# Exhibit 10.18

# [LOGO]

December 15, 2003

Mr. David W. Dewey
{address redacted}
{address redacted}

Dear David,

This letter confirms our
agreement concerning your decision to resign employment at the end of March and
to then begin working with us as an independent consultant.

|Position Status: | You have
decided that you would like to continue in your current position as an employee
and officer until Saturday, April 3, 2004. You have tendered, and I have
accepted, your resignation effective that date from all positions (including
subsidiary directorships) with Department 56, Inc. and its direct and indirect
subsidiaries (collectively, D56).
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Beginning
Sunday, April 4, 2004, D56 will engage you, and you have committed to serve, as an
independent consultant. This engagement is intended to continue from that date through
March 31, 2005 (the Consulting Period), and the Consulting Period may be
extended past that time by mutual agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Compensation: | Your salary as
an employee will continue at the current annual rate of $368,000 until the
effective date of your resignation.
|------------- | -----------------------------------------------------------------------------------------------------------------------------

| | In consideration
for your services during the Consulting Period and the non-competition covenants
contained in this letter agreement, D56 will pay you a regular fee of $20,833.33
per month during each month of the Consulting Period and you will be eligible
for the cash incentive payments described below.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Cash Incentives: | You will be
eligible to receive a bonus based on overall corporate performance in 2004. This
Corporate Performance Bonus will be calculated in a manner
consistent with the 2004 defined bonus program for Department 56, Inc. officers
and is illustrated on the attached spreadsheet. The final bonus program
structure and EPS budget target are subject to the approval of the Board of
Directors, and actual payout amounts will not be determined and paid until
closure and Board acceptance of the 2004 full-year audited financials.
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | You will also be
eligible to receive two Giftware Performance Bonuses, the structure
of each of which is set out and illustrated on the attached spreadsheets.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|Benefits: | Your employee
benefits will cease upon the effective date of your resignation. At your own
expense you could then continue health and certain other insurances per our
then-current COBRA plans.
|--------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Stock Options& Restricted Stock: | For so long as
you are a consultant to D56 under this letter agreement, you will be able to
hold and continue vesting in the stock options and restricted shares you have
been awarded.
|-------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Consulting Duties: | Throughout the
Consulting Period you would, on an as-needed basis (recognizing that foreign
product development trips may be more than half-time), regularly perform a broad
range of advisory, technical and commercial services on behalf of D56 with
regard to product development and sourcing, including 
|------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Development of product to be introduced in December 2004/January 2005/May 2005
in existing or new non-collectible lines, including samples production and
delivery


Oversight of vendor relations and collectible product in development during the
Consulting Period

Identification of potential new vendors, product features, and design
or manufacturing innovations

Weekly meeting with {redacted name} and other members of the Creative, Product
Development and Sourcing teams concerning products or designs in-process and any
other business issues

Regular meeting with Marketing, Creative and Product Development personnel
regarding product and design direction and other business issues

Transition and training of {redacted names} and any other existing or new
personnel regarding any aspect of product development, sourcing, vendor relations or
their job responsibilities

Transition and facilitation of {redacted name} consulting services in vendor
price negotiations, quality issues, product specification adjustment
for feasibility concerns, and coordination of sculpting approvals.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | You would also
perform such other services as I, {redacted name} or {redacted name} may request
from time to time during the Consulting Period. In performing your services
during the Consulting Period you will do so consistent with D56 direction and
policies, including the Code of Ethics and Business Conduct. In this connection,
during and after the Consulting Period you will keep confidential and not
disclose any and all non-public D56 information.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | You will make
yourself available for contact by D56 regularly throughout the Consulting
Period. In this regard, you will keep us apprised of your home and mobile phone
numbers. You will also provide advance notice and itinerary and contact
information for any travel (including holiday and product development trips)
outside the Minneapolis area. D56 will reimburse your reasonable travel expenses
for any foreign product development trips of which
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | D56 has prior
notice and during which at least half of your time is spent performing services
for D56 under this letter agreement.
| | ----------------------------------------------------------------------------------------------------------------------------------

