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                                                                 EXHIBIT 10.6


                         EXECUTIVE EMPLOYMENT AGREEMENT


                 THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and
entered into as of June 4, 1998 by and between Home Interiors & Gifts, Inc., a
Texas corporation (hereinafter, together with its successors, referred to as
the "COMPANY"), on the one hand, and Donald J. Carter, Jr. (hereinafter
referred to as the "EXECUTIVE"), on the other hand.

                             W I T N E S S E T H :

                 WHEREAS, the Company is party to an Agreement and Plan of
Merger (the "MERGER AGREEMENT"), dated as of April 13, 1998, between the
Company and Crowley Investments, Inc., a Texas corporation ("NEWCO");

                 WHEREAS, pursuant to the terms of the Merger Agreement, Newco
will be merged (the "MERGER") with and into the Company, with the Company being
the surviving corporation of the Merger;

                 WHEREAS, upon the consummation of the Merger, 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 desire to set forth in writing the
terms and conditions of their understandings and agreements.

                 NOW THEREFORE, in consideration of the foregoing, of the
mutual promises contained herein and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

                 SECTION 1.       DEFINITIONS.

                          "ACCRUED BENEFITS" means (i) all salary earned or
         accrued through the date the Executive's employment is terminated,
         plus, in the case of death, the product of the Annual Bonus paid to
         the Executive with respect to the preceding fiscal year (or, if
         applicable, a partial fiscal year) of the Company and a fraction, the
         numerator of which is the number of days in the current fiscal year of
         the Company through the Date of Termination, and the denominator of
         which is 365; (ii) reimbursement for any and all monies advanced in
         connection with the Executive's employment for reasonable expenses
         incurred by the Executive in accordance with Section 4(c)hereof
         through the date the Executive's employment is terminated and (iii)
         all other payments and benefits to which the Executive or the
         Executive's family or other beneficiaries
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         may be entitled under the terms of any applicable compensation
         arrangement, benefit plan, program or policy of the Company, including
         any compensation previously deferred by the Executive (together with
         any accrued earnings thereon) and not yet paid by the Company and any
         earned and accrued, but unused vacation pay, in each case through the
         Date of Termination.

                          "ACT" shall mean the Securities Exchange Act of 1934,
         as amended.

                          "AFFILIATE" shall have the meaning given such term in
         Rule 12b-2 of the Act.

                          "ANNUAL BONUS" has the meaning set forth in Section
         4(b).

                          "BASE SALARY" has the meaning set forth in Section
         4(a).

                          "BOARD" shall mean the board of directors of the
         Company.

                          "CAUSE" shall mean (i) the Executive's conviction of
         any felony, unless the Board reasonably determines that the
         Executive's conviction of such felony does not materially affect the
         Executive's business reputation or significantly impair the
         Executive's ability to carry out his duties under this Agreement
         (provided the Board shall have no obligation to make such
         determination); (ii) the Executive's willful and material breach of
         his obligations under this Agreement which results in material damage
         to the Company's business, or (iii) the Executive's dishonesty or
         gross misconduct in connection with his employment hereunder which
         results in material damage to the Company's business. Notwithstanding
         the above, the occurrence of the event specified in clause (ii) above
         shall not constitute Cause unless the Executive fails to cure such
         event within ten (10) days after receipt from the Company of the
         Notice of Termination (as defined in Section 5(e) below).

                          "CHANGE OF CONTROL" shall mean the first to occur of
         the following events: (1) the Company is acquired or becomes
         controlled by any Person or group of Persons, other than by any member
         of the HMC Group (as hereinafter defined); (2) Hicks, Muse, Tate &
         Furst Incorporated or any of its Affiliates, including without
         limitation HM/RB Partners, L.P., a Delaware limited partnership, or
         its or their respective partners, employees, officers and directors
         (and members of their respective families and trusts for the primary
         benefit of such family members) (collectively, the "HMC GROUP") shall
         cease to have the power, directly or indirectly, to vote or direct the
         voting of securities having a majority of the ordinary voting power
         for the election of directors of the Company; or (3) the shareholders
         of the Company approve a complete liquidation or dissolution of the
         Company; provided that the occurrence of an event described in (1) or
         (2) above shall not be deemed a Change of Control if (a) prior to the
         consummation of an Initial Public Offering (i)





