Document:

<PAGE>   1
                                                                    EXHIBIT 10.4

                    PARTNERSHIP INTERESTS PURCHASE AGREEMENT

                            DATED AS OF JUNE 30, 2000

                                 BY AND BETWEEN

                             MIRACLE CANDLE COMPANY,

                                       AND

                           SPRING VALLEY SCENTS, INC.

<PAGE>   2

                                TABLE OF CONTENTS

                                    ARTICLE I
                   Sale and Purchase of Partnership Interests

<TABLE>

<S>      <C>
1.1      Sale and Purchase of Partnership Interests..............................................................1
1.2      Unadjusted Purchase Price...............................................................................1
1.3      Adjustment of the Unadjusted Purchase Price.............................................................1

                                                     ARTICLE II
                                      Representations and Warranties of Seller

2.1      Organization and Power..................................................................................2
2.2      Authorization...........................................................................................2
2.3      No Conflicts............................................................................................3
2.4      Consents and Approvals..................................................................................3
2.5      Title to Partnership Interests..........................................................................3
2.6      Broker's Fees...........................................................................................3
2.7      Litigation; Orders......................................................................................3
2.8      Legal Compliance........................................................................................4
2.9      Permits.................................................................................................4
2.10     Contracts...............................................................................................4
2.11     Intellectual Property...................................................................................4
2.12     Related-Party Transactions..............................................................................5
2.13     Financial Statements....................................................................................5
2.14     Absence of Undisclosed Liabilities......................................................................5
2.15     Absence of Certain Changes..............................................................................5
2.16     [intentionally omitted].................................................................................5
2.17     Insurance...............................................................................................5
2.18     Real Property...........................................................................................6
2.19     Inventory...............................................................................................6
2.20     Tangible Personal Property..............................................................................6
2.21     Title to and Condition of Asset and Properties..........................................................6
2.22     Bank Accounts...........................................................................................6
2.23     Accounts Payable........................................................................................6
2.24     Affiliate Liabilities...................................................................................6
2.25     Environmental Matters...................................................................................7
2.26     Accounts Receivable.....................................................................................7
2.27     Fixed Assets............................................................................................7
2.28     Disclosure..............................................................................................7

                                                        ARTICLE III
                                        Representations and Warranties of Purchaser

3.1      Organization............................................................................................7
3.2      Authorization...........................................................................................7
3.3      No Conflicts............................................................................................8
3.4      Consents and Approvals..................................................................................8
3.5      Broker's Fees...........................................................................................8
</TABLE>

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<TABLE>
<CAPTION>

                                                        ARTICLE IV
                                                         Covenants

<S>      <C>                                                                                                     <C>
4.1      Further Assurances......................................................................................8
4.2      Public Announcements....................................................................................8
4.3      [intentionally omitted].................................................................................8
4.4      Confidentiality.........................................................................................8
4.5      Tax Matters.............................................................................................9

                                                         ARTICLE V
                                  Documents Delivered Upon Execution and Delivery Hereof

5.1      Documents Delivered by Seller..........................................................................10
5.2      Documents Delivered by Purchaser.......................................................................11

                                                        ARTICLE VI
                                                      Miscellaneous

6.1      Amendments.............................................................................................12
6.2      Assignments............................................................................................12
6.3      Binding Effect.........................................................................................12
6.4      Construction...........................................................................................12
6.5      Counterparts...........................................................................................12
6.6      Entire Agreement.......................................................................................12
6.7      Expenses...............................................................................................13
6.8      Governing Law..........................................................................................13
6.9      Headings...............................................................................................13
6.10     Jurisdiction...........................................................................................13
6.11     Notices................................................................................................13
6.12     Severability...........................................................................................14
6.13     Specific Performance...................................................................................14
6.14     Third-Party Beneficiaries..............................................................................14
6.15     Waiver.................................................................................................14
6.16     Survival of Representation, Warranties, and Covenants..................................................15
</TABLE>

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<PAGE>   4

EXHIBITS

       Exhibit A           (Escrow Agreement)
       Exhibit B           (Wire Transfer Instructions)
       Exhibit C           (Adjustment Schedule)
       Exhibit D           (Assignment Agreement)
       Exhibit E           (License Agreement)
       Exhibit F           (Certificate of Non-Foreign Status)

SCHEDULES

       Schedule 2.7                 (Litigation, Orders)
       Schedule 2.9                 (Permits)
       Schedule 2.10                (Contracts)
       Schedule 2.11                (Recorded Intellectual Property)
       Schedule 2.13                (Financial Statements)
       Schedule 2.15                (Certain Changes)
       Schedule 2.18                (Real Property)
       Schedule 2.22                (Bank Accounts)
       Schedule 2.23                (Accounts Payable)
       Schedule 2.24                (Affiliate Liabilities)
       Schedule 2.25                (Environmental Matters)
       Schedule 2.26                (Accounts Receivable)
       Schedule 2.27                (Fixed Assets)

