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                                                           EXECUTION COPY

                             EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT  (this "Agreement"), made and entered into on the
20th day of December, 1996 (the "Effective Date"), by and among Montgomery
Ward & Co., Incorporated, an Illinois corporation (together with its
successors and assigns permitted under this Agreement, the "Company"),
Montgomery Ward Holding Corp., a Delaware corporation ("Holding") and Roger
V. Goddu (the "Executive").


                                 W I T N E S S E T H

     WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment, subject to the terms and provisions of this
Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and premises
contained herein, the parties hereto agree as follows:

     1.  DEFINITIONS.  As used herein, the following terms shall have the
following meanings:

      (a)  "Affiliate" of a person or other entity shall mean a person or
other entity that directly or indirectly controls, is controlled by, or is
under common control with, the person or other entity specified.

      (b)  "Base Salary" shall mean the salary provided for in Section 4
herein.

      (c)  "Board" shall mean the Board of Directors of any one or more of
the Company, Holding and each Subsidiary, as the context may provide.

      (d)  "Cause" shall mean any one or more of the following:

         (i)  the Executive is convicted of a felony involving moral
turpitude or any other felony if in the case of such other felony the
Executive is unable to show that he

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(A)  acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, Holding or any Subsidiary or
(B) had no reason to believe his conduct was unlawful;

         (ii)  a majority of the Company's Board, consisting of at least a 2/3
majority of the non-management directors, determines that:

               (A)  the Executive has engaged in illegal conduct which is
materially injurious to the Company;

               (B)  the Executive has engaged in conduct that constitutes
willful or gross misconduct in carrying out his duties under this Agreement;
or

               (C)  the Executive has neglected or refused, after written
notice from the Board of the Company, to attend to the material duties
assigned to him by such Board, provided that such duties are consistent with
his position, duties and responsibilities as set forth in Section 3 herein.

      (e)  A "Change in Control" shall mean (i) any sale, lease, license,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the business and/or assets of
the Company or Holding or (ii) the possession by any person or entity (other
than Holding, General Electric Capital Corporation or an Affiliate of either
of them) of beneficial ownership (as such term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of either (A) a number of
securities carrying a greater voting power than General Electric Capital
Corporation and its Affiliates taken together or (B) over 50% of the then
outstanding voting securities of the Company; PROVIDED, that in the case of
either (A) or (B), no Change in Control shall be deemed to occur unless and
until, after the occurrence of such event, a majority of the members of the
Board of the Company or Holding are removed or replaced within six months
following any event described in either (A) or (B) above.

      (f) "Constructive Termination" shall mean a termination of the
Executive's employment at his initiative within six months following the
occurrence (except in consequence of a prior termination), without the
Executive's prior written consent, of one or more of the following


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events, in each such case after the Executive shall have given the Company
(A) prior written notice reasonable in the circumstances and (B) an
opportunity to cure reasonable in the circumstances:

         (i)  a reduction in the Executive's then current Base Salary or
Annual Bonus opportunity (as described in Section 5 herein) or the
termination or material reduction of any material employee benefit or
perquisite enjoyed by him (other than as part of an across-the-board
reduction of such benefit or perquisite applicable to all executive officers
of the Company);

         (ii)  reduction by overt action of the Board in the scope of the
responsibilities and authority assigned to the position held by the Executive
or a removal of the Executive from any of the positions (including any
directorship) described in Section 3(a) herein (other than in connection
with or as a result of the sale, transfer or dissolution of any Subsidiary)
or the creation of a position (other than member of a Board) in the Company
of equal or superior rank to the highest position then held by the Executive
in the Company;

         (iii)  the failure of the Company or Holding, as appropriate, to
obtain the assumption in writing of its obligation to perform this Agreement
by any successor to the Company, Holding or their business within 15 days
after the occurrence of the transaction which results in such person or
entity becoming a successor to the Company, Holding or their business; or

         (iv)  a Change in Control.

      (g)  "Current Employer" shall mean Toys "R" Us, Inc. and any subsidiary
thereof.

      (h)  "Disability" shall mean the Executive's inability to substantially
perform his duties and responsibilities under this Agreement by reason of any
physical or mental incapacity, as determined by a majority of the Company's
Board, consisting of a least a 2/3 majority of the non-management directors,
for 90 days in any period of 180 consecutive days.

      (i)  "ERISA" shall mean the Employee Retirement Income Security Act of
1974.


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      (j)  "Fair Market Value Per Share" shall mean the fair market value of
a share of Class A Common Stock of Holding as determined in accordance with
Article III of the Stockholders' Agreement.

      (k)  "Plan" shall mean the Montgomery Ward & Co., Incorporated Stock
Ownership Plan.

      (l)  "Start Date" shall mean January 6, 1997.

      (m)  "Stock" shall mean all capital stock of Holding.

      (n)  "Stockholders' Agreement" shall mean that certain Stockholders'
Agreement, dated as of June 18, 1988, as amended through December 10, 1996.