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         the HMC Group otherwise has the right, directly or indirectly, to
         designate (and does so designate) a majority of the Board or (ii) the
         HMC Group, together with members of management of the Company,
         directly or indirectly, own of record and beneficially an amount of
         common stock of the Company equal to at least fifty percent (50%) of
         the amount of common stock of the Company (adjusted for stock splits,
         stock dividends and other similar events on an equitable basis)
         directly or indirectly owned by the HMC Group, together with
         management of the Company, of record and beneficially as of the date
         of this Agreement and such ownership by the HMC Group, together with
         members of management of the Company, represents the largest single
         block of voting securities of the Company held by any Person or group
         of Persons (within the meaning of Section 13(d) of the Act), or (b)
         after the consummation of an Initial Public Offering, and for any
         reason whatever, (i) no Person or group of Persons, excluding the HMC
         Group, shall become the beneficial owner, directly or indirectly, of
         more than the greater of (x) fifteen percent (15%) of the voting
         shares of the Company then outstanding and (y) the percentage of the
         then outstanding voting stock of the Company directly or indirectly
         owned by the HMC Group, together with members of management of the
         Company; and (ii) the Board shall consist of a majority of Continuing
         Directors. For the purposes of this definition, the term "the Company"
         shall include any successor to the Company.

                          "CONTINUING DIRECTORS" shall mean the directors of
         the Company on the date of this Agreement and each director appointed
         subsequent to the date of this Agreement, if, in each case, such other
         director's nomination for election to the Board, as applicable, is
         recommended by a majority of the directors at the time of such
         election or such director receives the vote of the HMC Group in his or
         her election by the shareholders.

                          "CONTROL" (including the correlative terms
         "Controlled by" and "Controlling") shall mean the possession, directly
         or indirectly, of the power to direct, or to cause the direction of,
         the management and policies of a Person, whether through ownership of
         voting securities, by contract or otherwise.

                          "COBRA" means the Consolidated Omnibus Reconciliation
         Act of 1985, as amended.

                          "EMPLOYMENT DATE" has the meaning set forth in
         Section 2.

                          "EMPLOYMENT PERIOD" shall mean the period during
         which the Executive is employed by the Company.

                          "GOOD REASON" shall mean (i) any material breach by
         the Company of this Agreement or the Shareholders Agreement (for so
         long as Executive is subject thereto) or the failure of the Executive
         to be a director of the Company for any reason





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         (other than death, Permanent Disability, voluntary resignation or
         termination of employment for Cause); (ii) any reduction or
         alteration, approved by the Board without the Executive's written
         consent, in the Executive's title, duties or responsibilities or the
         Executive's Base Salary and/or annual target bonus opportunity other
         than under a circumstance which constitutes Cause; provided, that any
         such reduction or alteration in the Executive's title, duties or
         responsibilities without the Executive's consent during the ten-day
         cure period applicable to subparagraph (ii) of the definition of Cause
         shall not constitute "Good Reason"; provided, further, that any cure
         by the Executive during such ten-day period shall entitle the
         Executive to reinstatement of his title, duties and responsibilities;
         and (iii) a change, without the Executive's written consent, of more
         than twenty-five (25) miles in the office or location where the
         Executive is based. Notwithstanding the above, the occurrence of any
         of the events described above will not constitute Good Reason unless
         the Company fails to cure any such event within ten (10) days after
         receipt from the Executive of the Notice of Termination (as defined in
         Section 5(e) below).

                          "INITIAL PUBLIC OFFERING" shall mean an underwritten
         public offering of capital stock of the Company, as applicable,
         pursuant to a registration statement filed with the Securities and
         Exchange Commission in accordance with the Securities Act of 1933, as
         amended.

                          "PERMANENT DISABILITY" shall mean the inability of
         the Executive to discharge his duties hereunder for a period of six
         (6) consecutive months, or for a total of six (6) months in any twelve
         (12) month period, by reason of physical or mental illness, injury or
         incapacity.

                          "PERSON" shall mean any "person," within the meaning
         of Sections 13(d) and 14(d) of the Act, including a "group" as therein
         defined.

                          "SHAREHOLDERS AGREEMENT" shall mean that certain
         Shareholders Agreement, dated as of June 4, 1998, among the Company
         and the securityholders of the Company listed on the signature pages
         thereof.

                          "SUBSIDIARY" shall mean, with respect to any Person,
         any other Person of which such first Person owns the majority of the
         economic interest in such Person or owns or has the power to vote,
         directly or indirectly, securities representing a majority of the
         votes ordinarily entitled to be cast for the election of directors or
         other governing Persons.

                 SECTION 2.       TERM OF EMPLOYMENT. Unless earlier terminated
in accordance with the terms of this Agreement, the Executive's Employment
Period shall commence on the date hereof (the "EMPLOYMENT DATE") and shall end
on June 4, 2003; provided, however, that such Employment Period shall be
extended for successive terms of one (1)





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year each unless either party advises the other, at least one hundred twenty
(120) 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.

