Document:

Exhibit
10.3

CONFIDENTIAL

SEPARATION, RELEASE AND

CONSULTING SERVICES
AGREEMENT

THIS SEPARATION RELEASE AND CONSULTING SERVICES AGREEMENT (“Agreement”),
is entered into as of May 3, 2007, by and between Dyax Corp., a Delaware
corporation with a principal place of business at 300 Technology Square,
Cambridge, MA 02139 (“Dyax”) and Thomas R. Beck, M.D. of 345 Silver Hill Road,
Concord, MA 01742 (“Beck”).

In consideration of the mutual covenants contained herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Dyax and Beck hereby agree as follows:

1.                                      Termination.

Beck’s
employment with Dyax terminated as of May 3, 2007 (the “Termination Date”).  Furthermore, by this Agreement and in
consideration for the compensation and other benefits provided to Beck
hereunder, Beck acknowledges and agrees that all rights provided to him under
his employment offer letter, dated May 31, 2005 (the “Offer Letter”), and his “change
in control” agreement, also dated May 31, 2005, are hereby terminated.

2.                                      Consulting
Services.

Upon Dyax’s receipt of a
fully-executed copy of this Agreement, and upon the expiration of the seven-day
period referenced in Section 16 below without revocation of this Agreement by
Beck, Dyax will engage Beck as a consultant through the Term of this Agreement,
to provide strategic and operational advice with respect to clinical, regulatory
and product development functions within Dyax, together with such other responsibilities
as the Chief Executive Officer may designate
in connection therewith (the “Consulting Services”), all in accordance
with the following:

(a)                                  Beck shall be accountable to the Chief Executive
Officer and shall perform and discharge, faithfully and to the best of Beck’s
ability, all duties and responsibilities hereunder in a professional
manner in accordance with the terms and conditions of this Agreement and the
policies set by Dyax from time to
time.

(b)                                 Beck
acknowledges and agrees that the Consulting Services may include attendance at
meetings (both at Dyax and offsite) and reasonable travel activities.

(c)                                  In performing the Consulting Services, Beck
shall not be authorized to take any external action on behalf of Dyax without
Dyax’s prior written consent.

(d)                                 At all times
during the term of this Agreement, Beck is and shall be an independent
contractor in providing the Consulting Services hereunder.  Except as expressly set forth herein, this
Agreement shall not be deemed or construed to create a partnership or joint
venture, to create the relationships of employee/employer or principal/agent,
or otherwise create any liability whatsoever of either party with respect to
the indebtedness, liabilities, obligations or actions of the other party or any
of their employees or agents, or any other person or entity.

3.                                      Consulting
Schedule; Availability.

During the Term of this
Agreement, Beck shall be available to perform the Consulting Services upon
request, from time-to-time, according to a
schedule mutually agreed upon by Chief
Executive Officer and Beck in advance. Beck represents and warrants that
he is not under any contractual obligation or other restriction which is
inconsistent with Beck’s execution of this Agreement or the performance of the
Consulting Services.  Furthermore, Beck
covenants that, during the Term of this Agreement, he will not enter into any
agreement, either written or oral, which conflicts with this Agreement or
limits the ability of Beck to furnish the Consulting Services in any way.

4.                                      Consulting
Fees.

In consideration for the
performance of Consulting Services and Beck’s other obligations hereunder, Dyax
will pay Beck:

(a)          a consulting fee equal to $29,466.66
per month during the Term of this Agreement, payable no more frequently than
bi-weekly; and

(b)         if and to the extent that Beck is required to perform the
Consulting Services above and beyond fifty (50) working days during the term of this
Agreement, an additional consulting fee of $2,500 per day for each such
day.  Dyax agrees that it will not
require Beck to perform the Consulting Services for more than ten (10) days per
month during the first five (5) months of the Term of this Agreement and no
more than five (5) days per month during the remaining four (4) months of the
Term of the Agreement.

Dyax acknowledges and agrees
that, prior to the execution of this Agreement, Beck was entitled to a minimum
of six (6) months severance pursuant to the terms of the Offer Letter.  Therefore, the equivalent of six (6) months
severance at the rate of Beck’s base salary at the Termination Date does not
constitute consideration for this Agreement.

