SUPPLY AND CONSIGNMENT AGREEMENT

1.

Definitions:

A.

“affiliate” has the meaning provided in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

B.

“Conversion Date” shall mean a date as soon as practicable after the date hereof, and in any event before *, mutually agreed to by the Parties after taking into account the preparation of the Warehouse for the consignment of everyday Party Goods. After the Conversion Date, all everyday Party Goods shipped to the Warehouse after such date shall be consigned inventory of Amscan.

C.

“everyday Party Goods” means Party Goods that do not specifically relate to any of the Seasons listed on Exhibit B .

D.

“Party Goods” means all party goods, including without limitation paper and plastic tableware, accessories and novelties, distributed by Amscan or its affiliates, including (i) all such goods currently stocked by Factory Card and (ii) any new goods either developed or acquired by Amscan or its affiliates after the date hereof. Notwithstanding anything set forth herein, “party goods” for the purposes of this Agreement shall not include metallic and/or latex balloons.

E.

“Person” means any entity, individual or group of individuals, including without limitation, any corporation, limited liability company, syndicate or partnership.

F.

“seasonal Party Goods” means Party Goods that specifically relate to one of the Seasons listed on Exhibit B.

G.

“Solid Color Goods” means the solid color paper tableware and plastic tablecovers listed on Exhibit A hereto.

H.

“Warehouse” means Factory Card’s warehouse located at 2727 Diehl Road, Naperville, Illinois 60563-2371 and any other warehouse facilities specified in writing by Factory Card to Amscan.

2.

Supply:

A.

During the Term, and subject to the terms and conditions set forth herein, Amscan shall supply Factory Card with the Party Goods as are ordered by Factory Card pursuant to Section 2.D. hereof.

B.

Except as provided below, Factory Card agrees that, during the Term, and subject to the terms and conditions set forth herein, Amscan shall be the exclusive supplier of Solid Color Goods for all stores

which Factory Card currently owns or directly operates and for such additional stores which Factory Card shall open as new stores, excluding any franchised stores and stores acquired from third party operators (to the extent existing contracts prohibit such an arrangement); provided that, within thirty days after opening any franchised store or any store acquired from third party operators, Factory Card and Amscan shall meet to attempt to negotiate in good faith an additional supply agreement covering such stores on terms mutually satisfactory to the Parties. The foregoing sentence shall not prohibit Factory Card from: (i) obtaining PartyMania branded tablecovers or banquet rolls from any Person; or (ii) obtaining any Solid Color Goods from any Person to the extent that Amscan is unable to fill an order from Factory Card for such Solid Color Goods. Amscan shall be deemed “unable to fill an order,” if Amscan is unable to fill at least * of Solid Color Goods orders with * of submission of such orders by Factory Card.

C.

Factory Card will manage all aspects of the replenishment process and will place orders for Party Goods in its discretion based upon sales data collected through Factory Card’s store-level POS system and shipment data from the Warehouse.

D.

Amscan agrees that, except as expressly set forth in this Agreement, the order and supply by Amscan of the Party Goods pursuant to this Agreement shall be subject to the terms and conditions set forth in the Factory Card Vendor Compliance Manual.

E.

From and after the Conversion Date, Amscan will maintain an inventory level of everyday Party Goods in the Warehouse so that, on an average daily basis each week, the quotient obtained by dividing (i) the aggregate number of skus or designs included in the everyday Party Goods line that are not out of stock in the Warehouse by (ii) the aggregate number of skus or designs included in the everyday Party Goods line that are required for display in Factory Card’s stores at such time (the “Stock Rate”) is *. Factory Card will compute the Stock Rate on an average daily basis and transmit it weekly to Amscan. Notwithstanding the foregoing, Amscan shall not be deemed to have failed to maintain * Stock Rate (i) if Amscan has maintained * fill rate against invoices submitted by Factory Card or (ii) where the failure to maintain the Stock Rate is the result of any errors, omissions or delays in ordering by Factory Card in connection with its management of the replenishment process.

F.

In the event that the Stock Rate at any time or from time to time after the Conversion Date and during the Term is * for *, then Factory Card shall receive a credit equal to * for * that the Stock Rate is * during * until the Stock Rate for such * returns to *; provided that if the Stock Rate during any such subsequent * is *, then the credit for such * shall equal * for * that the Stock Rate *.

For example, if the Stock Rate is * during *, Factory Card shall receive a credit of * for * and * for *. Factory Card would again be entitled to additional credits in the event that the Stock Rate in * after * is *.

3.

Pricing/Allowances/Credits:

A.

During the Term, Solid Color Products sold by Amscan to Factory Card in accordance with the provisions of this Agreement will be invoiced at the prices set forth on Exhibit A . These prices shall not be increased during the Term.

B.

From the date hereof until *, Party Goods (other than Solid Color Products) sold by Amscan to Factory Card in accordance with the provisions of this Agreement will be invoiced as follows: (i) with respect to such Party Goods listed on Exhibit C , the price will be the lower of (x) the price * or (y) the * for such Party Goods; and (ii) with respect to all other Party Goods covered by this Section 3.B, the price will be *, as *. Amscan will endeavor to avoid any price increases after *. In the event that it becomes necessary to increase the price of any Party Good covered by this Section 3.B, Amscan shall give Factory Card * prior written notice of such increase and, if the increase (together with any prior increases during the Term) exceeds * of the price paid by Factory Card on the date hereof, such

increase shall not become effective until * after such written notice; provided that, with respect to the Party Goods listed on Exhibit C , the price will in no event be higher than the Party City everyday contract price for such Party Goods.