                 SECTION 3.       DUTIES. During the Employment Period, the
Executive (i) shall serve as Chairman of the Board and Chief Executive Officer
of the Company, subject to the direction and control of the Board; (ii) shall
report directly to the Board; and (iii) shall devote his full business time
during normal business hours to the business and affairs of the Company and
shall use his best efforts to perform faithfully and efficiently the
responsibilities assigned to Executive hereunder, to the extent necessary to
discharge such responsibilities, except for: (A) time spent in managing
Executive's personal, financial, and legal affairs and serving on corporate,
civic, or charitable boards or committees, in each case, only to the extent not
substantially interfering with the performance of such responsibilities; and
(B) a vacation to which Executive is entitled. The continuing service by the
Executive on any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the date of this Agreement, or
the Executive's service on any other boards or committees of which the Company
has knowledge and does not object in writing, within thirty (30) days after
first becoming aware of such service or proposed service, shall not be deemed
to interfere with the performance of the Executive's services to the Company;
provided that Executive's time commitment or participation in respect of such
continuing service does not materially increase after the date hereof or after
the expiration of such thirty (30) day period, as applicable.

                 SECTION 4.       COMPENSATION. During the Employment Period,
the Executive shall be compensated as follows:

                          (a)     the Executive shall receive a minimum annual
         salary (pro rata for any partial year) equal to Five Hundred Thousand
         and No/100 Dollars ($500,000) ("BASE SALARY"), which Base Salary shall
         be payable in equal monthly installments and shall be subject to
         appropriate increase, as determined by the sole discretion of the
         Board;

                          (b)     the Executive shall be eligible to receive an
         annual bonus (the "ANNUAL BONUS") in an amount up to the percentage of
         the Executive's Base Salary set forth on Schedule 1 hereto for each
         fiscal year of the Company commencing with the fiscal year ending
         December 31, 1998 (on a pro rata basis for any partial year)
         calculated based upon budgeted earnings before interest, income tax,
         depreciation and amortization ("EBITDA") as approved by the Board in
         good faith, and such other criteria as may be recommended by
         management and established by the Board from time to time, at the
         beginning of each fiscal year provided that in any event the Executive
         shall become entitled to receive an annual bonus for any fiscal year
         in which the Company achieves at least eighty-eight percent (88%) of
         such budgeted EBITDA in such fiscal year (the amount of such bonus to
         be determined in good faith





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         by the Board based upon the formula set forth on Schedule 1 hereto).
         Each Annual Bonus (or portion thereof) shall be paid in cash promptly
         following the delivery to the Board of audited financial statements of
         the Company for the fiscal year for which the Annual Bonus (or
         prorated 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;

                          (c)     the Executive shall be reimbursed, at such
         intervals and in accordance with such Company policies as may be in
         effect from time to time, for any and all reasonable business expenses
         incurred by him in the business interests of the Company, including
         but not limited to travel expenses;

                          (d)     the Executive shall be entitled to
         participate in all incentive, savings, retirement and death benefit
         plans, practices, policies and programs on a basis no less favorable
         than that basis available to similarly-situated senior executives of
         the Company as determined by the Board from time to time;

                          (e)     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 generally provided by the Company to similarly-situated
         senior executives of the Company (including, without limitation,
         medical, prescription, dental, disability, salary continuance,
         employee life, group life, accidental death and travel accident
         insurance plans and programs), in each case at the most favorable
         level of participation and providing the highest levels of benefits
         available to them;

                          (f)     the Executive shall be entitled to receive
         (in addition to the benefits described above) such perquisites and
         fringe benefits appertaining to Executive's position in accordance
         with any practice established by the Board, including without
         limitation, air travel arrangements consistent with policies and
         practice in effect during the one (1) year prior to the date of this
         Agreement; and

                          (g)     in addition to any benefits the Executive may
         receive pursuant to paragraph 4(d), the Company shall grant stock
         options (the "STOCK OPTIONS") to the Executive under the Company's
         1998 Stock Option Plan exercisable for an aggregate of 338,441 shares
         of common stock, par value $.10 per share, at an exercise price of
         $18.05451 per share. The Stock Options shall vest and become
         exercisable in five equal annual installments commencing on the first
         anniversary of the date of grant; provided, however, that the Stock
         Options shall, subject to Section 7 below, vest and become immediately
         exercisable upon (i) the termination of the Executive's employment
         without Cause, (ii) the Executive's termination of his employment for
         Good Reason, (iii) the occurrence of a Change of Control; (iv) the
         sale, conveyance or other disposition by the Company of all or
         substantially all of its assets to a Person





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         that is not an Affiliate of the Company. In addition to the foregoing,
         the Stock Options will contain the following provisions:

                                      (i)  Stock options will be exercisable
                 for a period of ten (10) years from the date of issuance.

