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                                                                  EXECUTION COPY

                                 FIRST AMENDMENT

                  FIRST AMENDMENT dated as of January 27, 2000 (this
"AMENDMENT") to the Credit Agreement dated as of March 19, 1999 (the "CREDIT
AGREEMENT") among DEPARTMENT 56, INC., a Delaware corporation (the "BORROWER"),
the several banks and other financial institutions party thereto (the "LENDERS")
and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative
agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT").

                              W I T N E S S E T H :

                  WHEREAS, the Borrower, the Lenders and the Administrative
Agent are parties to the Credit Agreement;

                  WHEREAS, the Borrower has requested that the Administrative
Agent and the Lenders amend the Credit Agreement in certain respects; and

                  WHEREAS, the Administrative Agent and the Lenders 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.

1.                           AMENDMENT TO SECTION 1.1. Subsection 1.1 of the
Credit Agreement is hereby amended by inserting therein, in appropriate
alphabetical order, the following new definitions:

                  "`FIRST AMENDMENT':  the First Amendment dated as of January
27, 2000, to this Agreement.

                  `FIRST AMENDMENT EFFECTIVE DATE':  the date on which the
First Amendment shall become effective."

1.                            AMENDMENT TO SECTION 7.1(c). Section 7.1(c) of
the Credit Agreement is hereby amended by deleting such Section 7.1(c) in its
entirety and inserting the following in lieu thereof:

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         "(c) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth at the last
         day of any fiscal quarter to be less than the greater of (i)
         $65,000,000 or (ii) $142,988,000 MINUS, (A) for any fiscal quarter
         ending after the First Amendment Effective Date (and, for purposes of
         calculating pro forma compliance pursuant to Section 7.6(b), the
         applicable fiscal quarter ending prior to the First Amendment Effective
         Date) and on or prior to December 30, 2000, the amount expended by the
         Borrower to repurchase its Capital Stock pursuant to Section 7.6(b)
         (after giving effect to this clause (ii)(A)) during the period from the
         First Amendment Effective Date to the last day of such fiscal quarter
         and (B) for any fiscal quarter ending thereafter, the amount expended
         by the Borrower to repurchase its Capital Stock pursuant to Section
         7.6(b) (after giving effect to clause (ii)(A)) during the period from
         the First Amendment Effective Date to December 30, 2000."

1.            REPRESENTATIONS AND WARRANTIES. The Borrower hereby confirms
that, after giving effect to the amendments provided for herein, the
representations and warranties contained in Section 4 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.

1.            NO OTHER AMENDMENTS. Except as expressly amended hereby, the
Credit Agreement shall continue to be, and shall remain, in full force and
effect in accordance with its terms.

1.            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. Delivery of
an executed counterpart of a signature page to this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Amendment.

1.            CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective
upon the receipt by the Administrative Agent of (i) this Amendment, executed and
delivered by a duly authorized officer of each of the Borrower and the Required
Lenders and (ii) all fees required to be paid by the Borrower pursuant to
Section 9 of this Amendment.

1.            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.

1.            AMENDMENT FEE. The Borrower shall pay an amendment fee to each of
the Lenders entering into this Amendment prior to January 27, 2000 of .075% of
each such Lender's Commitment, payable on the First Amendment Effective Date.


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                                                                             3

                  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.


DEPARTMENT 56, INC.



By:  /s/ Percy C. Tomlinson
   -------------------------------------
     Title: Executive Vice President and
            Chief Financial Officer



THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender



By:  /s/ Jonathan L. Twichell
   -------------------------------------
     Title: Vice President



ABN AMRO BANK N.V., as Co-Documentation Agent and as a Lender

By:  /s/ John E. Robertson
   -------------------------------------
     Title: Vice President

By:  /s/ Peter J. Hallan
   -------------------------------------
     Title: Assistant Vice President



BANK ONE, NA (Main Office Chicago),
as Co-Documentation Agent and as a Lender

By:  /s/ Lisa Whatley
   -------------------------------------
     Title: Vice President



U.S. BANK NATIONAL ASSOCIATION, as Managing Agent and as a Lender



By:  /s/ Michael J. Reymann
   -------------------------------------
     Title: Vice President


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COMERICA BANK



By:  /s/ Timothy O'Rourke
   -------------------------------------
     Title: Vice President



FIRSTAR BANK MILWAUKEE, N.A.

By:  /s/ Jason R. Hickey
   -------------------------------------
     Title: Assistant Vice President



HARRIS TRUST AND SAVINGS BANK



By:  /s/ Andrew K. Peterson
   -------------------------------------
     Title: Managing Director

M&I MARSHALL & ILSLEY BANK



By:  /s/ John W. Howard
   -------------------------------------
     Title: Vice President


THE FIFTH THIRD BANK



By:  /s/ Kevin J. Walter
   -------------------------------------
     Title: Corporate Banking Officer


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                                                                           iii
WELLS FARGO BANK, NATIONAL      ASSOCIATION



By:  /s/ Molly S. Van Metre
   -------------------------------------
     Title: Vice President and Senior Banker



MICHIGAN NATIONAL BANK



By:  /s/ Draga B. Palincas
   -------------------------------------
     Title: Vice President



WACHOVIA BANK



By:  /s/ Walter R. Gillikin
   -------------------------------------
     Title: Senior Vice President

BANK HAPOALIM B.M.



By:
     Title:


By:  /s/ Conrad Wagner
   -------------------------------------
     Title: First Vice President