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Exhibit 10.14

[DEPARTMENT 56 LOGO]

January 28, 2003

Ms. Susan E. Engel
[Address]

Dear Ms. Engel:

In recognition of your contributions to Department 56, Inc. ("DFS" or the
"Company") and the Company's desire to assure your continued services in your
current position in the event of a pending or actual Change in Control (as
defined) of DFS, the Company's Board of Directors is pleased to offer you the
Change of Control protection outlined in this letter agreement ("Agreement").

        1.    Term Of Agreement.    The Term of this Agreement shall commence on
the date of this letter (the "Effective Date") and end on the third anniversary
of such date (the "Original Term"). The Original Term shall be automatically
renewed for successive one-year terms (the "Renewal Terms") unless at least
180 days prior to the expiration of the Original Term or any Renewal Term,
either of us notifies the other in writing that you or we are electing to
terminate this Agreement at the end of the then current Term. "Term" shall mean
the Original Term and all Renewal Terms. If a Change in Control occurs during
the Term, the Term shall not expire earlier than two years from the date of the
Change in Control.

        2.    Entitlement to Severance Benefits.    

        (a)    Cash Severance Benefit.    In the event your employment
terminates (a "Termination") or for any reason whatsoever (other than due to
death, disability, retirement at or after age 65 or an involuntary termination
for Cause) within one year following a Change in Control, you shall be entitled
to receive the sum of the following, payable in a cash lump sum no later than
15 days after the Termination date (the "Cash Severance Benefit"): (i) your Base
Salary through the Termination date; (ii) an amount equal to 299% of the sum of
(x) your Base Salary plus (y) the maximum annual cash bonus for which you are
eligible in the year of the Change in Control; and (iii) your pro rata annual
incentive award at target for the year in which the Termination occurs.

        Notwithstanding anything in this Agreement to the contrary, if (1) your
employment is involuntarily terminated (x) within four weeks prior to a public
announcement by DFS of an agreement with a third party to effect a Change in
Control which agreement is approved by the DFS Board of Directors in force
immediately prior to such announcement or (y) at any time from the time of such
announcement through the closing of such agreement (or through the consummation
of a Change in Control with or by a party competing with such third party to
effectuate an Approved Change in Control) and (2) such Termination is under
circumstances that would have entitled you to the Cash Severance Benefit if they
had occurred following a Change in Control, then a Change in Control shall be
deemed to have occurred on the date immediately prior to the date of such
involuntary termination for all purposes of this Agreement. Written notice of
involuntary termination shall be given to you by hand or overnight courier
delivery to your most recent address contained in the Company's personnel
records and shall set forth in reasonable detail the relevant facts,
circumstances and effective date of Termination.

        (b)    Other Severance Benefits.    In addition to the benefits provided
in Section 2(a), you shall also be entitled to the following: (i) elimination of
all restrictions on any restricted or deferred stock awards outstanding on the
Termination date; (ii) immediate vesting of all outstanding stock options and
the right to exercise such stock options for 36 months (or the remainder of the
exercise period, if less); (iii) immediate vesting of all restricted or deferred
stock awards and non-qualified retirement benefits; (iv) continued participation
in all DFS benefit plans (described on annexed sheet) at the same benefit level
at which you were participating on the Termination date for a period of
36 months unless or until the date or dates you receive substantially equivalent
coverage from a subsequent employer; and (v) reimbursement of all expenses
relating to

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your relocation to New York City, including without limitation, an amount equal
to the difference, if any, of (1) the tax basis of your primary residence
located in the Minneapolis-St. Paul metropolitan area minus (2) the net proceeds
you receive relating to the sale of such primary residence (e.g., the sale
proceeds net of brokerage fees paid for the sale). Notwithstanding anything in
this Agreement to the contrary, (1) you shall be entitled to exchange any or all
of the Cash Severance Benefit for options to purchase mutual fund shares
pursuant to the D56, Inc. Executive Compensation Exchange Plan ("KEYSOP") at the
time the Cash Severance Benefit would otherwise be payable to you, and
(2) except for your right provided in clause (1) of this sentence, your right to
continued participation in the D 56, Inc. 401(k) Retirement Savings Plan and in
the KEYSOP pursuant to clause (iv) of this Section 2(b) shall be subject to the
eligibility and other terms and conditions of such plans as they are in effect
immediately prior to the Change in Control giving rise to the Cash Severance
Benefit becoming payable to you under this Agreement.

