Document:

Exhibit 4.2

                             KMART CORPORATION,
                                   Issuer

                                    and

                           THE BANK OF NEW YORK,
                                  Trustee

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                        THIRD SUPPLEMENTAL INDENTURE

                         Dated as of June 19, 2001

                                     to

                                 INDENTURE

                       Dated as of December 13, 1999

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                       9-7/8% Notes Due June 15, 2008

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                               TABLE OF CONTENTS

                                                                                 Page

                                   ARTICLE 1 DEFINITIONS

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SECTION 1.01   Definitions .......................................................1
SECTION 1.02   Other Definitions .................................................5

                                 ARTICLE 2 TERMS OF NOTES

SECTION 2.01   Designation of Notes; Aggregate Principal Amount ...................
SECTION 2.02   Form of Notes ......................................................
SECTION 2.03   Certain Terms of the Notes ........................................6
SECTION 2.04   Transfer and Exchange .............................................7
SECTION 2.05   Certificated Notes ...............................................10
SECTION 2.06   Defeasance .......................................................10
SECTION 2.07   Covenants ........................................................11
SECTION 2.08   Additional Notes .................................................11
SECTION 2.09   Right of Optional Redemption; Prices..............................11

                        ARTICLE 3 COVENANTS APPLICABLE TO THE NOTES

SECTION 3.01   Restrictions on Liens ............................................11
SECTION 3.02   Limitations on Sale and Leaseback Transactions ...................13

                              ARTICLE 4 SUCCESSOR CORPORATION

SECTION 4.01   Consolidation, Merger and Sale of Assets .........................14

                       ARTICLE 5 DEFEASANCE AND COVENANT DEFEASANCE

SECTION 5.01   Indenture Satisfaction and Discharge Provisions ..................14
SECTION 5.02   Company's Option to Effect Defeasance or Covenant Defeasance .....14
SECTION 5.03   Defeasance and Discharge .........................................14
SECTION 5.04   Covenant Defeasance ..............................................15
SECTION 5.05   Conditions to Defeasance and Discharge or Covenant Defeasance ....15

                                  ARTICLE 6 MISCELLANEOUS

SECTION 6.01   Ratification and Confirmation ....................................16
SECTION 6.02   Recitals, Validity and Sufficiency ...............................16
SECTION 6.03   Counterparts .....................................................16
SECTION 6.04   Governing Law ....................................................16

EXHIBIT 1:  Form of Initial Note
EXHIBIT 2:  Form of Exchange Note and Private Exchange Note

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         THIRD SUPPLEMENTAL INDENTURE dated as of June 19, 2001 (the "Third
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 Third Supplemental
Indenture to establish the form and terms of its 9-7/8% Notes Due June 15,
2008 (the "Initial Notes") and to establish the form and terms of Exchange
Notes (as defined herein) or Private Exchange Notes (as defined herein) for
issue only in a Registered Exchange Offer (as defined herein) or Private
Exchange (as defined herein), respectively, pursuant to a Registration
Rights Agreement (as defined herein) for a like principal amount of Initial
Notes.

         NOW THEREFORE, in consideration of the premises and the purchase
of the Initial Notes and Exchange Notes or Private Exchange 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.

         "Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker that would be
utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Notes.

         "Comparable Treasury Price" means, with respect to any Redemption
Date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) on the third business day preceding such Redemption Date, as set
forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Notes" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, (a) the average of the Reference Treasury Dealer Quotations
for such Redemption Date, after excluding the highest and lowest of such
Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all
such Quotations.

         "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;

         (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.

         "Exchange Notes" means the 9-7/8% Notes due June 15, 2008 issued
pursuant to the Third Supplemental Indenture in connection with a
Registered Exchange Offer pursuant to the Registration Rights Agreement.

         "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.

         "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company.

         "Initial Notes" means up to $430,000,000 aggregate principal
amount of 9-7/8% Notes due June 15, 2008 issued on the Issue Date.

         "Initial Purchasers" means, with respect to the Initial Notes
issued on the Issue Date, the entities identified as Purchasers in the
Purchase Agreement.

         "Issue Date" means June 19, 2001.

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

         "Notes" means the Initial Notes, the Exchange Notes and the
Private Exchange Notes.

         "Opening" means the completion of construction or commencement of
commercial operation of such property, whichever is later.

         "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.

         "Person" means any individual, corporation, limited liability
company, partnership, joint-venture, joint-stock company, unincorporated
organization or government or any agency or political subdivision of the
government.

         "Private Exchange" means the offer by the Company, pursuant to the
Registration Rights Agreement, to the Initial Purchaser, in exchange for
the Initial Notes held by the Initial Purchaser as part of its initial
distribution, a like aggregate principal amount of Private Exchange Notes.

         "Private Exchange Notes" means the 9-7/8% Notes due June 15, 2008
issued in connection with a Private Exchange pursuant to the Registration
Rights Agreement.

         "Purchase Agreement" means, with respect to the Initial Notes
issued on the Issue Date, the Purchase Agreement dated June 14, 2001, among
the Company and the Initial Purchasers.

         "QIB" means a "qualified institutional buyer" as defined in Rule
144A.

         "Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to the
Indenture.

         "Reference Treasury Dealer" means Credit Suisse First Boston
Corporation and its respective successors and two other nationally
recognized investment banking firms that are Primary Treasury Dealers
specified from time to time by the Company; provided, however, that if any
of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
designate as a substitute another nationally recognized investment banking
firm that is a Primary Treasury Dealer.

         "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury Dealer
as of 3:30 p.m., New York City time, on the third Business Day preceding
such Redemption Date.

         "Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Rights Agreement, to certain holders of
Initial Notes, to issue and deliver to such holders, in exchange for the
Initial Notes, a like aggregate principal amount of Exchange Notes
registered under the Securities Act.

