EXHIBIT 10.11

DEPARTMENT 56, INC.

2004 STOCK INCENTIVE PLAN
(AS ADOPTED FEBRUARY 18, 2004)

1.     Purpose of the Plan

        This Department 56, Inc. 2004 Stock Incentive Plan is intended to
promote the interests of the Company and its shareholders by providing the
employees and consultants of the Company and eligible non-employee directors of
Department 56, Inc., who are largely responsible for the management, growth and
protection of the business of the Company, with incentives and rewards to
encourage them to continue in the service of the Company. The Plan is designed
to meet this intent by providing such employees, consultants and eligible
non-employee directors with a proprietary interest in pursuing the long-term
growth, profitability and financial success of the Company.

2.     Definitions

        As used in the Plan, the following definitions apply to the terms
indicated below:

        (a)        “Board of Directors” means the Board of Directors of
Department 56, Inc.

        (b)        “Change in Control” means the occurrence of any of the
following:

        (i)        Any Person becoming the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act, a “Beneficial Owner”) of
fifty-one percent (51%) or more of the combined voting power of Department 56‘s
then outstanding voting securities (“Voting Securities”); provided, however that
a Change in Control shall not be deemed to occur by reason of an acquisition of
Voting Securities directly from Department 56 or by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (A) Department 56 or any
Person of which a majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by Department 56 (the “D56
Group”), (B) any member of the D56 Group, or (C) any Person in connection with a
Non-Control Transaction (as such term is hereinafter defined);

        (ii)        The individuals who, as of February 18, 2004, are members of
the Board of Directors (the “Incumbent Board”), cease for any reason to
constitute at least two-thirds of the members of the Board of Directors;
provided, however that if the election, or nomination for election by Department
56‘s common stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes of the
Plan, be considered as a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of an actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a “Proxy Contest”) including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or

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        (iii)        The consummation of:

                       (A)        A merger, consolidation or reorganization with
or into Department 56 or in which securities of Department 56 are issued, unless
such merger, consolidation or reorganization is a “Non-Control Transaction.” A
“Non-Control Transaction” is a merger, consolidation or reorganization with or
into Department 56 or in which securities of Department 56 are issued where:

                                (I)       the stockholders of Department 56,
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger or
consolidation or reorganization (the “Surviving Corporation”) in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,

                                (II)        the individuals who were members of
the Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the Surviving
Corporation, or a corporation beneficially owning a majority of the voting
securities of the Surviving Corporation,

                                (III)        no Person other than (1) any member
of the D56 Group, (2) any employee benefit plan (or any trust forming a part
thereof) maintained immediately prior to such merger, consolidation or
reorganization by any member of the D56 Group, or (3) any Person who,
immediately prior to such merger, consolidation or reorganization Beneficially
Owns fifty-one percent (51%) or more of the then outstanding Voting Securities,
owns, directly or indirectly, fifty-one percent (51%) or more of the combined
voting power of the Surviving Corporation’s voting securities outstanding
immediately following such transaction;

                        (B)        A complete liquidation or dissolution of the
Company; or

                       (C)        The sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
member of the D56 Group).

                       Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any Person (the “Subject Person”) becomes
the Beneficial Owner of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Persons,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Company,
and after such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.

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        (c)        “Code” means the Internal Revenue Code of 1986, as amended
from time to time.

        (d)        “Committee” means the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan and to otherwise exercise and perform the
authority and functions assigned to the Committee under the terms of the Plan.

        (e)        “Common Stock” means Department 56‘s Common Stock, $.01 par
value per share, or any other security into which the common stock shall be
changed pursuant to the adjustment provisions of Section 10 of the Plan.

        (f)        “Company” means Department 56 and each of its Subsidiaries,
collectively.

        (g)        “Covered Employee” means a Participant who at the time of
reference is a “covered employee” as defined in Code Section 162(m) and the
regulations promulgated under Code Section 162(m), or any successor statute.

        (h)        “Director” means a member of the Board of Directors who is
not at the time of reference an employee of the Company.