5.                                      Reimbursement
of Expenses.

Dyax will reimburse Beck on a monthly basis for all pre-authorized
out-of-pocket expenses and travel reasonably requested by Dyax in connection
with the Consulting Services. 
Reimbursement of such expenses shall be made by Dyax only after receipt
of an itemized statement from Beck with actual bills, receipts, or other
reasonable evidence of expenses.

6.                                      Stock
Options.

A schedule setting forth all of the vested and unvested stock options
granted to Beck prior to the Termination Date is attached to this Agreement as Exhibit
A.  As additional consideration for
the performance of Consulting Services and Beck’s other obligations hereunder,
Dyax and Beck hereby agree that, notwithstanding anything to the contrary
contained in any prior agreement, any and all of Beck’s vested stock options
will remain exercisable by Beck for a period of two (2) years following the termination
of this Agreement.  Beck acknowledges and
agrees that this extension will cause any such options which had previously
been qualified as Incentive Stock Options under Section 422 of the Internal
Revenue Code to

 2
 

become non-qualified options and loose, irrevocably, any tax-advantaged
treatment previously available. Dyax represents that this extension is
permissible under all applicable laws and stock option plans.

Any and all of Beck’s unvested stock options will terminate as of the Termination
Date.

7.                                      Benefits.

(a)                                  Group Health and
Dental Coverage.  From and
after the Termination Date, Beck shall continue to be eligible to receive group
health and dental insurance as provided by federal COBRA law.  During the Term of this Agreement, the cost
of such insurance shall be shared between Dyax and Beck to the same extent it
was shared while Beck was an employee of Dyax. 
After the termination of this Agreement, Beck shall be solely
responsible for the cost of such insurance. Beck agrees to notify Dyax promptly
when he is covered by another plan.

(b)                                 Retirement Plans.  Beck shall be entitled to any vested benefit
in the Dyax 401(k) Plan earned as an employee of Dyax prior to the Termination
Date.  Service credit will cease as of
the Termination Date.

(c)                                  Vacation Pay.  Beck acknowledges that he has received full
payment for all accrued unused paid time off earned as an employee of Dyax
prior to the Termination Date.

(d)                                 D&O Insurance.  Beck
will continue to be covered by Dyax’s Directors & Officers (D&O)
insurance policy in accordance with the terms of such policy.  In addition, the by-laws of Dyax require Dyax,
to the fullest extent permitted by the General Corporation Law of the State of
Delaware (the state in which Dyax was incorporated), to indemnify each person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was, or
has agreed to become, a director or officer of Dyax.

(e)                                  Cessation of
Other Benefits. Except as expressly stated herein, Beck shall not
be entitled to participate in, or receive benefits under, any of Dyax’s
employee benefit plans or arrangements.

8.                                      Competition
Solicitation.

(a)                                  During the Term of this
Agreement, and for a period of two (2) years thereafter, Beck shall not, without Dyax’s prior written
consent, directly or indirectly, as principal, employee, consultant, partner or
stockholder of, or in any capacity with, any business enterprise (other than as
a holder of not more than 1% of the combined voting power of the outstanding
stock of a publicly held company) develop, design, produce, market, sell or
render (or assist any other person or entity in developing, designing,
producing, marketing, selling or rendering) any product, process or service:
(i) which is identical to, substantially the same as, or an adequate substitute
for any product, process or service of Dyax in existence or under development
during the term of this Agreement and on which Beck worked or about which Beck acquired
Confidential Information (as defined in the Confidentiality Agreement between
Dyax and Beck, dated May 31, 2005 (the “Beck Confidentiality Agreement”); and
(ii) which is (or could reasonably be anticipated to be) marketed,

 3
 

distributed or provided in
such a manner as to actually compete with the product, process or service of
Dyax.

(b)                                 During the Term of this
Agreement (as defined below), and for a period of one (1) year thereafter, Beck shall not, without Dyax’s prior written
consent, directly or indirectly, as principal, employee, consultant, partner or
stockholder of, or in any capacity with, any business enterprise (other than as
a holder of not more than 1% of the combined voting power of the outstanding
stock of a publicly held company): (i)
solicit, take away or hire any employees or exclusive consultants of Dyax; (ii)
knowingly solicit or divert any of the business being conducted by Dyax; (iii) knowingly
solicit, divert or accept any business that is being actively pursued by Dyax
with any customer or partner; or (iv) divert investors or potential investors
from Dyax.