         "Registration Rights Agreement" means with respect to the Initial
Notes issued on the Issue Date, the Registration Rights Agreement dated
June 19, 2001, among the Company and the Initial Purchasers.

         "Remaining Scheduled Payments" means, with respect to each Note to
be redeemed, the remaining scheduled payments of the principal thereof and
interest thereon that would be due after the related Redemption Date but
for such redemption, except that, if such Redemption Date is not an
interest payment date with respect to such Note, the amount of the next
succeeding scheduled interest payment thereon shall be reduced by the
amount of interest accrued thereon to such Redemption Date.

         "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.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Securities Custodian" means the custodian with respect to a
Global Note (as appointed by the Depository), or any successor Person
thereto, and shall initially be the Trustee.

         "Shelf Registration Statement" means the registration statement
filed by the Company in connection with the offer and sale of Initial Notes
or Private Exchange Notes pursuant to the Registration Rights Agreement.

         "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.

         "Transfer Restricted Notes" means Notes that bear or are required
to bear the legend set forth in Section 2.04(b) hereof.

         "Treasury Rate" means, with respect to any Redemption Date, the
rate per annum equal to the semiannual equivalent yield to maturity
(computed as of the second business day immediately preceding such
Redemption Date) of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such Redemption Date.

         SECTION 1.02 Other Definitions.

                        Term                               Defined in Section
         "Agent Members"............................................2.02(b)
         "Global Note"..............................................2.02(a)
         "Regulation S".............................................2.02(a)
         "Restricted Global Note"...................................2.02(a)
         "Rule 144A"................................................2.02(a)

                                 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"9-7/8% Notes Due June 15, 2008." The aggregate
principal amount of the Initial Notes that may be authenticated and
delivered under the Indenture shall be $430,000,000, and Exchange Notes or
Private Exchange Notes for issue only in a Registered Exchange Offer or
Private Exchange, respectively, pursuant to the Registration Rights
Agreement, for a like principal amount of Initial Notes. In addition, Notes
may be authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes and may be authenticated and
delivered as set forth in Section 2.08 in this Third Supplemental
Indenture.

         SECTION 2.02 Form of Notes.

         (a) Initial Notes offered and sold to a QIB in reliance on Rule
144A under the Securities Act ("Rule 144A") or in reliance on Regulation S
under the Securities Act ("Regulation S"), in each case as provided in the
Purchase Agreement, and Private Exchange Notes, as provided in the
Registration Rights Agreement, shall be issued initially in the form of one
or more permanent Global Notes in definitive, fully registered form without
interest coupons with the global securities legend and restricted
securities legend set forth in Exhibit 1 hereto (each, a "Restricted Global
Note"), which shall be deposited on behalf of the purchasers of the Initial
Notes represented thereby with the Trustee, at its Corporate Trust Office,
as Securities Custodian (or with such other Securities Custodian as the
Depository may direct), and registered in the name of the Depository or a
nominee of the Depository, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of
the Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depository or its
nominee as hereinafter provided. Exchange Notes shall be issued in global
form (with the global securities legend set forth in Exhibit 1 hereto).
Exchange Notes issued in global form and Restricted Global Notes are
sometimes referred to in this Third Supplemental Indenture as "Global
Notes." The form of Exchange Notes and Private Exchange Notes shall be
substantially in the form as set forth in Exhibit 2 attached hereto. The
Depositary for the Notes shall be The Depository Trust Company, a New York
corporation.

         (b) Book-Entry Provisions. This Section 2.02(b) shall apply only
to a Global Note deposited with or on behalf of the Depository.

         The Company shall execute and the Trustee shall, in accordance
with this Section 2.02(b), authenticate and deliver initially one or more
Global Notes that (a) shall be registered in the name of the Depository or
the nominee of the Depository and (b) shall be delivered by the Trustee to
the Depository or pursuant to the Depository's instructions or held by the
Trustee as Securities Custodian.

         Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Third Supplemental Indenture with respect
to any Global Note held on their behalf by the Depository or by the Trustee
as the Securities Custodian or under such Global Note, and the Company, the
Trustee and any agent of the Company or the Trustee shall be entitled to
treat the Depository as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company, or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices of
such Depository governing the exercise of the rights of a holder of a
beneficial interest in any Global Note.

         (c) Certificated Notes. Except as provided in this Section 2.02,
Section 2.04 or Section 2.05, owners of beneficial interests in Restricted
Global Notes shall not be entitled to receive physical delivery of
certificated Notes.

         SECTION 2.03 Certain Terms of the Notes. Set forth in the forms of
the Notes attached hereto as Exhibits 1 and 2 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;

         (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; and

         (v)   the terms upon which the Notes are redeemable.

         SECTION 2.04 Transfer and Exchange.

         (a) Transfer and Exchange of Global Notes.

                  (i) The transfer and exchange of Global Notes or
         beneficial interests therein shall be effected through the
         Depository, in accordance with this Third Supplemental Indenture
         (including applicable restrictions on transfer set forth herein,
         if any) and the procedures of the Depository therefor.

                  (ii) Notwithstanding any other provision of this Third
         Supplemental Indenture (other than the provisions set forth in
         Section 2.05), a Global Note may not be transferred as a whole
         except by the Depository to a nominee of the Depository or by a
         nominee of the Depository to the Depository or another nominee of
         the Depository or by the Depository or any such nominee to a
         successor Depository or a nominee of such successor Depository.

                  (iii) In the event that a Restricted Global Note is
         exchanged for Notes in certificated registered form pursuant to
         Section 2.05 prior to the consummation of a Registered Exchange
         Offer or the effectiveness of a Shelf Registration Statement with
         respect to such Notes, such Restricted Global Note may be
         exchanged only in accordance with such procedures as are
         substantially consistent with the provisions of this Section 2.04
         (including the certification requirements set forth on the reverse
         of the Initial Notes intended to ensure that such transfers comply
         with Rule 144A or Regulation S, as the case may be) and such other
         procedures as may from time to time be adopted by the Company.

