Document:

SECURITY AGREEMENT

      THIS SECURITY AGREEMENT (this "Agreement") is made as of September 30,
1999, by and between Interiors, Inc., a Delaware corporation ("Debtor"), Petals,
Inc., a Delaware corporation (the "Subsidiary") and Limeridge LLC (hereinafter
referred to as the "Secured Party").

      1. Definitions.

      (a) Certain Defined Terms. The following terms, as used herein, have the
meanings set forth below:

      Collateral - has the meaning assigned to that term in Section 2.

      Event of Default - has the meaning assigned to that term in Section 9.

      Note - means that certain Secured Convertible Notes of even date herewith,
in the aggregate original principal amount of $13,540,626, made and executed by
Debtor and issued to Secured Party, and all amendments and supplements thereto,
restatements thereof and renewals, extensions, restructuring and refinancings
thereof.

      Person - means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.

      Proceeds - means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims against third parties for
loss of, damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance with respect to any Collateral,
and any condemnation or requisition payments with respect to any Collateral, in
each case whether now existing or hereafter arising.

      Purchase Agreement - means that certain Secured Convertible Note Purchase
Agreement (including all Exhibits annexed thereto) of even date herewith, by and
between Debtor and Secured Party.

      Secured Obligations - has the meaning assigned to that term in Section 3.

      Security Interests - means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.

      Shares - means all of the outstanding securities of Petals, Inc.
<PAGE>

      UCC - means the Uniform Commercial Code as in effect on the date hereof in
the State of New York, provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.

      (b) Other Definition Provisions. References to "Sections", "subsections",
"Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1(a) may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. All references to statutes and related regulations shall include
(unless otherwise specifically provided herein) any amendments of same and any
successor statutes and regulations.

      2. Grant of Security Interest

      In order to secure the payment and performance of the Secured Obligations
in accordance with the terms thereof, Debtor and Subsidiary hereby grant to
Secured Party a continuing security interest in and to all right, title and
interest of Debtor and/or Subsidiary in the Shares (also referred to as the
"Collateral").

      3. Security for Obligations

      This Agreement secures the payment and performance of the Purchase
Agreement and the Note, and all renewals, extensions, restructuring and
refinancings thereof (the "Secured Obligations").

      4. Representations and Warranties. Debtor and Subsidiary represent and
warrant as follows:

            (a) Binding Obligation. This Agreement has duly executed and
delivered by the Subsidiary and Debtor, which is a legal, valid and binding
obligation of Debtor and Subsidiary, enforceable against Debtor and Subsidiary
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable
principles relating to or limiting creditor's rights generally. This Agreement
is not in violation of any other agreements, instruments, order or judgment by
which Debtor and/or Subsidiary is bound or subject. The execution, delivery and
performance of this Agreement by Debtor and Subsidiary do not require the
consent or approval of any other person, entity or governmental agency.

            (b) Ownership of Shares. Debtor owns the Shares free and clear of
any lien, security interest or encumbrance. No effective financing statement or
other form of lien notice covering all or any part of the Collateral is on file
in any recording office. Debtor is, and as long as this Agreement shall be in
effect pursuant to its terms, shall be the sole, record, legal and beneficial
owner of, and has good and marketable title to, the Shares, subject to no lien,
pledge

<PAGE>

or encumbrance, except the lien on the Shares created by this Agreement.

            (c) Office Locations; Debtor Names.

                  (i) As of the date hereof, the chief place of business, the
            chief executive office and the office where Debtor and Subsidiary
            keeps its books and records is located at 320 Washington Street,
            Mount Vernon, New York 10553. Debtor and/or Subsidiary have not
            maintained any other address at any time during the five years
            preceding the date hereof.

                  (ii) Debtor and Subsidiary do not do business nor, as of the
            date hereof, have they done business during the past five years
            under any corporate name, trade name or fictitious business name
            except for Debtor and Subsidiary's corporate name set forth above.
            Debtor and Subsidiary will notify Secured Party promptly in writing
            at least thirty (30) calendar days prior to (a) any change in Debtor
            and/or Subsidiary's name and (b) Debtor and/or Subsidiary's
            commencing the use of any trade name, assumed name or fictitious
            name.

            (d) Perfection. This Agreement, together with the UCC filings
referenced herein, created to secure the Secured Obligations a valid, perfected
and priority security interest in the Collateral, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.

            (e) Governmental Authorizations; Consents. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or consent of any other Person is required either
(i) for the grant by Debtor and Subsidiary of the Security Interests granted
hereby or for the execution, delivery or performance of this Agreement by Debtor
and Subsidiary or (ii) for the perfection of or the exercise by Secured Party of
its rights and remedies hereunder (except as may have been taken by or at the
direction of Debtor, Subsidiary or Secured Party) other than the filing of
financing statements in connection with the perfection of the Security
Interests.

            (f) Value of Collateral. The value of the Collateral as of the date
hereof is approximately $10,000,000.

            (g) Accurate Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Debtor and Subsidiary
with respect to the Collateral is and will be accurate and complete in all
material respects.

            (h) Deficiency. Debtor and Subsidiary will remain liable for any
deficiency in the event that the delivery of the Shares to the Secured Party is
insufficient to satisfy the Debtor's obligations under the Notes.

