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                                                                    EXHIBIT 10.5


                                MICHAEL D. LOHNER
                              EMPLOYMENT AGREEMENT


                  THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of May 24, 2000, by and between HOME INTERIORS & GIFTS, INC., a
Texas corporation (together with its successors and assigns permitted hereunder,
the "Company"), and Michael D. Lohner (the "Executive").

                  WHEREAS, the Company desires to employ the Executive in an
executive capacity with the Company, and the Executive desires to be employed by
the Company in said capacity; and

                  WHEREAS, the parties hereto deem it desirable and in the best
interest of the Company and its stockholders for the Company to employ the
Executive on the terms and conditions set forth herein.

                  NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         1. EMPLOYMENT PERIOD. Subject to Section 3 hereof, the Company hereby
agrees to employ the Executive, and the Executive hereby agrees to be employed
by the Company, in accordance with the terms and provisions of this Agreement,
for the period commencing as of the date of this Agreement and continuing until
May 24, 2001; provided, however, that such Employment Period shall be extended
for successive terms of one (1) year each unless either party advises the other,
at least ninety (90) days prior to the end of the initial term or annual
extension, as the case may be, that it will not agree to extend this Agreement
(the "Employment Period").

         2. TERMS OF EMPLOYMENT.

                  (a) Position and Duties.

                        (i) During the Employment Period, the Executive shall
perform the functions of Senior Vice President and Chief Operating Officer of
the Company and, in so doing, shall report to the Chief Executive Officer of the
Company. The Executive shall have such powers and duties as may from time to
time be prescribed by the appropriate officers, so long as such powers and
duties are reasonable and customary for the Senior Vice President and Chief
Operating Officer of an enterprise comparable to the Company. Executive shall
also be appointed as President of an operating subsidiary of the Company.

                        (ii) During the Employment Period and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote such time as the Chief Operating Officer shall deem
necessary, up to and including substantially all of his business time, to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully, effectively and efficiently such
responsibilities.


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During the term of Executive's employment it shall not be a violation of this
Agreement for the Executive to (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures or fulfill speaking engagements, and
(3) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.

                  (b) Compensation.

                        (i) Base Salary. During the Employment Period, the
Executive shall receive, at such intervals and in accordance with such Company
policies as may be in effect from time to time, an annual salary (pro rata for
any partial year) equal to $295,000, payable in equal installments no less often
than monthly (the "Annual Base Salary"), which Annual Base Salary shall be
subject to appropriate increase, as determined by the sole discretion of the
Board of Directors of the Company.

                        (ii) Annual Performance Bonus. The Executive shall be
eligible to participate in the Company's Key Employee Bonus Plan, based on
EBITDA performance, applicable to executives of the Company (the "Annual Bonus")
for each fiscal year of the Company commencing pro rata from his date of
employment with the fiscal year ending December 31, 2000 as approved by the
Board of Directors of the Company in good faith, and such other criteria as may
be recommended by management and established by the Board of Directors of the
Company from time to time. Each Annual Bonus (or portion thereof) shall be paid
in cash promptly following delivery to the Board of Directors of the Company of
audited financial statements of the Company for the fiscal year for which the
Annual Bonus (or pro rated portion) is earned or awarded, unless electively
deferred by the Executive pursuant to any deferral programs or arrangements that
the Company may make available to the Executive but on the same basis as for
other members of the Senior Executive Management Team;

                        (iii) Stock Options. The Company shall grant to the
Executive an options to purchase 50,000 of shares of Common Stock of the Company
at a purchase price not to exceed $21.33 per share based upon a valuation of the
Company as of May 24, 2000, to be determined by the Option Committee of the
Company's Board of Directors. The options will be evidenced by a separate Option
Agreement and will be granted pursuant to, and subject to the terms and
conditions of the Company's 1998 Stock Option Plan for Key Employees. The
options will vest in five (5) equal installments over five years and become
exercisable in the manner and at the times provided in the Option Agreement.
Vesting will be accelerated if there is a change in control.

                        (iv) Incentive, Savings and Retirement Plans. During the
term of the Executive's employment, the Executive shall be entitled to
participate in all incentive, savings, and retirement plans, practices, policies
and programs applicable generally to other employees of the Company ("Investment
Plans") as determined by and at the discretion of the Board of Directors of the
Company.


