<PAGE>

                             PROGRAM AGREEMENT AMENDMENT

         PROGRAM AGREEMENT AMENDMENT dated as of March 4, 1997 (this
"Amendment") among GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("GE Capital"), MONTGOMERY WARD & CO., INCORPORATED, an Illinois
corporation ("MW"), and LECHMERE, INC., a Massachusetts corporation
("Lechmere").

                                  R E C I T A L S

         WHEREAS, MW and GE Capital have heretofore entered into a Program
Agreement dated October 12, 1989, as amended (the "Program Agreement"; terms
defined therein being used herein as so defined); and

         WHEREAS, GE Capital and MW desire to amend the Program Agreement in
certain respects (including, but not limited to, adding Lechmere, a wholly
owned subsidiary of MW, as a party thereto); and

         WHEREAS, MW and Lechmere each acquire Inventory for resale to its
customers from certain manufacturers and distributors; and

        WHEREAS, MW and Lechmere have requested GE Capital to provide funds to
each of MW and Lechmere to pay to such manufacturers and distributors
supplying Inventory to MW and/or Lechmere; and

        WHEREAS, GE Capital is willing to make such payments for MW and
Lechmere in the amounts and under the terms and subject to the conditions set
forth in the Program Agreement as amended by this Amendment; and

        WHEREAS, in connection with this Amendment, Montgomery Ward Holding
Corp., the direct parent of MW ("Holding"), will agree to amend its
certificate of incorporation to create and issue to GE Capital shares of its
Series C Preferred Stock having a liquidation value of $21,120,000, and MW
will agree to amend its articles of incorporation to create and issue to
Holding preferred stock with substantially identical forms of such Series C
Preferred Stock of Holding and with an equivalent liquidation value;

<PAGE>

        NOW, THEREFORE, the parties hereto, in consideration of the terms,
covenants, provisions and conditions hereinafter set forth, hereby agree as
follows:

        1.    Section 1 of the Program Agreement is hereby amended by (i)
inserting "or Lechmere's" after the word "MW" on the first line of this
Section, (ii) deleting the reference to "One Hundred Million Dollars
($100,000,000.00)" in the first paragraph of this Section and replacing it
with the words "Three Hundred Fifty Million Dollars ($350,000,000.00)", (iii)
inserting the words "or Lechmere" after each other reference to "MW" in this
Section and (iv) adding the following at the end thereof:

              "MW and Lechmere shall, from time to time, make payments to
          vendors (the "Vendor Payable Extension Program") in amounts equal
          to the invoice price (net of applicable discount) for inventory
          acquired by MW or Lechmere by checks written against an account
          maintained for such purpose at The First National Bank of Boston
          ("FNBB"), or such other account as may be approved by GE Capital
          (the "FNBB Account").  MW and Lechmere will send GE Capital a
          report indicating the total amount of the same day's cleared checks
          before 11:00 a.m. of each day.  Upon the request of MW or Lechmere,
          GE Capital will wire same day funds into the FNBB Account in an
          amount equal to the prior day's Vendor Payments (the "Daily FNBB
          Funding"). GE Capital will provide MW and Lechmere an invoice equal
          to the amount of the previous day's Daily FNBB Funding (the "Vendor
          Payable Invoices").  The aggregate amount of outstanding payments
          and other amounts payable in connection with the Vendor Payable
          Extension Program, at any given time, shall not exceed One Hundred
          Fifty Million Dollars ($150,000,000).

              Notwithstanding anything contained herein to the contrary, (i)
          the maximum aggregate amount of outstanding payments and other
          amounts payable to GE Capital hereunder, at any time, shall not
          exceed $500,000,000 and (ii) in no event shall the aggregate amount
          of outstanding payments and other amounts payable to GE Capital
          pursuant to the Vendor Payable Extension Program exceed the amount
          set forth below for the time periods indicated:


                                       2


<PAGE>



                Maximum
          Amount Outstanding                            Period

          $100,000,000                        date hereof through
                                              March 14, 1997
           150,000,000                        March 15, 1997 and thereafter