      (o)  "Subsidiary" shall mean any corporation in which the Company or
Holding owns, directly or indirectly, more than 50% of the outstanding voting
securities of such corporation entitled to vote in the election of directors.

     2.  AGREEMENT TERM AND EMPLOYMENT PERIOD.  The Company hereby employs
the Executive, and the Executive hereby accepts such employment, pursuant to
the terms and conditions set forth in this Agreement.  The term of this
Agreement shall commence on the date hereof and shall end on December 31,
2001.  The employment period shall commence on the Start Date and end on the
earlier of (i) the effective date of any terminations of employment and (ii)
December 31, 2001 (the "Employment Period").  This Agreement is void if the
Executive has not submitted his written resignation to Current Employer by
the close of business on December 20, 1996 and delivered a copy thereof to
the Company.

     3.  POSITION, DUTIES AND RESPONSIBILITIES.

      (a)  During the Employment Period, the Executive shall be employed and
serve as the Chairman of the Board and Chief Executive Officer of the Company
and the Chief Executive Officer of Holding (or such other position or
positions as may be agreed upon in writing by the Executive and the Company).
The Executive's services shall be performed in Chicago, Illinois and the
Executive shall not be transferred outside that area without his consent,
other than for normal business travel and temporary assignments.  In
addition, Executive is entering into this Agreement on the basis that,
pursuant to the terms of the Stockholders'


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Agreement the Executive and a designee of the Executive shall be elected a
member of the Board of Holding and the Company and, following such election,
each shall be nominated and recommended for election to each such Board at
each annual meeting of such entity held during the Employment Period. The
Executive shall report only to the Board of the Company and the Board of
Holding, or a duly organized committee thereof, and shall be a member of any
Board committee directed to formulate the strategic direction to be taken by
the Company or Holding. The Executive shall make, at his earliest
convenience, a recommendation to the Board of the Company and Holding, or
such committee, as to all strategic planning issues for the Company.

     (b) The Executive shall perform such duties and carry out such
responsibilities incident to his position as may be determined from time to
time by the Board of the Company, which shall be consistent with the duties
and responsibilities customarily performed by persons in a similar executive
capacity. Subject to periods of vacation, sick leave, and the like to which
he may be entitled, the Executive shall devote all of his business time,
attention and skill to the performance of such duties and responsibilities,
and shall use his best efforts to promote the interests of the Company.

     (c) Notwithstanding anything to the contrary contained herein, nothing
shall preclude the Executive from (i) serving on the boards of trade
associations and/or charitable organizations (subject to the reasonable
approval of the Board of the Company), (ii) engaging in charitable activities
and community affairs, and (iii) managing his personal investments and
affairs, provided that such activities individually or collectively do not
interfere with the proper performance of his duties and responsibilities
hereunder.

     (4) BASE SALARY.  During the Employment Period, the Company shall pay to
the Executive for the services to be rendered by the Executive hereunder a
base salary at the rate of One Million Dollars ($1,000,000) per annum ("Base
Salary"), increasing at the rate of $50,000 per year in each successive year
("Minimum Increase"). Base Salary shall be reviewed at least once each year
and may be increased in excess of the Minimum Increase at any time from time
to time in the discretion of the Board of the Company, and shall be payable
in accordance with the Company's customary payroll


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practices applicable for senior-level executives generally. After any
increase in Base Salary (whether as a result of a Minimum Increase or
otherwise), Base Salary shall not thereafter be reduced.

      5.  ANNUAL BONUS; RELOCATION; SUPPLEMENTAL PENSION PAYMENTS.

     (a)  In addition to the Base Salary and any other benefits or emoluments
received from the Company, Holding or any Affiliate thereof, the Executive
shall be eligible to receive an annual cash bonus in an amount equal to not
more than 50% of the Base Salary (as the same may be increased from time to
time) (the "Annual Bonus"), payable within the first fiscal quarter following
the close of each of the Company's fiscal years during the Employment Period.
The Annual Bonus shall be based on performance targets to be established from
time to time by the Board of the Company (or any committee thereof appointed
for such purpose); provided that for the fiscal years ending in 1997, 1998
and 1999, the Annual Bonus will not be less than $350,000 for each of such
years without regard to such performance targets. The Annual Bonus may be
increased by up to an additional 50% of the Base Salary (as the same may
change from time to time), based on the achievement of exceptional
performance against the aforementioned targets, as determined by the Board
of the Company in the good faith exercise of its business judgment.

     (b)  The Company and the Executive shall, simultaneously with execution
and delivery of this Agreement, execute and deliver the Relocation Agreement
attached hereto as Exhibit A.

     (c)  The Company shall provide for a supplemental pension benefit on the
same terms and conditions as Executive's current pension arrangement with an
actuarial present value at age 60 of $3.9 million subject to the Executive's
providing to the Company W-2 Forms for the five years ending on December 31,
1995 or an earnings history from Current Employer for the same period.

