Document:

SECOND AMENDMENT
                         TO THE EXCESS BENEFIT AGREEMENT

                                       OF

                      FIRST FEDERAL SAVINGS BANK OF MARION
                                 MARION, INDIANA

This Second Amendment  ("Amendment"),  dated the 10th day of March, 2000, hereby
amends the Excess  Benefit  Agreement  ("Agreement")  dated  February  28, 1996,
between First Federal Savings Bank of Marion and John M. Dalton as follows:

The following Section 8.12 is added to the Agreement:

8.14     Secular  Trust.  A secular  trust called the John Dalton  Grantor Trust
         shall be  established  in the event of a Change in Control,  into which
         the Bank shall make a contribution only in such event. If the Executive
         dies  prior to this  contribution  being  made,  then  the  Executive's
         Beneficiary  is entitled to the  Survivor's  Benefit  beginning  within
         thirty (30) days payable over the Payout Period. The contribution shall
         be the full present value,  using an appropriate  discount rate, of the
         benefit specified in Subsection 1.14;  provided,  however,  in no event
         shall the  contribution  be less than an amount which is  sufficient to
         provide the Executive with after-tax  benefits (assuming a constant tax
         rate  equal  to the rate in  effect  as of the  date of the  Change  in
         Control)  beginning  at his Benefit Age equal in amount to that benefit
         which would have been payable to the  Executive if no secular trust had
         been implemented and the benefit  obligation had been accrued under APB
         Opinion No. 12, as amended by FAS 106.

<PAGE>

         IN WITNESS WHEREOF, the Bank has caused ths Amendment to be executed in
triplicate, this the 10th day of March, 2000.

                                    FIRST FEDERAL SAVINGS BANK OF MARION

                                    By: /s/ Steven L. Banks

                                    Title: President

                                    /S/ John M. Dalton
                                    ----------------------------------------
                                    JOHN M. DALTONFIRST AMENDMENT TO DEBTOR IN POSSESSION
                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

         THIS FIRST AMENDMENT TO DEBTOR IN POSSESSION LOAN AND SECURITY
AGREEMENT (this "First Amendment") is entered into and effective as of April 14,
1999, by and among Factory Card Outlet of America Ltd., an Illinois corporation
and a debtor and debtor in possession (the "Borrower"), on the one hand, and
Foothill Capital Corporation, as Agent ("Foothill") and the financial
institutions listed on the signature page of the Loan Agreement referred to
below (such financial institutions, together with their respective successors
and assigns, are collectively referred to herein as the "Lenders"), on the other
hand. This First Amendment amends certain provisions of the Debtor in Possession
Loan and Security Agreement dated as of March 23, 1999 by and among the Borrower
and Foothill, as Agent, and the Lenders (as amended by and through the date of
this First Amendment, and as hereafter amended and/or restated from time to
time, the "Loan Agreement"). Capitalized terms used herein and not otherwise
defined shall have the same meanings herein as in the Loan Agreement.

                                   BACKGROUND
                                   ----------

         This First Amendment is entered into to conform the Loan Agreement to
the terms of the Final Order (A) Approving Postpetition Financing, (B) Granting
Security Interests and Superpriority Administrative Expense Treatment, and (C)
Modifying Automatic Stay, Pursuant to Sections 362 and 364 of the Bankruptcy
Code and Bankruptcy Rule 4001(c) entered in the Case by the Bankruptcy Court on
April 14, 1999.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Agent and the
Lenders hereby agree as follows:

         1.       Amendments to Loan Agreement.
                  ----------------------------

         (a)      Amendments to Subsection 1.1.
                  ----------------------------

                  (i) Subsection 1.1 is hereby amended by deleting the existing
         definition of "Carve Out" appearing therein and inserting in lieu
         thereof the following:

                           "'Carve Out' means, at any time of determination, the
                           sum of (i) allowed administrative expenses payable
                           pursuant to 28 U.S.C. ss. 1930(a)(6) and (ii) up to
                           $1,250,000 of Priority Professional Expenses due but
                           unpaid as of, or incurred after the date of an Event
                           of Default, and (iii) up to $250,000 of Nonpriority
                           Professional Expenses."

