EXHIBIT
10.4


EXECUTION COPY


SUPPLEMENTAL
RETIREMENT AGREEMENT


THIS SUPPLEMENTAL RETIREMENT
AGREEMENT (this “Agreement”), is entered by and between MOTHERS WORK,
INC., a Delaware Corporation (the “Company”), and DAN W. MATTHIAS
(the “Executive”);


WHEREAS, the Executive
is presently employed by the Company in a key executive position and possesses
substantial talent, ability and unique business experience which has been and
will continue to be of great value to the Company; and


WHEREAS, in
consideration for the Executive’s past contributions to the Company and his continued
service with the Company, the Company desires to provide the Executive with
supplemental retirement benefits upon his cessation of service with the
Company;


NOW, THEREFORE,
intending to be legally bound, the parties agree as follows:


1.            DEFINITIONS.  For purposes of this Agreement, the
following terms will have the meanings defined below:


(a)           “Actuarial Present Value” means, for any stream of
payments as of any date, the actuarial present value of those payments on the
date specified, determined using the 1994 Group Annuity Unisex Mortality table
and assuming a 6% rate of interest.


(b)           “Benefit” means the benefit payable to the
Executive pursuant to the terms of this Agreement.


(c)           “Board” means the Board of Directors of the
Company, as constituted from time to time; provided,
however, that if the Board appoints a committee to perform some or
all of the Board’s administrative functions hereunder, references to the “Board”
will be deemed to also refer to that committee in connection with matters
performed by that committee.


(d)           “Cause” will have the same meaning as is set forth
in the Employment Agreement.


(e)           “Change in Control” will have the same meaning as
is set forth in the Employment Agreement.


(f)            “Code” means the Internal Revenue Code of 1986, as
amended, and any successor thereto.


(g)           “Deemed Final Pay” means $531,803 (the “Base
Salary”), increased by 3% per year on each October 1st that occurs after
the Effective Date and before the Executive ceases to be employed by the
Company, provided, however, that no
increases to Deemed Final Pay will be made on or after October 1, 2012.













(h)           “Effective Date” means the date this Agreement is
fully executed by both parties hereto.


(i)            “Employment Agreement” means that certain Second Amended
and Restated Employment Agreement between the Executive and the Company dated
March 1, 2007, as amended from time to time.


(j)            “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.


(k)           “Good Reason” will have the same meaning as is set
forth in the Employment Agreement.


(l)            “Plan
Administrator” means the Board.


(m)          “Separation from Service” means a separation from
service as defined in Prop. Treas. Reg. § 1.409A-1(h).


(n)           “Vested
Percentage” means as of any given date, that portion of the Benefit that is
then vested, as determined in accordance with Section 2 hereof.


2.            VESTING OF BENEFIT.


(a)           Vesting
Based on Continued Service.  Subject
to the remainder of this Section 2, the Vested Percentage will be determined as
follows:


(i)            The
Vested Percentage will be 33a% on the Effective Date;


(ii)           Subject
to Section 2(b), the Vested Percentage will be increased by 15% on each
September 30th occurring after the Effective Date, provided the Executive has
remained in continuous employment with the Company through that date; and


(iii)          In
no event will the Vested Percentage exceed 100%.


(b)           Part-Time Service. 
If the Executive elects “part-time” status in accordance with Section 2.2
of the Employment Agreement, the reference to “15%” in Section 2(a)(ii) will thereafter
be replaced with a reference to “7.5%.”


(c)           Accelerated Vesting.  The Vested Percentage will be 100% if, following
a Change in Control, the Executive’s employment by the Company ceases due to
the Executive’s resignation with Good Reason or termination by the Company
without Cause.


3.            AMOUNT, FORM
AND TIMING OF BENEFIT.


(a)           Form of Benefit. 
The Benefit will be paid in cash, in a single lump sum and will be
subject to applicable tax withholding.


(b)           Amount of Benefit. 
The amount of the Benefit will be equal to: (i) the Actuarial Present
Value, determined as of the date of Executive’s Separation from Service, of an



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immediately commencing single life annuity with
annual payments equal to 60% of the Executive’s Deemed Final Pay, multiplied by
(ii) the Vested Percentage.


(c)           Time Of Payment.


(i)            Subject to Section 2(c)(ii), the
Benefit will be paid within 60 days following the Executive’s Separation from
Service.


(ii)           If the
payment of the Benefit is subject to the requirements of Prop. Treas. Reg. §
1.409A-3(g)(2) (or any successor provision), the Benefit will be paid on
the first day of the seventh month following the Executive’s Separation from
Service (or, if earlier, the date of the Executive’s death).


