on or designated in accordance with
the Surviving Certificate of Incorporation, the Surviving Bylaws and Exhibit A
hereto until the earlier of the resignation or removal of any individual set
forth on or designated in accordance with the Surviving Certificate of
Incorporation, the Surviving Bylaws and Exhibit A or until their respective
successors are duly elected and qualified, as the case may be, or until as
otherwise provided in the Surviving Certificate of Incorporation, the Surviving
Bylaws and Exhibit A. If any officer set forth on or designated in accordance
with Exhibit A ceases to be a full-time employee of either Decor or Interiors
at or before the Effective Time, Interiors, in the case of any such employee of
Interiors on the date hereof or any such employee to be designated by
Interiors, or Decor, in the case of any such employee of Decor on the date
hereof or any such employee to be designated by Decor, shall designate another
person to serve in such person's stead.

SECTION 1.7. NAME OF THE SURVIVING CORPORATION. The name of the Surviving
Corporation shall be Interiors, Inc.

                                       2

<PAGE>




SECTION 1.8. RESERVATION OF RIGHT TO REVISE TRANSACTION. If each of Decor and
Interiors agree, the parties hereto may change the method of effecting the
business combination between Interiors and Decor, and each party shall
cooperate in such efforts, including to provide for (a) a merger of a wholly
owned subsidiary of Interiors with and into Decor, or (b) a merger of Decor
with and into a wholly owned subsidiary of Interiors; provided, however, that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of Decor Common Stock as provided for in this Agreement
(the "Merger Consideration").


                                   ARTICLE II

                   EFFECT OF THE MERGER ON THE CAPITAL STOCK
                        OF THE CONSTITUENT CORPORATIONS;
                            EXCHANGE OF CERTIFICATES


SECTION 2.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Decor Common Stock:

                  (a) CANCELLATION OF STOCK. Each share of capital stock of
Interiors that is owned by Decor, and each share of capital stock of Decor
owned by Interiors, shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.

                  (b) CONVERSION OF DECOR COMMON STOCK. Subject to Section
2.2(e), each issued and outstanding share of Decor Common Stock (other than
shares to be canceled in accordance with Section 2.1(a)) shall be converted
into the right to receive $1.50 (the "Exchange Ratio") validly issued, fully
paid and nonassessable shares of Class A common stock, par value $.001 per
share ("Interiors Class A Common Stock"), of Interiors. As of the Effective
Time, all such shares of Decor Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Decor Common Stock
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration and any cash in lieu of fractional shares of
Interiors Class A Common Stock to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 2.2, without
interest.

                  (c) DECOR WARRANTS. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, each
outstanding warrant to purchase shares of Decor Common Stock (a "Warrant")
shall remain outstanding, unchanged by reason of the Merger, except that, in
accordance with the adjustment provisions thereof, each such Warrant shall no
longer be exercisable for Decor Common Stock but shall thereafter be
exercisable for that whole number of Interiors Class A Common Stock and cash in
lieu of fractional share interests as the

                                       3

<PAGE>



holder thereof would have been entitled to receive pursuant to the Merger had
such holder exercised such Warrant in full immediately prior to the Effective
Time, at a price per share of Interiors Class A Common Stock equal to (i) the
aggregate exercise price for the Decor Common Stock purchasable pursuant to
such Warrant immediately prior to the Effective Time divided by (ii) the number
of shares of Interiors Class A Common Stock deemed purchasable pursuant to such
Warrant (the aggregate number of shares of Interiors Class A Common Stock
issuable upon exercise of all such outstanding Warrants). Interiors shall
comply with the terms and provisions of all such Warrants.

SECTION 2.2.  EXCHANGE OF CERTIFICATES.

                  (a) EXCHANGE AGENT. As of the Effective Time, Interiors shall
enter into an agreement with such bank or trust company or transfer agent as
may be designated by Interiors and reasonably satisfactory to Decor (the
"Exchange Agent"), which shall provide that Interiors shall deposit with the
Exchange Agent as of the Effective Time, for the benefit of the holders of
shares of Decor Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates representing the shares of Interiors
Class A Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding shares of Decor Common Stock.

                  (b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, but no more than ten (10) days after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding shares of Decor Common Stock (the "Certificates") whose shares were
converted into the right to receive the Merger Consideration pursuant to
Section 2.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Interiors and Decor may reasonably
specify) and (ii) instructions for use in surrendering the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Interiors Class A Common Stock which such holder has the right to receive
pursuant to the provisions of this Article II, and cash in lieu of any
fractional share of Interiors Class A Common Stock in accordance with Section
2.2(e), and the Certificate so surrendered shall forthwith be canceled (such
cash and Interiors Class A Common Stock deposited with the Exchange Agent for
the purpose of the Merger, collectively, the "Exchange Fund"). In the event of
a surrender of a Certificate representing shares of Decor Common Stock which
are not registered in the transfer records of Decor under the name of the
person surrendering such Certificate, a certificate representing the proper
number of shares of Interiors Class A Common Stock may be issued to a person
other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other taxes required by reason of the issuance

                                       4

<PAGE>



of shares of Interiors Class A Common Stock to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Interiors that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration which the holder thereof has the right to
receive in respect of such Certificate pursuant to the provisions of this
Article II, and cash in lieu of any fractional share of Interiors Class A
Common Stock in accordance with Section 2.2(e). No interest shall be paid or
will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article II.

                  (c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Interiors Class A Common Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Interiors Class A
Common Stock represented thereby, and, in the case of Certificates representing
Decor Common Stock, no cash payment in lieu of fractional shares shall be paid
to any such holder pursuant to Section 2.2(e), and all such dividends, other
distributions and cash in lieu of fractional shares of Interiors Class A Common
Stock shall be paid by Interiors to the Exchange Agent for payment to holders
of Decor Common Stock, in each case until the surrender of such Certificate in
accordance with this Article II. Subject to the effect of applicable escheat or
similar laws, following surrender of any such Certificate there shall be paid
to the holder of the certificate representing whole shares of Interiors Class A
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Interiors Class A Common Stock and, in the case of Certificates
representing Decor Common Stock, the amount of any cash payable in lieu of a
fractional share of Interiors Class A Common Stock to which such holder is
entitled pursuant to Section 2.2(e) and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time and with a payment date subsequent to such surrender payable
with respect to such whole shares of Interiors Class A Common Stock.

                   (d) NO FURTHER OWNERSHIP RIGHTS IN DECOR COMMON STOCK. All
shares of Interiors Class A Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms of this Article II (including any
cash paid pursuant to this Article II) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to the shares of Decor
Common Stock, theretofore represented by such Certificates, subject, however,
to the Surviving Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which may
have been declared or made by Decor on such shares of Decor Common Stock which
remain unpaid at the Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Decor Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II, except as otherwise
provided by law.

                                       5

<PAGE>




                  (e) NO FRACTIONAL SHARES. (i) No certificates or scrip
representing fractional shares of Interiors Class A Common Stock shall be
issued upon the surrender for exchange of Certificates, no dividend or
distribution of Interiors shall relate to such fractional share interests and
such fractional share interests will not entitle the owner thereof to vote or
to any rights of a stockholder of Interiors.

         (ii) The Surviving Corporation shall pay each former holder of Decor
Common Stock an amount in cash equal to the product obtained by multiplying (A)
the fractional share interest to which such former holder (after taking into
account all shares of Decor Common Stock held at the Effective Time by such
holder) would otherwise be entitled by (B) the Exchange Ratio.

         (iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates formerly representing Decor
Common Stock with respect to any fractional share interests, the Exchange Agent
shall make available such amounts to such holders of Certificates formerly
representing Decor Common Stock subject to and in accordance with the terms of
Section 2.2(c).

                  (f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Interiors, upon demand,
and any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Interiors for payment of their claim
for Merger Consideration, any dividends or distributions with respect to
Interiors Class A Common Stock and any cash in lieu of fractional shares of
Interiors Class A Common Stock.

                  (g) NO LIABILITY. None of Interiors, Decor, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Interiors Class A Common Stock, any dividends or distributions
with respect thereto, any cash in lieu of fractional shares of Interiors Class
A Common Stock or any cash from the Exchange Fund, in each case delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.

                  (h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Interiors, on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Interiors.

                  (i) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration and, if

                                       6

<PAGE>



applicable, any unpaid dividends and distributions on shares of Interiors Class
A Common Stock deliverable in respect thereof and any cash in lieu of
fractional shares, in each case pursuant to this Agreement.

SECTION 2.3. CERTAIN ADJUSTMENTS. If between the date hereof and the Effective
Time, the outstanding shares of Decor Common Stock or of Interiors Class A
Common Stock shall be changed into a different number of shares by reason of
any reclassification, recapitalization, split-up, combination or exchange of
shares, or any dividend payable in stock or other securities shall be declared
thereon with a record date within such period, the Exchange Ratio shall be
adjusted accordingly to provide to the holders of Decor Common Stock the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or
dividend.

SECTION 2.4. PREFERRED SHARES OF DECOR. Prior to the Effective Date the Decor
Series A Preferred will be converted into Decor Common Stock and treated in the
same manner as set forth in Section 2.1 hereof. At the Effective Date the Decor
Series B Preferred will be canceled.


                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF DECOR. Except as disclosed in
the Decor Filed SEC Documents (as defined in Section 3.1(g)) or as set forth on
the Disclosure Schedule delivered by Decor to Interiors prior to the execution
of this Agreement (the "Decor Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is being taken,
Decor represents and warrants to Interiors as follows:

                  (a) ORGANIZATION, STANDING AND CORPORATE POWER. (i) Each of
Decor and its subsidiaries (as defined in Section 8.3) is a corporation or
other legal entity duly organized, validly existing and in good standing (with
respect to jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite corporate or other
power, as the case may be, and authority to carry on its business as now being
conducted, except, as to subsidiaries, for those jurisdictions where the
failure to be so organized, existing or in good standing individually or in the
aggregate would not have a material adverse effect (as defined in Section 8.3)
on Decor. Each of Decor and its subsidiaries is duly qualified or licensed to
do business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing individually
or in the aggregate would not have a material adverse effect on Decor.

         (ii) Decor has delivered to Interiors prior to the execution of this
Agreement complete

                                                         7

<PAGE>



and correct copies of its Certificate of Incorporation and Bylaws, as amended
to date.

         (iii) In all material respects, the minute books of Decor contain
accurate records of all meetings and accurately reflect all other actions taken
by the stockholders, the Board of Directors and all committees of the Board of
Directors of Decor since inception.

                  (b) SUBSIDIARIES. All the outstanding shares of capital stock
of, or other equity interests in, each such subsidiary have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly by
Decor, free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens") and
free of any other restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership interests).

                  (c) CAPITAL STRUCTURE. The authorized capital stock of Decor
consists of 20,000,000 shares of Decor Common Stock and 35,000,000 shares of
preferred stock, par value $.0001 per share ("Decor Preferred Stock"),
5,000,000 shares of which have been designated as "Series A Convertible
Preferred Stock"; 20,000,000 shares of which have been designated as "Series B
Non-Convertible Preferred Stock"; and 1,000,000 shares of which have been
designated as "Series C Convertible Preferred Stock" (together with the Series
A Convertible Preferred Stock, the "Decor Convertible Securities") At the close
of business on December 31, 1997 (i) 1,709,176 shares of Decor Common Stock
were issued and outstanding; (ii) no shares of Decor Common Stock were held by
Decor in its treasury; (iii) 250,000 shares of Series A Convertible Preferred
Stock were issued and outstanding; (iv) 20,000,000 shares of Series B
Non-Convertible Preferred Stock were issued and outstanding; (v) 54,934 shares
of Series C Convertible Preferred Stock were issued and outstanding; (vi)
83,333 shares of Decor Common Stock were reserved for issuance pursuant to the
Decor 1996 Stock Plan, complete and correct copies of which have been delivered
to Interiors (such plans, collectively, the "Decor Stock Plans"); (vii)
1,500,000 shares of Decor Common Stock were reserved for issuance upon the
exercise of 1,500,000 Class A Warrants ; (viii) 250,000 shares of Decor Common
Stock were reserved for issuance upon the conversion of 250,000 shares of
Series A Convertible Preferred Stock ; (ix) 54,934 shares of Decor Common Stock
were reserved for issuance upon the conversion of 54,934 shares of Series C
Convertible Preferred Stock. Section 3.1(c) of the Decor Disclosure Schedule
sets forth a complete and correct list, as of March 31, 1998, of the number of
shares of Decor Common Stock subject to employee stock options or other rights
to purchase or receive Decor Common Stock granted under the Decor Stock Plans
(collectively, "Decor Employee Stock Options"), the dates of grant and exercise
prices thereof. All outstanding shares of capital stock of Decor are, and all
shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth in this Section 3.1(c), Section 3.1(c) of the Decor
Disclosure Schedule and except for changes since March 31, 1998 resulting from
the issuance of shares of Decor Common Stock pursuant to the Decor Employee
Stock Options, the Decor Convertible Securities or as permitted by Section
4.1(a)(i)(y) and 4.1(a)(ii), (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of
Decor, (B) any securities

                                       8

<PAGE>



of Decor or any Decor subsidiary convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of Decor, (C) any
warrants, calls, options or other rights to acquire from Decor or any Decor
subsidiary, and any obligation of Decor or any Decor subsidiary to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of Decor, and (y) there
are no outstanding obligations of Decor or any Decor subsidiary to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or sell,
or cause to be issued, delivered or sold, any such securities. There are no
outstanding (A) securities of Decor or any Decor subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Decor subsidiary, (B) warrants, calls,
options or other rights to acquire from Decor or any Decor subsidiary, and any
obligation of Decor or any Decor subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Decor subsidiary or (C) obligations of Decor or any
Decor subsidiary to repurchase, redeem or otherwise acquire any such
outstanding securities of Decor subsidiaries or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. Neither Decor nor
any Decor subsidiary is a party to any agreement restricting the transfer of,
relating to the voting of, requiring registration of, or granting any
preemptive or, except as provided by the terms of the Decor Employee Stock
Options and the Decor Convertible Securities, antidilutive rights with respect
to, any securities of the type referred to in the two preceding sentences.
Other than the Decor subsidiaries and the shares of capital stock of Interiors
held by Decor, Decor does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity except
for non-controlling investments made in the ordinary course of business in
entities which are not individually or in the aggregate material to Decor and
its subsidiaries as a whole.