        (c)    Section 280(G) Gross-Up Protection.    In the event you become
entitled to payments or benefits which become subject to tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any other similar tax, but not income tax of any nature (collectively, "Excise
Tax"), DFS shall pay you an additional amount ("Gross-Up Payment") such that the
amount retained by you after reduction for any Excise Tax (including penalties
or interest thereon) equals the amount to be paid to you hereunder prior to the
imposition of such Excise Tax. The amount of the Gross-Up Payment shall include
the amount of all federal, state and local income taxes (including, without
limitation, Excise Tax) imposed on the Gross-Up Payment at the maximum marginal
rates then in effect and shall be calculated by DFS' independent auditors. In
the event that such Gross-Up Payment is ultimately determined to be less than
the amount necessary to achieve the purposes of this paragraph, DFS shall pay an
additional amount to you in respect of such deficiency (including any interest
and penalties). In the event that such Gross-Up Payment is ultimately determined
to exceed the amount necessary to achieve the purposes of this paragraph, you
must promptly repay the entire amount of such excess Gross-Up Payment to DFS.

        (d)    No Mitigation; No Offset.    In the event of any Termination, you
shall be under no obligation to seek other employment; and no amounts due to you
under this Agreement shall be subject to offset due to any remuneration
attributable to subsequent employment that you may obtain.

        (e)    Release.    Termination payments and benefits to be made to you
hereunder are conditioned upon your execution of a release agreement, in the
form attached as Exhibit A to this Agreement. Upon the Company's receipt of such
release executed by you, the Company will provide to you an executed copy of the
release attached as Exhibit B to this Agreement.

        3.    Definitions.    For purposes of this Agreement, the following
terms shall have the meanings ascribed to them.

        (a)  "Base Salary" means the annualized rate of pay in effect on the
Termination date.

        (b)  "Cause" shall exist if: (i) you are convicted of, or plead nolo
contendere to, any felony which materially and adversely impacts DFS' financial
condition or reputation, (ii) you engage in conduct that constitutes willful
gross neglect or willful gross misconduct in carrying out your duties which
materially and adversely impacts DFS' financial condition or reputation, or
(iii) you violate Section 4 of this Agreement prior to Termination and that is
the sole basis for your involuntary Termination.

        (c)  A "Change in Control" shall be deemed to occur upon any of the
following: (i) acquisition by any one "person" (as such term is defined in
§3(a)(9) of the Securities and Exchange Act of 1934, as amended, and used in
§13(d) and 14(d) thereof, including "group" as

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defined in §13(d) thereof) of 20% or more of DFS' voting shares; (ii) directors
elected to the DFS Board of Directors over any 24 month period not nominated by
the DFS Nominating Committee represent 30% or more of the total number of
directors constituting the DFS Board of Directors at the beginning of the period
(for these purposes, a director "not nominated by the DFS Nominating Committee"
shall include, without limitation, any individual(s) whose nomination results
from an actual or threatened proxy contest or whose initial assumption of office
as a director occurs as a result of an actual or threatened proxy contest or
other actual or threatened solicitation or execution of proxies or consents by
or on behalf of any "person(s)" other than the Company or the DFS Board of
Directors); (iii) any merger, consolidation or other corporate combination upon
the completion of which DFS shares do not represent more than 50% of the
combined voting power of the resulting entity; and (iv) upon the sale of all or
substantially all of the consolidated assets of DFS, other than a distribution
to shareholders. An "Approved Change in Control" is any Change in Control that
is approved by the DFS Board of Directors in force immediately prior to the
Change in Control.