         (b) Legend.

                  (i) Except as permitted by the following paragraphs (ii),
         (iii) and (iv), each Note certificate evidencing a Transfer
         Restricted Note shall bear a legend in substantially the following
         form:

                  THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
                  TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES
                  ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT
                  BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
                  OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
                  THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED
                  THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
                  EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
                  SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

                  THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE
                  COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD,
                  PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED
                  STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
                  A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
                  UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
                  REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES
                  IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
                  UNDER THE SECURITIES ACT, (III) PURSUANT TO EXEMPTION
                  FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
                  RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN
                  EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
                  ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH
                  ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
                  STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
                  HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE
                  FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A)
                  ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
                  DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
                  CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
                  MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
                  COMPLIES WITH THE FOREGOING RESTRICTIONS.

                  (ii) Upon any sale or transfer of a Transfer Restricted
         Note (including any Transfer Restricted Note represented by a
         Restricted Global Note) pursuant to Rule 144, the Security
         Registrar shall, subject to approval by the Company, permit the
         transferee thereof to exchange such Transfer Restricted Note for a
         certificated Note that does not bear the legend set forth above
         and rescind any restriction on the transfer of such Transfer
         Restricted Note, if the transferor thereof certifies in writing to
         the Security Registrar that such sale or transfer was made in
         reliance on Rule 144 (such certification to be in the form set
         forth on the reverse of the Note).

                  (iii) After a transfer of any Initial Notes or Private
         Exchange Notes pursuant to and during the period of the
         effectiveness of a Shelf Registration Statement with respect to
         such Initial Notes or Private Exchange Notes, as the case may be,
         all requirements pertaining to legends on such Initial Notes or
         such Private Exchange Notes with respect to such Notes transferred
         will cease to apply and Initial Notes or Private Exchange Notes in
         global form, in each case without restrictive transfer legends,
         will be available to the transferee of the Holder of such Initial
         Notes or Private Exchange Notes upon written directions to
         transfer such Holder's interest in the Global Note.

                  (iv) Upon the consummation of a Registered Exchange Offer
         with respect to the Initial Notes, Exchange Notes in global form
         will be available to holders that exchange such Initial Notes in
         such Registered Exchange Offer.

                  (v) Upon the consummation of a Private Exchange with
         respect to the Initial Notes, all requirements pertaining to such
         Initial Notes that Initial Notes issued to certain holders be
         issued in global form will still apply with respect to holders of
         such Initial Notes that do not exchange their Initial Notes, and
         Private Exchange Notes in global form with the global securities
         legend and the Restricted Notes Legend set forth in Exhibit 1
         hereto will be available to holders that exchange such Initial
         Notes in such Private Exchange.

         (c) Cancellation or Adjustment of Global Note. At such time as all
beneficial interests in a Global Note have either been exchanged for
certificated Notes, redeemed, purchased or canceled, such Global Note shall
be canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for certificated Notes,
redeemed, purchased or canceled, the principal amount of Notes represented
by such Global Note shall be reduced and an adjustment shall be made on the
books and records of the Securities Custodian with respect to such Global
Note.

         (d) Obligations with Respect to Transfers and Exchanges of Notes.

                  (i) To permit registrations of transfers and exchanges,
         the Company shall execute and the Trustee shall authenticate
         certificated Notes and Global Notes at the Security Registrar's
         request.

                  (ii) No service charge shall be made for registration of
         transfer or exchange, but the Company may require payment of a sum
         sufficient to cover any transfer tax, assessments or similar
         governmental charge payable in connection therewith.

                  (iii) Prior to the due presentation for registration of
         transfer of any Note, the Company, the Trustee, the Paying Agent
         or the Security Registrar may deem and treat the Person in whose
         name a Note is registered as the absolute owner of such Note for
         the purpose of receiving payment of principal of and interest on
         such Note and for all other purposes whatsoever, whether or not
         such Note is overdue, and none of the Company, the Trustee, the
         Paying Agent or the Security Registrar shall be affected by notice
         to the contrary.

                  (iv) All Notes issued upon any transfer or exchange
         pursuant to the terms of the Indenture shall evidence the same
         debt and shall be entitled to the same benefits under the
         Indenture as the Notes surrendered upon such transfer or exchange.

         (e) No Obligation of Trustee.

                  (i) The Trustee shall have no responsibility or
         obligation to any beneficial owner of a Global Note, Agent Member
         or other Person with respect to the accuracy of the records of the
         Depository or its nominee or of any Agent Member, with respect to
         any ownership interest in the Notes or with respect to the
         delivery to any Agent Member, beneficial owner or other Person
         (other than the Depository) of any notice (including any notice of
         redemption) or the payment of any amount, under or with respect to
         such Notes. All notices and communications to be given to the
         holders and all payments to be made to holders under the Notes
         shall be given or made only to or upon the order of the registered
         Holders (which shall be the Depository or its nominee in the case
         of a Global Note). The rights of beneficial owners in any Global
         Note shall be exercised only through the Depository subject to the
         applicable rules and procedures of the Depository. The Trustee may
         rely and shall be fully protected in relying upon information
         furnished by the Depository with respect to its Agent Members and
         any beneficial owners.

                  (ii) The Trustee shall have no obligation or duty to
         monitor, determine or inquire as to compliance with any
         restrictions on transfer imposed under this Third Supplemental
         Indenture or under applicable law with respect to any transfer of
         any interest in any Note (including any transfers between or among
         Agent Members or beneficial owners in any Global Note) other than
         to require delivery of such certificates and other documentation
         or evidence as are expressly required by, and to do so if and when
         expressly required by, the terms of the Indenture.

         SECTION 2.05 Certificated Notes.