                  (d) AUTHORITY; NONCONTRAVENTION. Decor has all requisite
corporate power and authority to enter into this Agreement and, subject, in the
case of the Merger, to the Decor Stockholder Approval (as defined in Section
3.1(l)) to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Decor and the consummation by Decor
of the transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Decor, subject, in the case of
the Merger, to the Decor Stockholder Approval. This Agreement has been duly
executed and delivered by Decor and, assuming the due authorization, execution
and delivery by Interiors, constitutes the legal, valid and binding obligation
of Decor, enforceable against Decor in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Decor or any of its subsidiaries under, (i) the
certificate of incorporation or bylaws of Decor or the comparable
organizational documents of any of its subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or

                                       9

<PAGE>



other agreement, instrument, permit, concession, franchise, license or similar
authorization applicable to Decor or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Decor or any
of its subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate would not (x)
have a material adverse effect on Decor or (y) reasonably be expected to impair
the ability of Decor to perform its obligations under this Agreement. No
consent, approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental agency,
commission or authority or any nongovernmental self-regulatory agency,
commission or authority (a "Governmental Entity") is required by or with
respect to Decor or any of its subsidiaries in connection with the execution
and delivery of this Agreement by Decor or the consummation by Decor of the
transactions contemplated by this Agreement, except for (1) the filing with the
SEC of (A) a proxy statement relating to the Decor Stockholders Meeting (as
defined in Section 5.1(b)) (such proxy statement, together with the proxy
statement relating to the Interiors Stockholders Meeting (as defined in Section
5.1(c)), in each case as amended or supplemented from time to time, the "Joint
Proxy Statement"), and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as may be required in connection with this Agreement and the transactions
contemplated by this Agreement; (2) the filing of the Certificate of Merger
with the Secretary of State of Delaware and appropriate documents with the
relevant authorities of other states in which Decor is qualified to do business
and such filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; and (3) such consents,
approvals, orders or authorizations the failure of which to be made or obtained
individually or in the aggregate would not (x) have a material adverse effect
on Decor or (y) reasonably be expected to impair the ability of Decor to
perform its obligations under this Agreement.

                  (e) SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Decor has filed
all required registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC since November 12, 1996 (the "Decor SEC
Documents"). As of their respective dates, the Decor SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Decor SEC Documents, and none of the Decor SEC Documents when filed contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Decor included in the Decor SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by Form 10-QSB of the SEC) applied on a consistent basis during
the periods involved (except as

                                       10

<PAGE>



may be indicated in the notes thereto) and fairly present the consolidated
financial position of Decor and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended. Except (i) as reflected in such financial statements or in
the notes thereto or (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, neither Decor nor any of its
subsidiaries has any liabilities or obligations of any nature which,
individually or in the aggregate, would have a material adverse effect on
Decor.

                  (f) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Decor specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Interiors in connection with the issuance of Interiors Class A Common
Stock in the Merger (the "Form S-4") will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) the Joint Proxy
Statement will, at the date it is first mailed to Decor's stockholders or at
the time of the Decor Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by Decor with respect to statements made or
incorporated by reference therein based on information supplied by Interiors
specifically for inclusion or incorporation by reference in the Joint Proxy
Statement.


                  (g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby and except as permitted by Section 4.1(a) or set forth in
Section 3.1(g) of the Decor Disclosure Schedule, since September 30, 1997,
Decor and its subsidiaries have conducted their business only in the ordinary
course or as disclosed in any Decor SEC Document filed since such date and
prior to the date hereof, and there has not been (i) any material adverse
change (as defined in Section 8.3) in Decor, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of Decor's capital stock, (iii) any split,
combination or reclassification of any of Decor's capital stock or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of or substitution for shares of Decor's capital stock, except for
issuances of Decor Common Stock upon conversion of Decor Convertible Securities
or upon the exercise of Decor Employee Stock Options, in each case awarded
prior to the date hereof in accordance with their present terms or issued
pursuant to Section 4.1(a), (iv)(A) any granting by Decor or any of its
subsidiaries to any current or former director, executive officer or other key
employee of Decor or its subsidiaries of any increase in compensation, bonus or
other benefits, except for normal increases as a result of promotions, normal
increases of base pay in the ordinary course of business or as was required
under any employment agreements in effect as of September 30, 1997, (B) any
granting by Decor or any of

                                       11

<PAGE>



its subsidiaries to any such current or former director, executive officer or
key employee of any increase in severance or termination pay, or (C) any entry
by Decor or any of its subsidiaries into, or any amendment of, any employment,
deferred compensation, consulting, severance, termination or indemnification
agreement with any such current or former director, executive officer or key
employee, (v) except insofar as may have been disclosed in Decor SEC Documents
filed and publicly available prior to the date of this Agreement (as amended to
the date hereof, the "Decor Filed SEC Documents") or required by a change in
GAAP, any change in accounting methods, principles or practices by Decor
materially affecting its assets, liabilities or business, (vi) except insofar
as may have been disclosed in the Decor Filed SEC Documents, any tax election
that individually or in the aggregate would have a material adverse effect on
Decor or any of its tax attributes or any settlement or compromise of any
material income tax liability, or (vii) any action taken by Decor or any of the
Decor subsidiaries during the period from September 30, 1997 through the date
of this Agreement that, if taken during the period from the date of this
Agreement through the Effective Time would constitute a breach of Section
4.1(a).

                  (h) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION. (i) Decor,
its subsidiaries and employees hold all permits, licenses, variances,
exemptions, orders, registrations and approvals of all Governmental Entities
which are required for the operation of the businesses of Decor and its
subsidiaries (the "Decor Permits"), except where the failure to have any such
Decor Permits individually or in the aggregate would not have a material
adverse effect on Decor. Decor and its subsidiaries are in compliance with the
terms of the Decor Permits and all applicable statutes, laws, ordinances, rules
and regulations, except where the failure so to comply individually or in the
aggregate would not have a material adverse effect on Decor. As of the date of
this Agreement, except as disclosed in the Decor Filed SEC Documents, no
action, demand, requirement or investigation by any Governmental Entity and no
suit, action or proceeding by any person, in each case with respect to Decor or
any of its subsidiaries or any of their respective properties is pending or, to
the knowledge (as defined in Section 8.3) of Decor, threatened, other than, in
each case, those the outcome of which individually or in the aggregate would
not (A) have a material adverse effect on Decor or (B) reasonably be expected
to impair the ability of Decor to perform its obligations under this Agreement
or prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.

         (ii) Neither Decor nor any Decor subsidiary is subject to any
outstanding order, injunction or decree which has had or, insofar as can be
reasonably foreseen, individually or in the aggregate will have a material
adverse effect on Decor.

                  (i) ABSENCE OF CHANGES IN BENEFIT PLANS. Decor has delivered
to Interiors true and complete copies of (i) all severance and employment
agreements of Decor with directors, executive officers or key employees, (ii)
all severance programs and policies of each of Decor and each Decor subsidiary,
and (iii) all plans or arrangements of Decor and each Decor subsidiary relating
to its employees which contain change in control provisions. Since September
30, 1997, there has not been any adoption or amendment in any material respect
by Decor or any of its subsidiaries of any collective bargaining agreement,
employment agreement, consulting

                                       12

<PAGE>



agreement, severance agreement or any material bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
providing benefits to any current or former employee, officer or director of
Decor or any of its wholly owned subsidiaries (collectively, the "Decor Benefit
Plans"), or any material change in any actuarial or other assumption used to
calculate funding obligations with respect to any Decor pension plans, or any
material change in the manner in which contributions to any Decor pension plans
are made or the basis an which such contributions are determined.

                  (j) ERISA COMPLIANCE. (i) With respect to the Decor Benefit
Plans, no event has occurred and, to the knowledge of Decor, there exists no
condition or set of circumstances, in connection with which Decor or any of its
subsidiaries could be subject to any liability that individually or in the
aggregate would have a material adverse effect on Decor under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code or any
other applicable law.

         (ii) Each Decor Benefit Plan has been administered in accordance with
its terms, except for any failures so to administer any Decor Benefit Plan that
individually or in the aggregate would not have a material adverse effect on
Decor. Decor, its subsidiaries and all the Decor Benefit Plans have been
operated, and are, in compliance with the applicable provisions of ERISA, the
Code and all other applicable laws and the terms of all applicable collective
bargaining agreements, except for any failures to be in such compliance that
individually or in the aggregate would not have a material adverse effect on
Decor. Each Decor Benefit Plan that is intended to be qualified under Section
401(a) or 401(k) of the Code has received a favorable determination letter from
the IRS that it is so qualified and each trust established in connection with
any Decor Benefit Plan that is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that such trust is so exempt. To the knowledge of Decor, no fact
or event has occurred since the date of any determination letter from the IRS
which is reasonably likely to affect adversely the qualified status of any such
Decor Benefit Plan or the exempt status of any such trust.

         (iii) Neither Decor nor any of its subsidiaries has incurred any
unsatisfied liability under Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course). No Decor Benefit Plan has incurred an "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code) whether
or not waived. To the knowledge of Decor, there are not any facts or
circumstances that would materially change the funded status of any Decor
Benefit Plan that is a "defined benefit" plan (as defined in Section 3(35) of
ERISA) since the date of the most recent actuarial report for such plan. No
Decor Benefit Plan is a "multiemployer plan" within the meaning of Section
3(37) of ERISA.

          (iv) With respect to each of the Decor Benefit Plans (other than any
multiemployer plan)

                                       13

<PAGE>



that is subject to Title IV of ERISA, the present value of accrued benefits
under each such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan, did not, as of its latest valuation date, exceed the
then current value of the aggregate assets of such plans allocable to such
accrued benefits in any material respect. With respect to any Decor Benefit
Plan that is a multiemployer plan, (A) none of Decor nor any of its
subsidiaries has any contingent liability under Section 4204 of ERISA, and no
circumstances exist that present a material risk that any such plan will go
into reorganization, and (B) the aggregate withdrawal liability of Decor and
its subsidiaries, computed as if a complete withdrawal by Decor and any of its
subsidiaries had occurred under each such Decor Benefit Plan on the date
hereof, would not be material.

         (v) No Decor Benefit Plan provides medical benefits (whether or not
insured), with respect to current or former employees after retirement or other
termination of service (other than coverage mandated by applicable law or
benefits, the full cost of which is borne by the current or former employee)
other than individual arrangements the amounts of which are not material.

         (vi) As of the date of this Agreement, neither Decor nor any of its
subsidiaries is a party to any collective bargaining or other labor union
contract applicable to persons employed by Decor or any of its subsidiaries and
no collective bargaining agreement is being negotiated by Decor or any of its
subsidiaries. As of the date of this Agreement, there is no labor dispute,
strike or work stoppage against Decor or any of its subsidiaries pending or, to
the knowledge of Decor, threatened which may interfere with the respective
business activities of Decor or any of its subsidiaries, except where such
dispute, strike or work stoppage individually or in the aggregate would not
have a material adverse effect on Decor. As of the date of this Agreement, to
the knowledge of Decor, none of Decor, any of its subsidiaries or any of their
respective representatives or employees has committed any material unfair labor
practice in connection with the operation of the respective businesses of Decor
or any of its subsidiaries, and there is no material charge or complaint
against Decor or any of its subsidiaries by the National Labor Relations Board
or any comparable governmental agency pending or threatened in writing.

         (vii) No employee of Decor will be entitled to any material payment,
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any Decor Benefit Plan as a result of the transactions
contemplated by this Agreement (either alone or in conjunction with any other
event such as a termination of employment), except that all Decor Employee
Stock Options will vest as of the Effective Time as a result of the Merger.

         (k) TAXES. (i) Each of Decor and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all such
returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to file,
to be complete or correct or to have extensions granted that remain in effect
individually or in the aggregate would not have a material adverse effect on
Decor. Decor and each of its subsidiaries has paid (or Decor has paid on its
behalf) all taxes (as defined herein) shown as due on such returns, and the
most

                                       14

<PAGE>



recent financial statements contained in the Decor Filed SEC Documents reflect
an adequate reserve in accordance with GAAP for all taxes payable by Decor and
its subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements.

