EXCHANGE AGREEMENT

            This Convertible Note Exchange Agreement (the "Agreement") is made
as of the 31st day of December 1999, by and between Interiors, Inc., a Delaware
corporation ("Interiors") and Endeavour Capital Fund SA (hereinafter referred to
as the "Holder") of 1,500 shares of Series C Convertible Preferred Stock (the
"Preferred Stock") of Interiors.

                                    Recitals

      A. Holder is currently the record owner of 1,500 shares of Preferred
Stock.

      B. Interiors has created a secured convertible note (the "Notes") with all
of the rights and privileges set forth in the Note annexed hereto as Exhibit A.

      C. By this Agreement, Interiors desires to assign, convey, transfer and
deliver to the Holder of the Preferred Stock that principal amount of Notes set
forth beside the Holder's name on Schedule A hereto, in exchange for the
surrender of the Preferred Stock, set forth on such Schedule.

                             Statement of Agreement

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

      1. Exchange of Preferred Shares. Interiors and the Holder agree to
exchange that number of shares of Preferred Stock for that principal amount of
Notes as set forth on Schedule A and warrants (in the form of Exhibit B annexed
hereto) to purchase 110,000 shares of Interiors Class A Common Stock (the
"Common Stock"), pursuant to the terms set forth herein and the Escrow Agreement
(annexed hereto as Exhibit C) within ten Business Days after the date hereof.
The "Exchange Date" shall be defined as the date the Escrow Agent receives the
original Note and the Preferred Stock being exchange thereby. On the Exchange
Date, the Holder will cease to have any right to receipt or payment of dividends
in whole or in part, on the Preferred Stock, but will begin the right to receipt
or payment of interest or principal on the Notes.

      1.1 Conditions to Closing of the Exchange. Upon the terms and satisfaction
of each of the following conditions, and in reliance upon the representations
and warranties contained in this Agreement, Interiors and the Holder agree to
exchange the Preferred Stock for the Notes and Warrants (the business date each
of these conditions are satisfied is hereby referred to as the "Closing Date"):

            (a) Acceptance by the Holder of a satisfactory Exchange Agreement
      (including all Exhibits annexed hereto) and due execution by all parties
      of this Agreement and the Exhibits annexed hereto;

            (b) Delivery into escrow by Interiors of the original Notes and the
      original Warrants to be issued as per the terms of the Escrow Agreement;

<PAGE>

            (c) All representations and warranties of Interiors contained herein
      and in all Exhibits (and the representations and warranties of Petals,
      Inc. contained in the Security Agreement) annexed hereto shall remain true
      and correct in all material respects as of the Closing Date;

            (d) Holder shall have received an opinion of counsel substantially
      in the form of Exhibit D annexed hereto;

            (e) Interiors shall have obtained all permits and qualifications
      required by any state for the issuance of the Notes and Warrants, or shall
      have the availability of exemptions therefrom. At the Closing Date, all
      laws and regulations to which Interiors and Holder are subject shall
      legally permit the issuance of the Notes and Warrants;

            (f) Interiors and Petals, Inc. shall have executed the financing
      statements and Security Agreement, and filed same with the proper state
      authorities in the states of New York and Delaware giving notice of the
      Holder's security interest in the Collateral; and

            (g) Interiors shall have obtained consents for Interiors to
      participate in this transaction from any party necessary to complete this
      transaction.

      2. Representations and Warranties of Interiors and Holder.

      2.1 Interiors Representations and Warranties.

            (a) Organization and Good Standing. Interiors is a corporation duly
incorporated and validly existing and in good standing under the laws of the
State of Delaware, with the full authority to issue the Notes and complete the
exchange as set forth herein and to carry out the provisions hereof, and has all
requisite corporate authority to own its properties and to carry on its business
as now being conducted except as described in the "SEC Documents" (defined as
Interiors filings with the SEC during the 12 consecutive months immediately
preceding the Closing Date). Interiors is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those (individually or in the aggregate) in
which the failure so to qualify would not reasonably be expected to have a
"Material Adverse Effect" (defined as any effect on the business, operations,
properties, prospects, or financial condition of Interiors and/or its
subsidiaries that is material and adverse to Interiors and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of Interiors to enter into and perform any of its obligations under this
Agreement, the Escrow Agreement, the Security Agreement, the Registration Rights
Agreement, the Notes, or Warrants in any material respect. Interiors is not in
violation of any material terms of its Articles of Incorporation (as defined
below) or Bylaws (as defined below).

            (b) Notes and Warrants. The Notes and Warrants, when issued pursuant
to the terms of this Agreement will be duly authorized, and validly issued, and
will be subject to no lien or encumbrance. The Notes shall be convertible into
shares of Common Stock pursuant to the terms and conditions set forth in the
Note in the form attached hereto as Exhibit A. The Warrants shall be


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<PAGE>

exercisable for shares of Common Stock pursuant to the terms and conditions of
the Warrant in the form annexed hereto as Exhibit B.

            (c) Registration Rights. The terms and conditions of the
Registration Rights Agreement between Interiors and the Holder, substantially in
the form annexed hereto as Exhibit E, shall be executed by the parties herein,
and remain in full force and effect when exchange occurs pursuant to the terms
of this Agreement, and all provisions of the Registration Rights Agreement are
incorporated herein by reference and made a part of this Agreement.