(d)           One Payment Only. 
Only one Benefit will be paid hereunder and payment of that Benefit will
constitute a full discharge of all the Company’s liabilities hereunder.  For avoidance of doubt, if a Benefit is paid
before the amount of the Benefit is maximized (e.g., because the Vested
Percentage is then less than 100% or because Deemed Final Pay has not yet been
maximized), a subsequent return to employment will not create a right to any
additional or incremental payment hereunder.


(e)           Payment to Beneficiary.  By delivery of notice in writing to the
Company, the Executive may designate a beneficiary to receive his Benefit in
the event of the Executive’s death (i) while still employed, or (ii) after a
Separation from Service but before payment of the Benefit.  In the event of the Executive’s death while
still employed, the amount of the Benefit will be determined as though the
Executive had experienced a Separation from Service immediately prior to his
death.  Any beneficiary designation that
is duly made will supersede all prior designations.  If no designation is duly made, the Executive’s
beneficiary will be his spouse or, if the Executive is unmarried at the time of
his death, the Executive’s estate.


4.            FUNDING.


(a)           Benefits payable under this Agreement will be “unfunded,”
as that term is used in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of
ERISA with respect to unfunded plans maintained primarily for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees.  Accordingly, except
as otherwise provided below in Section 4(b), the Company will not be required
to segregate or earmark any of its assets for the benefit of the Executive, and
the Executive will have only a contractual right against the Company for
benefits hereunder.


(b)           The
Company will establish a grantor trust, the assets of which will be used
exclusively to provide benefits to the Executive pursuant to this Agreement
(subject, however, to the claims of the general creditors of the Company).  Unless otherwise agreed between the Company
and Executive, the trustee of that grantor trust will be Wachovia Bank,
National Association.  An initial deposit
will be made to that trust within 60 days following the Effective Date.  Subsequent deposits will be made within 60
days following the end of each fiscal year of the Company ending after the
Effective Date and before the Benefit is paid. 
Deposits will be made in cash or marketable securities and will in each
case be an amount sufficient, on an actuarial basis, to cause the total assets
of the trust immediately following the



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deposit to reasonably approximate the Company’s
then current obligation hereunder if the Executive then experienced a
Separation from Service.  After the
Benefit has been paid, any amounts remaining in the trust will be distributed
to the Company.


(c)           The
Company will exercise commercially reasonable efforts to cause the grantor
trust and its assets described in the preceding paragraph to be excluded from
any security interest granted by the Company to secure its debts, including
under the credit agreements it is currently negotiating.  To the extent the Company is successful in
excluding grantor trust assets from security interests granted under such
credit agreements, but subsequently negotiates additional or replacement credit
agreements, the Company agrees that it will (i) not agree in any such
additional or replacement credit agreement to grant any security interest to
any additional or replacement lender in any amounts held in the trust and
excluded from any then existing lender’s security interests at the time the
Company enters into such additional or replacement credit agreement, and (ii)
use commercially reasonable efforts to exclude from any additional or replacement
lender’s security interests any assets to be contributed to the trust after the
date of such additional or replacement credit agreement.  Nothing in this paragraph will be deemed to
exclude the assets of the grantor trust from the reach of the Company’s general
creditors in the event of insolvency or bankruptcy.


5.            ADMINISTRATION.


The Board, as Plan Administrator, will have
full power, authority and discretion to (i) supply omissions, reconcile
inconsistencies and to otherwise interpret this Agreement, (ii) prescribe,
amend and rescind any rules, forms and procedures as it deems necessary or
appropriate for the proper administration of this Agreement, and (iii) make other
determinations and take other such actions as it deems necessary or advisable
in carrying out its duties under this Agreement.  All action taken by the Plan Administrator
arising out of, or in connection with, the administration of this Agreement or
any rules adopted hereunder will be final, conclusive and binding upon the
Company and the Executive.


6.            CLAIMS PROCEDURE.


(a)        
Pursuant to the requirements of ERISA, claims for benefits hereunder will be
handled in accordance with 29 CFR §2560.503-1, as such regulations of the
United States Department of Labor may from time to time be amended, as follows:


(i)            In
General.  If the Executive believes
that he is being denied any rights or benefits under this Agreement, he may
file a claim in writing with the Plan Administrator.  If any such claim is wholly or partially
denied, the Plan Administrator will notify the Executive of its decision in
writing.  Such notification will contain
(1) specific reasons for the denial, (2) specific reference to pertinent
provisions of this Agreement, (3) a description of any additional material or
information necessary for the Executive to perfect such claim and an
explanation of why such material or information is necessary, and (4)
information as to the steps to be taken if the Executive wishes to submit a
request for review.  Such notification
will be given within 90 days after the claim is received by the Plan
Administrator (or within 180 days, if special circumstances require an
extension of time for processing the claim and if written notice of such
extension and circumstances is given to the Executive within the initial 90-day
period).



