<PAGE>



                                   THIRD AMENDMENT
                                          TO
                             SHORT TERM CREDIT AGREEMENT


         THIS AMENDMENT (the "Amendment") dated as of December 23, 1996 (the
"Third Amendment Effective Date"), is made and entered into among MONTGOMERY
WARD & CO., INCORPORATED (the "Company") and the banks listed on the signature
pages hereof (herein, together with their respective successors and assigns,
collectively called the "Banks" and individually called a "Bank").

         WHEREAS the Banks are parties to that certain Short Term Credit
Agreement dated as of September 15, 1994, as amended as of March 19, 1996 and
September 6, 1996 (the "Short Term Credit Agreement"), among Montgomery Ward &
Co., Incorporated, various banks named therein, The First National Bank of
Chicago, as Documentary Agent, The Bank of Nova Scotia, as Administrative Agent,
The Bank of New York, as Negotiated Loan Agent, and Bank of America National
Trust and Savings Association, as Advisory Agent; and

         WHEREAS the Company and the Banks desire to amend the Short Term
Credit Agreement in certain respects;

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:

                                      ARTICLE I

                                      AMENDMENTS

         1.1 SECTION 1.1 of the Short Term Credit Agreement is hereby amended
by adding the following definitions thereto (or in the case of the definitions
of Maturity Date and Termination Date, amending such definitions to read in
their entirety, as set forth below):

         "APPLICABLE MARGIN" means as to any Type of Loan, for any period set
    forth below, a rate per annum, as follows:



                                       EURODOLLAR          BASE RATE LOAN
          PERIOD                          LOAN               SWING LOAN
          ------                       ----------          --------------

    December 23, 1996                     1.50%                 0.25%
    through March 31, 1997

    April 1, 1997                         2.00%                 0.75%
    through June 30, 1997

<PAGE>

                                       EURODOLLAR          BASE RATE LOAN
          PERIOD                          LOAN               SWING LOAN
          ------                       ----------          --------------

    After June 30, 1997                   2.50%                 1.25%

         "EBITDAR" means, for any fiscal period, on a consolidated basis for
    the Company and its Subsidiaries, net income, PLUS interest expense, PLUS
    provision for taxes on income, PLUS depreciation and amortization expense,
    PLUS rent expense, MINUS interest income, in each case, for such fiscal
    period.

         "CONSOLIDATED CAPITAL EXPENDITURES" means, for any fiscal period, the
    consolidated capital expenditures of the Company and its Subsidiaries for
    such period, as the same are (or would in accordance with GAAP be) set
    forth in the consolidated statement of changes in cash flow of the Company
    and its Subsidiaries for such period.

         "CREDIT AGREEMENT PERCENTAGE" means a percentage corresponding to the
    fraction, the numerator of which is equal to the aggregate principal of
    Loans then outstanding under this Agreement, and the denominator of which
    is equal to the aggregate principal amount of loans then outstanding under
    this Agreement and under the Long Term Credit Agreement.

         "DISPOSITION" means the sale, assignment, transfer, contribution,
    conveyance, issuance or other disposition of, or granting of options,
    warrants or other similar rights with respect to, any asset of the Company
    or any Subsidiary, EXCLUDING, HOWEVER, (i) the sale or transfer of inventory
    in the ordinary course of business, (ii) the sale or transfer of obsolete
    fixtures and equipment in the ordinary course of business, (iii) the sale or
    transfer of receivables pursuant to the Retail Credit Program Agreement and
    other receivables agreements similar to the receivables agreements
    currently in effect, (iv) the liquidation of cash equivalents in the
    ordinary course of business, (v) the sale or transfer by Signature of
    investment portfolio assets in the ordinary course of business, (vi) any
    sale or transfer by the Company or any Subsidiary to the Company or any
    other Subsidiary, (vii) the sale or transfer by Signature of fixtures,
    equipment and certain hardware and software acquired after January 1, 1996
    for telemarketing/customer service centers, provided that the aggregate
    sale price thereof does not exceed $10,000,000, and (viii) any sale or
    transfer or related series of sales or transfers in which the aggregate Net
    Proceeds shall be less than $50,000.