         (ii) No deficiencies for any taxes have been proposed, asserted or
assessed against Decor or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
would not have a material adverse effect on Decor. No federal income tax
returns of Decor and each of its subsidiaries consolidated in such returns have
closed by virtue of the applicable statute of limitations.

         (iii) Neither Decor nor any of its subsidiaries has taken any action
or knows of any fact, agreement, plan or other circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.

         (iv) As used in this Agreement, "taxes" shall include all (x) federal,
state, local or foreign income, property, sales, excise and other taxes or
similar governmental charges, including any interest, penalties or additions
with respect thereto, (y) liability for the payment of any amounts of the type
described in (x) as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (z) liability for the payment of any amounts as
a result of being party to any tax sharing agreement or as a result of any
express or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or (y).

                  (l) VOTING REQUIREMENTS. The affirmative vote at the Decor
Stockholders Meeting (the "Decor Stockholder Approval") of the holders of a
majority of the total votes represented by all outstanding shares of Decor
Common Stock and Series B Non-Convertible Preferred Stock to adopt this
Agreement is the only vote of the holders of any class or series of Decor's
capital stock necessary to approve and adopt this Agreement and the
transactions contemplated hereby, including the Merger.

                  (m) STATE TAKEOVER STATUTES. The Board of Directors of Decor
has approved this Agreement and the transactions contemplated hereby and,
assuming the accuracy of Interiors' representation and warranty contained in
Section 3.2(q), such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Decor Board of Directors under the
provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
knowledge of Decor, no other state takeover statute is applicable to the Merger
or the other transactions contemplated hereby.

                  (n) INTENTIONALLY OMITTED

                  (o) BROKERS. No broker, investment banker, financial advisor
or other person, is entitled to any finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Decor. Decor

                                       15

<PAGE>



has furnished to Interiors true and complete copies of all agreements under
which any such fees or expenses are payable and all indemnification and other
agreements related to the engagement of the persons to whom such fees are
payable.

                  (p) INTENTIONALLY OMITTED.

                  (q) OWNERSHIP OF INTERIORS CAPITAL STOCK. As of the date
hereof, neither Decor nor, to its knowledge without independent investigation,
any of its affiliates, (i) beneficially owns (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of Interiors (except for
certain shares of Interiors Class A Common Stock owned by Max Munn, a member of
the Board of Directors of Decor; and certain shares of Interiors Class B Common
Stock owned by Laurie Munn, the wife of Max Munn, the beneficial ownership of
which Mr. Munn disclaims).

                  (r) INTELLECTUAL PROPERTY. Decor and its subsidiaries own or
have a valid license to use all trademarks, service marks, trade names, patents
and copyrights (including any registrations or applications for registration of
any of the foregoing) (collectively, the "Decor Intellectual Property")
necessary to carry on its business substantially as currently conducted except
for such Decor Intellectual Property the failure of which to own or validly
license individually or in the aggregate would not have a material adverse
effect on Decor. Neither Decor nor any such subsidiary has received any notice
of infringement of or conflict with, and, to Decor's knowledge, there are no
infringements of or conflicts (i) with the rights of others with respect to the
use of, or (ii) by others with respect to, any Decor Intellectual Property that
individually or in the aggregate, in either such case, would have a material
adverse effect on Decor.

                  (s) CERTAIN CONTRACTS. Except as set forth in the Decor Filed
SEC Documents, neither Decor nor any of its subsidiaries is a party to or bound
by (i) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC), (ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any material respect the
manner in which, or the localities in which, all or any material portion of the
business of Decor and its subsidiaries (including, for purposes of this Section
3.1(s), Interiors and its subsidiaries, assuming the Merger has taken place),
taken as a whole, is or would be conducted, or (iii) any contract or other
agreement which would prohibit or materially delay the consummation of the
Merger or any of the transactions contemplated by this Agreement (all contracts
of the type described in clauses (i) and (ii) being referred to herein as
"Decor Material Contracts"). Each Decor Material Contract is valid and binding
on Decor (or, to the extent an Decor subsidiary is a party, such subsidiary)
and is in full force and effect, and Decor and each Decor subsidiary have in
all material respects performed all obligations required to be performed by
them to date under each Decor Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a material
adverse effect on Decor. Neither Decor nor any Decor subsidiary knows of, or
has received notice of, any violation or default

                                       16

<PAGE>



under (nor, to the knowledge of Decor, does there exist any condition which
with the passage of time or the giving of notice or both would result in such a
violation or default under) any Decor Material Contract.

SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF INTERIORS. Except as disclosed
in the Interiors Filed SEC Documents (as defined in Section 3.2(g)) or as set
forth on the Disclosure Schedule delivered by Interiors to Decor prior to the
execution of this Agreement (the "Interiors Disclosure Schedule") and making
reference to the particular subsection of this Agreement to which exception is
being taken, Interiors represents and warrants to Decor as follows:

                  (a) ORGANIZATION, STANDING AND CORPORATE POWER. (i) Each of
Interiors and its subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to jurisdictions
which recognize such concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority to carry on its business as now being conducted, except, as to
subsidiaries, for those jurisdictions where the failure to be so organized,
existing or in good standing individually or in the aggregate would not have a
material adverse effect on Interiors. Each of Interiors and its subsidiaries is
duly qualified or licensed to do business and is in good standing (with respect
to jurisdictions which recognize such concept) in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate would not have a material adverse
effect on Interiors.

         (ii) Interiors has delivered to Decor prior to the execution of this
Agreement complete and correct copies of its Certificate of Incorporation and
Bylaws, as amended to date.

         (iii) In all material respects, the minute books of Interiors contain
accurate records of all meetings and accurately reflect all other actions taken
by the stockholders, the Board of Directors and all committees of the Board of
Directors of Interiors since January 1, 1997.

                  (b) SUBSIDIARIES. An exhibit to Interiors' Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1997 includes all the
subsidiaries of Interiors. All the outstanding shares of capital stock of, or
other equity interests in, each such subsidiary have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by
Interiors, free and clear of all Liens and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests).

                  (c) CAPITAL STRUCTURE. The authorized capital stock of
Interiors consists of 60,000,000 shares of Interiors Class A Common Stock;
2,500,000 shares of Class B common stock, par value $.001 per share, of
Interiors ("Interiors Class B Common Stock"); and 5,300,000 shares of preferred
stock, par value $.01 per share, of Interiors ("Interiors Preferred Stock")
2,870,000 shares of which are designated as Series A 10% Cumulative Convertible
Preferred

                                       17

<PAGE>



Stock. At the close of business on April 8, 1998 14,333,971 shares of Interiors
Class A Common Stock were issued and outstanding (including shares of
restricted Interiors Class A Common Stock) of which 6,833,971 shares of Class A
Common Stock are issued and outstanding and 7,500,000 are held by the Stevens
Escrow Agent pursuant to the terms of the Stevens Settlement;
(ii) 1,719,750 shares of Interiors Class B Common Stock were issued and
outstanding (including shares of restricted Interiors Class B Common Stock) and
1,250,000 shares of Class B Common Stock are held by the Stevens Escrow Agent
pursuant to the terms of the Stevens Settlement; (iii) no shares of Interiors
Class A Common Stock were held by Interiors in its treasury; (iv) no shares of
Interiors Class B Common Stock were held by Interiors in its treasury; (v)
846,197 shares of Series A Preferred Stock were issued and outstanding; (vi)
250,000 shares of Interiors Class A Common Stock were reserved for issuance
pursuant to the Interiors 1994 Stock Plan, complete and correct copies of which
have been delivered to Decor (the "Interiors 1994 Stock Plan"); (vii) 250,000
shares of Interiors Class A Common Stock were reserved for issuance pursuant to
the Interiors Director Stock Plan, complete and correct copies of which have
been delivered to Decor (the "Director Stock Plan" and together with the 1994
Stock Plan, the "Interiors Stock Plan"); (viii) 2,994,782 shares of Class A
Common Stock are issuable upon the exercise of 2,994,782 Class W A Warrants and
2,984,782 shares of Class A Common Stock are issuable upon the conversion of
2,984,782 Class A Warrants to be received upon the conversion of 2,984,782
Class B Warrants; (ix) 905,956 shares of Class A Common Stock are issuable upon
the exercise of 905,956 Class W B Warrants; (x) 2,270,000 shares of Interiors
Series A Preferred Stock are issuable upon the exercise of 2,270,000 Class W C
Warrants; (xi) 2,538,591 shares of Class A Common Stock are issuable upon the
conversion of 846,197 shares of Series A Preferred Stock; (xii) 6,810,000
shares of Class A Common Stock are issuable upon the conversion of the
2,270,000 shares of Interiors Series A Preferred Stock are issuable upon the
exercise of 2,270,000 Class W C Warrants and (xiii) a maximum of 6,000,000
shares of Class A Common Stock are issuable upon the conversion of a series of
15% Convertible Subordinated Promissory Notes issued in a series of private
placements; and (xiv) 750,000 shares of Class A Common Stock are issuable upon
the conversion of Warrants issued in connection with a series of private
placements and for services. Section 3.2(c) of the Interiors Disclosure
Schedule sets forth a complete and correct list, as of June 30, 1998, of the
number of shares of Interiors Class A Common Stock subject to employee stock
options or other rights to purchase or receive Interiors Class A Common Stock
granted under the Interiors Stock Plans (collectively, "Interiors Employee
Stock Options"), the dates of grant and exercise prices thereof. All
outstanding shares of capital stock of Interiors are, and all shares which may
be issued pursuant to this Agreement or otherwise will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth in this Section 3.2(c), Section 3.2 (c)
of the Interiors Disclosure Schedule there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of Interiors, (B) any securities of Interiors or any Interiors
subsidiary convertible into or exchangeable or exercisable for shares of
capital stock or voting securities of Interiors, (C) any warrants, calls,
options or other rights to acquire from Interiors or any Interiors subsidiary,
and any obligation of Interiors or any Interiors subsidiary to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of Interiors, and (D)
there are no outstanding

                                       18

<PAGE>



obligations of Interiors or any Interiors subsidiary to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities. There are no outstanding (A)
securities of Interiors or any Interiors subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Interiors subsidiary, (B) warrants,
calls, options or other rights to acquire from Interiors or any Interiors
subsidiary, and any obligation of Interiors or any Interiors subsidiary to
issue, any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interests in, any Interiors subsidiary or
(C) obligations of Interiors or any Interiors subsidiary to repurchase, redeem
or otherwise acquire any such outstanding securities of Interiors subsidiaries
or to issue, deliver or sell, or cause to be issued, delivered or sold, any
such securities. Neither Interiors nor any Interiors subsidiary is a party to
any agreement restricting the transfer of, relating to the voting of, requiring
registration of, or granting any preemptive or, except as provided by the terms
of the Interiors Employee Stock Options and the Interiors Convertible
Securities, antidilutive rights with respect to, any securities of the type
referred to in the two preceding sentences. Other than the Interiors
subsidiaries, Interiors does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity except
for non-controlling investments made in the ordinary course of business in
entities which are not individually or in the aggregate material to Interiors
and its subsidiaries as a whole.

                  (d) AUTHORITY; NONCONTRAVENTION. Interiors has all requisite
corporate power and authority to enter into this Agreement and, subject to the
Interiors Stockholder Approval (as defined in Section 3.2(l)), to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Interiors and the consummation by Interiors of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Interiors, subject, in the case of
the Merger and the issuance of Interiors Class A Common Stock in connection
with the Merger, to the Interiors Stockholder Approval. This Agreement has been
duly executed and delivered by Interiors and, assuming the due authorization,
execution and delivery by Decor, constitutes the legal, valid and binding
obligations of Interiors, enforceable against Interiors in accordance with its
terms. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under, or result in the creation of any
Lien upon any of the properties or assets of Interiors or any of its
subsidiaries under, (i) the certificate of incorporation or bylaws of
Interiors or the comparable organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license or similar authorization applicable to Interiors or any of its
subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Interiors or any of its subsidiaries or their respective

                                       19

<PAGE>



properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not (x) have a material adverse effect on Interiors
or (y) reasonably be expected to impair the ability of Interiors to perform its
obligations under this Agreement. No consent, approval, order or authorization
of, action by, or in respect of, or registration, declaration or filing with,
any Governmental Entity is required by or with respect to Interiors or any of
its subsidiaries in connection with the execution and delivery of this
Agreement by Interiors or the consummation by Interiors of the transactions
contemplated by this Agreement, except for (1) the filing with the SEC of (A)
the Joint Proxy Statement relating to the Interiors Stockholders Meeting, (B)
the Form S-4 and (C) such reports under Section 13(a), 13(d), 15(d) or 16(a) of
the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement; (2) the filing of the Certificate
of Merger with the Secretary of State of Delaware and appropriate documents
with the relevant authorities of other states in which Interiors is qualified
to do business and such filings with Governmental Entities to satisfy the
applicable requirements of state securities or "blue sky" laws; (3) such
filings with and approvals of NASDAQ to permit the shares of Interiors Class A
Common Stock that are to be issued in the Merger to be listed on The Nasdaq
SmallCap Market; and (4) such consents, approvals, orders or authorizations the
failure of which to be made or obtained individually or in the aggregate would
not (x) have a material adverse effect on Interiors or (y) reasonably be
expected to impair the ability of Interiors to perform its obligations under
this Agreement.