                  (ii) Subsection 1.1 is hereby amended by deleting the existing
         definition of "Case" appearing therein and inserting in lieu thereof
         the following:

                                        1
NY2:\3001578\3\44336.0003
<PAGE>

                           "'Case' means the Borrower's and Parent's jointly
                           administered reorganization cases Nos. 99-685(JJF)
                           and 99-686(JJF) under Chapter 11 of the Bankruptcy
                           Code, pending in the Bankruptcy Court."

                  (iii) Subsection 1.1 is hereby amended by deleting the
         existing definition of "Obligations" appearing therein and inserting in
         lieu thereof the following:

                           "'Obligations' means all loans, Advances, debts,
                           principal, interest (including any interest that, but
                           for the provisions of the Bankruptcy Code, would have
                           accrued), contingent reimbursement obligations under
                           any outstanding Letters of Credit, premiums
                           (including Early Termination Premiums), liabilities
                           (including all amounts charged to Borrower's Loan
                           Account pursuant hereto), obligations, fees, charges,
                           costs, or Lender Group Expenses (including any fees
                           or expenses that, but for the provisions of the
                           Bankruptcy Code, would have accrued), lease payments,
                           guaranties, covenants, and duties owing by Borrower
                           to the Lender Group (provided the same arises under
                           or pursuant to, or is evidenced by, the Loan
                           Documents), whether direct or indirect, absolute or
                           contingent, due or to become due, now existing or
                           hereafter arising, and including any debt, liability,
                           or obligation owing from Borrower to others that the
                           Lender Group may have obtained by assignment or
                           otherwise, and further including all interest not
                           paid when due and all Lender Group Expenses that,
                           Borrower is required to pay or reimburse by the Loan
                           Documents, by law, or otherwise, but, as to each item
                           referenced in this definition, only to the extent the
                           same arises under or pursuant to the Loan Documents."

                  (iv) Subsection 1.1 is hereby amended by inserting the
         following definitions alphabetically therein:

                           "Avoidance Actions" means the Borrower's rights and
                           recoveries under Section 544, 545, 547, 548, 550 and
                           551 of the Bankruptcy Code."

                           "Committee" means the Official Committee of Unsecured
                           Creditors appointed in the Case."

                           "Permitted Application" has the meaning set forth in
                           Section 9.1.

                           "Petition Date" means March 23, 1999.

                           "Postpetition Liens" has the meaning given to such
                           term in the Final Order.

         (b) Amendment to Subsection 2.2(a). Subsection 2.2(a) of the Loan
Agreement is hereby amended by deleting such subsection in its entirety and
inserting in lieu thereof the following:

                                        2

<PAGE>

                           "(a) Agreement to Cause Issuance; Amounts; Outside
                  Expiration Date. Subject to the terms and conditions of this
                  Agreement, Agent agrees to issue, or cause an Affiliate of
                  Agent to issue, letters of credit for the account of Borrower
                  (each, an "L/C") or to guaranty letters of credit issued by an
                  Issuing Bank for the account of the Borrower (each such
                  guaranty, an "L/C Guaranty"). The Agent shall have no
                  obligation to issue an L/C or L/C Guaranty (x) at any time
                  during the pendency of a Default or Event of Default, or (y)
                  if, after giving effect to the issuance of such L/C or L/C
                  Guaranty:

                                    (i) the sum of 50% (or such other percentage
                           as may from time to time equal the inverse of the
                           inventory advance rate) of the aggregate amount of
                           all undrawn and unreimbursed Inventory Letters of
                           Credit plus 100% of the aggregate amount of all other
                           types of undrawn and unreimbursed Letters of Credit,
                           would exceed the Borrowing Base less the amount of
                           outstanding Advances (including any Agent Advances
                           and Agent Loans);

                                    (ii) the aggregate amount of all undrawn or
                           unreimbursed Letters of Credit would exceed the lower
                           of: (x) the Maximum Revolving Amount minus the amount
                           of outstanding Advances (including any Agent Advances
                           and Agent Loans); or (y) $10,000,000; or

                                    (iii) the outstanding Obligations would
                           exceed the Maximum Revolving Amount.