|Early Termination
Of Consulting Period: | In the event
that D56 or you (1) commit any material fraud against the other, (2) commit any
unlawful act which adversely affects the others commercial prospects or
(3) willfully or habitually breach or neglect our respective obligations under
this letter agreement, the other party hereto may terminate the consulting
engagement with 30 days prior notice in writing, and during such 30 day
period you and D56 shall meet to attempt to resolve the matters giving rise to
the termination notice. In the event D56 has delivered valid notice, does not
rescind it and an early termination thereby occurs, the fixed monthly consulting
fee shall be prorated on a daily basis for the month termination is effective,
any 2004 cash bonus payments will be prorated on a daily basis from the first
day of the 2004 fiscal year to the effective date of the early termination, and
any 2005 cash bonus payment shall be prorated from the first day of the 2005
fiscal year in which you have been engaged by D56 under this letter agreement to
the effective date of the early termination. In the event you have delivered
valid notice, do not rescind it and an early termination thereby occurs, the
fixed monthly consulting fee shall be payable through the month of March 2005
and there shall be no proration of any cash bonus payments, irrespective the
early termination.
|--------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Non-Competition: | From the date
hereof through one year following expiration of the Consulting Period, you agree
that you will not own (other than a negligible interest), manage, operate, join,
be employed by or otherwise provide services anywhere in the world to:
Any of D56s existing Village or Snowbabies factories (including any new
factories they may establish or sponsor) (example: {redacted names});

Any person or firm engaged in the design, development, production or
distribution of miniature decorative or collectible buildings or coordinated
village accessories; or

Any person or firm engaged in the design, development, production or
distribution of giftware, home décor or tabletop products for the
wholesale Gift & Specialty Retail trade (examples: {redacted names}), except
that you may work or deal on products for Mass Market distribution with any such
person or firm described in this third bullet point so long as such person or
firm already is a product manufacturer for the Mass Market channel.
|---------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | From the date
hereof through one year following expiration of the Consulting Period, you will
keep us informed of other giftware, collectibles, and home décor
businesses you work with, and other products you develop, for distribution
through the Gift, Specialty Retail or Department Store channels.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In addition, you
will not at anytime from the date hereof through five years following expiration
of the Consulting Period:
| | ---------------------------------------------------------------------------------------------------------------------------

| | make any statement (under circumstances reasonably likely to become public or that
you might reasonably expect to become public) critical of D56 or any of its employees,
officers, directors, representatives, products, activities or practices, or in any way
adversely affecting or otherwise maligning the business or reputation of D56 or any of
its employees, officers, directors or representatives; or

directly or indirectly divert or interfere with any of the employees, customers
or suppliers of D56, or solicit for employment or business with any of
D56s employees or representatives.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The foregoing
supersedes all other non-compete, non-solicitation, non-disparagement, and
non-interference covenants you have made in favor of D56, all of which are of no
further effect.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Assignment of Creations: | You assign, and
agree to assign. all ownership of copyright, know-how and other intellectual
property created, conceived or commissioned by you in the course of your
delivery of consulting services under this engagement, all of which shall be
deemed works for hire.
|------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|General Legal Release: | Upon the
effective date of your resignation as an employee, you will sign and deliver to
D56 a release in the form of Exhibit A to this letter agreement.
|---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|Nature of Legal Relationship: | D56 will
continue its practice of having all binding purchase orders issued by OVP
personnel. Accordingly, during the Consulting Period and thereafter you will be
able to discuss and reach informal understanding with vendors as to indicative
terms much as you do today, but shall not be authorized to enter into any
legally binding obligations on behalf of D56 as its agent. Your relationship to
D56 during the Consulting Period shall be as an independent contractor, not as
an employee, and you shall be responsible for all taxes, withholding, and the
acquisition and cost of any insurances or benefits that are afforded by D56 in
light of your status as an employee prior to your resignation of employment.
|----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Legal Matters: | The laws of
Minnesota shall govern this letter agreement, and all disputes shall be decided
by binding AAA arbitration in Minneapolis after good faith negotiation. The
parties agree that specific performance and injunctive relief shall be
available, in addition to all other remedies available at law or in equity. This
letter agreement may be amended or waived only in a writing signed by both
parties. The provisions of this letter agreement are severable so that
invalidity of any provision shall not affect the enforceability or validity of
any other provision.
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | You agree that
the covenants contained under the section captioned Non-Competition
are reasonable and valid in geographic, temporal and subject-matter scope and in
all other respects, and do not pose limitations greater than necessary to
protect the goodwill and other business interests of D56, which you agree could
foreseeably be harmed in an irreparable manner by your breach. If any arbitrator
or court determines any of such covenants, or any part thereof, is unenforceable
because of scope, such authority shall be deemed by this letter agreement to
have the power to reduce the scope to the extent legally necessary and such
covenant shall then be enforceable to the maximum extent legally permitted; with
respect to geographic scope in particular, if a court or arbitrator deems such
scope overbroad, the parties agree that the court or arbitrator may reduce such
scope by one-mile increments to the extent necessary to satisfy such authority
that the restricted territory is fair and reasonably required for the protection
of D56s interests.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Kindly sign the enclosed copy of
this letter in the space provided below to confirm this as our mutual agreement,
superseding all prior understandings and agreements with respect to any of the subject
matter hereof.