          GE Capital shall not be obligated to make any payments pursuant to
          the Vendor Payable Extension Program if MW has the ability to
          borrow any amounts under the Long Term Credit Agreement among MW,
          various banks, and The First National Bank of Chicago, The Bank of
          Nova Scotia, The Bank of New York, and Bank of America National
          Trust and Savings Association, as agents, or the Short Term Credit
          Agreement among MW, various banks, and The First National Bank of
          Chicago, The Bank of Nova Scotia, The Bank of New York, and Bank of
          America National Trust and Savings Association, as agents, each
          dated as of September 15, 1994 and as amended on March 19, 1996,
          September 6, 1996 and as of December 23, 1996 (collectively, the
          "Bank Facility") or under its existing inventory financing facility
          with Deutsche Financial Services Corporation ("DFS") pursuant to
          the Program Agreement, dated as of October 7, 1996, among DFS, MW
          and Lechmere (the "Inventory Financing Facility"), to the extent
          that MW or Lechmere have outstanding invoices payable thereunder.
          MW hereby covenants and agrees that it will not make any optional
          prepayment of principal under the Bank Facility or the Inventory
          Financing Facility, if the aggregate amount of outstanding Payments
          and other amounts payable to GE Capital hereunder exceed
          $350,000,000 (a "Prohibited Payment"). The making of any such
          Prohibited Payment shall constitute an Event of Default and shall
          have the consequences set forth in Section 7(b) of this Agreement.
          GE Capital's agreement to provide funds to MW and Lechmere under
          this Agreement pursuant to the Vendor Payable Extension Program
          shall terminate on the first to occur of (i) March 4, 1998, (ii) an
          occurrence and continuation of an Event of Default pursuant to
          Section 7(a)(6) of this Agreement or (iii) upon notice by GE
          Capital, the occurrence and continuation of an Event of Default
          pursuant to any other subsection of Section 7(a) of this

                                       3

<PAGE>

          Agreement.  Upon any termination of GE Capital's obligations under
          this Agreement due to the occurrence and continuance of an Event of
          Default pursuant to Section 7(a)(6) of this Agreement, all of
          MW's and Lechmere's obligations under this Agreement shall be
          immediately due and payable and upon any termination due to the
          occurrence and continuation of an Event of Default under any other
          subsection of Section 7(a) of this Agreement, GE Capital may
          immediately, by written notice to MW and Lechmere, declare all of
          MW's and Lechmere's obligations under this Agreement to be
          immediately due and payable."

      2.  Section 2 of the Program Agreement is hereby amended by (i) adding
the words "and Lechmere" after each reference to "MW" in this Section and (ii)
adding the following to the end thereof:

               "MW and Lechmere shall each reimburse GE Capital in full the
          amount funded by it on their respective behalfs as set forth in
          each Vendor Payable Invoice no later than 45 days after the date of
          such Vendor Payable Invoice together with interest on such amount
          from the date of funding until paid in full at the GE Capital
          Charge Rate as in effect from time to time. "GE Capital Charge
          Rate" means the per annum GE Capital money cost as reported in the
          internal financial reports of GE Capital's Appliance/Electronics
          Financing Group plus four hundred twenty-five (425) basis points."

      3.  Section 3 of the Program Agreement is hereby amended by inserting
after the second word of subsection (i) the words "purchased by MW" and by
adding the following to the end thereof:

              "Lechmere represents and warrants to GE Capital that:

              (a) Lechmere is a corporation duly organized, validly existing
          and in good standing under the laws of the State of Massachusetts;

              (b) Lechmere is duly authorized to enter into this Agreement,
          has taken all necessary corporate action to authorize the execution
          and

                                       4

<PAGE>

          consummation of this Agreement, and shall furnish GE Capital with
          satisfactory evidence of same upon request.  This Agreement is a
          legal, valid and binding obligation of Lechmere enforceable against
          Lechmere in accordance with its terms except as such enforceability
          may be limited by bankruptcy, insolvency or other similar laws
          affecting creditors' rights generally;