            (d) Execution of this Agreement. Interiors has the full right, power
and authority to enter into and to perform its obligations under this Agreement
and all other agreements, certificates and documents executed and delivered, or
to be executed and delivered, by Interiors in connection herewith (collectively,
with this Agreement, the "Interiors Documents"), and to issue the Notes and
Warrants. This Agreement has been duly authorized, executed and delivered by
Interiors, and the Interiors Documents are (or when executed and delivered will
be) legal, valid and binding obligations of Interiors, enforceable in accordance
with their respective terms. The execution, issuance and delivery of this
Agreement, and all Exhibits annexed hereto by Interiors and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action and no further consent or authorization of
Interiors, its shareholders, or its Board of Directors is necessary. This
Agreement, and all Exhibits annexed hereto, have been duly executed and
delivered by Interiors and constitute valid and binding obligations of Interiors
enforceable against Interiors in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application. Upon their
issuance and delivery pursuant to this Agreement, the Notes and Warrants will be
validly issued, fully paid and nonassessable, and will be free of any liens or
encumbrances other than those created hereunder or by the actions of the Holder;
provided, however, that the Notes and Warrants are subject to restrictions on
transfer under state and/or federal securities laws. The issuance of the Notes
and Warrants will not give rise to any preemptive right or right of first
refusal or right of participation on behalf of any person other than the Holder
pursuant to the terms of this Agreement.

            (e) Information True and Correct. All the information that is set
forth in this Agreement with respect to the Interiors is correct and complete as
of the date of this Agreement.

            (f) Capitalization. As of September 27, 1999, the authorized capital
stock of Interiors consists of 60,000,000 shares of Class A Common Stock, $0.001
par value, of which 31,378,067 shares of Class A Common Stock are outstanding,
2,500,000 shares of Class B Common Stock, of which 2,445,000 shares of Class B
Common Stock are outstanding, and 5,300,000 shares of preferred stock, of which
1,002,907 of Series A Preferred Stock are outstanding, 200,000 shares of Series
B Preferred Stock are outstanding, and 6,527 shares of Series C Preferred Stock
are outstanding. All of the outstanding shares of the Interior's capital stock
have been duly and validly authorized and issued and are fully paid and
nonassessable. No shares of common stock or preferred stock of Interiors are
entitled to preemptive or similar rights. Except as disclosed in the SEC
Documents or on Schedule 2.1(f) annexed hereto, there are no outstanding
options, warrants, rights to subscribe to, calls or commitments of any


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<PAGE>

character whatsoever relating to, or, except as a result of the issuance of the
Notes and Warrants, securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of common stock, or contracts, commitments, understandings, or
arrangements by which Interiors or any subsidiary is or may become bound to
issue additional shares of common stock or securities or rights convertible or
exchangeable into shares of common stock. Except as disclosed in the SEC
Documents or on Schedule 2.1(f) annexed hereto, and to the knowledge of
Interiors, no person or group of persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) or has the right to
acquire by agreement with or by obligation binding upon Interiors beneficial
ownership of in excess of five percent of the Common Stock.

            (g) Common Stock. Interiors has registered its Common Stock pursuant
to Section 12(g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and such Common Stock is currently
listed or quoted, and trades, on the Nasdaq Small Cap Stock Market, and
Interiors is in full compliance with the rules and regulations of the Nasdaq
Small Cap Stock Market.

            (h) SEC Documents. Interiors has delivered or made available to the
Holder true and complete copies of the SEC Documents. Interiors has not provided
to the Holder any information that, according to applicable law, rule or
regulation, should have been disclosed publicly prior to the date hereof by
Interiors, but which has not been so disclosed. The SEC Documents comply in all
material respects with the requirements of the Securities Act and/or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder and none of the SEC Documents contain any untrue
statement of a material fact or omit 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 SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of Interiors as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Interiors has filed a Form
12b-25 on June 30, 1999, relating to its Form 10-K for the year ended June 30,
1999 and agrees that it shall file the aforementioned Form 10-K in a timely
manner as set forth on the Form 12b-25.

            (i) Valid Issuances. Neither the issuance of the Notes and Warrants,
nor the Company's performance of its obligations under this Agreement, and all
Exhibits annexed hereto, will (i) result in the creation or imposition by the
Company of any liens, charges, claims or other encumbrances upon the Notes,
Warrants, or shares of Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares"), issued or issuable hereunder, or any of the assets of the
Company other than the security interest granted under the Security Agreement,
or (ii) entitle the


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<PAGE>

holders of Outstanding Capital Shares to preemptive or other rights to subscribe
to or acquire any Capital Shares or other securities of Interiors.

            (j) No General Solicitation or Advertising in Regard to this
Transaction. Neither Interiors nor any of its affiliates, nor any distributor or
any person acting on its or their behalf (i) has conducted or will conduct any
general solicitation (as that term is used in Rule 502(c) of Regulation D) or
general advertising in connection with the issuance of the Notes and Warrants,
or (ii) has made any offers or sales of any security or solicited any offers to
buy any security under any circumstances that would require registration of the
Notes and Warrants under the Securities Act, except as contemplated by this
Agreement.

            (k) Corporate Documents. Interiors has furnished or made available
to the Holder true and correct copies of Interior's Articles of incorporation,
as amended and in effect on the date hereof (the "Articles of Incorporation"),
and Interior's bylaws, as amended and in effect on the date hereof (the
"ByLaws"). The Articles of Incorporation and ByLaws are in full force and effect
as of the Closing Date, without change or amendment.

            (l) No Conflicts. The execution, delivery and performance of this
Agreement (including all Exhibits annexed hereto) by Interiors and the
consummation by Interiors of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Notes, Warrants and Warrant
Shares, do not and will not (i) result in a violation of the Articles of
Incorporation or ByLaws or (ii) conflict with, or constitute a material default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, patent, patent license, indenture, instrument or
any "lock-up" or similar provision of any underwriting or similar agreement to
which Interiors is a party, or (iii) result in a violation of any federal, state
or local law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to Interiors or by which any
property or asset of Interiors is bound or affected, nor is Interiors otherwise
in violation of, in conflict with, or in default under, any of the foregoing
except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The business of Interiors is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. Except for
the filing of a Form D within 15 days after the Closing Date (which Interiors
agrees it will file), and such other form(s) required by "blue sky" laws,
Interiors is not required under federal, state or local law, rule or regulation
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or issue the
Note, or Warrant, in accordance with the terms hereof; provided that, for
purposes of the representation made in this sentence, Interiors is assuming and
relying upon the accuracy of the relevant representations and agreements of the
Holder herein.