                  (e) SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Interiors has
filed all required registration statements, prospectuses, reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) with the SEC since June 30, 1994 (the
"Interiors SEC Documents"). As of their respective dates, the Interiors SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Interiors SEC
Documents, and none of the Interiors SEC Documents when filed contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Interiors included in the Interiors SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Interiors and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments. Except (i) as
reflected in such financial statements or in the notes thereto, (ii) for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, or (iii) liabilities incurred in the ordinary course of
business, neither Interiors nor any of its subsidiaries has any liabilities or
obligations of any nature which, individually or in the aggregate, would have a
material adverse effect on Interiors.

                                       20

<PAGE>




                  (f) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Interiors specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) the Joint Proxy Statement
will, at the date it is first mailed to Interiors's stockholders or at the time
of the Interiors Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4 and the
Joint Proxy Statement will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
Interiors with respect to statements made or incorporated by reference therein
based on information supplied by Decor specifically for inclusion or
incorporation by reference in the Form S-4 or the Joint Proxy Statement.

                  (g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, and except as permitted by Section 4.1(b), since September
30, 1997, Interiors and its subsidiaries have conducted their business only in
the ordinary course or as disclosed in any Interiors SEC Document filed since
such date and prior to the date hereof, and there has not been (i) any material
adverse change in Interiors, (ii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to any of Interiors's capital stock, (iii) any split, combination or
reclassification of any of Interiors's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of Interiors's capital stock, except for
issuances of Interiors Class A Common Stock, Interiors Class B Common Stock, or
Interiors Preferred Stock upon conversion or redemption of Interiors
Convertible Securities or the exercise of Interiors Employee Stock Options, in
each case, awarded prior to the date hereof in accordance with their present
terms or issued pursuant to Section 4.1(b), (iv)(A) any granting by Interiors
or any of its subsidiaries to any current or former director, executive officer
or other key employee of Interiors or its subsidiaries of any increase in
compensation, bonus or other benefits, except for normal increases as a result
of promotions, normal increases of base pay in the ordinary course of business
or as was required under any employment agreements in effect as of September
30, 1997, (B) any granting by Interiors or any of its subsidiaries to any such
current or former director, executive officer or key employee of any increase
in severance or termination pay, or (C) any entry by Interiors or any of its
subsidiaries into, or any amendment of, any employment, deferred compensation
consulting, severance, termination or indemnification agreement with any such
current or former director, executive officer or key employee, (v) except
insofar as may have been disclosed in Interiors SEC Documents filed and
publicly available prior to the date of this Agreement (as amended to the date
hereof, the "Interiors Filed SEC Documents") or required by a change in GAAP,
any change in accounting methods, principles or practices by Interiors
materially affecting its assets, liabilities or business, (vi) except insofar
as may have been disclosed in the Interiors Filed SEC Documents, any tax
election that individually or in the aggregate would have a material adverse
effect on Interiors or any of its tax attributes or any settlement or
compromise of any material

                                       21

<PAGE>



income tax liability or (vii) any action taken by Interiors or any of the
Interiors subsidiaries during the period from September 30, 1997 through the
date of this Agreement that, if taken during the period from the date of this
Agreement through the Effective Time would constitute a breach of Section
4.1(b).

                  (h) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION. (i)
Interiors, its subsidiaries and employees hold all permits, licenses,
variances, exemptions, orders, registrations and approvals of all Governmental
Entities which are required for the operation of the businesses of Interiors
and its subsidiaries (the "Interiors Permits") except where the failure to have
any such Interiors Permits individually or in the aggregate would not have a
material adverse effect on Interiors. Interiors and its subsidiaries are in
compliance with the terms of the Interiors Permits and all applicable statutes,
laws, ordinances, rules and regulations, except where the failure so to comply
individually or in the aggregate would not have a material adverse effect on
Interiors. As of the date of this Agreement, except as disclosed in the
Interiors Filed SEC Documents, no action, demand, requirement or investigation
by any Governmental Entity and no suit, action or proceeding by any person, in
each case with respect to Interiors or any of its subsidiaries or any of their
respective properties, is pending or, to the knowledge of Interiors,
threatened, other than, in each case, those the outcome of which individually
or in the aggregate would not (A) have a material adverse effect on Interiors
or (B) reasonably be expected to impair the ability of Interiors to perform its
obligations under this Agreement or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.

         (ii) Neither Interiors nor any Interiors subsidiary is subject to any
outstanding order, injunction or decree which has had or, insofar as can be
reasonably foreseen, individually or in the aggregate will have a material
adverse effect on Interiors.

                  (i) ABSENCE OF CHANGES IN BENEFIT PLANS. Interiors has
delivered to Decor true and complete copies of (i) all severance and employment
agreements of Interiors with directors, executive officers or key employees,
(ii) all severance programs and policies of each of Interiors and each
Interiors subsidiary, and (iii) all plans or arrangements of Interiors and each
Interiors subsidiary relating to its employees which contain change in control
provisions. Since September 30, 1997, there has not been any adoption or
amendment in any material respect by Interiors or any of its subsidiaries of
any collective bargaining agreement or any material bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding providing benefits to any current or former employee, officer
or director of Interiors or any of its wholly owned subsidiaries (collectively,
the "Interiors Benefit Plans"), or any material change in any actuarial or
other assumption used to calculate funding obligations with respect to any
Interiors pension plans, or any material change in the manner in which
contributions to any Interiors pension plans are made or the basis on which
such contributions are determined.

                  (j) ERISA COMPLIANCE. (i) With respect to the Interiors
Benefit Plans, no event has occurred and, to the knowledge of Interiors, there
exists no condition or set of circumstances, in connection with which Interiors
or any of its subsidiaries could be subject to any liability that

                                       22

<PAGE>



individually or in the aggregate would have a material adverse affect on
Interiors under ERISA, the Code or any other applicable law.

         (ii) Each Interiors Benefit Plan has been administered in accordance
with its terms, except for any failures so to administer any Interiors Benefit
Plan that individually or in the aggregate would not have a material adverse
effect on Interiors. Interiors, its subsidiaries and all the Interiors Benefit
Plans have been operated, and are, in compliance with the applicable provisions
of ERISA, the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements, except for any failures to be in
such compliance that individually or in the aggregate would not have a material
adverse effect on Interiors. Each Interiors Benefit Plan that is intended to be
qualified under Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each trust
established in connection with any Interiors Benefit Plan that is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that such trust is so exempt. To
the knowledge of Interiors, no fact or event has occurred since the date of any
determination letter from the IRS which is reasonably likely to affect
adversely the qualified status of any such Interiors Benefit Plan or the exempt
status of any such trust.

         (iii) Neither Interiors nor any of its subsidiaries has incurred any
unsatisfied liability under Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course). No Interiors Benefit Plan has incurred an "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code) whether or not waived. To the knowledge of Interiors, there are not any
facts or circumstances that would materially change the funded status of any
Interiors Benefit Plan that is a "defined benefit" plan (as defined in Section
3(35) of ERISA) since the date of the most recent actuarial report for such
plan. No Interiors Benefit Plan is a "multi-employer plan" within the meaning
of Section 3(37) of ERISA.

         (iv) No Interiors Benefit Plan is subject to Title IV of ERISA.

         (v) No Interiors Benefit Plan provides medical benefits (whether or
not insured), with respect to current or former employees after retirement or
other termination of service (other than coverage mandated by applicable law or
benefits, the full cost of which is borne by the current or former employee)
other than individual arrangements the amounts of which are not material.

         (vi) As of the date of this Agreement, except as disclosed in the
Interiors SEC Documents neither Interiors nor any of its subsidiaries is a
party to any collective bargaining or other labor union contract applicable to
persons employed by Interiors or any of its subsidiaries and no collective
bargaining agreement is being negotiated by Interiors or any of its
subsidiaries. As of the date of this Agreement, there is no labor dispute,
strike or work stoppage against Interiors or any of its subsidiaries pending
or, to the knowledge of Interiors, threatened which may interfere with the
respective business activities of Interiors or any of its subsidiaries, except
where such dispute, strike or work stoppage individually or in the aggregate
would not have a material adverse effect on Interiors. As of the date of this
Agreement, to the knowledge of Interiors, none of Interiors, any of its
subsidiaries or any of their respective representatives or employees has

                                       23

<PAGE>



committed any material unfair labor practice in connection with the operation
of the respective businesses of Interiors or any of its subsidiaries, and there
is no material charge or complaint against Interiors or any of its subsidiaries
by the National Labor Relations Board or any comparable governmental agency
pending or threatened in writing.

         (vii) No employee of Interiors will be entitled to any material
payment, additional benefits or any acceleration of the time of payment or
vesting of any benefits under any Interiors Benefit Plan as a result of the
transactions contemplated by this Agreement (either alone or in conjunction
with any other event such as a termination of employment).

                  (k) TAXES. (i) Each of Interiors and its subsidiaries has
filed all material tax returns and reports required to be filed by it and all
such returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to file,
to be complete or correct or to have extensions granted that remain in effect
individually or in the aggregate would not have a material adverse effect on
Interiors. Except as disclosed in the Interiors Filed SEC Documents Interiors
and each of its subsidiaries has paid (or Interiors has paid on its behalf) all
taxes shown as due on such returns, and the most recent financial statements
contained in the Interiors Filed SEC Documents reflect an adequate reserve in
accordance with GAAP for all taxes payable by Interiors and its subsidiaries
for all taxable periods and portions thereof accrued through the date of such
financial statements.

         (ii) No deficiencies for any taxes have been proposed, asserted or
assessed against Interiors or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
would not have a material adverse effect on Interiors. The federal income tax
returns of Interiors and each of its subsidiaries consolidated in such returns
for tax years through 1993 have closed by virtue of the applicable statute of
limitations.

         (iii) Neither Interiors nor any of its subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.

                  (l) VOTING REQUIREMENTS. The affirmative vote at the
Interiors Stockholders Meeting (the "Interiors Stockholder Approval") of (i)
the holders of a majority of all outstanding voting shares of Interiors Class A
Common Stock and Interiors Class B Common Stock is the only vote of the holders
of any class or series of Interiors' capital stock necessary to approve and
adopt this Agreement and the transactions contemplated hereby, including the
Merger, the issuance of the Interiors Class A Common Stock pursuant to the
Merger and the Certificate of Amendment to the Certificate of Incorporation,
and (ii) the holders of a majority of all shares of Interiors Class A Common
Stock casting votes is the only vote of the holders of any class or series of
Interiors's capital stock necessary to approve (A) in accordance with the
applicable rules of NASDAQ, the issuance of Interiors Class A Common Stock
pursuant to the Merger, and (B) the New Interiors Stock Plan.

                  (m) STATE TAKEOVER STATUTES; CERTIFICATE OF INCORPORATION.  
The Board of

                                       24

<PAGE>



Directors of Interiors (including the disinterested Directors thereof) has
unanimously approved this Agreement and the transactions contemplated hereby,
and, assuming the accuracy of Decor's representation and warranty contained in
Section 3.1(q), such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Interiors Board of Directors under the
provisions of Section 203 of the DGCL and constitutes approval of the Merger
and the other transactions contemplated hereby, the assumption of the Adjusted
Options, the issuance of the options to purchase shares of Interiors Class A
Common Stock granted pursuant to Section 5.17 and the issuance of the shares of
Interiors Class A Common Stock upon exercise of the Adjusted Options and other
options under the provisions of Interiors' Certificate of Incorporation such
that Section 203 and the applicable provision of Interiors' Certificate of
Incorporation do not apply to this Agreement, the transactions contemplated
hereby, the assumption of the Adjusted Options, the issuance of the options to
purchase shares of Interiors Class A Common Stock granted pursuant to Section
5.17 and the issuance of the shares of Interiors Class A Common Stock upon
exercise of the Adjusted Options and other options. To the knowledge of
Interiors, no state takeover statute other than Section 203 of the DGCL (which
has been rendered inapplicable) is applicable to the Merger or the other
transactions contemplated hereby.

                  (n) INTENTIONALLY OMITTED.

                  (o) BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Interiors. Interiors has furnished to Decor true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the persons
to whom such fees are payable.

                  (p) OPINION OF FINANCIAL ADVISOR. Interiors has received the
opinion of Hugenot Associates, Inc., dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio for the conversion of Decor
Common Stock into Interiors Class A Common Stock is fair to Interiors, a signed
copy of which opinion has been delivered to Decor, it being understood and
agreed by Decor that such opinion is for the benefit of the Board of Directors
of Interiors and may not be relied upon by Decor, its affiliates or any of
their respective stockholders.

                  (q) OWNERSHIP OF DECOR COMMON STOCK. As of the date hereof,
neither Interiors nor, to its knowledge without independent investigation, any
of its affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of Decor (other than
20,000,000 shares of Decor Series B Preferred Stock owned by Interiors, which
is subject to a voting trust, the sole trustee of which is Max Munn, a member
of the Board of Directors of Decor and an executive officer and member of the
Board of Directors of Interiors).

