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                                                            EXHIBIT 10.(i)(M)(3)


                           WAIVER AND THIRD AMENDMENT
                                       TO
                                CREDIT AGREEMENT


          THIS WAIVER AND THIRD AMENDMENT (the "Waiver and Amendment") dated as
of March 29, 1997, is made and entered into among MONTGOMERY WARD & CO.,
INCORPORATED (the "Company") and the lenders listed on the signature pages
hereof (herein, together with their respective successors and assigns,
collectively called the "Lenders" and individually called a "Lender").

          WHEREAS the Lenders are parties to that certain Credit Agreement dated
as of October 4, 1996, as amended (the "Credit Agreement"), among Montgomery
Ward & Co., Incorporated, various Lenders, The Bank of New York as Documentation
Agent, and The Bank of Nova Scotia, as Administrative Agent; and

          WHEREAS the Company desires to amend the 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

                                     WAIVER

          1.1  Waiver. The Lenders hereby waive any Event of Default under
Section 13.1(c) of the Credit Agreement arising by reason of any payment or
other concession pursuant to the Finance Agreement Modifications referred to in
Section 3.2 hereof.

          1.2  Limitation on Waivers. The waiver contained herein is limited
precisely to their terms and shall not constitute an amendment, modification or
waiver generally or for any other purpose. The waiver contained herein shall
immediately terminate and cease to be effective upon breach by the Company of
its obligations under Section 2.3 hereof or any of the representations or
warranties contained in Article III.

                                   ARTICLE II

                                   AMENDMENTS

          2.1 Section 1.1 of the Credit Agreement is hereby amended by adding
the following definitions thereto:

          (a) the definition of "Existing Credit Agreements"
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is amended by deleting reference therein to "December 23, 1996" and inserting in
lieu thereof "March 29, 1997".

          (b) the definition of "Change in Control" is corrected by deleting
reference therein to "Company" and inserting in lieu thereof "Montgomery Ward
Holding Corp., a Delaware corporation".

          (c)  The following definition is added in the appropriate alphabetical
order:

          "Finance Agreements" means any or all of the following: (i) any and
     all agreements of the Company or any of its Subsidiaries evidencing or
     governing the terms of any Indebtedness for Borrowed Money, (ii) the so-
     called synthetic or operating lease agreements with Sumitomo Bank Leasing
     and Finance, Inc. and Credit Lyonnais, as lessors, as amended, and (iii)
     any agreements or notes (including the so-called Seller Notes referred to
     in Section 13.1(j)) evidencing amounts owed by the Company or a Subsidiary
     under the Retail Credit Program Agreement.

          2.2 Section 11 of the Credit Agreement is hereby amended by replacing
in subsection (i) reference to "December 23, 1996" and inserting in lieu thereof
"March 29, 1997".

          2.3 Section 11 of the Credit Agreement is hereby amended by adding the
following paragraph at the end of the section:

     Modification of Finance Agreements. Without the consent of the Required
     Lenders, after the Effective Date the Company will not, and will not permit
     any Subsidiary to, enter into any material amendment, waiver or
     modification with respect to any Finance Agreement.

          2.4 Inventory Financing and Note Purchase Agreements. Section 13.1 of
the Credit Agreement is further amended by adding subsections (m) and (n) as
follows:

          (m)  Inventory Financing with GE Capital.  The aggregate outstanding
     principal amount of indebtedness of the Company and its subsidiary,
     Lechmere, Inc. to GE Capital pursuant to its so-called vendor program shall
     at any time be less than $350,000,000.

          (n)  Note Purchase Agreements. The occurrence of an event of default
     under the Company's Note Purchase Agreements dated as of March 1, 1993 and
     July 11, 1995, as amended. No waiver, amendment or other action by the
     noteholders with respect to any event of default under the such Note
     Purchase Agreements shall be effective to

                                       2
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     terminate the Event of Default arising under this Section 13.1(n).

