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                                                                     EXHIBIT 4.2

                                                      January 24, 2003


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<S>                                          <C>                          <C>
General Electric Capital Corporation         Fleet Retail Finance Inc.    Bank of America, N.A.
500 West Monroe                              40 Broad Street              335 Madison Ave, 6th Fl
Chicago, IL  60661                           Boston, MA  02108            New York, NY  10017

GECC Capital Markets Group, Inc.             Fleet Securities, Inc.       Banc of America Securities LLC
3001 Summer Street                           100 Federal Street           100 N. Tryon Street
Stamford, CT  06927                          Boston, MA  02110            Charlotte, NC  28255
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Re       Plan of Reorganization Financing for Kmart Corporation

Ladies and Gentlemen:

Reference is made to (a) that certain commitment letter dated January 13, 2003,
with respect to the proposed plan of reorganization financing (the "Commitment
Letter"), among General Electric Capital Corporation, GECC Capital Markets
Group, Inc., Fleet Retail Finance, Inc., Fleet Securities, Inc., Bank of
America, N.A., Banc of America Securities LLC and Kmart Corporation, (b) that
certain syndication letter dated January 13, 2003 (the "Syndication Letter")
among General Electric Capital Corporation, GECC Capital Markets Group, Inc.,
Fleet Retail Finance, Inc., Fleet Securities, Inc., Bank of America, N.A., Banc
of America Securities LLC and Kmart Corporation, and (c) that certain letter
agreement dated January 16, 2003 among General Electric Capital Corporation,
GECC Capital Markets Group, Inc., Fleet Retail Finance, Inc., Fleet Securities,
Inc., Bank of America, N.A., and Banc of America Securities LLC (the "January
16th Letter"). All defined terms used herein and not otherwise defined shall
have the meaning given to them in the Commitment Letter.

Kmart has previously advised the parties hereto that its principal stockholder
on a post-reorganization basis (the "Stockholder") contemplated contributing up
to $280 million in cash to Kmart at closing, in exchange for equity securities
of Kmart, to enable Kmart to repay certain of its pre-petition claims (the
"Claims") in cash. The Stockholder has subsequently advised Kmart, GE Capital
and GECMG that it may instead desire, at closing, to:

                  (a) Contribute $140 million in cash to Kmart, in exchange for
         equity securities of Kmart (the "Cash Contribution"), to enable Kmart
         to repay the Claims.

                  (b) Loan $60 million (as the same may be reduced as provided
         below) in cash to Kmart, in exchange for a convertible, subordinated
         promissory note issued by Kmart and more fully described below (the
         "Initial Note"), to enable Kmart to repay the Claims; provided that, if
         Kmart's Liquidity (as hereinafter defined) at closing (after giving
         effect to the making of all distributions and other payments to be made
         pursuant to the Plan of Reorganization on the Closing Date (other than
         (x) $60 million of such distributions and payments and (y) priority
         claims in respect of post-petition payables in favor of Kmart's and its
         subsidiaries' vendors and suppliers which are to be paid in the
         ordinary course of their business) and without duplication of the
         foregoing, any extensions of credit under the Financing to be made on
         such date, but without giving effect to the issuance of any Note) is in
         excess of $1.545 billion, then the amount of the loan shall be reduced
         by the amount of such excess. As used herein, (i) "Liquidity" means, at
         any time, Excess Availability at such time plus the Cash Balance and
         (ii) "Cash Balance" means, at any time, the aggregate amount of Kmart's
         unrestricted cash, cash equivalents and short-term
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         investments at that time, calculated in a manner consistent with the
         Business Plan (but exclusive of cash necessary for store operations in
         an amount equal to $300 million).

                  (c) At the Stockholder's option, contribute additional cash to
         Kmart, in exchange for additional equity securities of Kmart (each, an
         "Additional Contribution"), to enable Kmart to repay the Claims.

In addition, in the event Kmart determines during the 90-day period following
the closing that the aggregate amount of distributions and other payments
required to be made pursuant to the Plan of Reorganization (other than payables
by Kmart and its subsidiaries to their suppliers and vendors on a post-petition
basis, so long as such payables are to be paid (and ultimately are paid) out in
the ordinary course of their business) are or will be in excess of those
actually paid at closing (such excess, the "Excess Distributions"), Kmart shall
have the right to (and shall) cause the Stockholder to make a loan in cash to
Kmart, in exchange for a convertible, subordinated promissory note issued by
Kmart and more fully described below (the "Additional Note" and, together with
the Initial Note, the "Notes"), in an amount equal to the lesser of (a) the
amount of the Excess Distributions, and (b) the excess, if any, of $60 million
over the original principal amount of the Initial Note; provided that, if (i)
the difference of Liquidity at closing (after giving effect to the making of all
distributions and other payments to be made pursuant to the Plan of
Reorganization on the Closing Date (other than (x) $60 million of such
distributions and payments and (y) priority claims in respect of post-petition
payables in favor of Kmart's and its subsidiaries' vendors and suppliers which
are to be paid (and ultimately are paid) in the ordinary course of their
business) and without duplication of the foregoing, any extensions of credit
under the Financing to be made on such date, but without giving effect to the
issuance of any Note) minus the amount of the Excess Distributions is in excess
(such excess, the "Excess Cash Balance") of (ii) $1.545 billion, then the amount
of such loan shall be reduced by the amount of the Excess Cash Balance.