      6.  STOCK OPTION AWARDS.

     (a)  Holding shall, as promptly as possible following the Effective
Date, receipt of shareholder approval pursuant to Section 6(g) hereof and the
execution by the Executive of the Stockholders' Agreement (subject to


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certain amendments as agreed in that certain letter agreement dated the date
hereof among the Executive, Holding, General Electric Capital Corporation and
Bernard F. Brennan), grant to the Executive non-qualified stock
options (the "Options"), pursuant to the Plan, to purchase that number of
shares of Class A Common Stock Series 3 of Holding equal to 5% of the issued
and outstanding shares of Stock on a fully diluted basis after giving effect
to the Options granted hereunder, as of the date of this Agreement. For
purposes of this calculation, the number of shares of Stock underlying the
Options shall be adjusted upwards from time to time until the last day of the
fiscal year of the Company ending on or about December 31, 1998, to give
effect to the grant of stock options during such period to management
employees of the Company covering up to 10% of the outstanding shares of
Stock (the "Management Options") on a fully diluted basis after giving effect
to such grants. Such Options shall be granted pursuant to the terms and
conditions of the Plan and such additional terms and conditions as may be
customary or appropriate in the circumstances.

     (b)  Subject to the terms of this Agreement and the provisions of the
Plan, the Options shall (i) have a per share exercise price equal to the Fair
Market Value Per Share as of December 29, 1996 (i.e. the first day of the
1997 fiscal year) and (ii) become vested on the basis of cumulative
installments of 25% of the underlying shares on each of December 31, 1997
and the last day of each successive fiscal year of the Company until the
Option is 100% vested; PROVIDED HOWEVER, that an Option will not vest unless
the Executive is at the applicable date of determination, and has been at all
times since the date of grant of the Option, employed by the Company. Only
Options which are vested may be exercised.

     (c)  Once any Option becomes vested, it shall remain exercisable until
(i) three (3) months after the date of cessation of the Executive's employment
with the Company, if such cessation occurs due to the Executive's voluntary
termination as provided under Section 9(e) or termination for Cause as
provided under Section 9(c), or (ii) the third anniversary of the date of
cessation of the Executive's employment with the Company for any other reason.

     (d)  The Options contemplated hereby (and the underlying shares of
Stock) and the Management Options shall equally dilute all holders of Stock
then outstanding (taking


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into account the impact of then outstanding stock options of Holding).

      (e)  Subject to the Executive's put rights described in Section 6(f),
Holding shall have the right to repurchase any shares of Stock, (the "Call
Shares") acquired by the Executive pursuant to the exercise by the Executive
of his vested Options in accordance with the terms of this Agreement, at any
time and from time to time during the period beginning on the date of
termination of the Executive's employment hereunder and ending on the date
that is 90 days after the expiration of all of the Executive's rights to
exercise his vested Options. The purchase price (the "Call Purchase Price")
for such Call Shares shall be equal to the Fair Market Value per Share as of
the first day of the fiscal year in which the Closing Date (as defined below)
occurs determined in accordance with Section 3.10 of the Stockholders'
Agreement, multiplied by the number of Call Shares being purchased by
Holding. Holding shall exercise its rights hereunder by delivering a written
notice to the Executive setting forth the number of Call Shares it is
purchasing and the expected date of closing, which shall be no later than 10
days after the date of such written notice (the "Closing Date"). On the
Closing Date, the Executive shall deliver to Holding stock certificates
representing the Call Shares being purchased by Holding free and clear of any
and all liens, claims or encumbrances of any kind in exchange for the Call
Purchase Price by check or wire transfer in immediately available funds.

     (f)  The Executive shall have the right, at any time and from time to
time during the period beginning on December 31, 1997 and ending on the date
that is 90 days after the expiration all of the Executive's rights to
exercise his vested Options, to request Holding to repurchase any shares of
Stock (the "Put Shares") acquired by the Executive pursuant to the exercise
by the Executive of any vested Option in accordance with the terms of this
Agreement. The purchase price (the "Put Purchase Price") for each such Put
Share shall be equal to the Fair Market Value Per Share as of the first day
of the fiscal year of the Company in which the Executive Notice is given,
determined in accordance with Section 3.10 of the Stockholders Agreement,
multiplied by the number of Put Shares being purchased by Holding. The
Executive may exercise his rights hereunder by delivering a written notice
(the "Executive Notice") to Holding setting forth (i) the number of Put
Shares it is requesting Holding to purchase;


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and (ii) the date ("Put Closing Date") upon which the purchase of such Put
Shares shall occur, which shall not be less than 30 nor more than 90 days
after the Executive Notice. Holding shall, within 10 days of receipt of such
Executive Notice, provide the Executive written notice stating whether it can
repurchase all or part of such Put Shares. If Holding determines that it
cannot repurchase all the Put Shares, it shall so specify in its notice and
set forth the reasons therefor; provided, that the only reason Holding may
decline to purchase such Put Shares will be the Limitations (as defined and
applied in Article IV of the Stockholders Agreement). In such event, however,
Holding will purchase Put Shares to the extent permitted by the Limitations
(as defined and applied in Article IV of the Stockholders Agreement). If
Holding fails to provide such notice, it will be deemed to have given notice
that it will repurchase all of the Put Shares covered by the Executive Notice
subject to the Limitations (as defined and applied in Article IV of the
Stockholders Agreement).