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<PAGE>   5

                                  DEFINED TERMS

<TABLE>

<S>                                                                                                            <C>
         "1999 Financial Statements"...................................................................Section 2.13
         "Accountants"...............................................................................Section 1.3(c)
         "Adjustment"................................................................................Section 1.3(a)
         "Adjustment Date"...........................................................................Section 1.3(a)
         "Adjustment Statement"......................................................................Section 1.3(b)
         "affiliate"....................................................................................Section 6.4
         "Agreement".......................................................................................preamble
         "Assignment Agreement"......................................................................Section 5.1(a)
         "business day".................................................................................Section 6.4
         "Certificate of Non-Foreign Status".........................................................Section 5.1(h)
         "Code"......................................................................................Section 4.5(e)
         "control"......................................................................................Section 6.4
         "Contracts"...................................................................................Section 2.10
         "day"..........................................................................................Section 6.4
         "dollar" or "$"................................................................................Section 6.4
         "Environmental Laws"..........................................................................Section 2.25
         "Environmental Permits".......................................................................Section 2.25
         "Escrow Agent".................................................................................Section 1.2
         "Escrow Agreement".............................................................................Section 1.2
         "Escrow Deposit"...............................................................................Section 1.2
         "Financial Statements"........................................................................Section 2.13
         "GAAP"......................................................................................Section 1.3(b)
         "Governmental Entity"..........................................................................Section 2.3
         "including" or "include".......................................................................Section 6.4
         "Intellectual Property"....................................................................Section 2.11(b)
         "Interim Financial Statements"................................................................Section 2.13
         "Interim Financial Statements Date"...........................................................Section 2.13
         "Inventory"...................................................................................Section 2.21
         "Law"..........................................................................................Section 2.3
         "License Agreement".........................................................................Section 5.1(d)
         "Liens"........................................................................................Section 1.1
         "Material Adverse Effect".....................................................................Section 2.15
         "or"...........................................................................................Section 6.4
         "Order"........................................................................................Section 2.3
         "Partnership".....................................................................................preamble
         "Partnership Interests"...........................................................................preamble
         "Permits"......................................................................................Section 2.9
         "person".......................................................................................Section 6.4
         "Post-Closing Period"..........................................................................Section 4.5
         "Pre-Closing Period"...........................................................................Section 4.5
         "Purchaser Documents"..........................................................................Section 3.2
         "Purchase Price"...............................................................................Section 1.2
         "Purchaser".......................................................................................preamble
         "Real Property"...............................................................................Section 2.18
         "Related Documents"............................................................................Section 3.2
         "Related Persons".............................................................................Section 2.12
         "Seller"..........................................................................................preamble
         "Seller Documents".............................................................................Section 2.2
         "Straddle Period"..............................................................................Section 4.5
         "Tangible Personal Property"..................................................................Section 2.20
         "Taxes".....................................................................................Section 4.5(f)
         "Transfer Taxes"...............................................................................Section 4.5
         "Unadjusted Purchase Price"....................................................................Section 1.2
         "U.S." or "United States"......................................................................Section 6.4
</TABLE>

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<PAGE>   6

                    PARTNERSHIP INTERESTS PURCHASE AGREEMENT

         THIS PARTNERSHIP INTERESTS PURCHASE AGREEMENT (this "Agreement") is
made as of July 3, 2000, by and between Miracle Candle Company, a Texas
corporation (the "Seller"), and Spring Valley Scents, Inc., a Texas corporation
(the "Purchaser").

         WHEREAS, Seller owns a 40% partnership interest (the "Partnership
Interests") in Laredo Candle Company L.L.P., a Texas limited liability
partnership (the "Partnership"); and

         WHEREAS, Seller desires to sell, and Purchaser desires to purchase, all
of the Partnership Interests on the terms set forth in this Agreement.

         NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties, covenants, and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

                                    ARTICLE I
                   Sale and Purchase of Partnership Interests

         1.1 Sale and Purchase of Partnership Interests. Concurrently herewith
and upon the terms set forth herein, Seller is selling, transferring, conveying,
assigning, and delivering to Purchaser, and Purchaser is purchasing, acquiring,
and accepting, all right, title, and interest of Seller in and to the
Partnership Interests, free and clear of all liens, pledges, security interests,
mortgages, charges, claims, restrictions, and encumbrances of any nature
whatsoever (collectively, "Liens").

         1.2 Unadjusted Purchase Price. Purchaser will pay to Seller an
aggregate amount equal $8,700,000 for the Partnership Interests (the "Unadjusted
Purchase Price"), subject to adjustment as provided in Section 1.3 (which shall
not exceed $900,000) (as adjusted, the "Purchase Price"). The Unadjusted
Purchase Price, less $900,000 (the "Escrow Deposit") which is being paid
concurrently herewith to Chase Bank of Texas, National Association, as escrow
agent (the "Escrow Agent"), to be held for one year from the date hereof and
distributed pursuant to the Escrow Agreement by and among Seller, Purchaser, and
the Escrow Agent in the form of EXHIBIT A (the "Escrow Agreement"), is being
paid concurrently herewith by cashier's check or by wire transfer of immediately
available funds to the account of Seller designated on EXHIBIT B.

         1.3 Adjustment of the Unadjusted Purchase Price.

                  (a) If the EBITDA Margin (determined in accordance with
         Section 1.3(b)) of the Partnership is less than 21% for the 12 months
         ended June 30, 2001 (the "Adjustment Date"), the Unadjusted Purchase
         Price shall be decreased by a pro rata amount not to exceed $900,000
         (the "Adjustment") in accordance with the adjustment schedule attached
         as EXHIBIT C

                  (b) As used herein, the term (i) "EBITDA Margin" means EBITDA
         as a percentage of net sales of the Partnership, (ii) "EBITDA" means
         earnings before interest, tax, depreciation, and amortization, and
         (iii) "Adjustment Statement" means the statement of EBITDA Margin to be
         prepared by Purchaser as of the Adjustment Date in accordance with this
         Section 1.3 and to be delivered to Seller as promptly as practicable,
         and in any event within 60 days, after the Adjustment Date. The
         Adjustment Statement shall be prepared by Purchaser in accordance with
         United States generally accepted accounting principles ("GAAP") applied
         in a manner consistent with the application of those principles in the
         Interim Financial Statements and shall take into

<PAGE>   7

         account any inflationary, material adverse changes in the total average
         cost of labor and raw materials excluding new products.

                  (c) Seller shall have the opportunity to examine the work
         papers, schedules, and other documents prepared by Purchaser in
         connection with its preparation of the Adjustment Statement. The
         Adjustment Statement shall be final and binding on the parties hereto
         unless, within 30 days after delivery thereof to Seller, written notice
         is delivered by Seller to Purchaser of its objection setting forth in
         reasonable detail Seller's basis for objection. If written notice of
         objection is delivered, Seller and Purchaser shall consult with each
         other in respect of the objection. If Seller and Purchaser are unable
         to reach agreement within 20 days after the notice of objection has
         been delivered, the dispute shall be referred for resolution to Arthur
         Andersen LLP (the "Accountants") as promptly as practicable. The
         Accountants will make a determination as to each of the items in
         dispute, which determination will be (i) in writing, (ii) furnished to
         each of the parties hereto as promptly as practicable after the items
         in dispute have been referred to the Accountants, (iii) made in
         accordance with this Agreement, and (iv) conclusive and binding upon
         each of the parties hereto. In connection with their determination of
         the disputed items, the Accountants will be entitled to rely on the
         workpapers, trial balances, and similar materials prepared by the
         Partnership's auditors in connection with such firm's examination of
         the financial statements of the Partnership, and the fees and expenses
         of the Accountants will be shared equally by Purchaser and Seller.
         Purchaser and Seller will use their respective reasonable best efforts
         to cause the Accountants to render their decision as soon as reasonably
         practicable, including promptly complying with all reasonable requests
         by the Accountants for information, books, records, and similar items.
         The fees and expenses of the Accountants shall be borne equally by
         Seller and Purchaser; provided, however, that if the determination of
         the Accountants is within three percent of Purchaser's determination as
         set forth in the Adjustment Statement, the fees and expenses of the
         Accountants shall be borne solely by Seller.

