<PAGE>
                     AMENDMENT TO PLEDGE AGREEMENT


                    AMENDMENT dated as of December 30, 1997 (this
          "Amendment") to the Pledge Agreement dated as of February 17,
          1995 (as in effect immediately prior to the date hereof, the
          "Pledge Agreement") among DEPARTMENT 56, INC., a Delaware
          corporation (the "Pledgor"), in favor of THE CHASE MANHATTAN BANK
          (as successor to Chemical Bank), a New York banking corporation,
          as agent for the Banks referred to below (in such capacity, the
          "Agent").


                                W I T N E S S E T H :


                    WHEREAS, D 56, Inc. (the "Company"), certain lenders
          (the "Banks") and co-agents (the "Co-Agents") and the Agent are
          parties to the Amended and Restated Credit Agreement dated as of
          February 17, 1995 (as amended, the "Credit Agreement"); and

                    WHEREAS, it is a condition precedent to the
          effectiveness of the Third Amendment dated as of December 17,
          1997 that the Pledge Agreement be amended as set forth herein in
          order to include as Pledged Stock thereunder all of the shares of
          capital stock of Department 56 Retail, Inc., a Minnesota
          corporation, and Department 56 Sales, Inc., a Minnesota
          corporation (collectively, the "New Pledged Subsidiaries"), each
          of which is a wholly-owned subsidiary of the Pledgor;

                    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 or the Pledge Agreement are used herein as so defined.

                    2.  Amendments to Pledge Agreement.    (a)  All
          references in the Pledge Agreement to the "Issuer" shall be
          deemed to be a reference to each of FL 56 Intermediate Corp., a
          Delaware corporation, and the New Pledged Subsidiaries;

                    (b)  All references in the Pledge Agreement to the
          "Pledged Stock" shall be deemed to be a reference to all of the
          capital stock of each of FL 56 Intermediate Corp., a Delaware
          corporation, and the New Pledged Subsidiaries;

                    (c)  Schedule I to the Pledge Agreement is hereby
          supplemented by adding thereto the information set forth on
          Schedule I to this Amendment; and

                    (d)  The address of each Issuer shall be the same
          address as for the Company under the Credit Agreement.

                    3.  Pledge of Capital Stock of Department 56 Retail,

<PAGE>


          Inc. and Department 56 Sales, Inc.  Upon the effectiveness of
          this Amendment, the Pledgor will deliver to the Agent, for the
          ratable benefit of the Banks, all of the Pledgor's right, title
          and interest in the capital stock of each of Department 56
          Retail, Inc. and Department 56 Sales, Inc. and thereby transfer
          and grant to the Agent, for the ratable benefit of the Banks, a
          first security interest in all of the Pledgor's right, title and
          interest in such capital stock, as collateral security for the
          prompt and complete payment and performance when due (whether at
          the stated maturity, by acceleration or otherwise) of the
          Guarantee Obligations.  The Pledgor will execute and deliver
          stock powers to the Agent with respect to such capital stock as
          required by Section 3 of the Pledge Agreement.

                    4.  No Other Amendments.  Except as expressly amended
          hereby, the Pledge Agreement shall continue to be, and shall
          remain, in full force and effect in accordance with its terms.
          Without limitation of the foregoing, the security interest in the
          Collateral created by the Pledge Agreement prior to the
          effectiveness of this Amendment shall remain in full force and
          effect having the same perfected status and priority, and this
          Amendment shall not affect the perfection or priority of any such
          security interest.

                    5.  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.

                    6.  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 Pledgor and the Agent; and

                   (ii)  the Agent shall have received the Acknowledgement
               and Consent, attached to the Pledge Agreement, duly executed
               by each of the New Pledged Subsidiaries.

                    7.  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.

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

                                        THE CHASE MANHATTAN BANK, as Agent
                                        By: /s/ JOHATHAN TWITCHELL
                                          Title:  Authorized Signatory

<PAGE>


                               Schedule I


                 INFORMATION ON NEW PLEDGED SUBSIDIARIES TO BE ADDED
                        TO SCHEDULE I OF THE PLEDGE AGREEMENT

<TABLE>
<CAPTION>

                                         Stock                    Percentage
                             Class of    Certificate   No. of     of
          Issuer             Stock       No.           Shares     Issued
                                                                  Shares

<S>                          <C>         <C>          <C>         <C>
          Department 56      Common      1            100,000     100%
          Retail, Inc.

          Department 56      Common      5            100,000     100%
          Sales, Inc.

</TABLE>