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If such notification is not given within the
specified period, the claim will be deemed denied and the Executive may then
appeal the denial of his claim.


(ii)           Appeals.  Within 60 days after the date on which the
Executive receives a written notice of a denied claim (or, if applicable,
within 60 days after the date on which denial is deemed to have occurred) the
Executive (or his duly authorized representative) may (1) file a written
request with the Plan Administrator for a review of his denied claim and of
pertinent documents and (ii) submit written issues and comments to the Plan
Administrator.  The Plan Administrator
will notify the Executive of its decision in writing.  Such notification will be written in a manner
calculated to be understood by the Executive and will contain specific reasons
for the decision as well as specific references to pertinent provisions of this
Agreement.  The decision on review will
be made within 60 days after the request for review is received by the Plan
Administrator (or within 120 days, if special circumstances, such as an
election by the Plan Administrator to hold a hearing, require an extension of
time for processing the request, and if written notice of such extension and
circumstances is given to the Executive within the initial 60-day period).  If the decision on review is not made within
such period, the claim will be considered denied.


(b)           Mediation.  If the Executive is dissatisfied with the
Plan Administrator’s decision upon appeal, the Executive agrees that he will
make a good faith attempt to resolve his claim by submitting the matter to
mediation in Philadelphia, Pennsylvania before resorting to any other
proceeding or forum.  The parties will
submit the matter to mediation within 5 business days of the determination that
there is a dispute and will choose a mediator within 5 business days following
such submission, provided that if the parties cannot agree on a mediator, the
mediator will be selected by the American Arbitration Association.  Within 30 days after the selection of the
mediator, the parties and their respective attorneys will meet with the
mediator for two mediation sessions of at least two hours each.  If the claim or dispute cannot be settled
during such mediation sessions (or a mutually agreed continuation of those
sessions), either of the parties may give the mediator and the other party
written notice declaring the end of the mediation process.  All discussions connected with this mediation
provision will be confidential and treated as compromise and settlement
discussions.  Accordingly, nothing
disclosed in such discussions may be used for any purpose in any later
proceeding.


7.            MISCELLANEOUS PROVISIONS.


(a)           Entire Agreement. 
This Agreement represents the entire agreement between the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature regarding that subject matter.


(b)           Employment Status. This Agreement does not
constitute a contract of employment or impose upon the Executive any obligation
to remain as an employee, nor does it impose on the Company any obligation (i)
to retain the Executive as an employee or (ii) to limit in any respect the
right of the Company to discharge the Executive at any time for any reason.  For avoidance of doubt, service as a director
will not, itself, constitute employment by the Company for purposes of this
Agreement.



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(c)           Non-alienation. 
Except as expressly provided herein with respect to payment to a
designated beneficiary in the event of the Executive’s premature death, the
rights and interests of the Executive under this Agreement will not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge
or encumbrance by the Executive or any person claiming under or through the
Executive, nor will they be subject to the debts, contracts, liabilities or
torts of the Executive or anyone else prior to payment.


(d)           Notices. Any notices provided hereunder must be in
writing, and such notices or any other written communication will be deemed
effective upon the earlier of personal delivery (including personal delivery by
facsimile) or the third day after mailing by first class mail, to the Company
at its primary office location and to the Executive at the Executive’s address
as listed in the Company’s payroll records.  Any payments made by the Company to the Executive
under the terms of this Agreement will be delivered to the Executive either in
person or at the address as listed in the Company’s payroll records.  


(e)           Legal Construction. All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the laws of the Commonwealth of Pennsylvania, without regard to such state’s
conflict of laws rules, to the extent that such laws are not preempted by
ERISA.


(f)            Amendment.  This
Agreement may only be amended by a writing signed by each of the parties
hereto.


(g)           Counterparts.  This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.


IN WITNESS
WHEREOF, the parties hereto have executed this Agreement on the respective
date(s) below indicated.


MOTHERS WORK, INC.


	
  By:

  	
  /s/ Edward M. Krell

  	
   

  	
  Date:

  	
   

  	
  March 2, 2007

  	
   

  
	
  Name:

  	
  Edward M. Krell

  
	
  Title:

  	
  Executive Vice President - Chief Financial Officer

  



 


EXECUTIVE


	
  By:

  	
  /s/ Dan W. Matthias

  	
   

  	
  Date:

  	
   

  	
  March 2, 2007

  	
   

  
	
   

  	
  Dan W. Matthias

  



 



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