On the Put Closing Date, the Executive shall deliver to Holding stock
certificates representing the Put Shares being purchased by Holding free and
clear of any and all liens, claims or encumbrances of any kind in exchange for
the Put Purchase Price which shall be payable as provided in section 3.9 of
the Stockholders Agreement in 25% cash and 75% promissory notes.

The obligation of Holding provided hereunder to purchase Put Shares shall not
exceed a total of $15,000,000 in the aggregate in any fiscal year of the
Company, beginning with the 1998 fiscal year (and, to the extent purchases
are less than $15,000,000 in any such fiscal year, such unutilized portion
shall be rolled over to the next fiscal year on a cumulative basis), up to an
aggregate amount of $75,000,000 for all such purchases of Put Shares, such
amounts to be determined on a cashless exercise basis (i.e. the spread of the
Fair Market Value Per Share paid over the exercise price for such option
shares).

     (g)  Promptly after the Effective Date, Holding shall seek all approvals
of its stockholders necessary to effectuate the terms of the Options
reflected in this Agreement, including without limitation any necessary
amendments to the certificate of incorporation of Holding or the Plan, and
any such amendments as are necessary to comply with the provisions of this
Section 6, and shall recommend such approval to its stockholders.


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     7.  EMPLOYEE BENEFIT PROGRAMS.  During his employment with the Company,
the Executive shall be entitled to participate in all employee pension and
welfare benefit plans and programs made available to the Company's
senior-level executives or its employees generally, as such plans or programs
may be in effect from time to time, including, without limitation, pension,
profit sharing, savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel
accident insurance, and any other pension or retirement plans or programs and
any other employee welfare benefit plans or programs that may be sponsored by
the Company from time to time, including any plans that supplement the
above-listed types of plans or programs, whether funded on unfunded.  The
Executive shall be entitled to post-retirement welfare benefits, if any, as
are made available by the Company to its senior-level executives generally.

     8.  REIMBURSEMENT OF BUSINESS EXPENSES; PERQUISITES; VACATION.

     (a)  The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company or Holding, as appropriate, shall promptly reimburse him for all
such expenses, subject to documentation in accordance with its Company's
policy.

     (b)  During the Employment Period, the Executive shall be entitled to
participate in any of the Company's executive fringe benefits (including any
benefits relating to tax and financial planning services), in accordance with
the terms and conditions of such arrangements as are in effect from time to
time for the Company's senior-level executives generally.

     (c)  During the Employment Period, the Executive shall be entitled to
four weeks paid vacation per year in accordance with the policies of the
Company as in effect from time to time with respect to senior executives of
the Company.

     (d)  The Company shall pay to the Executive on or before January 6. 1997
the amount of $2,221,948 as compensation for benefits which have been accrued
with the Executive's present employer and which shall be lost upon


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Executive's acceptance of employment with the Company pursuant to this
Agreement.

     (e)  On or before January 6, 1997, the Company shall loan to Executive
the principal amount of $2,000,000, which loan ("Loan") shall be due and
payable 5 years from the date said loan is made, with interest accruing
annually at Libor plus 25 basis points (.25%) and payable annually in arrears
on each January 6 during the loan term and shall be evidenced by a promissory
note in substantially the form attached as Exhibit B.

     (f)  Nothing herein shall be construed to prevent the Company from
amending, altering, eliminating or reducing any plans, benefits or programs
so long as the Executive continues to have the opportunity to receive
compensation and benefits consistent with Sections 8(a) through (c).

     9. TERMINATION OF EMPLOYMENT.

     (a)  TERMINATION DUE TO DEATH.  In the event the Executive's employment
is terminated due to his death, then, this Agreement shall terminate without
further obligation of the Company or Holding under this Agreement to the
Executive's legal representatives other than those accrued hereunder or under
the terms of applicable Company plans or programs which take effect at the
date of his death or those obligations provided in this Section 9(a).
Provided the lawful representative of the Executive's estate shall have
executed an employment release as mutually agreed by the parties at the time
of execution (the "Employment Release"), such estate shall be entitled to:

       (i)  all unpaid Base Salary through the end of the month in which the
death occurs;

      (ii)  in lieu of any Annual Bonus, an amount equal to 50% of the Base
Salary in effect on the date of death;

     (iii)  the right to exercise the Options to the extent vested pursuant
to the vesting schedule set forth in Section 6(b), but, as provided in
Section 6(c), only until the third anniversary of the Executive's death;

      (iv)  the Loan shall be amended and restated to provide a maturity date
of the third anniversary of the date of death;


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       (v)  any amount earned, accrued or owing to the Executive but not yet
paid under Section 8 herein; and

      (vi)  other or additional benefits in accordance with the plans and
programs of the Company referred to in Section 7 herein, and reimbursement of
any employee benefit contribution paid by the Executive's family pursuant to
the Consolidated Omnibus Budget Reconciliation Act ("COBRA").