                                   ARTICLE II
                    Representations and Warranties of Seller

         Seller hereby makes the following representations and warranties to
Purchaser, each of which is true and correct as of the date hereof.

         2.1 Organization and Power. Seller is a corporation duly incorporated,
validly existing, and in good standing under the Laws of the State of Texas. The
Partnership is a general partnership duly organized and validly existing under
the Laws of the State of Texas and registered as a limited liability partnership
under the Laws of the State of Texas. Seller has the requisite corporate power
and authority to own, lease, or otherwise hold the assets and properties owned,
leased, or otherwise held by it and necessary to carry on its business as
presently conducted by it and as proposed to be conducted by it.

         2.2 Authorization. Seller has the requisite corporate power to execute
and deliver this Agreement and each other agreement, certificate, instrument,
and document contemplated by this Agreement to be executed by Seller in
connection with the consummation of the transactions contemplated hereby (all
other such agreements, certificates, instruments, and documents required to be
executed by Seller being collectively referred to as, the "Seller Documents")
and to perform the transactions contemplated hereby and thereby. The execution
and delivery by Seller of this Agreement and each Seller Document and the
performance by it of the transactions contemplated hereby and thereby to be
performed by it have been duly authorized by all necessary corporate action on
the part of Seller. Each of this Agreement and each Seller Document has been
duly executed and delivered by duly authorized officers of Seller and, assuming
the due execution and delivery of this Agreement and each Seller Document by the
other party or parties hereto or thereto, constitutes a valid and binding
obligation

                                       2
<PAGE>   8

of Seller enforceable against Seller in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar Laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

         2.3 No Conflicts. None of the execution and delivery of this Agreement
and each Seller Document, the performance by Seller of the transactions
contemplated hereby and thereby to be performed by it, or the consummation of
the transactions contemplated hereby and thereby, will (i) conflict with the
articles of incorporation or bylaws of Seller or the application for
registration as a limited liability partnership or the partnership agreement of
the Partnership, (ii) conflict with, result in any violation of, constitute a
default (with or without notice, lapse of time, or both) under, or give rise to
a right of termination, cancellation, or acceleration of, or any obligation or
to loss of a benefit under, any note, bond, mortgage, indenture, license,
agreement, or other document or obligation to which the Partnership is a party
or by which its assets or properties are bound, (iii) violate, constitute a
default under, or cause the forfeiture, impairment, non-renewal, revocation, or
suspension of any Permit, (iv) violate any order, judgment, decree, writ, or
injunction ("Order") of any federal, state, or local court, tribunal, or
arbitrator or governmental, administrative, or regulatory agency, authority, or
body or any instrumentality or political subdivision thereof ("Governmental
Entity") applicable to the Partnership, (v) violate any domestic or foreign law,
statute, ordinance, rule, or regulation ("Law") applicable to the Partnership,
or (vi) result in the creation of any Lien upon any of the Partnership's assets
or properties.

         2.4 Consents and Approvals. No consent, approval, waiver, order, or
authorization of, or registration, declaration, or filing with, or notice to,
any third person or Governmental Entity (including any consent, approval,
waiver, or authorization in respect of any Contract or Permit) is required to be
obtained or made by or in respect of Seller or the Partnership in connection
with the execution and delivery of this Agreement or any Seller Document by
Seller, the performance by Seller of the transactions contemplated hereby or
thereby to be performed by it, or the consummation of the transactions
contemplated hereby or thereby.

         2.5 Title to Partnership Interests. Seller owns the Partnership
Interests free and clear of all Liens and, except for this Agreement and the
Partnership's Agreement of Partnership, there is no agreement that gives any
person the right to purchase or otherwise receive or be issued any interest in
the Partnership. Upon consummation of the transactions contemplated hereby,
Seller will convey to Purchaser, and Purchaser will acquire from Seller, good
and marketable title to the Partnership Interests free and clear of all Liens.

         2.6 Broker's Fees. Neither Seller nor any person acting on its behalf
has agreed to pay any commission, finder's or broker's fee, or similar payment
in connection with the transactions contemplated by this Agreement or any matter
related hereto to any person for which Purchaser, the Partnership, or any of
their respective affiliates will be liable.

         2.7 Litigation; Orders. Except as set forth on Schedule 2.7, there is
no claim or judicial or administrative action, suit, proceeding, or
investigation pending or, to the best of Seller's knowledge, threatened (i) that
questions the validity of this Agreement or any Seller Document, the performance
by Seller of the obligations to be performed by it hereunder or thereunder, or
the consummation of the transactions contemplated hereby or thereby, or (ii)
relating to the business of the Partnership (as now conducted or as proposed to
be conducted) or otherwise affecting the Partnership or any of its assets or
properties. There is no Order of any Governmental Entity binding on the
Partnership or any of its assets or properties.

                                       3
<PAGE>   9

         2.8 Legal Compliance. The Partnership has complied with each Law and
Order binding on it or any of its assets or properties and is not currently in
violation of any such Law or Order.

         2.9 Permits. Except as set forth on Schedule 2.9, the Partnership owns,
holds, possesses, or lawfully uses in its business all approvals,
authorizations, certifications, franchises, licenses, permits, and similar
authorities ("Permits") that are necessary for the conduct of its business as
currently conducted and as proposed to be conducted and for the ownership and
use of its assets or properties, free and clear of all Liens. The Partnership is
not in default and has not received any notice of any claim of default, in
respect of any such Permit.

         2.10 Contracts. To the best of Seller's knowledge, Schedule 2.10 sets
forth each agreement, arrangement, commitment, contract, lease, license, plan,
and understanding, whether written or oral, to which the Partnership is a party
or otherwise bound, including all agreements relating to supplies, products,
equipment, raw materials, and other similar items ("Contracts"), except for such
Contracts that involve the payment by the Partnership of an aggregate amount
less than $5,000. To the best of Seller's knowledge, the Partnership is not in
default under any Contract and, to the best of Seller's knowledge, no other
party to any Contract is in default thereunder.