         "MATURITY DATE" means the Termination Date.

<PAGE>

         "NET PROCEEDS" means the aggregate amount of cash and readily
    marketable cash equivalents, and all other proceeds (excluding rental
    income) received by the Company or any Subsidiary in connection with any
    Disposition (including, when received by the Company or any Subsidiary, any
    principal installments with respect to installment sales contracts or
    purchase money indebtedness of purchasers or other similar deferred
    consideration), LESS the amount (as estimated by the Company in good faith)
    of:

              (i) all reasonable costs of the Company or such Subsidiary
         (excluding any rental expense) associated with such Disposition,

              (ii) all amounts paid by the Company or such Subsidiary in
         retiring or satisfying any Lien on such asset which is required to be
         retired or satisfied in connection with such Disposition,

              (iii) in the case of a Disposition of assets of Signature, all
         indebtedness of Signature which is required to be repaid in connection
         with such Disposition,

              (iv) any and all taxes (including Federal and state income or
         gross receipts taxes) arising from or related to such Disposition,

              (v) solely with respect to Dispositions of real property (and the
         related fixtures and equipment) on which retail stores or distribution
         centers are located, any amounts which the Company expends (or
         reasonably estimates it will expend in a written notice promptly
         delivered to the Administrative Agent and each Bank) for the purchase
         and/or construction and fixturing of a replacement or substitute
         facility in the geographic area in which such real property is
         situated, PROVIDED that the agreement or letter of intent pursuant to
         which such replacement or substitute facility is to be acquired is
         entered into prior to or within 3 Business Days after the Disposition
         of such real property and that such agreement or such letter of intent
         is not subsequently cancelled prior to the acquisition or substantial
         completion of such replacement or substitute facility, and

              (vi) proceeds (other than cash or cash equivalent proceeds) with
         respect to properties (and the related fixtures and equipment) listed
         on SCHEDULE IX.

         "SIGNATURE" means collectively Signature Financial/Marketing, Inc.
    and/or its Subsidiaries.

<PAGE>

         "SIGNATURE CREDIT AGREEMENT" means the Credit Agreement dated as of
    September 27, 1996, as amended and restated as of October 21, 1996, among
    Signature Financial/Marketing, Inc., various Banks, The Bank of New York as
    Documentation Agent, and The Bank of Nova Scotia, as Administrative Agent,
    as the same may be further amended or modified from time to time.

         "TERMINATION DATE" means, with respect to each Bank, the earlier to
    occur of (i) August 29, 1997, or (ii) such other date on which the
    Aggregate Commitments shall terminate pursuant to SECTION 5 or 13.2 or be
    reduced to zero pursuant to SECTION 2.6 and, if in any case such day is not
    a Business Day, the next succeeding Business Day.  Notwithstanding any
    provision herein to the contrary, after the Third Amendment Effective Date,
    the Company shall not be entitled to request an extension of the
    Termination Date pursuant to SECTION 2.7.

         "THIRD AMENDMENT EFFECTIVE DATE" means December 23, 1996.

         1.2  SECTION 2 of the Short Term Credit Agreement is hereby amended by
adding the following SECTION 2.8 thereto:

         2.8.   MANDATORY PREPAYMENTS.  After the Third Amendment Effective
    Date, following receipt by the Company or any Subsidiary of any Net
    Proceeds from any Disposition, the Company shall make a mandatory
    prepayment of the Loans, such prepayment to be equal to the Credit
    Agreement Percentage of 80% of such Net Proceeds (the "Net Proceeds Share")
    or the aggregate unpaid principal amount of all Loans then outstanding,
    whichever is less; PROVIDED, HOWEVER, that up to $20,000,000 of Net
    Proceeds received after the Third Amendment Effective Date by the Company
    or its Subsidiaries from all Dispositions shall not be subject to this
    SECTION 2.8.  Each prepayment pursuant to this SECTION 2.8 shall be made
    within 3 Business Days of the date upon which the amount of the Net
    Proceeds which have not theretofore been applied by the Company to
    prepayments under this Agreement or the Long Term Credit Agreement shall
    equal or exceed $1,000,000.  Concurrently with any prepayment required
    under this SECTION 2.8 the Aggregate Commitment shall automatically be
    reduced by the amount of such Net Proceeds Share (such reduction to be
    prorata among the Banks according to their respective Commitments).