            (i) Survival. From and after the date hereof and so long as this
Agreement shall be in effect pursuant to its terms, the Debtor and Subsidiary
agree that they shall not take any action that would cause the Debtor and/or
Subsidiary to be in breach or default of any of the Secured Obligations, that
all representations and warranties made by Debtor and Subsidiary shall

<PAGE>

survive this Agreement and that as of the date hereof, the Secured Party shall
be deemed to have a priority lien on the Shares for the purposes and in
accordance with the terms and provisions hereof, and the Debtor and Subsidiary
shall cooperate with the Secured Party and take all action requested by the
Secured Party to ensure the representations and warranties shall survive this
Agreement with respect thereto.

            (j) Delivery. Upon the Shares being delivered to the Secured Party
as heretofore provided, they shall become fully the property of the Secured
Party. In addition, the Debtor and Subsidiary shall promptly take all necessary
action, at the direction of the Secured Party (at no cost to the Secured Party)
to transfer the Shares to the Secured Party or its nominee for sale

            (k) Valid Issuances. The Subsidiary's performance of its obligations
under this Agreement will not (i) result in the creation or imposition by the
Debtor and Subsidiary of any liens, charges, claims or other encumbrances upon
the Shares, or any of the assets of the Subsidiary other than the security
interest granted under this Agreement, or (ii) entitle the holders of
outstanding capital shares of the Subsidiary to preemptive or other rights to
subscribe to or acquire any capital shares or other securities of the
Subsidiary.

            (l) No Conflicts. The execution, delivery and performance of this
Agreement by the Subsidiary and the consummation by the Subsidiary of the
transactions contemplated hereby do not and will not (i) result in a violation
of its 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 the Subsidiary 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 the Subsidiary or by which any property or asset of the Subsidiary
is bound or affected, nor is the Subsidiary 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 the Subsidiary 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.

            (m) No Undisclosed Liabilities. The Subsidiary has no liabilities or
obligations, known or unknown, absolute or otherwise (individually or in the
aggregate), which have not been disclosed in writing to the Secured Party or
otherwise publicly announced, or as incurred in the ordinary course of the
Subsidiary's business since January 1, 1999, or which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

            (n) Litigation and Other Proceedings. There are no lawsuits or
proceedings pending or to the knowledge of the Debtor and/or Subsidiary
threatened, against the Subsidiary, nor has the Debtor and Subsidiary received
any written or oral notice of any such action, suit, proceeding or
investigation, which would reasonably be expected to have a Material Adverse

<PAGE>

Effect. No judgment, order, writ, injunction or decree or award has been issued
by or, so far as is known by the Debtor and Subsidiary, requested of any court,
arbitrator or governmental agency which would be reasonably expected to result
in a Material Adverse Effect.

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

            (p) Insurance. The Subsidiary is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Debtor and Subsidiary believe to be prudent and customary in
the businesses in which the Subsidiary is engaged. The Debtor and Subsidiary
have no notice to believe that the Subsidiary 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.

            (q) Patents and Trademarks. The Subsidiary 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 the
Subsidiary, none of the Intellectual Property Rights is infringing, or will
infringe on any trademark, trade name, patent right, copyright, license, trade
secret or other similar right of others currently in existence rights of any
other Person, and the Subsidiary either owns or has duly licensed or otherwise
acquired all necessary rights with respect to the Intellectual Property Rights.
The Subsidiary has not received any notice from any third party of any claim of
infringement by the Subsidiary 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 the Subsidiary, there is no existing infringement by another Person
on any of the Intellectual Property Rights.

            (r) Permits; Compliance. Subsidiary 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 "Subsidiary Permits")
all of which are valid and in full force and effect, and there is no action
pending or, to the knowledge of the Subsidiary, threatened regarding the
suspension or cancellation of any of the Subsidiary Permits except for such
Subsidiary 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 the Debtor and/or Subsidiary's knowledge, the
Subsidiary is in material conflict with, or in material default or material
violation of, any of the Subsidiary Permits. Since January 1, 1999 the
Subsidiary has not received any notification with respect to possible material
conflicts, material defaults or material violations of applicable laws.

            (s) Taxes. All federal, state, city and other tax returns, reports
and declarations required to be filed by or on behalf of the Subsidiary have
been filed and such

<PAGE>

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.

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

            (u) No Default. Subsidiary 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

            (v) Title to Assets. Subsidiary has good and marketable title to all
properties and material assets 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 Subsidiary.

            (w) Organization of the Subsidiary. The Subsidiary is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted. The Subsidiary 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. The Subsidiary is not in violation of any
material terms of its Articles of Incorporation or Bylaws.

            (x) Authority. (i) The Subsidiary has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement,
(ii) the execution, issuance and delivery of this Agreement by the Subsidiary
and the consummation by it of the transactions contemplated hereby have been
duly authorized by all necessary corporate action and no further consent or
authorization of the Subsidiary, its shareholders, or its Board of Directors is
necessary, and (iii) this Agreement has been duly executed and delivered by the
Subsidiary and constitute valid and binding obligations of the Subsidiary
enforceable against the Subsidiary 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 Shares 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 Secured
Party.

<PAGE>

      5. Further Assurances; Covenants

            (a) Other Documents and Actions. Debtor and Subsidiary will, from
time to time, at its expense, promptly execute and deliver all further
instruments and documents and take all further action that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, Debtor and/or Subsidiary will: (i) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby; (ii) at any reasonable time, upon demand by
Secured Party exhibit the Collateral to allow inspection of the Collateral by
Secured Party or persons designated by Secured Party; (iii) upon Secured Party's
request, appear in and defend any action or proceeding that may affect
Subsidiary's title to or Secured Party's security interest in the Collateral,
and (iv) take all action necessary to have the Pledged Stock transferred in the
name of the Pledgee.