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                        (v) Welfare Benefit Plans. During the term of the
Executive's employment, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs ("Welfare Plans")
provided by the Company (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other executives of the Company. The Company agrees to waive the
ninety (90) day waiting period for medical insurance benefits.

                        (vi) Expenses. During the term of the Executive's
employment, the Executive shall be entitled to receive prompt reimbursement for
all reasonable employment expenses incurred by the Executive in accordance with
the policies, practices and procedures of the Company.

                        (vii) Vacation and Holidays. Executive shall be entitled
to two (2) weeks vacation during July, 2000. Additionally, during the term of
the Executive's employment, the Executive shall be entitled annually to paid
vacation of (3) three weeks per year and paid holidays in accordance with the
plans, policies, programs and practices of the Company for its employees which
includes six (6) national holidays and two additional vacation days at
Christmas.

                        (ix) Other Benefits. During the term of Executive's
employment, the Executive shall be entitled to other perquisites and benefits
applicable to other members of the Senior Executive Management Team in effect
from time to time and in accordance with the policies, practices and procedures
of the Company.

         3. TERMINATION OF EMPLOYMENT.

                  (a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), the Company shall
give to the Executive no less than thirty (30) days written notice in accordance
with Section 11(b) hereof of its intention to terminate the Executive's
employment based upon Disability, and in the event Executive shall within such
30 day period become able to perform his duties and obligations under this
Agreement, then Executive's employment shall not be terminated. In such event,
the Executive's employment with the Company shall terminate effective on the
receipt of such notice by the Executive (the "Disability Effective Date"). For
purposes of this Agreement, "Disability" shall mean the Executive's inability to
perform his duties and obligations hereunder for a period of 120 consecutive
days or any 120 days in any twelve month period due to mental or physical
incapacity as determined by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).


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                  (b) Termination by the Company. The Company may terminate the
Executive's employment during the Employment Period either with or without
Cause. For purposes of this Agreement, "Cause" shall mean (i) a breach by the
Executive of the Executive's obligations under Section 2(a) (other than as a
result of physical or mental incapacity) which constitutes a continued material
nonperformance by the Executive of his obligations and duties thereunder, as
reasonably determined by the Board of Directors of the Company, (ii) commission
by the Executive of an act of fraud upon, or willful misconduct toward, the
Company, as reasonably determined by a majority of the disinterested members of
the Board of Directors of the Company (neither the Executive nor members of his
family being deemed disinterested for this purpose), (iii) a material breach by
the Executive of Section 6 or Section 9 hereof, (iv) the conviction of the
Executive of any felony (or deferred adjudication or a plea of nolo contendere
thereto), or (v) the failure of the Executive to carry out, or comply with, in
any material respect any directive of the Chief Executive Officer consistent
with the terms of this Agreement, which is not remedied within 30 days after
receipt of written notice from the Company specifying such failure.

                  (c) Termination by Executive. The Executive's employment may
be terminated during the Employment Period by the Executive for any reason or no
reason.

                  (d) Notice of Termination. Any termination by the Company (for
Cause or otherwise), or by the Executive, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b)
hereof.

                  (e) Date of Termination. "Date of Termination" means (i) the
date of receipt of the Notice of Termination or any later date specified therein
pursuant to Section 3(d) hereof, as the case may be, and (ii) if the Executive's
employment is terminated by reason of death or Disability, the date of death of
the Executive or the Disability Effective Date, as the case may be.

