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                         THIRD AMENDMENT


                    THIRD AMENDMENT dated as of December 16, 1997 (this
          "Amendment") to the Amended and Restated Credit Agreement dated
          as of February 17, 1995 (as in effect immediately prior to the
          date hereof, the "Credit Agreement") among D 56, INC., a
          Minnesota corporation (the "Company"), the several banks and
          other financial institutions party thereto (the "Banks") and The
          CHASE MANHATTAN BANK (as successor to Chemical Bank), a New York
          banking corporation, as agent for the Banks (in such capacity,
          the "Agent").


                                W I T N E S S E T H :


                    WHEREAS, the Company, the Banks, the Co-Agents named
          therein and the Agent are parties to the Credit Agreement;

                    WHEREAS, the Company has requested that the Agent and
          the Banks amend the Credit Agreement and the Holding Guarantee
          (as defined in the Credit Agreement) in certain respects in order
          to permit Holding to create two new Subsidiaries and to permit
          the Company and its Subsidiaries to enter into certain
          transactions with such two new Subsidiaries; and

                    WHEREAS, the Agent and the Banks are willing to enter
          into this Amendment on the terms and conditions hereof;

                    NOW, THEREFORE, in consideration of the premises and
          the mutual covenants herein contained, the parties hereto agree
          as follows:

                    1.  Defined Terms.  Unless otherwise defined herein,
          capitalized terms used herein which are defined in the Credit
          Agreement are used herein as so defined.

                    2.  Amendments to Subsection 1.1.    (a)  Subsection
          1.1 of the Credit Agreement is hereby amended by inserting the
          following new definitions:

                    "Retail Subsidiary":  Department 56 Retail, Inc., a
               Minnesota corporation, or any other direct wholly-owned
               Subsidiary of Holding created principally to make retail
               sales of the Company's inventory;

                    "Sales Subsidiary":  Department 56 Sales, Inc., a
               Minnesota corporation, or any other direct wholly-owned
               Subsidiary of Holding created principally to employ sales
               representatives for the Company's inventory.

                    (b)  Subsection 1.1 of the Credit Agreement is hereby
          further amended by deleting the phrase "its Debt Ratio and its
          Fixed Charge Coverage Ratio" each time it appears in the
          definition of "Applicable Level" and substituting therefor each

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          such time the phrase "the Debt Ratio and the Fixed Charge
          Coverage Ratio".

                    (c)  Subsection 1.1 of the Credit Agreement is hereby
          further amended by deleting from the definitions of "Applicable
          Level", "Capital Expenditures", " Consolidated Current Assets",
          "Consolidated Current Liabilities", Consolidated EBITDA",
          "Consolidated Net Income", "Consolidated Net Worth", "Debt
          Ratio", "Excess Cash Flow", "Fixed Charge Coverage Ratio",
          "Indebtedness", "Lease Obligations", "Net Interest Expense", "Net
          Proceeds" and "Working Capital", the phrase "the Company" each
          time it appears therein and substituting therefor each such time
          the phrase "Holding".

                    (d)  Subsection 1.1 of the Credit Agreement is hereby
          further amended by deleting from the definition of "Fixed Charge
          Coverage Ratio" the phrase ",plus, for any period, Holding Net
          Interest Expense".

                    (e)  Subsection 1.1 of the Credit Agreement is hereby
          further amended by deleting therefrom the definition of "Holding
          Net Interest Expense".

                    (f)  Subsection 1.1 of the Credit Agreement is hereby
          amended by deleting from paragraph (b) of the definition of "Net
          Proceeds" the word "Borrower" and substituting therefor the word
          "Company".

                    (g)  Subsection 1.1 of the Credit Agreement is hereby
          further amended by inserting, at the end of the definition of
          "Subsidiary",  the following phrase:

               , and Retail Subsidiary and Sales Subsidiary shall be deemed
               to be Subsidiaries of the Company for purposes of the Credit
               Documents (except for purposes of computing the Borrowing
               Base).

                    3.  Amendment to Subsection 7.1.  Subsection 7.1 of the
          Credit Agreement is hereby amended by adding the phrase "each of
          Holding and its Subsidiaries and" immediately before the phrase
          "the Company and its Subsidiaries" each time such latter phrase
          appears.

                    4.  Amendment to Subsection 7.2.  Subsection 7.2 of the
          Credit Agreement is hereby amended by deleting each reference to
          "the Company" (except for references therein to officers of the
          Company) and substituting therefor each such time a reference to
          "Holding".

                    5.  Amendment to Subsection 7.9.  Subsection 7.9 of the
          Credit Agreement is hereby amended by deleting each reference to
          "the Company" (except for references therein to officers of the
          Company) and substituting therefor each such time a reference to
          "Holding".