                                     (ii)  To the extent definitions in this
                 Agreement are different from the definitions in the Company's
                 1998 Stock Option Plan (e.g., Change of Control, Cause, Good
                 Reason, etc.), the definitions in this Agreement will control.

                                    (iii)  On a termination for Cause or a
                 voluntary termination by the Executive, the Executive may
                 exercise all vested options within thirty (30) days after the
                 termination date.

                                     (iv)  If Employment is terminated as a
                 result of death or disability, the vested stock options may be
                 exercised within one hundred eighty (180) days after the date
                 of the Executive's termination of employment.

                                      (v)  On a termination of employment for
                 any other reason, all vested stock options may be exercised
                 within thirty (30) days after such date of termination. The
                 Committee (as such term is defined in the Company's 1998 Stock
                 Option Plan) may not shorten the exercise period described in
                 clauses (iii), (iv) or (v).

                                     (vi)  The Company shall have no right to
                 purchase the Executive's Stock Options or shares of stock
                 pursuant to Section 9 of the Stock Option Plan.

                 SECTION 5.       TERMINATION OF EMPLOYMENT.

                          (a)     Permanent Disability. The Company may
         terminate the Executive's employment because of a Permanent Disability
         by first giving Executive written notice of the Company's intention to
         terminate such employment.

                          (b)     Voluntary Termination by Executive.
         Notwithstanding anything in this Agreement to the contrary the
         Executive may, upon not less than thirty (30) days written notice to
         the Company, voluntarily terminate employment for any reason (provided
         that any termination by the Executive pursuant to Section 5(d) on
         account of Good Reason shall not be treated as a voluntary termination
         under this Section 5(b)).





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                          (c)     Termination by the Company. The Company at
         any time may terminate the Executive's employment for Cause or without
         Cause.

                          (d)     Good Reason. The Executive at any time may
         terminate his employment for Good Reason.

                          (e)     Notice of Termination. Any termination by the
         Company for Cause or by the Executive for Good Reason shall be
         communicated by a Notice of Termination to the other party hereto
         given in accordance with Section 18. For purposes of this Agreement, a
         "NOTICE OF TERMINATION" means a written notice given, in the case of a
         termination for Cause, within one hundred eighty (180) days of the
         Company's having actual knowledge of the events giving rise to such
         termination, and in the case of a termination for Good Reason, within
         one hundred eighty (180) days of the Executive's having actual
         knowledge of the events giving rise to such termination. The Notice of
         Termination shall: (i) indicate the specific termination provision in
         this Agreement relied upon; (ii) set forth in reasonable detail the
         facts and circumstances claimed to provide a basis for termination of
         the Executive's employment under the provision so indicated; and (iii)
         if the termination date is other than the date of receipt of such
         notice, specify the termination date of this Agreement (which date
         shall be no more than fifteen (15) days after the giving of such
         notice). The failure by the Executive or the Company to set forth in
         the Notice of Termination any fact or circumstance which contributes
         to a showing of Good Reason or Cause, as applicable, shall not waive
         any right of the Executive hereunder or preclude the Executive from
         asserting such fact or circumstance in enforcing his rights hereunder.
         In addition, in the event the Company determines to terminate the
         Executive's employment without Cause, the Company shall deliver to the
         Executive written notification thereof on a date not later than the
         Date of Termination.

                          (f)     Date of Termination. For the purpose of this
         Agreement, the term "DATE OF TERMINATION" means: (i) in the case of a
         termination for which a Notice of Termination is required, the date of
         receipt of such Notice of Termination or, if later, the date specified
         therein, as the case may be; and (ii) in all other cases, the actual
         date on which the Executive's employment terminates.

                 SECTION 6.       OBLIGATIONS OF THE COMPANY UPON TERMINATION.
Upon termination of the Executive's employment with the Company, the Company
shall have the following obligations:

                          (a)     Death. If the Executive's employment is
         terminated by reason of the Executive's death, all Accrued Expenses
         shall be paid to the Executive, his beneficiaries, or his estate, as
         applicable, in a lump sum in cash within thirty (30) days after the
         Date of Termination. In addition, the Executive's family shall be





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         entitled to receive benefits generally available to the surviving
         families of other senior executive officers of the Company.

