<PAGE>   1
                                                                     EXHIBIT 4.3

                               KMART CORPORATION,
                                     Issuer

                                       and


                              THE BANK OF NEW YORK,
                                     Trustee


-------------------------------------------------------------------------------


                          SECOND SUPPLEMENTAL INDENTURE

                          Dated as of January 30, 2001

                                       to

                                    INDENTURE

                          Dated as of December 13, 1999


-------------------------------------------------------------------------------


                              9.375% Notes Due 2006

<PAGE>   2
                                TABLE OF CONTENTS

                                                                       Page
                                                                       ----

                                    ARTICLE 1
                                   DEFINITIONS

SECTION 1.01.  Definitions...............................................1

                                    ARTICLE 2
                                 TERMS OF NOTES

SECTION 2.01.  Designation of Notes; Aggregate Principal Amount..........3
SECTION 2.02.  Form of Notes.............................................3
SECTION 2.03.  Certain Terms of the Notes................................3
SECTION 2.04.  Global Form...............................................3
SECTION 2.05.  Defeasance................................................3
SECTION 2.06.  Covenants.................................................3
SECTION 2.07.  Additional Notes..........................................3

                                    ARTICLE 3
                        COVENANTS APPLICABLE TO THE NOTES

SECTION 3.01.  Restrictions on Liens.....................................4
SECTION 3.02.  Limitations on Sale and Leaseback Transactions............6

                                    ARTICLE 4
                              SUCCESSOR CORPORATION

SECTION 4.01.  Consolidation, Merger and Sale of Assets..................6

                                    ARTICLE 5
                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 5.01.  Indenture Satisfaction and Discharge Provisions...........7
SECTION 5.02.  Company's Option to Effect Defeasance or Covenant
                 Defeasance..............................................7
SECTION 5.03.  Defeasance and Discharge..................................7
SECTION 5.04.  Covenant Defeasance.......................................7
SECTION 5.05.  Conditions to Defeasance and Discharge or Covenant
                 Defeasance..............................................8

                                    ARTICLE 6
                                  MISCELLANEOUS

SECTION 6.01.  Ratification and Confirmation.............................9
SECTION 6.02.  Recitals, Validity and Sufficiency........................9
SECTION 6.03.  Counterparts..............................................9
SECTION 6.04.  Governing Law.............................................9


EXHIBIT A:  Form of Note...............................................A-1




                                      (i)

<PAGE>   3
     SECOND SUPPLEMENTAL INDENTURE dated as of January 30, 2001 (the "SECOND
SUPPLEMENTAL INDENTURE") between Kmart Corporation, a corporation duly organized
and existing under the laws of the State of Michigan (the "COMPANY") and The
Bank of New York, a New York banking corporation, as trustee (the "TRUSTEE").

     WHEREAS, the Company has executed and delivered to the Trustee an Indenture
dated as of December 13, 1999 (the "INDENTURE") providing for the issuance from
time to time of one or more series of the Company's debt securities;

     WHEREAS, Section 2.01 of the Indenture provides that the Company and the
Trustee may enter into an indenture supplemental to the Indenture to establish
the form or terms of Securities of any series as permitted by Section 2.01 and
Section 9.01 of the Indenture; and

     WHEREAS, the Company is entering into this Second Supplemental Indenture to
establish the form and terms of its 9.375% Notes Due 2006 (the "NOTES").

     NOW THEREFORE, in consideration of the premises and the purchase of the
Notes by the holders thereof, the Company and the Trustee mutually covenant and
agree for the equal and ratable benefit of the holders of Notes as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     SECTION 1.01. Definitions. Unless otherwise specifically defined herein,
each term used herein which is defined in the Indenture has the meaning assigned
to such term in the Indenture. The following terms, as used herein, have the
following meanings:

     "ATTRIBUTABLE DEBT" means, with respect to a Sale and Leaseback
Transaction, at the time of determination, the present value of the obligation
of the lessee for net rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period for which
such lease has been extended or may, at the option of the lessor, be extended),
using a discount rate equal to the average interest rate per annum used to
calculate the present value of operating lease payments for the most recent year
in the Company's most recent Annual Report to Stockholders. The term "net rental
payments" under any lease for any period shall mean the sum of the rental and
other payments required to be paid in such period by the lessee thereunder, not
including, however, any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges required
to be paid by such lessee thereunder or any amounts required to be paid by such
lessee thereunder contingent upon the amount of sales, maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges.