        (d)  "Confidential Information" shall mean all information concerning
the business of DFS relating to any of its products, product development, trade
secrets, customers, suppliers, finances, and business plans and strategies.
Excluded from the definition of "Confidential Information" is information
(i) that is or becomes part of the public domain, other than through your breach
of this Agreement, or (ii) regarding DFS' business or industry properly acquired
by you in the course of your career as an employee in DFS' industry and
independent of your employment by DFS. For this purpose, information known or
available generally within the trade or industry of DFS shall be deemed to be
known or available to the public.

        4.    Non-Disclosure; Non-Solicitation; Non-Disparagement.    

        (a)  During the Term and thereafter, you shall not, without DFS' prior
written consent disclose to anyone (except in good faith in the ordinary course
of business) or make use of any Confidential Information except in the
performance of your duties hereunder or when required to do so by law. In the
event that you are so ordered, you shall give prompt written notice to DFS
sufficient to allow DFS the opportunity to object to or otherwise resist such
order.

        (b)  During the Term and for a period of 24 months thereafter, you shall
not, without DFS' prior written consent, solicit for employment, whether
directly or indirectly, any person who at the time is employed by DFS or any
affiliate.

        (c)  You agree that, during the Term and thereafter (including following
any Termination for any reason) you will not make statements or representations,
or otherwise communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may, directly or indirectly, disparage or be
damaging to DFS or its respective officers, directors, employees, advisors,
businesses or reputations. Notwithstanding the foregoing, nothing in this
Agreement shall preclude you from making truthful statements or disclosures that
are required by applicable law, regulation or legal process.

        5.    Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or any breach or asserted breach hereof shall be
resolved by binding arbitration, to be held at an office closest to DFS'
principal offices in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court of competent jurisdiction. Pending the resolution of
any arbitration or court proceeding, DFS shall continue payment of all amounts
and benefits due you hereunder. All reasonable costs and expenses of any
arbitration or court proceeding (including fees and disbursements of counsel)
shall be promptly paid on your behalf by DFS; provided, however, that no such
expense reimbursement shall be made if and to the extent the arbitrator(s)
determine(s) that any of your litigation assertions or defenses were in bad
faith or frivolous.

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        6.    Effect of Agreement on Other Benefits; Complete Agreement. Except
as specifically provided in this Agreement, the existence of this Agreement
shall not be interpreted to prohibit or restrict your participation in any other
employee benefit or other plans or programs in which you currently participate.
This is the entire agreement between you and DFS with respect to, and supersedes
all prior arrangements concerning, the subject matter of this Agreement.

        7.    Not an Employment Agreement. This Agreement is not a contract of
employment between you and DFS. DFS may terminate you at any time, subject to
the terms of any employment agreement between you and DFS that may then be in
effect.

        8.    Assignability; Binding Nature.    This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors,
heirs (as applies to you) and permitted assigns. DFS agrees that in the event of
a sale or transfer of assets, it shall take whatever action it legally can to
cause such assignee or transferee to expressly assume DFS's liabilities,
obligations and duties hereunder.

        9.    Governing Law/Jurisdiction.    This Agreement shall be governed by
and construed and interpreted in accordance with the laws of Minnesota without
reference to principles of conflict of laws.

Please acknowledge your acceptance of the terms of this Agreement by executing
below and returning a copy to DFS.

    DEPARTMENT 56, INC.
 
 
By:
       

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    Name:
Title:
 
 
Accepted:
 
 

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Susan E. Engel

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Department 56
Benefit Plans
referred to in
Executive Continuity Agreements

•Group Medical Plan

•Group Dental Plan

•Group Vision Plan

•Section 125 Healthcare Reimbursement Plan (HCRA)

•Section 125 Dependent Care Reimbursement Plan (DCRA)

•Group Life Insurance, including option to purchase supplemental for self and/or
dependent(s)

•Group AD&D Insurance, including option to to supplemental coverage for self
and/or dependent(s)

•Short-Term Disability Income Plan (self-insured)

•Long-Term Disability Income Individual and Group Policies (Northwestern
Mutual), including imputation to current income of employer-paid premium and
corresponding tax reimbursement ("gross-up")