         (a) A Global Note deposited with the Depository or with the
Trustee as Securities Custodian pursuant to Section 2.02 shall be
transferred to the beneficial owners thereof in the form of certificated
Notes in an aggregate principal amount equal to the principal amount of
such Global Note, in exchange for such Global Note, only if such transfer
complies with this Section 2.05 and the conditions set forth in Sections
2.05 and 2.11 of the Indenture.

         (b) Any Global Note that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depository to
the Trustee at its Corporate Trust Office to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Note, an equal aggregate principal amount of certificated Notes of
authorized denominations. Any portion of a Global Note transferred pursuant
to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 principal amount and any integral multiple thereof
and registered in such names as the Depository shall direct. Any
certificated Initial Note or Private Exchange Note delivered in exchange
for an interest in the Global Note shall, except as otherwise provided by
Section 2.04(b), bear the restricted securities legend set forth in Exhibit
1 hereto.

         (c) Subject to the provisions of Section 2.05(b), the registered
holder of a Global Note shall be entitled to grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a holder is
entitled to take under the Indenture or the Notes.

         (d) In the event of the occurrence the events specified in Section
2.11 of the Indenture, the Company shall promptly make available to the
Trustee a reasonable supply of certificated Notes in definitive, fully
registered form without interest coupons.

         SECTION 2.06 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 Third Supplemental Indenture.

         SECTION 2.07 Covenants. Holders of the Notes shall have the
benefit of the additional restrictive covenants set forth in Article 3 and
4 of this Third Supplemental Indenture.

         SECTION 2.08 Additional Notes. Notwithstanding Section 2.01 of
this Third 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. SECTION 2.09 Right of
Optional Redemption; Prices. The Notes are redeemable in whole or in part,
at the option of the Company at any time and from time to time, on not less
than 30 or more than 90 days' prior notice mailed to the holders of the
Notes, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Notes to be redeemed and (ii) the sum of the
present values of the Remaining Scheduled Payments thereon discounted to
the Redemption Date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 62.5 basis
points, together in either case with accrued interest on the principal
amount being redeemed to the Redemption Date.

                                 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 the 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,
         improved or opened by the Company or any Subsidiary after the date
         of this Third Supplemental Indenture to secure Debt issued,
         assumed or guaranteed within 360 days after such acquisition or
         completion of construction or improvement or Opening to provide
         for the payment of the purchase price of, or the cost of
         constructing or improving or Opening, 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 this
         Third Supplemental 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;

               (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.

         (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 involves a store
         and occurs within 360 days of the Opening;

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

               (iv) 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 this Third Supplemental Indenture on the part of
         the Company to be performed or observed;

               (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 Third 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 Third 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
Third Supplemental Indenture.

         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 Third
         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) of the Indenture 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 Third
         Supplemental Indenture or any other agreement or instrument to
         which the Company is a party or by which it is bound;

               (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 Third Supplemental Indenture, is in all respects
ratified and confirmed. This Third 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 Third
Supplemental Indenture.

         SECTION 6.03 Counterparts. This Third 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 Third 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 Third
Supplemental Indenture to be duly executed as of the date first above
written.

                                          KMART CORPORATION

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

                                          THE BANK OF NEW YORK,
                                            as Trustee

                                          By:  /s/ Paul Schmalzel
                                              ------------------------------
                                              Name:  Paul Schmalzel
                                              Title: Vice President

                                 EXHIBIT 1
                                     to
                        THIRD SUPPLEMENTAL INDENTURE

                       [FORM OF FACE OF INITIAL NOTE]

                           [Global Notes Legend]

                  UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT OR AGENTS FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR 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.

                  TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                         [Restricted Notes Legend]

                  THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER
OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

                  THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) OUTSIDE THE UNITED STATES 1N AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

                             KMART CORPORATION

                       9-7/8% Note Due June 15, 2008

         No.

         $                                                CUSIP: __________

         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 $___________ on June 15, 2008, 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 June 15 and December 15 of each year (each, an "Interest
Payment Date"), commencing December 15, 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 June 19, 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; provided, however, that if a Registration Default (as defined
in the Registration Rights Agreement) occurs, additional interest will
accrue on this Note at a rate of 0.50% per annum (increasing by an
additional 0.50% per annum after the first 90-day period that occurs, after
the date on which such Registration Default occurs up to a maximum
additional interest rate of 1.00% per annum) from and including the date on
which any such Registration Default shall occur to but excluding the date
on which all Registration Defaults have been cured. Interest shall be
computed on the basis of a 360-day 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 June 1 or December 1 (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.

         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

                     [FORM OF REVERSE OF INITIAL NOTE]

                             KMART CORPORATION

                       9-7/8% Note Due June 15, 2008

         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 9-7/8% Notes Due June 15, 2008 of the Issuer,
initially limited in aggregate principal amount to $430,000,000, all issued
or to be issued under and pursuant to the Indenture, dated as of December
13, 1999, as supplemented by the Third Supplemental Indenture, dated as of
June 19, 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 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. The Notes are redeemable in whole or in part, at the option of
the Company at any time and from time to time, on not less than 30 or more
than 90 days' prior notice mailed to the holders of the Notes, at a
redemption price equal to the greater of (i) 100% of the principal amount
of the Notes to be redeemed and (ii) the sum of the present values of the
Remaining Scheduled Payments thereon discounted to the Redemption Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 62.5 basis points, together in either
case with accrued interest on the principal amount being redeemed to the
Redemption Date.

         Subject to payment by the Company of a sum sufficient to pay the
amount due on redemption, interest on this Note (or portion hereof if this
Note is redeemed in part) shall cease to accrue upon the date duly fixed
for redemption of this Note (or portion hereof if this Note is redeemed in
part).

         6. 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.

         7. 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.

         8. 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.

         9. 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 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.

         10. 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.

         11. Holders' Compliance with Registration Rights Agreement. Each
holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including the obligations
of the holders with respect to a registration and the indemnification of
the Company to the extent provided therein.

         12. 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.