     (b)  TERMINATION DUE TO DISABILITY.  In the event the Executive's
employment is terminated due to his Disability, then, provided the Executive
or his legal representative shall have executed the Employment Release, the
Executive shall be entitled to:

       (i)  all unpaid Base Salary through the date of termination due to
Disability;

      (ii)  in lieu of any Annual Bonus, an amount equal to 50% of the
Base Salary in effect at the date of such termination;

     (iii)  the benefits due him under any then current disability program of
the Company;

      (iv)  the right to exercise the Options to the extent vested pursuant to
the vesting schedule set forth in Section 6(b), but, as provided in Section
6(c), only until the third anniversary of the date of the Executive's
termination due to his Disability;

       (v)  the Loan shall be amended and restated to provide a maturity date
of the third anniversary of the date of termination due to Disability;

      (vi)  any amount earned, accrued or owing to the Executive but not yet
paid under Section 8 herein; and

     (vii)  other or additional benefits in accordance with the plans and
programs of the Company referred to in Section 7 herein, and reimbursement of
any employee benefit contribution paid by the Executive or Executive's family
pursuant to COBRA.

     In no event shall a termination of the Executive's employment for
Disability occur unless the party terminating


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his employment gives written notice to the other party in accordance with
Section 21 herein.

     (c)  TERMINATION BY THE COMPANY FOR CAUSE.

       (i)  A termination for Cause shall not take effect unless the
provisions of this clause (i) are complied with.  The Executive shall be
given written notice by the Board of the Company of its intention to
terminate him for Cause, such notice (A) to state in detail the particular
act or acts or failure or failures to act that constitute the grounds on
which the proposed termination for Cause is based and (B) to be given within
six (6) months of the Board of the Company learning of such act or acts or
failure or failures to act.  The Executive shall have ten (10) days after the
date that such written notice has been given to the Executive in which to
cure such conduct, to the extent such cure is possible.  If he fails to cure
such conduct, the Executive shall then be entitled to written notice by the
Board of the Company confirming that, in their judgment, grounds for Cause on
the basis of the original notice exist, at which time his employment with the
Company shall thereupon be terminated for Cause.

      (ii)  In the event the Company terminates the Executive's employment
for Cause, then, provided the Executive shall have executed the Employment
Release, the Executive shall be entitled to:

          (A)  all unpaid Base Salary through the date of termination of his
employment for Cause;

          (B)  the right to exercise the Options to the extent vested
pursuant to the vesting schedule set forth in Section 6(b), but, as provided
in Section 6(c), only until the end of the third month after the date of the
Executive's termination;

          (C)  any amounts earned, accrued or owing to the Executive but not
yet paid under Section 8 herein; and

          (D)  other or additional benefits in accordance with the plans or
programs of the Company referred to in Section 7 herein.

     (iii)  If the Executive is terminated for Cause pursuant to Section 9(c)
the Loan shall become due and


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payable, including any interest accrued, 90 days after such termination.

      (iv)  If the Executive is terminated for Cause solely as the result of
being convicted of a felony, which conviction is ultimately reversed on
appeal, the Executive shall be deemed to have been terminated without cause
and shall be entitled to the benefits provided under Section 9(d) to the
extent such benefits are greater than those received by the Executive in
accordance with Section 9(c), provided, that the date of termination shall
be deemed to be the date of the original termination.

     (d)  TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION.  In the
event the Executive's employment is terminated without Cause, other than due
to Disability or death, or in the event there is a Constructive Termination,
then, provided the Executive shall have executed the Employment Release, the
Executive shall be entitled to:

       (i)  all unpaid Base Salary and a prorated Annual Bonus for the fiscal
year of the date of termination through the date of termination based on the
prior year's Annual Bonus;

      (ii)  the Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment (or in the event a reduction in
Base Salary is the basis for a Constructive Termination, then the annualized
rate of the Base Salary in effect immediately prior to such reduction), for a
period of twenty-four (24) months following the date of such termination and,
in lieu of any further Annual bonus, and amount equal to $700,000, in each
case in substantially equal installments payable not less frequently than
semi-monthly in arrears;  PROVIDED, that the Company may at any time and from
time to time pay the Executive the present value of such salary continuation
payments in a lump sum (using as the discount rate the applicable Federal
rate for short-term Treasury obligations as published by the Internal Revenue
Service for the month in which such termination occurs);  and PROVIDED
FURTHER, that if a Change in Control is the basis for a Constructive
Termination, the salary continuation payments shall be paid in a lump sum
without any discount;

    (iii)  the right to exercise the Options to the extent vested pursuant to
the vesting schedule set forth in Section 6(b), but as provided in Section
6(c), only


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until the third anniversary of the date of the Executive's termination
without Cause (other than due to Disability or death) or the Executive's
Constructive Termination, as the case may be;