                   (r) INTELLECTUAL PROPERTY. Interiors and its subsidiaries
own or have a valid license to use all trademarks, service marks, trade names,
patents and copyrights (including any

                                       25

<PAGE>



registrations or applications for registration of any of the foregoing)
(collectively, the "Interiors Intellectual Property") necessary to carry on its
business substantially as currently conducted, except for such Interiors
Intellectual Property the failure of which to own or validly license
individually or in the aggregate would not have a material adverse effect on
Interiors. Neither Interiors nor any such subsidiary has received any notice of
infringement of or conflict with, and, to Interiors's knowledge, there are no
infringements of or conflicts (i) with the rights of others with respect to the
use of, or (ii) by others with respect to, any Interiors Intellectual Property
that individually or in the aggregate, in either such case, would have a
material adverse effect on Interiors.

                  (s) CERTAIN CONTRACTS. Except as set forth in the Interiors
Filed SEC Documents, neither Interiors nor any of its subsidiaries is a party
to or bound by (i) any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC), (ii) any non-competition agreement or
any other agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any material
portion of the business of Interiors and its subsidiaries (including Decor and
its subsidiaries, assuming the Merger had taken place), taken as a whole, is or
would be conducted, or (iii) any contract or other agreement which would
prohibit or materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement (all contracts of the type
described in clauses (i) and (ii) being referred to herein as "Interiors
Material Contracts"). Each Interiors Material Contract is valid and binding on
Interiors (or, to the extent a Interiors subsidiary is a party, such
subsidiary) and is in full force and effect, and Interiors and each Interiors
subsidiary have in all material respects performed all obligations required to
be performed by them to date under each Interiors Material Contract, except
where such noncompliance, individually or in the aggregate, would not have a
material adverse effect on Interiors. Neither Interiors nor any Interiors
subsidiary knows of, or has received notice of, any violation or default under
(nor, to the knowledge of Interiors, does there exist any condition which with
the passage of time or the giving of notice or both would result in such a
violation or default under) any Interiors Material Contract.

                                   ARTICLE IV

                   COVENANTS RELATING TO CONDUCT OF BUSINESS

SECTION 4.1. CONDUCT OF BUSINESS.

                  (a) CONDUCT OF BUSINESS BY DECOR. Except as set forth in
Section 4.1(a) of the Decor Disclosure Schedule, as otherwise expressly
contemplated by this Agreement or as consented to by Interiors in writing, such
consent not to be unreasonably withheld or delayed, during the period from the
date of this Agreement to the Effective Time, Decor shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice and in compliance in all material respects with
all applicable laws and regulations and, to the extent consistent therewith,
use all reasonable efforts to preserve intact their current business
organizations, use reasonable efforts to keep available the services of their
current officers and other key employees and preserve their relationships with
those persons

                                       26

<PAGE>



having business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing (but subject to the above exceptions), during the
period from the date of this Agreement to the Effective Time, Decor shall not,
and shall not permit any of its subsidiaries to:

         (i) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of Decor to its parent, or by a subsidiary that is
partially owned by Decor or any of its subsidiaries, provided that Decor or any
such subsidiary receives or is to receive its proportionate share thereof, (x)
declare, set aside or pay any dividends on, make any other distributions in
respect of, or enter into any agreement with respect to the voting of, any of
its capital stock, (y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, except for issuances of
Decor Common Stock upon conversion of Decor Convertible Securities or upon the
exercise of Decor Employee Stock Options, in each case, outstanding as of the
date hereof in accordance with their present terms, including cashless
exercise, or issued pursuant to Section 4.1(a)(ii) or (z) purchase, redeem or
otherwise acquire any shares of capital stock of Decor or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities;

         (ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than the
issuance of Decor Common Stock upon the exercise of Decor Employee Stock
Options, in each case, outstanding as of the date hereof in accordance with
their present terms or the issuance of Decor Employee Stock Options (and shares
of Decor Common Stock upon the exercise thereof) granted after the date hereof
in the ordinary course of business consistent with past practice (1) for new
employees (so long as such additional amount of Decor Common Stock subject to
Decor Employee Stock Options issued to new employees does not exceed 100,000
shares of Decor Common Stock in the aggregate) or (2) in connection with
employee promotions;

          (iii) amend its certificate of incorporation, bylaws or other
comparable organizational documents;

          (iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any person;

          (v) subject to compliance with Section 5.15, sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets (including securitization), other than (A) in
the ordinary course of business consistent with past practice or (B) up to
$1,000,000 of such assets, in the aggregate;

          (vi) take any action that would cause the representations and
warranties set forth in Section 3.1(g) (with each reference therein to
"ordinary course of business" being deemed for purposes of this Section
4.1(a)(vi) to be immediately followed by "consistent with past practice")

                                       27

<PAGE>



to no longer be true and correct;

          (vii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for the obligations of any person for borrowed money; or

          (viii) authorize, or commit or agree to take, any of the foregoing
actions; provided that the limitations set forth in this Section 4.1(a) (other
than clause (iii)) shall not apply to any transaction between Decor and any
wholly owned subsidiary or between any wholly owned subsidiaries of Decor.

                  (b) CONDUCT OF BUSINESS BY INTERIORS. Except as set forth in
Section 4.1(b) of the Interiors Disclosure Schedule, as otherwise expressly
contemplated by this Agreement or as consented to by Decor in writing, such
consent not to be unreasonably withheld or delayed, during the period from the
date of this Agreement to the Effective Time, Interiors shall, and shall cause
its subsidiaries to, carry on their respective businesses in the ordinary
course consistent with past practice and in compliance in all material respects
with all applicable laws and regulations and, to the extent consistent
therewith, use all reasonable efforts to preserve intact their current business
organizations, use reasonable efforts to keep available the services of their
current officers and other key employees and preserve their relationships with
those persons having business dealings with them to the end that their goodwill
and ongoing businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing (but subject to the above exceptions),
during the period from the date of this Agreement to the Effective Time,
Interiors shall not, and shall not permit any of its subsidiaries to:

         (i) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of Interiors to its parent, or by a subsidiary that is
partially owned by Interiors or any of its subsidiaries, provided that
Interiors or any such subsidiary receives or is to receive its proportionate
share thereof, (x) declare, set aside or pay any dividends on, make any other
distributions in respect of, or enter into any agreement with respect to the
voting of, any of its capital stock, (y) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
except for issuances of Interiors Class A Common Stock upon conversion or
redemption of Interiors Convertible Securities or upon the exercise of
Interiors Employee Stock Options, in each case, outstanding as of the date
hereof in accordance with their present terms, including cashless exercise, or
issued pursuant to Section 4.1(b)(ii);

         (ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than (x) the
issuance of Interiors capital stock or warrants to acquire Interiors capital
stock in connection with any acquisition permitted by Section 4.1(b)(iv) and in
compliance with Section 5.15, (y) the issuance of Interiors Class A Common
Stock upon conversion or redemption of Interiors Convertible Securities in
accordance with their present terms at the option of the holders thereof, and
(z) the issuance of Interiors Class A Common Stock upon the exercise of
Interiors

                                       28

<PAGE>



Employee Stock Options, in each case, outstanding as of the date hereof in
accordance with their present terms or the issuance of Interiors Employee Stock
Options (and shares of Interiors Class A Common Stock upon the exercise
thereof) granted after the date hereof in the ordinary course of business
consistent with past practice (1) for new employees (so long as such additional
amount of Interiors Class A Common Stock subject to Interiors Employee Stock
Options issued to new employees does not exceed 500,000 shares of Interiors
Class A Common Stock in the aggregate) or (2) in connection with employee
promotions;

         (iii) except as contemplated hereby, amend its certificate of
incorporation, bylaws or other comparable organizational documents;

         (iv) subject to compliance with Section 5.15, sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets (including securitization), other than (A) in
the ordinary course of business consistent with past practice (B) up to
$2,000,000 of such assets, in the aggregate;

         (v) take any action that would cause the representations and
warranties set forth in Section 3.2(g) (with each reference therein to ordinary
course of business, being deemed for purposes of this Section 4.1(b)(vi) to be
immediately followed by "consistent with past practice") to no longer be true
and correct;

         (vi) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for the obligations of any person for borrowed money; or

         (vii) authorize, or commit or agree to take, any of the foregoing
actions; provided that the limitations set forth in this Section 4.1(b) (other
than clause (iii)) shall not apply to any transaction between Interiors and any
wholly owned subsidiary or between any wholly owned subsidiaries of Interiors.

                  (c) OTHER ACTIONS. Except as required by law, Decor and
Interiors shall not, and shall not permit any of their respective subsidiaries
to, voluntarily take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of such
party set forth in this Agreement that are qualified as to materiality becoming
untrue at the Effective Time, except as provided in the proviso in Section
6.2(a) or Section 6.3(a), (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect at the Effective
Time, except as provided in the proviso in Section 6.2(a) or Section 6.3(a), or
(iii) any of the conditions to the Merger set forth in Article VI not being
satisfied.

                  (d) ADVICE OF CHANGES. Decor and Interiors shall promptly
advise the other party orally and in writing to the extent it has knowledge of
(i) any representation or warranty made by it contained in this Agreement that
is qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply in any
material respect with or satisfy in any material respect any covenant,
condition or agreement to be complied with or

                                       29

<PAGE>



satisfied by it under this Agreement and (iii) any change or event having, or
which, insofar as can reasonably be foreseen, could reasonably be expected to
have a material adverse effect on such party or on the truth of their
respective representations and warranties or the ability of the conditions set
forth in Article VI to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement.

SECTION 4.2. NO SOLICITATION BY DECOR. (a) Decor shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any
proposal which constitutes any Decor Takeover Proposal (as defined below) or
(ii) participate in any discussions or negotiations regarding any Decor
Takeover Proposal; provided, however, that if the Board of Directors of Decor
determines in good faith, based on the advice of outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to Decor's stockholders under applicable law, Decor may, in response to
an Decor Superior Proposal (as defined in Section 4.2(b)) which was not
solicited by it, which did not otherwise result from a breach of this Section
4.2(a) and which is made or received prior to the obtaining of the Decor
Stockholder Approval, and subject to providing prior written notice of its
decision to take such action to Interiors and compliance with Section 4.2(c),
(x) furnish information with respect to Decor and its subsidiaries to any
person making an Decor Superior Proposal pursuant to a customary
confidentiality agreement (as determined by Decor based on the advice of its
outside counsel, the terms of which are no more favorable to such person than
the Confidentiality Agreement (as defined herein)) and (y) participate in
discussions or negotiations regarding such Decor Superior Proposal. For
purposes of this Agreement, "Decor Takeover Proposal" means any inquiry,
proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 50% or more of the net
revenues, net income or the assets of Decor and its subsidiaries, taken as a
whole, or 25% or more of any class of equity securities of Decor, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 25% or more of any class of equity securities of Decor, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Decor or the Decor Common Stock
(or any Decor subsidiary whose business constitutes 50% or more of the net
revenues, net income or the assets of Decor and its subsidiaries, taken as
whole), other than the transactions contemplated by this Agreement.

                  (b) Except as expressly permitted by this Section 4.2,
neither the Board of Directors of Decor nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Interiors, the approval or recommendation by such Board of Directors
or such committee of the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Decor Takeover Proposal, or
(iii) cause Decor to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Decor Acquisition
Agreement") related to any Decor Takeover Proposal. Notwithstanding the
foregoing, at any time prior to the obtaining of the

                                       30

<PAGE>



Decor Stockholder Approval, the Board of Directors of Decor, to the extent that
it determines in good faith, based upon the advice of outside counsel, that it
is necessary to do so in order to act in a manner consistent with its fiduciary
duties to Decor's stockholders under applicable law, may (subject to this and
the following sentences) terminate this Agreement solely in order to
concurrently enter into an Decor Acquisition Agreement with respect to any
Decor Superior Proposal, but only at a time that is after the fifth business
day following Interiors's receipt of written notice advising Interiors that the
Board of Directors of Decor is prepared to accept an Decor Superior Proposal,
specifying the material terms and conditions of such Decor Superior Proposal
and identifying the person making such Decor Superior Proposal. For purposes of
this Agreement, an "Decor Superior Proposal" means any proposal made by a third
party to acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting
of cash and/or securities, more than 50% of the combined voting power of the
shares of Decor Common Stock then outstanding or all or substantially all the
assets of Decor and otherwise on terms which the Board of Directors of Decor
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to Decor's
stockholders than the Merger and for which financing, to the extent required,
is then committed or which, in the good faith judgment of the Board of
Directors of Decor based on the advice of its financial advisor, is reasonably
capable of being obtained by such third party.

                  (c) In addition to the obligations of Decor set forth in
paragraphs (a) and (b) of this Section 4.2, Decor shall immediately advise
Interiors orally and in writing of any request for information or of any Decor
Takeover Proposal, the material terms and conditions of such request or Decor
Takeover Proposal and the identity of the person making such request or Decor
Takeover Proposal. Decor will keep Interiors reasonably informed of the status
and details (including amendments or proposed amendments) of any such request
or Decor Takeover Proposal. Interiors shall treat any information it receives
from Decor pursuant to this section as confidential information and shall be
subject to the Confidentiality Agreement dated November 25, 1997, between
Interiors and Decor.

                  (d) Nothing contained in this Section 4.2 shall prohibit
Decor from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to Decor's stockholders if, in the good faith judgment of the Board of
Directors of Decor, after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable law;
provided, however, that neither Decor nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, an Decor Takeover
Proposal.