        (i)        “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

        (j)        “Fair Market Value” means, with respect to a share of Common
Stock, as of the applicable date of determination (i) the average of the high
and low sales prices on the immediately preceding business day of a share of
Common Stock as reported on the principal securities exchange on which shares of
Common Stock are then listed or admitted to trading or (ii) if not so reported,
the average of the closing bid and ask prices on the immediately preceding
business day as reported on the National Association of Securities Dealers
Automated Quotation System or (iii) if not so reported, as furnished by any
member of the National Association of Securities Dealers, Inc. selected by the
Committee. In the event that the price of a share of Common Stock shall not be
so reported, the Fair Market Value of a share of Common Stock shall be
determined by the Committee in its absolute discretion.

        (k)        “Incentive Award” means an Option, SAR or Other Stock-Based
Award granted to a Participant pursuant to the terms of the Plan.

        (l)        “Option” means a non-qualified stock option to purchase
shares of Common Stock granted to a Participant pursuant to Section 6.

        (m)        “Other Stock-Base Award” means an equity or equity-related
award granted to a Participant pursuant to Section 8.

        (n)        “Participant” means a Director, employee or consultant of the
Company who is eligible to participate in the Plan and to whom one or more
Incentive Awards have been granted pursuant to the Plan and, following the death
of any such employee, his successors, heirs, executors and administrators, as
the case may be.

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        (o)        “Performance-Based Compensation” means compensation that
satisfies the requirements of Section 162(m) of the Code for deductibility of
remuneration paid to Covered Employees.

        (p)        “Performance Measures” means such measures as are described
in Section 9 on which performance goals are based in order to qualify certain
awards granted hereunder as Performance-Based Compensation.

        (q)        “Performance Period” means the period of time during which
the performance goals must be met in order to determine the degree of payout
and/or vesting with respect to an Incentive Award that is intended to qualify as
Performance-Based Compensation.

        (r)        “Permitted Acceleration Event” means (i) with respect to any
Incentive Award that is subject to performance-based vesting, the full or
partial vesting of such Incentive Award based on satisfaction of the applicable
performance-based conditions, (ii) the occurrence of a Change in Control or an
event described in Section 10(b), (c) or (d) or (iii) any termination of the
employment of a Participant, other than a termination for cause (as defined by
the Committee) or voluntary termination prior to retirement (as defined by the
Committee).

        (s)        “Person” means a “person” as such term is used in Section
13(d) and 14(d) of the Exchange Act.

        (t)        “Plan” means this Department 56, Inc. 2004 Stock Incentive
Plan, as it may be amended from time to time.

        (u)        “Prior Plans” mean the Department 56, Inc. 1995 Stock
Incentive Plan, Department 56, Inc. 1997 Stock Incentive Plan and the Department
56, Inc. 2001 Non-Officer Stock Option Plan.

        (v)        “SAR” means a stock appreciation right granted to a
Participant pursuant to Section 7.

        (w)        “Securities Act” means the Securities Act of 1933, as
amended.

        (x)        “Department 56” means Department 56, Inc., a Delaware
corporation, and any successor thereto.

        (y)        “Subsidiary” means any “subsidiary corporation” within the
meaning of Section 424(f) of the Code.

3.     Stock Subject to the Plan

        (a)        In General

        Subject to adjustment as provided in Section 10 and the following
provisions of this Section 3, the maximum number of shares of Common Stock that
may be covered by Incentive Awards granted under the Plan shall not exceed the
sum of (A) 1,000,000 shares of Common

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Stock, (B) shares of Common Stock available to be issued under the Prior Plans
on the date hereof and (C) any shares of Common Stock subject to an outstanding
Option or Award (as such terms are defined in the Prior Plans) under the Prior
Plans on the date hereof that, after the date hereof, would have become
available under the Prior Plans pursuant to Section 4.3 of any of the Prior
Plans had the Prior Plans not been succeeded by the Plan. Shares of Common Stock
issued under the Plan may be either authorized and unissued shares or treasury
shares, or both, at the discretion of the Committee.