                  Borrower expressly understands and agrees that Agent shall
                  have no obligation to arrange for the issuance by Issuing
                  Banks of the letters of credit that are to be the subject of
                  L/C Guaranties. Borrower and the Lender Group acknowledge and
                  agree that certain of the letters of credit that are to be the
                  subject of L/C Guaranties may be outstanding on the Closing
                  Date. Each Letter of Credit shall have an expiry date no later
                  than 60 days prior to the date on which this Agreement is
                  scheduled to terminate under Section 3.4 (without regard to
                  any potential renewal term), unless the Agent expressly agrees
                  to a later expiry date, and all such Letters of Credit shall
                  be in form and substance acceptable to Agent in its sole
                  discretion. If the Lender Group is obligated to advance funds
                  under a Letter of Credit, Borrower immediately shall reimburse
                  such amount to Agent and, in the absence of such
                  reimbursement, the amount so advanced immediately and
                  automatically shall be deemed to be an Advance hereunder and,
                  thereafter, shall bear interest at the rate then applicable to
                  Advances under Section 2.7."

         (c) Amendment to Subsection 2.6. Subsection 2.6 of the Loan Agreement
is hereby amended by deleting the word "immediately" appearing therein and
inserting after the word "Agent" the phrase "by no later than the second
Business Date after the Agent has provided notice to the Borrower that an
Overadvance exists."

                                        3

<PAGE>

         (d) Amendment to Subsection 2.11. Subsection 2.11 of the Loan Agreement
is hereby amended by deleting the last sentence of such existing subsection and
inserting in lieu thereof the following sentences:

                  "Agent shall render statements regarding the Loan Account to
                  Borrower and the Committee, including principal, interest, and
                  fees, including an itemization of all charges and expenses
                  constituting the Lender Group Expenses owing, and, subject to
                  the following sentence, such statements shall be conclusively
                  presumed to be correct and accurate and constitute an account
                  stated between Borrower and Lender Group unless, within 30
                  days after receipt thereof by Borrower, Borrower shall deliver
                  to Agent written objection thereto describing the error or
                  errors contained in any such statements. In addition, the
                  Borrower and the Committee shall have thirty (30) days after
                  the receipt of such statements to object to the reasonableness
                  of the attorneys' fees and expenses incurred by the Lender
                  Group. Any objection shall be first sent to the Agent and its
                  counsel. If the parties cannot resolve the dispute within ten
                  (10) days of the objection's delivery to the Agent and its
                  counsel, the Borrower and/or the Committee may seek relief
                  from the Bankruptcy Court. In the absence of a timely
                  objection and (if necessary) request for relief by the
                  Borrower or the Committee, the attorneys' fees and expenses of
                  the Lender Group shall be conclusively presumed reasonable."

         (e) Amendment to Subsection 4.2. Subsection 4.2 of the Loan Agreement
is hereby amended by adding the following sentence to the end of such existing
subsection:

                  "Notwithstanding the foregoing, the proceeds of any Avoidance
                  Actions shall not be subject to, and shall not be used to
                  satisfy, the Super-Priority Claim of the Lender Group, except
                  that to the extent the Lender Group funds the Carve Out, the
                  amount so funded shall be first repaid from the proceeds of
                  the Avoidance Actions to satisfy the Super-Priority Claim of
                  the Lender Group."

         (f) Amendment to Subsection 6.19. Subsection 6.19 of the Loan Agreement
is hereby amended by deleting the number "25" appearing therein and inserting in
lieu thereof the number "32."

         (g) Amendment to Section 8. Section 8 of the Loan Agreement is hereby
amended by deleting such section in its entirety and inserting in lieu thereof
the following:

         "8.      EVENTS OF DEFAULT.

                  Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:

                  8.1 If Borrower shall fail to pay when due and payable or when
         declared due and payable, any portion of the Obligations (whether of
         principal, interest

                                        4

<PAGE>

         (including any interest which, but for the provisions of the Bankruptcy
         Code, would have accrued on such amounts), fees and charges due the
         Lender Group, reimbursement of Lender Group Expenses, or other amounts
         constituting Obligations);

                  8.2 If Borrower shall fail to perform, keep or observe: (a)
         any term, provision, condition, covenant or agreement contained in
         Sections 6.3 (Tax Returns), 6.6 (Title to Equipment), 6.11 (Location of
         Inventory and Equipment), 6.12 (Compliance with Laws), 6.13 (Employee
         Benefits) or 6.14 (Leases) of this Agreement, and such failure
         continues for a period of 5 days after the date of such failure or
         neglect; (b) any term, provision, condition, covenant or agreement
         contained in Sections 6.1 (Accounting System) or 6.17 (Cycle Count
         Program) of this Agreement, and such failure continues for a period of
         15 days after the date of such failure or neglect; or (c) any other
         term, provision, condition, covenant or agreement contained in this
         Agreement, or in any of the other Loan Documents (subject to any grace
         periods set forth therein); provided, however, that during any period
         of time that any such failure exists, even if such failure is not yet
         an Event of Default by virtue of the existence of a grace period,
         Lenders shall not be required during such period to make Advances to
         Borrower;