            (b) Secured Party Authorized. Debtor and Subsidiary hereby
authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of Debtor and/or Subsidiary where permitted by
law.

            (c) Stock Dividends, Distributions, etc. If, while this Agreement is
in effect, the Debtor and/or Subsidiary shall became entitled to receive or
shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend, stock split, conversion of a
convertible security or a distribution in connection with any reclassification
or any increase or reduction of capital, or issued in connection with any
reorganization), option or right, whether as an addition to, in substitution, of
or in exchange for any of the Shares, Debtor and Subsidiary agrees that such
stock certificate, option or right shall be additional collateral security for
the Secured Obligations, and shall be delivered to Escrow Agent to be held as
Collateral pursuant to the terms of this Agreement.

            (d) Other Information. Debtor and Subsidiary will, promptly upon
request, provide to Secured Party all information and evidence it may reasonably
request concerning the Collateral to enable Secured Party to enforce the
provisions of this Agreement.

            (e) Maintenance. The Debtor and Subsidiary will maintain the
business of the Subsidiary as presently operated, and shall take any and all
actions necessary for such maintenance as are customary.

      6. Escrow Agent. The parties each hereby designate The Goldstein Law
Group, P.C., New York NY 10006 as the "Escrow Agent" to hold the Shares in
accordance with the escrow agreement dated as of the date hereof. Simultaneously
with the execution of this Agreement, Debtor has delivered the Shares along with
duly endorsed stock powers that permit Secured Party to transfer the Shares to
the Secured Party if an Event of Default occurs, as set forth herein or in the
Notes to the Escrow Agent to be held by Escrow Agent as Collateral under

<PAGE>

this Agreement, to secure complete and final payment by the debtor of the
Secured Obligations in accordance with the terms and provisions of this
Agreement.

      7. Voting Rights. Unless an Event of Default, as defined herein or in the
Note, shall have occurred, Debtor shall be entitled to vote the Shares and to
give consents, waiver and ratification in respect of the Shares; provided,
however, that no vote shall be cast, or consent, waiver or ratification given or
action taken, which would violate any rights the Secured Party has to the Shares
under the terms of this Agreement or the Notes.

      8. Rights of Secured Party. Any of the Shares may, if an Event of Default
has occurred and is continuing (as defined below or in the Note), (a) be
registered in the name of the Secured Party and its nominees (for which a power
of attorney coupled with an interest is hereby granted), which may thereafter
exercise all voting and other rights and exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Shares as if it were the absolute owner thereof or (b)
to the extent permitted by law, be sold by Secured Party in the name of Debtor
to any third party with proceeds (up to the amount equal to the Secured
Obligations plus any and all monies due to the Secured Party pursuant to this
Agreement and the Purchase Agreement) of such sale being paid to Secured Party
(for which a power of attorney coupled with an interest is hereby granted). In
addition, Debtor and Subsidiary grant to Secured Party a power of attorney
coupled with an interest to sign on behalf of Debtor and Subsidiary after an
Event of Default (as defined herein or in the Note), a statement renouncing or
modifying Debtor and Subsidiary right under section 9-505 of the Uniform
Commercial Code of the State of New York.

      9. Secured Party Appointed Attorney-in-Fact. Debtor and Subsidiary hereby
irrevocably appoint Secured Party as its attorney-in-fact, with full authority
in the place and stead of Debtor and Subsidiary and in the name of Debtor and
Subsidiary, Secured Party or otherwise, from time to time in Secured Party's
discretion to take any action and to execute any instrument that Secured Party
may deem necessary or advisable after the occurrence and during the continuation
of an Event of Default to accomplish the purposes of this Agreement, including,
without limitation:

            (a) to obtain and adjust insurance required to be paid to Secured
Party;

            (b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for monies due and to become due under or in
respect of any of the Collateral;

            (c) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;

            (d) to pay or discharge taxes or liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, and such payments made by Secured Party to become obligations
of Debtor and Subsidiary, due and payable immediately without demand and secured
by the Security Interests; and

<PAGE>

            (e) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Debtor and Subsidiary's expense, at any time
or from time to time, all acts and things that Secured Party deems necessary to
protect, preserve or realize upon the Collateral.

      This power, being coupled with an interest, is irrevocable so long as this
Agreement shall remain in force.

      10. Transfers and Other Liens. Debtor and Subsidiary shall not, without
Secured Party's prior written consent:

            (a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral.

            (b) Create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to secure
indebtedness of any Person except for the security interest created by this
Agreement.

      11. Events of Default. The occurrence of any "Event of Default" as that
term is defined in Note shall constitute an Event of Default by Debtor and/or
Subsidiary under this Agreement.

      12. Remedies

            (a) If any Event of Default shall have occurred and be continuing,
Secured Party may declare the entire outstanding principal amount of the Note
immediately due and payable without any notice, demand or other action on the
part of Secured Party.

            (b) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Collateral) and also may: (i) without notice
or demand or legal process, take possession of the Collateral and take any and
all actions necessary to transfer the Shares in the name of the Secured Party;
(ii) without notice except as specified below, sell the Collateral or any part
thereof at such time or times, for cash, on credit or for future delivery, and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable; (iii) notify the obligors on any Accounts or
Instruments to make payments there under directly to Secured Party; (iv) without
notice to Debtor and/or Subsidiary, renew, modify or extend any of the Accounts
and Instruments or grant waivers or indulgences with respect thereto or accept
partial payment thereof, or substitute any obligor thereon, in any manner as
Secured Party may deem advisable, without affecting or diminishing Debtor and/or
Subsidiary's continuing obligations hereunder, and (v) and shall have all
applicable remedies set forth in the New York Uniform Commercial Code.