         2.11 Intellectual Property.

                  (a) Schedule 2.11 sets forth all right, title, and interest of
         the Partnership in and to all of the Intellectual Property owned or
         used by the Partnership in the operation of its business and capable of
         being described on such Schedule. The Partnership has the right to use,
         free and clear of all claims or rights of others, all Intellectual
         Property owned or used by it in the operation of its business, and such
         use does not, to the best of Seller's knowledge, infringe on any
         patent, trademark, copyright, service mark, or trade name, or
         misappropriate any other Intellectual Property, of any other person.
         The Partnership has taken all necessary action to protect and preserve
         the confidentiality of all technical Intellectual Property not
         otherwise protected by patents, patent applications, or copyrights. To
         the best of Seller's knowledge, the Partnership has not interfered
         with, infringed upon, misappropriated, or otherwise come into conflict
         with any Intellectual Property rights of third persons, and the
         Partnership has not received any charge, complaint, claim, or notice
         alleging any such interference, infringement, misappropriation, or
         violation. No third person has, to the best of Seller's knowledge,
         interfered with, infringed upon, misappropriated, or otherwise come
         into conflict with any Intellectual Property rights of the Partnership.

                  (b) The term "Intellectual Property" means all domestic and
         foreign letters patent, patents, patent registrations and applications,
         patent licenses, trademarks, trademark registrations and applications,
         trade names, trade name applications and registrations, service marks,
         service mark registrations and applications, know-how licenses, and
         copyright registrations and applications, and the goodwill of the
         Partnership's business associated therewith, together with copyrights
         (including, copyrights in computer programs), computer programs,
         service marks, trade secrets, technical knowledge, know-how,
         confidential information, proprietary processes, formulae, and related
         ownership, use, and other rights (including, rights of renewal and
         rights to sue for past, present, and future infringements or
         misappropriations thereof).

                  (c) Nothing in this Section 2.11 shall be construed to limit
         Seller's right to the use of any technical knowledge, trade secrets,
         know-how, proprietary processes, formulas, confidential information on
         a non-exclusive use basis.

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<PAGE>   10
         2.12 Related-Party Transactions. No officer, director, employee, or
affiliate of Seller, any member of his or her immediate family, or any person
controlled by or under common control with any of the foregoing persons
("Related Persons") (i) owes any amount to the Partnership other than amounts
owed in respect of advances made in the ordinary course of business nor does the
Partnership owe any amount, or has it committed to make any loan or extend or
guarantee credit to or for the benefit of, any Related Person, (ii) has any
claim or cause of action or any action, suit, or proceeding whatsoever against
the Partnership except as otherwise disclosed herein, (iii) to the best of
Seller's knowledge, has any direct or indirect ownership interest in, or is an
officer, director, partner, member, manager, employee, consultant, or agent of,
any person that has a business relationship with the Partnership, or (iv) owns,
directly or indirectly, in whole or in part, any real property, leasehold
interest, or other property or any Permit, the use of which is necessary for the
conduct of the Partnership's business as currently conducted and as proposed to
be conducted. No Related Person has any direct or indirect interest in any
Contract.

         2.13 Financial Statements. Attached as Schedule 2.13 is a true,
correct, and complete copy of the Partnership's unaudited financial statements
as at and for the fiscal year ended December 31, 1999 (the "1999 Financial
Statements") and as at and for the five-month period ended May 31, 2000 (the
"Interim Financial Statements" and, together with the 1999 Financial Statements,
the "Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP consistently applied and fairly present the financial
condition, assets and liabilities, the results of operations, and cash flows of
the Partnership as of the dates, and for the periods, indicated therein, subject
in the case of the unaudited Financial Statements to normal year-end adjustments
and the absence of footnotes thereto. The term "Interim Financial Statements
Date" means the date of the Interim Financial Statements.

         2.14 Absence of Undisclosed Liabilities. To the best of Seller's
knowledge, the Partnership has no liabilities, either direct or indirect,
matured or unmatured, fixed or contingent, known or unknown, asserted or
unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured
(whether or not required by GAAP to be set forth on a balance sheet or footnotes
thereto), except (i) those liabilities provided for or reserved against in the
Financial Statements, and (ii) liabilities arising in the ordinary course of
business since the Interim Financial Statements Date that are not material in
the aggregate. Except as disclosed in the Financial Statements, the Partnership
is not a guarantor or indemnitor of any debt, obligation, or liability of any
other person.

         2.15 Absence of Certain Changes. Except as set forth on Schedule 2.15,
since the Interim Financial Statements Date, to the best of Seller's knowledge,
the Partnership has not: (i) made or suffered any amendment of any Contract
listed on Schedule 2.10 or cancelled, modified, or waived any debts or claims
held by it or waived any right, whether or not in the ordinary course of
business; (ii) suffered any event or circumstance that, individually or in the
aggregate, has had or could reasonably be expected to have a material adverse
effect on the business (as currently conducted or as proposed to be conducted),
operations, assets, properties, condition (financial or otherwise), or prospects
of the Partnership ("Material Adverse Effect"); (iii) increased the salaries or
other compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its current or former employees
or made any increase in, or any addition to, other benefits to which any of its
current or former employees may be entitled; (iv) made or agreed to make any
distribution or payment in respect of any interest in the Partnership; (v)
changed any of the accounting principles followed by it or the methods of
applying such principles; or (vi) entered into any transaction other than in the
ordinary course of business consistent with past practice.

         2.16 [intentionally omitted].

         2.17 Insurance. There are no pending claims against Seller's insurance
for Builder's Risk and Worker's Compensation or Liability Insurance.

                                       5
<PAGE>   11

         2.18 Real Property. Schedule 2.18 contains a true, correct, and
complete list of all real property owned or leased by the Partnership (the "Real
Property"). Except as set forth on Schedule 2.18, (i) the owned real property of
the Partnership is free and clear of all Liens including all encumbrances that
affect the ownership or use thereof, and (ii) the Partnership has good and
indefeasible title to, or a good and valid leasehold interest in, the Real
Property. Seller has not taken any action, or failed to take any action, which
such action or inaction has caused or could cause any diminution in, or
adversely affect the interest of the Partnership in any of the Real Property.

         2.19 Inventory. All raw materials, components, work-in-progress,
finished products, packaging materials, stores and supplies, spare parts, and
samples used or useful in the operation of the Partnership's business
("Inventory") reflected on the Interim Financial Statements or acquired since
the Interim Financial Statements Date (i) were acquired and have been maintained
in the ordinary course of business; (ii) are in good and merchantable quality;
(iii) consist substantially of a quality, quantity, and condition usable,
leasable, or saleable in the ordinary course of business; (iv) are not subject
to any write-down or write-off.