9.                                      Nondisparagement.

(a)                                  Beck agrees that
he will not make any disparaging remarks to any third party concerning Dyax or
any of its officers, directors, agents, employees, successors and assigns which
might damage or adversely affect their respective reputations, goodwill, or
businesses.

(b)                                 Dyax agrees that
none of its officers or directors will make any disparaging remarks to any
third party concerning Beck, or any other comments to any third party regarding
Beck which might damage or adversely affect his reputation, goodwill, or
business.

10.                               Intellectual
Property.

Beck
shall promptly and fully disclose to Dyax any and all inventions, improvements,
discoveries, developments, original works of authorship, trade secrets, or
other intellectual property (whether or not reduced to practice and whether or
not protectible under state, federal or foreign patent, copyright, trade
secrecy or similar laws) conceived, developed or reduced to practice by Beck or
any of his employees in connection with the performance of the Consulting
Services or resulting from the Confidential Information acquired or generated
by Beck during the term of this Agreement (“Intellectual Property”).  Beck agrees to assign, and does hereby
assign, to Dyax and its successors and assigns, without further consideration,
the entire right, title and interest in and to the Intellectual Property. Beck further
agrees to execute all applications for patents and/or copyrights, domestic or
foreign, assignments and other papers necessary to secure and enforce rights
related to such Intellectual Property.

11.                               Confidential
Information.

Beck
acknowledges and agrees that he has continuing obligations to Dyax pursuant to
Section 1(a)-(d) of the Beck Confidentiality Agreement.

12.                               MUTUAL
RELEASE.

Beck
for himself, executors, heirs, administrators, assigns, and anyone else
claiming by, through or under him, irrevocably and unconditionally, releases,
and forever discharges Dyax from, and with respect to, any and all debts,
demands, actions, causes of action, suits, covenants, contracts, wages,
bonuses, damages and any and all claims, demands, liabilities, and expenses
(including attorneys’ fees and costs) whatsoever

 4
 

of
any name or nature both in law and in equity, whether known or unknown (“Claim”)
which Beck now has, ever had or may in the future have against Dyax by reason
of any matter, cause or thing which has happened, developed or occurred before
the execution of this Agreement, including, but not limited to, (i) any and all
claims, asserted or unasserted, arising from employee’s employment with or
separation from Dyax, and specifically including any claims employee may have
under any federal, state or local labor, employment, discrimination, human
rights, civil rights, wage/hour, pension, or tort law, statute, order, rule,
regulation or public policy, including but not limited to, those arising under
the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act,
the Fair Labor Standards Act, the Americans With Disabilities Act of 1990, the
Civil Rights Acts of 1964 and 1991, the Civil Rights Act of 1866, Employee
Retirement Income Security Act of 1974, the Rehabilitation Act of 1973, the
Family and Medical Leave Act of 1993, the Equal Pay Act of 1963, the
Massachusetts Fair Employment Practices Act, the Massachusetts Payment of Wages
Statute, and Chapters 149 through 154 of the Massachusetts General Laws, (ii)
those arising under common law, including but not limited to claims or suits
for intentional interference with contractual relations, breach of the implied
covenant of good faith and fair dealing, breach of contract, wrongful
termination, negligent supervision, negligence, intentional and negligent
infliction of emotional distress, defamation, false imprisonment, libel, and
slander, and (iii) any other action or grievance against the other party based
upon any conduct whatsoever, which has happened, developed, or occurred before
the signing of this Agreement.  It is
expressly agreed and understood that the release contained herein is a GENERAL
RELEASE.  In the event that Beck
institutes any action hereby released or to which he has agreed not to sue, the
claim shall be dismissed immediately upon presentation of this Agreement.  Beck further agrees not to institute any
charge, complaint, or lawsuit to challenge the validity of this Agreement or
the circumstances surrounding its execution.

Dyax agrees to release and
forever discharge Beck from liability for any and all claims, damages, causes
of action, both in law and equity, which Dyax now has or may have, whether
known or unknown, suspected or unsuspected, and whether asserted or not,
against Beck including, but not limited to, any claims arising out of or connected
with Beck’s employment by Dyax and his termination there from, except for the
following: (1) any claim related to any intentional or negligent tort or
omission committed or omitted by Beck; (2) any claim which may arise based on
any act or omission occurring after the execution of this Agreement; or (3) any
claim for breach of this Agreement.