     "CONSOLIDATED NET TANGIBLE ASSETS" means the total of all the assets
appearing on the consolidated balance sheet of the Company and its Subsidiaries,
less the following:

     (1)  current liabilities, including liabilities for Debt maturing more than
          12 months from the date of the original creation thereof but maturing
          within 12 months from the date of determination;



                                       1
<PAGE>   4

     (2)  reserves for depreciation and other asset valuation reserves;

     (3)  intangible assets, including, without limitation, such items as
          goodwill, trademarks, tradenames, patents, unamortized debt discount
          and expense and other similar intangibles carried as an asset on said
          balance sheet; and

     (4)  appropriate adjustments on account of minority interests of other
          Persons holding stock in any Subsidiary of the Company.

     Consolidated Net Tangible Assets shall be determined in accordance with
generally accepted accounting principles and practices applicable to the type of
business in which the Company and its Subsidiaries are engaged and that are
approved by the independent accountants regularly retained by the Company, and
may be determined as of a date not more than 60 days prior to the happening of
the event for which such determination is being made.

     "DEBT" means, all obligations of a Person for borrowed money, including
obligations secured by Liens on property owned by the Person whether or not the
Person is directly liable for the obligations.

     "FUNDED DEBT" means Debt which matures more than one year from the date of
computation, or which is extendable or renewable at the sole option of the
obligor so that it may become payable more than one year from such date.

     "LIEN" means any mortgage, deed of trust, security interest, pledge, lien
or other encumbrance.

     "OPERATING PROPERTY" means (a) all real property and improvements thereon
owned by the Company or a Subsidiary constituting, without limitation, any
store, warehouse, service center or distribution center wherever located,
provided that such term shall not include any store, warehouse, service center
or distribution center which the Company's Board of Directors declares by
resolution, together with all other stores, warehouses, service centers or
distribution centers similarly not included in such term, not to be of material
importance to the business of the Company and its Subsidiaries taken as a whole,
and (b) all equipment (including all transportation and warehousing equipment
but excluding office equipment and data processing equipment) owned by the
Company or a Subsidiary.

     "SALE AND LEASEBACK TRANSACTION" means any arrangement with any Person
providing for the leasing to the Company or any Subsidiary of any Operating
Property, which Operating Property has been or is to be sold or transferred by
the Company or such Subsidiary to such Person.

     "SUBSIDIARY" means (1) a corporation more than 50% of the outstanding
Voting Stock of which is owned, directly or indirectly, by the Company, by one
or more other Subsidiaries, or by the Company and one or more other Subsidiaries
or (2) any other Person in which the Company, or one or more Subsidiaries, or
the Company and one or more Subsidiaries, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs of
such Person.




                                       2
<PAGE>   5

                                    ARTICLE 2
                                 TERMS OF NOTES

     SECTION 2.01. Designation of Notes; Aggregate Principal Amount. Subject to
and in accordance with Section 2.01 of the Indenture, the Company hereby
establishes a series of securities to be issued under the Indenture with the
title "9.375% Notes Due 2006." The aggregate principal amount of the Notes that
may be authenticated and delivered under the Indenture shall be $400,000,000
(except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes and except as set forth in
Section 2.07 in this Second Supplemental Indenture).

     SECTION 2.02. Form of Notes. The form of the Notes and the form of the
Certificate of Authentication for the Notes shall be substantially in the form
of Exhibit A hereto.

     SECTION 2.03. Certain Terms of the Notes. Set forth in the form of the
Notes attached hereto as Exhibit A are:

          (i)   the date on which the principal of the Notes is payable;

          (ii)  the rate at which the Notes shall bear interest;

          (iii) the place where payments with respect to the Notes shall be
     payable; and

          (iv)  the date from which interest on the Notes will accrue, the
     Interest Payment Dates and the record dates for the determination of
     holders to whom interest is payable on Interest Payment Dates.

     SECTION 2.04. Global Form. The Notes will be issued initially as a Global
Security in accordance with Section 2.11 of the Indenture. The Depositary for
the Notes shall be The Depository Trust Company, a New York corporation.

     SECTION 2.05. Defeasance. The Notes shall be subject to defeasance as set
forth in Article XI of the Indenture as amended and supplemented by Article 5 of
this Second Supplemental Indenture.