     (iv)  cancellation without further payment by the Executive of his
obligation to pay the principal and all unpaid accrued interest thereon under
the loan;

     (v)   any amount earned, accrued or owing to the Executive but not yet
paid under Section 8 herein;

     (vi)  other or additional benefits in accordance with the plans and
programs of the Company referred to in Section 7 herein; and

     (vii) until the earlier of (1) the third anniversary of the date of
termination or (2) the date the Executive accepts other employment:

          (A)  reimbursement for any employee benefit contribution paid by
the Executive or the Executive's family pursuant to COBRA;

          (B)  out placement services at the expense of the Company
commensurate with those provided to terminated executives of comparable level
and made available through and at the facilities of a reputable and
experienced vendor; and

          (C)  use of personal, financial and legal counseling services
through the vendor engaged by the Executive and paid for by the Company, up
to a maximum of $20,000 per year.

     If it is determined that any payment or distribution by the Company to
the Executive pursuant to Section 9(d) (determined without regard to any
additional payments required pursuant to this sentence) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), or by similar provisions of state or
local tax laws applicable to the Executive or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax
and similar provisions, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive with respect to each Payment an


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additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

     (e)  VOLUNTARY TERMINATION. In the event of a termination of employment
by the Executive on his own initiative ("Voluntary Termination"), other than
a termination due to death or Disability or a Constructive  Termination,
then, provided the Executive shall have executed the Employment Release, the
Executive shall be entitled to:

          (i)  the Base Salary through the date of termination of his
employment;

          (ii) the right to exercise the Options to the extent vested pursuant
to the vesting schedule set forth in Section 6(b), but as provided in Section
6(c), only for a period ending three (3) months after the effective date of
the Executive's voluntary termination;

          (iii) any amounts earned, accrued or owing to the Executive but not
yet paid under Section 8 herein; and

          (iv)  other or additional benefits in accordance with the plans or
programs of the Company referred to in Section 7 herein.

     In the event of a Voluntary Termination, the Loan shall become due and
payable, including any interest accrued, 90 days after such termination.

     (f)  EXPIRATION OF TERM. If the Executive continues to be employed by the
Company until the expiration of the Term of this Agreement, but does not
continue to be employed by the Company after such time, the Executive shall
receive as salary continuation payments (i) the Base Salary, at an annualized
rate in effect on the date of the expiration of the Term of this Agreement,
for a period of twenty-four (24) months following such expiration and (ii) in
lieu of any Annual Bonus an amount equal to $700,000, in each case payable
in substantially equal installments not


                                     -16-

<PAGE>

less frequently than semi-monthly in arrears; PROVIDED, that the Company may
at any time and from time to time pay the Executive the present value of such
salary continuation payments in a lump sum (using as the discount rate the
then applicable Federal rate for short-term Treasury obligations as published
by the Internal Revenue Service for the month in which such termination
occurs). In addition, the Loan shall be forgiven without further obligation
on the part of the Executive to pay the principal and all unpaid accrued
interest thereon. The expiration of the Term of this Agreement shall not
constitute termination of the Executive's employment with the Company under
any of Sections 9(a), 9(b), 9(c), 9(d) or 9(e) herein and, other than as set
forth in this Section 9(f), the Executive shall not be entitled to any other
compensation or benefits provided for in this Agreement.

     (g)  OFFSETS.  In the event of any termination of employment under this
Section 9, (i) any remuneration attributable to any subsequent employment with
a Direct Competitor that the Executive may obtain and (ii) any amounts due
the Company under any claim the Company may have against the Executive may,
at the option of the Company, be applied to reduce any amounts due the
Executive under this Agreement.

     (h)  NATURE OF PAYMENTS. Any amounts due under this Section 9 are in the
nature of severance or salary continuation payments considered to be
reasonable by the Company and are not in the nature of a penalty.

     (i)  ASSIGNMENT. The severance or salary continuation payments hereunder
may not be transferred, assigned or encumbered in any manner, either
voluntarily or involuntarily, without the prior written consent of the
Company.

     (j)  EXCLUSIVITY OF SEVERANCE OR SALARY CONTINUATION PAYMENTS. Upon
termination of the Executive's employment, he shall not be entitled to any
severance or salary continuation payments or benefits from the Company or
Holding or any payments by the Company or Holding on account of any claim by
him of wrongful termination, including claims under any federal, state or
local human and civil rights or labor laws, common law, other than the
payments and benefits provided under paragraphs 9(a) through (e) of this
Section 9 depending on the factual circumstances of the termination hereunder.


                                     -17-

<PAGE>

     (k)  TERMINATION AT WILL. Notwithstanding anything herein to the
contrary, the Executive's employment with the Company is terminable at will
with or without Cause; PROVIDED that the Executive's entitlement to payments
and benefits following such termination will depend on the type of
termination and therefore be governed by the other provisions of this
Section 9.