SECTION 4.3. NO SOLICITATION BY INTERIORS. (a) Interiors shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any of
its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or

                                       31

<PAGE>



encourage (including by way of furnishing information), or take any other
action designed to facilitate, any inquiries or the making of any proposal
which constitutes any Interiors Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any Interiors Takeover
Proposal; provided, however, that if the Board of Directors of Interiors
determines in good faith, based on the advice of outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to Interiors's stockholders under applicable law, Interiors may, in
response to a Interiors Superior Proposal (as defined in Section 4.3(b)) which
was not solicited by it, which did not otherwise result from a breach of this
Section 4.3(a) and which is made or received prior to the obtaining of the
Interiors Stockholder Approval, and subject to providing prior written notice
of its decision to take such action to Decor and compliance with Section 4.3(c)
(x) furnish information with respect to Interiors and its subsidiaries to any
person making a Interiors Superior Proposal pursuant to a customary
confidentiality agreement (as determined by Interiors based on the advice of
its outside counsel, the terms of which are no more favorable to such person
than the Confidentiality Agreement) and (y) participate in discussions or
negotiations regarding such Interiors Superior Proposal. For purposes of this
Agreement, "Interiors Takeover Proposal" means any inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or purchase of a
business that constitutes 50% or more of the net revenues, net income or the
assets of Interiors and its subsidiaries, taken as a whole, or 25% or more of
any class of equity securities of Interiors, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 25% or more
of any class of equity securities of Interiors, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Interiors or the Interiors Class A Common Stock (or any
Interiors subsidiary whose business constitutes 50% or more of the net
revenues, net income or the assets of Interiors and its subsidiaries, taken as
a whole), other than the transactions contemplated by this Agreement.

                  (b) Except as expressly permitted by this Section 4.3,
neither the Board of Directors of Interiors nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Decor, the approval or recommendation by such Board of Directors or
such committee of the Merger, this Agreement or the issuance of Interiors Class
A Common Stock in connection with the Merger, (ii) approve or recommend, or
propose publicly to approve or recommend, any Interiors Takeover Proposal, or
(iii) cause Interiors to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, a "Interiors
Acquisition Agreement") related to any Interiors Takeover Proposal.
Notwithstanding the foregoing, at any time prior to the obtaining of the
Interiors Stockholder Approval, the Board of Directors of Interiors, to the
extent that it determines in good faith, based upon the advice of outside
counsel, that it is necessary to do so in order to act in a manner consistent
with its fiduciary duties to Interiors's stockholders under applicable law, may
(subject to this and the following sentences) terminate this Agreement solely
in order to concurrently enter into any Interiors Acquisition Agreement with
respect to any Interiors Superior Proposal, but only at a time that is after
the fifth business day following Decor's receipt of written notice advising
Decor that the Board of Directors of Interiors is prepared to accept a
Interiors Superior Proposal, specifying the material terms and conditions of
such Interiors Superior Proposal and identifying the person making such
Interiors Superior Proposal. For purposes of this Agreement, a "Interiors
Superior Proposal" means any proposal made by a third

                                       32

<PAGE>



party to acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting
of cash and/or securities, more than 50% of the combined voting power of the
shares of Interiors Class A Common Stock then outstanding or all or
substantially all the assets of Interiors and otherwise on terms which the
Board of Directors of Interiors determines in its good faith judgment (based on
the advice of a financial advisor of nationally recognized reputation) to be
more favorable to Interiors's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in the good
faith judgment of the Board of Directors of Interiors based on the advice of
its financial advisor, is reasonably capable of being obtained by such third
party.

                  (c) In addition to the obligations of Interiors set forth in
paragraphs (a) and (b) of this Section 4.3, Interiors shall immediately advise
Decor orally and in writing of any request for information or of any Interiors
Takeover Proposal, the material terms and conditions of such request or
Interiors Takeover Proposal and the identity of the person making such request
or Interiors Takeover Proposal. Interiors will keep Decor reasonably informed
of the status and details (including amendments or proposed amendments) of any
such request or Interiors Takeover Proposal. Decor shall treat any information
it receives from Interiors pursuant to this section as confidential information
and shall be subject to the Confidentiality Agreement dated November 25, 1997,
between Interiors and Decor.

                  (d) Nothing contained in this Section 4.3 shall prohibit
Interiors from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to Interiors's stockholders if, in the good faith judgment of
the Board of Directors of Interiors, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that neither Interiors nor its Board of
Directors nor any committee thereof shall withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this Agreement,
the Merger, the issuance of Interiors Class A Common Stock in connection with
the Merger, or approve or recommend, or propose publicly to approve or
recommend, a Interiors Takeover Proposal.

                                   ARTICLE V

                             ADDITIONAL AGREEMENTS

SECTION 5.1. PREPARATION OF THE FORM S-4 AND THE JOINT PROXY STATEMENT;
STOCKHOLDERS MEETINGS. (a) As soon as practicable following the date of this
Agreement, Decor and Interiors shall prepare and file with the SEC the Joint
Proxy Statement and Interiors shall prepare and file with the SEC the Form S-4,
in which the Joint Proxy Statement will be included as a prospectus. Each of
Decor and Interiors shall use best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such
filing. Decor will use all best efforts to cause the Joint Proxy Statement to
be mailed to Decor's stockholders, and Interiors will use all best efforts to
cause the Joint Proxy Statement to be mailed to Interiors's stockholders, in
each case as promptly as practicable after the Form S-4 is declared effective
under the Securities Act.

                                       33

<PAGE>



Interiors shall also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified or to file a general
consent to service of process) required to be taken under any applicable state
securities laws in connection with the issuance of Interiors Class A Common
Stock in the Merger and the approval of the Certificate of Amendment and Decor
shall furnish all information concerning Decor and the holders of Decor Common
Stock as may be reasonably requested in connection with any such action. No
filing of, or amendment or supplement to, the Form S-4 or the Joint Proxy
Statement will be made by Interiors without providing Decor the opportunity to
review and comment thereon. Interiors will advise Decor, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Interiors Class A Common Stock issuable
in connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement or the Form S-4
or comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information
relating to Decor or Interiors, or any of their respective affiliates, officers
or directors, should be discovered by Decor or Interiors which should be set
forth in an amendment or supplement to any of the Form S-4 or the Joint Proxy
Statement, so that any of such documents would not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of Decor and
Interiors.

                   (b) Decor shall, as promptly as practicable after the Form
S-4 is declared effective under the Securities Act, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Decor Stockholders
Meeting") in accordance with the DGCL for the purpose of obtaining the Decor
Stockholder Approval and, subject to its rights to terminate this Agreement
pursuant to Section 4.2(b), shall, through its Board of Directors, recommend to
its stockholders the approval and adoption of this Agreement, the Merger, and
the other transactions contemplated hereby. Without limiting the generality of
the foregoing but subject to its rights to terminate this Agreement pursuant to
Section 4.2(b), Decor agrees that its obligations pursuant to the first
sentence of this Section 5.1(b) shall not be affected by the commencement,
public proposal, public disclosure or communication to Decor of any Decor
Takeover Proposal.

                  (c) Interiors shall, as promptly as practicable after the
Form S-4 is declared effective under the Securities Act, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Interiors Stockholders
Meeting") in accordance with the DGCL for the purpose of obtaining the
Interiors Stockholder Approval and, subject to its rights to terminate this
Agreement pursuant to Section 4.3(b), shall, through its Board of Directors,
recommend to its stockholders the approval and adoption of this Agreement, the
Merger, the Certificate of Amendment, the New Interiors Stock Plan and the
other transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its rights to terminate this Agreement pursuant to
Section 4.3(b), Interiors agrees that its obligations pursuant to the first
sentence of this Section 5.1(c) shall not be affected by the commencement,
public proposal,

                                       34

<PAGE>



public disclosure or communication to Interiors of any Interiors Takeover
Proposal.

                  (d) Interiors and Decor will use best efforts to hold the
Decor Stockholders Meeting and the Interiors Stockholders Meeting on the same
date and as soon as reasonably practicable after the date hereof.

SECTION 5.2. LETTERS OF DECOR'S ACCOUNTANTS. (a) Decor shall use best efforts
to cause to be delivered to Interiors two letters from Decor's independent
accountants, one dated a date within two business days before the date on which
the Form S-4 shall become effective and one dated a date within two business
days before the Closing Date, each addressed to Interiors, in form and
substance reasonably satisfactory to Interiors and customary in scope and
substance or comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.

                  (b) Decor shall use best efforts to cause to be delivered to
Interiors and Interiors' accountants a letter from Decor's independent
accountants addressed to Interiors and Decor, dated as of the date the Form S-4
is declared effective and as of the Closing Date, stating that accounting for
the Merger as a purchase under the rules of the Accounting Principles Board and
applicable SEC rules and regulations is appropriate if the Merger is closed and
consummated as contemplated by this Agreement.

SECTION 5.3. LETTERS OF INTERIORS' ACCOUNTANTS. (a) Interiors shall use best
efforts to cause to be delivered to Decor two letters from Interiors'
independent accountants, one dated a date within two business days before the
date on which the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to Decor, in form and
substance reasonably satisfactory to Decor and customary in scope and substance
for comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.

                  (b) Interiors shall use best efforts to cause to be delivered
to Decor and Decor's accountants a letter from Interiors' independent
accountants, addressed to Decor and Interiors, dated as of the date the Form
S-4 is declared effective and as of the Closing Date, stating that accounting
for the Merger as a purchase under the rules of the Accounting Principles Board
and applicable SEC rules and regulations is appropriate if the Merger is closed
and consummated as contemplated by this Agreement.

SECTION 5.4. ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the
Confidentiality Agreement dated November 25, 1997, between Interiors and Decor
(the "Confidentiality Agreement"), and subject to restrictions contained in
confidentiality agreements to which such party is subject (which such party
will use its best efforts to have waived) and applicable law, each of Decor and
Interiors shall, and shall cause each of its respective subsidiaries to, afford
to the other party and to the officers, employees, accountants, counsel,
financial advisors and other representatives of such other party, reasonable
access during normal business hours during the period prior to the Effective
Time to all their respective properties, books, contracts, commitments,
personnel and records and, during such period, each of Decor and Interiors
shall,

                                       35

<PAGE>



and shall cause each of its respective subsidiaries to, furnish promptly to the
other party (a) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
No review pursuant to this Section 5.4 shall affect any representation or
warranty given by the other party hereto. Each of Decor and Interiors will
hold, and will cause its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in accordance with the terms of the Confidentiality
Agreement.

SECTION 5.5. BEST EFFORTS. (a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of
all necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed,
and (iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement. Nothing set forth in this Section 5.5(a) will
limit or affect actions permitted to be taken pursuant to Sections 4.2 and 4.3.

                  (b) In connection with and without limiting the foregoing,
Decor and Interiors shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
the Merger, this Agreement, or any of the other transactions contemplated by
this Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement, or any other
transaction contemplated by this Agreement, take all action necessary to ensure
that the Merger and the other transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and the other transactions contemplated by this Agreement.

SECTION 5.6. STOCK OPTIONS. (a) As soon as practicable following the date of
this Agreement, the Board of Directors of Decor (or, if appropriate, any
committee administering the Decor Stock Plans) shall adopt such resolutions or
take such other actions as may be required to effect the following:

         (i) adjust the terms of all outstanding Decor Employee Stock Options 
granted under

                                       36

<PAGE>



Decor Stock Plans, whether vested or unvested, as necessary to provide that, at
the Effective Time, each Decor Employee Stock Option outstanding immediately
prior to the Effective Time shall be adjusted and thereafter represent an
option to acquire, on the same terms and conditions as were applicable under
such Decor Employee Stock Option, including vesting as such may be accelerated
at the Effective Time pursuant to the terms of such Decor Employee Stock
Options in effect as of the date hereof (which include cashless exercise), the
same number of shares of Interiors Class A Common Stock as the holder of such
Decor Employee Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such Decor Employee Stock Option in full
immediately prior to the Effective Time, with any fractional shares of
Interiors Class A Common Stock resulting from such calculation being rounded to
the nearest whole share, at a price per share of Interiors Class A Common Stock
equal to (A) the aggregate exercise price for the shares of Decor Common Stock
otherwise purchasable pursuant to such Decor Employee Stock Option divided by
(B) the aggregate number of shares of Interiors Class A Common Stock deemed
purchasable pursuant to such Decor Employee Stock Option, rounding the exercise
price thus determined down to the nearest whole cent (each, as so adjusted, an
"Adjusted Option"); and

         (ii) take such other actions relating to the Decor Stock Plans as
Decor and Interiors may agree are appropriate to give effect to the Merger,
including as provided in Section 5.7.

                  (b) As soon as practicable after the Effective Time,
Interiors shall deliver to the holders of Decor Employee Stock Options
appropriate notices setting forth such holders' rights pursuant to the
respective Decor Stock Plans and the agreements evidencing the grants of such
Decor Employee Stock Options and that such Decor Employee Stock Options and
agreements shall be assumed by Interiors and shall continue in effect on the
same terms and conditions (subject to the adjustments required by this Section
5.6 after giving effect to the Merger).

                  (c) A holder of an Adjusted Option may exercise such Adjusted
Option in whole or in part in accordance with its terms by delivering a
properly executed notice of exercise to Interiors, together with the
consideration therefor and the federal withholding tax information, if any,
required in accordance with the related Decor Stock Plan.