•D 56, Inc. 401k Retirement Savings Plan, including employer-paid match
contribution (100% of first 3% of eligible compensation deferred, 50% of 4th%
and 5th%) and employer-paid profit-sharing contribution (recent historical and
future anticipated at 8% to 10% of compensation)

•Executive Compensation Exchange Plan ("KEYSOP"), including employer-paid match
contribution (2% of gross amount deferred by participant) and employer-paid
profit-sharing contribution (restoring the percentage profit-sharing
contribution contemplated of the D 56, Inc. 401k plan to the extent prohibited
by the 401k rules under that plan or applicable law or regulation (eg, 415
limitation))

•Tuition Reimbursement Program

•Professional Dues, License and Continuing Professional Education Fee
Reimbursement

•Employee D56 Retail Discount Program

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Exhibit A to Executive Continuity Agreement
between Susan Engel and Department 56, Inc.

EMPLOYEE RELEASE

Susan E. Engel ("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 "Executive Continuity
Agreement"), does hereby confirm her agreement and delivery of this Release by
setting forth her signature in the space provided below.

Employee, on behalf of herself and her 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 termination from employment with Company). Employee
understands that this Release is a full, final and complete settlement and
release of all her claims whatsoever.

Employee further agrees that she 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.

ADDITIONALY, 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:

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 any of the Company's applicable insurance policies or any
applicable indemnification agreement or law with respect to suits, demands,
proceedings or other claims arising out of events, occurrences or conduct in
connection with Employee's conduct as a director, officer or employee of the
Company or any of its subsidiaries so long as, with respect to the events,
occurrences or conduct which give rise to any such suit, demand, proceeding or
other claim, Employee acted in good faith in the reasonable belief that
Employee's acts or omissions were in (or not opposed to) the best interest of
the Company, (2) under the Executive Continuity Agreement or (3) 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.

    Date:  

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Susan E. Engel    

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Exhibit B to Executive Continuity Agreement
between Susan Engel and Department 56, Inc.

COMPANY RELEASE

Department 56, Inc. (the "Company"), in consideration for the release by Susan
E. Engel ("Employee") pursuant to the Letter Agreement to which this Release is
annexed as Exhibit B (the "Executive Continuity Agreement"), does hereby confirm
its agreement and delivery of this Release by setting forth the signature of its
duly authorized officer in the space provided below.

Company hereby releases Employee from all liability for damages, claims, and,
demands, whether known or unknown, of any kind, including all claims for costs,
expenses, and attorneys' fees, which the Company, its successors or assigns may
have against Employee; provided, however, that the foregoing release shall not
extend to, and the Company expressly does not release, any claim, known or
unknown, which the Company, its successors or assigns may have against Employee
relating in any way to any misconduct by Employee prior to Employee's
termination of employment which constitutes "Cause" as such term is defined in
the Executive Continuity Agreement.

Department 56, Inc.      
 
 
Date:
 

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Authorized Officer    

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[DEPARTMENT 56 LOGO]

[Date]

«GRANTEE_NAME»
«STREET_ADDRESS»
«CITY_ADDRESS»

Dear «FIRST_NAME»:

In recognition of your contributions to Department 56, Inc. ("DFS" or the
"Company") and the Company's desire to assure your continued services in your
current position in the event of a pending or actual Change in Control (as
defined) of DFS, the Company's Board of Directors is pleased to offer you the
Change of Control protection outlined in this letter agreement ("Agreement").

        1.    Term Of Agreement.    The Term of this Agreement shall commence on
the date of this letter (the "Effective Date") and end on the third anniversary
of such date (the "Original Term"). The Original Term shall be automatically
renewed for successive one-year terms (the "Renewal Terms") unless at least
180 days prior to the expiration of the Original Term or any Renewal Term,
either of us notifies the other in writing that you or we are electing to
terminate this Agreement at the end of the then current Term. "Term" shall mean
the Original Term and all Renewal Terms. If a Change in Control occurs during
the Term, the Term shall not expire earlier than two years from the date of the
Change in Control.