         1.3  SECTION 4 of the Short Term Credit Agreement is hereby amended by
adding the following SECTION 4.6 thereto:

         4.6.  SUSPENSION PERIOD FOR NEGOTIATED LOANS.  Notwithstanding any
    provision of this Agreement to the contrary, commencing on and after the
    Third Amendment Effective Date until the Termination Date, the Company
    shall not request and no Bank shall make Negotiated Loans.

<PAGE>

         1.4  SECTION 6.1 of the Short Term Credit Agreement is hereby amended
so that SECTION 6.1 through SECTION 6.1(b) shall read in its entirety as
follows:

         6.1  INTEREST RATES.  The Company hereby promises to pay interest on
    the unpaid principal amount of each Loan for the period commencing on the
    Funding Date of such Loan until such Loan is paid in full, as follows:

              (a) if such Loan is a Base Rate Loan or a Swing Loan, at a
         rate per annum equal to the Base Rate from time to time in
         effect, plus on and after the Third Amendment Effective Date, the
         Applicable Margin;

              (b) if such Loan is a Eurodollar Loan, at a rate per annum during
         each Interest Period equal to the Eurodollar Rate applicable to such
         Interest Period, plus (i) prior to the Third Amendment Effective Date,
         0.375% plus any Eurodollar Margin Increment, and (ii) on and after the
         Third Amendment Effective Date, the Applicable Margin;

         1.5  SECTION 6.2 of the Short Term Credit Agreement is deleted as of
the Third Amendment Effective Date (it being understood, however, that the
provisions of such section shall survive as to any additional interest accruing
prior to the Third Amendment Effective Date).

         1.6  SECTION 6.3 of the Short Term Credit Agreement is amended to read
in its entirety as follows:

         6.3  INTEREST PAYMENT DATES.  Accrued interest on each Loan shall be
    payable on the last day of the Interest Period therefor and on each
    Conversion date related to such Loan; PROVIDED, HOWEVER, that accrued
    interest on each Eurodollar Loan which has an Interest Period of 6 months
    shall be payable on the 90th day of such Interest Period or, if such day is
    not a Business Day, on the next succeeding Business Day.  After maturity of
    any Loan, accrued interest on such Loan shall be payable on demand.

         1.7  SUPPLEMENTAL COMMITMENT FEE.  SECTION 6.10 of the Short Term
Credit Agreement is amended to read in its entirety as follows:

         6.10  SUPPLEMENTAL COMMITMENT FEE.  The Company agrees to pay to the
    Administrative Agent for the account of each Bank (PRO RATA in accordance
    with the average daily amount of the Unused Commitment of such Bank),
    within fifteen days of the last day of December 1996, and thereafter within
    fifteen days of the last day of each calendar quarter of each year until

<PAGE>

    the Termination Date for such Bank, and on the Termination Date for such
    Bank, a commitment fee which, when added to the fees payable under SECTIONS
    6.5 and 6.6 in respect of the corresponding period for which the commitment
    fee under this SECTION 6.10 is computed, shall equal a commitment fee
    computed at the rate of 0.375% per annum on the average daily amount of the
    Aggregate Commitment minus the aggregate principal amount of all Loans then
    outstanding during the quarterly or other period preceding the date of such
    payment.  Such commitment fee shall commence accruing on the Third
    Amendment Effective Date and shall be payable in arrears.  Commitment fees
    shall be payable regardless of the occurrence of an Event of Default or an
    Unmatured Event of Default. Fees for any period prior to the Third
    Amendment Effective Date shall be computed according to the provisions of
    the Short Term Credit Agreement as in effect prior to the Third Amendment
    Effective Date.

         1.8  SECTION 11.1(b) of the Short Term Credit Agreement is amended to
read in its entirety as follows:

         (b) INTERIM REPORTS.