              (c) The execution, delivery and performance of this Agreement
          do not constitute a breach of any provisions contained in
          Lechmere's Articles of Organization or Bylaws;

              (d) The execution, delivery or performance of this Agreement is
          not in contravention of any applicable provision of law,
          governmental rule or regulation and does not require the consent or
          approval of any governmental entity or authority or any other
          person which has not been obtained;

              (e) The execution, delivery or performance of this Agreement is
          not in contravention of any order binding upon Lechmere, or any
          agreement, indenture or other instrument, including, without
          limitation, any loan agreement to which Lechmere is a party or
          by which Lechmere or its property is or may be bound, and will not
          result in a breach or termination thereof, constitute a default
          thereunder, or accelerate any performance required thereby or
          result in the creation or imposition of a lien on any of its
          properties;

              (f) No litigation which might impair the enforceability of this
          Agreement or Lechmere's ability to perform its obligations
          hereunder ("Material Litigation") is pending or, to Lechmere's
          knowledge, threatened against Lechmere;

              (g) The Inventory of Lechmere is not covered by or subject to,
          in whole or in part, (1) any effective security agreement or
          equivalent security or lien instrument, or (2) any financing
          statement or continuation statement on file or of record in any
          public office, except for the security agreement and financing
          statement in favor of MW;


                                      5

<PAGE>

              (h)   Lechmere's principal place of business is located at
          Montgomery Ward Plaza, Chicago, Illinois 60671."

    4.   Section 5 of the Program Agreement is hereby amended by deleting
subsection (i) and by adding the following to the end thereof:

                    "Lechmere covenants and agrees that, for so long as it
              shall have any obligation to GE Capital hereunder, it shall:

                    (a)   Not grant a security interest in, or otherwise
              create a lien on, any Inventory with respect to which GE
              Capital is to make or makes a Payment to a Lechmere Vendor
              without giving GE Capital 45 days prior written notice thereof;

                    (b)   Not change its principal place of business without
              giving GE Capital 30 days' prior written notice thereof;

                    (c)   Permit a GE Capital employee or employees designated
              by GE Capital to work on Lechmere's premises in Lechmere's
              accounts payable operation to administer the program as to
              Lechmere and to allow such employee or employees access to all
              Lechmere's books and records necessary to perform this function."

    5.   Section 6 of the Program Agreement is hereby amended by inserting
the words "and Lechmere" after each reference to "MW" in this Section.

    6.   Section 7 of the Program Agreement is hereby amended by (i)
inserting the words "or Lechmere" after each reference to "MW" in subsection
(a)(1), (a)(2), (a)(3), (a)(4), (a)(6), (a)(7) and (a)(8), (ii) by inserting
the words "or Lechmere's" after each reference to "MW's" in subsection
(a)(4), (iii) inserting the words "and Lechmere" after each reference to "MW"
and inserting the words "or Lechmere's" after the reference to "MW's" in
subsection (b), and (iv) deleting subsection (a)(5) in its entirety and
replacing it with the following:

                 (5)   The Interim Consumer Credit Card Agreement, dated as
    of April 1, 1996, as amended, restated and renamed The Bank Credit Card
    Program
                                      6


<PAGE>

    Agreement, among Monogram Credit Card Bank of Georgia and MW or
    the Account Purchase Agreement dated as of June 24, 1988, as amended and
    restated and renamed the Account Related Agreement, dated as of April 1,
    1996, between Montgomery Ward Credit Corporation and MW (i) shall fail to
    remain in full force and effect, or (ii) any "MW Default" (as defined in
    such agreements) shall occur thereunder or (iii) MW shall give notice of
    termination or take any action to terminate any of such agreements.

    7.   Section 8 of the Program Agreement is hereby amended  by (i)
inserting the words "and Lechmere" after each reference to "MW" and (ii)
inserting the words "or Lechmere's" after each reference to "MW's".

    8.   Section 9 of the Program Amendment is hereby amended by (i)
inserting the words "and Lechmere" after each reference to "MW", (ii) inserting
the words "and Lechmere's" after each reference to "MW's", (iii) deleting the
first two words of the second sentence of the third paragraph of subsection
9(a) and by inserting in its place "MW and Lechmere will jointly and
severally" and (iv) deleting the first two words of the last sentence of
subsection 9(b) and by inserting in its place "MW and Lechmere will jointly
and severally".