        2.    Entitlement to Severance Benefits.    

        (a)    Cash Severance Benefit.    In the event your employment
terminates under the circumstances specified below in this Section 2(a) (a
"Termination"), you shall be entitled to receive the sum of the following,
payable in a cash lump sum no later than 15 days after the Termination date (the
"Cash Severance Benefit"): (i) your Base Salary through the Termination date;
(ii) an amount equal to [150%] [200%] of the sum of (x) your Base Salary plus
(y) the highest annual cash bonus earned by you during the most recent 3 years;
and (iii) your pro rata annual incentive award at target for the year in which
the Termination occurs.

        A Termination shall occur and the Cash Severance Benefit shall be
payable only if your employment termination occurs—

        (1)  for any reason whatsoever (other than due to death, disability,
retirement at or after age 65 or an involuntary termination for Cause) within
two years following an Unapproved Change in Control; or

        (2)  without Cause or for Good Reason (other than due to death,
disability or retirement at or after age 65), in either case within one year
following an Approved Change in Control.

        Notwithstanding anything in this Agreement to the contrary, if (1) your
employment is involuntarily terminated (x) within four weeks prior to a public
announcement by DFS of an agreement with a third party to effect a Change in
Control which agreement is approved by the DFS Board of Directors in force
immediately prior to such announcement or (y) at any time from the time of such
announcement through the closing of such agreement (or through the consummation
of a Change in Control with or by a party competing with such third party to
effectuate an Approved Change in Control) and (2) such Termination is under
circumstances that would have entitled you to the Cash Severance Benefit if they
had occurred following a Change in Control, then a Change in Control shall be
deemed to have occurred on the date immediately prior to the date of such
involuntary termination for all purposes of this Agreement. Written notice of
involuntary termination shall be given to you by hand or overnight courier
delivery to your most recent address contained in the Company's personnel
records and shall set forth in reasonable detail the relevant facts,
circumstances and effective date of Termination.

        (b)    Other Severance Benefits.    In addition to the benefits provided
in Section 2(a), you shall also be entitled to the following: (i) elimination of
all restrictions on any restricted or deferred

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stock awards outstanding on the Termination date; (ii) immediate vesting of all
outstanding stock options and the right to exercise such stock options for
24 months (or the remainder of the exercise period, if less); (iii) immediate
vesting of all restricted or deferred stock awards and non- qualified retirement
benefits; (iv) continued participation in all DFS benefit plans (described on
annexed sheet) at the same benefit level at which you were participating on the
Termination date for a period of 24 months unless and until the date or dates
you receive substantially equivalent coverage from a subsequent employer.
Notwithstanding anything in this Agreement to the contrary, (1) you shall be
entitled to exchange any or all of the Cash Severance Benefit for options to
purchase mutual fund shares pursuant to the D56, Inc. Executive Compensation
Exchange Plan ("KEYSOP") at the time the Cash Severance Benefit would otherwise
be payable to you, and (2) except for your right provided in clause (1) of this
sentence, your right to continued participation in the D 56, Inc. 401(k)
Retirement Savings Plan and in the KEYSOP pursuant to clause (iv) of this
Section 2(b) shall be subject to the eligibility and other terms and conditions
of such plans as they are in effect immediately prior to the Change in Control
giving rise to the Cash Severance Benefit becoming payable to you under this
Agreement.