            (m) No Material Adverse Change. Since January 1, 1999, no Material
Adverse Effect has occurred or exists with respect to Interiors, except as
disclosed in the SEC Documents, or as publicly announced.


                                       5
<PAGE>

            (n) No Undisclosed Liabilities. Interiors has no liabilities or
obligations, known or unknown, absolute or otherwise (individually or in the
aggregate), which are not disclosed in the SEC Documents or otherwise publicly
announced, or as incurred in the ordinary course of its businesses since January
1, 1999, or which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.

            (o) No Undisclosed Events or Circumstances. Since January 1, 1999,
no event or circumstance has occurred or exists with respect to Interiors or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by Interiors, but which has not been so
publicly announced or disclosed in the SEC Documents.

            (p) Litigation and Other Proceedings. Except as set forth in the SEC
Documents, there are no lawsuits or proceedings pending or to the knowledge of
Interiors threatened, against the Company, nor has the Company received any
written or oral notice of any such action, suit, proceeding or investigation,
which would reasonably be expected to have a Material Adverse Effect. Except as
set forth in the SEC Documents, no judgment, order, writ, injunction or decree
or award has been issued by or, so far as is known by Interiors, requested of
any court, arbitrator or governmental agency which would be reasonably expected
to result in a Material Adverse Effect.

            (q) Accuracy of Reports and Information. Interiors is in compliance,
to the extent applicable, with all reporting obligations under either Section
12(b), 12(g) or 15(d) of the Exchange Act. Interiors has complied in all
material respects and to the extent applicable with all reporting obligations,
under either Section 13(a) or 15(d) of the Exchange Act for a period of at least
twelve (12) months immediately preceding the Closing Date.

            (r) Acknowledgment of Dilution. Interiors is aware and acknowledges
that issuance of Common Stock upon the conversion of the Notes and/or exercise
of the Warrants, may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions.
Interiors further acknowledges that its obligation to issue Additional Shares in
accordance with the terms of the Registration Rights Agreement, Underlying
Shares in accordance with the Notes, and Warrant Shares in accordance with the
Warrant is unconditional and absolute regardless of the effect of any such
dilution.

            (s) Employee Relations. Interiors is not involved in any labor
dispute, nor, to the knowledge of Interiors, is any such dispute threatened
which could reasonably be expected to have a Material Adverse Effect. None of
Interior's employees is a member of a union and Interiors believes that its
relations with its employees are good.

            (t) Insurance. Interiors is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of Interiors believes to be prudent and customary in the businesses
in which Interiors is engaged. Interiors has no notice to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires, or obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.


                                       6
<PAGE>

            (u) Board Approval. The Board of Directors of Interiors has
concluded, in its good faith business judgment that the issuances of the
securities of Interiors in connection with this Agreement are in the best
interests of Interiors.

            (v) Integration. Interiors, any of its affiliates, or any person
acting on its or their behalf has not, shall not, and shall use its best efforts
to ensure that no affiliate shall, directly or indirectly, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security of
Interiors that would be integrated with the issuance of the Notes and Warrants
in a manner that would require the registration under the Securities Act of the
issue of the Notes and Warrants to the Holder. The Notes and Warrants are being
offered and sold pursuant to the terms hereunder, are not being offered and sold
as part of a previously commenced private placement of securities.

            (w) Patents and Trademarks. Interiors has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, licenses, trade secrets and other intellectual property
rights which are necessary for use in connection with its business or which the
failure to so have would have a Material Adverse Effect (collectively, the
"Intellectual Property Rights"). To the best knowledge of Interiors, none of the
Intellectual Property Rights infringe on any rights of any other Person, and
Interiors either owns or has duly licensed or otherwise acquired all necessary
rights with respect to the Intellectual Property Rights. Interiors has not
received any notice from any third party of any claim of infringement by
Interiors of any of the Intellectual Property Rights, and has no reason to
believe there is any basis for any such claim. To the best knowledge of
Interiors, there is no existing infringement by another Person on any of the
Intellectual Property Rights.

            (x) Use of Proceeds. The net proceeds are to be used for general
working capital and not for the repayment of any judgment.

            (y) Subsidiaries. Except as disclosed in the SEC Documents,
Interiors does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity. Petals, Inc. ("Petals") is a wholly owned subsidiary of the Company. The
Company is the beneficial owner all of the outstanding shares of Petals (a total
of 411 shares of Petals common stock). Petals is authorized to, and has the
power to enter into, and perform its obligations as set forth in this Agreement
and all Exhibits annexed hereto.

            (z) No Private Placements. Except as disclosed in the SEC Documents
and in Schedule 4.3 annexed hereto, Interiors has not conducted a private
placement of its Common Stock or of any debt or equity instrument convertible
into Common Stock within one year prior to the Closing Date. Except for the
transactions contemplated hereby, there are no outstanding securities issued by
Interiors that are entitled to registration rights under the Securities Act.
Except as disclosed in the SEC Documents, there are no outstanding securities
issued by Interiors that are directly or indirectly convertible into,
exercisable into, or exchangeable for, shares of Common Stock, that have
anti-dilution or similar rights that would be affected by the issuance of the
Notes, Warrants, Warrant Shares, and/or Underlying Shares.


