WAIVER AND RELEASE

1.

In consideration for the promises made herein by the Executive, the Company hereby agrees as follows:

(a)

Severance Pay . The Company will pay to the Executive severance pay in the gross amount of $287,500, minus customary payroll deductions, pursuant to the Factory Card & Party Outlet Executive Severance Plan (the “Severance Plan”). This gross severance pay, minus customary payroll deductions, shall be made as follows: (i) $143,750 shall be paid on the first regular payroll day following the six month anniversary of the Effective Date (as defined in Section 2(h) below); and (ii) the remaining $143,750 shall be paid in equal installments payable over a period of six months, commencing with the first regular payroll day after the payment specified in clause (i) above, in accordance with the Company’s payroll practices. The period from the Effective Date through the final payment of severance pay pursuant to this Section 1(a) is sometimes referred to herein as the “Severance Period”. The Company will also pay Executive accrued but unused vacation pay in the amount of $37,596.16 representing (34) days of accrued but unused vacation.

(b)

Other Benefits . The Executive will be eligible to receive other benefits as described in the Severance Plan, including: (i) the bonus, if any, pursuant to Section 3.2(a)(ii) of the Severance Plan; (ii) participation in the health and life insurance benefit plans during the Severance Period pursuant to Section 3.3 of the Severance Plan; and (iii) outplacement counseling with an outplacement firm of the Company’s selection, for a period not to exceed six months after the Effective Date pursuant to the last sentence of Section 3.3 of the Severance Plan.

(c)

Equity Awards . All of the Executives’ equity awards granted under the Company’s equity plans or granted as contemplated by the Company’s Amended Plan of Reorganization, including stock option and restricted stock grants, shall become fully exercisable and vested as of the Effective Date. The Company further agrees that, notwithstanding anything to the contrary in the Company’s equity plans, the Executive will be permitted to exercise stock options that were granted to the Executive under such plans at anytime prior to 30 days following the severance payment made pursuant to clause (i) of Section 1(a) above.

(d)

Unemployment Compensation . The Company will not contest the decision of the appropriate regulatory commission regarding unemployment compensation that may be due to the Executive.

2.

In consideration for the Executive’s right to receive the severance pay and other benefits described in the Plan and this Release, Executive hereby agrees as follows:

(a)

Waiver . Executive and any person acting through or under the Executive hereby release, waive and forever discharge the Company, its past subsidiaries and its past and present affiliates, and their respective successors and assigns, and their respective present or past officers, trustees, directors, shareholders, employees and agents of each of them, from any and all claims, demands, actions, liabilities and other claims for relief and remuneration whatsoever (including without limitation attorneys’ fees and expenses), whether known or unknown, absolute, contingent or otherwise (each, a “Claim”), arising or which could have arisen up to and including the date of his execution of this Release, including without limitation those arising out of or relating to Executive’s employment or cessation and termination of employment, or any other written or oral agreement, any change in Executive’s employment status, any benefits or compensation, any tortious injury, breach of contract, wrongful discharge (including any Claim for constructive discharge), infliction of emotional distress, slander, libel or defamation of character, and any Claims arising under Title VII of the Civil Rights Act of 1964 (as amended by the Civil Rights Act of 1991), the Americans With Disabilities Act, the Rehabilitation Act of 1973, the Equal Pay Act, the Fair Labor Standards Act, the Older Workers Benefits Protection Act, the Age Discrimination in Employment Act, the Executive Retirement Income Security Act of 1974, or any other federal, state or local statute, law, ordinance, regulation, rule or executive order, any tort or contract claims, and any of the claims, matters and issues which could have been asserted by Executive against the Company or its subsidiaries and affiliates in any legal, administrative or other proceeding. Executive agrees that if any action is brought in his name before any court or administrative body, Executive will not accept any payment of monies in connection therewith.

(b)

Resignation . Executive agrees that, effective upon his signing of this Release, he hereby resigns from all of his positions as a director, officer and employee of the Company and from any positions as a committee member, trustee or administrator of any employee benefit plan or arrangement of the Company, including (without limitation) the 401(k) Committee, the Severance Committee and the Supplemental Incentive Savings Plan Committee.

(c)

Non-disparagement . Executive agrees that he will not, nor will he cause or assist any other person to, make any statement to a third party or take any action which is intended to or would reasonably have the effect of disparaging or harming the Company or the Company’s employees, officers and managers. The Company agrees that it will not make any statement to a third party or take any action which is intended to or would reasonably have the effect of disparaging or harming Executive.

(d)

Miscellaneous . Executive agrees that this Release specifies payment from the Company to himself, the total of which meets or exceeds any and all funds due him by the Company, and that he will not seek to obtain any additional funds from the Company with the exception of