<PAGE>

      13. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default as set forth herein, the proceeds of any sale
of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all fees, costs and expenses incurred by Secured Party with
respect to the Collateral; and second, to the Secured Obligations. Secured Party
shall pay over to Debtor and Subsidiary any surplus and Debtor and Subsidiary
shall remain liable for any deficiency.

      14. Expenses. Debtor and Subsidiary agree to pay all insurance expenses
and all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping the Collateral, all costs, fees and expenses
of perfecting and maintaining the Security Interests, and any and all excise,
property, sales and use taxes imposed by any state, federal or local authority
on any of the Collateral, or with respect to periodic appraisals and inspections
of the Collateral, or with respect to the sale or other disposition thereof. If
Debtor and/or Subsidiary fails promptly to pay any portion of the above expenses
when due or to perform any other obligation of Debtor and/or Subsidiary under
this Agreement, Secured Party may, at its option, but shall not be required to,
pay or perform the same, and Debtor and Subsidiary agree to reimburse Secured
Party therefor on demand. All sums so paid or incurred by Secured Party for any
of the foregoing, any and all other sums for which Debtor and Subsidiary may
become liable hereunder and all costs and expenses (including attorneys' fees,
legal expenses and court costs) incurred by Secured Party in enforcing or
protecting the Security Interests or any of their rights or remedies under this
Agreement shall be payable on demand, shall constitute Secured Obligations,
shall bear interest until paid at the rate provided in the Note and shall be
secured by the Collateral.

      15. Termination of Security Interests; Release of Collateral. Upon payment
in full of all Secured Obligations, the Security Interests shall terminate and
all rights to the Collateral shall revert to Debtor and Subsidiary. Upon such
termination of the Security Interests or release of any Collateral, Secured
Party will, at the expense of Debtor and Subsidiary, execute and deliver to
Debtor and Subsidiary such documents as Debtor and Subsidiary shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be.

      16. Notices. Each notice, communication and delivery under this Agreement:
(a) shall be made in writing signed by the party giving it; (b) shall specify
the section of this Agreement pursuant to which given; (c) shall either be
delivered in person or by telecopier, a nationally recognized next business day
courier service or Express Mail; (d) unless delivered in person, shall be given
to the address specified below; (e) shall be deemed to be given (i) if delivered
in person, on the date delivered, (ii) if sent by telecopier, on the date of
telephonic confirmation of receipt, (iii) if sent by a nationally recognized
next business day courier service with all costs paid, on the next business day
after it is delivered to such courier, or (iv) if sent by Express Mail (with
postage and other fees paid), on the next business day after it is mailed. Such
notice shall not be effective unless copies are provided contemporaneously as
specified below, but neither the manner nor the time of giving notice to those
to whom copies are to be given (which need not be the same as the addressee)
shall control the date notice is given or received. The addresses and
requirements for copies are as follows:

<PAGE>

      If to Debtor or Subsidiary:

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

      With a copy to:

                  Greenberg Traurig
                  200 Park Avenue
                  New York, New York 10166
                  Telephone: (212) 801-9200
                  Facsimile: (212) 801-6400
                  Attention: Stephen A. Weiss, Esq.

      If to Secured Party:

                  Limeridge LLC
                  c/o Citco Trustees Cayman Limited
                  Corporate Centre
                  PO Box 31106SMB
                  Grand Cayman, Cayman Islands
                  British West Indies
                  Attention: Sabrina Hew
                  Facsimile: 345 945-7566
                  Telephone: 345 949-3977

      Except as otherwise expressly set forth in any particular provision of
this Agreement, any consent or approval required or permitted by this Agreement
to be given by Secured Party may be given, and any term of this Agreement or of
any other instrument related hereto or mentioned herein may be amended, and the
performance or observance by Debtor and/or Subsidiary of any term of this
Agreement, the Purchase Agreement or the Note may be waived (either generally or
in a particular instance and either retroactively or prospectively) with, but
only with, the written specific consent of Secured Party. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of Secured Party
in exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon Debtor and/or Subsidiary shall
entitle Debtor and/or Subsidiary to other or further notice or demand in similar
or other circumstances. The rights in this Agreement, the Purchase Agreement and
the Note are cumulative and are not exclusive of any other remedies provided by
law. The invalidity, illegality or unenforceability of any provision in or
obligation under this Agreement shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under this
Agreement.

<PAGE>

      17. Successors and Assigns. This Agreement is for the benefit of Secured
Party and its successors and assigns, and in the event of an assignment of all
or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the Secured Obligations so assigned, may be transferred with such
Secured Obligations. This Agreement shall be binding on Debtor and Subsidiary
and its successors and assigns, provided that Debtor and/or Subsidiary shall not
assign this Agreement without Secured Party's prior written consent.

      18. Changes in Writing. No amendment, modification, termination or waiver
of any provision of this Agreement or consent to any departure by Debtor and/or
Subsidiary therefrom, shall in any event be effective without the written
concurrence of Secured Party, Debtor, and Subsidiary.