        (c)    Section 280(G) Gross-Up Protection.    In the event you become
entitled to payments or benefits, all or a portion of which become subject to
tax imposed under Section 4999 of the Internal Revenue Code of 1986 as amended
(the "Code") or any other similar tax, but not income tax of any nature
(collectively, "Excise Tax"), DFS shall pay you an additional amount ("Gross-Up
Payment") such that the amount retained by you after reduction for any Excise
Tax (including penalties or interest thereon) equals the amount to be paid to
you by DFS hereunder prior to the imposition of such Excise Tax ("Total
Payments"), provided that in the event the amount to be retained after
imposition of the Excise tax is equal to or exceeds 80% of the Total Payments,
no such Gross-Up payment shall be made to you by DFS. The amount of the Gross-Up
Payment shall include the amount of all federal, state and local income taxes
(including, without limitation, Excise Tax) imposed on the Gross-Up Payment at
the maximum marginal rates then in effect and shall be calculated by DFS'
independent auditors. In the event that such Gross-Up Payment is finally
determined to be less than the amount necessary to achieve the purposes of this
paragraph, DFS shall pay an additional amount to you in respect of such
deficiency (including any interest and penalties). In the event that such
Gross-Up Payment is finally determined to exceed the amount necessary to achieve
the purposes of this paragraph, you must promptly repay the entire amount of
such excess Gross-Up Payment to DFS.

        (d)    No Mitigation; No Offset.    In the event of any Termination, you
shall be under no obligation to seek other employment; and no amounts due to you
under this Agreement shall be subject to offset due to any remuneration
attributable to subsequent employment that you may obtain.

        (e)    Release.    Termination payments and benefits to be made to you
hereunder are conditioned upon your execution of a release in the form attached
as Exhibit A to this Agreement. Upon the Company's receipt of such release
executed by you, the Company will provide to you an executed copy of the release
attached as Exhibit B to this Agreement.

        3.    Definitions.    For purposes of this Agreement, the following
terms shall have the meanings ascribed to them.

        (a)  An "Approved Change in Control" is any Change in Control that is
approved by the DFS Board of Directors in force immediately prior to the Change
in Control.

        (b)  "Base Salary" means the annualized rate of pay in effect on the
Termination date, provided that if a reduction in Base Salary is the basis for a
Termination for Good Reason, then "Base Salary" shall mean the rate of pay in
effect immediately prior to such reduction.

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        (c)  "Cause" shall exist if: (i) you are convicted of, or plead nolo
contendere to, any felony which materially and adversely impacts DFS' financial
condition or reputation, (ii) you engage in conduct that constitutes willful
gross neglect or willful gross misconduct in carrying out your duties which
materially and adversely impacts DFS' financial condition or reputation, or
(iii) you violate Section 4 of this Agreement prior to Termination and that is
the sole basis for your involuntary Termination.

        (d)  A "Change in Control" shall be deemed to occur upon any of the
following: (i) acquisition by any one "person" (as such term is defined in
§3(a)(9) of the Securities and Exchange Act of 1934, as amended, and used in
§13(d) and 14(d) thereof, including "group" as defined in §13(d) thereof) of 20%
or more of DFS' voting shares, (ii) directors elected to the DFS Board of
Directors over any 24 month period not nominated by the DFS Nominating Committee
represent 30% or more of the total number of directors constituting the DFS
Board of Directors at the beginning of the period (for these purposes, a
director "not nominated by the DFS Nominating Committee" shall include, without
limitation, any individual(s) whose nomination results from an actual or
threatened proxy contest or whose initial assumption of office as a director
occurs as a result of an actual or threatened proxy contest or other actual or
threatened solicitation or execution of proxies or consents by or on behalf of
any "person(s)" other than the Company or the DFS Board of Directors); (iii) any
merger, consolidation or other corporate combination upon the completion of
which DFS shares do not represent more than 50% of the combined voting power of
the resulting entity; and (iv) upon the sale of all or substantially all of the
consolidated assets of DFS, other than a distribution to shareholders.

        (e)  "Confidential Information" shall mean all information concerning
the business of DFS relating to any of its products, product development, trade
secrets, customers, suppliers, finances, and business plans and strategies.
Excluded from the definition of "Confidential Information" is information
(i) that is or becomes part of the public domain, other than through your breach
of this Agreement, or (ii) regarding DFS' business or industry properly acquired
by you in the course of your career as an employee in DFS' industry and
independent of your employment by DFS. For this purpose, information known or
available generally within the trade or industry of DFS shall be deemed to be
known or available to the public.