         (i)  Within 10 days after each fiscal month, a flash report containing
    (x) the total retail sales of the Company and its Subsidiaries (other than
    Signature) for the fiscal month then ended and for the corresponding fiscal
    month of the previous Fiscal Year, (y) the aggregate reinvestment by the
    Company of borrowings under its loan agreements and uncommitted lines in
    cash equivalents as of the end of such month, and (z) the aggregate
    principal amount of loans as of the end of such month which are then
    outstanding under the Company's revolving loan agreements (including this
    Agreement), any uncommitted lines of the Company, and any loan agreement of
    Signature, together with a breakdown thereof,

         (ii)  Within 30 days after each fiscal month (or in the case of the
    last fiscal month in a Fiscal Year, within 60 days after such fiscal
    month), (A) a copy of the unaudited internally prepared (x) consolidated
    financial statements of the Company and its Subsidiaries (but accounting
    for Signature on the equity method) consisting of at least a balance sheet
    as at the close of such fiscal month, statements of earnings for such
    fiscal month and for the period from the beginning of such Fiscal Year to
    the close of such fiscal month, and a statement of cash flows for the
    period from the beginning of such Fiscal Year to the close of such fiscal
    month, and (y) consolidated financial statements of Signature, consisting
    of at least a balance sheet of Signature as at the close of such fiscal
    month and statements of earnings of Signature for such fiscal month and for
    the period from the beginning of such Fiscal Year to the close of such
    fiscal month, (B) a report

<PAGE>

    setting forth the cumulative amount of all Net Proceeds received after the
    Third Amendment Effective Date, together with the aggregate amount of
    prepayments and Commitment reductions related thereto, and

         (iii) within 60 days after each Fiscal Quarter (except the last Fiscal
    Quarter in a Fiscal Year), a copy of the unaudited consolidated financial
    statements of the Company and its Subsidiaries prepared in accordance with
    GAAP (subject to normal year end audit adjustments) consisting of at least
    a balance sheet as at the close of such Fiscal Quarter, statements of
    earnings for such Fiscal Quarter and for the period from the beginning of
    such Fiscal Year to the close of such Fiscal Quarter, and a statement of
    cash flows from the beginning of such Fiscal Year to the close of such
    Fiscal Quarter.

         1.9  SECTION 11.3 of the Short Term Credit Agreement is hereby amended
by deleting the text contained in SECTION 11.3 and substituting the following
therefor:

         11.3  MINIMUM CONSOLIDATED SHAREHOLDER'S EQUITY. As of the end of any
    Fiscal Quarter ending on or after December 28, 1996, not permit the
    Consolidated Shareholder's Equity of the Company to be less than
    $450,000,000.

         1.10  SECTION 11.4 of the Short Term Credit Agreement is hereby
amended to read in its entirety as follows:

         11.4  RATIO OF DEBT TO TOTAL CAPITALIZATION.  Not permit the Debt of
    the Company and its Restricted Subsidiaries at the end of any Fiscal
    Quarter to exceed the percentage of Total Capitalization applicable to such
    Fiscal Quarter as follows:

                                                      Percentage of Total
         Fiscal Quarter End                              Capitalization
         ------------------                           -------------------

         December 28, 1996                                     70%
         March 29, 1997                                        75%
         June 28, 1997                                         75%

         1.11  SECTION 11.18 of the Short Term Credit Agreement is hereby
amended by adding the following proviso at the end of the section:

         ; provided, however, in the case of the Fiscal Quarters ending
    March 29, 1997 and June 28, 1997, "75%" shall replace "60%" in clause (a)
    above; and in the case of the Fiscal Quarter ending December 28, 1996,
    "70%" shall replace "50%" in clause (b) above.

<PAGE>

         1.12 SECTION 11.20 of the Short Term Credit Agreement is hereby
amended to read in its entirety as follows:

         11.20  EBITDAR.  As of the end of any Fiscal Quarter set forth below,
    not permit EBITDAR of the Company and its Subsidiaries for the 4
    consecutive Fiscal Quarters then ending to be less than the amount
    applicable to the end of such Fiscal Quarter as follows:

         4-Fiscal Quarters Ended                           EBITDAR
         -----------------------                           -------
         December 28, 1996                               $190,000,000
         March 29, 1997                                  $220,000,000
         June 28, 1997                                   $190,000,000

         1.13  SECTION 11 of the Short Term Credit Agreement is hereby amended
by adding the following SECTION 11.21 thereto:

         11.21.  CAPITAL EXPENDITURES.  Not permit Consolidated Capital
    Expenditures in any Fiscal Quarter ending on or after December 23, 1996, to
    exceed $30,000,000.