13.                               Return of Property.

Upon
request of Dyax made at any time on or after the Effective Date, Beck shall
return all property belonging to Dyax, including but not limited to papers,
files, documents, reference guides, equipment, keys, identification, credit
cards, software, computer access codes, disks, supplies and institutional
manuals, and Beck shall not retain any copies, duplicates, reproductions or
excerpts of any of the foregoing.

14.                               Breach.

Except
as provided in Section 17(b) below, Beck agrees that the compensation and
benefits contained in this Agreement and which flow to Beck from Dyax are
subject to termination, reduction, cancellation or repayment in the event that
Beck takes any action or engages in any conduct in violation of this
Agreement.  Beck further acknowledges
that any breach of this Agreement by Beck may cause irreparable damage to Dyax
and that in the event of such breach, Dyax shall be entitled, in addition to
monetary damages and to any other remedies available to Dyax under this
Agreement and at law, to equitable relief, including

 5
 

injunctive
relief.  In the event that Beck
institutes legal proceedings to enforce this Agreement, the sole remedy
available to Beck shall be enforcement of the terms of this Agreement and/or a
claim for damages resulting from the breach of this Agreement, but that under
no circumstances shall Beck be entitled to receive or collect any damages for
claims that Beck has released under this Agreement.

15.                               Time to Consider Agreement.

Beck acknowledges that he has
been advised to consult with an attorney and has had ample time to consult with
an attorney of his choice, and has been given a period of at least twenty-one
days within which to consider whether to sign this Agreement.  Beck may sign this Agreement prior to the end
of this twenty-one day period, provided that Beck does this knowingly and
voluntarily.

16.                               Revocation.

It is agreed that for a
period of seven days following the execution of this Agreement, which period
shall end at 11:59 p.m. on the seventh day following the date of execution by
Beck, Beck may revoke this Agreement. 
This Agreement will not become effective until this revocation period
has expired (the “Effective Date”).  This
seven-day revocation period cannot be shortened by agreement of the parties or
by any other means.

17.                               Term and Termination.

(a)                                  The term of this Agreement shall commence on
the Effective Date and, unless earlier terminated in accordance with Section 17(b)
below, shall continue though February 10, 2008 (the “Term”).

(b)                                 In the event of a breach or default of a
material provision of this Agreement by either party, the other party can
terminate this Agreement immediately upon written notice to the other party.  For the avoidance of doubt, the parties agree
that Sections 8, 9, 10, 11 and 12 are all material provisions of this Agreement
and that upon any breach by either party of their respective obligations
thereunder, the non-breaching party can terminate this Agreement immediately
upon written notice to the breaching party.  
In the event of any termination of this Agreement, Dyax shall be
obligated to pay to Beck the greater of (i) any amounts owed pursuant to this
Agreement through the effective date of such termination or (ii) the equivalent
of (A) six (6) months severance at the rate of Beck’s monthly base salary at
the Termination Date, less (B) any amounts already paid to Beck under this
Agreement through the effective date of such termination.

(c)                                  Sections 8, 9, 10, 11, 12, 13, 14, 17, 19, 21
and 22 shall survive termination of this Agreement.

 6
 

18.                               Acknowledgements.

Beck
acknowledges that in exchange for entering into this Agreement he has received
good and valuable consideration in excess of that to which he would otherwise
have been entitled in the absence of this Agreement.  This consideration includes, but is not
limited to, a portion of the the consulting fees payable to Beck as described
in Section 4, extending the period under which his stock options may be
exercised as described in Section 6, and extending Dyax’s obligation to pay its
portion of COBRA benefits as described in Section 7(a).  Beck further acknowledges the sufficiency of
that consideration.

19.                               Governing
Law.

This
Agreement shall be governed in all respects, including construction, validity,
terms, performance and waiver, by the laws of the Commonwealth of Massachusetts
without giving effect to the conflicts of laws rules therefor.  Both parties agree to submit to jurisdiction
in Massachusetts and further agree that any cause of action arising under this
Agreement may be brought in a court in Middlesex County, Massachusetts.

20.                               Notices.

Any notice or other
communication required or which may be given hereunder shall be in writing and
either be personally delivered or be mailed, certified, registered or overnight
mail, postage prepaid and shall be deemed given when or so delivered or, if
mailed, 72 hours after the time of such mailing, as follows:

	
  If to Beck:

  	
  If to Dyax:

  
	
   

  	
   

  
	
  Thomas R. Beck

  345 Silver Hill Road

  Concord, MA 01742

  Facsimile: (978) 418-9177

  	
  Dyax Corp.