        (f)    "Good Reason" shall mean your termination of your employment
based upon one or more of the following events (except as a result of a prior
termination): (i) any material change (except a change in reporting
relationship) in your position, responsibilities or assignment of duties
materially inconsistent with your status prior to the Change of Control;
(ii) any decrease in your Base Salary, target annual incentive or long term
incentive award opportunity, or equity grants; (iii) any breach of the terms of
this Agreement by DFS after receipt of written notice from you and a reasonable
opportunity to cure such breach; (iv) DFS fails to obtain any successor entity's
assumption of its obligations to you hereunder; or (v) upon relocation of you to
a location more than 50 miles from our current headquarters.

        (g)  An "Unapproved Change in Control" is any Change in Control that is
not approved by the DFS Board of Directors in force immediately prior to the
Change in Control.

        4.    Non-Disclosure; Non-Solicitation; Non-Disparagement.    

        (a)  During the Term and thereafter, you shall not, without DFS' prior
written consent disclose to anyone (except in good faith in the ordinary course
of business) or make use of any Confidential Information except in the
performance of your duties hereunder or when required to do so by law. In the
event that you are so ordered, you shall give prompt written notice to DFS
sufficient to allow DFS the opportunity to object to or otherwise resist such
order.

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        (b)  During the Term and for a period of 24 months thereafter, you shall
not, without DFS' prior written consent, solicit for employment, whether
directly or indirectly, any person who at the time is employed by DFS or any
affiliate.

        (c)  You agree that, during the Term and thereafter (including following
any Termination for any reason) you will not make statements or representations,
or otherwise communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may, directly or indirectly, disparage or be
damaging to DFS or its respective officers, directors, employees, advisors,
businesses or reputations. Notwithstanding the foregoing, nothing in this
Agreement shall preclude you from making truthful statements or disclosures that
are required by applicable law, regulation or legal process.

        5.    Resolution of Disputes.    Any controversy or claim arising out of
or relating to this Agreement or any breach or asserted breach hereof shall be
resolved by binding arbitration, to be held at an office closest to DFS'
principal offices in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court of competent jurisdiction. Pending the resolution of
any arbitration or court proceeding, DFS shall continue payment of all amounts
and benefits due you hereunder. All reasonable costs and expenses of any
arbitration or court proceeding (including fees and disbursements of counsel)
shall be promptly paid on your behalf by DFS; provided, however, that no such
expense reimbursement shall be made if and to the extent the arbitrator(s)
determine(s) that any of your litigation assertions or defenses were in bad
faith or frivolous.

        6.    Effect of Agreement on Other Benefits; Complete
Agreement.    Except as specifically provided in this Agreement, the existence
of this Agreement shall not be interpreted to prohibit or restrict your
participation in any other employee benefit or other plans or programs in which
you currently participate. This is the entire agreement between you and DFS with
respect to, and supersedes all prior arrangements concerning, the subject matter
of this Agreement.

        7.    Not an Employment Agreement.    This Agreement is not a contract
of employment between you and DFS. DFS may terminate you at any time, subject to
the terms of any employment agreement between you and DFS that may then be in
effect.

        8.    Assignability; Binding Nature.    This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors,
heirs (as applies to you) and permitted assigns. DFS agrees that in the event of
a sale or transfer of assets, it shall take whatever action it legally can to
cause such assignee or transferee to expressly assume DFS's liabilities,
obligations and duties hereunder.

        9.    Governing Law/Jurisdiction.    This Agreement shall be governed by
and construed and interpreted in accordance with the laws of Minnesota without
reference to principles of conflict of laws.

Please acknowledge your acceptance of the terms of this Agreement by executing
below and returning a copy to DFS.

    DEPARTMENT 56, INC.
 