     SECTION 2.06. Covenants. Holders of the Notes shall have the benefit of the
additional restrictive covenants set forth in Article 3 and 4 of this Second
Supplemental Indenture.

     SECTION 2.07. Additional Notes. Notwithstanding Section 2.01 of this Second
Supplemental Indenture, the Company may, without the consent of the holders of
Notes, issue additional notes having the same ranking and the same interest
rate, maturity and other terms as the Notes. Any additional notes having such
similar terms, together with the Notes, will constitute a single series of Notes
under the Indenture, and will be issued in compliance with Section 2.01 of the
Indenture.


                                       3
<PAGE>   6
                                    ARTICLE 3
                        COVENANTS APPLICABLE TO THE NOTES

     For the sole benefit of the holders of the Notes, the Company agrees:

     SECTION 3.01. Restrictions on Liens. (a) The Company will not, nor will it
permit any Subsidiary to, issue, assume or guarantee any Debt secured by any
Lien upon any Operating Property or upon any shares of stock or Debt of any
Subsidiary (whether such Operating Property, shares of stock or Debt is now or
hereafter acquired) without in any such case effectively securing, concurrently
with the issuance, assumption or guaranty of any such Debt, the Notes (together
with, if the Company shall so determine, any other Debt of or guaranteed by the
Company or such Subsidiary ranking equally with such Notes and then existing or
thereafter created) equally and ratably with such Debt; provided that the
foregoing restrictions shall not apply to:

          (i)   Liens on any Operating Property acquired, constructed or
                improved by the Company or any Subsidiary after the date of the
                Indenture to secure Debt issued, assumed or guaranteed within
                360 days after such acquisition or completion of construction or
                improvement to provide for the payment of the purchase price of,
                or the cost of constructing or improving, such Operating
                Property;

          (ii)  Liens existing on any Operating Property at the time of its
                acquisition by the Company or one of its Subsidiaries, or Liens
                on any shares of stock or Debt of any Subsidiary existing at the
                time it becomes a Subsidiary;

          (iii) Liens existing on any property acquired from a Person that is
                merged with or into the Company or a Subsidiary;

          (iv)  Liens to secure Debt of a Subsidiary to the Company or to
                another Subsidiary;

          (v)   Liens in existence on any Operating Property or any shares of
                stock or Debt of any Subsidiary on the date of the Indenture;

          (vi)  Liens in favor of the United States of America or any state
                thereof, or any department, agency or instrumentality or
                political subdivision of the United States of America or any
                state thereof to secure partial progress, advance or other
                payments pursuant to any contract or statute or to secure any
                Debt incurred for the purpose of financing all or any part of
                the purchase price or the cost of constructing or improving the
                property subject to such Liens;

                                       4
<PAGE>   7
               (vii)  Liens imposed by law, such as carriers', warehousemen's,
                      mechanics', landlord's, materialmen's, repairmen's or
                      other like Liens;

               (viii) Pledges or deposits in connection with workers'
                      compensation, unemployment insurance and similar
                      legislation and deposits securing liability to insurance
                      carriers under insurance or self-insurance arrangements;

               (ix)   Liens in favor of customs and revenue authorities arising
                      as a matter of law to secure payment of customs duties in
                      connection with the importation of goods;

               (x)    Liens for taxes, assessments, governmental charges or
                      levies not yet due or which are being contested in good
                      faith;

               (xi)   Any Lien incurred or assumed in connection with the
                      issuance by a state or political subdivision of a state of
                      any securities the interest on which is exempt from
                      Federal income taxes by virtue of Section 103 of the
                      Internal Revenue Code of 1986, as amended, or any other
                      laws and regulations in effect at the time of such
                      issuance; or

               (xii)  Liens securing Debt incurred to extend, renew or replace
                      in whole or in part Debt secured by any Lien, provided
                      that (a) the principal amount of Debt secured thereby
                      shall not exceed the principal amount of Debt so secured
                      at the time of such extension, renewal or replacement, and
                      (b) such extension, renewal or replacement shall be
                      limited to all or a part of the property that secured the
                      Debt so extended, renewed or replaced plus improvements on
                      such property.

     (b)  In addition to the foregoing, the Company and its Subsidiaries may
issue, assume or guarantee Debt secured by a Lien upon any Operating Property or
shares of stock or Debt of any Subsidiary or enter into a Sale and Leaseback
Transaction involving any Operating Property without equally and ratably
securing the Notes if the sum of (1) the amount of the Debt secured by Liens
otherwise prohibited by Section 3.01(a) and (2) the Attributable Debt of all
Sale and Leaseback Transactions otherwise prohibited by Section 3.02 does not
exceed at the time 10% of Consolidated Net Tangible Assets.

