EXHIBIT
10.4


 


RESTRICTED STOCK AGREEMENT


 


 


THIS AGREEMENT,
made as of the ____ day of ________, _____ (the “Grant
Date”), between Department 56, Inc., a Delaware corporation (the
“Corporation”), and _____________ (the ”Grantee”).


 


WHEREAS, the
Corporation has adopted the 2004 Stock Incentive Plan (the “Plan”) for the
purpose of providing employees, consultants and non-employee members of its
Board of Directors a proprietary interest in pursuing the long-term growth,
profitability and financial success of the Corporation (except as otherwise
expressly set forth herein, the capitalized terms used in this Agreement shall
have the same definitions set forth in the Plan).


 


WHEREAS, pursuant
to the Plan, the Board of Directors has determined to grant an Other Stock-Based
Award to the Grantee in the form of shares of Common Stock subject to the
terms, conditions and limitations provided herein and in the Plan (“Restricted
Stock”);


 


NOW, THEREFORE,
the parties hereto agree as follows:


 


1.             Grant of Restricted Stock.


 


1.1        The Corporation hereby grants to the
Grantee, on the terms and conditions set forth in this Agreement, the number of
shares of Restricted Stock set forth under the Grantee’s name on the signature
page hereto.


 


1.2        The Grantee’s rights with respect to all
the shares of Restricted Stock shall remain forfeitable at all times prior to
the Lapse Date (as defined below).


 


1.3        This
Agreement shall be construed in accordance with, and subject to, the terms of
the Plan (the provisions of which are incorporated herein by reference).


 


2.             Rights of Grantee.


 


Except as
otherwise provided in this Agreement, the Grantee shall be entitled, at all
times on and after the Grant Date, to exercise all rights of a shareholder with
respect to the shares of Restricted Stock (whether or not the restrictions
thereon shall have lapsed), other than with respect to those shares of
Restricted Stock which have been forfeited pursuant to Section 3.2 hereof,
including the right to vote the shares of Restricted Stock and the right to receive
dividends thereon.  The deferred
dividends shall


 


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be held by the
Corporation for the account of the Grantee until the Lapse Date, at which time
the dividends, with no interest thereon, shall be paid to the Grantee or
her/his estate, as the case may be. 
Notwithstanding the foregoing, prior to the Lapse Date, the Grantee
shall not be entitled to transfer, sell, pledge, hypothecate or assign any
shares of Restricted Stock (collectively, the “Transfer Restrictions”).


 


3.             Vesting;
Lapse of Restrictions.


 


3.1        The Transfer Restrictions with respect to
all the shares of Restricted Stock granted under this Agreement shall lapse on
the third (3rd) anniversary of the Grant Date (the “Lapse Date”)
provided the Grantee continues to be serving as a director of the Corporation
until such Lapse Date; provided, however, that the Transfer Restrictions
with respect to all the shares of Restricted Stock shall lapse, if sooner, on
the date of the Grantee’s termination of service as a director of the
Corporation as a result of the Grantee’s retirement (which may be without
Committee approval at or after age 74 or with Committee approval if before age
74 (“Qualifying Retirement”)) or death (also, a “Lapse Date”).  Notwithstanding anything in the vesting
acceleration provision contained in the proviso of the preceding sentence to
the contrary, in no event shall the Grantee be vested or otherwise entitled to
more than one hundred percent (100%) of the shares of Restricted Stock granted
pursuant to section 1.1 above.


 


3.2        Notwithstanding anything in this
Agreement to the contrary, upon the termination of the Grantee’s service as a
director of the Corporation for any reason other than as a result of the
Grantee’s Qualifying Retirement or death, all shares of Restricted Stock in
respect of which the Transfer Restrictions have not previously lapsed in
accordance with Section 3.1 hereof shall be forfeited and automatically
transferred to and reacquired by the Corporation at no cost to the Corporation,
and neither the Grantee nor any heirs, executors, administrators or successors
of such Grantee shall thereafter have any right or interest in such shares of
Restricted Stock.


 


3.3        In the event the Grantee takes a leave of
absence from the Board of Directors which exceeds six (6) consecutive months in
duration, whether such leave of absence is paid or unpaid, the shares of
Restricted Stock shall be treated as if the Grantee had terminated his or her
employment other than by reason of his or her Qualifying Retirement or death,
as of the first day of the leave of absence; provided,
however, that the Committee may, in its sole discretion, treat an approved
leave of absence, in either case, of more than six (6) consecutive months as
not constituting a termination of service as a director of the Corporation with
respect to all the shares of Restricted Stock issued hereunder in which case
the leave of absence will be treated in the manner set forth in the following
sentence.  In the event of an approved
leave of absence for a period consisting of six (6) consecutive months or less,
the period of such leave of absence shall not be taken into account in
determining if the Grantee was serving as a director by the Corporation on the
Lapse Date.


 


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4.             Escrow and Delivery of Shares.


 


4.1        Certificates (or an “electronic “book
entry” on the books of the Corporation’s stock transfer agent) representing the
shares of Restricted Stock shall be issued and held by the Corporation (or its
stock transfer agent) in escrow (together with any stock transfer powers which
the Corporation may request of Grantee) and shall remain in the custody of the
Corporation (or its stock transfer agent) until (i) their delivery to the
Grantee or his/her estate as set forth in Section 4.2 hereof, or
(ii) their forfeiture and transfer to the Corporation as set forth in
Section 3.2 hereof. The appointment of an independent escrow agent shall not be
required.