                  (d) Except as otherwise contemplated by this Section 5.6 and
except to the extent required under the respective terms of the Decor Employee
Stock Options in effect as of the date hereof, all restrictions or limitations
on transfer and vesting with respect to Decor Employee Stock Options awarded
under the Decor Stock Plans or any other plan, program or arrangement of Decor
or any of its subsidiaries, to the extent that such restrictions or limitations
shall not have already lapsed, shall remain in full force and effect with
respect to such options after giving effect to the Merger and the assumption by
Interiors as set forth above.

SECTION 5.7. DECOR STOCK PLANS AND CERTAIN EMPLOYEE MATTERS. (a) At the
Effective Time, by virtue of the Merger, the Decor Stock Plans shall be assumed
by Interiors, with the result that all obligations of Decor under the Decor
Stock Plans, including with respect to awards outstanding at the Effective Time
under each Decor Stock Plan, shall be obligations of Interiors following the
Effective Time. Prior to the Effective Time, Interiors shall take all necessary

                                       37

<PAGE>



actions (including, if required to comply with Section 162(m) or 422 of the
Code (and the regulations thereunder) or applicable law or rule of NASDAQ,
obtaining the approval of its stockholders at the Interiors Stockholders
Meeting) for the assumption of the Decor Stock Plans, including the
reservation, issuance and listing of Interiors Class A Common Stock in a number
at least equal to (x) the number of shares of Interiors Class A Common Stock
that will be subject to Adjusted Options and (y) the product of the Exchange
Ratio and the number of shares of Decor Common Stock available for future
awards under the Decor Stock Plans immediately prior to the Effective Time. No
later than the Effective Time, Interiors shall prepare and file with the SEC a
registration statement on Form S-8 (or another appropriate form) registering a
number of shares of Interiors Class A Common Stock determined in accordance
with the preceding sentence and the unrestricted re-offer and resale of such
shares. Such registration statement shall be kept effective (and the current
status of the prospectus or prospectuses required thereby shall be maintained)
at least for so long as Adjusted Options remain outstanding and until such time
as the shares of Interiors Class A Common Stock subject to such Adjusted
Options are no longer subject to resale restrictions under the Securities Act.

                  (b) Following the Effective Time, Interiors, as the Surviving
Corporation in the Merger, will honor all obligations of Decor or its
subsidiaries under employment agreements of Decor or its subsidiaries as
amended and/or restated as contemplated in this Agreement.

SECTION 5.8. INDEMNIFICATION, EXCULPATION AND INSURANCE. (a) Interiors agrees
to maintain in effect in accordance with their terms all rights to
indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time now existing in favor of the
current or former directors or officers of Decor and its subsidiaries as
provided in their respective certificates of incorporation or bylaws (or
comparable organizational documents) and any indemnification agreements of
Decor. In addition, from and after the Effective Time, directors and officers
of Decor who become directors or officers of Interiors will be entitled to the
same indemnity rights and protections as are afforded to other directors and
officers of Interiors.

                  (b) In the event that Interiors or any of its successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision will be
made so that the successors and assigns of Interiors assume the obligations set
forth in this Section 5.8.

                  (c) For one year after the Effective Time, Interiors shall
provide to Decor's current directors and officers liability insurance covering
acts or omissions occurring prior to the Effective Time with respect to those
persons who are currently Decor's directors and officers.

                  (d) The provisions of this Section 5.8 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by contract or otherwise.


                                       38

<PAGE>



SECTION 5.9. FEES AND EXPENSES. (a) Except as provided in this Section 5.9, all
fees and expenses incurred in connection with the Merger, this Agreement, and
the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that each of Interiors and Decor shall bear and pay one-half of the
costs and expenses incurred in connection with the filing, printing and mailing
of the Form S-4 and the Joint Proxy Statement (including SEC filing fees).

                  (b) In the event that (i) an Decor Takeover Proposal shall
have been made known to Decor or any of its subsidiaries or has been made
directly to its stockholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make an Decor Takeover
Proposal and thereafter this Agreement is terminated by either Interiors or
Decor pursuant to Section 7.1(b)(i) or (ii), or (ii) this Agreement is
terminated by Decor pursuant to Section 7.1(f), then Decor shall promptly, but
in no event later than two days after the date of such termination, pay
Interiors a fee equal to $250,000 (the "Termination Fee"), payable by wire
transfer of same day funds; provided, however, that no Termination Fee shall be
payable to Interiors pursuant to clause (i) of this paragraph (b) unless and
until within 18 months of such termination Decor or any of its subsidiaries
enters into any Decor Acquisition Agreement or any transaction which would be
an Decor Takeover Proposal is consummated, in which event the Termination Fee
shall be payable upon the first to occur of such events. Decor acknowledges
that the agreements contained in this Section 5.9(b) are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, Interiors would not enter into this Agreement; accordingly, if
Decor fails promptly to pay the amount due pursuant to this Section 5.9(b),
and, in order to obtain such payment, Interiors commences a suit which results
in a judgment against Decor for the fee set forth in this Section 5.9(b), Decor
shall pay to Interiors its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank N.A. in effect on the date such payment
was required to be made.

                  (c) In the event that (i) a Interiors Takeover Proposal shall
have been made known to Interiors or any of its subsidiaries or has been made
directly to its stockholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make a Interiors
Takeover Proposal and thereafter this Agreement is terminated by either
Interiors or Decor pursuant to Section 7.1(b)(i) or (iii), or (ii) this
Agreement is terminated by Interiors pursuant to Section 7.1(d), then Interiors
shall promptly, but in no event later than two days after the date of such
termination, pay Decor the Termination Fee, payable by wire transfer of same
day funds; provided, however, that no Termination Fee shall be payable to Decor
pursuant to clause (i) of this paragraph (c) unless and until within 18 months
of such termination Interiors or any of its subsidiaries enters into any
Interiors Acquisition Agreement or any transaction which would be a Interiors
Takeover Proposal is consummated, in which event the Termination Fee shall be
payable upon the first to occur of such events. Interiors acknowledges that the
agreements contained in this Section 5.9(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Decor would not enter into this Agreement; accordingly, if
Interiors fails promptly to pay the amount due pursuant to this Section 5.9(c),
and, in order to obtain such payment, Decor commences a suit which results in a
judgment against Interiors for the fee set forth in this Section 5.9(c),
Interiors shall pay to Decor

                                      39

<PAGE>



its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of Citibank N.A. in effect on the date such payment was required to be
made.

SECTION 5.10. PUBLIC ANNOUNCEMENTS. Interiors and Decor will consult with each
other before issuing, and provide each other the opportunity to review, comment
upon and concur with and use reasonable efforts to agree on, any press release
or other public statements with respect to the transactions contemplated by
this Agreement, including the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
either party may determine is required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.

SECTION 5.11. AFFILIATES. (a) As soon as practicable after the date hereof,
Decor shall deliver to Interiors a letter identifying all persons who are, at
the time this Agreement is submitted for adoption by the stockholders of Decor,
"affiliates" of Decor for purposes of Rule 145 under the Securities Act and
such list shall be updated as necessary to reflect changes from the date
hereof.

                  (b) Interiors shall publish no later than 45 days after the
end of the first month after the Effective Time in which there are at least 30
days of post Merger combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.

SECTION 5.12. NASDAQ LISTING. Interiors shall use best efforts to cause the
Interiors Class A Common Stock issuable under Article II, upon exercise of the
outstanding Decor Class A Warrants, upon exercise of Adjusted Options pursuant
to Section 5.6 and upon exercise of the options to purchase shares of Interiors
Class A Common Stock granted pursuant to Section 5.17 and the shares of
restricted Interiors Class A Common Stock issued pursuant to Section 5.17 to be
approved for listing on The Nasdaq SmallCap Market, subject to official notice
of issuance, as promptly as practicable after the date hereof, and in any event
prior to the Closing Date.

SECTION 5.13. STOCKHOLDER LITIGATION. Each of Decor and Interiors shall give
the other the reasonable opportunity to participate in the defense of any
stockholder litigation against Decor or Interiors, as applicable, and its
directors relating to the transactions contemplated by this Agreement. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions herein stated, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have

                                       40

<PAGE>



the right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel shall not be at
the expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that the reasonable fees and expenses of such counsel shall be
at the expense of the indemnifying party if (i) the employment of such counsel
has been specifically authorized in writing by the indemnifying party or (ii)
the named parties to any such action (including any impleaded parties) include
both the indemnified party and the indemnifying party and in the reasonable
judgment of the counsel to the indemnified party, it is advisable for the
indemnified party to be represented by separate counsel (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for
the indemnified party, which firm shall be designated in writing by the
indemnified party). No settlement of any action against an indemnified party
shall be made without the consent of the indemnified party, which shall not be
unreasonably withheld in light of all factors of importance to such indemnified
party. If it is ultimately determined that indemnification is not permitted,
then an indemnified party will return all monies advanced to the indemnifying
party.

SECTION 5.14. TAX TREATMENT. Each of Interiors and Decor shall use best efforts
to cause the Merger to qualify as a reorganization under the provisions of
Section 368 of the Code and to obtain the opinions of counsel referred to in
Sections 6.2(c) and 6.3(c).

SECTION 5.15. INTENTIONALLY OMITTED

SECTION 5.16. STANDSTILL AGREEMENTS; CONFIDENTIALITY AGREEMENTS. During the
period from the date of this Agreement through the Effective Time, neither
Decor nor Interiors shall terminate, amend, modify or waive any provision of
any confidentiality or standstill agreement to which it or any of its
respective subsidiaries is a party. During such period, Decor or Interiors, as
the case may be, shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including by obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
of America or of any state having jurisdiction.

SECTION 5.17. COMPANY OFFICERS; EMPLOYMENT CONTRACTS; EQUITY AWARDS. (a)
Pursuant to and in accordance with the terms hereof and of the amended and/or
restated employment agreements referred to in Section 5.17(b) (i) at the
Effective Time and until January 1, 2000, Mr. Dennis D'Amore shall serve as
President of Artisan House, Inc.

                  (b) At or prior to the Effective Time, Interiors agrees to
enter into the amended and restated employment agreements substantially in the
forms set forth in Exhibit 5.17 attached hereto with the Interiors officers
identified in Exhibit 5.17, and Decor agrees to enter into amendments to and/or
restatements of the employment agreements substantially in the forms set

                                       41

<PAGE>



forth in Exhibit 5.17 attached hereto with the Decor officers identified in
Exhibit 5.17.

                  (c) Prior to the Effective Time, each of Interiors and Decor
agree to adopt a stock option and restricted stock plan (the "New Interiors
Stock Plan"), the terms of which shall be mutually agreed upon by Interiors and
Decor, pursuant to which the option and restricted share grants described in
this Section 5.17 and in the amended and/or restated employment agreements
referred to in this 5.17 will be made.

SECTION 5.18. POST-MERGER OPERATIONS.  Following the Effective Time, the 
combined company shall maintain its principal corporate office in Mt. Vernon, 
New York.

SECTION 5.19. CONVEYANCE TAXES. Interiors and Decor shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees or any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time. Interiors
shall pay, and Decor shall pay, without deduction or withholding from any
amount payable to the holders of Decor Common Stock, any such taxes or fees
imposed by any Governmental Entity (and any penalties and interest with respect
to such taxes and fees), which become payable in connection with the
transactions contemplated by this Agreement, on behalf of their respective
stockholders.

SECTION 5.20. TRANSITION PLANNING. Mr. Dennis D'Amore and Mr. Max Munn, as
Presidents of Decor and Interiors, respectively, jointly shall be responsible
for coordinating all aspects of transition planning and implementation relating
to the Merger and the other transactions contemplated hereby. If either such
person ceases to be President of his respective company for any reason, such
person's successor as President shall assume his predecessor's responsibilities
under this Section 5.20.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:

                  (a) STOCKHOLDER APPROVALS. Each of the Decor Stockholder
Approval and the Interiors Stockholder Approval shall have been obtained.

                  (b) GOVERNMENTAL AND REGULATORY APPROVALS. Other than the
filing provided for under Section 1.3, all consents, approvals and actions of,
filings with and notices to any Governmental Entity required of Decor,
Interiors or any of their subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or taken
(i) is reasonably expected to have a material adverse effect on the Surviving
Corporation

                                       42

<PAGE>



and its prospective subsidiaries, taken as a whole, or (ii) will result in a
violation of any laws, shall have been obtained, all in form and substance
reasonably satisfactory to Decor and Interiors.

                  (c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect (i) preventing the consummation of the Merger,
or (ii) which otherwise is reasonably likely to have a material adverse effect
on Decor or Interiors, as applicable; provided, however, that each of the
parties shall have used its best efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that may
be entered.

                  (d) FORM S-4. The Form S-4 shall have become effective under
the Securities Act prior to the mailing of the Joint Proxy Statement by each of
Decor and Interiors to their respective stockholders and no stop order or
proceedings seeking a stop order shall be threatened by the SEC or shall have
been initiated by the SEC.

                  (e) NASDAQ LISTING. The shares of Interiors Class A Common
Stock issuable to Decor's stockholders as contemplated by Article II, the
shares of Interiors Class A Common Stock issuable upon exercise of Adjusted
Options pursuant to Section 5.6 and upon exercise of the options to purchase
shares of Interiors Class A Common Stock granted pursuant to Section 5.17 shall
have been approved for listing on The Nasdaq SmallCap Market, subject to
official notice of issuance.