                  8.3      If there is a Material Adverse Change;

                  8.4 If any material portion (i.e., more than $250,000 per
         creditor or $1,000,000 in the aggregate) of Borrower's or Parent's
         properties or assets shall be attached, seized, subjected to a writ or
         distress warrant, or levied upon, or come into the possession of any
         third Person;

                  8.5 If Borrower shall fail to make: (a) rental payments not in
         bona fide dispute in the aggregate amount of at least $100,000 due
         under its retail location leases, or (b) any rental payment not in bona
         fide dispute under the lease for its principal place of business and
         main distribution center, to the extent such payments arose after the
         commencement of the Case and prior to the rejection of any such lease;

                  8.6 If the Case is dismissed or converted to a case under
         Chapter 7 of the Bankruptcy Code, or if a trustee under Section 1104 of
         the Bankruptcy Code or an examiner with expanded powers relating to the
         operation of the business of the Borrower and/or the Parent under
         Section 1106(b) of the Bankruptcy Code is appointed;

                  8.7 If Borrower is enjoined, restrained, or in any way
         prevented by court order from continuing to conduct all or any material
         part of its business affairs;

                  8.8 If a notice of lien, levy, or assessment is filed of
         record with respect to any of Borrower's properties or assets by the
         United States Government, or any department, agency, or instrumentality
         thereof, or by any state, county, municipal, or governmental agency, or
         if any taxes or debts owing at any time hereafter to any one

                                        5

<PAGE>

         or more of such entities becomes a lien, whether choate or otherwise
         with a priority equal or superior to the liens granted to the Agent and
         the Lenders hereunder, upon any of Borrower's properties or assets and
         the same is not paid on the payment date thereof;

                  8.9 If a judgment or other claim becomes a lien or encumbrance
         with a priority equal or superior to the liens granted to the Agent and
         the Lenders hereunder upon any material portion (i.e., more than
         $250,000 per creditor or $1,000,000 in the aggregate) of Borrower's or
         Parent's properties or assets;

                  8.10 If there is a filing by Borrower or Parent, or
         confirmation (regardless of the proponent), of a Reorganization Plan or
         Plans in the Case which does not provide for (i) the termination of all
         of the Lenders' commitments to lend and indefeasible payment in full in
         cash of all Obligations and the cash collateralization or return of all
         Letters of Credit in a manner satisfactory to Agent on or before the
         effective date of such plan and (ii) the continuation of the
         Postpetition Liens in favor of Agent until such effective date;

                  8.11 If Borrower shall make any payment on account of
         Indebtedness that has been contractually subordinated in right of
         payment to the payment of the Obligations, except to the extent such
         payment is permitted by the terms of the subordination provisions
         applicable to such Indebtedness;

                  8.12 If any material misstatement or misrepresentation exists
         now or hereafter in any warranty, representation, statement, or report
         made to the Lender Group by Borrower or any officer, employee, agent,
         or director of Borrower, or if any such warranty, representation,
         statement or report is withdrawn;

                  8.13 If the obligation of any guarantor under its guaranty or
         other third person under any Loan Document is limited or terminated by
         operation of law or by the guarantor or other third Person thereunder,
         or any such guarantor (other than the Parent) or other third person
         becomes the subject of an Insolvency Proceeding, it being acknowledged
         that as of the date of this Agreement the Parent is the only Guarantor
         of the Obligations;

                  8.14 If the Bankruptcy Court shall enter any order (i)
         amending, supplementing, altering, staying, vacating, rescinding or
         otherwise modifying any Order, or (ii) granting relief from the
         automatic stay to any creditor asserting a lien or reclamation claim on
         a material portion (i.e., more than $250,000 per creditor or $1,000,000
         in the aggregate) of the assets of the Borrower or the Parent;

                  8.15 If an application shall be filed by the Borrower for the
         approval of any other superpriority claim herein which is pari passu
         with or senior to the claims of the Agent and the Lenders against the
         Borrower hereunder and the Order or under any of the other Loan
         Documents (unless after giving effect to the transactions contemplated

