QuickLinks
 -- Click here to rapidly navigate through this document

 
 

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 






 





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 



2





 





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. 


3





 

        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:	

 
	 	 	 	

	 	 	Name:

Title:
	

 	
 	

Accepted:
	

 	
 	

 Susan E. Engel




4







 
 

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 





 
 

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:	 
	
 Susan E. Engel	 	 	








 
 

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:	

 
	
 Authorized Officer	 	 	









[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 






 





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. 



2





 




        (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. 



3





 

        (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:	

 
	 	 	 	
 Authorized Signatory
	

 	
 	

Accepted:
	

 	
 	

 «GRANTEE_NAME»






4







 
 

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 





 
 

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:	 
	
 «GRANTEE_NAME»	 	 	








 
 

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:	

 
	
 Authorized Officer	 	 	












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