Exhibit 10.1

AGREEMENT

THIS AGREEMENT (the “Agreement”), is made on this 13th day of October, 2010 (the
“Effective Date”), by and between DESTINATION MATERNITY CORPORATION (the
“Company”) and LISA HENDRICKSON (the “Employee”).

WHEREAS, the Employee serves or will serve as an executive of the Company; and

WHEREAS, the Company and the Employee desire to establish certain protections
for the Employee in the event of her separation from service from the Company
under specified circumstances.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
promises contained herein, and intending to be bound hereby, the parties agree
as follows:

1. Definitions. As used herein:

1.1. “Base Salary” means, as of any given date, the annual base rate of salary
payable to the Employee by the Company, as then in effect; provided, however,
that in the case of a resignation by the Employee for the Good Reason described
in Section 1.5.1, “Base Salary” will mean the annual base rate of salary payable
to the Employee by the Company, as in effect immediately prior to the reduction
giving rise to that Good Reason.

1.2. “Cause” means:

1.2.1. conviction of, or the entry of a plea of guilty or no contest to, a
crime, other than a minor traffic offense;

1.2.2. alcohol abuse or use of controlled drugs (other than in accordance with a
physician’s prescription);

1.2.3. willful misconduct or gross negligence in the course of employment;

1.2.4. material breach of any published Company policy, including (without
limitation) the Company’s ethics guidelines, insider trading policies or
policies regarding employment practices;

1.2.5. material breach of any agreement with or duty owed to the Company or any
of its affiliates; or

1.2.6. refusal to perform the lawful and reasonable directives of a supervisor.

For avoidance of doubt, a separation from service that occurs as a result of a
condition entitling the Employee to benefits under any Company sponsored or
funded long term disability arrangement will not constitute a termination
“without Cause.”

1.3. “Change in Control” means the first to occur of any of the events described
in Section 1(f) of the Company’s 2005 Equity Incentive Plan, as in effect on the
date hereof, provided that such Change in Control is completed on or before the
third anniversary of the Effective Date.

1.4. “Code” means Internal Revenue Code of 1986, as amended.

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1.5. “Good Reason” means any of the following, without the Employee’s prior
consent:

1.5.1. a reduction in Base Salary; or

1.5.2. a relocation of the Employee’s principal worksite more than 50 miles.

However, none of the foregoing events or conditions will constitute Good Reason
unless the Employee provides the Company with written objection to the event or
condition within 30 days following the occurrence thereof, the Company does not
reverse or otherwise cure the event or condition within 30 days of receiving
that written objection, and the Employee resigns his employment within 30 days
following the expiration of that cure period.

2. Severance Benefits.

2.1. Severance Events Following a Change in Control. Subject to Sections 2.3 and
3, if during the one year period immediately following a Change in Control, the
Employee separates from service with the Company due to a termination by the
Company without Cause or a resignation by the Employee for Good Reason, the
Employee will be entitled to the following severance benefits:

2.1.1. monthly severance payments equal to one-twelfth of Employee’s Base Salary
as of the date of such separation for a period equal to twelve months, payable
in accordance with the Company’s payroll practices then in effect; and

2.1.2. waiver of the applicable premium otherwise payable for COBRA continuation
coverage for the Employee (and, to the extent covered immediately prior to the
date of the Employee’s separation, his or her eligible dependents) for a period
of twelve months.

2.2. Severance Events Preceding a Change in Control. Subject to Sections 2.3 and
3, if during the 90 days immediately preceding a Change in Control, the Employee
separates from service with the Company due to a termination by the Company
without Cause or a resignation by the Employee for Good Reason, then following
such Change in Control, the Employee will be entitled to the following severance
benefits:

2.2.1. monthly severance payments equal to one-twelfth of Employee’s Base Salary
as of the date of such separation for a period equal to twelve months, payable
in accordance with the Company’s payroll practices then in effect; provided,
however, that the amount that would have been payable (absent the Employee’s
separation from service) from the Employee’s separation from service to the date
of the Change in Control will be payable in an immediate lump sum, with the
remainder payable in substantially equal installments, in accordance with the
Company’s payroll practices then in effect, over the period remaining until the
date that is twelve months following the Employee’s separation from service; and

2.2.2. waiver of the applicable premium otherwise payable for COBRA continuation
coverage for the Employee (and, to the extent covered immediately prior to the
date of the Employee’s separation, his or her eligible dependents) for a period
of twelve months; provided that, if applicable, the Employee will be reimbursed
for COBRA premiums paid out-of-pocket for the period following his or her
separation from service and preceding the Change in Control; and provided
further that if the Employee has not elected (and is no longer eligible to
elect) COBRA continuation coverage, no waiver or reimbursement will be made
pursuant to this Section 2.2.2.

 

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2.3. Offsets.

2.3.1. Duty to Mitigate. The Employee hereby agrees to exercise his or her best
efforts to obtain new employment or engagement following any separation from
service with the Company and agrees to notify the Company of such new employment
or engagement within 10 days following the commencement thereof. The Company’s
obligations hereunder will be reduced by the amount of any compensation earned
by the Employee from the performance of personal services during the twelve
month period following his or her separation from service (whether or not then
paid). The Employee agrees that the operation of this provision may give rise to
an obligation to repay to the Company amounts received hereunder.

2.3.2. Other Company Severance Arrangements. The Company’s obligations hereunder
will also be reduced by payments or benefits due under any employment agreement,
severance plan or similar arrangement maintained by the Company or its
affiliates.

