Exhibit 10.4

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between
DESTINATION MATERNITY CORPORATION (the “Company”) and RONALD J. MASCIANTONIO
(the “Executive”).

WHEREAS, the Company and the Executive are parties to a Change in Control
Agreement dated July 14, 2006, the severance provisions of which will soon
expire (the “Change in Control Agreement”); and

WHEREAS, the parties wish to enter into this Agreement to provide continued and
enhanced severance protection to Executive and to otherwise memorialize the
terms of Executive’s continued employment by the Company.

NOW, THEREFORE, in consideration of the foregoing and intending to be bound
hereby, the parties agree as follows:

1. Duration of Agreement. This Agreement is effective on the date it is fully
executed and has no specific expiration date. Unless terminated by agreement of
the parties, this Agreement will govern Executive’s continued employment by the
Company until that employment ceases.

2. Title; Duties. Executive will be employed as the Company’s Vice President -
General Counsel, reporting directly to the Company’s Chief Executive Officer
(the “CEO”) or as otherwise directed by the Company’s Board of Directors (the
“Board”). Executive will devote his best efforts and substantially all of his
business time and services to the Company and its affiliates to perform such
duties as may be customarily incident to his position and as may reasonably be
assigned to him from time to time. Executive will not, in any capacity, engage
in other business activities or perform services for any other individual, firm
or corporation without the prior written consent of the Company; provided,
however, that without such consent, Executive may engage in charitable, public
service and personal investment activities, so long as such activities do not in
any respect interfere with Executive’s performance of his duties and obligations
hereunder.

3. Place of Performance. Executive will perform his services hereunder at the
principal executive offices of the Company in Philadelphia, Pennsylvania;
provided, however, that Executive may be required to travel from time to time
for business purposes.

4. Compensation and Indemnification.

4.1. Base Salary. Executive’s annual salary will be $250,000 (the “Base
Salary”), paid in accordance with the Company’s payroll practices as in effect
from time to time. The Base Salary will be reviewed annually by the CEO.

4.2. Annual Bonuses.

4.2.1. For each fiscal year ending during his employment, Executive will be
eligible to earn an annual bonus. The target amount of that bonus will be 35%
percent of Executive’s Base Salary for the applicable fiscal year. The actual
bonus payable with respect to a particular year will be determined by the CEO,
based on the achievement of corporate and individual performance objectives
established by the CEO. Any bonus payable under this paragraph will be paid
within 90 days following the end of the applicable fiscal year and, except as
otherwise provided in Section 5.1.2, will only be paid if Executive remains
continuously employed by the Company through the actual bonus payment date.

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4.2.2. For purposes of determining any bonus payable to Executive, the
measurement of corporate and individual performance will be performed by the CEO
in good faith. From time to time, the CEO may, in his sole discretion, make
adjustments to corporate or individual performance goals, so that required
departures from the Company’s operating budget, changes in accounting
principles, acquisitions, dispositions, mergers, consolidations and other
corporate transactions, and other factors influencing the achievement or
calculation of such goals do not affect the operation of this Section 4.2 in a
manner inconsistent with its intended purposes.

4.2.3. The CEO may choose to provide Executive’s annual bonus opportunity
through the Company’s Management Incentive Program, in which case such bonus
opportunity will be subject to the additional terms and conditions therein
contained.

4.3. Paid Time Off. Executive will be entitled to paid time off each year in
accordance with the policies of the Company, as in effect from time to time.

4.4. Indemnification. Executive will be indemnified for acts performed as an
employee of the Company to the extent provided in the Company’s Bylaws, as in
effect from time to time.

5. Termination. Upon any cessation of his employment with the Company, Executive
will be entitled only to such compensation and benefits as described in this
Section 5. Upon any cessation of his employment for any reason, unless otherwise
requested by the Company, Executive agrees to resign immediately from all
officer and director positions he then holds with the Company and its
affiliates.

5.1. Termination without Cause or for Good Reason. If Executive’s employment by
the Company ceases due to a termination by the Company without Cause (as defined
below) or a resignation by Executive for Good Reason (as defined below),
Executive will be entitled to:

5.1.1. payment of all accrued and unpaid Base Salary through the date of such
cessation;

5.1.2. payment of any annual bonus otherwise payable (but for the cessation of
Executive’s employment) with respect to a year ended prior to the cessation of
Executive’s employment;

5.1.3. payment of a pro-rata annual bonus for the year of termination,
determined and paid in the same manner and at the same time as the Executive’s
annual bonus would otherwise have been determined and paid for the applicable
year, but for the termination. Such annual bonus will be pro-rated based on the
number of full and partial months of the year transpired prior to the date of
termination;

5.1.4. monthly severance payments equal to one-twelfth of Executive’s Base
Salary for a period equal to 9 months; and

5.1.5. waiver of the applicable premium otherwise payable for COBRA continuation
coverage for Executive (and, to the extent covered immediately prior to the date
of such cessation, his eligible dependents) for a period equal to 9 months.