Sincerely,

/s/   Susan Engel

Susan EngelChairwoman & CEO

Confirmed and agreed:

/s/   David W. Dewey

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# Exhibit A to Letter Agreement between
David W. Dewey and Department 56, Inc.

# EMPLOYEE RELEASE

David W. Dewey
(Employee), in consideration for the payment of monies and benefits
by Department 56, Inc. (the Company) pursuant to the Letter
Agreement to which this Release is annexed as Exhibit A (the Letter
Agreement), does hereby confirm his agreement and delivery of this Release
by setting forth his signature in the space provided below.

Employee, on behalf of
himself and his heirs and representatives, hereby releases Company and all of
its affiliates, predecessors, subsidiaries, successors, employees, officers,
directors, agents, insurers, representatives, counsel, shareholders, and all
other persons, entities, and corporations affiliated or related with any of
them, from all liability for damages, claims, and, demands, whether known or
unknown, of any kind, including all claims for costs, expenses, and
attorneys fees arising out of any events, acts, decisions, or omissions
occurring prior to execution of this Release (including, but not limited to,
Employees resignation of employment with Company). Employee understands
that this Release is a full, final and complete settlement and release of all
his claims whatsoever.

Without limiting the
generality of the foregoing, Employee does hereby waive, release and discharge,
and agree to hold harmless Company from, any and all rights, claims and causes
of action whatsoever Employee may have, or which may arise, against Company for
all claims, including equitable or at law and including but not limited to those
based on libel, invasion of privacy, violation of any right of publicity,
copyright or trademark infringement in connection with any publication or use,
past, present or future, of Employees name, image, signature or any
photographic reproductions, modifications or alterations thereof in conjunction
with Companys promotional material and products. Employee hereby further
assigns to Company all his right, title and interest in any and all inventions,
discoveries, improvements and ideas, whether or not in writing or reduced to
practice and whether or not patentable or copyrightable, made, authored or
conceived by Employee, whether by the Employees individual efforts or in
connection with the efforts of others, and that either (i) relate or related to
the Companys business, products or processes, past, present, anticipated
or under development, or (ii) result or resulted from the Employees
employment by Company, or (iii) use or used Companys equipment, supplies,
facilities or trade secret information.

Employee further agrees
that he will not institute any claim for damages, by charge or otherwise, nor
otherwise authorize any other party, governmental or otherwise, to institute any
claim for damages via administrative or legal proceedings against Company, its
affiliates, predecessors, subsidiaries, successors, employees, officers,
directors, agents, insurers, representatives, counsel, shareholders, and all
other persons, entities, and corporations affiliated or related with any of them
based on any events, acts, decisions, or omissions occurring prior to execution
of this Release. Employee also waives the right to money damages or other legal
or equitable relief awarded by any governmental agency related to any such
claim.

ADDITIONALLY, THIS
RELEASE SPECIFICALLY WAIVES ALL OF EMPLOYEES RIGHTS AND CLAIMS ARISING
UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967 (29 U.S.C. § 621 et
seq.), AS AMENDED, AND THE OLDER WORKERS BENEFIT PROTECTION ACT, AS
AMENDED.In connection with this waiver, Employee acknowledges and agrees to
the following:

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|a. |  | Employee is not waiving any rights or claims under the Age Discrimination in
Employment Act of 1967, as amended, that may arise after this Release is
executed.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|b. |  | Employee can waive rights or claims under the Age Discrimination in Employment
Act only in exchange for consideration that this is in addition to anything of
value to which Employee is already entitled.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c. |  | Employee has carefully read and fully understands all of the provisions and
effects of this Release and Employee knowingly and voluntarily entered into all
of the terms set forth herein.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Employees signature below
evidences Employees understanding and voluntary waiver of all claims against the
Company, including but not limited to those pursuant to the Age Discrimination in
Employment Act and the Older Workers Benefit Protection Act.

Notwithstanding anything in this
Release to the contrary, Employee does not release the Company of any of its obligations
or any of Employees claims or demands (1) under the Letter Agreement or (2) under
any employee pension benefit plan or employee welfare benefit plan under ERISA
(Employees Retirement Income Security Act, 29U.S.C. Sec 1001 et seq.),
which rights shall be governed by the terms of any such plans maintained by the Company.



|/s/ ____________________________David W. Dewey | Date: April 3, 2004
|---------------------------------------------- | -------------------

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