2.4. Separation From Service. Whether a “separation from service” has occurred
for purposes of this Agreement will be determined in accordance with Treas. Reg.
§1.409A-1(h)(1) (or any successor provision).

3. Payments Conditioned Upon Release; Required Delay in Payment. Notwithstanding
any provision of this Agreement, all payments and benefits hereunder are
conditioned on the Employee’s execution and delivery of a general release of
claims against the Company and its affiliates in a form reasonably prescribed by
the Company (the “Release”). Payments and benefits due hereunder will begin to
be paid on the 30th day following Employee’s separation from service, provided
that the Release is then irrevocable.

4. Certain Tax Considerations.

4.1. Application of Section 280G. If any payment or benefit due to the Employee
from the Company or its subsidiaries or affiliates, whether under this Agreement
or otherwise, would (if paid or provided) constitute an “Excess Parachute
Payment” (as defined in Section 280G(b)(1) of the Code), then notwithstanding
any other provision of this Agreement or any other commitment of the Company,
that payment or benefit will be limited to the minimum extent necessary to
ensure that no portion thereof will fail to be tax-deductible to the Company by
reason of Section 280G of the Code. The determination of whether any payment or
benefit would (if paid or provided) constitute an Excess Parachute Payment will
be made by the Company, in good faith and in its sole discretion. If multiple
payments or benefits are subject to reduction under this paragraph, such
payments or benefits will be reduced in the order that maximizes the Employee’s
economic position (as determined by the Company in good faith). If,
notwithstanding the initial application of this Section 4.1, the IRS determines
that any payment or benefit provided to the Employee constituted an Excess
Parachute Payment, this Section 4.1 will be reapplied based on the IRS’s
determination and the Employee will be required to promptly repay to the Company
any amount in excess of the payment limit of this Section 4.1, plus interest on
such amount as determined at the applicable federal rate specified in
Section 7872(f)(2) of the Code.

4.2. Application of Section 409A. The amounts payable under this Agreement are
intended to be exempt from the application of Section 409A of the Code pursuant
to Treas. Reg. § 1.409A-1(b)(4) and/or § 1.409A-(1)(b)(9) (or any relevant
successor provision) and this Agreement should be interpreted accordingly.
Nevertheless, to the extent compliance with the requirements of Treas. Reg. §
1.409A-3(i)(2) (or any successor provision) is necessary to avoid the
application of an additional tax under Section 409A of the Code to payments due
to the Employee upon or following his or her separation from service, then
notwithstanding any other provision of this Agreement (or any otherwise

 

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applicable plan, policy, agreement or arrangement), any such payments that are
otherwise due within six months following the Employee’s separation from service
will be deferred without interest and paid to Employee in a lump sum immediately
following that six month period. For purposes of the application of Treas. Reg.
§ 1.409A-1(b)(4)(or any successor provision), each payment in a series of
payments will be deemed a separate payment.

5. Miscellaneous.

5.1. No Liability of Officers and Directors for Severance Upon Insolvency.
Notwithstanding any other provision of the Agreement and intending to be bound
by this provision, the Employee hereby (a) waives any right to claim payment of
amounts owed to him/her, now or in the future, pursuant to this Agreement from
directors or officers of the Company if the Company becomes insolvent, and
(b) fully and forever releases and discharges the Company’s officers and
directors from any and all claims, demands, liens, actions, suits, causes of
action or judgments arising out of any present or future claim for such amounts.

5.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
the principles of conflicts of laws.

5.3. Assignment. The rights of the Employee hereunder are personal to the
Employee and may not be assigned, pledged or otherwise transferred by him/her.

5.4. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law.
However, if any provision of this Agreement is declared by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision,
and this Agreement will be reformed, construed and enforced as though the
invalid, illegal or unenforceable provision had never been herein contained.

5.5. Notices. All notices and communications that are required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly
given when delivered personally or upon mailing by registered or certified mail,
postage prepaid, return receipt requested, as follows:

If to the Company, to:

Destination Maternity Corporation

456 North Fifth Street

Philadelphia, PA 19123

Attn: General Counsel

If to the Employee, to: the address contained in the Company’s personnel files

or, in either case, to such other address as may be specified by notice given in
the manner described above.

5.6. Entire Agreement; Amendments. This Agreement and the Release contain the
entire agreement and understanding of the parties relating to the provision of
severance benefits in connection with a change in control, and merges and
supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating to that subject (including, without
limitation, that certain letter agreement by and between Employee and the
Company dated January 18,

 

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2008); provided, however, that the terms of this Agreement do not alter or amend
the terms of that letter agreement between the Company and the Employee dated
November 20, 2009 (re: FY 2009 deferred bonus). This Agreement may not be
changed or modified, except by an Agreement in writing signed by each of the
parties hereto.

5.7. Withholding. The Company is hereby authorized to withhold from any cash or
property otherwise payable to the Employee all taxes or other amounts required
to be withheld pursuant to any applicable law.

5.8. Headings Descriptive. The headings of sections and paragraphs of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

5.9. Counterparts. This Agreement may be executed in multiple counterparts, each
of which will be deemed to be an original, but all of which together will
constitute but one and the same instrument

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Employee has executed this Agreement, in each
case on the date first above written.

 

DESTINATION MATERNITY CORPORATION

/s/ Edward M. Krell

By:    Edward M. Krell Title: Chief Executive Officer & President LISA
HENDRICKSON

/s/ Lisa Hendrickson

 

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