FACTORY CARD OUTLET CORP
SEPARATION AGREEMENT - GLEN J. FRANCHI
<DOCUMENT>
<TYPE>EX-10.33
<SEQUENCE>6
<FILENAME>dex1033.txt
<DESCRIPTION>SEPARATION AGREEMENT - GLEN J. FRANCHI
<TEXT>
<PAGE>

                                                                Exhibit Ex 10.33

                              SEPARATION AGREEMENT

     This Separation Agreement ("Agreement") between FACTORY CARD OUTLET CORP.
(FCO), a Delaware corporation (the "Company"), and Glen J Franchi (the
"Executive") dated as of April 5, 2002.

                                    RECITALS

     The Company and Executive desire to provide an orderly and amicable
arrangement with respect to the cessation of Executive's employment as Executive
Vice President and Chief Operating Officer, and to resolve claims between
parties relating to his employment, the cessation of his employment and the
Company's Management Severance Plan (the "Severance Plan")(a copy of which is
attached hereto as Exhibit A).

                                    AGREEMENT

     In consideration of the foregoing recitals, the agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Executive agree as follows:

     1.   Resignation.
          -----------

          (a) Executive confirms his resignation as of the effective date of the
          Company's Amended Plan of Reorganization dated February 5, 2002, as it
          may be modified and amended (the "Separation Date") as Executive Vice
          President and Chief Operating Officer, and officer of each subsidiary,
          if any for which Executive served in such capacity, and any other
          position or office with respect to the Company or any of its
          subsidiaries, including as a legal representative or trustee of any
          employee benefit plan or trust of any capacity, including that of an
          employee, independent contractor or otherwise, for the Company or any
          of its subsidiaries.

          (b) As a result of his voluntary resignation and the cessation of his
          employment, effective on the Separation Date, Executive has ceased to
          perform any duties or be entitled to or eligible for any compensation
          or benefits except as expressly provided in this Agreement. As
          outlined below, the Company offers and Executive accepts the following
          severance package.

     2.   Severance Package.
          -----------------

          (a) The Company shall pay the Executive severance in the amount of
          four hundred twenty one thousand two hundred fifty dollars
          ($401,250.00), less applicable payroll deductions and tax withholdings
          ("Severance Pay"). This amount is equal to eighteen months salary of
          the Executives current base annual salary. The Severance Pay shall be
          payable to the Executive within eight (8) business days after the
          Effective Date of this Agreement, as the Effective Date is defined
          below in Paragraph 8 of this Agreement.

                                     - 1 -

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          (b)  Management Bonuses

               (i) Executive shall be entitled to the receipt of his remaining
               Management Bonus for fiscal year 2001 (as set forth in and
               calculated pursuant to the Incentive Plan, which is attached
               hereto and incorporated herein as Exhibit B). Executive
               acknowledges and affirms that, pursuant to the Incentive Plan, he
               has already received twenty six thousand five hundred dollars
               ($26,500.00), less applicable payroll deductions and tax
               withholdings, of his Management Bonus for fiscal year 2001, which
               was paid to him in or around August 2001. Executive further
               agrees that the amount of his remaining Management Bonus for
               fiscal 2001 will be paid to him, less applicable payroll
               deductions and tax withholdings, at the same time and in the same
               manner as payments are made to other participants in the
               Incentive Plan, as dictated by and provided for in the Incentive
               Plan, attached hereto as Exhibit B.

               (ii) If Executive would have otherwise been be entitled to the
               receipt of a Management Incentive Bonus for fiscal year 2002
               ending February 1, 2003, (as set forth in and calculated pursuant
               to the Management Incentive Plan, which is attached hereto and
               incorporated herein as Exhibit C) Executive shall receive a lump
               sum payment equal to that amount prorated in accordance with the
               provision set forth in the Severance Plan. (Such pro-ration shall
               be calculated in an amount equal to two twelve's which is equal
               to the number of months of completed service in the fiscal
               period). Executive further agrees that the amount of his
               Management Bonus for fiscal 2002 will be paid to him, less
               applicable payroll deductions and tax withholdings, at the same
               time and in the same manner as payments are made to other
               participants in the Incentive Plan, as dictated by and provided
               for in the Incentive Plan, attached hereto as Exhibit C.