                                        6

<PAGE>

         by such application, all Obligations (whether contingent or otherwise)
         shall be paid in full in cash and the Commitment shall be terminated,
         or there shall arise any such superpriority claim;

                  8.16 If Borrower shall be generally unable to pay its
         post-petition debts as they mature, or shall fail to comply with any
         order of the Bankruptcy Court in any material respect;

                  8.17 If a Reorganization Plan shall be filed by the Borrower
         or approved by the Bankruptcy Court (regardless of the proponent) in
         the Case which does not satisfy the requirements of Section 4.4 of this
         Agreement;

                  8.18 If Borrower shall file a motion in the Case (i) to use
         cash collateral of the Lenders under Section 363(c) of the Bankruptcy
         Code except with the Lenders' consent, (ii) to recover from any portion
         of the Collateral any costs or expenses of preserving or disposing of
         any such collateral under Section 506(c) of the Bankruptcy Code, or
         (iii) except with respect to the filing of a Permitted Application (as
         defined in Section 9 below), to take any other action or actions
         adverse to the Lenders or their rights and remedies hereunder or under
         any of the other Loan Documents or any documents related thereto or the
         Lenders' interest in any of the Collateral, which other action or
         actions would individually or in the aggregate, have a Material Adverse
         Change;

                  8.19 If Borrower shall pay or discharge any prepetition
         Indebtedness in an aggregate amount exceeding $50,000, other than the
         Prepetition Bank Debt and such Indebtedness paid pursuant to customary
         orders entered by this Court on or immediately following the Petition
         Date;

                  8.20 If there shall remain undischarged for more than thirty
         (30) days any final post-petition judgment against the Borrower in
         excess of $400,000;

                  8.21 If the Borrower or Parent shall commence, or participate
         in (unless compelled to do so by order of the Bankruptcy Court) any
         lawsuit, adversary proceeding, or contested matter against the Agent or
         Lenders, other than a Permitted Application; or

                  8.22 If there shall occur any attempt by Borrower or Parent to
         invalidate, reduce or otherwise impair Agent's or any Lender's claims
         against Borrower or Parent or to subject any Collateral to assessment
         pursuant to Section 506(c) of the Bankruptcy Code."

         (h) Amendment to Subsection 9.1. Subsection 9.1 of the Loan Agreement
is hereby amended by deleting the third paragraph of such subsection in its
entirety and inserting in lieu thereof the following paragraph

                                        7

<PAGE>

         Upon the occurrence and during the continuance of an Event of Default
         which has resulted in any of the Obligations having been declared due
         and payable prior their stated maturity (an "Acceleration") and before
         exercising any of the rights or remedies of the Lender Group comprising
         the enforcement of its Liens against Collateral subject to the
         immediately preceding paragraph or the exercise of its rights of
         set-off under this Agreement, the Agent shall provide at least seven
         (7) Business Days' prior written notice to the Borrower, bankruptcy
         counsel to the Borrower, counsel to the Committee and the office of the
         United States Trustee in the Case, setting forth the Event of Default
         or Events of Default which the Agent believes in good faith to have
         occurred and to have been continuing at the time of such Acceleration
         and providing notice that the Agent, on behalf of the Lender Group,
         intends to enforce its Liens against Collateral and/or to exercise its
         rights of set-off. During such seven (7) Business Day period (the
         "Waiting Period"), any of such parties may file an application (a
         "Permitted Application") with the Bankruptcy Court with a copy to the
         Agent and its counsel, (a) stating that: (i) such party believes in
         good faith that no Event of Default specified in such notice has
         occurred and was continuing at the time of such Acceleration; or (ii)
         that due to compelling circumstances the immediate enforcement of the
         Agent's and the Lender's rights should not be permitted; and (b)
         requesting that a hearing be held promptly to determine whether such is
         the case. During the Waiting Period and, if any such Permitted
         Application is filed with the Bankruptcy Court, during such additional
         period (an "Extended Period") expiring on the earlier to occur of (i)
         the conclusion of any such hearing requested and (ii) five (5) Business
         Days following the filing of such application, (A) the Agent shall
         refrain from proceeding to exercise such rights or remedies or rights
         of set-off, and (B) the Borrower may use funds to make payment in the
         ordinary course of business consistent with past practices in the
         Operating Account and up to 50% of the amount of cash proceeds from
         account debtors and obligors received by the Borrower or the Agent and
         otherwise creditable to the Obligations; provided that the total amount
         for the Waiting Period and the Extended Period (if applicable) shall
         not exceed, in the aggregate, the sum of $250,000 plus payroll expenses
         in an amount not to exceed $1,700,000. At the end of the Waiting Period
         or the Extended Period (if applicable) the Agent shall be free to
         exercise all of such rights and remedies and such rights of set-off
         unless, in the event a Permitted Application has been filed, the
         Bankruptcy Court has determined within such Extended Period that no
         such Event of Default has occurred and was continuing at the time of
         such Acceleration or that due to compelling circumstances the immediate
         enforcement of the Agent's and the Lender's rights should not be
         permitted. In the event that the Bankruptcy Court does determine that
         no such Event of Default has occurred and was continuing at the time of
         such Acceleration, the scheduled maturity of the Obligations which had
         been the subject of such Acceleration, together with the automatic stay
         of Section 362(a) of the Bankruptcy Code, shall be reinstated, all with
         the same effect as if no such Event of Default has been declared or
         Acceleration occurred.