                          (b)     Permanent Disability. If the Executive's
         employment is terminated by reason of the Executive's Permanent
         Disability, the Executive, and the Executive's spouse, shall be
         entitled to continue to participate in or be covered under the
         Company's health and life insurance benefit plans generally applicable
         to similarly situated senior executives of the Company or, at the
         Company's option, to receive equivalent benefits by alternate means,
         at least equal to such health and life insurance benefits. Unless
         otherwise directed by the Executive, the Executive shall also be paid
         all Accrued Benefits in a lump sum in cash within thirty (30) days
         after the Date of Termination. In addition, the Executive shall
         receive severance pay from the Company in an amount equal to one
         hundred percent (100%) of the total Base Salary and Annual Bonus, if
         any, received by the Executive with respect to the fiscal year
         immediately prior to the fiscal year in which such Date of Termination
         occurs; provided, however, that the Company shall not be obligated to
         make such severance payment to the extent that such severance payment
         reduces the disability benefits to which the Executive is entitled
         from an insurer by an equal or greater amount. Such severance payment
         is to be made within thirty (30) days after the Date of Termination.

                          (c)     Termination by the Company for Cause and
         Voluntary Termination by Executive. If the Executive's employment is
         terminated for Cause or voluntarily terminated by the Executive (other
         than for Good Reason), the Company shall pay the Executive the Accrued
         Benefits in a lump sum in cash within thirty (30) days after the Date
         of Termination.

                          (d)     Other Termination of Employment. If the
         Company terminates the Executive's employment other than for Cause or
         Permanent Disability, or the Executive terminates his employment for
         Good Reason, the Company shall pay or provide the Executive the
         following:

                                  (A)      Cash Payment. The Company shall pay
                 to the Executive in a lump sum in cash within 30 days after
                 the Date of Termination the following amounts (other than
                 amounts payable from non-qualified retirement plans and
                 deferred compensation plans, which amounts shall be paid in
                 accordance with the terms of such plans):

                                        (1)     all Accrued Benefits;

                                        (2)     if the Date of Termination
                          occurs on or prior to the first anniversary of this
                          Agreement, a cash amount equal to five (5) times the
                          Executive's Base Salary;





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                                        (3)     if the Date of Termination
                          occurs after the first anniversary of this Agreement,
                          a cash amount equal to the greater of:

                                        (I)      the Base Salary that would be
                                  paid to the Executive from the Date of
                                  Termination through June 4, 2003 if the Date
                                  of Termination had not occurred; and

                                        (II)     three (3) times the total Base
                                  Salary and Annual Bonus, if any, received by
                                  the Executive with respect to the fiscal year
                                  immediately prior to the fiscal year in which
                                  the Date of Termination occurs.

                                  (B)      Other Benefits Continuation. The
                 Company shall provide for the continued participation of the
                 Executive, and his spouse, as the case may be, until June 4,
                 2003, in the Company's health and life insurance benefit plans
                 generally applicable to similarly situated senior executives
                 of the Company. In lieu of continued participation in any such
                 medical and life insurance programs, the Executive may elect
                 by written notice delivered to the Company prior to the Date
                 of Termination to receive an amount equal to the annual cost
                 to the Company (based on premium rates) of providing such
                 coverage.

                          (e)     Any amounts payable to the Executive pursuant
         to this Section 6 shall be considered severance payments and be in
         full and complete satisfaction of the obligations of the Company to
         the Executive in connection with the termination of the Executive.

                 SECTION 7.      APPLICABILITY OF SECTION 280G OF THE CODE.

                          (a)     Limitation on Severance Pay and Other
         Benefits. Notwithstanding any other provision of this Agreement to the
         contrary, unless and until this Agreement has been approved by a
         separate vote of the Company's shareholders in accordance with Section
         7(g) below, the Company shall not be obligated to make any payment or
         provide any benefit (including the acceleration of Stock Options) to
         the extent that such payment or benefit results (as determined in
         accordance with Section 7(c) below) in a parachute payment (as defined
         in Section 280G of the Code); provided, however, that the Company
         shall make all payments and provide all benefits under this Agreement
         to the fullest extent permitted without giving rise to a parachute
         payment.

                          (b)     Tax Reimbursement Payment. If the amount or
         benefit paid or distributed to the Executive by the Company or any
         Person that is an Affiliate of the Company, whether pursuant to this
         Agreement or otherwise with respect to