                    6.  Amendment to Subsection 8.5.  Subsection 8.5 of the

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          Credit Agreement is hereby amended by (i) deleting the word "and"
          appearing at the end of clause (f) thereof, (ii) replacing the
          period at the end of clause (g) thereof with the phrase "; and"
          and (iii) adding at the end of such subsection the following new
          clause (h):

                    (h)  the Company and its Subsidiaries may transfer
               assets to Retail Subsidiary and Sales Subsidiary of the type
               and having values as set forth on Schedule I to the Third
               Amendment to this Agreement dated as of December 16, 1997.

                    7.  Amendment to Subsection 8.6.  Subsection 8.6 of the
          Credit Agreement is hereby amended by adding at the end of clause
          (b) the following:

               and provided further that the Company and its Subsidiaries
               may also transfer assets to Retail Subsidiary and Sales
               Subsidiary in accordance with subsection 8.5(h).

                    8.  Amendment to Subsection 8.11.  Subsection 8.11 of
          the Credit Agreement is hereby amended by (i) deleting the word
          "and" appearing at the end of clause (c) thereof, (ii) replacing
          the period at the end of clause (d) thereof with the phrase ";
          and" and (iii) adding at the end of such subsection the following
          new clause (e):

                    (e)  the Company may declare and pay dividends to EBI
               and Intermediate Co., EBI may declare and pay dividends to
               Intermediate Co. and Intermediate Co. may declare and pay
               dividends to Holding, in each case consisting of assets
               which the Company is permitted to transfer to Retail
               Subsidiary and Sales Subsidiary pursuant to subsection
               8.5(h).

                    9.  Amendment to Section 9.  Section 9 of the Credit
          Agreement is hereby amended by adding at the end the proviso
          clause in clause (j) the following:

               and (iii) create and own Retail Subsidiary and Sales
               Subsidiary as its direct Subsidiaries and permit Retail
               Subsidiary to engage in the business of retail sales of the
               inventory of the Company and activities related thereto and
               the Sales Subsidiary to engage in the business of the
               employment of sales representatives for the Company's
               inventory and activities related thereto and make
               investments in Retail Subsidiary and Sale Subsidiary
               consisting of (a) assets permitted to be transferred to
               Retail Subsidiary and Sales Subsidiary pursuant to
               subsection 8.5(h) and (b) capital contributions of up to
               $1,000,000 in the aggregate in Retail Subsidiary and Sales
               Subsidiary;

                    10.  Amendment to Holding Guarantee.  Section 10 of the
          Holding Guarantee is hereby amended by adding immediately before
          the phrase "; provided that . . ." the following:

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               and (iii) create and own Retail Subsidiary and Sales
               Subsidiary as its direct Subsidiaries and permit Retail
               Subsidiary to engage in the business of retail sales of the
               inventory of the Company and activities related thereto and
               the Sales Subsidiary to engage in the business of the
               employment of sales representatives for the Company's
               inventory and activities related thereto and make
               investments in Retail Subsidiary and Sale Subsidiary
               consisting of (a) assets permitted to be transferred to
               Retail Subsidiary and Sales Subsidiary pursuant to
               subsection 8.5(h) and (b) capital contributions of up to
               $1,000,000 in the aggregate in Retail Subsidiary and Sales
               Subsidiary;

                    11.  Special Provisions Relating to Retail Subsidiary
          and Sales Subsidiary.  Notwithstanding any provisions to the
          contrary set forth in the Credit Documents (a) Holding and the
          Company will cause Retail Subsidiary and Sales Subsidiary to be
          owned as direct wholly-owned Subsidiaries of Holding, and the
          capital stock of such Subsidiaries shall be free of Liens; (b)
          Retail Subsidiary and Sales Subsidiary shall not be permitted to
          make any investment of the type permitted by clauses (h) or (i)
          of subsection 8.6; (c) for purposes of the Credit Documents,
          Subsidiaries of the Company shall include Retail Subsidiary and
          Sales Subsidiary except for purposes of computing the Borrowing
          Base; and (d) Retail Subsidiary and Sales Subsidiary shall not be
          permitted to create, incur, assume or suffer to exist any
          Indebtedness of the type permitted by clause (f) of subsection
          8.1, any Liens of the type permitted by clause (h) of subsection
          8.2 to secure Indebtedness permitted by clause (f) of subsection
          8.1 or any Liens of the type permitted by clause (k) of
          subsection 8.2.

                    12.  Representations and Warranties.  The Company
          hereby confirms that, after giving effect to the amendments
          provided for herein, the representations and warranties contained
          in Section 5 of the Credit Agreement are true and correct in all
          material respects on and as of the date hereof and no Default or
          Event of Default has occurred and is continuing.

                    13.  No Other Amendments.  Except as expressly amended
          hereby, the Credit Documents shall continue to be, and shall
          remain, in full force and effect in accordance with its terms.