      19. Governing Law/Venue/Jurisdiction. This Agreement shall be exclusively
governed by and construed in accordance with the laws of the State of New York,
without giving effect to the conflicts of law principles thereof. Each of the
parties consents to the exclusive jurisdiction of the U.S. District Court
sitting in the Southern District of the State of New York sitting in Manhattan
in connection with any dispute arising under this Agreement and hereby waives,
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. Each party hereby agrees that if the other 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.

      20. Headings. Cross reference pages and headings contained herein are for
convenience of reference only, do not constitute a part of this Agreement, and
shall not be deemed to limit or affect any of the provisions hereof.

      21. Counterparts. This Agreement may be executed by each party upon a
separate copy, and in such case one counterpart of this Agreement shall consist
of enough of such copies to reflect the signatures of all of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be an
original, and each of which shall constitute one and the same agreement. Any
party may deliver an executed copy of this Agreement and of any documents
contemplated hereby by facsimile transmission to another party and such delivery
shall have the same force and effect as any other delivery of a manually signed
copy of this Agreement or of such other documents.

<PAGE>

      This Security Agreement has been duly executed and delivered by the
parties on the date first written above.

                                        Interiors, Inc.

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

                                        Petals, Inc.

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

                                        SECURED PARTY:

                                        LIMERIDGE LLC

                                        By: /s/
                                           -------------------------------------
                                           Name:
                                           Title:REGISTRATION RIGHTS AGREEMENT

            THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 31st day of
December 1999, between Endeavour Capital Fund SA (referred to as the "Holder")
and Interiors, Inc. a corporation incorporated under the laws of the State of
Delaware (the "Company").

            WHEREAS, pursuant to the Exchange Agreement dated as of December 31,
1999 (the "Exchange Agreement"), the Holder will be purchasing Notes and
Warrants (hereinafter collectively referred to as the "Securities" of the
Company) of the Company; All capitalized terms not hereinafter defined shall
have that meaning assigned to them in the Exchange Agreement; and

            WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the Securities set forth in the Exchange
Agreement.

            NOW, THEREFORE, the parties hereto mutually agree as follows:

            Section 1. Registrable Securities. As used herein the term
"Registrable Security" shall mean the Additional Shares, Warrant Shares, and
Underlying Shares (for that portion of the Note that remains outstanding when
the Company's obligation to file a Registration Statement arises as set forth in
Section 3 below): (i) in respect of which a registration statement (covering
these securities) has not been declared effective by the SEC, (ii) which have
not been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) which have not been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, or (iv)
the sales of which, in the opinion of counsel to the Company, are subject to any
time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a Registrable Security. In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of Registrable Security as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Section.

            Section 2. Restrictions on Transfer. The Holder acknowledges and
understands that prior to the registration of the Registrable Securities as
provided herein and prior to an exemption to registration being available, the
Registrable Securities are "restricted securities" as defined in Rule 144
promulgated under the Securities Act. The Holder understands that no disposition
or transfer of the Registrable Securities may be made by the Holder in the
absence of (i) an opinion of counsel to the Company (which shall not
unreasonably be withheld and/or delayed) that such transfer may be made without
registration under the Securities Act and state law, or (ii) such registration.

<PAGE>

            Section 3. Registration Rights.

                  (a) The Company agrees, that in the event that all of the
principal amount of the Notes has not been redeemed (as per the terms of the
Notes) on or before May 30, 2000 (and in the event all of the principal amount
of the Notes has been redeemed on or before May 30, 2000, the Company shall
prepare such registration statement set forth below and include all Warrant
Shares issuable upon exercise of the Warrants issued pursuant to the Exchange
Agreement), it will prepare and file with the Securities and Exchange Commission
("SEC"), on or before June 30, 2000, a registration statement (on Form S-3)
under the Securities Act (the "Registration Statement"), at the sole expense of
the Company (except as provided in Section 3(c) hereof), in respect of the
Holder for resales under the Securities Act of the Registrable Securities. The
Company shall use its best efforts to cause the Registration Statement to become
effective on or before September 30, 2000. The number of shares of Common Stock
designated in the Registration Statement to be registered shall be one hundred
fifty (150%) percent of the number of shares of Common Stock that would be
required if the then outstanding principal amount of the Notes and Warrants were
converted and exercised on the Trading Day immediately preceding the date the
Registration Statement was filed.

                  (b) The Company will maintain the effectiveness of any
Registration Statement or post-effective amendment filed under this Section 3
hereof under the Securities Act until the earlier of (i) the date that all of
the Registrable Securities have been sold pursuant to a Registration Statement,
(ii) the date the holders thereof receive an opinion of counsel that all of the
Registrable Securities may be sold (without volume limitation) under the
provisions of Rule 144 or (iii) five and one half years after the filing of such
Registration Statement.

                  (c) All fees, disbursements, out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement and in complying with applicable securities and blue sky
laws (including, without limitation, all attorneys' fees) shall be borne by the
Company. The Holder shall bear the cost, pro rata, of underwriting discounts and
commissions, if any, applicable to the Registrable Securities being registered
and the fees and expenses of their counsel. The Company shall qualify any of the
Registrable Securities for sale in such states as the Holder reasonably
designates and shall furnish indemnification in the manner provided in Section 8
hereof. However, the Company shall not be required to qualify in any state that
will require an escrow or other restriction relating to the Company and/or the
sellers. The Company at its expense will supply the Holder with copies of the
Registration Statement and the prospectus or offering circular included therein
and other related documents in such quantities as may be reasonably requested by
the Holder.