          (c) Executive shall be paid the full amount of vacation pay to which
          he would be entitled during 2002, less applicable payroll deductions
          and tax withholdings. Employee acknowledges and affirms that in 2002
          he would have been entitled to four (4) weeks paid vacation and that
          the appropriate and accurate compensation for that vacation pay is
          twenty thousand five hundred seventy six dollars and ninety two cents
          ($20,576.92), less applicable payroll deductions and tax withholdings.

          (d) Executive shall be entitled to receive the outstanding portion of
          his Retention Bonus pursuant to the Company's "Retention Bonus
          Program(s) that were in effect from February1, 1999 through November
          1, 2001 that become payable upon the Company's receipt of Confirmation
          of a Plan of Reorganization. Executive acknowledges and affirms that
          the amount of this retention bonus, to which he is entitled under the
          Retention Bonus Program(s), is fifty five thousand five hundred and
          four dollars and fifty cents ($55,504.50), less applicable payroll
          deductions and tax withholdings. Executive further acknowledges and
          affirms that he will not be paid the final portion of his Fall 2001
          Retention Bonus until approximately ninety (90) days after the
          Bankruptcy Court's confirmation of a Plan of Reorganization for the
          Company, at which time Executive will be paid the remainder of his
          Retention Bonus

                                     - 2 -

<PAGE>

               at the same time and in the same manner as the active
               participants in the Company's Fall 2001 Retention Bonus Program.
               Executive acknowledges that the amount of the final Retention
               Bonus to which he is entitled is five thousand eight hundred
               eighty-nine dollars ($5,889.00).

               (e) The Company shall continue Executive's medical insurance and
               basic term life coverage (as in effect immediately prior to the
               Separation Date) until the earlier of (i) eighteen (18) months or
               (ii) the first date on which Executive becomes covered under any
               other group health plan (as an employee or otherwise) which does
               not contain any exclusion or limitation with respect to any
               preexisting condition of Executive; provided that Executive's
               Severance Pay shall be reduced by an amount equal to the portion
               of the periodic cost for such coverage that was payable by
               Executive immediately prior to the Separation Date consistent
               with the Company's ordinary payroll practices. As and to the
               extent provided by the Consolidated Omnibus Reconciliation Act of
               1985 ("COBRA"), Executive will be eligible to continue his/her
               health insurance benefits at his/her own expense for up to 18
               months following the end of the 18 month Severance Period and,
               later, to convert such benefits to an individual policy pursuant
               to and consistent with COBRA. Executive will be provided with a
               separate notice of his/her COBRA rights at the end of the
               Severance Period consistent with and to the extent required by
               COBRA.

               (f) The Company will reimburse Executive for any unreimbursed
               reasonable business expenses incurred and paid for by Executive
               prior to the Separation Date consistent with the Company's
               policies in effect with respect to travel, entertainment and
               other business expenses, and upon Executive's providing to the
               Company reasonably acceptable documentation of such expenses
               within sixty (60) days after the Separation Date.

               (g) The Company will provide Executive job search assistance to
               include (i) Use of his current business phone and voice mail for
               a period of 90 days (ii) coverage of reasonable Outplacement
               Consulting expenses up to a maximum of ten thousand dollars
               ($10,000.00).

               (h) The Company will reimburse the Executive's reasonable
               expenses incurred to consult with legal council regarding this
               Agreement, up to a maximum of five thousand ($5,000.00).

               (i) Except as expressly provided in this Agreement or in an
               employee benefit plan of the Company, Executive shall not be
               entitled to receive any severance payments or any other benefits
               or compensation from the Company.

               (j) Nothing in this Agreement shall preclude the Company from
               amending or eliminating any employee benefit plan, program or
               practice at any time in compliance with applicable law.

          3.   Restrictive Covenants.
               ---------------------

                                     - 3 -

<PAGE>

               (a) Executive hereby agrees that during the term of his
               employment with the Company and for a period of six months
               thereafter (the "Restriction Period"), the Executive will not,
               singly, jointly, or as a partner, member, consultant, or agent of
               any partnership, or as an agent, consultant, or stockholder of
               any other corporation or entity, or as an investor of more than
               five percent (5%) of the voting stock of any entity, or in any
               other capacity, directly, indirectly or otherwise beneficially:

