Document:

Exhibit 10.11 To Department 56, Inc. Form 10-K dated 1/3/2004

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 

        (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

6

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

9

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,

10

(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

11

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. 

               

12

        (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 

13

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 

14

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. 

15

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. 

16Exhibit 32.2 To Department 56, Inc. Form 10-K dated 1/3/2004

Exhibit 10.18  

[LOGO] 

December 15, 2003 

Mr. David W. Dewey

{address redacted}

{address redacted}  

Dear David, 

This letter confirms our
agreement concerning your decision to resign employment at the end of March and
to then begin working with us as an independent consultant. 

	Position 
Status:	You have
decided that you would like to continue in your current position as an employee
and officer until Saturday, April 3, 2004. You have tendered, and I have
accepted, your resignation effective that date from all positions (including
subsidiary directorships) with Department 56, Inc. and its direct and indirect
subsidiaries (collectively, “D56”). 

	  	
Beginning
Sunday, April 4, 2004, D56 will engage you, and you have committed to serve, as an
independent consultant. This engagement is intended to continue from that date through
March 31, 2005 (the “Consulting Period”), and the Consulting Period may be
extended past that time by mutual agreement.  

	Compensation:	Your salary as
an employee will continue at the current annual rate of $368,000 until the
effective date of your resignation. 

	  	In consideration
for your services during the Consulting Period and the non-competition covenants
contained in this letter agreement, D56 will pay you a regular fee of $20,833.33
per month during each month of the Consulting Period and you will be eligible
for the cash incentive payments described below. 

	Cash Incentives:	You will be
eligible to receive a bonus based on overall corporate performance in 2004. This
“Corporate Performance Bonus” will be calculated in a manner
consistent with the 2004 defined bonus program for Department 56, Inc. officers
and is illustrated on the attached spreadsheet. The final bonus program
structure and EPS budget target are subject to the approval of the Board of
Directors, and actual payout amounts will not be determined and paid until
closure and Board acceptance of the 2004 full-year audited financials.

	  	You will also be
eligible to receive two “Giftware Performance Bonuses”, the structure
of each of which is set out and illustrated on the attached spreadsheets.

	Benefits:	Your employee
benefits will cease upon the effective date of your resignation. At your own
expense you could then continue health and certain other insurances per our
then-current COBRA plans. 

Page 2 

	Stock Options
& Restricted Stock:	For so long as
you are a consultant to D56 under this letter agreement, you will be able to
hold and continue vesting in the stock options and restricted shares you have
been awarded. 

	Consulting Duties: 	Throughout the
Consulting Period you would, on an as-needed basis (recognizing that foreign
product development trips may be more than half-time), regularly perform a broad
range of advisory, technical and commercial services on behalf of D56 with
regard to product development and sourcing, including – 

	  	
	
Development of product to be introduced in December 2004/January 2005/May 2005
in existing or new non-collectible lines, including samples production and
delivery
	
Oversight of vendor relations and collectible product in development during the
Consulting Period
	
Identification of potential new vendors, product features, and design
or manufacturing innovations
	
Weekly meeting with {redacted name} and other members of the Creative, Product
Development and Sourcing teams concerning products or designs in-process and any
other business issues
	
Regular meeting with Marketing, Creative and Product Development personnel
regarding product and design direction and other business issues
	
Transition and training of {redacted names} and any other existing or new
personnel regarding any aspect of product development, sourcing, vendor relations or
their job responsibilities
	
Transition and facilitation of {redacted name} consulting services in vendor
price negotiations, quality issues, product specification adjustment
for feasibility concerns, and coordination of sculpting approvals.

	  	You would also
perform such other services as I, {redacted name} or {redacted name} may request
from time to time during the Consulting Period. In performing your services
during the Consulting Period you will do so consistent with D56 direction and
policies, including the Code of Ethics and Business Conduct. In this connection,
during and after the Consulting Period you will keep confidential and not
disclose any and all non-public D56 information. 

	  	You will make
yourself available for contact by D56 regularly throughout the Consulting
Period. In this regard, you will keep us apprised of your home and mobile phone
numbers. You will also provide advance notice and itinerary and contact
information for any travel (including holiday and product development trips)
outside the Minneapolis area. D56 will reimburse your reasonable travel expenses
for any foreign product development trips of which 

Page 3 

	  	D56 has prior
notice and during which at least half of your time is spent performing services
for D56 under this letter agreement. 

	Early Termination

Of Consulting Period: 	In the event
that D56 or you (1) commit any material fraud against the other, (2) commit any
unlawful act which adversely affects the other’s commercial prospects or
(3) willfully or habitually breach or neglect our respective obligations under
this letter agreement, the other party hereto may terminate the consulting
engagement with 30 days’ prior notice in writing, and during such 30 day
period you and D56 shall meet to attempt to resolve the matters giving rise to
the termination notice. In the event D56 has delivered valid notice, does not
rescind it and an early termination thereby occurs, the fixed monthly consulting
fee shall be prorated on a daily basis for the month termination is effective,
any 2004 cash bonus payments will be prorated on a daily basis from the first
day of the 2004 fiscal year to the effective date of the early termination, and
any 2005 cash bonus payment shall be prorated from the first day of the 2005
fiscal year in which you have been engaged by D56 under this letter agreement to
the effective date of the early termination. In the event you have delivered
valid notice, do not rescind it and an early termination thereby occurs, the
fixed monthly consulting fee shall be payable through the month of March 2005
and there shall be no proration of any cash bonus payments, irrespective the
early termination. 