                  (e) Unless otherwise agreed to in writing by the Holder, the
Company shall only be permitted to include the Registrable Securities in the
Registration Statement. The Company represents that as of the date hereof it is
not obligated to file a registration statement on behalf of any other Person
and/or entity not a party to this Agreement.

                  (f) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above has not been filed by the Company in a
timely manner as provided above, or declared effective by the SEC on or before
the September 30, 2000, then the

<PAGE>

Company will pay to the Holder, as liquidated damages for such failure and not
as a penalty, two (2%) percent of the principal amount of the then outstanding
Notes for each 30 calendar day period thereafter (pro rated on a daily basis),
until the Registration Statement has been filed and/or declared effective.
Notwithstanding the foregoing the Company shall not be obligated for liquidated
damages if not filed in a timely manner if the Registration Statement has been
declared effective on or before September 30, 2000. Such payment of the
liquidated damages shall be made to the Holder in cash, immediately upon written
demand, provided, however, that the payment of such liquidated damages shall not
relieve the Company from its obligations to register the Securities pursuant to
this Section and registration shall not relieve the Company from any obligation
to pay liquidated damages. The Holder's rights to liquidated damages as set
forth herein shall not interfere with the Holder's right to call the Notes due
and payable immediately as per the terms of the Note for the failure of the
Company to timely file the Registration Statement, or the failure of the
Registration Statement to be declared effective by the SEC in a timely manner as
provided herein.

                  (g) If the Company does not remit the damages to the Holder as
set forth above, the Company will pay the Holder's reasonable costs of
collection, including reasonable attorney's fees, in addition to the liquidated
damages. The registration of the Securities pursuant to this provision shall not
affect or limit the Holders other rights or remedies as set forth in this
Agreement.

                  (h) The Company agrees that within five calendar days after
being notified by the SEC that the Registration Statement has been cleared to go
effective, the Company it will declare Registration Statement effective. The
Company agrees that it shall forward to the Investor a copy of any and all SEC
comments it may receive pertaining to the Registration Statement. The Company
also agrees that it shall respond in writing to any questions and/or comments
from the SEC that relate to the Registration Statement within ten calendar days
of receipt of such question or comment.

                  (i) In the event the number of shares of Common Stock included
in the Registration Statement shall be insufficient to cover the number of
Registrable Securities due to the Holder under the terms of the Purchase
Agreement and/or the Notes and Warrants, the Company agrees that it shall file
either a new Registration Statement including such additional shares or amend
the then existing Registration Statement. The Company agrees that in such event
it will file with the SEC either an amendment to the then existing Registration
Statement or a new Registration Statement within 30 calendar days of when
required hereunder, and use its best efforts to cause either the amendment or
such Registration Statement to become effective within 90 calendar days from
when required to file such Registration Statement pursuant to the terms herein.
If such amendment or new Registration Statement is not filed and/or declared
effective in a timely manner as set forth herein, the Company shall be subject
to liquidated damages as pursuant to the provisions of Section 3(e).

            Section 4. Cooperation with Company. The Holder will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.

<PAGE>

            Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Securities Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible:

                  (a) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
whenever the Holder of such securities shall desire to sell or otherwise dispose
of the same (including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Securities Act);

                  (b) furnish to the Holder copies of the Registration Statement
(and any amendments thereto), a summary prospectus or other prospectus,
including a preliminary prospectus or any amendment or supplement to any
prospectus, in conformity with the requirements of the Securities Act, and shall
also furnish such other documents as the Holder may reasonably request in order
to facilitate the public sale or other disposition of the Securities owned by
the Holder;

                  (c) register and qualify the Registrable securities covered by
the Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Holder shall reasonably request, and do any and all other
acts and things which may be necessary or advisable to enable the Holder to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by the Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified, or to file therein any general
consent to service of process, or to qualify any of the securities for sale in
any state which will require an escrow or other restriction relating to the
Company and/or sellers;

                  (d) list such securities on the Nasdaq Small Cap Market or
other national securities exchange on which any securities of the Company are
then listed, if the listing of such securities is then permitted under the rules
of such exchange or market;

                  (e) notify the Holder of Registrable Securities covered by the
Registration Statement, at any time when a prospectus relating thereto covered
by the Registration Statement is required to be delivered under the Securities
Act, of the happening of any event of which the executive officers of the
Company have knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.

<PAGE>

                  (f) If a "blackout period" (which is defined as any period in
which the effectiveness of the Registration Statement is suspended for a reason
other than a suspension of the Registration Statement arising because the
Company possesses material non-public information) occurs at any time after the
first anniversary of the Closing Date, and the Bid Price on the Trading Day
immediately preceding such "blackout period" (the "Old Bid Price") is greater
than the Bid Price on the first Trading Day following such "blackout period"
(the "New Bid Price"), the Company shall issue to the Holder the number of
additional shares of Common Stock equal to the difference between (y) the
product of (i) the number of Underlying Shares and Warrant Shares held by the
Holder during such "blackout period" that are or were not otherwise freely
tradable and (ii) the Old Bid Price, divided by the New Bid Price and (z) the
number of Underlying Shares and Warrant Shares held by the Holder during such
blackout period that were not otherwise freely tradable during such blackout
period. In the event a "blackout period" lasts for more than 30 calendar days
then the Holder shall have the right to demand the Company to redeem the Notes
and Warrants pursuant to the redemption provision of the Notes and Warrants.