        For purposes of the preceding paragraph, shares of Common Stock covered
by Incentive Awards shall only be counted as used to the extent they are
actually issued and delivered to a Participant (or such Participant’s permitted
transferees as described in the Plan) pursuant to the Plan. For purposes of
clarification, in accordance with the preceding sentence if an Incentive Award
is settled for cash or if shares of Common Stock are withheld to pay the
exercise price of an Option or to satisfy any tax withholding requirement in
connection with an Incentive Award only the shares issued (if any), net of the
shares withheld, will be deemed delivered for purposes of determining the number
of shares of Common Stock that are available for delivery under the Plan. In
addition, if shares of Common Stock are issued subject to conditions which may
result in the forfeiture, cancellation or return of such shares to the Company,
any portion of the shares forfeited, cancelled or returned shall be treated as
not issued pursuant to the Plan. In addition, if shares of Common Stock owned by
a Participant (or such Participant’s permitted transferees as described in the
Plan) are tendered (either actually or through attestation) to the Company in
payment of any obligation in connection with an Incentive Award, the number of
shares tendered shall be added to the number of shares of Common Stock that are
available for delivery under the Plan. In addition, if the Company uses cash
received by the Company in payment of the exercise price or purchase price in
connection with any Incentive Award granted pursuant to the Plan to repurchase
shares of Common Stock from any Person, the shares so repurchased will be added
to the aggregate number of shares available for delivery under the Plan. For
purposes of the preceding sentence, shares of Common Stock repurchased by the
Company shall be deemed to have been repurchased using such funds only to the
extent that such funds have actually been previously received by the Company and
that the Company promptly designates in its books and records that such
repurchase was paid for with such funds. Shares of Common Stock covered by
Incentive Awards granted pursuant to the Plan in connection with the assumption,
replacement, conversion or adjustment of outstanding equity-based awards in the
context of a corporate acquisition or merger (within the meaning of Section
303A.08 of the New York Stock Exchange Listed Company Manual) shall not count as
used under the Plan for purposes of this Section 3.

        Subject to adjustment as provided in Section 10, the maximum number of
shares of Common Stock that may be covered by Incentive Awards granted under the
Plan to any single Participant in any fiscal year of the Company shall not
exceed 300,000 shares, prorated on a daily basis for any fiscal year of the
Company that is shorter than 365 days.

        (b)        Prohibition on Substitutions and Repricings

        In no event shall any new Incentive Awards be issued in substitution for
outstanding Incentive Awards previously granted to Participants, nor shall any
repricing (within the meaning

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of US generally accepted accounting practices or any applicable stock exchange
rule) of Incentive Awards issued under the Plan be permitted at any time under
any circumstances, in each case unless the shareholders of the Company expressly
approve such substitution or repricing.

4.     Administration of the Plan

        The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, at least two of whom qualify as non-employee
directors (within the meaning of Rule 16b-3 promulgated under Section 16 of the
Exchange Act), and as “outside directors” within the meaning of Treasury
Regulation Section 1.162-27(e)(3). The Committee shall, consistent with the
terms of the Plan, from time to time designate those who shall be granted
Incentive Awards under the Plan and the amount, type and other terms and
conditions of such Incentive Awards. All of the powers and responsibilities of
the Committee under the Plan may be delegated by the Committee, in writing, to
any subcommittee thereof. In addition, the Committee may from time to time
authorize a committee consisting of one or more Directors to grant Incentive
Awards to persons who are not “executive officers” of Department 56 (within the
meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and
limitation as the Committee may specify. In addition, the Board of Directors
may, consistent with the terms of the Plan, from time to time grant Incentive
Awards to Directors.