     (c)  If at any time the Company or any Subsidiary shall issue, assume or
guarantee any Debt secured by any Lien upon any Operating Property or shares of
stock or Debt of any Subsidiary and if Section 3.01(a) requires that the Notes
be secured equally and ratably with such Debt, the Company will promptly
execute, at its expense, any instruments necessary to so equally and ratably
secure such Notes and deliver the same to the Trustee together with:

               (i)  an Officers' Certificate stating that the covenant of the
          Company contained in Section 3.01(a) has been complied with; and

               (ii) an Opinion of Counsel to the effect that such covenant has
          been complied with, and that any instruments executed by the Company
          in the performance of such covenant comply with the requirements of
          such covenant.




                                       5
<PAGE>   8
     (d)  If the Company shall hereafter secure the Notes equally and ratably
with any other Debt pursuant to the provisions of this Section 3.01, the Trustee
is hereby authorized to enter into an indenture or supplemental indenture and to
take such action, if any, as it may deem advisable to enable it to enforce
effectively the rights of the holders of the Notes so secured, equally and
ratably with such other Debt.

     SECTION 3.02. Limitations on Sale and Leaseback Transactions. The Company
will not, nor will it permit any Subsidiary to, enter into any Sale and
Leaseback Transaction involving any Operating Property, unless within 360 days
of the effective date of such Sale and Leaseback Transaction, the Company or
such Subsidiary applies or causes to be applied an amount equal to the greater
of (i) the fair market value of the Operating Property so sold and leased back
at the time of entering into such Sale and Leaseback Transaction (as determined
by the Company's Board of Directors) and (ii) the net proceeds of the sale of
the Operating Property sold and leased back pursuant to such Sale and Leaseback
Transaction, to:

     (a)  the prepayment or retirement (other than mandatory prepayment or
retirement) of Funded Debt of the Company or any Subsidiary, or

     (b)  the purchase of other property that will constitute Operating
Property.

The foregoing restriction shall not apply to a Sale and Leaseback Transaction,
if:

          (i)   the Company or such Subsidiary would be entitled to issue,
                assume or guarantee Debt in an amount equal to the Attributable
                Debt of the Sale and Leaseback Transaction secured by the
                Operating Property without being required to equally and ratably
                secure the Notes pursuant to Section 3.01(a),

          (ii)  such Sale and Leaseback Transaction is between the Company and a
                Subsidiary or between Subsidiaries, or

          (iii) such Sale and Leaseback Transaction involves taking back a
                lease for a period of three years or less (including renewals).

                                    ARTICLE 4
                              SUCCESSOR CORPORATION

     SECTION 4.01. Consolidation, Merger and Sale of Assets. The Company will
not consolidate with or merge into any other Person or convey, transfer or lease
all or substantially all of its properties and assets to any Person, unless:

          (i)   the Person (if other than the Company) formed by such
                consolidation or into which the Company is merged or the Person
                which acquires by conveyance or transfer, or which leases all or
                substantially all of the properties and assets of the Company
                shall be a corporation organized and existing under the laws of
                the United States of America, any state or the District of
                Columbia and shall expressly assume, by an indenture
                supplemental hereto, executed and delivered to the Trustee, in
                form satisfactory to the Trustee, the due and punctual payment
                of the principal of (and premium, if any) and interest on all
                the Notes and the performance of every covenant of the Indenture
                as supplemented by the Second Supplemental Indenture on the part
                of the Company to be performed or observed;


                                       6
<PAGE>   9

          (ii)  immediately after giving effect to such transaction, no Event of
                Default and no Default shall have happened and be continuing.

     The Trustee may require that the Company deliver an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture complies with this
Section 4.01 and that all conditions precedent herein provided for relating to
such transaction have been complied with.


                                    ARTICLE 5
                       DEFEASANCE AND COVENANT DEFEASANCE

     SECTION 5.01. Indenture Satisfaction and Discharge Provisions. Section
11.02 of the Indenture shall not apply to the Notes. Section 11.03 and 11.04
shall apply to all moneys and Governmental Obligations deposited with the
Trustee or held by any paying agent under this Article 5.