Except as otherwise provided in this Section 5.1, all compensation and benefits
will cease at the time of such cessation and the Company will have no further
liability or obligation by reason of such cessation. The payments and benefits
described in this Section 5.1 are in lieu of, and not in addition to, any other

 

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severance arrangement maintained by the Company. Notwithstanding any provision
of this Agreement, the payments and benefits described in Section 5.1 are
conditioned on Executive’s execution and delivery to the Company, within 60 days
following his cessation of employment, of a general release of claims against
the Company and its affiliates in such form as the Company may reasonably
require in a manner consistent with the requirements of the Older Workers
Benefit Protection Act (the “Release”). Subject to Section 5.4, below, the
severance benefits described in this Section 5.1 will begin to be paid or
provided as soon as the Release becomes irrevocable.

5.2. Termination Following a Change in Control. For cessations of employment
described in Section 5.1 that occur during the one year period following a
Change in Control, the references in Sections 5.1.4 and 5.1.5 to “9 months” will
each be replaced with a reference to “15 months.”

5.3. Other Terminations. If Executive’s employment with the Company ceases for
any reason other than as described in Section 5.1, above (including but not
limited to termination (a) by the Company for Cause, (b) as a result of
Executive’s death, (c) as a result of Executive’s disability or (d) by Executive
without Good Reason), then the Company’s obligation to Executive will be limited
solely to the payment of accrued and unpaid Base Salary through the date of such
cessation. All compensation and benefits will cease at the time of such
cessation and, except as otherwise provided by COBRA, the Company will have no
further liability or obligation by reason of such termination. The foregoing
will not be construed to limit Executive’s right to payment or reimbursement for
claims incurred prior to the date of such termination under any insurance
contract funding an employee benefit plan, policy or arrangement of the Company
in accordance with the terms of such insurance contract.

5.4. Compliance with Section 409A. If the termination giving rise to the
payments described in Section 5.1 is not a “Separation from Service” within the
meaning of Treas. Reg. § 1.409A-1(h)(1) (or any successor provision), then the
amounts otherwise payable pursuant to that section will instead be deferred
without interest and will not be paid until Executive 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 avoid
the application of an additional tax under Section 409A of the Internal Revenue
Code (the “Code”) to payments due to Executive upon or following his Separation
from Service, then notwithstanding any other provision of this Agreement (or any
otherwise applicable plan, policy, agreement or arrangement), any such payments
that are otherwise due within six months following Executive’s Separation from
Service (taking into account the preceding sentence of this paragraph) will be
deferred without interest and paid to Executive in a lump sum immediately
following that six month period. This paragraph should not be construed to
prevent the application of Treas. Reg. § 1.409A-1(b)(9)(iii)(or any successor
provision) to amounts payable hereunder. 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.

5.5. Compliance with Section 280G. If any payment or benefit due to Executive
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 below), 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 Executive’s economic position (as determined by the
Company in good faith). If, notwithstanding the initial application of this
Section 5.5, the Internal Revenue Service determines that any payment or benefit

 

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provided to Executive constituted an Excess Parachute Payment, this Section 5.5
will be reapplied based on the Internal Revenue Service’s determination and
Executive will be required to promptly repay to the Company any amount in excess
of the payment limit of this Section 5.5, plus interest on such amount as
determined at the applicable federal rate specified in Section 7872(f)(2) of the
Code.

5.6. Definitions. For purposes of this Agreement:

5.6.1. “Cause” means (a) conviction of, or the entry of a plea of guilty or no
contest to, a crime, other than a minor traffic offense; (b) alcohol abuse or
use of controlled drugs (other than in accordance with a physician’s
prescription); (c) willful misconduct or gross negligence in the course of
employment; (d) material breach of any published Company policy, including
(without limitation) the Company’s ethics guidelines, insider trading policies
or policies regarding employment practices; (e) material breach of any agreement
with or duty owed to the Company or any of its affiliates; or (f) 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 Executive to benefits under any Company sponsored or funded long
term disability arrangement will not constitute a termination “without Cause.”

5.6.2. “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 (or any
successor provision).