                              ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

       (Print or type assignee's name, address and zip code)

       (Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint                  agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.

____________________________________

Date:  ______________ Your Signature:_________________________________________

_______________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.

         In connection with any transfer of any of the Notes evidenced by
this certificate occurring prior to the expiration of the period referred
to in Rule 144(k) under the Securities Act after the later of the date of
original issuance of such Notes and the last date, if any, on which such
Notes were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Notes are being transferred in accordance
with its terms:

CHECK ONE BOX BELOW

         (1)      [  ]     to the Company; or

         (2)      [  ]     pursuant to an effective registration statement
                           under the Securities Act of 1933; or

         (3)      [  ]     inside the United States to a "qualified
                           institutional buyer" (as defined in Rule 144A
                           under the Securities Act of 1933) that purchases
                           for its own account or for the account of a
                           qualified institutional buyer to whom notice is
                           given that such transfer is being made in
                           reliance on Rule 144A, in each case pursuant to
                           and in compliance with Rule 144A under the
                           Securities Act of 1933; or

         (4)      [  ]     outside the United States in an offshore
                           transaction within the meaning of Regulation S
                           under the Securities Act of 1933 in compliance
                           with Rule 904 under the Securities Act of 1933;
                           or

         (5)      [  ]     pursuant to the exemption from registration provided
                           by Rule 144 under the Securities Act of 1933.

         Unless one of the boxes is checked, the Trustee will refuse to
         register any of the Notes evidenced by this certificate in the
         name of any person other than the registered holder thereof;
         provided, however, that if box (4) or (5) is checked, the Trustee
         shall be entitled to require, prior to registering any such
         transfer of the Notes, such legal opinions, certifications and
         other information as the Company has reasonably requested to
         confirm that such transfer is being made pursuant to an exemption
         from, or in a transaction not subject to, the registration
         requirements of the Securities Act of 1933, such as the exemption
         provided by Rule 144 under such Act.

                                     ----------------------------------------
                                                   Signature

Signature Guarantee:

-----------------------------------         ----------------------------------
Signature must be guaranteed                            Signature

         Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Security Registrar, which
requirements include membership or participation in the Security Transfer
Agent Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Security Registrar in addition to, or
in substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

         The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act of 1933, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.

         Dated:
               ----------------------------------    -------------------------
         NOTICE: To be executed by an executive
                 officer

                      [TO BE ATTACHED TO GLOBAL NOTES]

             SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

         The following increases or decreases in this Global Note have been
made:

<TABLE>
<CAPTION>

                                                                                        Signature of
                                          Amount of increase   Principal amount of   authorized officer
                     Amount of decrease      in principal        this Global Note       of Trustee or
      Date of       in principal amount     amount of this        following such         Securities
      Exchange     of this Global Note       Global Note      decrease or increase       Custodian
      --------     --------------------   ------------------  --------------------   -------------------
<S>                <C>                      <C>               <C>                       <C>

</TABLE>

                                 EXHIBIT 2
                                     to
                        THIRD SUPPLEMENTAL INDENTURE

                       [FORM OF FACE OF EXCHANGE NOTE
                         OR PRIVATE EXCHANGE NOTE]

                                   */**/

-------------------
         */[If the Note is to be issued in global form, add the Global
Notes Legend from Exhibit 1 to the Third Supplemental Indenture and the
attachment from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL NOTES]
-- SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE".]

         **/[If the Note is a Private Exchange Note issued in a Private
Exchange to an Initial Purchaser holding an unsold portion of its initial
allotment, add the Restricted Securities Legend from Exhibit 1 to the Third
Supplemental Indenture and replace the Assignment Form included in this
Exhibit A with the Assignment Form included in such Exhibit 1.]

                             KMART CORPORATION

                       9-7/8% Note Due June 15, 2008

         No.

         $                                                CUSIP: __________

         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 $___________ on June 15, 2008, 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 June 15 and December 15 of each year (each, an "Interest
Payment Date"), commencing December 15, 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 June 19, 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-day 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 June 1 or December 1 (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.

         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

        [FORM OF REVERSE OF EXCHANGE NOTE OR PRIVATE EXCHANGE NOTE]

                             KMART CORPORATION

                       9-7/8% Note Due June 15, 2008

         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 9-7/8% Notes Due June 15, 2008 of the Issuer,
initially limited in aggregate principal amount to $430,000,000, all issued
or to be issued under and pursuant to the Indenture, dated as of December
13, 1999, as supplemented by the Third Supplemental Indenture, dated as of
June 19, 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 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. The Notes are redeemable in whole or in part, at the option of
the Company at any time and from time to time, on not less than 30 or more
than 90 days' prior notice mailed to the holders of the Notes, at a
redemption price equal to the greater of (i) 100% of the principal amount
of the Notes to be redeemed and (ii) the sum of the present values of the
Remaining Scheduled Payments thereon discounted to the Redemption Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 62.5 basis points, together in either
case with accrued interest on the principal amount being redeemed to the
Redemption Date.

         Subject to payment by the Company of a sum sufficient to pay the
amount due on redemption, interest on this Note (or portion hereof if this
Note is redeemed in part) shall cease to accrue upon the date duly fixed
for redemption of this Note (or portion hereof if this Note is redeemed in
part).

         6. 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.

         7. 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.

         8. 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.

         9. 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 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.

         10. 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.

         11. Holders' Compliance with Registration Rights Agreement. Each
holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including the obligations
of the holders with respect to a registration and the indemnification of
the Company to the extent provided therein.

         12. 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.

                              ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

       (Print or type assignee's name, address and zip code)

       (Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint      agent to                    transfer this Note
on the books of the Company. The agent may substitute another to act for him.