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         employment by the Company after the Employment Date (collectively, the
         "Covered Payments"), is or becomes subject to the tax imposed under
         Section 4999 of the Code or any similar tax that may hereafter be
         imposed (the "Excise Tax") and if this Agreement has been approved by
         a separate vote of the Company's shareholders in accordance with
         Section 7(g) below, the Company shall pay to the Executive, at the
         time specified in Section 7(f) below, the Tax Reimbursement Payment
         (as defined below). The Tax Reimbursement Payment is defined as an
         amount, which when added to the Covered Payments and reduced by any
         Excise Tax on the Covered Payments and any federal, state and local
         income tax and Excise Tax on the Tax Reimbursement Payment provided
         for by this Agreement (but without reduction for any federal, state
         and local income or employment tax on such Covered Payments), shall be
         equal to the sum of (i) the amount of the Covered Payments; and (ii)
         an amount equal to the product of any otherwise permitted deductions
         disallowed for federal, state or local income tax purposes as a result
         of the inclusion of the Tax Reimbursement Payment in the Executive's
         adjusted gross income and the applicable marginal rate of federal,
         state or local income taxation if the Tax Reimbursement Payment had
         not been made, respectively, for the calendar year in which the Tax
         Reimbursement Payment is to be made.

                          (c)     Determining Excise Tax. For purposes of
         determining whether any of the Covered Payments will be subject to the
         Excise Tax and the amount of such Excise Tax,

                                  (i)      such Covered Payments will be
                 treated as "parachute payments" within the meaning of Section
                 280G of the Code, and all "parachute payments" in excess of
                 the "base amount" (as defined under Section 280G(b)(3) of the
                 Code) shall be treated as subject to the Excise Tax, to the
                 extent so determined in the opinion of the Company's
                 independent certified public accountants (the "Accountants");
                 and

                                  (ii)     the value of any non-cash benefits
                 or any deferred payment or benefit shall be determined by the
                 Accountants in accordance with the principles of Section 280G
                 of the Code.

                          (d)     Applicable Tax Rates and Deductions. For
         purposes of determining the amount of the Tax Reimbursement Payment,
         the Executive shall be deemed:





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                                  (i)      to pay federal income taxes at the
                 highest applicable marginal rate of federal income taxation
                 for the calendar year in which the Tax Reimbursement Payment
                 is to be made, except in connection with the determination of
                 the Tax Reimbursement Payment attributable to a disallowed
                 deduction under clause (ii) of the definition of Tax
                 Reimbursement Payment; and

                                  (ii)     to pay any applicable state and
                 local income taxes at the highest applicable marginal rate of
                 taxation for the calendar in which the Tax Reimbursement
                 Payment is to be made, net of the maximum reduction in federal
                 income taxes which could be obtained from the deduction of
                 such state or local taxes if paid in such year (determined
                 without regard to limitations on deductions based upon the
                 amount of the Executive's adjusted gross income).

                          (e)     Subsequent Events. In the event that the
         Excise Tax is subsequently determined by the Accountants or the
         Internal Revenue Service to be less than the amount taken into account
         hereunder in calculating the Tax Reimbursement Payment made, the
         Executive shall repay to the Company, at the time that the amount of
         such reduction in the Excise Tax is finally determined, the portion of
         such prior Tax Reimbursement Payment that has been paid to the
         Executive or to federal, state or local tax authorities on the
         Executive's behalf and that would not have been paid if such Excise
         Tax had been applied in initially calculating such Tax Reimbursement
         Payment, plus interest on the amount of such repayment at the rate
         provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
         foregoing provisions of this Section 7(e), in the event any portion of
         the Tax Reimbursement Payment to be refunded to the Company has been
         paid to any federal, state or local tax authority, repayment thereof
         shall not be required until actual refund or credit of such portion
         has been made to the Executive, and interest payable to the Company
         shall not exceed interest received or credited to the Executive by
         such tax authority for the period it held such portion. The Executive
         and the Company shall mutually agree upon the course of action to be
         pursued (and the method of allocating the expenses thereof) if the
         Executive's good faith claim for refund or credit is denied.

                          In the event that the Excise Tax is later determined
         by the Accountants to exceed the amount taken into account hereunder
         at the time the Tax Reimbursement Payment is made (including, but not
         limited to, by reason of any payment the existence or amount of which
         cannot be determined at the time of the Tax Reimbursement Payment in
         respect thereof) the Company shall make an additional Tax
         Reimbursement Payment of such excess (which Tax Reimbursement Payment
         shall include any interest or penalty payable with respect to such
         excess) at the time that the amount of such excess is finally
         determined.





                                       12
<PAGE>   13
                          The Company and the Executive each agrees to
         reasonably cooperate in good faith in the event of any reduction in
         payments or benefits pursuant to Section 7(a) or any Tax Reimbursement
         Payment pursuant to Section 7(b) to minimize the amount of such
         reduction or Tax Reimbursement Payment and to take such other actions
         under this Section 7 as may be necessary or required.