                                       7
<PAGE>

            (aa) Permits; Compliance. Interiors and each of its subsidiaries is
in possession of and operating in compliance with all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Interiors Permits") all of which are valid and in full force
and effect, and there is no action pending or, to the knowledge of Interiors,
threatened regarding the suspension or cancellation of any of the Interiors
Permits except for such Interiors Permits, the failure of which to possess, or
the cancellation, or suspension of which, would not, individually or in the
aggregate, have a Material Adverse Effect. To Interior's knowledge, neither
Interiors nor any of its subsidiaries is in material conflict with, or in
material default or material violation of, any of the Interiors Permits. Since
January 1, 1999 neither Interiors nor any of its subsidiaries has received any
notification with respect to possible material conflicts, material defaults or
material violations of applicable laws.

            (bb) Taxes. Except where non-compliance would not have a Material
Adverse Effect, all federal, state, city and other tax returns, reports and
declarations required to be filed by or on behalf of Interiors have been filed
and such returns are complete and accurate and disclose all taxes (whether based
upon income, operations, purchases, sales, payroll, licenses, compensation,
business, capital, properties or assets or otherwise) required to be paid in the
periods covered thereby.

            (cc) No Bankruptcy. Interiors is aware of no facts or claims against
it that would, and Interiors has no present intention to, liquidate the assets
of Interiors and/or seek bankruptcy protection either voluntarily or
involuntarily.

            (dd) No Default. Except where non-compliance would not have a
Material Adverse Effect, Interiors is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its property is bound.

            (ee) Absence of Events of Default. Except as set forth in the SEC
Documents and this Agreement, no Event of Default, as defined in any agreement
to which Interiors is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a Material Adverse Effect.

            (ff) Governmental Consent, etc. Except for the filing of the Form D
and any state securities filings, no consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of Interiors is required in connection with the valid execution and delivery of
this Agreement, or the offer, sale or issuance of the Notes, Warrants,
Underlying Shares and/or Warrant Shares, or the consummation of any other
transaction contemplated hereby.

            (gg) Intellectual Property Rights. Except as disclosed in the SEC
Documents, Interiors has sufficient trademarks, trade names, patent rights,
copyrights and licenses to conduct


                                       8
<PAGE>

its business. To Interior's knowledge, neither Interiors nor its products is
infringing or will infringe any trademark, trade name, patent right, copyright,
license, trade secret or other similar right of others currently in existence;
and there is no claim being made against Interiors regarding any trademark,
trade name, patent, copyright, license, trade secret or other intellectual
property right which could have a Material Adverse Effect.

            (hh) Material Contracts. Except as set forth in the SEC Documents,
the agreements to which Interiors is a party described in the SEC Documents are
valid agreements, in full force and effect Interiors is not in material breach
or material default (with or without notice or lapse of time, or both) under any
of such agreements and, to Interior's knowledge, the other contracting party or
parties thereto are not in material breach or material default (with or without
notice or lapse of time, or both) under any of such agreements.

            (ii) Title to Assets. Except as set forth in SEC Documents,
Interiors has good and marketable title to all properties and material assets
described in the SEC Documents as owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of Interiors.

            (jj) Full Disclosure. There is no fact known to Interiors (other
than general economic conditions known to the public generally) that has not
been publicly disclosed by Interiors or disclosed in writing to the Investor
which could reasonably be expected to have a Material Adverse Effect, or could
reasonably be expected to materially and adversely affect the ability of
Interiors to perform its obligations pursuant to this Agreement.

            (kk) Security Interest. Interiors agrees to cause Petals to give the
Holder a security interest on the Collateral during the time that any portion of
the Notes remains outstanding. Interiors represents and warrants that as of the
Closing Date there are no liens, encumbrances, claims or security interests on
the Collateral, other than the security interest given to the Holder pursuant to
this Agreement and the Security Agreement, and the security given to Limeridge
LLC which is acknowledged by all parties hereto. Interiors hereby agrees to file
a UCC-1 Financing Statement on the Collateral in favor of the Holder. Interiors
agrees that it will not, and will not cause Petals to, encumber the Collateral
in any way during the time the Notes remain outstanding.

      2.2 Holder's Representations and Warranties.

            (a) Title. The Holder is the owner, beneficially and of record, of
all the shares of Preferred Stock set forth beside its name on Schedule A,
exchanged hereby, free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges and restrictions. The Holder has
full power to transfer the Preferred Stock exchanged hereby with Interiors
without obtaining the consent or approval of any other person, entity or
governmental authority. The Preferred Stock being exchanged hereby constitute
all of the Preferred Stock owned by the Holder.

            (b) Information True and Correct. All the information that is set
forth in this Agreement with respect to the Holder is correct and complete as of
the date of this Agreement.


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<PAGE>

            (c) Knowledge and Experience. The Holder has such knowledge and
experience in financial and business matters that the Holder, together with its
representatives and advisors, if any, is capable of evaluating the merits and
risks of an investment in the Notes.

            (d) Holder's Liquidity. The Holder has adequate means of providing
for its current needs and contingencies and has no need for liquidity in
connection with the investment contemplated herein. The Holder acknowledges that
it must bear the economic risk of investment in the Notes for an indefinite
period of time, and that it could bear a loss of its entire investment in the
Notes, without materially impairing its financial wherewithal.

            (e) Execution of this Agreement. The Holder has the full right,
power and authority to enter into and to perform this Agreement and all other
agreements, certificates and documents executed and delivered, or to be executed
and delivered, by the Holder in connection herewith (collectively, with this
Agreement, the "Holder Documents"). This Agreement has been duly authorized,
executed and delivered by the Holder, and the Holder Documents are (or when
executed and delivered will be) legal, valid and binding obligations of the
Holder, enforceable in accordance with their respective terms.