                    (i) Own, manage, operate, join in, control or participate in
                    the ownership, management, operation, or control of, or work
                    for (as an employee, consultant, independent contractor or
                    otherwise), or permit the use of his name by, or provide
                    financial, sales, marketing or other assistance to, or be
                    connected in any manner with, any of the following (each a
                    "Competitive Business"): (1) any retailer located anywhere
                    in the Restricted Area (as herinafter defined) which
                    generates thirty-five percent (35%) or more of its gross
                    revenues from the sale, anywhere in the Restricted Area, of
                    greeting cards, party goods, gift wrap accessories,
                    stationery and/or any other products or services which
                    materially reproduce, incorporate or copy any of the
                    products or services which are offered or developed for
                    marketing by the Company during the term of the Employee's
                    employment with the Company ("Competitive Products") or
                    which offers greeting cards for sale in the Restricted Area
                    under a "one price" strategy at a price per card of $.49 or
                    less or under a "half-off" strategy at a price per card of
                    2/$1.00 or less, or (2) any retailer which generates
                    thirty-five percent (35%) or more of its gross revenue from
                    the sale of Competitive Products anywhere in the restricted
                    Area;

                    (ii) Induce or attempt to induce any person who, during the
                    term of Executive's employment with the Company, is an
                    employee, representative, consultant, agent or supplier of
                    the Company, to terminate his, her or its employment or
                    relationship with the Company or to violate the terms of any
                    agreement between said representative, agent, consultant,
                    employee or supplier and the Company, or hire or attempt to
                    hire any employee of the Company who has left the employment
                    of the Company within sixty (60) days after the termination
                    of such employee's employment with the Company; or

                    (iii) Induce or attempt to induce any person, business or
                    entity which is or was a customer of the Company at any time
                    during the term preceding the effective date of this
                    Agreement to terminate any written or oral agreement or
                    understanding with the Corporation or to become a customer
                    of any person, corporation, partnership or other entity
                    which engages in any Competitive business.

               (b) For purposes of Section 3(a) hereof, "Restricted Area" means
               the United States (and any of its territories), Canada and
               Mexico.

               (c) If the Employee violates any of the restrictions contained in
               Section 3(a) above, the Restriction Period automatically shall be
               increased by the period of time from the commencement of any such
               violation until such time as the Executive has cured such
               violation.

                                     - 4 -

<PAGE>

          (d) Executive acknowledges and agrees that his employment by the
          Company under this Agreement necessarily involves his understanding
          and having access to certain trade secrets and other confidential
          information pertaining to the business of the Company and any
          affiliates. Accordingly, Executive agrees that for a period of one six
          months following the Separation Date, Executive shall not, without the
          express written consent of the Board or a person authorized thereby,
          directly or indirectly, disclose to any person, corporation or entity
          or use or knowingly permit to be so disclosed or used, for the benefit
          of any person, corporation or entity, or himself, any material
          confidential information obtained by the Executive while in the employ
          of the Company with respect to any of the Company or any of the
          affiliates' products, customers, or current or future plans, the
          disclosure of which the Executive knows or should reasonably believe
          will be damaging to the Company, provided that such confidential
          information shall not include any information known or available
          generally to the public (other than as a result of unauthorized
          disclosure by the Executive). This provision is intended only to
          prevent unauthorized disclosure of material confidential information
          and is not intended to preclude the Executive from securing other
          employment following the Separation Date except as subject to such
          restrictions on such other employment as set forth in subparagraph (a)
          of this section.

          (d)  Upon the Separation Date:

               (i) to the extent within his possession or control, the Executive
               shall surrender and deliver to the Company or its authorized
               representative all files, figures, calculations, letters, papers,
               records, proposals, listings, brochures, manuals, instruments,
               drawings, designs, programs, plans or statistics, or any copies
               thereof, any information or instruments derived therefrom, or any
               other similar documents or information of any type or
               description, however such information might be obtained or
               recorded and on whatever medium such information may be
               contained, arising out of or in any way relating to the business
               of affairs of the Company or any affiliate or obtained as a
               result of or in connection with the Executive's employment by the
               Company or any affiliate; and

               (ii) the Executive shall not be entitled to retain a copy of any
               document or information referred to in section (i) above; and

               (iii) Executive shall cease to represent himself as being in any
               way connected with, or interested in the business of, the Company
               or any affiliate.

          (e) Executive agrees and acknowledges that the Company does not have
          any adequate remedy at law for the breach or threatened breach by the
          Executive of any of the provisions of this Section 3 and agrees that
          the Company will be entitled to injunctive relief (without proof of
          monetary or immediate damage and without any bond or other security
          being required) to bar Executive from such breach or threatened breach
          in addition to any other remedies which might be available to the
          Company at law or in equity. If, at any time, Executive violates, to
          any material extent, any of the covenants or agreements set forth in
          this Section 3, the Company shall have the right

                                     - 5 -

<PAGE>

               to immediately terminate all of its obligations to make any
               further payments under Section 2.