                          (f)     Date of Payment. The portion of the Tax
         Reimbursement Payment attributable to a Covered Payment shall be paid
         to the Executive within ten (10) business days following the payment
         of the Covered Payment. If the amount of such Tax Reimbursement
         Payment (or portion thereof) is due, the Company shall pay to the
         Executive, an amount estimated in good faith by the Accountants to be
         the minimum amount of such Tax Reimbursement Payment and shall pay the
         remainder of such Tax Reimbursement Payment (which Tax Reimbursement
         Payment shall include interest at the rate provided in Section
         1274(b)(2)(B) of the Code) as soon as the amount thereof can be
         determined, but in no event later than forty-five (45) calendar days
         after payment of the related Covered Payment. In the event that the
         amount of the estimated Tax Reimbursement Payment exceeds the amount
         subsequently determined to have been due, such excess shall be repaid
         or refunded pursuant to the provisions of Section 7(e) above.

                          (g)     Shareholder Approval. The Company shall use
         its reasonable best efforts to obtain, within 45 days following the
         Employment Date, the approval of this Agreement (including, without
         limitation, the removal of the limitation under Section 7(a), the Tax
         Reimbursement Payment, the acceleration of vesting of Stock Options
         upon a Change of Control and the continuation of benefits following a
         termination of employment without Cause or resignation for Good Reason
         within one year of a Change of Control) by a separate vote of the
         Company's shareholders who own more than 75% of the total voting power
         of all outstanding stock of the Company (excluding for this purpose
         all stock actually or constructively owned by the Executive and all
         other disqualified individuals (as defined in Section 280G of the
         Code) who would receive payments constituting parachute payments if
         shareholder approval for purposes of Section 280G of the Code was not
         obtained). The vote of the Company's shareholders pursuant to this
         Section 7(g) is intended to satisfy the shareholder approval
         requirement described in Question and Answer 7 of the Proposed
         Regulations under Section 280G of the Code.

                 SECTION 8.       NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation, during the term of Executive's employment, in any benefit bonus,
incentive or other plan or program provided by the Company and for which the
Executive may qualify, nor shall anything herein limit or otherwise prejudice
such rights as the Executive may have under any other agreements with the
Company, including, but not limited to stock option or restricted stock
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive





                                       13
<PAGE>   14
under any plan or program of the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan or program.

                 SECTION 9.       FULL SETTLEMENT. Except as provided in
Section 11(b), the Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others whether by reason of the subsequent employment
of the Executive or otherwise. In no event shall the Executive be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement.

                 SECTION 10.      LEGAL FEES AND EXPENSES. The Company shall
pay or cause to be paid any and all reasonable attorneys' fees and expenses
incurred by Executive in connection with the preparation and negotiation of
this Agreement promptly following receipt of an invoice therefor (together with
reasonable supporting documentation) from Executive.

                 SECTION 11.      FURTHER OBLIGATIONS OF THE EXECUTIVE.

                          (a)     During and following the Executive's
         employment by the Company, the Executive shall use commercially
         reasonable efforts to hold in confidence and not directly or
         indirectly disclose any confidential information or proprietary data
         of the Company or any of its Subsidiaries, except to the extent
         authorized by the Board or required by any court or administrative
         agency or legal process, other than to an employee of or contractor
         with the Company or any of its Subsidiaries, or a Person to whom the
         Executive in good faith believes disclosure is reasonably necessary or
         appropriate in connection with the performance by the Executive of his
         duties as an executive of the Company. In determining whether such
         disclosure is required, Executive will be entitled to rely on the
         written advice of counsel provided to the Company. Confidential
         information shall not include any information known generally to the
         public or in the industry in which Company is engaged. All records,
         files, documents and materials, or copies thereof, relating to the
         Company's or any of its Subsidiaries', business which the Executive
         shall prepare, or use, or come into contact with, shall be and remain
         the sole property of the Company or any of its Subsidiaries, as the
         case may be, and shall be promptly returned by the Executive to the
         Company or such Subsidiary (as applicable) upon termination of the
         Executive's employment with the Company.

                          (b)     Except with the Board's prior written
         approval, during the Employment Period and for three (3) years after
         the Date of Termination, the Executive shall not, directly or
         indirectly (i) solicit, entice, persuade or induce any employee,
         displayer, or other independent contractor of the Company or any of
         its Subsidiaries to terminate his employment or relationship with the
         Company or any of





                                       14
<PAGE>   15
         its Subsidiaries or to become employed or engaged in a similar
         capacity by any Person other than the Company or any of its
         Subsidiaries or (ii) authorize, solicit or assist in the taking of
         such actions by any third party.