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

Date: ________________     Your Signature:___________________________________

-----------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note.Exhibit 4.5

                                $430,000,000

                             KMART CORPORATION

                           9-7/8% NOTES DUE 2008

                       REGISTRATION RIGHTS AGREEMENT

                                                              June 19, 2001

Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
Fleet Securities, Inc.
Banc One Capital Markets, Inc.
c/o Credit Suisse First Boston Corporation
      Eleven Madison Avenue
      New York, New York 10010-3629

Ladies and Gentlemen:

Kmart Corporation, a Michigan corporation (the "Company"), proposes to
issue and sell to Credit Suisse First Boston Corporation, J.P. Morgan
Securities Inc., BNY Capital Markets, Inc., Fleet Securities, Inc. and Banc
One Capital Markets, Inc. (collectively, the "Initial Purchasers"), upon
the terms set forth in a purchase agreement of even date herewith (the
"Purchase Agreement"), U.S. $430,000,000 aggregate principal amount of its
9-7/8% Notes due 2008 (the "Initial Securities"). The Initial Securities
will be issued pursuant to an indenture, dated as of December 13, 1999, as
supplemented by a third supplemental indenture, dated as of June 19, 2001
(collectively, the "Indenture"), among the Company and The Bank of New
York, as trustee (the "Trustee"). As an inducement to the Initial
Purchasers to enter into the Purchase Agreement, the Company agrees with
the Initial Purchasers, for the benefit of the Initial Purchasers and the
holders of the Securities (as defined below) (collectively the "Holders"),
as follows:

         1. Registered Exchange Offer. Unless not permitted by applicable
law (after the Company has complied with the ultimate paragraph of this
Section 1), the Company shall prepare and, not later than 90 days (such
90th day being a "Filing Deadline") after the date on which the Initial
Purchasers purchase the Initial Securities pursuant to the Purchase
Agreement (the "Closing Date"), file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to a proposed offer
(the "Registered Exchange Offer") to the Holders of Transfer Restricted
Securities (as defined in Section 6 hereof), who are not prohibited by any
law or policy of the Commission from participating in the Registered
Exchange Offer, to issue and deliver to such Holders, in exchange for the
Initial Securities, a like aggregate principal amount of debt securities of
the Company issued under the Indenture, identical in all material respects
to the Initial Securities and registered under the Securities Act (the
"Exchange Securities"). The Company shall use its best efforts to (i) cause
such Exchange Offer Registration Statement to become effective under the
Securities Act within 180 days after the Closing Date (such 180th day being
an "Effectiveness Deadline") and (ii) keep the Exchange Offer Registration
Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date notice of the Registered Exchange Offer is
mailed to the Holders (such period being called the "Exchange Offer
Registration Period").

         If the Company commences the Registered Exchange Offer, the
Company (i) will be entitled to consummate the Registered Exchange Offer 30
days after such commencement (provided that the Company has accepted all
the Initial Securities theretofore validly tendered in accordance with the
terms of the Registered Exchange Offer) and (ii) will be required to
consummate the Registered Exchange Offer no later than 90 days after the
date on which the Exchange Offer Registration Statement is declared
effective (such 90th day being the "Consummation Deadline").

         Following the declaration of the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the
Registered Exchange Offer, it being the objective of such Registered
Exchange Offer to enable each Holder of Transfer Restricted Securities
electing to exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the Company within the
meaning of the Securities Act, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no arrangements with any
person to participate in the distribution of the Exchange Securities and is
not prohibited by any law or policy of the Commission from participating in
the Registered Exchange Offer) to trade such Exchange Securities from and
after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws
of the several states of the United States.

         The Company acknowledges that, pursuant to current interpretations
by the Commission's staff of Section 5 of the Securities Act, in the
absence of an applicable exemption therefrom, (i) each Holder which is a
broker-dealer electing to exchange Initial Securities, acquired for its own
account as a result of market making activities or other trading
activities, for Exchange Securities (an "Exchanging Dealer"), is required
to deliver a prospectus containing the information set forth in (a) Annex A
hereto on the cover, (b) Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section, and (c) Annex C
hereto in the "Plan of Distribution" section of such prospectus in
connection with a sale of any such Exchange Securities received by such
Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an
Initial Purchaser that elects to sell Securities (as defined below)
acquired in exchange for Initial Securities constituting any portion of an
unsold allotment, is required to deliver a prospectus containing the
information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in connection with such sale.

         The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of
the Securities Act for such period of time as such persons must comply with
such requirements in order to resell the Exchange Securities; provided,
however, that (i) in the case where such prospectus and any amendment or
supplement thereto must be delivered by an Exchanging Dealer or an Initial
Purchaser, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers and the Initial Purchasers have sold all
Exchange Securities held by them (unless such period is extended pursuant
to Section 3(j) below) and (ii) the Company shall make such prospectus and
any amendment or supplement thereto available to any broker-dealer for use
in connection with any resale of any Exchange Securities for a period of
not less than 180 days after the consummation of the Registered Exchange
Offer.

         If, upon consummation of the Registered Exchange Offer, any
Initial Purchaser holds Initial Securities acquired by it as part of its
initial distribution, the Company, simultaneously with the delivery of the
Exchange Securities pursuant to the Registered Exchange Offer, shall issue
and deliver to such Initial Purchaser upon the written request of such
Initial Purchaser, in exchange (the "Private Exchange") for the Initial
Securities held by such Initial Purchaser, a like principal amount of debt
securities of the Company issued under the Indenture and identical in all
material respects to the Initial Securities (the "Private Exchange
Securities"). The Initial Securities, the Exchange Securities and the
Private Exchange Securities are herein collectively called the
"Securities."

         In connection with the Registered Exchange Offer, the Company
shall:

                  (a) mail to each Holder a copy of the prospectus forming
         part of the Exchange Offer Registration Statement, together with
         an appropriate letter of transmittal and related documents;

                  (b) keep the Registered Exchange Offer open for not less
         than 30 days (or longer, if required by applicable law) after the
         date notice thereof is mailed to the Holders;

                  (c) utilize the services of a depositary for the
         Registered Exchange Offer with an address in the Borough of
         Manhattan, The City of New York, which may be the Trustee or an
         affiliate of the Trustee;

                  (d) permit Holders to withdraw tendered Securities at any
         time prior to the close of business, New York time, on the last
         business day on which the Registered Exchange Offer shall remain
         open; and

                  (e) otherwise comply with all applicable laws.