     SECTION 5.02. Company's Option to Effect Defeasance or Covenant Defeasance.
In addition to discharge of the Indenture pursuant to Section 11.01 of the
Indenture, the Company may at its option elect at any time either (a) to effect
a defeasance and discharge of the Notes under Section 5.03 hereof or (b) to
effect a covenant defeasance of the Notes under Section 5.04 hereof, in each
case upon compliance with the applicable conditions set forth in Section 5.05
hereof.

     SECTION 5.03. Defeasance and Discharge. Upon election by Company to effect
a defeasance and discharge of the Notes under this Section 5.03 and satisfaction
of the conditions precedent set forth in Section 5.05, the Company shall be
deemed to have paid and discharged the Notes and the Company shall be deemed to
have satisfied all its other obligations under the Notes and all its other
obligations relating to the Notes under the Indenture, as supplemented by the
Second Supplemental Indenture, except for Sections 2.03, 2.05, 2.07, 4.01, 4.02,
4.03, 7.06, 7.10 and 11.05 of the Indenture that shall survive until the Notes
mature and be paid. Thereafter, Sections 7.06 and 11.05 of the Indenture shall
survive.

     SECTION 5.04. Covenant Defeasance. Upon election by the Company to effect a
covenant defeasance of the Notes under this Section 5.04, the Company shall be
released from its obligations under Sections 3.01 and 3.02 of this Second
Supplemental Indenture on or after the date the conditions precedent set forth
in Section 5.05 are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that the Issuer may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in Section 3.01 or 3.02 of this Second Supplemental Indenture.



                                       7
<PAGE>   10
     SECTION 5.05. Conditions to Defeasance and Discharge or Covenant
Defeasance. The following shall be conditions precedent to the application of
either Section 5.03 or 5.04:

          (i)   the Company shall have deposited or cause to be deposited
                irrevocably with the Trustee, as trust funds in trust for the
                purpose of making the following payments, specifically pledged
                as security for and dedicated solely to the benefit of the
                holders of Notes, of cash in U.S. dollars (or such other money
                or currencies as shall then be legal tender in the United
                States) and/or Government Obligations, which through the payment
                of interest and principal in respect thereof, in accordance with
                their terms, will provide (and without reinvestment and assuming
                no tax liability will be imposed on the Trustee), not later than
                the due date of any payment of money, an amount in cash,
                sufficient, in the opinion of a nationally recognized firm of
                independent certified public accountants expressed in a written
                certification thereof delivered to the Trustee, to discharge
                principal (including premium, if any) under the Notes, and each
                installment of principal (including premium, if any) and
                interest on the Outstanding Notes on the stated maturity of such
                principal or installment of principal or interest on the dates
                on which such installments of principal and interest are due, in
                accordance with the terms of the Indenture, as supplemented by
                this Second Supplemental Indenture, and the Notes;

          (ii)  the Company shall have delivered to the Trustee an Opinion of
                Counsel to the effect that holders of the Notes will not, or
                there has been published by the Internal Revenue Service a
                ruling to the effect that holders of the Notes will not,
                recognize income, gain or loss for Federal income tax purposes
                as a result of the Company's exercise of its option under
                Section 5.03 or 5.04, as the case may be, and will be subject to
                Federal income tax on the same amounts and in the same manner
                and at the same times, as would have been the case if such
                defeasance or covenant defeasance had not occurred;

          (iii) no Event of Default or Default shall have occurred and be
                continuing on the date of such deposit, and no Event of Default
                under Sections 6.01(a)(5) or (6) or event which with the giving
                of notice or lapse of time, or both, would become an Event of
                Default under Sections 6.01(a)(5) or (6) shall have occurred and
                be continuing on the 91st day after such date;

          (iv)  such deposit will not result in a breach or violation of, or
                constitute a default under, the Indenture or this Second
                Supplemental Indenture or any other agreement or instrument to
                which the Company is a party or by which it is bound;



                                       8
<PAGE>   11
          (v)   the Company has delivered to the Trustee an Officers'
                Certificate and an Opinion of Counsel, each stating that all
                conditions precedent provided for relating to either the
                defeasance and discharge under Section 5.03 or the covenant
                defeasance under Section 5.04 (as the case may be) shall have
                been complied with;

          (vi)  such defeasance and discharge or covenant defeasance will not
                result in the trust arising from such deposit to constitute an
                investment company under the Investment Company Act of 1940 or
                such trust shall be qualified under such act or exempt from
                regulation thereunder; and

          (vii) the Company has paid or caused to be paid all other sums payable
                with respect to the Outstanding Notes.