                          (c)     During the Employment Period and for three
         (3) years after the Date of Termination, the Executive shall not,
         directly or indirectly, engage, participate, make any financial
         investment in, or become employed by or render advisory or other
         services to or for any Person or other business enterprise (other than
         the Company and its Affiliates) engaged in the business of selling
         home decorative accessories within any of the same markets as the
         Company or any of its Subsidiaries (any of the foregoing activities
         being referred to herein as "COMPETITIVE ACTIVITIES"). The foregoing
         covenant respecting Competitive Activities shall not be construed to
         preclude the Executive from making any investments in the securities
         of any company, and whether or not engaged in competition with the
         Company or any of its Subsidiaries, to the extent that such securities
         are actively traded on a national securities exchange or in the
         over-the-counter market in the United States or any foreign securities
         exchange and such investment does not exceed five percent (5%) of the
         issued and outstanding shares of such company or give the Executive
         the right or power to control or participate directly in making the
         policy decisions of such company.

                          (d)     If any court determines that any portion of
         this Section 11 is invalid or unenforceable, the remainder of this
         Section 11 shall not thereby be affected and shall be given full
         effect without regard to the invalid provision. If any court construes
         any of the provisions of this Section 11, or any part thereof, to be
         unreasonable because of the duration or scope of such provision, such
         court shall have the power to reduce the duration or scope of such
         provision and to enforce such provision as so reduced.

                          (e)     The Executive hereby acknowledges and agrees
         that damages will not be an adequate remedy for the Executive's breach
         of any of his covenants contained in this Section 11, and further
         agrees that the Company shall be entitled to obtain appropriate
         injunctive and/or other equitable relief for any such breach, without
         the posting of any bond or other security.

                 SECTION 12.      SUCCESSORS. The Company may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company, by merger or otherwise, and may assign or encumber this Agreement
and its rights hereunder as security for indebtedness of the Company. Any such
assignment by the Company shall remain subject to the Executive's rights under
this Agreement, including without limitation, Section 5 and Section 6 hereof.
The rights of the Executive under this Agreement may not be assigned or
encumbered by the Executive, voluntarily or involuntarily, during his lifetime,
and any such purported assignment shall be void ab initio. However, all rights
of the Executive





                                       15
<PAGE>   16
under this Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, estates, executors,
administrators, heirs and beneficiaries. All amounts payable to the Executive
hereunder shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs or representatives.

                 SECTION 13.      THIRD PARTIES. Except for the rights granted
to the Company and its Subsidiaries pursuant hereto (including, without
limitation, pursuant to Section 10 hereof) and except as expressly set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give any Person other than the parties hereto and
their successors and permitted assigns any rights or remedies under or by
reason of this Agreement.

                 SECTION 14.      ENFORCEMENT. The provisions of this Agreement
shall be regarded as divisible, and if any of said provisions or any part
thereof is declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be affected
thereby.

                 SECTION 15.      AMENDMENT. This Agreement may not be amended
or modified at any time except by a written instrument approved by the Board,
and executed by the Company and the Executive; provided, however, that any
attempted amendment or modification without such approval and execution shall
be null and void ab initio and of no effect.

                 SECTION 16.      WITHHOLDING. The Company shall be entitled to
withhold from any amounts to be paid to the Executive hereunder any federal,
state, local, or foreign withholding or other taxes or charges which it is from
time to time required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any question as to the amount or requirement of any such
withholding shall arise.

                 SECTION 17.      GOVERNING LAW. This Agreement and the rights
and obligations hereunder shall be governed by and construed in accordance with
the laws of the State of Texas, without regard to principles of conflicts of
law of Texas or any other jurisdiction.

                 SECTION 18.      NOTICE. Notices given pursuant to this
Agreement shall be in writing and shall be deemed given when received and, if
mailed, shall be mailed by United States registered or certified mail, return
receipt requested, addressee only, postage prepaid:





                                       16
<PAGE>   17
         If to the Company:

                 Home Interiors & Gifts, Inc.
                 4550 Spring Valley Road
                 Dallas, Texas 75244
                 Attention: President

         If to the Executive:

                 Donald J. Carter, Jr.
                 5608 Glenbrook Circle
                 Plano, Texas 75093

or to such other address as the party to be notified shall have given to the
other in accordance with the notice provisions set forth in this Section 13.

                 SECTION 19.      NO WAIVER. No waiver by either party at any
time of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.

                 SECTION 20.      HEADINGS. The headings contained herein are
for reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.


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                                       17
<PAGE>   18
                 IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.


                                        HOME INTERIORS & GIFTS, INC.



                                        By: 
                                           --------------------------------
                                           Leonard A. Robertson 
                                           Chief Financial Officer



                                        EXECUTIVE:



                                        -----------------------------------
                                        Donald J. Carter, Jr.