C.

During the Term, Amscan shall issue to Factory Card a * allowance * of each year, in an amount equal to the product of (x) * times (y) the number of open Factory Card stores receiving Party Goods ordered pursuant to this Agreement on such date. Factory Card shall feature Amscan Party Goods in such advertising.

D.

Amscan shall issue to Factory Card on a * basis a * allowance in an amount equal to the product of (x) * times (y) the * of all Party Goods * shipped for delivery during such month by Factory Card to its stores.

E.

Amscan shall give Factory Card an allowance for all new Amscan Party Goods that are brought into Factory Card’s planogram sets. The allowance shall be equal to *. Factory Card agrees to provide to Amscan a report that shows inventory levels of the replaced product, together with the dead net cost (including all rebates and discounts) per sku to calculate the allowance.

F.

Amscan shall issue to Factory Card a credit for * of Party Goods ordered by Factory Card in connection with the opening of a new store.

G.

Amscan shall supply to Factory Card an initial load in order of one case as a free fill for each Party Good that is made available through Factory Card’s E-Commerce program.

H.

During the Term, Amscan agrees that all * beverage and luncheon napkins as well as * plates will be supplied, at no additional cost to Factory Card, in cartons designed to be perforated so they can be case stacked at the store level.

4.

Consignment:

A.

Commencing on the Conversion Date, all everyday Party Goods supplied by Amscan on or after such date shall be shipped by Amscan at its own cost and transit risk, to the Warehouse as consigned inventory. Amscan shall retain full ownership of all consigned inventory until sold to Factory Card in accordance with the provisions of this Agreement. Factory Card shall hold all such consigned everyday Party Goods as consignee for Amscan until Factory Card ships such Party Goods to a Factory Card store. Payments for everyday Party Goods shipped by Amscan on and after the Conversion Date shall be due to Amscan in accordance with Section 5.B.

B.

In connection with the consignment hereunder, Factory Card represents and warrants that Exhibit D hereto sets forth all secured creditors of Factory Card.

5.

Payment Terms:

A.

Payment for all everyday Party Goods, including Solid Color Goods, shipped by Amscan to the Warehouse prior to the Conversion Date shall be *.

B.

Payment for everyday Party Goods, including Solid Color Goods, shipped by Amscan to the Warehouse on or after the Conversion Date, shall be * from the date Factory Card ships such Goods from the Warehouse to its stores. For billing purposes, everyday Party Goods shall be deemed sold by Amscan to Factory Card at the moment Factory Card ships such everyday Party Goods from the Warehouse to its stores. Factory Card shall use optical scanners and its existing conveyer belt system to record inventory picked from its warehouse bins. At the beginning of each week, Factory Card will transmit the complete details of each order shipped during the previous week. The transmission will serve as the basis for the everyday Party Goods invoices created by Amscan which will be transmitted to Factory Card.

C.

Payment for seasonal Party Goods, whether supplied before or after the Conversion Date, shall be as set forth on Exhibit B hereto.

6.

Maintenance of Consigned Inventory:

A.

Factory Card will receive all shipments from Amscan in accordance with normal receiving and inspection procedures. Factory Card shall exercise reasonable care for the everyday Party Goods while they are in its possession as consigned inventory. Factory Card shall exercise normal and reasonable care in connection with Party Goods stored in its warehouse.

B.

Amscan shall furnish a consignment invoice/sheet with each shipment of everyday Party Goods to Factory Card, showing the quantity of such Party Goods shipped by item and the price thereof. Factory Card shall, at its expense, keep accurate daily records of all everyday Party Goods delivered hereunder to its stores, including, without limitation, the date everyday Party Goods were removed from the Warehouse, the stock number and amount of everyday Party Goods removed, the store to which the everyday Party Goods were delivered, and the picking sheet/invoice regarding each such transaction. Factory Card shall send copies of the weekly sales records to Amscan at the end of each week. Factory Card, and an Amscan’ representative if Amscan decides to utilize such representative, shall take a physical inventory of the everyday Party Goods on hand on an annual basis, and such inventory shall be made available to Amscan. In addition, Factory Card shall permit Amscan, or its agents or representatives, at its own expense, to inspect and/or take physical inventories of the everyday Party Goods at any time during Factory Card’s regular business hours upon at least 3 business days prior written notice to Factory Card.

C.

Factory Card, as Consignee, hereby authorizes Amscan to file a UCC Financing Statement naming Factory Card, as Consignee, and Amscan, as Consignor, in the jurisdictions deemed necessary by Amscan to reflect the consignment created by this Agreement without obtaining any signature or additional consent of Factory Card. Factory Card additionally authorizes the filing of continuation statements so long as this Agreement remains in effect by Amscan without Factory Card’s signature or additional consent. Amscan shall retain title to all consigned everyday Party Goods as provided herein, and this Agreement shall be a true consignment in all respects, not a consignment intended as security. Factory Card agrees to cooperate with Amscan in the filing of any other information statements or documentation reasonably required by Amscan to reflect Amscan’s ownership of the consigned everyday Party Goods.

D.

Amscan agrees that, upon the reasonable written request of Factory Card, it will at its own cost and transit risk, promptly remove from the Warehouse any everyday Party Goods that Factory Card, in its sole discretion, determines will not be shipped to any of its stores.

E.

Factory Card shall (i) maintain the current insurance coverages as previously provided to Amscan (or comparable replacement coverages) during the Term, (ii) name Amscan as an additional loss payee to the extent of the full replacement cost of eve