5.6.3. “Excess Parachute Payment” has the same meaning as used in
Section 280G(b)(1) of the Code.

5.6.4. “Good Reason” means any of the following, without the Executive’s prior
consent: (a) a material, adverse change in title, authority or duties (including
the assignment of duties materially inconsistent with the Executive’s position);
(b) a reduction in Base Salary or bonus opportunity (described in paragraph
4.2.1); or (c) a relocation of the Executive’s principal worksite more than 50
miles. However, none of the foregoing events or conditions will constitute Good
Reason unless the Executive 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 Executive resigns his employment
within 30 days following the expiration of that cure period.

6. Miscellaneous.

6.1. Confidentiality and Non-Compete Agreement. Executive’s rights under this
Agreement are subject to his immediate execution of, and continued compliance
with, the Restrictive Covenant Agreement attached hereto as Exhibit A.

6.2. No Liability of Officers and Directors Upon Insolvency. Notwithstanding any
other provision of the Agreement, Executive hereby (a) waives any right to claim
payment of amounts owed to him, 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.

6.3. Other Agreements. Executive represents and warrants to the Company that
there are no restrictions, agreements or understandings whatsoever to which he
is a party that would prevent or make unlawful his execution of this Agreement,
that would be inconsistent or in conflict with this Agreement or Executive’s
obligations hereunder, or that would otherwise prevent, limit or impair the
performance by Executive of his duties under this Agreement.

 

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6.4. Successors and Assigns. The Company may assign this Agreement to any
successor to its assets and business by means of liquidation, dissolution, sale
of assets or otherwise. For avoidance of doubt, a termination of Executive’s
employment by the Company in connection with a permitted assignment of the
Company’s rights and obligations under this Agreement is not a termination
“without Cause” so long as the assignee offers employment to Executive on the
terms herein specified (without regard to whether Executive accepts employment
with the assignee). The duties of Executive hereunder are personal to Executive
and may not be assigned by him.

6.5. Governing Law and Enforcement. This Agreement will be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to the principles of conflicts of laws. Any legal proceeding
arising out of or relating to this Agreement will be instituted in a state or
federal court in the Commonwealth of Pennsylvania, and Executive and the Company
hereby consent to the personal and exclusive jurisdiction of such court(s) and
hereby waive any objection(s) that they may have to personal jurisdiction, the
laying of venue of any such proceeding and any claim or defense of inconvenient
forum.

6.6. Waivers. The waiver by either party of any right hereunder or of any breach
by the other party will not be deemed a waiver of any other right hereunder or
of any other breach by the other party. No waiver will be deemed to have
occurred unless set forth in a writing. No waiver will constitute a continuing
waiver unless specifically stated, and any waiver will operate only as to the
specific term or condition waived.

6.7. 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 held 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.

6.8. Survival. This Agreement will survive the cessation of Executive’s
employment to the extent necessary to fulfill the purposes and intent the
Agreement.

6.9. Notices. Any notice or communication required or permitted under this
Agreement will be made in writing and (a) sent by overnight courier, (b) mailed
by overnight U.S. express mail, return receipt requested or (c) sent by
telecopier. Any notice or communication to Executive will be sent to the address
contained in his personnel file. Any notice or communication to the Company will
be sent to the Company’s principal executive offices, to the attention of its
General Counsel. Notwithstanding the foregoing, either party may change the
address for notices or communications hereunder by providing written notice to
the other in the manner specified in this paragraph.

6.10. Entire Agreement; Amendments. This Agreement, including Exhibit A attached
hereto, contains the entire agreement and understanding of the parties hereto
relating to the subject matter hereof, and merges and supersedes all prior and
contemporaneous discussions, agreements and understandings of every nature
relating to that subject matter. This Agreement may not be changed or modified,
except by an agreement in writing signed by each of the parties hereto.

6.11. Withholding. All payments (or transfers of property) to Executive will be
subject to tax withholding to the extent required by applicable law.

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

 

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6.13. Counterparts; Facsimile. This Agreement may be executed in multiple
counterparts (including by facsimile signature), each of which will be deemed to
be an original, but all of which together will constitute but one and the same
instrument.

[signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and Executive has executed this Agreement, in each case
on July 16, 2009.

 

DESTINATION MATERNITY CORPORATION By:  

/s/ Edward M. Krell

Name:  

Edward M. Krell

Title:  

Chief Executive Officer

RONALD J. MASCIANTONIO

/s/ Ronald J. Masciantonio

 

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Exhibit A

[Restrictive Covenant Agreement]

 

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