         2.20 Tangible Personal Property. The Partnership owns all machinery and
equipment, spare and maintenance parts, furniture, fixtures, vehicles, jigs,
tools, dies, leasehold improvements, and all other tangible personal property
used, useful in, or related to the business of the Partnership (collectively,
"Tangible Personal Property"), free and clear of all Liens. The laboratory,
equipment or facilities located at Seller's principal place of business do not
constitute property of the Partnership.

         2.21 Title to and Condition of Assets and Properties. The Partnership
has good and marketable title to its assets and properties, and good title to
its leasehold estates, in each case subject to no Lien other than those that
have arisen in the ordinary course of business consistent with past practice and
that do not impair the Partnership's ownership or use of such assets or
properties. All of the Partnership's assets are in good operating condition and
repair, subject to normal wear and maintenance, are useable in the regular and
ordinary course of business, and conform to all applicable Laws and Permits
relating to their construction, use, and operation. Such assets constitute
the assets and rights used to operate the Partnership's business as
currently conducted and as proposed to be conducted. No person other than the
Partnership owns any Tangible Personal Property or other asset or property
situated on the premises of the Partnership or necessary to operate the
Partnership's business as currently conducted and as proposed to be conducted.
All Tangible Personal Property, Intellectual Property, Contracts, Inventory,
Permits, and other assets used, useful in, or related to the operation of the
Partnership's business are in the possession, custody, or control of the
Partnership.

         2.22 Bank Accounts. Schedule 2.22 contains a true, correct, and
complete list of the names and locations of all banks in which the Partnership
has accounts or safe deposit boxes and the names of all persons authorized to
draw thereon or to have access thereto. No person holds a power of attorney to
act on behalf of the Partnership in relation to such accounts.

         2.23 Accounts Payable. Schedule 2.23 sets forth a list of all accounts
payable of the Partnership as of June 23, 2000, including the name of the payor,
the aggregate amount thereof, and the due date thereof. As of the date hereof
all accounts payable of the Partnership reflected on the Interim Financial
Statements or arising after the Interim Financial Statements Date are the result
of bona fide transactions, in the ordinary course of business, and have been
paid or are not yet due and payable.

         2.24 Affiliate Liabilities. Except as set forth on Schedule 2.24 which
shall specifically include inter-company obligations from Miracle to Laredo, if
any, (i) there are no liabilities between Seller or any of its affiliates, on
the one hand, and the Partnership on the other, and (ii) neither Seller nor any
of its

                                       6
<PAGE>   12

affiliates provides or causes to be provided any products, services, equipment,
facilities, or other similar item to the Partnership.

         2.25 Environmental Matters. Except as set forth in Schedule 2.25, the
Partnership possesses all Permits required by Environmental Laws for its
operations (collectively, "Environmental Permits"). The Partnership is and has
been in compliance with all Environmental Laws and Environmental Permits. There
are no claims or proceedings pending or threatened against the Partnership
alleging the violation of, non-compliance or potential liability under
Environmental Laws. For purposes of this Section 2.25, "Environmental Laws"
means any Law (including common law) or other legal requirement relating to the
protection of or the regulation of the human health and safety, environment, or
natural resources.

         2.26 Accounts Receivable. Schedule 2.26 sets forth a true, correct, and
complete list of all accounts receivable of the Partnership. All accounts
receivable of the Partnership incurred by Seller have arisen from bona fide
transactions in the ordinary course of business consistent with past practice.
All invoices for monies owed to the Partnership have been tendered to Home
Interiors & Gifts, Inc. as of the date hereof. Except as set forth on Schedule
2.26, there are no accounts receivable owed by the Partnership to Seller.

         2.27 Fixed Assets. Schedule 2.27 sets forth a true, correct, and
complete list of all fixed assets of the Partnership as of May 31, 2000.

         2.28 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any document (including the Schedules
attached hereto), list, certificate, or other instrument furnished or to be
furnished by or on behalf of Seller to Purchaser or any of its representatives
in connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading or necessary in order fully and
fairly to provide the information required to be provided in any such document,
list, certificate, or other instrument.

                                   ARTICLE III
                   Representations and Warranties of Purchaser

         Purchaser hereby makes the following representations and warranties to
Seller, each of which is true and correct as of the date hereof.

         3.1 Organization. Purchaser is a corporation duly formed, validly
existing, and in good standing under the Laws of the State of Texas.

         3.2 Authorization. Purchaser has the requisite corporate power to
execute and deliver this Agreement and each other agreement, certificate,
instrument, and document contemplated by this Agreement to be executed by
Purchaser in connection with the consummation of the transactions contemplated
hereby (all other such agreements, certificates, instruments, and documents
required to be executed by Purchaser being collectively referred to as, the
"Purchaser Documents" and, together with the Seller Documents, the "Related
Documents") and to perform the transactions contemplated hereby and thereby. The
execution and delivery by Purchaser of this Agreement and each Purchaser
Document and the performance by it of the transactions contemplated hereby and
thereby to be performed by it have been duly authorized by all necessary
corporate action on the part of Purchaser. Each of this Agreement and each
Purchaser Document has been duly executed and delivered by Purchaser and,
assuming the due execution and delivery of this Agreement and each Purchaser
Document by the other party or parties hereto or thereto, constitutes a valid
and binding obligation of Purchaser enforceable against Purchaser in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization,

                                       7
<PAGE>   13

moratorium, or other similar Laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).

         3.3 No Conflicts. None of the execution and delivery of this Agreement
and each Purchaser Document, the performance by Purchaser of the transactions
contemplated hereby and thereby to be performed by it, or the consummation of
the transactions contemplated hereby and thereby, will (i) conflict with the
articles of incorporation or the bylaws of Purchaser, (ii) conflict with, result
in any violation of, constitute a default (with or without notice, lapse of
time, or both) under, or give rise to a right of termination, cancellation, or
acceleration of, or any obligation or to loss of a benefit under, any note,
bond, mortgage, indenture, license, agreement, or other document or obligation
to which Purchaser is a party or by which its assets or properties are bound, or
(iii) violate any Order of any Governmental Entity or Law applicable to
Purchaser.