          4.   Releases and Covenants Not To Sue.
               ---------------------------------

               (a) Executive, for himself, his legal representatives, assigns,
               heirs, distributees, devisees, legatees, administrators, personal
               representatives and executors (collectively, the "Executive
               Releasing Parties"), releases and forever discharges the Company,
               its present or past subsidiaries and affiliates, and their
               respective successors and assigns, and their respective present
               or past officers, trustees, directors, shareholders, employees
               and agents of each of them (collectively, the "Executive Released
               Parties"), 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 Agreement, including
               without limitation those arising out of or relating to
               Executive's employment or cessation and termination of
               employment, the Severance Plan or any other written or oral
               agreement, any change in Executive's employment status, any
               benefits or compensation, any tortuous 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 Illinois Human
               Rights Act, the Illinois Wage Payment and Collection Act, the
               Employee Retirement Income Security Act of 1974, or any other
               federal, state or local stature, 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 in any legal,
               administrative or other proceeding; provided, however, that the
               foregoing release does not apply to (i) any Claim under or based
               on this Agreement or (ii) any vested benefit Executive may have
               as of the Separation Date under any applicable employee benefit
               plan of the Company.

               (b) Executive further agrees on behalf of himself and the
               Executive Releasing Parties (i) not to assert any Claim against
               the Executive Released Parties which Claim has been released
               pursuant to Section 4(a) and (ii) not to file or commence any
               proceeding in any forum in pursuit of any such released Claim.
               Executive agrees to indemnify and hold harmless each of the
               Executive Released Parties with respect to any such Claim or
               proceeding. If Executive files or commences any proceeding in
               pursuit of such claim, Executive shall forthwith return to the
               Company all payment and benefit amounts previously made to him
               pursuant to this Agreement.

               (c) The Company, for itself and each of its subsidiaries and
               their respective assigns, and to the extent it is legally able to
               do so, for their respective present or past officers, trustees,
               directors, shareholders, employees and agents (in each case
               solely relating to the scope of their employment or in their
               corporate capacities and to the extent such person is making a
               claim on behalf of the company) (the "Company

                                     - 6 -

<PAGE>

               Releasing Parties") hereby releases and forever discharges
               Executive from any and all Claims arising or which could have
               arisen up to and including the date of the execution of this
               Agreement, out of or relating to Executive's employment,
               cessation of employment or change in employment status, the
               termination of prior agreements with his or the performance of
               his duties on behalf of the Company; including any act, omission,
               occurrence, or other matters related to such employment, and any
               of the claims, matters and issues which could have been asserted
               by the Company against Executive in any legal, administrative, or
               other proceeding; provided, however, that the foregoing release
               does not apply to (i) any Claim under or based on this Agreement,
               (ii) any act or omission involving fraud; intentional tort;
               willful, reckless or grossly negligent misconduct; criminal
               activity; or the receipt by Executive, directly or indirectly, of
               any financial or other personal benefit to which she is not
               entitled, or (iii) any obligation of Executive with respect to
               Section 3 of this Agreement.

               (d) The Company further agrees on behalf of itself and the
               Company Releasing Parties (i) not to assert any Claim against
               Executive which Claim has been released pursuant to Section 4(c)
               and (ii) not to file or commence any proceeding in any forum in
               pursuit of any such released Claim. The Company agrees to
               indemnify and hold harmless Executive in respect of any such
               Claim or proceeding.

          5.   No Detrimental Communication.
               ----------------------------

               (a) Executive will not disclose or cause to be disclosed any
               negative, adverse or derogatory comments or information about the
               Company, about any product or service provided by the Company, or
               about the Company's prospects for the future, except as may be
               required by legal process.

               (b) The Company will not disclose or cause to be disclosed any
               negative, adverse or derogatory comments or information about
               Executive, except as may be required by legal process; provided,
               however, that the Company may (i) provide factual information
               regarding the beginning and ending dates of Executive's
               employment by the Company and the positions which she held during
               such employment and (ii) make all disclosures which, based on the
               advice of legal counsel, the Company reasonably believes to be
               required by securities or other law.

