EMPLOYMENT AGREEMENT

THIS AGREEMENT, is made as of the 23rd day of December, 2004, between FACTORY CARD OUTLET OF AMERICA LTD, an Illinois corporation (hereinafter, together with any successor thereof, referred to as the Corporation), and Gary Rada (the Executive).

W I T N E S S E T H:

WHEREAS, the Corporation and the Executive entered into an Employment Agreement (the Prior Agreement) dated as of April 8, 2002 which expires on April 8, 2005; and

WHEREAS, the Corporation desires to continue to employ the Executive after April 8, 2005, and the Executive is willing to render such services, in accordance with the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter contained, the parties hereto agree as follows:

1. Effectiveness of Agreement. Notwithstanding any other provision of this Agreement, this Agreement shall supersede any prior employment agreement with the Executive, including the Prior Agreement.

2. Term. Unless earlier terminated pursuant to Sections 8, 9 and 10 below, the employment term shall begin on the on the date hereof, and shall continue until April 8, 2007 (the Initial Term); provided that such term shall be automatically extended for subsequent one-year terms terminating on the next succeeding anniversary date of this Agreement (each such term an Additional Term, and all such terms, collectively with the Initial Term, the Employment Term or Term) unless either the Executive or the Corporation shall have given written notice to the other party that such party does not desire to extend the term of this

Agreement, such notice to be given at least sixty (60) days prior to the end of the Initial Term or an Additional Term, as applicable (such notice to be referred to herein as a Notice of Non-Renewal). Notwithstanding anything else herein and without implication for any other provisions hereof, the provisions of Sections 10 and 14 hereof shall survive and remain in effect notwithstanding the termination of the Employment Term for any reason or a breach or repudiation or alleged breach or repudiation by the Corporation of this Agreement or any one or more of its terms.

3. Duties and Extent of Services. (a) During the Term, the Executive shall serve as the President and Chief Executive Officer of the Corporation faithfully and to the best of his ability under the direction of the Board of Directors of the Corporation (the Board), and shall devote substantially all of his business time, energy and skill to such employment. The Executive shall perform the duties commensurate with the position of the President and Chief Executive Officer, including specific duties and services of a senior executive nature as the Board shall reasonably request. The Executives title(s) shall not be changed and his functions and responsibilities shall not be materially diminished without his written consent.

4. Salary. During the Term, the Corporation agrees to pay the Executive an annual salary in the amount of Four Hundred and Five Thousand Dollars ($405,000), subject to review and increases at the discretion of the Board. The Executives salary shall be paid in accordance with the Corporations payroll practices for its officers.

5. Annual Bonus. With respect to the Corporations fiscal year ending on January 29, 2005, the Executive shall be entitled to a bonus in accordance with the terms of the Corporations Management Incentive Program for such year in effect on the date hereof (Current Incentive Program), such bonus shall be the Target Bonus (as defined below) for such

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fiscal year. With respect to subsequent fiscal years, the Executive shall have a reasonable opportunity to earn a bonus of sixty percent (60%) of his annual salary (the Target Bonus) with respect to each fiscal year of the Corporation during which the Executive is employed by the Corporation or any affiliate thereof, subject to the achievement of Corporation and/or individual performance objectives reasonably established by the Board and subject to increase or decrease based on actual performance compared to target objectives in a similar manner as the Current Incentive Program. Such bonus, if any, shall be paid in respect of any fiscal year within ninety (90) days after the end of such fiscal year of the Corporation or, if earlier, as soon as practicable following the Corporations receipt of its audited financial statement for such fiscal year.

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