    9.    Section 10 of the Program Agreement is renumbered as Section 12 and
new Sections 10 and 11 are hereby added as follows:

          "10.  LECHMERE AND MW LIABILITY.  (a) By becoming a party to this
    Agreement, Lechmere shall be responsible only for reimbursement
    obligations or other obligations hereunder arising out of commitments or
    Payments made with respect to Lechmere's invoices or deduction against
    Payments made or claims asserted on behalf of Lechmere against Lechmere's
    Vendors, or payments made by GE Capital in connection with Lechmere's
    participation in the Vendor Payable Extension Program, but not for
    reimbursement obligations or other obligations hereunder arising out of
    commitments or Payments made with respect to MW's invoices or deductions
    made or claims asserted on behalf of MW against MW's Vendors or any other
    obligations of MW under this Agreement.  MW shall

                                      7

<PAGE>

     be responsibe for all its obligations under this Agreement.

                (b)   MW and Lechmere agree to jointly and severally
           indemnify and hold GE Capital harmless from and against any and
           all third party suits, actions, proceedings, claims, damages,
           losses, liabilities and expenses (including, without limitation,
           reasonable attorneys' fees and disbursements, including those
           incurred upon any appeal) which may be instituted or asserted
           against or incurred by GE Capital as the result of its having
           entered into this Agreement or made Payments hereunder or any
           payments pursuant to the Vendor Payable Extension Program;
           provided, however, that MW and Lechmere shall not be liable for
           such indemnification to GE Capital to the extent that any such
           suit, action, proceeding, claim, damage, loss, liability or
           expense results from GE Capital's gross negligence or willful
           misconduct.

           11.  GUARANTEE.

                11.1    MW GUARANTEE.  MW hereby unconditionally and
           irrevocably guarantees (the "Guarantee") to GE Capital the due and
           punctual payment and performance of all current and future
           liabilities and obligations of Lechmere arising under this
           Agreement, including, without limitation, the reimbursement
           obligations of Lechmere arising out of commitments or Payments for
           the benefit of Lechmere hereunder, including payments pursuant to
           the Vendor Payable Extension Program, together with all costs and
           expenses incurred by GE Capital for which Lechmere is responsible
           hereunder or incurred by GE Capital in connection with the
           enforcement of this Guarantee. The obligations of MW under this
           Guarantee shall be unconditional and absolute and, without
           limiting the generality of the foregoing, shall not be released,
           discharged or otherwise affected by:

               (a)  any extension, renewal, settlement, compromise, waiver or
           release in respect

                                      8



<PAGE>

           of any obligation of Lechmere under this Agreement by operation of
           law or otherwise;

               (b)  any modification or amendment of or supplement to this
           Agreement if such modification, amendment or supplement is signed
           by an officer of MW;

               (c)  any modification, amendment, waiver, release,
           non-perfection or invalidity of any direct or indirect security,
           or of any guarantee or other liability of any third party, for
           any obligation of Lechmere under this Agreement;

               (d)  any change in the corporate existence, structure or
           ownership of, or any insolvency, bankruptcy, reorganization or
           other similar proceeding affecting Lechmere, its assets or any
           resulting release or discharge of any obligation of
           Lechmere hereunder;

               (e) the existence of any claim, set-off or other rights which
           MW may have at any time against Lechmere, whether or not arising in
           connection with this Agreement, or against GE Capital arising under
           this Agreement; provided, however, that nothing herein shall
           prevent the assertion of any such claim by seperate suit or
           compulsory counterclaim;

               (f)  any invalidity or unenforceability of any liability or
           obligation of or relating to Lechmere for any reason under this
           Agreement, or any provision of applicable law or regulation
           purporting to prohibit the payment or performance by Lechmere of
           any liability or obligation under this Agreement; or

               (g)  any other act or omission to act or delay of any kind by
           Lechmere, GE Capital or any other circumstance whatsoever that
           might, but for the provisions of this paragraph, constitute


                                      9
<PAGE>
           a legal (excluding any statute of limitations defense) or
           equitable discharge of the obligations of MW under this
           Guarantee.