         1.14  SECTION 11 of the Short Term Credit Agreement is amended by
adding the following SECTION 11.22 thereto:

         11.22.  LECHMERE GUARANTY.  Cause the Liabilities to be guaranteed by
    Lechmere, Inc. ("Guarantor") pursuant to a guaranty substantially in the
    form of EXHIBIT N ("Guaranty").

         1.15  SECTION 11 of the Short Term Credit Agreement is amended by
adding the following SECTION 11.23 thereto:

         11.23   LIMITATION ON SIGNATURE DEBT.  Not permit Signature to incur
    or permit to exist any Indebtedness for Borrowed Money, except (i)
    Indebtedness for Borrowed Money which in the aggregate (including
    Indebtedness for Borrowed Money under the Signature Credit Agreement) does
    not exceed $200,000,000, and (ii) Indebtedness for Borrowed Money of
    Signature to the Company or its other Subsidiaries.

         1.16  EVENTS OF DEFAULT.  SECTION 13.1(e) of the Short Term Credit
Agreement is amended to read in its entirety as follows:

         (e)  SPECIFIED NON-COMPLIANCE WITH THIS AGREEMENT.  Failure by the
    Company to comply with or to perform its obligations under SECTIONS 11.3,
    11.4, 11.5, 11.6, 11.17, 11.18, 11.20 or 11.21 of this Agreement.

         1.17  SECTION 13.1 of the Short Term Credit Agreement is further
amended by adding thereto SECTION 13.1(l) as follows:

<PAGE>

         (l)  GUARANTOR DEFAULTS.  Guarantor fails in any material respect to
    perform or observe any term, covenant or agreement in its Guaranty; or the
    Guaranty of Guarantor is for any reason partially (including with respect
    to future advances) or wholly revoked or invalidated, or otherwise ceases
    to be in full force and effect, or Guarantor or any other Person contests
    in any manner the validity or enforceability thereof or denies that it has
    any further liability or obligation thereunder.

         1.18  SCHEDULE VIII to the Short Term Credit Agreement is hereby
amended as set forth in SCHEDULE VIII hereto.

         1.19  EXHIBIT I to the Short Term Credit Agreement shall be revised in
form and substance acceptable to the Administrative Agent and the Documentary
Agent so as to reflect the foregoing amendments.

         1.20  The Short Term Credit Agreement is further amended by adding
SCHEDULE IX and EXHIBIT N in the form attached hereto.


                                      ARTICLE II

                            REPRESENTATIONS AND WARRANTIES

         The Company hereby represents and warrants to the Agents and the Banks
as of the Third Amendment Effective Date:

         2.1  NO DEFAULT.  No Event of Default or Unmatured Event of Default
has occurred and is continuing which will not be cured by this Amendment
becoming effective.  No Event of Default or Unmatured Event of Default will
exist after giving effect to this Amendment.

         2.2  DUE EXECUTION.   The execution, delivery and performance of this
Amendment, (i) are within the Company's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not require any
governmental approval which has not been previously obtained (and each such
governmental approval that has been previously obtained remains effective), (iv)
do not and will not contravene or conflict with any provision of law, or of any
judgment, decree or order, or of the Company's charter or by-laws, and (v) do
not and will not contravene or conflict with, or cause any Lien to arise under,
any provision of any agreement binding upon the Company, any Subsidiary or any
of their respective properties.

         2.3  VALIDITY.  The Short Term Credit Agreement as amended by this
Amendment constitutes the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its respective terms, without defense,
counterclaim or offset.

<PAGE>

         2.4  SHORT TERM CREDIT AGREEMENT.  All representations and warranties
of the Company contained in SECTIONS 10.1, 10.2, 10.3, 10.4(a), 10.7, 10.10,
10.11, 10.12, 10.15 and 10.18 of the Short Term Credit Agreement are true and
correct as of the date hereof with the same effect as though made on the date
hereof.