  300 Technology Square

  Cambridge, MA 02139

  Attention: Chief Executive Officer

  Attention: General Counsel

  Facsimile: (617) 225-2501

  

 

Each party may change the persons and addresses to which notices or
other communications are to be sent by giving written notice of any such change
in the manner provided for herein for giving notice.

21.                               Disputes.

Any controversy or claim
arising out of or relating to this Agreement or breach thereof shall be settled
by arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and according to the
laws of the Commonwealth of Massachusetts. 
Judgment upon any award rendered by arbitration may be entered in any
court having jurisdiction thereof.  Costs
and fees of the arbitrators shall be paid equally by the parties, and each party
shall be responsible for its own fees and expenses of the arbitration, unless
the arbitrators’ award provides otherwise.

 7
 

22.                               Use of Names.

Beck agrees that he will not
disclose, directly or indirectly, the existence of this Agreement or any terms
or provisions of this Agreement without prior written consent of Dyax, except:
(a) to members of Beck’s immediate family, on the condition that they be
advised that they cannot further disclose the same to others; (b) as may be
necessary to obtain professional legal and/or tax advice; and (c) as required
by applicable law.  For purposes of this
paragraph, “immediate family” includes spouse, parents and children.  In addition, neither party shall use the name
of the other party in any public document, statement, advertisement or release without
the prior consent of such party.

23.                               Parties Bound: Assignment.

This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns provided however, neither Beck nor
Dyax may assign this Agreement without the prior written consent of the other
party which may be reasonably withheld in the sole discretion of such party.

24.                               Amendment: Waiver.

No modification or amendment
hereof shall be valid and binding, unless it be in writing and signed by the
parties hereto. The waiver of any provisions hereof shall be effective only if
in writing and signed by the parties hereto, and then only in specific instance
and for the particular purpose for which it was given. No failure to exercise,
and no delay in exercising, any right or power hereunder shall operate as
waiver thereof.

25.                               Entire Agreement.

This Agreement constitutes
the entire agreement of the parties with regard to the subject matter hereof
and supersedes all previous written or oral representations, agreements and
understandings between Dyax and Beck including, without limitation, the Offer Letter
(except as provided above) and “change of control” agreement described in
Section 1.  Notwithstanding the foregoing,
the parties agree that Sections 1(a)-(d) of the Beck Confidentiality Agreement
shall remain in effect in accordance with their terms.

IN WITNESS WHEREOF, the parties have signed this
Agreement as of this 3rd day
of May, 2007.

	
  DYAX CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:  Stephen S. Galliker,

  	
   

  
	
   

  	
  Executive Vice
  President, Finance and

  	
   

  
	
   

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  
	
   

  
	
  /s/ Stephen S.
  Galliker

  	
   

  	
  May 3, 2007

  	
   

  	
  /s/ Thomas R. Beck

  	
   

  	
  May 3, 2007

  	
   

  
	
  Signature

  	
   

  	
  Date

  	
   

  	
  Thomas R. Beck

  	
   

  	
  Date

  	
   

  
										

 

 8
 

EXHIBIT A

(See Attached Personnel Summary)

 9
 

PERSONNEL SUMMARY

AS OF 5/1/2007

Report Type:         All

ID is equal to 013389294

	
  Name

  	
   

  	
  ID

  	
   

  	
  Grant

  Number

  	
   

  	
  Grant

  Date

  	
   

  	
  Plan/

  Type

  	
   

  	
  Shares

  	
   

  	
  Price

  	
   

  	
  Exercised/

  Released

  	
   

  	
  Vested

  	
   

  	
  Cancelled

  	
   

  	
  Unvested

  	
   

  	
  Outstanding/

  Unrealesed

  	
   

  	
  Exercisable/

  Releasable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beck, Thomas R.