        The Committee shall have full discretionary authority to administer the
Plan, including discretionary authority to interpret and construe any and all
provisions of the Plan and the terms of any Incentive Award (and any agreement
evidencing any Incentive Award) granted thereunder and to adopt and amend from
time to time such rules and regulations for the administration of the Plan as
the Committee may deem necessary or appropriate. Without limiting the generality
of the foregoing, (i) the Committee shall determine whether an authorized leave
of absence, or absence in military or government service, shall constitute
termination of employment and (ii) the employment of a Participant with the
Company shall be deemed to have terminated for all purposes of the Plan if such
person is employed by or provides services to a Person that is a Subsidiary of
the Company and such Person ceases to be a Subsidiary of the Company, unless the
Committee determines otherwise. Decisions of the Committee shall be final,
binding and conclusive on all parties.

        On or after the date of grant of an Incentive Award under the Plan, the
Committee may (i) accelerate the date on which any such Incentive Award becomes
vested, exercisable or transferable, as the case may be, (ii) extend the term of
any such Incentive Award, including, without limitation, extending the period
following a termination of a Participant’s employment during which any such
Incentive Award may remain outstanding, (iii) waive any conditions to the
vesting, exercisability or transferability, as the case may be, of any such
Incentive Award or (iv) provide for the payment of dividends or dividend
equivalents with respect to any such Incentive Award.

        No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and Department 56 shall indemnify and hold
harmless each member of the

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Committee and each other director or employee of the Company to whom any duty or
power relating to the administration or interpretation of the Plan has been
delegated against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Committee) arising out of any action, omission or determination relating to the
Plan, unless, in either case, such action, omission or determination was taken
or made by such member, director or employee in bad faith and without reasonable
belief that it was in the best interests of the Company.

5.     Eligibility

        The Persons who shall be eligible to receive Incentive Awards pursuant
to the Plan shall be those Directors, consultants and employees of the Company
whom the Committee shall select from time to time, including those key employees
(including officers of Department 56, whether or not they are directors of
Department 56) who are largely responsible for the management, growth and
protection of the business of the Company. All Incentive Awards granted under
the Plan shall be evidenced by a separate written agreement entered into by the
Company and the recipient of such Incentive Award.

6.     Options

        The Committee may from time to time grant Options, subject to the
following terms and conditions:

        (a)        Exercise Price

        The exercise price per share of Common Stock covered by any Option shall
be not less than 100% of the Fair Market Value of a share of Common Stock on the
date on which such Option is granted.

        (b)        Term and Exercise of Options

        (1)        Each Option shall become vested and exercisable on such date
or dates, during such period and for such number of shares of Common Stock as
shall be determined by the Committee on or after the date such Option is
granted; provided, however that no Option shall be exercisable after the
expiration of ten years from the date such Option is granted; provided, further
that no Option shall become exercisable earlier than one year after the date on
which it is granted, other than upon the occurrence of a Permitted Acceleration
Event; and, provided, further, that each Option shall be subject to earlier
termination, expiration or cancellation as provided in the Plan or in the
agreement evidencing such Option.

        (2)        Each Option may be exercised in whole or in part; provided,
however that no partial exercise of an Option shall be for an aggregate exercise
price of less than $1,000. The partial exercise of an Option shall not cause the
expiration, termination or cancellation of the remaining portion thereof.

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        (3)        An Option shall be exercised by such methods and procedures
as the Committee determines from time to time, including without limitation
through net physical settlement or other method of cashless exercise.

        (4)        Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of a
Participant, only by the Participant; provided, however that the Committee may
permit Options to be sold, sold, pledged, assigned, hypothecated, transferred,
or disposed of, on a general or specific basis, subject to such conditions and
limitations as the Committee may determine.

        (c)        Effect of Termination of Employment or other Relationship

        The agreement evidencing the award of each Option shall specify the
consequences with respect to such Option of the termination of the employment,
service as a director or other relationship between the Company and the
Participant holding the Option.

        (d)        Effect of Change in Control

        Upon the occurrence of a Change in Control, each Option outstanding at
such time shall become fully and immediately vested and exercisable and shall
remain exercisable until its expiration, termination or cancellation pursuant to
the terms of the Plan and the agreement evidencing such Option.