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

          The Company hereby represents and warrants to the Agents and the
Lenders as follows:

          3.1 No Default. No Event of Default or Unmatured Event of Default has
occurred and is continuing or will exist after giving effect to this Waiver and
Amendment.

          3.2 Finance Agreements. Without limitation of Section 2.1, for the
Fiscal Quarter ending March 29, 1997 the Company has obtained all necessary
amendments, waivers or modifications (collectively, the "Finance Agreement
Modifications") in respect of any financial covenants under the Finance
Agreements so that during the Waiver Period, no default or event of default
shall exist under any of such Finance Agreements as a result of noncompliance
with any of such financial covenants. The Company has furnished to the Agents
copies of any amendment, waiver or modification entered into on or after
December 23, 1996 with respect to any Finance Agreement. The Company has
furnished to each of the Lenders a true and correct summary (dated as of
3/27/97) of each Finance Agreement Modification.

          3.3  Due Execution.   The execution, delivery and performance of this
Waiver and 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.

          3.4  Validity.  The Credit Agreement as amended by this Waiver and
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.

          3.5  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 Credit Agreement are true and correct as of the
date hereof with the same effect as though made on the date hereof.

                                       3
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                                  ARTICLE IV

                                    GENERAL
                                    -------

          4.1  Expenses.  The Company agrees to pay all out-of-pocket expenses
(including fees and expenses of McDermott, Will & Emery) of the Documentation
Agent and the Administrative Agent in connection with the preparation, execution
and delivery of this Waiver and Amendment.

          4.2  Effectiveness.  Article I of this Waiver and Amendment shall
become effective as of the date on which, McDermott, Will & Emery as counsel to
the Agents shall have received the following in form and substance reasonably
satisfactory to the Documentation Agent:

          (a)  Waiver and Amendment. Counterparts of this Waiver and Amendment,
     whether on the same or different counterparts, executed by the Company and
     the Required Lenders (or in the case of any Lender 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
     Lender).

          (b)  Finance Agreements. A certificate of an Authorized Officer of the
     Company to the effect that (i) attached thereto is an executed copy of each
     Finance Agreement Modification entered into during the period from December
     24, 1996 through the Effective Date, and (ii) each such Finance Agreement
     Modification is fully effective.

          4.3  Definitions. Except as otherwise herein specifically defined, all
the capitalized terms contained herein shall have the meaning ascribed to such
terms in the Credit Agreement.

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

          4.5  Successors.  This Waiver and Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

          4.6  Governing Law.  This Waiver and Amendment shall be governed by
and construed in accordance with the laws of the State of Illinois.

                                       4
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          4.7  Counterparts.  This Waiver and 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 original, but all such
counterparts shall together constitute but one and the same agreement.

          4.8  Acknowledgement of Lechmere.  By executing the acknowledgement to
this Waiver and Amendment, Lechmere, Inc. hereby confirms and agrees that the
Lechmere, Inc. Guaranty is, and shall continue to be in full force and effect
and is hereby ratified and confirmed in all respects, except that on or after
the Effective Date each reference therein to the "Credit Agreement" shall refer
to the Credit Agreement after giving effect to this Waiver and Amendment.

                                       5
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          Delivered at Chicago, Illinois as of the day, month and year first
above written.

                                 MONTGOMERY WARD & CO., INCORPORATED


                                 By: /s/ Carol J. Harms
                                    --------------------------------
                                 Name:   Carol J. Harms
                                 Title: Senior Vice President - Finance



ACCEPTED AND APPROVED:


THE BANK OF NEW YORK, in its
individual capacity and in
its capacity as Documentation 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/ A.S. Norsworthy
   -----------------------------
Name:   A.S. Norsworthy
Title:  Sr. Team Leader-Loan Operations

GENERAL ELECTRIC CAPITAL CORPORATION,
in its individual capacity


By: /s/ R.M. Agans
   ------------------------------
Name:   R.M. Agans


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GUARANTY REAFFIRMED:

LECHMERE, INC.


By: /s/ Carol J. Harms
   -------------------
Name:   Carol J. Harms
Title:  Vice President and Treasurer