 
By:
       

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Authorized Signatory
 
 
Accepted:
 
 

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«GRANTEE_NAME»

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Department 56
Benefit Plans
referred to in
Executive Continuity Agreements

•Group Medical Plan

•Group Dental Plan

•Group Vision Plan

•Section 125 Healthcare Reimbursement Plan (HCRA)

•Section 125 Dependent Care Reimbursement Plan (DCRA)

•Group Life Insurance, including option to purchase supplemental for self and/or
dependent(s)

•Group AD&D Insurance, including option to to supplemental coverage for self
and/or dependent(s)

•Short-Term Disability Income Plan (self-insured)

•Long-Term Disability Income Individual and Group Policies (Northwestern
Mutual), including imputation to current income of employer-paid premium and
corresponding tax reimbursement ("gross-up")

•D 56, Inc. 401k Retirement Savings Plan, including employer-paid match
contribution (100% of first 3% of eligible compensation deferred, 50% of 4th%
and 5th%) and employer-paid profit-sharing contribution (recent historical and
future anticipated at 8% to 10% of cash compensation)

•Executive Compensation Exchange Plan ("KEYSOP"), including employer-paid match
contribution (2% of gross amount deferred by participant) and employer-paid
profit-sharing contribution (restoring the percentage profit-sharing
contribution contemplated of the D 56, Inc. 401k plan to the extent prohibited
by the 401k rules under that plan or applicable law or regulation (eg, 415
limitation))

•Tuition Reimbursement Program

•Professional Dues, License and Continuing Professional Education Fee
Reimbursement

•Employee D56 Retail Discount Program

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Exhibit A to Executive Continuity Agreement
between «GRANTEE_NAME» and Department 56, Inc.

EMPLOYEE RELEASE

«GRANTEE_NAME» ("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 "Executive Continuity
Agreement"), does hereby confirm her/his agreement and delivery of this Release
by setting forth her/his signature in the space provided below.

Employee, on behalf of herself/himself and her/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 termination from employment with Company). Employee
understands that this Release is a full, final and complete settlement and
release of all her/his claims whatsoever.

Employee further agrees that s/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.

ADDITIONALY, 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:

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 any of the Company's applicable insurance policies or any
applicable indemnification agreement or law with respect to suits, demands,
proceedings or other claims arising out of events, occurrences or conduct in
connection with Employee's conduct as a director, officer or employee of the
Company or any of its subsidiaries so long as, with respect to the events,
occurrences or conduct which give rise to any such suit, demand, proceeding or
other claim, Employee acted in good faith in the reasonable belief that
Employee's acts or omissions were in (or not opposed to) the best interest of
the Company, (2) under the Executive Continuity Agreement or (3) 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.

    Date:  

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«GRANTEE_NAME»    

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Exhibit B to Executive Continuity Agreement
between «GRANTEE_NAME» and Department 56, Inc.

COMPANY RELEASE

Department 56, Inc. (the "Company"), in consideration for the release by
«GRANTEE_NAME» ("Employee") pursuant to the Letter Agreement to which this
Release is annexed as Exhibit B (the "Executive Continuity Agreement"), does
hereby confirm its agreement and delivery of this Release by setting forth the
signature of its duly authorized officer in the space provided below.

Company hereby releases Employee from all liability for damages, claims, and,
demands, whether known or unknown, of any kind, including all claims for costs,
expenses, and attorneys' fees, which the Company, its successors or assigns may
have against Employee; provided, however, that the foregoing release shall not
extend to, and the Company expressly does not release, any claim, known or
unknown, which the Company, its successors or assigns may have against Employee
relating in any way to any misconduct by Employee prior to Employee's
termination of employment which constitutes "Cause" as such term is defined in
the Executive Continuity Agreement.

Department 56, Inc.      
 
 
Date:
 

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Authorized Officer    

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QuickLinks

Exhibit 10.14

Department 56 Benefit Plans referred to in Executive Continuity Agreements
Exhibit A to Executive Continuity Agreement between Susan Engel and Department
56, Inc. EMPLOYEE RELEASE
Exhibit B to Executive Continuity Agreement between Susan Engel and Department
56, Inc. COMPANY RELEASE
Department 56 Benefit Plans referred to in Executive Continuity Agreements
Exhibit A to Executive Continuity Agreement between «GRANTEE_NAME» and
Department 56, Inc. EMPLOYEE RELEASE
Exhibit B to Executive Continuity Agreement between «GRANTEE_NAME» and
Department 56, Inc. COMPANY RELEASE