The Notes, if any: (a) will not require amortization payments, but will be
payable in full on the date which is no sooner than one year following the date
of closing, (b) may provide for interest to be paid in cash so long as the
interest rate does not exceed 10% per annum, (c) will provide that no payments
(whether interest, principal or otherwise) may be made (i) unless Liquidity as
of the end of the fiscal month immediately preceding such payment exceeds
Liquidity contemplated by the Business Plan as of such time by at least $60
million, provided that, notwithstanding the foregoing, such payment may be made
on or about January 31, 2005 if both (X) the Cash Balance at that time is at
least $100 million and (Y) there are no outstanding borrowings under the
Financing, other than outstanding and undrawn Letters of Credit or (ii) if a
default or Event of Default has occurred and is continuing under the definitive
Financing documentation, (d) will not be secured, (e) may be convertible into
common equity securities of Kmart, and (f) will be subject to subordination
provisions reasonably acceptable to the Initial Lenders. Any other material
terms and conditions of the Note not specifically described herein shall be
reasonably acceptable to the Initial Lenders. Notwithstanding anything in the
Syndication Letter to the contrary or anything therein which may otherwise be
inconsistent with the following, the defined term "Original Flex" in the
Syndication Letter is hereby deemed to include the Initial Lenders' ability to
change the terms of clause (a) of this paragraph (but only with respect to the
maturity date of the Notes) and subclause (i) of clause (c) of this paragraph,
in each case, to the extent GECMG and the other Co-Arrangers determine that they
will not be able to sell down the Financing to the Desired Hold Positions (as
defined in the Syndication Letter) without making such change(s).

Any Claims which are not paid in full on the Closing Date with the proceeds of
the Cash Contribution and the Initial Note may be paid (a) in cash, in an amount
not to exceed $140 million minus the actual principal amount of the Initial Note
(the "Cap"), on the Closing Date either by borrowings of up to $80 million under
the Financing (subject to the terms and conditions of the Commitment Letter, as
amended hereby) or with Kmart's other cash on hand (exclusive of any Additional
Contribution) and/or (b) in cash


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with the proceeds of any Additional Contribution (provided that the sum of the
aggregate amount of Additional Contributions received by Kmart plus the original
principal amount of the Additional Note shall reduce the amount of the Cap on a
dollar-for-dollar basis) or the Additional Note. Furthermore, if the aggregate
amount of Additional Contributions exceed the original amount of the Cap, then
the principal amount of the Initial Note (and thereafter the Additional Note)
shall be reduced on a dollar-for-dollar basis by such excess amount.

By your signatures below, please acknowledge your agreement that,
notwithstanding the terms of the Commitment Letter, (a) the term "Permitted
Pre-Petition Claim Payments" (as defined under the heading "Use of Proceeds" in
the Commitment Letter) shall include, in addition to the payments currently
described in such definition, payments to pre-petition creditors made (i) with
the proceeds of the Cash Contribution and the Notes, (ii) from the sources
described in clause (a) of the immediately preceding paragraph in an amount not
to exceed the Cap (as the same may be decreased as described in the immediately
preceding paragraph), and (iii) with the proceeds of Additional Contributions,
(b) the principal amount of the Initial Note will be excluded from the long term
indebtedness condition referred to in the 17th bullet point under the heading
"Other Terms and Conditions" in the Commitment Letter and (c) each of the Notes
will constitute permitted indebtedness for purposes of "Exhibit A" to the
Commitment Letter, but only, in the case of the preceding clauses (b) and (c),
so long as such Note is consistent with the terms and conditions identified
herein.

This letter agreement (a) amends to the extent set forth herein, and constitutes
a part of, each of the Commitment Letter and the Syndication Letter and (b)
supercedes all discussions and understandings, written or oral, since the date
of the Commitment Letter, between or among the parties hereto with respect to
the subject matter hereof (including, without limitation, the January 16th
Letter).

This letter agreement is governed by the internal laws of the State of New York
and may be executed in two or more counterparts, all of which, when taken
together, will constitute one original.

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                                        Very truly yours,

                                        KMART CORPORATION


                                        By:____________________________________
                                           Duly Authorized Signatory

ACCEPTED AND AGREED:

GENERAL ELECTRIC CAPITAL CORPORATION


By: ___________________________________
         Duly Authorized Signatory


GECC CAPITAL MARKETS GROUP, INC.


By:____________________________________
         Duly Authorized Signatory


FLEET RETAIL FINANCE INC.


By:____________________________________
         Its: Duly Authorized Signatory


FLEET SECURITIES, INC.


By:____________________________________
         Its: Duly Authorized Signatory


BANK OF AMERICA, N.A.


By:____________________________________
         Its: Duly Authorized Signatory


BANC OF AMERICA SECURITIES LLC


By:____________________________________
         Its: Duly Authorized Signatory