            (f) Intent. Without limiting its ability to resell the Securities
pursuant to an effective registration statement or an exemption from
registration, the Holder has no present arrangement (whether or not legally
binding) at any time to sell the Notes and/or Warrants to or through any person
or entity; provided, however, that by making the representations herein, the
Holder does not agree to hold the securities for any minimum or other specific
term and reserves the right to dispose of the securities at any time in
accordance with federal and state securities laws applicable to such
disposition. Without limiting its ability to resell the securities, the Holder
represents that the Notes and Warrants are acquired for the Holder's own
account, for investment purposes only and not for distribution or resale to
others. The Holder agrees that it will not sell the securities unless they are
registered under the Securities Act or unless an exemption from such
registration is available.

            (g) Accredited Investor/Investment Experience. The Holder is an
accredited investor (as defined in Rule 501 of Regulation D), and has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Notes and Warrants. As of the
Closing Date, the Holder (i) has adequate means of providing for its current
need and possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risk of an investment
in the Notes and Warrant for an indefinite period, and (iv) can afford the
complete loss of its investment. The Holder recognizes the highly speculative
nature of this investment. The Holder acknowledges that it has carefully read
the SEC Documents and the terms and conditions of the Notes and Warrants and
fully understands the contents thereof.

            (h) Not an Affiliate. The Holder is neither an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of
Interiors.

            (i) Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument executed in connection herewith,
and the consummation of the transactions contemplated hereby and thereby, and
compliance with the requirements thereof,


                                       10
<PAGE>

will not (a) violate the organizational documents of any of the Holder; (b)
violate any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on the Holder, or, to the knowledge of the Holder; (c) violate any
provision of any indenture, instrument or agreement to which the Holder is a
party or are subject, or by which the Holder or any of its assets is bound; (d)
conflict with or constitute a material default thereunder; (e) result in the
creation or imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement, or constitute a breach of any fiduciary duty owed by
the Holder to any third party; or (f) require the approval of any third-party
(which has not been obtained) pursuant to any material contract, agreement,
instrument, relationship or legal obligation to which the Holder is subject or
to which any of its assets, operations or management may be subject.

            (j) Disclosure; Access to Information. The Holder has received all
documents, records, books and other information pertaining to Holder's
investment in Interiors that have been requested by the Holder. The Holder has
had the opportunity to ask questions of, and receive answers from, Interiors.

            (k) Manner of Sale. At no time was the Holder presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising in
connection with the offer and sale of the Notes and Warrants.

            (l) Exemption from Registration. The Holder acknowledges and
understands that the Notes and Warrant have not been registered under the
Securities Act by reason of an exemption under the provisions of the Securities
Act.

            (m) No Legal, Tax or Investment Advice. The Holder understands that
nothing in this Agreement or any other materials presented to the Holder in
connection with the purchase and sale of the Notes and Warrants constitutes
legal, tax or investment advice. The Holder has relied on, and have consulted
with, such legal, tax and investment advisors as the Holder, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Notes and Warrants.

      4. Covenants of Interiors. Interiors hereby covenants as follows:

            (a) Registration Rights. Interiors shall cause the Registration
Rights Agreement to remain in full force and effect so long as any Registrable
Securities (as defined in the Registration Rights Agreement) remain outstanding
and the Company shall comply in all material respects with the terms thereof.

            (b) Reservation of Common Stock. As of the date hereof, Interiors
has authorized and reserved, and Interiors shall continue to reserve and keep
available at all times, free of preemptive rights, no less than 150% of the
Underlying Shares assuming conversion of the full principal amount of Notes on
the Trading Day immediately preceding the Closing Date, plus 100% of the Warrant
Shares for the purpose of enabling Interiors to satisfy any obligation to issue
the Underlying Shares and Warrant Shares; such number of shares of Common Stock
to be reserved shall be calculated based upon the Conversion Price and Exercise
Price under the terms of this Agreement, the Notes and Warrants on the Trading
Day immediately preceding the


                                       11
<PAGE>

Closing Date. The number of shares so reserved shall be increased to reflect
potential decreases in the Common Stock that Interiors may thereafter be so
obligated to issue by reason of adjustments to the Conversion Price and/or
Exercise Price as set forth in the Notes and Warrants, or in the event of a
reduction of the bid price of the Common Stock as reported by Bloomberg LP.

            (c) Listing of Common Stock. Interiors shall (a) not later than the
30th calendar day following the Closing Date prepare and file with the national
securities exchange, market or trading facility on which the Common Stock is
then listed, an additional shares listing application covering at least the sum
of (i) 150% the number of Underlying Shares as would be issuable upon a
conversion of (and as payment of dividends in respect of) the full principal
amount of the Notes, assuming such conversion occurred on the Closing Date, and
(ii) the Warrant Shares issuable upon exercise in full of the Warrants, (b) take
all steps necessary to cause such shares to be approved for listing on the
national securities exchange, market or trading facility on which the Common
Stock is then listed as soon as possible thereafter, and (c) provide to the
Holder evidence of such listing, and Interiors shall maintain the listing of the
Common Stock on such exchange or market for so long as the Notes, Warrants,
Warrant Shares and/or Underlying Shares, is owned by the Holder. In addition, if
at any time the number of shares of Common Stock issuable on conversion of all
then outstanding principal amount of Notes, and/or upon exercise in full of the
Warrant is greater than the number of shares of Common Stock theretofore listed
with the national securities exchange, market or trading facility of the Common
Stock, Interiors shall promptly take such action (including the actions
described in the preceding sentence), if required pursuant to the rules and
regulations of the national securities exchange, market or trading facility of
the Common Stock, to file an additional shares listing application with the
national securities exchange, market or trading facility of the Common Stock
covering at least a number of shares equal to the sum of (x) 150% of the number
of Underlying Shares as would then be issuable upon a conversion in full of the
Notes, and (y) the number of Warrant Shares as would be issuable upon exercise
in full of the Warrants. Interiors warrants that it (i) has not received any
notice, oral or written, affecting it's continued listing on the Nasdaq Small
Cap Market, and (ii) is in full compliance with the requirements for continued
listing on the Nasdaq Small Cap Market. Interiors will take no action, which
would adversely impact its continued listing or the eligibility of Interiors for
such listing. Interiors will comply with the listing and trading requirements of
its Common Stock on the Nasdaq Small Cap Market (and of any then national
securities exchange, market or trading facility of the Common Stock) and will
comply in all respects with Interior's reporting, filing and other obligations
under the bylaws or rules of the national securities exchange, market or trading
facility of the Common Stock. If Interiors receives notification from Nasdaq or
any other entity stating that Interiors is not in compliance with the listing
qualifications of such Principal Market, Interiors will immediately thereafter
give written notice to the Holder and take all action necessary to bring
Interiors into compliance with all applicable listing standards of the national
securities exchange, market or trading facility of the Common Stock.