         4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

                  (a) Termination by the Company. If the Company terminates
Executive other than for Cause, or in connection with death or disability as
covered by Section 4(b) below, or fails to renew this Agreement beyond the
initial term ending May 24, 2000, the Company shall pay to the Executive (i) in
a lump sum in cash within ten days after the Date of Termination (1) the sum of
the Executive's applicable Annual Base Salary through the Date of Termination to
the extent not theretofore paid ("Accrued Obligations") and (2) any amount
arising from Executive's participation in, or benefits under, any Investment
Plans ("Accrued Investments"), which amounts shall be payable in accordance with
the terms and conditions of such Investment Plans, (ii) severance pay equal to
the Executive's Annual Base Salary, payable in accordance with the Company's
regular pay schedule, for twelve (12) months from the date of termination of
employment and (iii) any earned but unpaid Annual Bonus in respect of any full
fiscal year ended prior to the date the Executive's employment is terminated,
payable in a lump sum in cash at such time as such Annual Bonus otherwise would
be payable pursuant to the last sentence of Section 2(b)(ii) ("Accrued Bonus").
Notwithstanding the foregoing, an election by the Company


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not to extend any annual extension thereof (not including the initial term)
pursuant to Section 2 hereof shall not be considered a termination without Cause
for purposes of this Section 4(a).

                  (b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to his legal representatives (i) in a
lump sum in cash within ten days after the Date of Termination the aggregate the
Accrued Obligations; (ii) the Accrued Investments, which shall be payable in
accordance with the terms and conditions of the Investment Plans; and (iii) any
Accrued Bonus, which shall be payable at such time as such Annual Bonus
otherwise would be payable pursuant to the last sentence of Section 2(b)(ii).
The Company shall have no further payment obligations to the Executive or his
legal representatives under this Agreement.

                  (c) Cause. If the Executive's employment shall be terminated
by the Company for Cause, or by the Executive, during the Employment Period, the
Company shall have no further payment obligations to the Executive other than
for payment of Accrued Obligations, Accrued Investments (which shall be payable
in accordance with the terms and conditions of the Investment Plans), and
Accrued Bonus (which shall be payable at such time as such Annual Bonus
otherwise would be payable pursuant to the last sentence of Section 2(b)(ii)).

         5. FULL SETTLEMENT, MITIGATION. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment. Neither the Executive nor the Company shall be liable
to the other party for any damages in addition to the amounts payable under
Section 4 hereof arising out of the termination of the Executive's employment
prior to the end of the Employment Period; provided, however, that the Company
shall be entitled to seek damages for any breach of Sections 6, 7, or 9 hereof
or criminal misconduct., and further provided Executive shall be entitled to
seek damages for any violation by Company of applicable statutory employment law
or for slander or libel.

         6. CONFIDENTIAL INFORMATION.

                  (a) The Executive acknowledges that the Company and its
affiliates have trade, business, and financial secrets and other confidential
and proprietary information including but not limited to sales and marketing and
product information and strategy, identity of suppliers, displayers
(collectively, the "Confidential Information"). As defined herein, Confidential
Information shall not include (i) information that is generally known to other
persons or entities who can obtain economic value from its disclosure or use and
(ii) information required to be disclosed by the Executive pursuant to a
subpoena or court order, or pursuant to a requirement of a governmental agency
or law of the United States of America or a state thereof or any governmental or
political subdivision thereof; provided, however, that the Executive shall take
all reasonable steps to prohibit disclosure pursuant to subsection (ii) above at
the sole cost and expense of Company.


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                  (b) The Executive agrees (i) to hold such Confidential
Information in confidence and (ii) not to release such information to any person
(other than Company employees and other persons to whom the Company has
authorized the Executive to disclose such information and then only to the
extent that such Company employees and other persons authorized by the Company
have a need for such knowledge).

                  (c) The Executive further agrees not to use any Confidential
Information for the benefit of any person or entity other than the Company.

         7. SURRENDER OF MATERIALS UPON TERMINATION. Upon any termination of the
Executive's employment, the Executive shall immediately return to the Company
all copies, in whatever form, of any and all Confidential Information and other
properties of the Company and its affiliates which are in the Executive's
possession, custody or control.

         8. SUCCESSORS.

                  (a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

                  (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. The failure of any successor of Company to expressly assume to
perform this Agreement in writing shall, at the election of Executive, be deemed
to be termination of this Agreement without cause, entitling Executive to
payment of one year's severance. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

         9. NON-COMPETITION AND NON-SOLICITATION.

                  (a) The term of Non-Competition and Non-Solicitation (herein
so called) shall be for a term beginning on the date hereof and continuing until
the first anniversary of the Date of Termination of this Agreement, by either
the Company or the Executive for any reason.

