EMPLOYMENT AGREEMENT

                              --------------------



                  THIS AGREEMENT, is made as of the eighth day of April, 2002,

between FACTORY CARD OUTLET OF AMERICA LTD, an Illinois corporation

(hereinafter, together with any successor thereof, referred to as the

"Corporation"), and Gary Rada ("Executive").



                              W I T N E S S E T H:

                               - - - - - - - - - -



                  WHEREAS, the Corporation and certain of its subsidiaries and

affiliates ("Debtors") filed petitions for protection under chapter 11 of the

Bankruptcy Code with the Bankruptcy Court for the District of Delaware (the

"Court");



                  WHEREAS, an Amended Plan of Reorganization proposed by the

Corporation dated February 5, 2002, as the same may be amended ("Plan") was

confirmed by the Court on March 20, 2002;



                  WHEREAS, Executive is a member of the Executive and Operating

Committees of the Corporation, and the Corporation desires to retain the

services of the Executive upon the terms and conditions set forth below; and



                  WHEREAS, the Executive is desirous of entering into the

Agreement with the Corporation, subject to 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 and become effective on the effective date of the

Plan (the "Effective Date"), except that this Agreement shall not supercede,

cancel or otherwise eliminate or nullify any obligations of the Corporation to





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the Executive pursuant to the terms of the "Fall 2001 Retention Program," dated

July 29, 2001.



                  2. Term. Unless earlier terminated pursuant to Sections 8, 9

and 10 below, the employment term shall begin on the Effective Date, and shall

continue until the third anniversary date of this Agreement (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 one hundred twenty (120) 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 6, 7, 10, 11 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,

Executive shall serve as the President and Chief Operating Officer and as a

member of the Executive and Operating Committees 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. Executive shall perform the

duties commensurate with the position of President and Chief Operating Officer





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and as a member of the Executive and Operating Committees, including specific

duties and services of a senior executive nature as the Board or superior

officer, if any, shall reasonably request. The Executive's 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 three hundred thousand dollars

($300,000), subject to annual review and increases at the discretion of the

Board. The Executive's salary shall be paid in accordance with the Corporation's

payroll practices for its officers.

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