         3.4 Consents and Approvals. No consent, approval, waiver, order, or
authorization of, or registration, declaration, or filing with, or notice to,
any third person or Governmental Entity is required to be obtained or made by or
in respect of Purchaser in connection with the execution and delivery of this
Agreement or any Purchaser Document by Purchaser, the performance by Purchaser
of the transactions contemplated hereby or thereby to be performed by it, or the
consummation of the transactions contemplated hereby or thereby. Purchaser has
obtained the consent of Home Interior & Gifts, Inc. to enter into and deliver
this Agreement and consummate the transactions contemplated hereby.

         3.5 Broker's Fees. Neither Purchaser nor any person acting on its
behalf has agreed to pay any commission, finder's or broker's fee, or similar
payment in connection with the transactions contemplated by this Agreement or
any matter related hereto to any person for which Seller or its affiliates will
be liable.

                                   ARTICLE IV
                                    Covenants

         4.1 Further Assurances. From time to time, as and when reasonably
requested by either party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such further and additional instruments
and agreements and shall take such further and additional actions, as may be
reasonably necessary to evidence or carry out the provisions of this Agreement
or to effectuate the transactions contemplated hereby.

         4.2 Public Announcements. Seller and Purchaser will consult with each
other and will mutually agree (the agreement of each party not to be
unreasonably conditioned, delayed, or withheld) upon the content and timing of
any press release or other public statements in respect of the transactions
contemplated by this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation and agreement, except
as may be required by applicable Law or by obligations under any listing
agreement with any securities exchange or any stock exchange regulations;
provided, however, that Seller and Purchaser will give prior notice to the other
of the content and timing of any such press release or other public statement
required by applicable Law or by the obligations under any listing agreement
with any securities exchange or any stock exchange regulations.

         4.3 [intentionally omitted].

         4.4 Confidentiality. Purchaser, on the one hand, and Seller, on the
other hand, shall, and shall cause their respective officers, directors,
shareholders, members, managers, affiliates, employees, agents, and other
representatives to, keep confidential and not disclose all information obtained
by it in

                                       8
<PAGE>   14

respect of the other and, in the case of Seller, the Partnership in connection
with this Agreement and the negotiations preceding this Agreement, and will use
such information solely in connection with the transactions contemplated hereby.
Notwithstanding the preceding sentence, no party hereto shall be required to
keep confidential or return any information that (i) is required to be disclosed
by Law, pursuant to an order or request of a Governmental Entity having
competent jurisdiction, or pursuant to the rules and regulations of any national
stock exchange applicable to the disclosing party and its affiliates (provided
the party seeking to disclose such information provides the other party with
reasonable prior written notice thereof), or (ii) can be shown to have been
generally available to the public other than as a result of a breach of this
Section 4.4.

         4.5 Tax Matters.

                  (a) Seller shall be liable for, promptly defend, and
         indemnify and hold Purchaser harmless from and against:

                  (i) 40% of all damages, liabilities, losses, or costs,
                  resulting from, arising out of, or relating to any and all
                  Taxes imposed on the Partnership, or other taxes for which
                  the Partnership may otherwise be liable including reasonable
                  fees and expenses of counsel (by reason of transferee
                  liability, assumption, contract, operation of law, or
                  otherwise):

                                    (A) for any taxable year or period that ends
                           on or before the date hereof; and

                                    (B) for the portion of any Straddle Period
                           that ends immediately after the close of business on
                           the date hereof;

                           (ii) 100% of all damages, liabilities, losses, or
                  costs, including reasonable fees and expenses of counsel,
                  resulting from, arising out of, or relating to the following:

                                    (A) any failure by the Seller to timely pay
                           any and all Transfer Taxes; and

                                    (B) any breach or inaccuracy of the
                           Certification of Non-Foreign Status.

The term "Straddle Period" means any taxable year or period beginning before and
ending after the date hereof.

                  (b) To the extent permitted by Law or administrative practice,
         the taxable year of the Partnership that includes the date hereof shall
         be treated as closing immediately after the close of business on the
         date hereof. Where it is necessary to apportion between Seller and
         Purchaser the Tax liability for a Straddle Period (that is not treated
         under the immediately preceding sentence as closing immediately after
         the close of business on the date hereof), such liability shall be
         apportioned between the period deemed to end at the close of business
         on the date hereof (the "Pre-Closing Period") and the period deemed to
         begin at the beginning of the day following the date hereof (the
         "Post-Closing Period") on the basis of an interim closing of the books;
         provided, however, that property Taxes whose lien date is in the
         Pre-Closing Period shall be allocated to the Pre-Closing Period and
         property Taxes whose lien date is in the Post-Closing Period shall be
         allocated to the Post-Closing Period; provided, further, that any
         taxable event occurring after the date hereof that is outside of the
         ordinary course of the Partnership's business of manufacturing and sale
         of candles (such as the sale of real property) will be allocated to the
         Post-Closing Period.

                                       9
<PAGE>   15

                  (c) Seller shall be liable for and shall pay 100% of all
         Transfer Taxes resulting from, arising out of, or based on the
         transactions contemplated by this Agreement. The term "Transfer Taxes"
         means all sales, use, stamp, documentary, filing, recording, transfer,
         real estate transfer, stock transfer, gross receipts, registration,
         duty, securities transactions or similar fees or taxes or governmental
         charges (together with any interest or penalty, addition to tax, or
         additional amount imposed) as levied by any taxing authority in
         connection with the transactions contemplated by this Agreement.
                  (d) Instead of the allocation specified in the first sentence
         of Section 6.1(b) of the Partnership Agreement, Seller's 40% interest
         in Partnership items of income, gain, loss, and deduction for the 2000
         calendar year shall be allocated between Seller and Purchaser under an
         interim closing of the Partnership's books in a manner consistent with
         the applicable provisions of the Code.

                  (e) At the option of Purchaser, the Partnership will timely
         make the election to in Section 754 of the Internal Revenue Code of
         1986, as amended (the "Code") in respect of the Partnership's taxable
         years (including the short taxable year ending on the date hereof) in
         which the sale contemplated by this Agreement occurs.

                  (f) The term "Taxes" means all taxes, charges, fees, imposts,
         levies, gaming or other assessments, including all net income, gross
         receipts, capital, sales, use, ad valorem, value added, transfer,
         franchise, profits, inventory, capital stock, license, withholding,
         payroll, employment, social security, unemployment, excise, severance,
         stamp, occupation, property and estimated Taxes, customs, duties, fees,
         assessments, and charges of any kind whatsoever, together with any
         interest and any penalties, fines, additions to Tax, or additional
         amounts imposed by any taxing authority (domestic or foreign) and
         include any transferee liability in respect of Taxes, any liability in
         respect of Taxes imposed by contract, Tax sharing agreement, Tax
         indemnity agreement, or any other similar agreement.