     (l)  BOARD RESIGNATION. Upon the Executive's cessation of employment
with the Company for any reason whatsoever, the Executive shall thereupon be
deemed to have resigned from the Board of Holding, the Company and of every
Subsidiary on which he shall then be serving, and of any other company in
which the Executive is then serving as a director at the request of the
Company or Holding, in each case effective as of the date of cessation.

     10.  NON-COMPETITION, NON-SOLICITATION AND PROTECTION OF TRADE SECRETS.

     (a)  By and in consideration of the substantial compensation and
benefits to be provided by the Company and Holding hereunder, and in further
consideration of the Executive's exposure to the proprietary information of
the Company, Holding and/or any Affiliate of either of them, the Executive
agrees that he shall not, during the Employment Period and for a period equal
to the greater of (i) the period during which he is receiving salary
continuation payments (or in respect of which a lump-sum salary continuation
payment is made) pursuant to this Agreement or (ii) one (1) year after the
Employment Period, directly or indirectly own, manage, operate, join,
control, be employed by, or participate in the ownership, management,
operation or control of or be connected in any manner, including but not
limited to holding the positions of officer, director, shareholder,
consultant, independent contractor, employee, partner, or investor, with any
Direct Competitor (as defined below); PROVIDED, HOWEVER, that the Executive
may invest in stocks, bonds, or other securities of any corporation or other
entity (but without participating in the business thereof) if such stocks,
bonds, or other securities are listed for trading on a national securities
exchange or NASDAQ and the Executive's investment does not exceed 1% of the
issued and outstanding shares of capital stock, or in the case of bonds or
other securities, 1% of the aggregate principal amount thereof issued and
outstanding. "Direct Competitor" shall mean any of Kmart Corporation,
Wal-Mart


                                     -18-

<PAGE>

Stores, Inc., Sears Roebuck and Co., Dayton Hudson Corp., or Current Employer
or any Affiliate of any of them; PROVIDED, that Current Employer and
Affiliates thereof shall only be deemed to be Direct Competitors in the event
of a Voluntary Termination.

     (b)  The Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary and that, by reason of his
employment hereunder, he may acquire confidential information and trade
secrets concerning the operations of the Company, Holding and/or any
Affiliate of either of them. Accordingly, the Executive agrees that he will
not, except in the good faith performance of his duties on behalf of the
Company or Holding, and not inconsistent with his fiduciary duties owed to
the Company or Holding, disclose on or after the date hereof any secret or
confidential information that he has learned by reason of his association
with the Company, Holding and any Subsidiary, or use any such information to
the detriment of the Company, Holding and any Subsidiary, so long as such
confidential information or trade secrets have not become generally known
through no fault of the Executive, provided that, if required to be disclosed
pursuant to a court order or legal process, the Executive shall give the
Company timely notice of such order or process and cooperate with the Company
to avoid or limit such disclosures.

     (c)  The Executive further agrees that he will not, at any time during
the Employment Period, and for a period of two years thereafter, directly or
indirectly solicit or induce any of the employees of the Company, Holding or
any Subsidiary to terminate their employment with the Company, Holding or any
Subsidiary.

     (d)  The Executive agrees that any material breach of the terms of this
Section would result in irreparable injury and damage to the Company, Holding
or any Subsidiary for which the Company, Holding or any Subsidiary would have
no adequate remedy at law; the Executive therefore also agrees that in the
event of said breach or any reasonable threat of material breach, the
Company, Holding or any Subsidiary shall be entitled to an immediate
injunction and restraining order to prevent such breach and/or threatened
breach and/or continued breach by the Executive and/or any and all persons
and/or entities acting for and/or with the Executive. The terms of this
paragraph shall not prevent the Company, Holding or any Subsidiary from
pursuing any


                                     -19-

<PAGE>

other available remedies for any breach or threatened breach hereof, including
but not limited to the recovery of damages.  The Executive, Holding and the
Company agree that the provisions of this Section are reasonable.  Should a
court or arbitrator determine, however, that any provision of this Section is
unreasonable, either in period of time, geographical area, or otherwise, the
parties hereto agree that this Section shall be interpreted and enforced to
the maximum extent which such court or arbitrator deems reasonable.

     (e)   The provisions of this Section 10 shall survive any termination of
this Agreement, and the extension of any claim or cause of action by the
Executive against the Company, Holding or any Subsidiary, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company, Holding or any Subsidiary of the covenants and
agreements of this Section.

     11. REPRESENTATIONS OF THE EXECUTIVE.  The Executive represents and
warrants that he is free to enter into this Agreement and to perform the
duties required hereunder, and that there is no agreement or understanding,
written or oral, between the Executive and Current Employer pertaining to
employment non-competition, disclosure of confidential information and/or
trade secrets or other restrictions preventing the performance of his duties
hereunder.

     12. EFFECT OF AGREEMENT ON OTHER BENEFITS. Except as specifically
provided in this Agreement, the existence of this Agreement shall not prohibit
or restrict the Executive's entitlement to full participation in the employee
benefit and other plans or programs in which senior-level executives of the
Company are eligible to participate generally (PROVIDED, however, that
notwithstanding anything to the contrary in this Agreement, the Executive may
not participate in any such plans or programs pertaining to severance or
salary continuation payments, or stock options, stock awards or other
equity-based forms of compensation).