 


4.2           (a)           Subject to paragraph (b) of this Section
4.2, certificates (or an electronic “book entry”) representing those shares of
Restricted Stock in respect of which the Transfer Restrictions have lapsed
pursuant to Section 3.1 hereof shall be delivered to the Grantee as soon as
practicable following the Lapse Date, subject to the application of Section 8
below.


 


(b)           Certificates (or an electronic “book
entry”) representing those shares of Restricted Stock in respect of which the
Transfer Restrictions have lapsed pursuant to Section 3.1(b) upon the Grantee’s
death shall be delivered to the executors or administrators of the Grantee’s
estate as soon as practicable following the Lapse Date and the Corporation’s
receipt of notification of the Grantee’s death, accompanied by an official
death certificate.


 


(c)           The Grantee, or the executors or
administrators of the Grantee’s estate, as the case may be, may receive, hold,
sell or otherwise dispose of those shares of Restricted Stock delivered to him
or her pursuant to paragraphs (a) or (b) of this Section 4.2 free and clear of
the Transfer Restrictions, but subject to compliance with all federal and state
securities laws.


 


4.3           (a)           Each stock certificate issued pursuant to
Section 4.1 shall bear a legend in substantially the following form:


 


This certificate
and the shares of stock represented hereby are subject to the terms and
conditions applicable to Restricted Stock contained in the 2004 Stock Incentive
Plan (the “Plan”) and a Restricted Stock Agreement (the “Agreement”) between
the Corporation and the registered owner of the shares represented hereby.
Release from such terms and conditions shall be made only in accordance with
the provisions of the Plan(s) and the Agreement, copies of which are on file in
the office of the Secretary of the Corporation.


 


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(b)           As soon as practicable following a Lapse
Date, the Corporation shall issue a new certificate (or electronic “book
entry”) for shares of the Restricted Stock which have become non-forfeitable in
relation to such Lapse Date, which new certificate (or electronic “book entry”)
shall not bear the legend set forth in paragraph (a) of this Section 4.3 and
shall be delivered in accordance with Section 4.2 hereof.


 


All dividends
declared and paid by the Corporation on shares of Restricted Stock shall be
deferred until the lapsing of the Transfer Restrictions pursuant to Section
3.1.  The deferred dividends shall be
held by the Corporation for the account of the Grantee until the Lapse Date, at
which time the dividends, with no interest thereon, shall be paid to the
Grantee or her/his estate, as the case may be. 
Upon the forfeiture of the shares of Restricted Stock pursuant to
Section 3.2, any deferred dividends shall also be forfeited to the Corporation.


 


5.             Dividends


 


All dividends
declared and paid by the Corporation on shares of Restricted Stock shall be
deferred until the lapsing of the Transfer Restrictions pursuant to Section
3.1.  The deferred dividends shall be
held by the Corporation for the account of the Grantee until the Lapse Date, at
which time the dividends, with no interest thereon, shall be paid to the
Grantee or her/his estate, as the case may be. 
Upon the forfeiture of the shares of Restricted Stock pursuant to
Section 3.2, any deferred dividends shall also be forfeited to the Corporation.


 


6.             No Right to Continued Membership.


 


Nothing in this
Agreement or the Plan shall be interpreted or construed to confer upon the
Grantee any right with respect to continuance as a member of the Board of
Directors, nor shall this Agreement or the Plan interfere in any way with the
right of the Corporation to terminate the Grantee’s service as a member of the
Board of Directors at any time.


 


7.             Adjustments
Upon Change in Capitalization.


 


If, by operation of
Section 10 of the Plan, the Grantee shall be entitled to new, additional or
different shares of stock or securities of the Corporation or any successor
corporation or entity or other property, such new, additional or different
shares or other property shall thereupon be subject to all of the conditions
and restrictions which were applicable to the shares of Restricted Stock
immediately prior to the event and/or transaction that gave rise to the
operation of Section 10 of the Plan.


 


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8.             Modification of Agreement.


 


Except as set
forth in the Plan and herein, this Agreement may be modified, amended,
suspended or terminated, and any terms or conditions may be waived, but only by
a written instrument executed by the parties hereto.


 


9.             Severability.


 


Should any provision of
this Agreement be held by a court of competent jurisdiction to be unenforceable
or invalid for any reason, the remaining provisions of this Agreement shall not
be affected by such holding and shall continue in full force and effect in
accordance with their terms.


 


10.           Governing
Law.


 


The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflicts of laws principles thereof.


 


11.           Successors in Interest.


 


This Agreement
shall inure to the benefit of and be binding upon any successor to the
Corporation.  This Agreement shall inure
to the benefit of the Grantee’s heirs, executors, administrators and
successors.  All obligations imposed upon
the Grantee and all rights granted to the Corporation under this Agreement
shall be binding upon the Grantee’s heirs, executors, administrators and
successors.


 


 


	
   

  	
  DEPARTMENT 56, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Number of Shares of
  Restricted Stock

  
	
   

  	
  Hereby Granted:

  	
   

  	
   

  
							



 


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