                  (g) In addition to any other provisions for liquidated damages
in this Agreement or any Exhibit annexed hereto, if that the Company does not
deliver unlegended, freely tradable Common Stock in connection with the sale of
such Common Stock by the Holder within five Business Days of surrender by the
Holder of the Common Stock certificate (such date of receipt is referred to as
the "Receipt Date"), the Company shall pay to the Holder, in immediately
available funds, upon demand, as liquidated damages for such failure and not as
a penalty, for every day thereafter for the first ten days, two percent of the
product of (i) the number of shares of Common Stock undelivered and (ii) the Bid
Price on the Receipt Date, and three percent of the product of (i) the number of
shares of Common Stock undelivered and (ii) the Bid Price on the Receipt Date,
for every day thereafter that the unlegended shares of Common Stock are not
delivered, which liquidated damages shall accrue from the sixth Business Day
after the Receipt Date. The parties hereto acknowledge and agree that the sums
payable and as set forth above, and the obligation to issue Additional Shares,
shall constitute liquidated damages and not penalties. The parties further
acknowledge that the amount of loss or damages likely to be incurred in the
event of a failure to deliver unlegended, freely tradable shares of Common Stock
cannot be precisely estimated, and the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial
counsel and negotiated this Agreement at arm's length. Notwithstanding the
above, in the event that the Company does not deliver unlegended Common Stock in
connection with the sale of such Common Stock by the Holder within five Business
Days of the Receipt Date, the Company shall also pay to the Holder, in
immediately available funds, interest (at the then current Prime Rate), based
upon the product of (i) the number of undelivered unlegended freely tradable
shares, and (ii) the Bid Price of the Common Stock on the Receipt Date,
undelivered for every day thereafter that the unlegended shares of Common Stock
are not delivered. Any and all payments required pursuant to this paragraph
shall be payable only in cash, and any payment hereunder shall not relieve the
Company of its delivery obligations under this Section or elsewhere in this
Agreement, the Note or Warrant.

                  (h) The Company shall make available for inspection and review
by the Holder, advisors to and representatives of the Holder (who may or may not
be affiliated with the Holder), and any underwriter participating in any
disposition of the Registrable Securities on

<PAGE>

behalf of the Holder pursuant to the Registration Statement, any such
registration statement or amendment or supplement thereto or any blue sky, NASD
or other filing, all financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and properties of the
Company as may be reasonably necessary for the purpose of such review, and cause
the Company's officers, directors and employees to supply all such information
reasonably requested by the Holder or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Holder and such representatives, advisors and underwriters and its respective
accountants and attorneys to conduct initial and ongoing due diligence with
respect to the Company and the accuracy of the Registration Statement.

                  (i) The Company shall not disclose non-public information to
the Holder, or advisors to or representatives of, the Investor unless prior to
disclosure of such information the Company identifies such information as being
non-public information and provides the Holder, and their advisors and
representatives, with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require the Holder, advisors and
representatives of the Holder, to enter into a confidentiality agreement in form
reasonably satisfactory to the Company and the Holder.

                  (j) Nothing herein shall require the Company to disclose
non-public information to the Holder or its advisors or representatives, and the
Company represents that it does not disseminate non-public information to any
investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove provided,
immediately notify the advisors and representatives of the Investor and, if any,
underwriters, of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes
aware, constituting non-public information (whether or not requested of the
Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in the
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements, therein, in light of the circumstances in which they
were made, not misleading. Nothing contained in this Section shall be construed
to mean that such persons or entities other than the Holder (without the written
consent of the Holder prior to disclosure of such information) may not obtain
non-public information in the course of conducting due diligence in accordance
with the terms of this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of its opinion that based on such
due diligence by such persons or entities, that the Registration Statement
contains an untrue statement of a material fact or omits a material fact
required to be stated in the Registration Statement or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.

                  (k) The Holder agrees to the imprinting, so long as is
required by this Section, of the following legend (or such substantially similar
legend as is acceptable to the Holder and its counsel, the parties agreeing that
any unacceptable legended securities shall be

<PAGE>

replaced promptly by and at the Company's cost) on each of the Securities
(provided that the Additional Shares, Underlying Shares and Warrant Shares shall
not contain such legend if such shares have been included as part of a then
effective Registration Statement or an exemption from registration then exists):

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT") OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE
      OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR
      SUCH SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
      LAWS OR PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
      COMPANY THAT THERE IS AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
      SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

      The Company agrees that it will provide the Holder, upon request, with a
certificate or certificates representing the Securities, free from such legend
at such time as such legend is no longer required hereunder. The Company may not
take any action or make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions of transfer set
forth in this Section.

      Upon the one-year anniversary of the Closing Date, the Company shall issue
to the transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent) instructions in substantially the form
of Exhibit G to the Exchange Agreement. Such instructions shall be irrevocable
by the Company from and after the date hereof or from and after the issuance
thereof to any such substitute or replacement transfer agent, as the case may
be, except as otherwise expressly provided in the Registration Rights Agreement.
It is the intent and purpose of such instructions, as provided therein, to
require the transfer agent for the Common Stock from time to time upon transfer
of Registrable Securities by the Holder to issue certificates evidencing such
Registrable Securities free of the Legend during the following periods and under
the following circumstances and except as provided below, without consultation
by the transfer agent with the Company or its counsel and without the need for
any further advice or instruction or documentation to the transfer agent by or
from the Company or its counsel or the Holder: (a) at any time after one year
after the Closing Date, and the Effective Date has occurred, upon surrender of
one or more certificates evidencing the Warrant, Notes, Underlying Shares or
Warrant Shares that bear the aforementioned Legend, to the extent accompanied by
a notice requesting the issuance of new certificates free of the aforementioned
legend to replace those surrendered; provided that (i) the Registration
Statement shall then be effective; (ii) the Holder confirms to the transfer
agent that it has sold, pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Common Stock in a bona fide transaction to a
third party that is not an affiliate of the Company; and (iii) the Investor
confirms to the transfer agent that the Holder has complied with the prospectus
delivery requirement; or (b) at any time upon any surrender of one or more
certificates evidencing Registrable Securities, that bear the aforementioned
legend, to the extent accompanied by a notice requesting the issuance of new