          MW's obligations under this Guarantee shall remain in full force and
          effect until all liabilities and obligations of Lechmere under this
          Agreement shall have been irrevocably paid and performed in full.
          If at any time the payment of any amount by Lechmere under this
          Agreement is rescinded or must be otherwise restored or returned
          upon the insolvency, bankruptcy or reorganization of Lechmere or
          otherwise, MW's obligations under this Guarantee with respect to
          such payment shall be reinstated at such time as though such
          payment had become due but had not been made at such time.

              11.2.  WAIVERS.  With respect to the Guarantee, MW irrevocably
          waives acceptance hereof, presentment, demand, protest and any
          notice not provided for herein, as well as any requirement that at
          any time any action be taken by any person against Lechmere or its
          successors or assigns.  Furthermore, MW irrevocably and absolutely
          waives any and all rights of subrogation, contribution,
          indemnification, recourse, reimbursement and any similar rights
          against Lechmere arising as a result of any payment made by MW
          hereunder for the account of Lechmere, whether such rights arise
          under any express or implied contract or by operation of law, until
          Lechmere's obligations hereunder have been irrevocably paid and
          discharged in full.  If acceleration or the time for payment of any
          amount payable by Lechmere under this Agreement is stayed upon the
          insolvency, bankruptcy or reorganization of Lechmere, all such
          amounts otherwise payable or subject to acceleration under the
          terms of this Agreement shall nonetheless be payable by MW hereunder
          forthwith on demand by GE Capital."

    10.   Section 12 of the Program Agreement is hereby amended by inserting
the words "and Lechmere" after each reference to "MW".  Subsection (c) of
Section 12 of the Program Agreement is hereby deleted and replaced with the
following:

                                     10


<PAGE>

               "(c)     Notices give under this Agreement shall be deemed
          made and received:     (a)  three Business Days after depositing
          same in the U.S. Mail, postage paid, addressed to the party to whom
          such notice is directed at the address set forth below or at such
          other address as such party may by written notice received by the
          other parties hereto designates as its address for such purpose or
          (b) if sooner, the next Business Day following facsimile
          transmission to the party to whom such notice is directed at the
          number set forth below or at such other number as such party may by
          written notice received by the other parties hereto designates as
          its number for such purpose.  The addresses and the facsimile
          transmission numbers for notices hereunder are as follows:

          If to GE Capital:

          General Electric Capital Corporation
          7595 Centurion Parkway
          Jacksonville, FL  32256
          Attention:  Director of Inventory Financing
          FAX No.  (800) 723-1590

          With a copy to:

          General Electric Capital Corporation
          260 Long Ridge Road
          Stamford, Connecticut  06904
          Attention:  Vice President and General Manager,
                      Retailer Financial Services
          FAX No.  (203) 357-4135

          and if to MW:

          Montgomery Ward & Co., Incorporated
          844 N. Larrabee, 5-3
          Chicago, Illinois  60671
          Attention:  Treasurer
          FAX No. (312) 467-7421



                                          11

<PAGE>

          with a copy to:

          Montgomery Ward & Co., Incorporated
          535 W. Chicago Avenue, 24-S
          Chicago, Illinois  60671
          Attention:  Secretary
          FAX No. (312) 467-7898

          and if to Lechmere:

          Lechmere, Inc.
          c/o Montgomery Ward & Co., Incorporated
          844 N. Larrabee, 5-3
          Chicago, Illinois  60671
          Attention:  Treasurer
          FAX No. (312) 467-7421

          with a copy to:

          Lechmere, Inc.
          c/o Montgomery Ward & Co., Incorporated
          535 W. Chicago Avenue, 24-S
          Chicago, Illinois  60671
          Attention:  Secretary
          FAX No. (312) 467-7898

     11.  In each place in the Program Agreement when the words "and
Lechmere", "or Lechmere" or "Lechmere's" have been inserted, all words in
the singular that follow such insertion shall include the plural and all
words in the plural that follow such insertion shall include the singular.