7.     Stock Appreciation Rights

        The Committee may from time to time grant SARs, subject to the following
terms and conditions:

        (a)        Stand-Alone and Tandem; Cash and Stock-Settled

        SARs may be granted on a stand-alone basis or in tandem with an Option.
Tandem SARs may be granted contemporaneously with or after the grant of the
Options to which they relate. SARs may be settled in shares of Common Stock or
in cash.

        (b)        Exercise Price

        The exercise price per share of Common Stock covered by any SAR shall be
not less than 100% of the Fair Market Value of a share of Common Stock on the
date on which such SAR is granted; provided, however that the exercise price of
an SAR that is tandem to an Option and that is granted after the grant of such
Option may have an exercise price less than 100% of the Fair Market Value of a
share of Common Stock on the date on which such SAR is granted provided that
such exercise price is at least equal to the exercise price of the related
Option.

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        (c)        Benefit Upon Exercise

        The exercise of an SAR with respect to any number of shares of Common
Stock prior to the occurrence of a Change in Control shall entitle the
Participant to (i) a cash payment, for each such share, equal to the excess of
(A) the Fair Market Value of a share of Common Stock on the effective date of
such exercise over (B) the per share exercise price of the SAR, (ii) the
issuance or transfer to the Participant of the greatest number of whole shares
of Common Stock which on the date of the exercise of the SAR have an aggregate
Fair Market Value equal to such excess or (iii) a combination of cash and shares
of Common Stock in amounts equal to such excess, as determined by the Committee.
The exercise of an SAR with respect to any number of shares of Common Stock upon
or after the occurrence of a Change in Control shall entitle the Participant to
a cash payment, for each such share, equal to the excess of (i) the greater of
(A) the highest price per share of Common Stock paid in connection with such
Change in Control and (B) the Fair Market Value of a share of Common Stock on
the effective date of exercise over (ii) the per share exercise price of the
SAR. Such payment, transfer or issuance shall occur as soon as practical, but in
no event later than five business days, after the effective date of exercise.

        (d)        Term and Exercise of SARs

        (1)        Each SAR shall become vested and exercisable on such date or
dates, during such period and for such number of shares of Common Stock as shall
be determined by the Committee on or after the date such SAR is granted;
provided, however that no SAR shall be exercisable after the expiration of ten
years from the date such Option is granted; provided, further that no SAR shall
become exercisable earlier than one year after the date on which it is granted,
other than upon the occurrence of a Permitted Acceleration Event; and, provided,
further, that each SAR shall be subject to earlier termination, expiration or
cancellation as provided in the Plan or in the agreement evidencing such Option.

        (2)        Each SAR may, to the extent vested and exercisable, be
exercised in whole or in part; provided, however that no partial exercise of an
SAR shall be for an aggregate exercise price of less than $1,000. The partial
exercise of an SAR shall not cause the expiration, termination or cancellation
of the remaining portion thereof.

        (3)        An SAR shall be exercised by such methods and procedures as
the Committee determines from time to time.

        (4)        SARs may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of a
Participant, only by the Participant; provided, however that the Committee may
permit SARs to be sold, sold, pledged, assigned, hypothecated, transferred, or
disposed of, on a general or specific basis, subject to such conditions and
limitations as the Committee may determine.

        (5)        The exercise with respect to a number of shares of Common
Stock of an SAR granted in tandem with an Option shall cause the immediate
cancellation of the Option with respect to the same number of shares. The
exercise with respect to a number of shares of

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Common Stock of an Option to which a tandem SAR relates shall cause the
immediate cancellation of the SAR with respect to an equal number of shares.

        (e)        Effect of Termination of Employment or other Relationship

        The agreement evidencing the award of each SAR shall specify the
consequences with respect to such SAR of the termination of the employment,
service as a director or other relationship between the Company and Participant
holding the SAR.

        (f)        Effect of Change in Control

        Upon the occurrence of a Change in Control, each SAR outstanding at such
time shall become fully and immediately vested and exercisable and shall remain
exercisable until its expiration, termination or cancellation pursuant to the
terms of the Plan and the agreement evidencing such SAR.