                                    ARTICLE V
             Documents Delivered Upon Execution and Delivery Hereof

         5.1 Documents Delivered by Seller. Concurrently with the execution and
delivery of this Agreement, Seller is delivering to Purchaser each of the
following items:

                  (a) Assignment Agreement. An original copy of the Assignment
         Agreement duly executed by Seller in a form attached as EXHIBIT D (the
         "Assignment Agreement").

                  (b) Escrow Agreement. An original copy of the Escrow Agreement
         duly executed by Seller and Escrow Agent.

                  (c) Officer's Certificate. An original copy of an Officer's
         Certificate duly executed by the President and the Secretary of Seller
         certifying that: (A) the articles of incorporation of Seller as
         attached thereto are true, correct, and complete, have not been
         modified, amended, or repealed, and are in full force and effect; (B)
         the bylaws of Seller as attached thereto are true, correct, and
         complete, have not been modified, amended, or repealed, and are in full
         force and effect; and (C) the duly executed copy of the resolutions of
         the board of directors of Seller authorizing and approving the
         execution and delivery of this Agreement and each Seller

                                       10
<PAGE>   16

         Document and the consummation of the transactions contemplated hereby
         and thereby, as attached thereto are true, correct, and complete and
         have not been modified or withdrawn.

                  (d) License Agreement. A copy of the License Agreement duly
         executed by Seller and the Partnership in a form attached as EXHIBIT E
         (the "License Agreement")

                  (e) Books and Records of the Partnership. All books, records,
         files, and documents (whether in paper, electronic, or other format) of
         the Partnership or relating to the business of the Partnership,
         including all books and records relating to the employees, the purchase
         of materials, supplies, and services, tax, financial, accounting, and
         operational matters, product research and development, manufacturing
         and sale of products, and all customer and vendor lists and other
         information relating to customers and vendors of the Partnership or its
         business, all correspondence with any Governmental Entity, and the
         partnership agreement and all applications for registration as a
         limited liability partnership.

                  (f) Resignations. Evidence that each of (i) Jorge Garcia and
         Richard Garcia has resigned as a member of the management committee of
         the Partnership, and (ii) Richard Garcia, Sr., Jorge Garcia, Richard
         Garcia, Jr., and Jaime Garcia has resigned as an officer of the
         Partnership.

                  (g) Termination of Pledge. Evidence that the Pledge Agreement
         dated as of February 18, 1999 executed in connection with the loan by
         Donald Carter has been terminated and ceased to have any force or
         effect.

                  (h) Certificate of Non-Foreign Status. A copy of the
         Certificate of Non-Foreign Status duly executed by Seller in the form
         attached hereto as EXHIBIT F ("Certificate of Non-Foreign Status").

         5.2 Documents Delivered by Purchaser. Concurrently with the execution
and delivery of this Agreement, Purchaser is delivering to Seller each of the
following items:

                  (a) Unadjusted Purchase Price. The Unadjusted Purchase Price
         in accordance with Section 1.2.

                  (b) Escrow Agreement. An original copy of the Escrow Agreement
         duly executed by Purchaser and Escrow Agent.

                  (c) Officer's Certificate. An original copy of an Officer's
         Certificate duly executed by the Secretary of Purchaser certifying
         that: (A) the articles of incorporation of Purchaser, have not been
         modified, amended, or repealed, and are in full force and effect; (B)
         the bylaws of Purchaser have not been modified, amended, or repealed,
         and are in full force and effect; and (C) the duly executed copy of the
         resolutions of the board of directors of Purchaser authorizing and
         approving the execution and delivery of this Agreement and each
         Purchaser Document and the consummation of the transactions
         contemplated hereby and thereby, as attached thereto are true, correct,
         and complete and have not been modified or withdrawn.

                                       11
<PAGE>   17

                                   ARTICLE VI
                                  Miscellaneous

         6.1 Amendments. This Agreement may be amended, modified, or
supplemented only pursuant to a written instrument making specific reference to
this Agreement and signed by each of the parties hereto.

         6.2 Assignment. This Agreement and the rights and obligations hereunder
shall not be assigned, delegated, or otherwise transferred (whether by operation
of law, by contract, or otherwise) without the prior written consent of the
other party hereto; provided, however, that Purchaser may, without obtaining the
prior written consent of Seller, (i) assign, delegate, or otherwise transfer its
rights and obligations hereunder to (a) any successor of Purchaser by merger or
otherwise, (b) a subsidiary or affiliate of Purchaser, (c) the purchaser of all
or substantially all the assets of Purchaser, or (d) any of its affiliates, or
(ii) make a collateral assignment of its rights hereunder to any institutional
lender to Purchaser. Seller shall execute such acknowledgements of such
assignments and collateral assignments in such forms as Purchaser or any such
institutional lender may from time to time reasonably request. Any attempted
assignment, delegation, or transfer in violation of this Section 6.2 shall be
void and of no force or effect.

         6.3 Binding Effect. Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

         6.4 Construction. All references to "Articles," "Sections,"
"Schedules," and "Exhibits" contained in this Agreement are, unless specifically
indicated otherwise, references to articles, sections, schedules, or exhibits of
or to this Agreement. Whenever in this Agreement the singular number is used,
the same shall include the plural where appropriate (and vice versa), and words
of any gender shall include each other gender where appropriate. As used in this
Agreement, the following words or phrases shall have the meanings indicated: (i)
"or" means "and/or"; (ii) "day" means a calendar day; (iii) "business day" means
any day other than Saturday, Sunday, or any day on which banks in Dallas, Texas
are required or authorized by Law to be closed for business; (iv) "U.S." or
"United States" means the United States of America; (v) "dollar" or "$" means
lawful currency of the United States; (vi) "including" or "include" means
"including without limitation"; (vii) references in this Agreement to specific
Laws or to specific sections or provisions of Laws, apply to the respective U.S.
or state Laws that bear the names so specified and to any succeeding Law,
section, or provision corresponding thereto; (viii) "person" means any
individual, corporation, partnership, joint venture, limited liability company,
trust, unincorporated association, or other legal entity or form of business or
Governmental Entity; (ix) "affiliate" means, in respect of any specified person,
any other person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such specified person; and (x) for purposes of the definition of "affiliate,"
"control" when used in respect of any person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract, or otherwise (and "controlling"
and "controlled" have meanings correlative thereto).