            (d) Exchange Act Registration. Interiors will maintain the
registration of the Common Stock under Section 12 of the Exchange Act, will
comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any


                                       12
<PAGE>

document (whether or not permitted by Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act.

            (e) Corporate Existence. Interiors will take all steps necessary to
preserve and continue the corporate existence of Interiors and Petals.

            (f) Notice of Certain Events Affecting Registration. Interiors will
immediately notify the Holder upon the occurrence of any of the following events
in respect of a registration statement or related prospectus in respect of an
offering of Registrable Securities: (i) receipt of any request for additional
information by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not 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, and that in the case of the related prospectus, it will
not 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, in the light of the circumstances under which they were made, not
misleading; and (v) the Interior's reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate.
Interiors will promptly make available to the Holder any such supplement or
amendment to the related prospectus.

            (g) Consolidation; Merger. For so long as any of the Notes,
Warrants, Underlying Shares and/or Warrant Shares are owned by the Holder,
Interiors shall not, at any time after the date hereof, effect any merger or
consolidation of Interiors with or into, or a transfer of all or substantially
all of the assets of Interiors to, another entity (a "Consolidation Event")
unless the resulting successor or acquiring entity (if not Interiors) assumes by
written instrument the obligation to deliver to the Holder such shares of stock
and/or securities as the Holder is entitled to receive pursuant to this
Agreement, and all Exhibits annexed hereto.

            (h) Issuance of Underlying Shares and Warrant Shares. The issuance
of the Warrant Shares and the Underlying Shares pursuant to exercise of the
Warrants and the conversion of the Notes, shall be made in accordance with the
provisions and requirements of Section 4(2) of the Securities Act or Regulation
D and any applicable state securities law.

            (i) Legal Opinion. Interior's independent counsel shall deliver to
the Holder upon execution of this Agreement, an opinion in the form of Exhibit
D. Interiors will obtain for the Holder, at Interiors expense, any and all
opinions of counsel which may be reasonably


                                       13
<PAGE>

required in order to convert the Notes and/or exercise the Warrants, including,
but not limited to, obtaining for the Holder an opinion of counsel, subject only
to receipt of a notice of conversion (the "Notice of Conversion") in the form of
Exhibit F, and/or subject only to a receipt of a notice of exercise in the form
annexed to the Warrant, directing Interior's transfer agent to remove the legend
from the certificate.

            (j) Restrictions on Future Financing. Interiors agrees that it shall
not enter into any financing transactions which provide for (i) the issuance of
shares of Common Stock that are freely tradable by such holder prior to the
first anniversary of the Closing Date, or (ii) any securities that are
convertible into Common Stock prior to the first anniversary of the Closing
Date.

            (k) Exercise of Warrants. Interiors will permit the Holder to
exercise its right to purchase shares of Common Stock upon exercise of the
Warrants as is set forth in the Warrants.

            (l) Conversion of Notes. Interiors will permit the Holder to
exercise its right to convert the Notes by telecopying an executed and completed
Notice of Conversion to Interiors.

            (m) Increase in Authorized Shares. At such time as Interiors would
be, if a Notice of Conversion or notice of exercise (as the case may be) were to
be delivered on such date, precluded from (a) converting in full all of the
Notes that remain unconverted at such date (and paying any accrued but unpaid
dividends in respect thereof in shares of Common Stock), or (b) honoring the
exercise in full of the Warrant, due to the unavailability of a sufficient
number of shares of authorized but unissued or re-acquired Common Stock, the
Board of Directors of Interiors shall promptly (and in any case within 75
calendar days from such date) hold a shareholders meeting in which the
shareholders would vote for authorization to amend the Articles of Incorporation
to increase the number of shares of Common Stock which Interiors is authorized
to issue to at least a number of shares equal to the sum of (i) all shares of
Common Stock then outstanding, (ii) the number of shares of Common Stock
issuable on account of all outstanding warrants, options and convertible
securities (other than the Notes and Warrants) and on account of all shares
reserved under any stock option, stock purchase, warrant or similar plan, (iii)
150% of the number of Underlying Shares as would then be issuable upon a
conversion in full of the then outstanding Notes and as payment of all future
dividends thereon in shares of Common Stock in accordance with the terms of this
Agreement and the Notes, and (iv) such number of Warrant Shares as would then be
issuable upon the exercise in full of the Warrant. In connection therewith, the
Board of Directors shall (x) adopt proper resolutions authorizing such increase,
(y) recommend to its shareholders, and otherwise use its best efforts to
promptly and duly obtain shareholder approval to carry out such resolutions and
(z) within five Business Days of obtaining such shareholder authorization, file
an appropriate amendment to the Articles of Incorporation to evidence such
increase. The foregoing shall not relieve Interiors from any claim for damages
that the Holder may have against Interiors as a result of Interiors not having a
sufficient number of authorized shares of Common Stock to satisfy its
obligations under this Agreement or any Exhibit annexed hereto.


