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                               [Letterhead]

April 19, 1996



Mike Searles
64 Balfour Drive
West Hartford, CT 07761



Dear Mike:

This letter will confirm our offer to you to join Montgomery Ward as
Executive Vice President Apparel and Gold 'N Gems. You will report to the
Chairman and C.E.O. and become a member of the Executive Committee of
Montgomery Ward Retail. Your compensation plan will be as follows:

     1.)  Base salary will be $500,000 annually, paid semi-monthly.

     2.)  Target bonus on the Short-Term Performance Management Plan will be
          $250,000 annually. Your objectives under this incentive plan will
          be set by the Board Committee on Senior Executive Compensation as
          required by the tax and S.E.C. regulations. Under the provisions of
          this plan, you can earn up to 150% of the target amount by
          exceeding the objectives. For 1996 and 1997, your target bonus of
          $250,000 will be guaranteed.

     3.)  You will participate in the Executive Long Term Incentive Plan with
          a target award of 50% of your average annual base salary for the
          three year cycle. For the 1994-1996 cycle, which ends in December
          of 1996, you will participate at a target amount of $150,000.
          Thereafter, you will participate at the full 50% target level for
          all cycles, including the 1995-1997 and 1996-1998 cycles. A copy
          of the plan description is attached.

     4.)  You will participate in all Senior Officer Perquisite Plans,
          including In-Town Limo Service, Financial Planning, Tax Preparation,
          Supplemental Medical and Life coverage and annual physicals. You
          will also participate in the Montgomery Ward Change of Control
          Security Plan for Senior Officers. Copies of these plans are attached.


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Mike Searles
April 19, 1996
Page 2



     5.)  The Stock Ownership Committee will be requested (and endorsed by
          Bernie Brennan) to grant you options for 300,000 shares of
          Montgomery Ward Holding Stock at $24.50 per share. These options will
          have a ten year term and will vest as follows:

                           150,000      June 1, 1997
                           150,000      June 1, 1998

          These Stock Options will be offered in accordance with the Terms and
          Conditions of the Stockholders Agreement. A copy of the current
          Prospectus is included.

     6.)  Montgomery Ward will provide you with a full relocation plan,
          including movement of household goods, househunting trips, and home
          purchase at 100% of the $1.5 million purchase value of your home in
          West Hartford. In addition, Montgomery Ward will pay your closing
          costs on your home purchase in the Chicago area, plus up to two
          points on your financing of a new home. Your temporary housing
          expenses in the Chicago area for the first four months (or until
          relocation if sooner) will be paid by Montgomery Ward.

     7.)  If Montgomery Ward initiates a separation of your employment for any
          reason other than "Cause" as defined below, or if you terminate
          your employment for "Good Reason" as defined below, you will receive
          the higher of either your base pay and most recent short term bonus
          award through May 31, 1998; the payments provided in the Montgomery
          Ward Change of Control Security Plan; or, 18 months base salary plus
          1 1/2 times your most recent short term P.M.P. Award. (See attached
          plans.) Also, all stock options in point 5 above will immediately
          vest if you are separated by the Company without "Cause", or if you
          terminate your employment for "Good Reason" as defined below.
          Additionally, you will be permitted to retain your health care
          coverage at the associate rate for 18 months following termination.


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Mike Searles
April 19, 1996
Page 3



          "Cause" shall mean (i) your willful failure to substantially perform
          your duties hereunder and to remedy such failure within ninety (90)
          days after receiving notice from the Board of Directors of the
          Company or their representative specifying the details thereof,
          (ii) your willful failure to follow a written, lawful order or
          written directive from the Board of Directors or Chief Executive
          Officer of the Company or their representative and to remedy such
          failure within ninety (90) days after receiving notice from the
          Board of Directors of the Company or their representative specifying
          the details thereof, or (iii) your conviction of any kind of felony
          or your conviction of any misdemeanor involving moral turpitude that
          negatively reflects on the Company. For purposes of this paragraph,
          no act, or failure to act, on your part shall be considered "willful"
          unless such act, or failure to act by you was not in good faith and
          was without reasonable belief that your action or omission was in the
          best interest of the Company. NOTE: "Cause" does not include poor
          work performance.

          If you are not made President, Montgomery Ward Retail on or before
          January 1, 1998, or if another Executive is named President,
          Montgomery Ward Retail during that period, you may elect (within
          90 days and with 90 days written notice) to treat your employment as
          separated without "Cause" and will receive a special severance plan
          equal to 18 months base salary plus 1 1/2 times your most recent
          short term P.M.P. Award in lieu of any other severance plan and your
          stock options in point 5 above will immediately vest. Additionally,
          you will be permitted to retain your health care coverage at the
          associate rate for the severance period.

          If you voluntarily leave Montgomery Ward without "Good Reason", or
          are separated for "Cause", you will receive no severance payments,
          nor will your stock or stock options (as the case may be) continue
          to vest beyond your separation date. "Good Reason" shall mean any
          action by Montgomery Ward which, without you prior written consent
          significantly reduces your job responsibilities, job title,
          compensation, or benefits.


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Mike Searles
April 19, 1996
Page 4



If you are in agreement with the compensation plan as detailed above, please
sign this letter below and return it to me.

Mike, I am pleased that you will be joining Montgomery Ward and I look forward
to working with you on moving our business to the next level.


Sincerely,



/s/ Robert A. Kasenter
________________________
Robert A. Kasenter
Executive Vice President
Human Resources



cc:  Bernie Brennan
     Silas Cathcart
     Dan Porter



                                       /s/ Michael S. Searles
                                       ________________________
                                             Mike Searles


                                               4/22/96
                                       ________________________
                                                 Date