8.     Other Stock-Based Awards

        The Committee may grant equity-based or equity-related awards not
otherwise described herein in such amounts and subject to such terms and
conditions as the Committee shall determine. Without limiting the generality of
the preceding sentence, each such Other Stock-Based Award may (i) involve the
transfer of actual shares of Common Stock to Participants, either at the time of
grant or thereafter, or payment in cash or otherwise of amounts based on the
value of shares of Common Stock, (ii) be subject to performance-based and/or
service-based conditions, (iii) be in the form of phantom stock, restricted
stock, restricted stock units, performance shares, or share-denominated
performance units and (iv) be designed to comply with applicable laws of
jurisdictions other than the United States. Notwithstanding anything in this
Section 8, no Other Stock-Based Award shall vest or otherwise become payable
earlier than three years following the date on which it is granted, other than
upon the occurrence of a Permitted Acceleration Event.

9.     Performance Measures

        (a)        Performance Measures

        The performance goals upon which the payment or vesting of any Incentive
Award (other than Options and SARs) to a Covered Employee that is intended to
qualify as Performance-Based Compensation depends shall relate to one or more of
the following Performance Measures: revenue growth, operating income, operating
cash flow, net income, earnings per share, return on sales, return on assets,
return on equity, return on invested capital and total shareholder return.

        Performance Periods may be equal to or longer than, but not less than,
one fiscal year of the Company and may be overlapping. Within 90 days after the
beginning of a Performance Period, and in any case before 25% of the Performance
Period has elapsed, the Committee shall establish (a) performance goals and
objectives for the Company for such Performance Period,

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(b) target awards for each Participant, and (c) schedules or other objective
methods for determining the applicable performance percentage to be applied to
each such target award.

        The measurement of any Performance Measure(s) may exclude the impact of
charges for restructurings, discontinued operations, extraordinary items, and
other unusual or non-recurring items, and the cumulative effects of accounting
changes, each as defined by generally accepted accounting principles and as
identified in the Company’s audited financial statements, including the notes
thereto. Any Performance Measure(s) may be used to measure the performance of
the Company or a Subsidiary as a whole or any business unit of the Company or
any Subsidiary or any combination thereof, as the Committee may deem
appropriate, or any of the above Performance Measures as compared to the
performance of a group of comparator companies, or a published or special index
that the Committee, in its sole discretion, deems appropriate.

        Nothing in this Section 9 is intended to limit the Committee’s
discretion to adopt conditions with respect to any Incentive Award that is not
intended to qualify as Performance-Based Compensation that relate to performance
other than the Performance Measures. In addition, the Committee may, subject to
the terms of the Plan, amend previously granted Incentive Awards in a way that
disqualifies them as Performance-Based Compensation.

        (b)        Committee Discretion

        In the event that the requirements of Section 162(m) and the regulations
thereunder change to permit Committee discretion to alter the Performance
Measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval.

10.   Adjustment Upon Changes in Common Stock

        (a)        Shares Available for Grants

        In the event of any change in the number of shares of Common Stock
outstanding by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum aggregate number of shares of Common Stock with respect to which the
Committee may grant Incentive Awards and the maximum aggregate number of shares
of Common Stock with respect to which the Committee may grant Incentive Awards
to any individual Participant in any year shall be appropriately adjusted by the
Committee. In the event of any change in the number of shares of Common Stock
outstanding by reason of any other similar event or transaction, the Committee
may, but need not, make such adjustments in the number and class of shares of
Common Stock with respect to which Incentive Awards may be granted as the
Committee may deem appropriate.

        (b)        Increase or Decrease in Issued Shares Without Consideration

        Subject to any required action by the shareholders of Department 56, in
the event of any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but

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only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt or payment of consideration by
the Company, the Committee shall proportionally adjust the number of shares of
Common Stock subject to each outstanding Incentive Award and the exercise price
per share of Common Stock of each such Incentive Award.

        (c)        Certain Mergers

        Subject to any required action by the shareholders of Department 56, in
the event that Department 56 shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Incentive Award outstanding on the date of such merger or consolidation shall
pertain to and apply to the securities which a holder of the number of shares of
Common Stock subject to such Incentive Award would have received in such merger
or consolidation.