                                       14
<PAGE>

            (n) Notice of Breaches. Each of Interiors on the one hand, and the
Holder on the other, shall give prompt written notice to the other of any breach
by it of any representation, covenant, warranty or other agreement contained in
this Agreement or any Exhibit annexed hereto, as well as any events or
occurrences arising after the date hereof, which would reasonably be likely to
cause any representation, covenant, or warranty or other agreement of such
party, as the case may be, contained in this Agreement or any Exhibit annexed
hereto, to be incorrect or breached as of such Closing Date. However, no
disclosure by either party pursuant to this Section shall be deemed to cure any
breach of any representation, warranty or other agreement contained in this
Agreement or any Exhibit annexed hereto. Notwithstanding the generality of the
foregoing, Interiors shall promptly notify the Holder of any notice or claim
(written or oral) that it receives from any lender of Interiors to the effect
that the consummation of the transactions contemplated by this Agreement or any
Exhibit annexed hereto, violates or would violate any written agreement or
understanding between such lender and Interiors, and Interiors shall promptly
furnish by facsimile to the Holder a copy of any written statement in support of
or relating to such claim or notice.

            (o) Transfer of Intellectual Property Rights. Except in the ordinary
course of Interior's business or in connection with the sale of all or
substantially all of its assets, Interiors shall not transfer, sell or otherwise
dispose of, any Intellectual Property Rights, or allow the Intellectual Property
Rights to become subject to any Liens, or fail to renew such Intellectual
Property Rights (if renewable and would otherwise expire); provided, however,
Interiors may license the Intellectual Property Rights.

            (p) Notices. Interiors agrees to provide all holders of Notes and
Warrants with copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to the holders of shares of Common Stock, contemporaneously with
the delivery of such notices or information to such Common Stock holders.

            (q) Questions/Answers. Interiors shall provide the Holder with the
opportunity to ask additional questions of, and receive answers (all of which
information shall be limited to information in the public domain) from Interiors
concerning Interiors during the period that the Holder owns the Notes and/or
Warrants.

            (r) Rule 144 Compliance. Interiors covenants and agrees that for so
long as any of the Common Stock issuable upon conversion of the Notes remain
outstanding and continue to be "restricted securities" within the meaning of
Rule 144 under the Act, Interiors shall cooperate in order to permit resales of
the Underlying Shares pursuant to Rule 144 under the Act. Interiors shall
provide its transfer agent any and all papers necessary to complete the transfer
under Rule 144, including, but not limited to, opinions of counsel to its
transfer agent, and Interiors shall continue to file all material required to be
filed pursuant to Sections 13(a) or 15(d) of the 1934 Act.

            (s) Transfer Agent. Interiors agrees that it shall issue the
Transfer Agent instructions annexed hereto as Exhibit G to its transfer agent as
per the terms of the Registration Rights Agreement.


                                       15
<PAGE>

      4. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a Business
Day between the hours of 9:00 a.m. and 5:00 p.m. where such notice is to be
received), or the first Business Day following such delivery (if delivered other
than on a Business Day between the hours of 9:00 a.m. and 5:00 p.m. where such
notice is to be received), (b) on the second Business Day following the date of
mailing by reputable courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur, or (c) five
calendar days after sent by regular mail. The addresses for such communications
shall be:

      If to Interiors:

                  Interiors, Inc.
                  320 Washington Street
                  Mount Vernon, New York 10553
                  Attention: Max Munn, President
                  Telephone:  (914) 665-5400
                  Facsimile: (914) 665-5469

      If to the Holder:

                  Endeavour Capital Fund SA
                  The Maduro Building, P.O. Box 662,
                  Wickhams Cay, Road Town, Tortola,
                  British Virgin Islands
                  Telephone: (284) 494-2217
                  Facsimile: (284) 494-3917
                  Attention: Phil Williams

            with a copy to:

                  Scott H. Goldstein, Esq.
                  The Goldstein Law Group, P.C.
                  65 Broadway, 10th Floor
                  New York, New York 10006
                  Telephone No. (212) 809-4220
                  Telecopier No. (212) 809-4228


                                       16
<PAGE>

      5. Choice of Law/Jurisdiction. This Agreement and all transactions
contemplated by this Agreement shall be exclusively governed by, and construed
and enforced in accordance with, the internal laws of the State of New York
without regard to principles of conflicts of laws. Each party consents to the
exclusive jurisdiction of the United States District Court of the Southern
District of New York in connection with any dispute arising under this Agreement
and hereby waive, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions.

      6. Survival of Representations. All statements contained in any
certificate or instrument or conveyance delivered by or on behalf of the parties
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed to be additional representations and warranties of the
parties making such disclosure. All representations and warranties shall survive
the exchange as contemplated herein.

      7. Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by either party without the prior written consent of
the other party hereto, which consent shall not be unreasonably withheld or
delayed. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and no other person shall have any right, benefit or obligation
hereunder.

      8. Entire Agreement; Amendments and Waivers. This Agreement, together with
all exhibits, attachments and schedules hereto, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, amendment, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.

      9. Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein shall
for any reason be held invalid, illegal or unenforceable in any respect, then
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other instrument.

      10. Further Assurances. The parties shall cooperate and take such actions,
and execute such other documents, in connection with the transactions
contemplated herein, as either may reasonably request in order to carry out the
provisions or purpose of this Agreement.