                                        8

<PAGE>

         (i) Amendments to Exhibit B-1. The Loan Agreement is hereby amended by
deleting in its entirety the existing Exhibit B-1 (Business Plan) thereto and
substituting therefor the form of Exhibit B-1 (Business Plan) attached to this
First Amendment.

         2.       Representations and Warranties; Confirmation of
                  Representations, Warranties.
                  -------------------------------------------------------------

         This First Amendment has been duly authorized, executed and delivered
by the Borrower. The Loan Agreement, as amended hereby, and each of the other
Loan Documents, as amended by and through the date hereof, constitute legal,
valid and binding obligations of the Borrower, enforceable against the Borrower
in accordance with their respective terms. The Borrower, by execution of this
First Amendment, certifies to the Agent and each of the Lenders that each of the
representations and warranties set forth in the Loan Agreement and the other
Loan Documents is true and correct as of the date hereof, except to the extent
such representations and warranties expressly relate to an earlier date, as if
fully set forth in this First Amendment, and that, as of the date hereof, no
Default or Event of Default has occurred and is continuing under the Loan
Agreement or any other Loan Document. The Borrower acknowledges and agrees that
this First Amendment shall become a part of the Loan Agreement and shall be a
Loan Document.

         3.       No Novation; Effect; Counterparts; Governing Law.
                  ------------------------------------------------

         Except to the extent specifically amended hereby, the Loan Agreement
and each of the other Loan Documents shall be unaffected hereby and shall remain
in full force and effect; this First Amendment shall not be deemed a novation of
the Loan Agreement or any other Loan Document. The Borrower hereby acknowledges,
confirms and ratifies its obligations under the Loan Agreement and each of the
other Loan Documents. This First Amendment may be executed in any number of
counterparts, and by the different parties on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all the
counterparts shall together constitute one instrument. This First Amendment
shall be governed by the internal laws of The Commonwealth of Massachusetts
(without reference to conflicts of law principles) and the United States
Bankruptcy Code and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Borrower acknowledges that the reasonable out-of-pocket expenses of the Agent
and the Lenders incurred in connection with the preparation, execution and
delivery of this First Amendment shall be "Lender Group Expenses," as such term
is defined in the Loan Agreement.

         4.       Construction.
                  ------------

         The Borrower, by execution hereof, acknowledges and confirms that for
all purposes of the Loan Agreement and the other Loan Documents, the term "Loan
Agreement" shall mean the Loan Agreement as amended by and through the date of
this First Amendment and as further amended and/or restated from time to time
hereafter.

                      [Signatures appear on following page]

                                        9

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Loan and Security Agreement as a sealed instrument as of the date
first above written.

                                 FACTORY CARD OUTLET OF AMERICA,
                                 LTD.

                                 By:
                                    ----------------------------------
                                 Name:
                                      ----------------------------------
                                 Title:
                                       ----------------------------------

                                 FOOTHILL CAPITAL CORPORATION, for
                                 itself and as Agent for the Lenders

                                 By:
                                    ----------------------------------
                                                           (Title)

                                 PARAGON CAPITAL, LLC, as a Lender

                                 By:
                                    ----------------------------------
                                                           (Title)

                                       10

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