EXHIBIT 10.3


 


DEPARTMENT 56, INC. STOCK OPTION
AGREEMENT (Director Option)


 




	
  Optionee:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Number of Shares subject to the Option:

  	
   

  	
   

  	
  Exercise Price per Share:

  	
   

  	
   

  
										






 


1.             General.


 


1.1           The Company hereby
grants to the Optionee, subject to the terms of this Agreement and the
Company’s 2004 Stock Incentive Plan (the “Plan”), the right and option (the
“Option”) to purchase, at the Exercise Price, the number of Shares set forth
above.  The number of Shares and the
Exercise Price are subject to adjustment as provided in Section 10 of the
Plan, which is made a part hereof as if fully set forth herein.  Except as otherwise defined herein,
capitalized terms used in this Agreement shall have the same definitions as set
forth in the Plan.


 


1.2           This Option is not intended
to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code.


 


1.3           The
Option shall be exercisable to the extent and in the manner provided herein for
a period of 10 years from the date hereof (the “Exercise Term”); provided,
however, that the Option may be earlier terminated as provided in
Section 4 hereof.


 


2.             Exercisability of
Options.


 


2.1           Vesting.  Subject to the provisions of this Agreement
and the Plan, the Option shall become exercisable immediately with respect to
the total number of Shares which may be purchased pursuant to the Option.


 


2.2           Timing of Exercise.  The Optionee or the guardian, executor,
administrator or other legal representative (each a “Legal Representative”) of
the Optionee (all references herein to “Optionee” being deemed to include the
Optionee’s Legal Representative, if any, unless the context otherwise requires)
may exercise the Option, in whole or in part, at any time or from time to time.


 


3.             Manner of Exercise
and Payment.


 


3.1           Subject to the terms
and conditions of this Agreement and the Plan, the Option may be exercised by
delivery of written notice, in person or by mail, to the Secretary of the
Company, at the Company’s principal executive office (or such other address as
the Company may from time to time notify the Optionee of in writing). Such
notice shall state that the Optionee is electing to exercise the Option and the
number of Shares in respect of which the Option is being exercised and shall be
signed by the Optionee or, where applicable, by his Legal Representative.  The Company may require proof satisfactory to
it as to the right of the Legal Representative to exercise the Option.


 


3.2           The notice of exercise
described in Section 3.1 hereof shall be accompanied by the full purchase
price for the Shares in respect of which the Option is being exercised, such
purchase price to be paid by check and/or the transfer of Shares to the Company
upon such terms and conditions as determined by the Committee.  No fewer than 10 Shares may be purchased at
any one time upon an exercise of the Option, unless the number of Shares so
purchased constitutes the total number of Shares then purchasable under the
Option.


 


3.3           The Optionee shall not
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any Shares subject to the Option until the conditions in Section 11
of the Plan have been satisfied.


 


4.             Certain
Restrictions.


 


4.1           Transferability.  The Option shall not be transferable by the
Optionee otherwise than (x) by will or the laws of descent and distribution or
(y) subject to such terms, conditions and undertakings as


 


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the Company may require from time to time. The terms of such Option
shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs, successors and permitted transferees of the Optionee.


 


4.2           Termination.  (a)  If the Optionee’s service as a
Director terminates for any reason other than Cause, the Optionee may for a
period of one (1) year after such termination exercise the Option to the
extent, and only to the extent, that the Option or portion thereof is vested
and exercisable as of the date the Optionee’s service as a Director is
terminated, after which time the Option shall automatically terminate in full.


 


(b)           If
the Optionee’s service as a Director terminates for Cause, the Option shall
immediately terminate in full and no rights hereunder may be exercised.


 


(c)           If
the Optionee dies while a Director or within the one (1) year period after
termination of his service as a Director as described in clause (a) of this
Section 4.2, the Option may be exercised at any time within twelve (12) months
after the Optionee’s death by his Legal Representative, after which time the
Option shall terminate in full; provided, however,
that the Option may be exercised to the extent, and only to the extent, that
the Option or portion thereof is exercisable on the date of death or earlier
termination of the Optionee’s services as a Director.


 


5.             Entire
Agreement.  This Agreement and the
Plan constitute the entire agreement, and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.


 


6.             Specific
Performance.  The parties hereto
acknowledge that there will be no adequate remedy at law for a violation of any
of the provisions of this Agreement and that, in addition to any other remedies
which may be available, all of the provisions of this Agreement shall be specifically
enforceable in accordance with their respective terms.


 


7.             Acknowledgment.  The Optionee hereby acknowledges prior
receipt of a copy of the Plan and agrees to be bound by all the terms and
provisions thereof as the same may be amended from time to time.  The Optionee hereby acknowledges that he has
reviewed the Plan and this Agreement and understands his rights and obligations
thereunder and hereunder.  The Optionee
also acknowledges that he has been provided with such information concerning
the Company, the Plan and this Agreement as he and his advisors have requested.


 


 


	
   

  	
  DEPARTMENT 56, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  [Name]

  



 


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