         6.    Further Assistance. For a period of three years after the
Separation Date, Executive shall from time to time provide the Company with such
assistance and cooperation as the Company may from time to time request in
connection with any investigation, claim, dispute, judicial, legislative,
administrative or arbitral proceeding, or litigation (any of the foregoing, a
"Proceeding") arising out of matters within the knowledge of Executive and
related to his position as an employee of the Company. Such assistance and
cooperation shall include providing information, declarations or statements to
the Company, meeting with attorneys or other representatives of the Company, and
preparing for and giving truthful testimony in connection with any Proceeding or
related deposition. In any such instance, Executive shall provide such
assistance and cooperation at times and in places mutually convenient for the
Company and Executive and which do not unreasonable interfere with Executive's
business or personal activities. The Company shall (i) pay Executive's
reasonable out-of-pocket costs and expenses in connection with such assistance
and cooperation, whenever provided,

                                     - 7 -

<PAGE>

and (ii) if the Company shall require Executive to provide more than three days
of assistance or cooperation pursuant to this Section during any calendar month,
the Company shall pay Executive a consulting fee equal to one thousand one
hundred dollars ($1,100.00) for each such day in excess of three days.

         7.       Voluntary Agreement.  Executive acknowledges and represents
that he (i) has read this Agreement, (ii) has had the opportunity to consult
with legal counsel prior to executing this Agreement, (iii) understands the
legal effect and binding nature of this Agreement; and (iv) is acting
voluntarily and with full knowledge of his actions in executing this Agreement.
Further, Executive acknowledges that he has been given at least twenty-one (21)
days to fully consider entering into this Agreement before its execution.

         8.       Revocation. Executive is advised that he has seven (7) days
following his execution of the document to revoke it. Any such revocation must
be in writing and delivered by the close of business on the seventh day, to
William Beyerl, Vice President of Human Resources for the Company, 2727 Diehl
Road, Naperville, Illinois 60563. In the event Executive exercises his right of
revocation within seven (7) days, this Agreement shall be null and void.
Executive and the Company further agree that this Agreement does not become
effective or enforceable until the day after the revocation period has expired
("Effective Date"). Executive therefore shall not be entitled to Severance Pay
until the expiration of the revocation period.

         9.       No Charges or Complaints Filed.  Executive represents that he
has not filed any complaints or charges against the Company with any local,
state or federal agency or court. If any such complaint or charge was or is
filed on her behalf, Executive shall take all reasonable steps necessary to
effectuate withdrawal of such complaint or charge.

         10.      Executive has no knowledge of any symptoms, events, or facts
which could form the basis of a claim by him against the Company before the
Illinois Industrial Commission or any similar agency or tribunal administering
and/or adjudicating worker's compensation claims or suits in any other state.

         11.      Executive acknowledges that he has received from the Company
all wages, compensation, bonuses, severance monies, accrued vacation pay, and
other benefits (including incentive compensation and stock options) to which he
is entitled, except for the Severance Pay expressly set forth on Paragraph 2.

         12.      Confidentiality.  Executive shall keep confidential the
existence of this Agreement, as well as all of its terms and conditions, and
shall not disclose the existence, terms or conditions of this Agreement to any
person, except to his attorney, or accountant, who have agreed to keep
confidential the existence, terms and conditions of this Agreement; and except
that Executive may inform any prospective employer that the reason for his
separation from employment with the Company was to pursue other opportunities.
In the event that Executive believes he is compelled by law to divulge the
existence, terms or conditions of this Agreement, he will notify the Company in
writing of the basis for that belief before actually divulging the information,
in order to permit the Company to take steps to protect its interests. Executive
affirmatively represents and avows that, as of the date of this Agreement, he
has not disclosed the existence, terms or conditions of this Agreement, except
as permitted by this Section. The Company shall not disclose the existence,
terms

                                     - 8 -

<PAGE>

or conditions of this Agreement, except to the extent necessary to further the
Company's legitimate business interests or as may be required by legal process
or by applicable law, rule or regulation.