      11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

      12. Indemnification. Interiors agrees to indemnify and hold harmless the
Holder and each agent and affiliate of the Holder against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which any of the Holder may become


                                       17
<PAGE>

subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon the breach by Interiors of any term of this Agreement. This indemnity
agreement will be in addition to any liability, which Interiors may otherwise
have. The Holder agrees that it will indemnify and hold harmless Interiors, and
each officer, director of Interiors or person, if any, who controls Interiors
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all costs of defense and investigation and all attorneys' fees)
to which Interiors or any such officer, director or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon the breach by such Person of any term of this Agreement. This
indemnity agreement will be in addition to any liability, which the Holder or
any subsequent assignee may otherwise have.

      Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. 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, assume the defense thereof, subject to the provisions herein stated
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, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have 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 if the indemnified party is
one of the Investor, the 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
Investor and the indemnifying party and the Investor shall have been advised by
such counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Holder (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of the Holder, it
being understood, however, that the indemnifying party shall, 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 only for the reasonable fees and expenses of one
separate firm of attorneys for the Holder, which firm shall be designated in
writing by the Holder). No settlement of any action against an indemnified party
shall be made without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld.


                                       18
<PAGE>

      Each party hereby agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law. Each party waives
its right to a trial by jury. If the Holder, or any person claimed to be
affiliated or associated with the Investor, becomes involved in any capacity in
any action, proceeding or investigation brought by or against any such person,
including shareholders of Interiors, in connection with or as a result of any
matter referred to in this Agreement or any Exhibit annexed hereto, Interiors
shall reimburse the Investor and/or those claimed to be affiliated or associated
with the Holder for its legal fees and expenses and other expenses (including
the cost of any investigation and preparation) incurred in connection therewith,
provided, however, that if at the conclusion of such action, proceeding or
investigation it shall be finally judicially determined by a court of competent
jurisdiction that indemnity for such fees and expenses is contrary to law, or
that the Holder is not the prevailing party then in that event, Interiors shall
not be responsible for such payment.

      13. Contribution. In order to provide for just and equitable contribution
under the Securities Act in any case in which (i) the indemnified party makes a
claim for indemnification pursuant to Section 11.2 hereof but is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 11.2 hereof
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then
Interiors and the Holder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in Section 12 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contributions from any person who was
not guilty of such fraudulent misrepresentation.


                                       19
<PAGE>

      14. Counterparts; Facsimile; Amendments. This Agreement may be executed in
multiple counterparts, each of which may be executed by less than all of the
parties and shall be deemed to be an original instrument which shall be
enforceable against the parties actually executing such counterparts and all of
which together shall constitute one and the same instrument. Except as otherwise
stated herein, in lieu of the original documents, a facsimile transmission or
copy of the original documents shall be as effective and enforceable as the
original. This Agreement may be amended only by a writing executed by the
Company on the one hand, and all of the Investor on the other hand.

      15. Entire Agreement. This Agreement, and the Exhibits and Schedules
annexed hereto, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits and Schedules to this Agreement are incorporated
herein by this reference and shall constitute part of this Agreement as is fully
set forth herein.

      16. Survival; Severability. The representations, and warranties of the
parties hereto shall survive for a period of one year after the termination of
this Agreement as provided above. If any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes the economic benefit of this Agreement to any party.

      17. Title and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

      18. Reporting Entity for the Common Stock. The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on any given Trading Day for the purposes of this Agreement and all
Exhibits shall be Bloomberg, L.P. or any successor thereto. The written mutual
consent of the Holder and Interiors shall be required to rely upon any other
reporting entity.

      19. Replacement of Certificates. Upon (i) receipt of evidence reasonably
satisfactory to Interiors of the loss, theft, destruction or mutilation of any
of the Notes, Warrants, Additional Shares, Warrant Shares and/or Underlying
Shares, and (ii) in the case of any such loss, theft or destruction of such
certificate, upon delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to Interiors, and to Interior's transfer agent,
or (iii) in the case of any such mutilation, on surrender and cancellation of
such certificate, Interiors at its expense will execute and deliver, in lieu
thereof, a new certificate of like tenor.

      20. Exchange. Interiors shall pay to the Holder the sum equal to one
percent (1%) of the outstanding principal amount of the Notes on the last
Business Day of each calendar month (or such earlier day that the Note has been
redeemed and/or converted) (pro rated for any period less than a full calendar
month) after the Closing Date for as long as the Notes remain outstanding. The
first such payment shall be due on the Closing Date and shall cover the period


                                       20
<PAGE>

from September 30, 1999 through November 30, 1999. All future payment(s) shall
be made within five business days of when due and shall be payable in
immediately available funds.

      21. Publicity. Interiors and the Holder shall consult with each other in
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and no party shall issue any such press
release or otherwise make any such public statement without the prior written
consent of the other parties, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
parties with prior notice of such public statement. Notwithstanding the
foregoing, Interiors shall not publicly disclose the name of the Holder without
the prior written consent of the Holder, except to the extent required by law,
in which case Interiors shall provide the Holder with prior written notice of
such public disclosure.

EXHIBITS:

A:    Note
B:    Common Stock Purchase Warrant
C:    Escrow Agreement
D:    Legal Opinion
E:    Registration Rights Agreement
F:    Notice of Conversion


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<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement
to be duly executed, on the day and year first above written.

                                        INTERIORS, INC.


                                        By: /s/ Max Munn
                                          --------------------------------------
                                          Name:
                                          Title:

                                        ENDEAVOUR CAPITAL FUND SA


                                        By: /s/
                                           -------------------------------------
                                           Name:
                                           Title:


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<PAGE>

                                   Schedule A

                              Principal Amount of            No. Shares of
         Holder                      Notes                  Preferred Stock
         ------                      -----                  ---------------

Endeavour Capital Fund SA          $1,744,518                    1,500


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