                                    ARTICLE 6
                                  MISCELLANEOUS

     SECTION 6.01. Ratification and Confirmation. The Indenture, as supplemented
by this Second Supplemental Indenture, is in all respects ratified and
confirmed. This Second Supplemental Indenture shall be deemed part of the
Indenture in the manner and to the extent herein and therein provided.

     SECTION 6.02. Recitals, Validity and Sufficiency. The recitals herein
contained are made by the Company and not by the Trustee, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee makes no
representation as to the validity or sufficiency of this Second Supplemental
Indenture.

     SECTION 6.03. Counterparts. This Second Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.

     SECTION 6.04. Governing Law. This Second Supplemental Indenture and the
Notes shall be governed by, and construed in accordance with, the laws of the
State of New York without regard to conflict of law provisions thereof.

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


                                        KMART CORPORATION


                                        By: /s/ John T. McDonald Jr.
                                            ------------------------------
                                            Name
                                            Title: Vice President and Treasurer


                                        THE BANK OF NEW YORK,
                                          as Trustee


                                        By: /s/ Stephen J. Giurlando
                                            ------------------------------
                                            Name
                                            Title: Vice President


                                       9
<PAGE>   12
                                                                       EXHIBIT A


     [So long as the Notes are Global Securities with The Depository Trust
Company as Depositary, include the following legends:

     Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

     Except as provided in Section 2.11 of the Indenture, this Note may be
transferred, in whole but not in part, by the Depositary only to another nominee
of the Depositary or to a successor Depositary or to a nominee of such successor
Depositary.]



                                      A-1
<PAGE>   13
                                KMART CORPORATION



                              9.375% NOTE DUE 2006



          No.

          $                                                     CUSIP: 482584BB4



     Kmart Corporation, a corporation duly organized and existing under the laws
of the State of Michigan (the "ISSUER"), for value received, hereby promises to
pay to Cede & Co. or registered assigns, the principal sum of $400,000,000 on
February 1, 2006, at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay semi-annually on February 1 and August 1 of
each year (each, an "INTEREST PAYMENT DATE"), commencing August 1, 2001, the
amount of interest on said principal sum at said office or agency, in like coin
or currency, at the rate per annum specified in the title of this Note, from
January 30, 2001 or from the most recent Interest payment Date to which interest
has been paid or duly provided for until said principal sum has been paid or
duly provided for. Interest shall be computed on the basis of a 360-year
consisting of twelve 30-day months.

     The interest payable on any Interest Payment Date which is punctually paid
or duly provided for on such Interest Payment Date will be paid to the Person in
whose name this Note is registered at the close of business on January 15 or
July 15 (in each case, whether or not a Business Day), as the case may be (each,
"REGULAR RECORD DATE"), immediately preceding such Interest Payment Date.
Interest payable on this Note which is not punctually paid or duly provided for
on any Interest Payment Date therefore shall forthwith cease to be payable to
the Person in whose name this Note is registered at the close of business on the
Regular Record Date immediately preceding such Interest Payment Date, and such
interest may either (i) be paid to the Person in whose name this Note is
registered at the close of business on a special record date to be established
for such payment by the Trustee or (ii) be paid in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, all as more fully provided in the Indenture referred to on the
reverse hereof. At the option of the Issuer, interest on the Notes may be paid
(i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the register of holders of the Notes or (ii) at the
expense of the Issuer, by wire transfer to an account maintained by the Person
entitled thereto as specified in writing to the Trustee by such Person by the
applicable record date of the Notes.



                                      A-2
<PAGE>   14
     Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

     This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee under
the Indenture referred to on the reverse hereof.

     IN WITNESS WHEREOF, KMART CORPORATION has caused this instrument to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto or imprinted hereon.

