<PAGE>
                                                            EXHIBIT 10.(i)(I)(6)

 
                          WAIVER AND FOURTH AMENDMENT
                                       TO
                          SHORT TERM CREDIT AGREEMENT


          THIS WAIVER AND AMENDMENT (this "Waiver and Amendment") dated as of
March 29, 1997 (the "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 (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 desires that the Banks waive compliance by the
Company with certain financial covenants contained in the Short Term Credit
Agreement;

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


                                   ARTICLE I

                                    WAIVERS

          1.1  Waiver.  (a)  For the Fiscal Quarter ending March 29, 1997 (the
"Waiver Period"), the Banks hereby waive any noncompliance by the Company with
the provisions of Sections 11.3, 11.4, and 11.20, of the Short Term Credit
Agreement.

          (b)  The Banks hereby further waive compliance by the Company under
Section 11.18 of the Short Term Credit Agreement with the ratio of Debt of the
Company and its Restricted Subsidiaries to Total Capitalization, such waiver
being for the sole purpose to permit the Company on March 31, 1997 to make a
dividend of (but not in excess of) $3,066,875 on its Debt-Like Preferred Stock.

          (c)  The Banks hereby further waive any Event of Default under Section
13.1(c) of the Short Term Credit Agreement arising by reason of any payment or
other concession pursuant to the Finance Agreement Modifications referred to in
Section 3.2(a) hereof.
<PAGE>
 
          1.2 Modification of Finance Agreements. After the Effective Date,
without the written consent of the Required Banks, the Company will not, and
will not permit any Subsidiary to, enter into any amendment, waiver or
modification with respect to any Finance Agreement (hereinafter defined).

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


                                   ARTICLE II

                                   AMENDMENTS
                                   ----------

          2.1  Signature Debt. Section 11.23 of the Short Term Credit Agreement
is amended to read in its entirety as follows:

         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 under the Signature Credit Agreement not
     exceeding $101,886,491 in aggregate principal amount, and (ii) Indebtedness
     for Borrowed Money of Signature to the Company or its other Subsidiaries.


          2.2  Seller Notes. Section 13.1(j) of the Short Term Credit Agreement
is amended by substituting "February 28, 2003" for "March 14, 1996".

                                                                                
          2.3  Inventory Financing. Section 13.1 of the Short Term 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 terminate the Event of Default
     arising under this Section 13.1(n).

                                       2
<PAGE>
 
                                  ARTICLE III

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

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

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

          3.2 Finance Agreements. (a) Without limitation of Section 2.1, for the
Waiver Period 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 Banks a true
and correct summary (dated as of 3/27/97) of the Finance Agreement
Modifications.

          (b)  As used herein, "Finance Agreement" 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) of the Short Term Credit Agreement) evidencing amounts owed by the
Company or a Subsidiary under the Retail Credit Program Agreement.

          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 Short Term Credit Agreement as modified by this
Waiver and Amendment constitutes the legal, valid and binding obligations of the
Company, enforceable against it in

                                       3
<PAGE>
 
accordance with its respective terms, without defense, counterclaim or offset.

          3.5  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.

          3.6  Maturity of Seller Notes.  The maturity of the Seller Notes
referred to in Section 13.1(j) of the Short Term Credit Agreement has been
extended to February 28, 2003.

          3.7  Inventory Financing with GE Capital.  As of the Effective Date,
the aggregate outstanding principal amount of indebtedness of the Company and
its Subsidiary Lechmere, Inc. to GE Capital under its so-called vendor program
is at least $350,000,000.


                                   ARTICLE IV

                                    GENERAL
                                    -------

          4.1  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 Waiver and Amendment.

          4.2  Effectiveness.  This Waiver and Amendment shall become effective
as of the Effective Date, subject to receipt by McDermott, Will & Emery as
counsel to the Agents of the following, each duly executed and dated the
Effective Date and in form and substance reasonably satisfactory to the
Administrative 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 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)  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; and

                                       4
<PAGE>
 
          (c) Long Term Credit Agreement. A duly executed waiver and amendment
to the Long Term Credit Agreement that has terms substantially identical to the
terms of this Waiver and Amendment.

          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 Short Term Credit Agreement.

          4.4  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 modified by this Waiver and Amendment. This Waiver and Amendment
shall be deemed incorporated into, and a part of, the Short Term 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.

          4.7  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 "Short Term Credit Agreement"
shall refer to the Short Term Credit Agreement after giving effect to this
Waiver and Amendment.

                                       5
<PAGE>
 
          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 FIRST NATIONAL BANK OF CHICAGO, in its 
individual capacity and in its capacity as
Documentary Agent


By: /s/ Linda M. Thompson
   -----------------------------
Name:   Linda M. Thompson
Title:  First Vice President


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/ A.S. Norsworthy
   -----------------------------
Name:   A.S. Norsworthy
Title:  Sr. Team Leader-Loan Operations
<PAGE>
 
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


CIBC INC.


By: /s/ William J. Koslo, Jr.
   -----------------------------
Name:   William J. Koslo, Jr.


NATIONSBANK, N.A.


By: /s/ Valerie C. Mills
   -----------------------------
Name:   Valerie C. Mills
Title:  Sr. Vice President


THE LONG-TERM CREDIT BANK OF JAPAN, LTD.


By:_____________________________
Name:


CREDIT LYONNAIS CHICAGO BRANCH


By: /s/ Mary Ann Klemm
   -----------------------------
Name:   Mary Ann Klemm
Title:  Vice President and Group Head
<PAGE>
 
BANCA COMMERCIALE ITALIANA, CHICAGO BRANCH


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


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


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


By:_____________________________
Name:


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


By: /s/ Gus C. Browne II
   -----------------------------
Name:   Gus C. Browne II


THE NORTHERN TRUST COMPANY


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


THE SAKURA BANK, LTD.


By:_____________________________
Name:
<PAGE>
 
SWISS BANK CORPORATION, CHICAGO BRANCH


By: /s/ Nancy Russell
   ----------------------------
Name:   Nancy Russell
Title:  SBC Director


By: /s/ Ernst Schirmer
   ------------------------------
Name:   Ernst Schirmer
Title:  Director Credit Risk Management


UNION BANK OF CALIFORNIA, N.A.


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


ABN AMRO BANK N.V.


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


By: /s/ Ronald R. Richter
   -----------------------------
Name:   Ronald R. Richter
Title:  Group Vice President


FIRST BANK NATIONAL ASSOCIATION


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


THE FIRST NATIONAL BANK OF BOSTON


By: /s/ Judith C.E. Kelly
   -----------------------------
Name:   Judith C.E. Kelly
Title:  Vice President
<PAGE>
 
PNC BANK, NATIONAL ASSOCIATION


By:_____________________________
Name:


THE YASUDA TRUST AND BANKING CO., LTD.


By: /s/ Joseph C. Meek
   -----------------------------
Name:   Joseph C. Meek


THE FIRST NATIONAL BANK OF MARYLAND


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


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


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


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


UNION BANK OF SWITZERLAND - NEW YORK BRANCH


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


By: /s/ Samuel Azizo
   -----------------------
Name:   Samuel Azizo
Title:  Vice President


WELLS FARGO BANK, N.A.


By:_____________________________
Name:
<PAGE>
 
COMERICA BANK


By: /s/ Harve C. Light
   -----------------------------
Name:   Harve C. Light
Title:  Assistant Vice President


BANK OF AMERICA ILLINOIS


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


THE INDUSTRIAL BANK OF JAPAN, LIMITED


By:_____________________________
Name:
<PAGE>
 
GUARANTY REAFFIRMED:

LECHMERE, INC.


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