         13.      Governing Law: Disputes.  This Agreement shall be governed by,
and construed and enforced in accordance with the Employee Retirement Income
Security Act of 1974 ("ERISA") to the extent applicable and, the laws of the
State of Illinois, without giving effect to its conflict or choice of law
provisions. Any action brought to enforce this Agreement may be brought in a
state court of competent jurisdiction located in DuPage County, Illinois, or a
federal court of competent jurisdiction located in the Northern District of
Illinois. Executive submits to the jurisdiction of any state court located in
DuPage Count, Illinois or any federal court located in the Northern District of
Illinois and waives the defense of an inconvenient forum to the maintenance of
any action in such jurisdiction. Each party agrees that, if any action is
brought to enforce this Agreement in a state court outside of DuPage County,
Illinois or any federal court outside of the Northern District of Illinois, such
party consents to a transfer to a state court located in DuPage County, Illinois
or a federal court located in the Northern District of Illinois, and will accept
service of process and other papers by any method permitted by the rules of the
court to which such action is transferred.

         14.      Notices.  For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be delivered personally, sent by certified, registered or express mail,
postage prepaid, or by overnight delivery service and shall be deemed to have
been duly given when delivered or three days after mailing (in the case of
communications sent by mail), as follows:

If to the Company:

                  Factory Card Outlet Corp.
                  2727 Diehl Road
                  Naperville, Illinois 60563
                  Attention:  Chairman of the Board or
                                  V.P. of Human Resources

with a copy to:

                  Fisher & Phillips LLP
                  420 Marquette Building
                  140 S. Dearborn Street, Suite 420
                  Chicago, Illinois 60603
                  Attention:  Jane M. McFetridge


If to Executive:

                  Glen J Franchi
                  27W303 Chartwell Drive
                  Winfield, IL 60190

                                     - 9 -

<PAGE>

Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.

         15.      Waiver.  No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

         16.      Counterparts.  This Agreement may be executed in separate
counterparts, each of which when so executed shall be deemed to be an original
but both of which together will constitute one and the same instrument.

         17.      Withholding.  The Company shall withhold from all benefits and
other amounts due or otherwise payable to Executive hereunder in order to comply
with any federal, state, local or other income or other tax laws requiring
withholding with respect to compensation and benefits provided to Executive
pursuant to this Agreement, or to comply with any personal or voluntary
deduction, including without limitation the employee contribution for any
insurance plan in which Executive participates, or other deductions authorized
by law or that have been requested by Executive during the course of his/her
employment.

          18.     Non-Admission.  Nothing contained in this Agreement, nor any
actions taken by any party hereto in connection herewith, shall constitute, be
construed as, or be deemed to be, an admission of fault, liability, or
wrongdoing of any kind whatsoever on the part of any party hereto. The Company
asserts that at all times its treatment of Executive is, was and has been fully
consistent with the requirements of the law and the Company's policies and
Executive acknowledges the Company's assertion.

         19.      Validity.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, covenants and
restrictions of this Agreement shall remain in full force and effect and in no
way shall affect, impair or invalidate this Agreement. If any court determines
that any provision of Paragraph 3 of this Agreement is unenforceable because of
the duration or geographical scope of such provision, such court shall have the
power to reduce the duration or scope of such provision, as the case may be,
and, in its reduced form, such provision shall then be enforceable.

         20.      Entire Agreement.  Except as otherwise expressly provided in
this Agreement, this Agreement contains the entire agreement between the parties
hereto with respect to the transactions contemplated hereby and supercedes all
previous oral and written agreements and all prior or contemporaneous oral
negotiations, commitments and understandings. Neither party has made, and
neither party has relied upon, any representation or warranty in connection with
this Agreement except as expressly set forth herein.

         21.      Assignment of Interests.  Executive warrants that he has not
assigned, transferred or purported to assign or transfer any claim of Executive
against the Company.

                                     - 10 -

<PAGE>

         22.      Sections or Paragraphs.  Except where otherwise indicated by
the context, any reference to a "Section" or "Paragraph" shall be to a section
or paragraph of this Agreement.

                                     - 11 -

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
first date set forth above.

                                       FACTORY CARD OUTLET CORP.

                                       By:  /s/ William A. Beyerl
                                            ----------------------
                                                William A Beyerl
                                                Vice President Human Resources

                                       EXECUTIVE:

                                       By:  /s/ Glen J. Franchi
                                            ----------------------
                                                Glen J Franchi

                                       Acknowledged and Approved by
                                       Factory Card Outlet Severance Pay Plan
                                       Administrative Committee:

                                       By:  /s/ Gerald L. Gitner
                                            ----------------------
                                                Gerald L. Gitner

                                           /s/ Laurie M. Shahon
                                           -----------------------
                                               Laurie M. Shahon

                                     - 12 -

</TEXT>
</DOCUMENT>