<PAGE>

certificates free of such legend to replace those surrendered and containing
representations that (i) the Holder is permitted to dispose of such Registrable
Securities, without limitation as to amount or manner of sale pursuant to Rule
144(k) under the Securities Act (or any other similar exemption as may then be
in effect), or (ii) the Holder has sold, pledged or otherwise transferred or
agreed to sell, pledge or otherwise transfer such Registrable Securities, in a
manner other than pursuant to an effective registration statement, to a
transferee who will upon such transfer be entitled to freely tradable
securities. The Company shall have counsel provide any and all opinions
necessary for the sale under Rule 144 (or such other applicable exemption). Any
of the notices referred to above in this Section may be sent by facsimile to the
Company's transfer agent. No instructions or "stop transfer orders," so called,
"stock transfer restrictions," or other restrictions have been or shall be given
to the Company's transfer agent with respect to the Notes, Warrants or
Securities other than as expressly set forth in this Article.

            Section 6. Indemnification.

                  (a) The Company agrees to indemnify and hold harmless the
Holder, and each officer, director or person, if any, who controls the Holder
within the meaning of the Securities Act ("Distributing 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 reasonable attorneys' fees), to which the Distributing
Holder 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 any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, or any related
preliminary prospectus, final prospectus, offering circular, notification or
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company (i) will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
the Distributing Holder, specifically for use in the preparation thereof, or
(ii) cannot pay any amounts paid in settlement of any loss, claim, damage or
liability if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld. This Section 6(a) shall not
inure to the benefit of any Distributing Holder with respect to any person
asserting such loss, claim, damage or liability who purchased the Registrable
Securities which are the subject thereof if the Distributing Holder failed to
send or give (in violation of the Securities Act or the rules and regulations
promulgated thereunder) a copy of the prospectus contained in such Registration
Statement to such person at or prior to the written confirmation of such person
of the sale of such Registrable Securities, where the Distributing Holder was
obligated to do so under the Securities Act or the rules and regulations
promulgated thereunder. This indemnity provision will be in addition to any
liability that the Company may otherwise have.

                  (b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, each officer, director, or person, if any, who
controls the Company

<PAGE>

within the meaning of the Securities Act (each a "Company Indemnitee"), and each
other Distributing 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 reasonable
attorneys' fees) to which any Company Indemnitee or other Distributing Holder
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 any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, or any related preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto in reliance upon, and in conformity with, written information
furnished to the Company by such Distributing Holder, specifically for use in
the preparation thereof. This indemnity provision will be in addition to any
liability that the Distributing Holder may otherwise have.

                  (c) Promptly after receipt by an indemnified party under this
Section 6 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 6, 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 6. 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 6 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
the Distributing Holder, 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
Distributing Holder and the indemnifying party and the Distributing Holder 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 Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party

<PAGE>

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 Distributing Holder, which
firm shall be designated in writing by the Distributing 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.

            Section 7. 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 6 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 6 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 the Company and the
applicable Distributing 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 relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. 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 this Section 7 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 contribution from any person who was not
guilty of such fraudulent misrepresentation.

            Section 8. 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),

<PAGE>

(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 the Company:

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

      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

      Either party hereto may from time to time change its address or facsimile
number for notices under this Section 8 by giving at least ten calendar days'
prior written notice of such changed address or facsimile number to the other
party hereto.

            Section 9. Assignment. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. In the event of a transfer of the rights granted under this
Agreement, the Holder agrees that the Company may require that the transferee
comply with reasonable conditions as determined in the discretion of the
Company.

            Section 10. 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 all parties.

            Section 11. Termination of Registration Rights. This Agreement shall
terminate as to the Holder (and permitted transferees or assignees) upon the
occurrence of any of the following:

            (a) all Holder's Securities subject to this Agreement have been
registered;

<PAGE>

            (b) all of such Holder's Securities subject to this Agreement may be
sold without such registration pursuant to Rule 144 promulgated by the SEC
pursuant to the Securities Act; and

            (c) all of such Holder's Securities subject to this Agreement can be
sold pursuant to Rule 144(k) without limitation.

            Section 12. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

            Section 13. Governing Law: Venue; Jurisdiction. This Agreement will
be exclusively construed and enforced in accordance with and governed by the
laws of the State of New York, except for matters arising under the Securities
Act, without reference to principles of conflicts of law. Each of the parties
consents to the exclusive jurisdiction of the U.S. District Court sitting in the
Southern District of the State of New York in connection with any dispute
arising under this Agreement and hereby waives, 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. 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.

            Section 14. Severability. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein. Terms not otherwise defined herein shall be defined in
accordance with the Agreement.

            Section 15. Capitalized Terms. All capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Purchase
Agreement.

            Section 16. Entire Agreement. This Agreement, together with all
documents referenced herein, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.

<PAGE>

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

                                        INTERIORS, INC.

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

                                        INVESTOR:

                                        Endeavour Capital Fund SA

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

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