         2.5  NEGOTIATED LOANS; RATABILITY OF LOANS, ETC.  As of the date of
this Amendment, all Loans of all Banks are ratable (by principal and by Group)
according to the amount of each Bank's Commitment; and no Negotiated Loans are
outstanding.


                                     ARTICLE III

                                       GENERAL

         3.1  EXPENSES.  The Company agrees to pay all fees and expenses of
McDermott, Will & Emery as counsel to the Documentary Agent, the Administrative
Agent and the Negotiated Loan Agent in connection with the preparation,
execution and delivery of this Amendment.

         3.2  EFFECTIVENESS.  Article I of this Amendment shall become
effective as of the Third Amendment Effective Date, subject to receipt by the
Documentary Agent of the following, each duly executed and dated the Third
Amendment Effective Date or such other date satisfactory to the Documentary
Agent, in form and substance reasonably satisfactory to the Documentary Agent:

         (a)  AMENDMENT.  Counterparts of this Amendment whether on the same or
    different counterparts, executed by the Company and the Required Banks (or
    in the case of any Bank as to which an executed counterpart shall not have
    been so received, telegraphic, telefax, telex or other written confirmation
    of execution of a counterpart hereof by such Bank);

         (b)  AMENDMENT FEE.  Evidence of payment from the Company to the
    Administrative Agent of a fee payable to the Administrative Agent for the
    account of each Bank for which the Documentary Agent receives by 12:00 noon
    (New York City time) on December 23, 1996 an executed counterpart hereof
    (including by fax), such fee to be equal to 0.25% of the amount of such
    Bank's Commitment and to be distributed by the Administrative Agent to each
    such Bank upon the effectiveness of this Amendment;

         (c)  GUARANTY.  The Guaranty executed by the Guarantor;

         (d)  RESOLUTIONS.   Copies of the resolutions of the board of
    directors of each of the Company and the Guarantor authorizing the
    transactions contemplated by this Amendment and the Guaranty, certified as
    of the Third Amendment

<PAGE>

    Effective Date by the Secretary or an Assistant Secretary (or in the case
    of the Guarantor, the Clerk or Assistant Clerk) of the Company and the
    Guarantor;

         (e)  INCUMBENCY.    A certificate of the Secretary or Assistant
    Secretary (or in the case of the Guarantor, the Clerk or Assistant Clerk)
    of each of the Company and the Guarantor certifying the names and true
    signatures of the officers of the Company or the Guarantor authorized to
    execute, deliver and perform, as applicable, this Amendment and the
    Guaranty;

         (f)  OPINION OF COUNSEL FOR THE COMPANY AND THE GUARANTOR.  A letter
    from Altheimer & Gray, counsel for the Company and the Guarantor, addressed
    to the Agents and the Banks substantially in the form attached hereto; and

         (g)  EXTENSION OF SIGNATURE CREDIT AGREEMENT.  Evidence of the
    extension to August 29, 1997 of the maturity date of loans under the
    Signature Credit Agreement.

         (h)  AMENDMENT OF OTHER CREDIT AGREEMENT.  Evidence of (i) the
    extension to August 29, 1997 of the termination date under the Credit
    Agreement dated as of October 4, 1996 among the Company, various lenders,
    The Bank of New York, as Administrative Agent, and The Bank of Nova Scotia,
    as Documentation Agent, and (ii) the amendment of the covenants therein to
    conform to the Short Term Credit Agreement as amended hereby.

       3.3  DEFINITIONS.  Except as otherwise herein specifically defined, all
the capitalized terms contained herein shall have the meaning ascribed to such
terms in the Short Term Credit Agreement.

       3.4  REAFFIRMATION.  Except as hereinabove expressly provided, all the
terms and provisions of the Short Term Credit Agreement shall remain in full
force and effect and all references therein and in any related documents to the
Short Term Credit Agreement shall henceforth refer to the Short Term Credit
Agreement as amended by this Amendment.  This Amendment shall be deemed
incorporated into, and a part of, the Short Term Credit Agreement.

       3.5  SUCCESSORS.  This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

       3.6  GOVERNING LAW.  This Amendment shall be governed by and construed
in accordance with the laws of the State of Illinois.

