**Exhibit 10.1**

 

**AMENDMENT TO**

**SECOND AMENDED AND RESTATED EMPLOYMENTAGREEMENT**

 

THIS AMENDMENT is made by andbetween DESTINATION MATERNITY CORPORATION (formerly known as MOTHERS WORK,INC.) (the “Company”) and REBECCA C. MATTHIAS (“Employee”).

 

WHEREAS, the Company and Employeeare parties to a Second Amended and Restated Employment Agreement dated March 2,2007 (the “Employment Agreement”); and

 

WHEREAS, Section 17 of theEmployment Agreement provides that the Company and Employee may amend theEmployment Agreement by agreement in writing; and

 

WHEREAS, the parties desire toamend the Employment Agreement to ensure compliance with, or exemption from,the provisions of the Section 409A of the Internal Revenue Code of 1986,as amended, and its implementing regulations and guidance.

 

NOW, THEREFORE, inconsideration of these premises and intending to be legally bound hereby, theEmployment Agreement is hereby amended as follows, effective on the latest datesigned by either party.

 

1.             Section 9.3(c)(i) isrestated as follows:

 

(i)            a lump sum in cashto be paid by the Company to Employee in an amount equal to (A) threetimes (1) Employee’s Base Salary as in effect on the date of the eventgiving rise to such payment (the “Severance Event”)(taking into account any reductionoccasioned by Employee’s change to part-time status, as described above in Section 2.2),plus (2) the target amount of Employee’s Cash Bonus for the year of theSeverance Event (again, taking into account any reduction occasioned byEmployee’s change to part-time status, as described above in Section 2.2),and (B) any accrued vacation pay, to the extent not theretofore paid;

 

2.             Section 9.6(e)(i) isamended by adding the following sentence to the end thereof:

 

Any additional payment made pursuant to this section will be paid atthe time the Parachute Excise Tax is required to be withheld by the Company andremitted to the Internal Revenue Service or, if the Company is not required towithhold such tax, on the 5th business day preceding the date it is required tobe remitted by the Employee.

 

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3.             Section 9.6(e)(iii) isamended by adding the following sentence to the beginning thereof:

 

If a reduction to the Total Payments is required pursuant to Section 9.6(e)(ii),such reduction shall be made to the payments, vesting or other benefitsconstituting the Total Payments in the following order: (A) stock optionsor stock appreciation rights, (B) restricted stock or restricted stockunits, (C) non-cash fringe benefits, (D) cash severance payments, (E) supplementalpension rights, and (F) other rights, payments or benefits.  If multiple rights, payments or benefits arecontained in the same category, each such right, payment or benefit will bereduced ratably, based on the proportion that the value of such right, paymentor benefit bears to the total value of all the rights, payments or benefitscontained in the same category (value, for this purpose, being the amount determinedfor purposes of calculations under Section 280G of the Code).

 

4.             Section 9.8is restated as follows:

 

Payment and Release.  Notwithstanding any other provision of thisAgreement, the payments and benefits contemplated by Sections 9.1, 9.3, 9.4,9.5, 9.6 and 9.7 are conditioned on, and made in consideration for, theexecution and delivery by Employee (or, in the case of Section 9.1, by theexecutor, legal representative or administrator of Employee’s estate) of ageneral and mutual release of claims in substantially the form attached heretoas Exhibit I within 45 days following the cessation of Employee’semployment (the “Release”).  The paymentsand benefits contemplated by those sections will be paid or provided (or willcommence to be paid or provided) within 60 days following cessation of Employee’semployment (subject to any delay required by Section 24), provided theRelease has been timely delivered and has not been revoked.

 

5.             Section 10is restated as follows:

 

In the event Employee’s employment hereunder is terminated pursuant toSections 9.3, 9.4 or 9.6, the Company shall, (a) pay for full outplacementservices for Employee for up to one year following termination of employment,such payment to be made to an agency selected by Employee, based upon thecustomary fees charged by nationally rated firms engaged in such services, and (b) provideto Employee, for up to one year following termination of employment, officespace and secretarial support to assist Employee in searching for and obtaininga new position, the location of such office space to be reasonably determinedby Employee.

 

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6.             Section 24 isrenumbered Section 24.1 and is restated as follows:

 

If the termination giving rise to thepayments described in Sections 9.3, 9.4, 9.6(c), 9.7(b) is not a “Separationfrom Service” within the meaning of Treas. Reg. § 1.409A-1(h)(1) (or anysuccessor provision), then the amounts otherwise payable pursuant to thoseparagraphs will instead be deferred without interest and will not be paid untilEmployee experiences a Separation from Service. In addition, to the extent compliance with the requirements of Treas.Reg. § 1.409A-3(i)(2) (or any successor provision) is necessary to avoidthe application of an additional tax under Section 409A of the Code topayments due to Employee upon or following his Separation from Service, thennotwithstanding any other provision of this Agreement (or any otherwiseapplicable plan, policy, agreement or arrangement), any such payments that areotherwise due within six months following Employee’s Separation from Service(taking into account the preceding sentence of this paragraph) will be deferredwithout interest and paid to Employee in a lump sum immediately following thatsix month period.  This paragraph shouldnot be construed to prevent the application of Treas. Reg. §§ 1.409A-1(b)(4) or-1(b)(9)(iii)(or any successor provisions) to any amount payable toEmployee.  For purposes of theapplication of Treas. Reg. § 1.409A-1(b)(4)(or any successor provision) to thisAgreement, each payment in a series of payments will be deemed a separatepayment.

 

7.             The following new Section 24.2is added:

 

Notwithstanding anything to the contrary containedin this Agreement or otherwise, to the extent an expense, reimbursement orin-kind benefit due to Employee constitutes a “deferral of compensation” withinthe meaning of Section 409A of the Code: (a) the amount of expenseseligible for reimbursement or in-kind benefits provided to the Employee duringany calendar year will not affect the amount of expenses eligible forreimbursement or in-kind benefits provided to the Employee in any othercalendar year, (b) reimbursement of expenses will be made on or before thelast day of the calendar year following the calendar year in which theapplicable expense is incurred, and (c) the right to payment,reimbursement or in-kind benefits may not be liquidated or exchanged for anyother benefit.

 

[*signature page follows*]

 

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IN WITNESS WHEREOF, the Companyhas caused this Amendment to be executed by its duly authorized officer and Employeehas executed this Amendment on the date(s) specified below, respectively.

 
| ** ** | **DESTINATION MATERNITY CORPORATION**                            |
|------------|------------------------------------------------------------------|
| ** ** | ** **                                                       |
| ** ** | ** **                                                       |
|       | By:                                                              | /s/ Edward  M. Krell |
|       |                                                             |
|       | Name &  Title: Edward M. Krell, Chief Executive Officer |
|       |                                                             |
|       | Date:                                                            | December 18,  2008 |
|       |                                                             |
|       |                                                             |
|       | **REBECCA  C. MATTHIAS**                                         |
|       |                                                             |
|       |                                                             |
|       | /s/ Rebecca C. Matthias                                          |
|       |                                                             |
|       | Date:                                                            | December 18,  2008 |
|            |                                                                  |  |  |

 

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