         6.5 Counterparts. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.

         6.6 Entire Agreement. This Agreement (including the Schedules and
Exhibits attached hereto and the Related Documents) constitute the entire
agreement of the parties hereto in respect of the

                                       12
<PAGE>   18

subject matter hereof and thereof, and supersede all prior agreements or
understandings, among the parties hereto in respect of the subject matter hereof
and thereof.

         6.7 Expenses. Each party shall bear all expenses incurred by or on
behalf of it (including fees and disbursements of its counsel) in connection
with the preparation, negotiation, execution, delivery, and performance of this
Agreement and each Related Document, and the consummation of the transactions
contemplated hereby and thereby.

         6.8 Governing Law. This Agreement shall be enforced, governed, and
construed in all respects in accordance with the laws of the State of Texas
applicable to contracts executed and performable solely in such state.

         6.9 Headings. The article and section headings of this Agreement are
for convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.

         6.10 Jurisdiction. The parties hereto agree that any action, suit, or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or relating to, this Agreement or the transactions contemplated hereby
can only be brought in federal court sitting in the Northern District of Texas
or, if such court does not have jurisdiction, any district court sitting in
Dallas County, Texas, and each of the parties hereto hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such action, suit, or proceeding and irrevocably waives, to the fullest
extent permitted by Law, any objection that it may now or hereafter have to the
laying of the venue of any such action, suit, or proceeding in any such court or
that any such action, suit, or proceeding that is brought in any such court has
been brought in an inconvenient forum.

         6.11 Notices. Any notice, demand, request, instruction, correspondence,
or other document required or permitted to be given hereunder by any party
hereto to the other shall be in writing and delivered (i) in person, (ii) by a
nationally recognized overnight courier service requiring acknowledgment of
receipt of delivery, (iii) by United States certified mail, postage prepaid and
return receipt requested, or (iv) by facsimile, as follows:

                  If to Seller, to:

                           Miracle Candle Company
                           3100 Guadalupe
                           Laredo, Texas  78043
                           Attention:  Jorge Garcia
                           Facsimile No.:  (956) 722-6741

                           with a copy to:

                           David Garcia
                           P. O. Box 1758
                           Laredo, Texas  78043

                                       13
<PAGE>   19

                  If to Purchaser, to:

                           Spring Valley Scents, Inc.
                           c/o Home Interiors & Gifts, Inc.
                           4055 Valley View, Suite 500
                           Dallas, Texas  75244
                           Attention:  General Counsel
                           Facsimile:  (972) 386-1106

                           with a copy to:

                           Weil, Gotshal & Manges LLP
                           100 Crescent Court, Suite 1300
                           Dallas, Texas  75201-6905
                           Attention:  Jeffrey B. Hitt
                           Facsimile:  (214) 746-7777

         Notice shall be deemed given, received, and effective on: (i) if given
by personal delivery or courier service, the date of actual receipt by the
receiving party, or if delivery is refused on the date delivery was first
attempted; (ii) if given by certified mail, the third day after being so mailed
if posted with the United States Postal Service; and (iii) if given by
facsimile, the date on which the facsimile is transmitted if confirmed by
transmission report during the transmitter's normal business hours, or at the
beginning of the next business day after transmission if confirmed at any time
other than the transmitter's normal business hours. Any person entitled to
notice may change any address or facsimile number to which notice is to be given
to it by giving notice of such change of address or facsimile number as provided
in this Section 6.11. The inability to deliver notice because of changed address
or facsimile number of which no notice was given shall be deemed to be receipt
of the notice as of the date such attempt was first made.

         6.12 Severability. If any provision of this Agreement or the
application of such provision to any person or circumstance shall be held (by a
court of competent jurisdiction) to be invalid, illegal, or unenforceable under
the applicable Law of any jurisdiction, (i) the remainder of this Agreement or
the application of such provision to other persons or circumstances or in other
jurisdictions shall not be affected thereby, and (ii) such invalid, illegal, or
unenforceable provision shall not affect the validity or enforceability of any
other provision of this Agreement.

         6.13 Specific Performance. Seller hereby acknowledges and agrees that
if Seller refuses to perform under this Agreement, monetary damages alone will
not be adequate to compensate Purchaser for its injury. Purchaser shall,
therefore, to the extent provided by applicable Law, be entitled to, in addition
to any other remedies that may be available, obtain specific performance of the
terms and provisions of this Agreement.

         6.14 Third-Party Beneficiaries. Nothing express or implied in this
Agreement is intended or shall be construed to confer upon or give any person
other than the parties hereto and their respective permitted assigns any rights
or remedies under of by reason of this Agreement or the transactions
contemplated hereby.

         6.15 Waiver. The rights and remedies provided for herein are cumulative
and not exclusive of any right or remedy that may be available to any party
hereto whether at law, in equity, or otherwise. No delay, forbearance, or
neglect by any party hereto, whether in one or more instances, in the exercise
or any right, power, privilege, or remedy hereunder or in the enforcement of any
term or condition of this

                                       14
<PAGE>   20

Agreement shall constitute or be construed as a waiver thereof. No waiver of any
provision hereof, or consent required hereunder, or any consent or departure
from this Agreement, shall be valid or binding unless expressly and
affirmatively made in writing and duly executed by the party to be charged with
such waiver. No waiver shall constitute or be construed as a continuing waiver
or a waiver in respect of any subsequent breach or default, either of similar or
different nature, unless expressly so stated in such writing.

         6.16 Survival of Representation, Warranties, and Covenants. The
representations, warranties and covenants of Seller and Purchaser shall survive
for a period of one year from the date hereof except (i) such representations
and warranties as to title which shall survive indefinitely, and (ii) such
representations, warranties, and covenants that are as of a specified date or
period.

                                    * * * * *

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>   21

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                         SELLER:

                                         MIRACLE CANDLE COMPANY

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

                                         PURCHASER:

                                         SPRING VALLEY SCENTS, INC.

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------<PAGE>   1
                                                                    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.

                                      -1-
<PAGE>   2
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.

                                      -2-
<PAGE>   3

                        (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).

                                      -3-
<PAGE>   4

                  (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

                                      -4-
<PAGE>   5

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.

                                      -5-
<PAGE>   6

                  (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

                                      -6-
<PAGE>   7

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:

                                      -7-
<PAGE>   8

         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.

                                      -8-
<PAGE>   9

                  (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

                                      -9-

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