                  (b) During the term of Non-Competition and Non-Solicitation,
the Executive will not (other than for the benefit of the Company pursuant to
this Agreement) directly or indirectly, individually or as an officer, director,
employee, shareholder, consultant, contractor, partner, joint venturer, agent,
equity owner or in my capacity whatsoever, (i) engage in any


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business that competes with the Company, either by selling similar products in
the continental United States and Mexico or by utilizing a direct sales or
multi-level marketing sales format to sell consumer products in the continental
United States (a "Competing Business"), (ii) hire, attempt to hire, or contact
or solicit with respect to hiring any employee or Independent Contractor
Displayers of the Company, or (iii) divert or take away any customers, including
Independent Contractors, or suppliers of the Company in the continental United
States. Notwithstanding the foregoing, the Company agrees that the Executive may
own less than five percent of the outstanding voting securities of any publicly
traded company that is a Competing Business so long as the Executive does not
otherwise participate in such competing business in any way prohibited by the
preceding clause. As used in this Section 9(b) (and in Section 6 hereof),
"Company" shall include the Company and any of its subsidiaries.

                  (c) During the term of Non-Competition and Non-Solicitation,
the Executive will not use the Executive's access to, knowledge of, or
application of Confidential Information to perform any duty for any Competing
Business; it being understood and agreed to that this Section 9(c) shall be in
addition to and not be construed as a limitation upon the covenants in Section
9(b) hereof.

                  (d) The Executive acknowledges that the geographic boundaries,
scope of prohibited activities, and time duration of the preceding paragraphs
are reasonable in nature and are no broader than are necessary to maintain the
confidentiality and the goodwill of the Company's proprietary information, plans
and services and to protect the other legitimate business interests of the
Company.

         10. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this
Agreement shall not prohibit or restrict the Executive's entitlement to full
participation in the employee benefit and other plans or programs in which
employees of the Company are eligible to participate.

         11. MISCELLANEOUS.

                  (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. Whenever the terms
"hereof", "hereby", "herein", or words of similar import are used in this
Agreement they shall be construed as referring to this Agreement in its entirety
rather than to a particular section or provision, unless the context
specifically indicates to the contrary. Any reference to a particular "Section"
or "paragraph" shall be construed as referring to the indicated section or
paragraph of this Agreement unless the context indicates to the contrary. The
use of the term "including" herein shall be construed as meaning "including
without limitation." This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

                  (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:


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         If to the Executive:       Michael D. Lohner
                                    901 Brazos Drive
                                    Southlake, Texas 76092


         If to the Company:         Donald J. Carter, Jr., CEO
                                    Home Interiors & Gifts, Inc.
                                    4550 Spring Valley Road
                                    Dallas, Texas  75244

                                    With a copy to the Company's General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                  (c) If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
of this Agreement, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

                  (d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation. The Company may not
withhold any sums under any circumstances from any amounts payable under this
Agreement as Accrued Obligations, Accrued Investments or Accrued Bonuses to
Executive beyond the date due.

                  (e) Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.

                  (f) The Executive acknowledges that money damages would be
both incalculable and an insufficient remedy for a breach of Section 6 or 9 by
the Executive and that any such breach would cause the Company irreparable harm.
Accordingly, the Company, in addition to any other remedies at law or in equity
it may have, shall be entitled, without the requirement of posting of bond or
other security, to equitable relief, including injunctive relief and specific
performance, in connection with a breach of Section 6 or 9 by the Executive.


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                  (g) The provisions of this Agreement constitute the complete
understanding and agreement between the parties with respect to the subject
matter hereof.

                  (h) This Agreement may be executed in two or more
counterparts.

                  (i) Sections 6 and 9 of this Agreement shall survive the
termination of this Agreement.

                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from the Board of Directors
of the Company, the Company has caused this Agreement to be executed in its name
on its behalf, all as of the day and year first above written.

                                 EXECUTIVE:



                                 -----------------------------------------------
                                 Michael D. Lohner


                                 COMPANY:

                                 HOME INTERIORS & GIFTS, INC.



                                 By:
                                          --------------------------------------
                                 Name:    Donald J. Carter, Jr.
                                 Title:   Chief Executive Officer



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