                  (f) ACCOUNTING LETTERS. Interiors and Decor shall have
received letters from each of Decor's independent accountants and Interiors's
independent accountants, dated as of the date the Form S-4 is declared
effective and as of the Closing Date, in each case addressed to Interiors and
Decor, stating that accounting for the Merger as a purchase under the rules of
the Accounting Principles Board and applicable SEC rules and regulations is
appropriate if the Merger is consummated and closed as contemplated by this
Agreement.

                  (g) CORPORATE GOVERNANCE. Interiors shall have taken all such
actions as shall be necessary so that (i) the Certificate of Amendment shall
become effective not later than the Effective Time; (ii) the resolutions set
forth as part of Exhibit A shall have been adopted, to be effective upon the
Effective Time; (iii) the New Interiors Stock Plan shall become effective not
later than the Effective Time; and (iv) at the Effective Time, the composition
of the Interiors Board of Directors and the committees of such Board shall
comply with the Restated Certificate and Exhibit A hereof (assuming Decor has
designated the Decor Directors and Interiors has designated the Interiors
Directors, in each case as contemplated by Exhibit A).

SECTION 6.2. CONDITIONS TO OBLIGATIONS OF INTERIORS. The obligation of
Interiors to effect the Merger is further subject to satisfaction or waiver of
the following conditions:

                  (a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Decor set forth herein shall be true and correct both when made
and at and as of the Closing

                                       43

<PAGE>



Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse effect" set
forth therein) does not have, and is not likely to have, individually or in the
aggregate, a material adverse effect on Decor; provided, that the
representations and warranties of Decor set forth in Sections 3.1(i), (j)(iii),
(j)(iv) and (j)(v) and (s) shall nonetheless be deemed true and correct at and
as of the Closing Date regardless of changes therein caused by an acquisition
permitted by 4.1(a)(iv) or by the incurrence of indebtedness permitted by
4.1(a)(vii), except to the extent that such changes have, or could reasonably
be expected to have, a material adverse effect on Decor.

                  (b) PERFORMANCE OF OBLIGATIONS OF DECOR. Decor shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.

                  (c) TAX OPINIONS. Interiors shall have received reasonable
comfort in its sole discretion, on a date immediately prior to the mailing of
the Joint Proxy Statement and on the Closing Date, to the effect that: (i) the
Merger will constitute a "reorganization" within the meaning of Section 368(a)
of the Code, and Interiors and Decor will each be a party to such
reorganization within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by Interiors or Decor as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of Decor upon the
exchange of their shares of Decor Common Stock solely for shares of Interiors
Class A Common Stock pursuant to the Merger, except with respect to cash, if
any, received in lieu of fractional shares of Interiors Class A Common Stock;
(iv) the aggregate tax basis of the shares of Interiors Class A Common Stock
received solely in exchange for shares of Decor Common Stock pursuant to the
Merger (including fractional shares of Interiors Class A Common Stock for which
cash is received) will be the same as the aggregate tax basis of the shares of
Decor Common Stock exchanged therefor; and (v) the holding period for shares of
Interiors Class A Common Stock received in exchange for shares of Decor Common
Stock pursuant to the Merger will include the holding period of the shares of
Decor Common Stock exchanged therefor, provided such shares of Decor Common
Stock were held as capital assets by the stockholder at the Effective Time. In
rendering such opinions, counsel for Interiors shall be entitled to rely upon
representations of officers of Interiors, Decor and stockholders of Decor
substantially in the form of Exhibits D and E hereto.

                  (d) NO MATERIAL ADVERSE CHANGE. At any time after the date of
this Agreement there shall not have occurred any material adverse change
relating to Decor.

SECTION 6.3. CONDITIONS TO OBLIGATIONS OF DECOR. The obligation of Decor to
effect the Merger is further subject to satisfaction or waiver of the following
conditions:

                  (a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Interiors set forth herein shall be true and correct both when
made and at and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and warranties to

                                       44

<PAGE>



be so true and correct (without giving effect to any limitation as to
"materiality," or "material adverse effect" set forth therein) does not have,
and is not likely to have, individually or in the aggregate, a material adverse
effect on Interiors; provided, that the representations and warranties of
Interiors set forth in Sections 3.2(i), (j)(iii), (j)(iv) and (j)(v) and (s)
shall nonetheless be deemed true and correct at and as of the Closing Date
regardless of changes therein caused by an acquisition permitted by 4.1(b)(iv)
or by the incurrence of indebtedness permitted by 4.1(b)(vii), except to the
extent that such changes have, or could reasonably be expected to have, a
material adverse effect on Interiors.

                  (b) PERFORMANCE OF OBLIGATIONS OF INTERIORS. Interiors shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.

                  (c) TAX OPINIONS. Decor shall have received from reasonable
comfort in its sole discretion on a date immediately prior to the mailing of
the Joint Proxy Statement and on the Closing Date to the effect that: (i) the
Merger will constitute a "reorganization" within the meaning of Section 368(a)
of the Code, and Interiors and Decor will each be a party to such
reorganization within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by Interiors or Decor as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of Decor upon the
exchange of their shares of Decor Common Stock solely for shares of Interiors
Class A Common Stock pursuant to the Merger, except with respect to cash, if
any, received in lieu of fractional shares of Interiors Class A Common Stock;
(iv) the aggregate tax basis of the shares of Interiors Class A Common Stock
received solely in exchange for shares of Decor Common Stock pursuant to the
Merger (including fractional shares or Interiors Class A Common Stock for which
cash is received) will be the same as the aggregate tax basis of the shares of
Decor Common Stock exchanged therefor; and (v) the holding period for shares of
Interiors Class A Common Stock received in exchange for shares of Decor Common
Stock pursuant to the Merger will include the holding period of the shares of
Decor Common Stock exchanged therefor, provided such shares of Decor Common
Stock were held as capital assets by the stockholder at the Effective Time. In
rendering such opinions, counsel for Decor shall be entitled to rely upon
representations of officers of Interiors, Decor and stockholders of Decor
substantially in the form of Exhibits D and E hereto.

                  (d) NO MATERIAL ADVERSE CHANGE. At any time after the date of
this Agreement there shall not have occurred any material adverse change
relating to Interiors.

                  (e) OPINION OF FINANCIAL ADVISOR. Decor will have received
the fairness opinion of a qualified investment banking firm, to the effect
that, as of the date of this Agreement, the Exchange Ratio for the conversion
of Decor Common Stock into Interiors Class A Common Stock is fair from a
financial point of view to holders of shares of Decor Common Stock (other than
Interiors and its affiliates), a signed copy of which opinion has been
delivered to Interiors, it being understood and agreed by Interiors that such
opinion is for the benefit of the Board of Directors of Decor and may not be
relied upon by Interiors, its affiliates or any of their respective
stockholders.


                                       45

<PAGE>




SECTION 6.4. FRUSTRATION OF CLOSING CONDITIONS. Neither Interiors nor Decor may
rely on the failure of any condition set forth in Section 6.1, 6.2 or 6.3, as
the case may be, to be satisfied if such failure was caused by such party's
failure to use best efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to Section 5.5.

                                  ARTICLE VII

                       TERMINATION, AMENDMENT AND WAIVER


SECTION 7.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, and (except in the case of 7.1(d) or 7.1(f)) whether before
or after the Decor Stockholder Approval or the Interiors Stockholder Approval:

                  (a) by mutual written consent of Interiors and Decor;

                  (b) by either Interiors or Decor:

         (i) if the Merger shall not have been consummated by December 31,
1998, provided, however, that the right to terminate this Agreement pursuant to
this Section 7.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the failure of
the Merger to be consummated by such time; provided, however, that this
Agreement may be extended not more than 30 days by either party by written
notice to the other party if the Merger shall not have been consummated as a
direct result of Interiors or Decor having failed to receive all regulatory
approvals required to be obtained with respect to the Merger.

         (ii) if the Decor Stockholder Approval shall not have been obtained at
an Decor Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof;

         (iii) if the Interiors Stockholder Approval shall not have been
obtained at a Interiors Stockholders Meeting duly convened therefor or at any
adjournment or postponement thereof; or

         (iv) if any Restraint having any of the effects set forth in Section
6.1(d) shall be in effect and shall have become final and nonappealable;
provided, that the party seeking to terminate this Agreement pursuant to this
Section 7.1(b)(iv) shall have used best efforts to prevent the entry of and to
remove such Restraint;

                  (c) by Interiors, if Decor shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth
in Section 6.2(a) or (b), and (B) is incapable of being cured by Decor or is
not cured within 45 days of written notice thereof;


                                       46

<PAGE>



                  (d) prior to receipt of the Interiors Stockholder Approval,
by Interiors in accordance with Section 4.3(b); provided that, in order for the
termination of this Agreement pursuant to this paragraph (d) to be deemed
effective, Interiors shall have complied with all provisions contained in
Section 4.3, including the notice provisions therein, and with applicable
requirements, including the payment of the Termination Fee, of Section 5.9;

                  (e) by Decor, if Interiors shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth
in Section 6.3(a) or (b), and (B) is incapable of being cured by Interiors or
is not cured within 45 days of written notice thereof; or

                  (f) prior to receipt of the Decor Stockholder Approval, by
Decor in accordance with Section 4.2(b); provided that, in order for the
termination of this Agreement pursuant to this paragraph (f) to be deemed
effective, Decor shall have complied with all provisions of Section 4.2,
including the notice provisions therein, and with applicable requirements,
including the payment of the Termination Fee, of Section 5.9.

SECTION 7.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Decor or Interiors as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Interiors or Decor, other than the provisions of
Section 3.1(o), Section 3.2(o), the last sentence of Section 5.4, Section 5.9,
this Section 7.2 and Article VIII, which provisions survive such termination,
and except to the extent that such termination results from the willful and
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.

SECTION 7.3. AMENDMENT. This Agreement may be amended by the parties at any
time before or after the Decor Stockholder Approval or the Interiors
Stockholder Approval; provided, however, that after any such approval, there
shall not be made any amendment that by law requires further approval by the
stockholders of Decor or Interiors without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.

SECTION 7.4. EXTENSION; WAIVER. At any time prior to the Effective Time, a
party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.3, waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.

SECTION 7.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement

                                       47

<PAGE>



pursuant to Section 7.3 or an extension or waiver pursuant to Section 7.4
shall, in order to be effective, require, in the case of Interiors or Decor,
action by its Board of Directors or, with respect to any amendment to this
Agreement, the duly authorized committee of its Board of Directors to the
extent permitted by law.

                                  ARTICLE VIII

                               GENERAL PROVISIONS


SECTION 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.

SECTION 8.2. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

                  (a) if to Interiors, to

                  Interiors, Inc.
                  320 Washington Street
                  Mt. Vernon, New York  10553
                  Attention: Max Munn

                  with a copy to:

                  Sol V. Slotnik, P.C.
                  295 Madison Avenue
                  39th Floor
                  New York, New York 10017
                  Attention: Sol V. Slotnik

                  (b) if to Decor, to

                  Decor Group, Inc.

                  Attention: Dennis D'Amore

                  with a copy to:

                  [TO BE PROVIDED TO OUTSIDE COUNSEL OF DECOR]


                                       48

<PAGE>




SECTION 8.3. DEFINITIONS.  For purposes of this Agreement:

                  (a) except for purposes of Section 5.11, an "affiliate" of
any person means another person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, such first person, where "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise;

                  (b) "material adverse change" or "material adverse effect"
means, when used in connection with Decor or Interiors, any change, effect,
event, occurrence or state of facts that is, or would reasonably be expected to
be, materially adverse to the business, financial condition or results of
operations of such party and its subsidiaries taken as a whole; and the terms
"material" and "materially" have correlative meanings;

                  (c) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity;

                  (d) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person; provided however, that with respect to Interiors, such
term shall not include Decor; and

           (e) "knowledge" of any person which is not an individual means the
knowledge of such person's executive officers or senior management of such
person's operating divisions and segments, in each case after reasonable
inquiry.

SECTION 8.4. INTERPRETATION. When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
The definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments)

                                       49

<PAGE>



by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.

SECTION 8.5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.

SECTION 8.6. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article II, Section 5.6 and Section 5.8, are not intended to
confer upon any person other than the parties any rights or remedies.

SECTION 8.7. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws
thereof.

SECTION 8.8. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by either of the parties hereto without
the prior written consent of the other party. Any assignment in violation of
the preceding sentence shall be void. Subject to the preceding two sentences,
this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.

SECTION 8.9. CONSENT TO JURISDICTION. Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any federal court located in
the State of New York or any New York state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of New York or a New York state court.

SECTION 8.10. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

SECTION 8.11. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

                                       50

<PAGE>


       IN WITNESS WHEREOF, Interiors and Decor have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.

                                    INTERIORS, INC.


                                    By: /s/ John D. Mazzuto
                                       -----------------------------------------
                                       Name: John D. Mazzuto
                                       Title: Executive Vice President

                                    DECOR GROUP, INC.


                                    By: /s/ Dennis D'Amore
                                       -----------------------------------------
                                       Name: Dennis D'Amore
                                       Title: President

                                       51