Dated:

                                        KMART CORPORATION



                                        By: ____________________________
                                        Name:
                                        Title:



                                        By: ____________________________
                                        Name:
                                        Title:


Attest:_____________________________
       Name:
       Title:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

Dated:

                                        THE BANK OF NEW YORK,
                                        as Trustee



                                        By:______________________________
                                           Authorized Signatory




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<PAGE>   15
                                 REVERSE OF NOTE

                                KMART CORPORATION

                              9.375% NOTE DUE 2006


     1.   Indenture. (a) This Note is one of a duly authorized issue of senior
debt securities of the Issuer hereinafter called the "NOTES") of a series
designated as the 9.375 % Notes Due 2006 of the Issuer, initially limited in
aggregate principal amount to $400,000,000, all issued or to be issued under and
pursuant to the Indenture, dated as of December 13, 1999, as supplemented by the
Second Supplemental Indenture, dated as of January 30, 2001 (as so amended and
supplemented, the "INDENTURE"), between the Issuer and The Bank of New York, as
Trustee (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Issuer, the Trustee and the holders of the Notes.

     (b)  Other debentures, notes, bonds or other evidences of indebtedness
(together with the Notes, hereinafter called the "SECURITIES") may be issued
under the Indenture in one or more series, which different series may vary from
the Notes and each other, as in the Indenture provided.


     (c)  All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.

         2. Amendments and Waivers. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Issuer and the rights of the holders of the
Securities of each series to be affected under the Indenture at any time by the
Issuer and the Trustee with the consent of the holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the holders of a
majority in principal amount of the Securities of each series at the time
Outstanding, on behalf of the holder of all Securities of such series, to waive
compliance by the Issuer with certain provisions of




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<PAGE>   16

the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders of this Note
and of any issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.

     3.   Obligation to Pay Principal, Premium, if Any, and Interest. No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Issuer or any other
obligor on the Notes, which is absolute and unconditional, to pay the principal
of, premium, if any, and interest on this Note in the manner, at the respective
times, at the rate, at the place and in the coin or currency herein prescribed.

     4.   Certain Covenants. The Indenture restricts the ability of the Issuer
and its Subsidiaries to incur certain secured indebtedness and enter into
certain sale and leaseback transactions. These covenants are subject to the
covenant defeasance procedures outlined in the Indenture.

     5.   Effect of Event of Default. If an Event of Default shall have occurred
and be continuing under the Indenture, the principal hereof may be declared, and
upon such declaration shall become, due and payable in the manner, with the
effect and subject to the conditions provided in the Indenture.

     6.   Defeasance. The Indenture contains provisions for defeasance and
covenant defeasance at any time of the indebtedness on this Note upon compliance
by the Issuer with certain conditions set forth therein.

     7.   Denominations; Exchanges. (a) The Notes are issuable in registered
form without coupons in denominations of $1,000 and any multiple of $1,000 at
the office or agency of the Issuer in the Borough of Manhattan, The City of New
York, and in the manner and subject to the limitations provided in the
Indenture, Notes may be exchanged for a like aggregate principal amount of Notes
of other authorized denomination.

     8.   Holder as Owner. The Issuer, the Trustee and any authorized agent of
the Issuer or the Trustee may deem and treat the registered holder hereof as the
absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and,
subject to the





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<PAGE>   17

provisions on the face hereof, interest hereon, and for all other purposes, and
none of the issuer or the Trustee nor any authorized agent of the Issuer or the
Trustee shall be affected by any notice to the contrary.

     9.   No Liability of Certain Persons. No recourse under or upon any
obligation, covenant or agreement of the Issuer in the Indenture or any
indenture supplement thereto or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any past, present or
future incorporator, shareholder, officer or director, as such, of the Issuer or
of any successor corporation of either of them, either directly or through the
Issuer, or any successor corporation, under any constitution, statute or rule of
law or by the enforcement of any assessment or otherwise, all such liability
being expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.

     10.  Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflict of
law provisions thereof.



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<PAGE>   18
          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto:

          PLEASE INSERT TAXPAYER
          IDENTIFICATION NUMBER OF ASSIGNEE

          ___________________________

          ___________________________

          ___________________________


          PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________


The within Note of Kmart Corporation and all rights thereunder and hereby
irrevocably constitutes and appoints such person attorney to transfer such Note
on the books of Kmart Corporation, with full power of substitution in the
premises.

Dated:


                                              _____________________________
                                                        Signature

NOTICE: THE SIGNATURE OF THIS AGREEMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
        UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT
        ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD
        BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY, A MEMBER
        ORGANIZATION OF A NATIONAL STOCK EXCHANGE OR BY SUCH OTHER ENTITY WHOSE
        SIGNATURE IS ON FILE WITH AND ACCEPTABLE TO THE TRANSFER AGENT.

Signature Guarantee:




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