       (d)        Certain Other Transactions

        In the event of (i) a dissolution or liquidation of Department 56, (ii)
a sale of all or substantially all of Department 56‘s assets, (iii) a merger or
consolidation involving Department 56 in which Department 56 is not the
surviving corporation or (iv) a merger or consolidation involving Department 56
in which Department 56 is the surviving corporation but the holders of shares of
Common Stock receive securities of another corporation and/or other property,
including cash, the Committee shall, in its absolute discretion, have the power
to:

             (i)        cancel, effective immediately prior to the occurrence of
such event, each Incentive Award (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Participant to whom such
Incentive Award was granted an amount in cash, for each share of Common Stock
subject to such Incentive Award equal to the value, as determined by the
Committee in its reasonable discretion, of such Incentive Award, provided that
with respect to any outstanding Option or SAR such value shall be equal to the
excess of (A) the value, as determined by the Committee in its reasonable
discretion, of the property (including cash) received by the holder of a share
of Common Stock as a result of such event over (B) the exercise price of such
Option or SAR; or

             (ii)        provide for the exchange of each Incentive Award
(whether or not then exercisable or vested) for an incentive award with respect
to, as appropriate, some or all of the property which a holder of the number of
shares of Common Stock subject to such Incentive Award would have received in
such transaction and, incident thereto, make an equitable adjustment as
determined by the Committee in its reasonable discretion in the exercise price
of the incentive award, or the number of shares or amount of property subject to
the incentive award or, if appropriate, provide for a cash payment to the
Participant to whom such Incentive Award was granted in partial consideration
for the exchange of the Incentive Award.

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        (e)        Other Changes

        In the event of any change in the capitalization of Department 56 or
corporate change other than those specifically referred to in paragraphs (b),
(c) or (d), the Committee may, in its absolute discretion, make such adjustments
in the number and class of shares subject to Incentive Awards outstanding on the
date on which such change occurs and in such other terms of such Incentive
Awards as the Committee may consider appropriate to prevent dilution or
enlargement of rights.

        (f)        No Other Rights

        Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of Department 56 or any other corporation. Except as expressly
provided in the Plan, no issuance by Department 56 of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to any Incentive Award.

11.   Rights as a Stockholder

        No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to the Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 10
hereof, no adjustment of any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.

12.   No Special Employment Rights; No Right to Incentive Award

        (a)        Nothing contained in the Plan or any Incentive Award shall
confer upon any Participant any right with respect to the continuation of his
employment by or service to the Company or interfere in any way with the right
of the Company at any time to terminate such employment or to increase or
decrease the compensation of the Participant from the rate in existence at the
time of the grant of an Incentive Award.

        (b)        No person shall have any claim or right to receive an
Incentive Award hereunder. The Committee’s granting of an Incentive Award to a
Participant at any time shall neither require the Committee to grant an
Incentive Award to such Participant or any other Participant or other person at
any time nor preclude the Committee from making subsequent grants to such
Participant or any other Participant or other person.

13.   Securities Matters

        (a)        Department 56 shall be under no obligation to effect the
registration pursuant to the Securities Act of any shares of Common Stock to be
issued hereunder or to effect similar

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compliance under any state laws. Notwithstanding anything herein to the
contrary, Department 56 shall not be obligated to cause to be issued or
delivered any certificates evidencing shares of Common Stock pursuant to the
Plan unless and until Department 56 is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authority and the requirements of any securities
exchange on which shares of Common Stock are traded. The Committee may require,
as a condition to the issuance and delivery of certificates evidencing shares of
Common Stock pursuant to the terms hereof, that the recipient of such shares
make such covenants, agreements and representations, and that such certificates
bear such legends, as the Committee deems necessary or desirable.