         As soon as practicable after the close of the Registered Exchange
Offer or the Private Exchange, as the case may be, the Company shall:

                  (x) accept for exchange all the Securities validly
         tendered and not withdrawn pursuant to the Registered Exchange
         Offer and the Private Exchange;

                  (y) deliver to the Trustee for cancellation all the
         Initial Securities so accepted for exchange; and

                  (z) cause the Trustee to authenticate and deliver
         promptly to each Holder of the Initial Securities, Exchange
         Securities or Private Exchange Securities, as the case may be,
         equal in principal amount to the Initial Securities of such Holder
         so accepted for exchange.

         The Indenture will provide that the Exchange Securities will not
be subject to the transfer restrictions set forth in the Indenture and that
all the Securities (as defined below) will vote and consent together on all
matters as one class and that none of the Securities will have the right to
vote or consent as a class separate from one another on any matter.

         Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest
was paid on the Initial Securities surrendered in exchange therefor or, if
no interest has been paid on the Initial Securities, from the date of
original issue of the Initial Securities.

         Each Holder participating in the Registered Exchange Offer shall
be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of
business, (ii) such Holder will have no arrangements or understanding with
any person to participate in the distribution of the Securities or the
Exchange Securities within the meaning of the Securities Act, (iii) such
Holder is not an "affiliate," as defined in Rule 405 of the Securities Act,
of the Company or if it is an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to
the extent applicable, (iv) if such Holder is not a broker-dealer, that it
is not engaged in, and does not intend to engage in, the distribution of
the Exchange Securities and (v) if such Holder is a broker-dealer, that it
will receive Exchange Securities for its own account in exchange for
Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Securities.

         Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and
any amendment thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) any prospectus forming part of any Exchange Offer
Registration Statement, and any supplement to such prospectus, does not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

         2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the
Company is not permitted to effect a Registered Exchange Offer, as
contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not
consummated by the 220th day after the Closing Date, (iii) any Initial
Purchaser so requests with respect to the Initial Securities (or the
Private Exchange Securities) not eligible to be exchanged for Exchange
Securities in the Registered Exchange Offer and held by it following
consummation of the Registered Exchange Offer or (iv) any Holder (other
than an Exchanging Dealer) is not eligible to participate in the Registered
Exchange Offer or, in the case of any Holder (other than an Exchanging
Dealer) that participates in the Registered Exchange Offer, such Holder
does not receive freely tradeable Exchange Securities on the date of the
exchange, the Company shall take the following actions (the date on which
any of the conditions described in the foregoing clauses (i) through (iv)
occur, including in the case of clauses (iii) or (iv) the receipt of the
required notice, being a "Trigger Date"):

                  (a) The Company shall as promptly as practicable (but in
         no event more than 60 days after the Trigger Date (such 60th day
         being a "Filing Deadline")) file with the Commission and
         thereafter use its best efforts to cause to be declared effective
         no later than 180 days after the Trigger Date (such 140th day
         being an "Effectiveness Deadline") a registration statement (the
         "Shelf Registration Statement" and, together with the Exchange
         Offer Registration Statement, a "Registration Statement") on an
         appropriate form under the Securities Act relating to the offer
         and sale of the Transfer Restricted Securities by the Holders
         thereof from time to time in accordance with the methods of
         distribution set forth in the Shelf Registration Statement and
         Rule 415 under the Securities Act (hereinafter, the "Shelf
         Registration"); provided, however, that no Holder (other than an
         Initial Purchaser) shall be entitled to have the Securities held
         by it covered by such Shelf Registration Statement unless such
         Holder agrees in writing to be bound by all the provisions of this
         Agreement applicable to such Holder.

                  (b) The Company shall use its best efforts to keep the
         Shelf Registration Statement continuously effective in order to
         permit the prospectus included therein to be lawfully delivered by
         the Holders of the relevant Securities, for a period of two years
         (or for such longer period if extended pursuant to Section 3(j)
         below) from the date of its effectiveness or such shorter period
         that will terminate when all the Securities covered by the Shelf
         Registration Statement (i) have been sold pursuant thereto or (ii)
         are no longer restricted securities (as defined in Rule 144 under
         the Securities Act, or any successor rule thereof) (the "Shelf
         Registration Period"). The Company shall be deemed not to have
         used its best efforts to keep the Shelf Registration Statement
         effective during the requisite period if it voluntarily takes any
         action that would result in Holders of Securities covered thereby
         not being able to offer and sell such Securities during that
         period, unless such action is required by applicable law.

                  (c) Notwithstanding any other provisions of this
         Agreement to the contrary, the Company shall cause the Shelf
         Registration Statement and the related prospectus and any
         amendment or supplement thereto, as of the effective date of the
         Shelf Registration Statement, amendment or supplement, (i) to
         comply in all material respects with the applicable requirements
         of the Securities Act and the rules and regulations of the
         Commission and (ii) not to contain any untrue statement of a
         material fact or omit to state a material fact required to be
         stated therein or necessary in order to make the statements
         therein, in light of the circumstances under which they were made,
         not misleading.