       3.7  COUNTERPARTS.  This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an

<PAGE>

original, but all such counterparts shall together constitute but one and the
same agreement.

<PAGE>

         Delivered at Chicago, Illinois as of the day, month and year first
above written.

                                       MONTGOMERY WARD & CO., INCORPORATED


                                       By: /s/ Douglas V. Gathany
                                          -------------------------------------
                                       Name:   Douglas V. Gathany




ACCEPTED AND APPROVED:

THE FIRST NATIONAL BANK OF CHICAGO, in its
individual capacity and in its capacity as
Documentary Agent


By: /s/ Tara W. Clark
   -------------------------------------
Name:   Tara W. Clark


THE BANK OF NEW YORK, in its individual
capacity and in its capacity as Negotiated
Loan Agent


By: /s/ Michael Flannery
   -------------------------------------
Name:   Michael Flannery


THE BANK OF NOVA SCOTIA, in its individual
capacity and in its capacity as Administrative
Agent


By: /s/ J.H. Youssef
   -------------------------------------
Name:   J.H. Youssef
Title:  Senior Manager Finance &
        Administration


BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, in its individual capacity and in
its capacity as Advisory Agent


By: /s/ Sandra S. Ober
   -------------------------------------
Name:   Sandra S. Ober

<PAGE>

CIBC INC.


By: /s/ Christopher P. Kleczkowski
   -------------------------------------
Name:   Christopher P. Kleczkowski
Title:  Director, CIBC Wood Gundy Securities
        Corp., AS AGENT


NATIONSBANK, N.A.


By: /s/ Valerie C. Mills
   -------------------------------------
Name:   Valerie C. Mills SVP


THE LONG-TERM CREDIT BANK OF JAPAN, LTD.


By: /s/ Mark A. Thompson
   -------------------------------------
Name:   Mark A. Thompson
Title:  Vice President and Deputy General
        Manager


CREDIT LYONNAIS CHICAGO BRANCH


By: /s/ Mary Ann Klemm
   -------------------------------------
Name:   Mary Ann Klemm
Title:  Vice President and Group Head


BANCA COMMERCIALE ITALIANA, CHICAGO BRANCH


By: /s/ Julian M. Teodori
   -------------------------------------
Name:   Julian M. Teodori
Title:  Senior Vice President and Manager


By: /s/ Matthew V. Trujillo
   -------------------------------------
Name:   Matthew V. Trujillo
Title:  Assistant Vice President

THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH


By: /s/ Seiichiro Ino
   -------------------------------------
Name:   Seiichiro Ino

<PAGE>

THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH


By: /s/ Noburu Kobayashi
   -------------------------------------
Name:   Noburu Kobayashi
Title:  Deputy General Manager

THE NORTHERN TRUST COMPANY


By: /s/ Sidney R. Dillard
   -------------------------------------
Name:   Sidney R. Dillard


THE SAKURA BANK, LTD.


By: /s/ Takao Okada
   -------------------------------------
Name:   Takao Okada
Title:  Senior Manager


SWISS BANK CORPORATION, CHICAGO BRANCH


By: /s/ Thomas R. Salzano
   -------------------------------------
Name:   Thomas R. Salzano
Title:  Associate Director Banking Finance
        Support, N.A.

By: /s/ Peter V. Matton                /s/ Carole Reading
   ------------------------------------------------------
Name:   Peter V. Matton                    Carole Reading
Title:  Executive Director                 Executive Director
        Restructuring                      Credit Risk Management, N.A.


UNION BANK


By: /s/ Richard A. Sutter
   -------------------------------------
Name:   Richard A. Sutter
Title:  Vice President

<PAGE>

ABN AMRO BANK N.V.


By: /s/ David G. Sagers
   -------------------------------------
Name:   David G. Sagers
Title:  Vice President

By: /s/ Laurie D. Flom
   -------------------------------------
Name:   Laurie D. Flom
Title:  Vice President


FIRST BANK NATIONAL ASSOCIATION


By: /s/ Christopher H. Patton
   -------------------------------------
Name:   Christopher H. Patton


THE FIRST NATIONAL BANK OF BOSTON


By: /s/ Bethann R. Halligan
   -------------------------------------
Name:   Bethann R. Halligan
Title:  Division Executive


PNC BANK, NATIONAL ASSOCIATION


By: /s/ Karen C. Brogan
   -------------------------------------
Name:   Karen C. Brogan


THE YASUDA TRUST AND BANKING CO., LTD.