	Non-Competition:	From the date
hereof through one year following expiration of the Consulting Period, you agree
that you will not own (other than a negligible interest), manage, operate, join,
be employed by or otherwise provide services anywhere in the world to:

	
Any of D56’s existing Village or Snowbabies factories (including any new
factories they may establish or sponsor) (example: {redacted names});
	
Any person or firm engaged in the design, development, production or
distribution of miniature decorative or collectible buildings or coordinated
“village” accessories; or 
	
Any person or firm engaged in the design, development, production or
distribution of giftware, home décor or tabletop products for the
wholesale Gift & Specialty Retail trade (examples: {redacted names}), except
that you may work or deal on products for Mass Market distribution with any such
person or firm described in this third bullet point so long as such person or
firm already is a product manufacturer for the Mass Market channel.

Page 4 

	  	From the date
hereof through one year following expiration of the Consulting Period, you will
keep us informed of other giftware, collectibles, and home décor
businesses you work with, and other products you develop, for distribution
through the Gift, Specialty Retail or Department Store channels. 

	  	In addition, you
will not at anytime from the date hereof through five years following expiration
of the Consulting Period: 

	  	
	
make any statement (under circumstances reasonably likely to become public or that
you might reasonably expect to become public) critical of D56 or any of its employees,
officers, directors, representatives, products, activities or practices, or in any way
adversely affecting or otherwise maligning the business or reputation of D56 or any of
its employees, officers, directors or representatives; or
	
directly or indirectly divert or interfere with any of the employees, customers
or suppliers of D56, or solicit for employment or business with any of
D56‘s employees or representatives. 

	  	The foregoing
supersedes all other non-compete, non-solicitation, non-disparagement, and
non-interference covenants you have made in favor of D56, all of which are of no
further effect. 

	Assignment 
of Creations:	You assign, and
agree to assign. all ownership of copyright, know-how and other intellectual
property created, conceived or commissioned by you in the course of your
delivery of consulting services under this engagement, all of which shall be
deemed “works for hire”. 

	General Legal 
Release:	Upon the
effective date of your resignation as an employee, you will sign and deliver to
D56 a release in the form of Exhibit A to this letter agreement.

	 Nature of 
Legal Relationship:	D56 will
continue its practice of having all binding purchase orders issued by OVP
personnel. Accordingly, during the Consulting Period and thereafter you will be
able to discuss and reach informal understanding with vendors as to indicative
terms much as you do today, but shall not be authorized to enter into any
legally binding obligations on behalf of D56 as its agent. Your relationship to
D56 during the Consulting Period shall be as an independent contractor, not as
an employee, and you shall be responsible for all taxes, withholding, and the
acquisition and cost of any insurances or benefits that are afforded by D56 in
light of your status as an employee prior to your resignation of employment.

Page 5 

	Legal Matters:	The laws of
Minnesota shall govern this letter agreement, and all disputes shall be decided
by binding AAA arbitration in Minneapolis after good faith negotiation. The
parties agree that specific performance and injunctive relief shall be
available, in addition to all other remedies available at law or in equity. This
letter agreement may be amended or waived only in a writing signed by both
parties. The provisions of this letter agreement are severable so that
invalidity of any provision shall not affect the enforceability or validity of
any other provision. 

	  	You agree that
the covenants contained under the section captioned “Non-Competition”
are reasonable and valid in geographic, temporal and subject-matter scope and in
all other respects, and do not pose limitations greater than necessary to
protect the goodwill and other business interests of D56, which you agree could
foreseeably be harmed in an irreparable manner by your breach. If any arbitrator
or court determines any of such covenants, or any part thereof, is unenforceable
because of scope, such authority shall be deemed by this letter agreement to
have the power to reduce the scope to the extent legally necessary and such
covenant shall then be enforceable to the maximum extent legally permitted; with
respect to geographic scope in particular, if a court or arbitrator deems such
scope overbroad, the parties agree that the court or arbitrator may reduce such
scope by one-mile increments to the extent necessary to satisfy such authority
that the restricted territory is fair and reasonably required for the protection
of D56‘s interests. 

Kindly sign the enclosed copy of
this letter in the space provided below to confirm this as our mutual agreement,
superseding all prior understandings and agreements with respect to any of the subject
matter hereof.  

Sincerely, 

/s/   Susan Engel 

Susan Engel
Chairwoman & CEO 

Confirmed and agreed: 

/s/   David W. Dewey

David W. Dewey 

Exhibit A to Letter Agreement between

David W. Dewey and Department 56, Inc.  

EMPLOYEE RELEASE  

David W. Dewey
(“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 “Letter
Agreement”), does hereby confirm his agreement and delivery of this Release
by setting forth his signature in the space provided below. 

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

Without limiting the
generality of the foregoing, Employee does hereby waive, release and discharge,
and agree to hold harmless Company from, any and all rights, claims and causes
of action whatsoever Employee may have, or which may arise, against Company for
all claims, including equitable or at law and including but not limited to those
based on libel, invasion of privacy, violation of any right of publicity,
copyright or trademark infringement in connection with any publication or use,
past, present or future, of Employee’s name, image, signature or any
photographic reproductions, modifications or alterations thereof in conjunction
with Company’s promotional material and products. Employee hereby further
assigns to Company all his right, title and interest in any and all inventions,
discoveries, improvements and ideas, whether or not in writing or reduced to
practice and whether or not patentable or copyrightable, made, authored or
conceived by Employee, whether by the Employee’s individual efforts or in
connection with the efforts of others, and that either (i) relate or related to
the Company’s business, products or processes, past, present, anticipated
or under development, or (ii) result or resulted from the Employee’s
employment by Company, or (iii) use or used Company’s equipment, supplies,
facilities or trade secret information. 

Employee further agrees
that 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. 

ADDITIONALLY, 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 the Letter Agreement or (2) 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. 

	/s/ ____________________________
David W. Dewey  	                               Date: April 3, 2004

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