                    14.  Counterparts.  This Amendment may be executed by
          the parties hereto in any number of separate counterparts and all
          of such counterparts taken together shall be deemed to constitute
          one and the same instrument.

                    15.  Conditions to Effectiveness.  This Amendment shall
          become effective as of the date first written above when each of
          the following conditions to effectiveness shall have been
          satisfied:

                    (i)  the Agent shall have received counterparts to this
               Amendment, duly executed by the Company, the Required Banks

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               and the Agent;

                   (ii)  the Agent shall have received the Acknowledgement
               and Consent, attached to each counterpart hereof, duly
               executed by each of the Credit Parties (other than the
               Company);

                  (iii)  the Agent shall have received an amendment to the
               Holding Pledge Agreement, satisfactory in form and substance
               to the Agent, which has the effect of pledging the capital
               stock of each of Retail Subsidiary and Sales Subsidiary to
               the Agent thereunder, accompanied by the share certificates
               evidencing such capital stock and duly executed stock powers
               therefor;

                   (iv)  the Agent shall have received a Subsidiary
               Guarantee, duly executed by each of Retail Subsidiary and
               Sales Subsidiary; and

                    (v)  the Agent shall have received an opinion from
               counsel to the Company with respect to the amendment to the
               Holding Pledge Agreement delivered pursuant to clause (iii)
               above and the Subsidiary Guarantee delivered pursuant to
               clause (iv) above, such opinion to be in form and substance
               satisfactory to the Agent.

                    16.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED
          BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
          THE LAWS OF THE STATE OF NEW YORK.


                    IN WITNESS WHEREOF, the parties hereto have caused this
          Amendment to be duly executed and delivered by their proper and
          duly authorized officers as of the date set forth above.

                                        D 56, INC.
                                        By: /s/ TIMOTHY J. SCHUGEL
                                          Title:  Vice President

                                        THE CHASE MANHATTAN BANK, as Agent
                                        and as a Bank
                                        By: /s/ LENARD WEINER
                                          Title:  Managing Director

                                        BANK OF AMERICA ILLINOIS
                                        By: /s/ THOMAS SULLIVAN
                                          Title:  Vice President

                                        FIRST BANK NATIONAL ASSOCIATION
                                        By: /s/ MICHAEL RAYMANN
                                          Title:   Vice President

                                        HARRIS TRUST AND SAVINGS BANK
                                        By: /s/ ANDREW T. CLAAR
                                          Title:  Authorized Signatory

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                                        THE BANK OF NOVA SCOTIA
                                        By:  /s/ F.C.H. ASHBY
                                          Title:  Senior Manager Loan Operations

                                        SUMITOMO BANK, LIMITED
                                        By: /s/ DOUG PUDVAH
                                          Title:  Vice President
                                        By: /s/ JOHN W. HOWARD, JR.
                                          Title:  Vice President & Manager

                                        NBD BANK
                                        By: /s/ MARGUERITE GORDY
                                          Title:  Authorized Signatory

                                        SOCIETE GENERALE
                                        By:
                                          Title:

                                        ABN-AMRO BANK N.V.
                                        By: /s/ JAMES PIERPONT
                                          Title: Authorized Signatory

                                        THE LONG-TERM CREDIT BANK OF JAPAN,
                                        LIMITED
                                        By: /s/ ARMUND J. SCHOEN, JR.
                                          Title: Authorized Signatory


                            ACKNOWLEDGEMENT AND CONSENT


                    Each of the undersigned Credit Parties (as defined in
          the Amended and Restated Credit Agreement dated as of February
          17, 1995; as amended, supplemented and otherwise modified prior
          to the execution and delivery of the Amendment, the "Credit
          Agreement") among D 56, INC., a Minnesota corporation (the
          "Company"), the banks and other financial institutions parties
          thereto (collectively, the "Banks") and THE CHASE MANHATTAN BANK
          (as successor to Chemical Bank), a New York banking corporation,
          as agent for the Banks (in such capacity, the "Agent") hereby
          acknowledges, and consents to, the execution and delivery of the
          Second Amendment dated as of December 16, 1997 to the Credit
          Agreement, and agrees to remain bound by each Credit Document to
          which it is a party.

                                        DEPARTMENT 56, INC.
                                        By: /s/ TIMOTHY J. SCHUGEL
                                          Title:  Vice President

                                        FL 56 INTERMEDIATE CORP.
                                        By: /s/ TIMOTHY J. SCHUGEL
                                          Title:  Vice President

                                        ed bazinet international, inc.
                                        By: /s/ TIMOTHY J. SCHUGEL
                                          Title:  Vice President

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                                        DEPARTMENT 56 TRADING CO., LTD.
                                        By: /s/ TIMOTHY J. SCHUGEL
                                          Title:  Vice President