  	
   

  	
  013389294

  	
   

  	
  00002344

  	
  *

  	
  1/19/2005

  	
   

  	
  1995/NQ

  	
   

  	
  2,500

  	
   

  	
  $

  	
  6,620

  	
   

  	
  0

  	
   

  	
  2,500

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  2,500

  	
   

  	
  2,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002345

  	
  *

  	
  2/18/2005

  	
   

  	
  1995/NQ

  	
   

  	
  2,500

  	
   

  	
  $

  	
  5,200

  	
   

  	
  0

  	
   

  	
  2,500

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  2,500

  	
   

  	
  2,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002542

  	
  *

  	
  3/19/20005

  	
   

  	
  1995/NQ

  	
   

  	
  5,000

  	
   

  	
  $

  	
  4,340

  	
   

  	
  0

  	
   

  	
  5,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5,000

  	
   

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002543

  	
  *

  	
  4/19/2005

  	
   

  	
  1995/NQ

  	
   

  	
  5,000

  	
   

  	
  $

  	
  3,900

  	
   

  	
  0

  	
   

  	
  5,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5,000

  	
   

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002544

  	
  *

  	
  5/19/2005

  	
   

  	
  1995/NQ

  	
   

  	
  5,000

  	
   

  	
  $

  	
  4,460

  	
   

  	
  0

  	
   

  	
  5,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5,000

  	
   

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002563

  	
  *

  	
  6/1/2005

  	
   

  	
  1995/ISO

  	
   

  	
  80,000

  	
   

  	
  $

  	
  4,590

  	
   

  	
  0

  	
   

  	
  35,000

  	
   

  	
  0

  	
   

  	
  45,000

  	
   

  	
  80,000

  	
   

  	
  35,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002564

  	
  *

  	
  6/1/2005

  	
   

  	
  1995/ISO

  	
   

  	
  11,786

  	
   

  	
  $

  	
  4,590

  	
   

  	
  0

  	
   

  	
  11,786

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  11,786

  	
   

  	
  11,786

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002565

  	
  *

  	
  6/1/2005

  	
   

  	
  1995/NQ

  	
   

  	
  8,214

  	
   

  	
  $

  	
  4,590

  	
   

  	
  0

  	
   

  	
  8,214

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  8,214

  	
   

  	
  8,214

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002684

  	
  *

  	
  12/8/2005

  	
   

  	
  1995/ISO

  	
   

  	
  1,902

  	
   

  	
  $

  	
  4,310

  	
   

  	
  0

  	
   

  	
  634

  	
   

  	
  0

  	
   

  	
  1,268

  	
   

  	
  1,902

  	
   

  	
  634

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002685

  	
  *

  	
  12/8/2005

  	
   

  	
  1995/NQ

  	
   

  	
  23,098

  	
   

  	
  $

  	
  4,310

  	
   

  	
  0

  	
   

  	
  7,699

  	
   

  	
  0

  	
   

  	
  15,399

  	
   

  	
  23,098

  	
   

  	
  7,699

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002743

  	
  *

  	
  7/3/2006

  	
   

  	
  1995/ISO

  	
   

  	
  38,562

  	
   

  	
  $

  	
  2,940

  	
   

  	
  0

  	
   

  	
  2,788

  	
   

  	
  0

  	
   

  	
  35,774

  	
   

  	
  38,562

  	
   

  	
  2,788

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  00002744

  	
  *

  	
  7/3/2006

  	
   

  	
  1995/NQ

  	
   

  	
  61,438

  	
   

  	
  $

  	
  2,940

  	
   

  	
  0

  	
   

  	
  15,962

  	
   

  	
  0

  	
   

  	
  45,476

  	
   

  	
  61,438

  	
   

  	
  15,962

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Account: Beck, Thomas R.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  245,000

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  102,083

  	
   

  	
  0

  	
   

  	
  142,917

  	
   

  	
  245,000

  	
   

  	
  102,083

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  245,000

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  102,083

  	
   

  	
  0

  	
   

  	
  142,917

  	
   

  	
  245,000

  	
   

  	
  102,083

  	
   

  

 

* This option requires acceptance before exercise, but has not yet
been accepted.

 10Exhibit
10.33

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 REBECCA C. 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 her continued
service with the Company, the Company desires to provide the Executive with
supplemental retirement benefits upon her 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
2, 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 331/3%
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 

 2
 

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 her 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 her
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 her spouse or, if the Executive is unmarried at the time of
her 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 

 3
 

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 she is being denied any rights or benefits under this Agreement, she 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).  

 4
 

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 her 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 her duly authorized representative) may (1) file a written
request with the Plan Administrator for a review of her 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 she will
make a good faith attempt to resolve her 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.

 5
 

(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/ Rebecca C. Matthias

  	
    

  	
  Date:

  	
  March 2, 2007

  	
    

  
	
   

  	
  Rebecca C. Matthias

  	
   

  	
   

  
							

 

 6

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