     13. ASSIGNABILITY; BLINDING NATURE. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, heirs (in the case of the Executive) and assigns. No right or
obligation of the Company or Holding, as the case may be, under this Agreement
may be assigned or transferred by the


                                     -20-

<PAGE>

Company or Holding, as the case may be, except that such right or obligation
may be assigned or transferred pursuant to a merger or consolidation in which
the Company or Holding, as the case may be, is not the continuing entity, or
pursuant to the sale or liquidation of all or substantially all of the assets
or business of the Company or Holding, as the case may be, provided that the
assignee or transferee is the successor to all or substantially all of the
assets or business of the Company or Holding, as the case may be, and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company or Holding, as the case may be, as contained in this Agreement, either
contractually or as a matter of law.  Each of the Company and Holding further
agrees that, in the event of a sale of assets or liquidation as described in
the preceding sentence, it shall exercise reasonable efforts to cause such
assignee or transferee to expressly assume the liabilities, obligations and
duties of the Company and Holding hereunder. No right or obligation of the
Executive under this Agreement may be assigned or transferred by the Executive
other than his rights to compensation and benefits, which may be transferred
only by will or operation of the law, except as provided herein.  Nothing in
this Section 14 shall be deemed to affect the Executive's rights under this
Agreement following a Change in Control.

     14.  REPRESENTATIONS OF THE COMPANY.  Each of Holding and the Company
represents and warrants that it is fully authorized and empowered by action of
its Board or a duly authorized committee thereof to enter into this Agreement,
that the Agreement is the valid and binding obligation of the Company
enforceable against the Company in accordance with the terms herein, subject
to applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other laws of general application affecting creditors' rights
generally and by equitable principles and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization.

     15.  ENTIRE AGREEMENT.   This Agreement contains the entire understanding
and agreement between the parties hereto concerning the subject matter hereof
and supersedes all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the parties with respect
thereto.


                                     -21-

<PAGE>

     16.  AMENDMENT OR WAIVER.  No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by the Executive and
an authorized officer of each of the Company and Holding.  No waiver by either
party of any breach by the other party of any condition or provision contained
in this Agreement to be performed by such other party shall be deemed a waiver
of a similar or dissimilar condition or provision at the same or any prior or
subsequent time.  Any waiver must be in writing and signed by the Executive or
an authorized officer of the Company or Holding, as the case may be.

     17.  SEVERABILITY.  In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
in whole or in part, in any jurisdiction the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law in such jurisdiction, and such
invalidity or unenforceability shall have no effect in any other jurisdiction.

     18.  BENEFICIARIES/REFERENCES.  The Executive shall be entitled, to the
extent permitted under applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following the Executive's death by giving the Company and Holding written
notice thereof.  In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.

     19.  GOVERNING LAW/JURISDICTION.  This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of Illinois
without reference to principles of conflict of laws.

     20.  CONFIDENTIALITY;  PRESS RELEASE.  The Executive shall not disclose
the contents of this Agreement to Current Employer or to any other potential
employer except as may be required by enforceable legal process or to the
extent there is public disclosure made by the Company or Holding of such
matters.  The Executive shall use his best efforts to arrange an opportunity
for the Company or its designee to coordinate any press release with his
present employer.


                                     -22-
<PAGE>

     21. NOTICES.  Any notice given to a party shall be in writing and shall
be deemed to have been given when delivered personally or, if sent by
certified or registered mail, postage prepaid, return receipt requested, five
days after being sent duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
such notice.

If to the Company
or Holding:            Montgomery Ward & Co., Incorporated
                       Montgomery Ward Plaza
                       Chicago, IL  60671
                       Attention:  General Counsel

If to the Executive:   Roger V. Goddu
                       930 Olentangy Road
                       Franklin Lakes, New Jersey  07417

                       With a copy to :

                       Buchalter, Nemer, Fields & Younger
                       601 S. Figueroa Street
                       Suite 2400
                       Los Angeles, CA  90017

                       Attention:  Stuart D. Buchalter, Esq.

     22.  WITHHOLDING.  All amounts required to be paid by the Company herein
shall be subject to reduction in order to comply with applicable Federal,
state and local tax withholding requirements.

     23.  HEADINGS.  The headings of the sections contained in this Agreement
are for convenience of reference only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.

     24.  COUNTERPARTS.  THis Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.

                                     -23-

<PAGE>

     IN WITNESS WHEREOF, the undersigned have executed
this Agreement on the date first written above.

                  MONTGOMERY WARD & CO., INCORPORATED


_________________      By:__________________________
Witness                   Name:
                          Title:

                  MONTGOMERY WARD HOLDING CORP.

_________________      By:__________________________
Witness                   Name:
                          Title:

_________________         __________________________
Witness                   Roger V. Goddu