By: /s/ Joseph C. Meek
   -------------------------------------
Name:   Joseph C. Meek
Title:  Deputy General Manager


THE FIRST NATIONAL BANK OF MARYLAND


By: /s/ Andrew W. Fish
   -------------------------------------
Name:   Andrew W. Fish
Title:  Vice President

<PAGE>

ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.P.A.


By: /s/ Carlo Persico
   -------------------------------------
Name:   Carlo Persico
Title:  Deputy General Manager

By: /s/ Robert Wurster
   -------------------------------------
Name:   Robert Wurster
Title:  First Vice President


UNION BANK OF SWITZERLAND - NEW YORK BRANCH


By: /s/ Michael J. Ahearn
   -------------------------------------
Name:   Michael J. Ahearn
Title:  Managing Director

By: /s/ Daniel R. Strickford
   -------------------------------------
Name:   Daniel R. Strickford
Title:  Assistant Vice President


WELLS FARGO BANK, N.A.


By: /s/ Seth D. Moldoff
   -------------------------------------
Name:   Seth D. Moldoff

COMERICA BANK


By: /s/ Harve C. Light
   -------------------------------------
Name:   Harve C. Light


BANK OF AMERICA ILLINOIS


By: /s/ Sandra S. Ober
   -------------------------------------
Name:   Sandra S. Ober


THE INDUSTRIAL BANK OF JAPAN, LIMITED


By: /s/ Hiroaki Nakamura
   -------------------------------------
Name:   Hiroaki Nakamura

<PAGE>

                                                                   SCHEDULE VIII


                                    FINDER'S LIST


         Schedule VIII to the Short Term Credit Agreement is hereby amended to
add the following thereto:

         "APPLICABLE MARGIN" - used in SECTION 6.1.

         "CONSOLIDATED CAPITAL EXPENDITURES" - used in SECTION 11.21.

         "CREDIT AGREEMENT PERCENTAGE" - used in SECTION 2.8.

         "DISPOSITION" - used in the definition of Net Proceeds and SECTION
         2.8.

         "EBITDAR" - used in SECTION 11.20.

         "GUARANTOR" - used in SECTIONS 11.22 and 13.1(l).

         "GUARANTY" - used in SECTIONS 11.22 and 13.1(l).

         "NET PROCEEDS" - used in SECTION 2.8.

         "SIGNATURE" - used in the definition of Net Proceeds and
         SECTIONS 11.1(b) and 11.23.

         "SIGNATURE CREDIT AGREEMENT" - used in SECTION 11.23.

         "THIRD AMENDMENT EFFECTIVE DATE" - used in SECTIONS 2.8, 4.6, 6.1,
         6.9, and 6.10.


<PAGE>

                                      SCHDULE IX
                   (List of Locations referred to in clause (vi) of
                            definition of "Net Proceeds")


1.  Former catalog house and warehouse situated at Monroe and Washington
    streets Baltimore, MD.

2.  Former administration center situated at Shadeland and Widget Lane, Walnut
    Creek, CA.

3.  Former Jefferson Ward retail store at 815-25 Hendrix Street, Philadelphia,
    PA.

4.  Distribution Center situated at Schnelling and Wynne, St. Paul, MN.

5.  Retail store situated at Lafayette Square in Indianapolis, IN.

6.  Retail store situated at Washington Square in Indianapolis, IN.

7.  Retail store situated at Castleton Square in Indianapolis, IN.

8.  Retail store situated at Greenwood Mall, Greenwood, IN.

If any one or more of the above listed properties is owned by a Subsidiary of
the Company and comprises substantially all the assets of such Subsidiary, the
disposition of the stock of such Subsidiary shall be treated as the Disposition
of the properties owned by such Subsidiary for the purpose of applying clause
(vi) of the definition of "Net Proceeds" contained in Section 1.1 of this
Agreement.