        (b)        The exercise of any Option granted hereunder shall only be
effective at such time as counsel to Department 56 shall have determined that
the issuance and delivery of shares of Common Stock pursuant to such exercise is
in compliance with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange on which shares of Common Stock
are traded. Department 56 may, in its sole discretion, defer the effectiveness
of an exercise of an Option hereunder or the issuance or transfer of shares of
Common Stock pursuant to any Incentive Award pending or to ensure compliance
under federal or state securities laws. Department 56 shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option or the issuance or transfer of shares of Common Stock
pursuant to any Incentive Award. During the period that the effectiveness of the
exercise of an Option has been deferred, the Participant may, by written notice,
withdraw such exercise and obtain the refund of any amount paid with respect
thereto.

14.   Withholding Taxes

        (a)        Cash Remittance

        Whenever shares of Common Stock are to be issued upon the exercise of an
Option or the grant or vesting of an Incentive Award, Department 56 shall have
the right to require the Participant to remit to Department 56 in cash an amount
sufficient to satisfy federal, state and local withholding tax requirements, if
any, attributable to such exercise, grant or vesting prior to the delivery of
any certificate or certificates for such shares or the effectiveness of the
lapse of such restrictions. In addition, upon the exercise or settlement of any
Incentive Award in cash, Department 56 shall have the right to withhold from any
cash payment required to be made pursuant thereto an amount sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise or settlement.

        (b)        Stock Remittance

        At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the exercise, grant
or vesting of an Incentive Award, the Participant may tender to Department 56 a
number of shares of Common Stock that have been owned by the Participant for at
least six months (or such other period as the Committee may determine) having a
Fair Market Value at the tender date determined by the Committee to be
sufficient to satisfy the federal, state and local withholding tax requirements,
if any, attributable

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to such exercise, grant or vesting but not greater than such withholding
obligations. Such election shall satisfy the Participant’s obligations under
Section 14(a) hereof, if any.

        (c)        Stock Withholding

        At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the exercise, grant
or vesting of an Incentive Award, Department 56 shall withhold a number of such
shares having a Fair Market Value at the exercise date determined by the
Committee to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise, grant or vesting but
not greater than such withholding obligations. Such election shall satisfy the
Participant’s obligations under Section 14(a) hereof, if any.

15.   Amendment or Termination of the Plan

        The Board of Directors may at any time suspend or discontinue the Plan
or revise or amend it in any respect whatsoever; provided, however, that without
approval of the shareholders no revision or amendment shall except as provided
in Section 10 hereof, (i) increase the number of shares of Common Stock that may
be issued under the Plan or (ii) materially modify the requirements as to
eligibility for participation in the Plan. Nothing herein shall restrict the
Committee’s ability to exercise its discretionary authority hereunder pursuant
to Section 4 hereof, which discretion may be exercised without amendment to the
Plan. No action hereunder may, without the consent of a Participant, reduce the
Participant’s rights under any previously granted and outstanding Incentive
Award. Nothing herein shall limit the right of the Company to pay compensation
of any kind outside the terms of the Plan.

16.   No Obligation to Exercise

        The grant to a Participant of an Option or SAR shall impose no
obligation upon such Participant to exercise such Option or SAR.

17.   Transfers Upon Death

        Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant’s estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind
Department 56 unless the Committee shall have been furnished with (a) written
notice thereof and with a copy of the will and/or such evidence as the Committee
may deem necessary to establish the validity of the transfer and (b) an
agreement by the transferee to comply with all the terms and conditions of the
Incentive Award that are or would have been applicable to the Participant and to
be bound by the acknowledgements made by the Participant in connection with the
grant of the Incentive Award.

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18.   Expenses and Receipts

        The expenses of the Plan shall be paid by Department 56. Any proceeds
received by Department 56 in connection with any Incentive Award will be used
for general corporate purposes.

19.   Governing Law

        The Plan and the rights of all persons under the Plan shall be construed
and administered in accordance with the laws of the State of New York without
regard to its conflict of law principles.

20. Effective Date and Term of Plan

        The Plan was adopted by the Board of Directors on February 18, 2004,
subject to the approval of the Plan by the shareholders of Department 56. No
grants may be made under the Plan after February 18, 2014.

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