     12.  Supplement No. 1 to the Program Agreement is hereby amended by
inserting the words "and Lechmere" after the first reference to "MW" in such
supplement and the words "or Lechmere" after each subsequent reference to
"MW".  In addition, the second paragraph of Supplement No. 1 to the Program
Agreement is hereby deleted and replaced with the following:

               "Commencing as of March 1, 1997 in consideration of the
          payments made from time to time by GE Capital for MW and/or
          Lechmere under the Agreement for certain invoices covering
          inventory acquired by MW and/or Lechmere from Vendors (other than
          pursuant to the Vendor Payable Extension Program, as to which the
          provisions of this Supplement No. 1 shall not be applicable), MW


                                            12

<PAGE>

          and Lechmere each agree to make reimbursement in full of each such
          Invoice paid by GE Capital on its behalf no later than 120 days
          from the earlier of (i) the shipping date of the Inventory covered
          by such Invoice or (ii) the date of such Invoice, or such other
          date as may be agreed upon by GE Capital and MW or Lechmere, as the
          case may be.  Notwithstanding the foregoing, MW or Lechmere may
          delay any such reimbursement payment for up to 90 days beyond the
          due date with respect to any particular Invoice, but not beyond 180
          days from the date of such Invoice.  GE Capital may terminate this
          90-day extension right as to future Invoices at any time upon 30
          days' prior written notice to MW and Lechmere.  If for any reason
          any reimbursement is received by GE Capital later than the
          applicable due date, MW and Lechmere, as the case may be, each
          agree to pay to GE Capital interest on such outstanding amount from
          such due date until paid in full at the GE Capital Charge Rate as
          in effect from time to time."

     13.  MW and Lechmere hereby jointly and severally represent and warrant
to GE Capital as follows:

          (a)  No Event of Default or event which with the giving of notice
or the lapse of time, or both, would constitute an Event of Default has
occurred and is continuing.

          (b)  The execution, delivery and performance by MW and Lechmere of
this Amendment have been duly authorized by all necessary or proper
corporate action and do not require the consent or approval of any person
which has not been obtained.

          (c)  This Amendment has been duly executed and delivered by MW and
Lechmere and each of this Amendment and the Program Agreement as amended
hereby constitutes a legal, valid and binding obligation of MW and Lechmere,
enforceable against them in accordance with its terms.

          MW further represents and warrants to GE Capital that each of the
representations and warranties of MW contained in subsections 3(a), (c), (d),
(e), (g), (i) and (j) is true and correct as of the date hereof, with all
references therein to the Agreement being deemed to refer to the Agreement as
amended hereby.


                                            13

<PAGE>

     14.  That certain letter agreement dated February 14, 1997 between GE
Capital and MW relating to the Program Agreement (the "Letter Agreement") is
deemed terminated and the commitment amount under Section 1 of the Agreement
is reinstated at $350,000,000; provided, however, that MW's payment
obligation under the Letter Agreement shall remain in full force and effect
and that any amounts funded by GE Capital pursuant to the Letter Agreement
prior to the date hereof shall be deemed outstanding for purposes of
calculating the maximum amount outstanding under Section 1 of the Program
Agreement (as amended hereby).

     15.  MW agrees to pay on demand all costs and expenses of GE Capital in
connection with the preparation, execution and delivery of this Amendment and
the Letter Agreement, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for GE Capital with respect thereto.

     16.  This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which
taken together shall constitute but one and the same instrument.

     17.  This Amendment shall be governed by, construed and enforced in
accordance with the laws of the State of New York, without regard to the
principles thereof regarding conflict of laws.

     18.  Except as amended hereby, the Program Agreement shall remain in
full force and effect.

                                            14

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed as of the date first above written.

                                   GENERAL ELECTRIC CAPITAL CORPORATION

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


                                   MONTGOMERY WARD & CO., INCORPORATED

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


                                   LECHMERE, INC.


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



                                            15