         3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent
applicable, any Registered Exchange Offer contemplated by Section 1 hereof,
the following provisions shall apply:

                  (a) The Company shall (i) furnish to each Initial
         Purchaser, prior to the filing thereof with the Commission, a copy
         of the Registration Statement and each amendment thereof and each
         supplement, if any, to the prospectus included therein and, in the
         event that an Initial Purchaser (with respect to any portion of an
         unsold allotment from the original offering) is participating in
         the Registered Exchange Offer or the Shelf Registration Statement,
         the Company shall use its best efforts to reflect in each such
         document, when so filed with the Commission, such comments as such
         Initial Purchaser reasonably may propose; (ii) include the
         information substantially to the effect set forth in Annex A
         hereto on the cover, in Annex B hereto in the "Exchange Offer
         Procedures" section and the "Purpose of the Exchange Offer"
         section and in Annex C hereto in the "Plan of Distribution"
         section of the prospectus forming a part of the Exchange Offer
         Registration Statement and include the information set forth in
         Annex D hereto in the Letter of Transmittal delivered pursuant to
         the Registered Exchange Offer; (iii) if requested by an Initial
         Purchaser, include the information required by Items 507 or 508 of
         Regulation S-K under the Securities Act, as applicable, in the
         prospectus forming a part of the Exchange Offer Registration
         Statement; (iv) include within the prospectus contained in the
         Exchange Offer Registration Statement a section entitled "Plan of
         Distribution," reasonably acceptable to the Initial Purchasers,
         which shall contain a summary statement of the positions taken or
         policies made by the staff of the Commission with respect to the
         potential "underwriter" status of any broker-dealer that is the
         beneficial owner (as defined in Rule 13d-3 under the Securities
         Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange
         Securities received by such broker-dealer in the Registered
         Exchange Offer (a "Participating Broker-Dealer"), whether such
         positions or policies have been publicly disseminated by the staff
         of the Commission or such positions or policies, in the reasonable
         judgment of the Initial Purchasers based upon advice of counsel
         (which may be in-house counsel), represent the prevailing views of
         the staff of the Commission; and (v) in the case of a Shelf
         Registration Statement, include the names of the Holders who
         propose to sell Securities pursuant to the Shelf Registration
         Statement as selling securityholders.

                  (b) The Company shall give written notice to the Initial
         Purchasers, the Holders of the Securities and any Participating
         Broker-Dealer from whom the Company has received prior written
         notice that it will be a Participating Broker-Dealer in the
         Registered Exchange Offer (which notice pursuant to clauses
         (ii)-(v) hereof shall be accompanied by an instruction to suspend
         the use of the prospectus until the requisite changes have been
         made):

                           (i) when the Registration Statement or any
                  amendment thereto has been filed with the Commission and
                  when the Registration Statement or any post-effective
                  amendment thereto has become effective;

                           (ii) of any request by the Commission for
                  amendments or supplements to the Registration Statement
                  or the prospectus included therein or for additional
                  information;

                           (iii) of the issuance by the Commission of any
                  stop order suspending the effectiveness of the
                  Registration Statement or the initiation of any
                  proceedings for that purpose;

                           (iv) of the receipt by the Company or its legal
                  counsel of any notification with respect to the
                  suspension of the qualification of the Securities for
                  sale in any jurisdiction or the initiation or threatening
                  of any proceeding for such purpose; and

                           (v) of the happening of any event that requires
                  the Company to make changes in the Registration Statement
                  or the prospectus in order that the Registration
                  Statement or the prospectus do not contain an untrue
                  statement of a material fact nor omit to state a material
                  fact required to be stated therein or necessary to make
                  the statements therein (in the case of the prospectus, in
                  light of the circumstances under which they were made)
                  not misleading.

                  (c) The Company shall make every reasonable effort to
         obtain the withdrawal at the earliest possible time, of any order
         suspending the effectiveness of the Registration Statement.

                  (d) The Company shall furnish to each Holder of
         Securities included within the coverage of the Shelf Registration,
         without charge, at least one copy of the Shelf Registration
         Statement and any post-effective amendment thereto, including
         financial statements and schedules, and, if the Holder so requests
         in writing, all exhibits thereto (including those, if any,
         incorporated by reference).

                  (e) The Company shall deliver to each Exchanging Dealer
         and each Initial Purchaser, and to any other Holder who so
         requests, without charge, at least one copy of the Exchange Offer
         Registration Statement and any post-effective amendment thereto,
         including financial statements and schedules, and, if any Initial
         Purchaser or any such Holder requests, all exhibits thereto
         (including those incorporated by reference).

                  (f) The Company shall, during the Shelf Registration
         Period, deliver to each Holder of Securities included within the
         coverage of the Shelf Registration, without charge, as many copies
         of the prospectus (including each preliminary prospectus) included
         in the Shelf Registration Statement and any amendment or
         supplement thereto as such person may reasonably request. The
         Company consents, subject to the provisions of this Agreement, to
         the use of the prospectus or any amendment or supplement thereto
         by each of the selling Holders of the Securities in connection
         with the offering and sale of the Securities covered by the
         prospectus, or any amendment or supplement thereto, included in
         the Shelf Registration Statement.

                  (g) The Company shall deliver to each Initial Purchaser,
         any Exchanging Dealer, any Participating Broker-Dealer and such
         other persons required to deliver a prospectus following the
         Registered Exchange Offer, without charge, as many copies of the
         final prospectus included in the Exchange Offer Registration
         Statement and any amendment or supplement thereto as such persons
         may reasonably request. The Company consents, subject to the
         provisions of this Agreement, to the use of the prospectus or any
         amendment or supplement thereto by any Initial Purchaser, if
         necessary, any Participating Broker-Dealer and such other persons
         required to deliver a prospectus following the Registered Exchange
         Offer in connection with the offering and sale of the Exchange
         Securities covered by the prospectus, or any amendment or
         supplement thereto, included in such Exchange Offer Registration
         Statement.

                  (h) Prior to any public offering of the Securities
         pursuant to any Registration Statement the Company shall register
         or qualify or cooperate with the Holders of the Securities
         included therein and their respective counsel in connection with
         the registration or qualification of the Securities for offer and
         sale under the securities or "blue sky" laws of such states of the
         United States as any Holder of the Securities reasonably requests
         in writing and do any and all other acts or things necessary or
         advisable to enable the offer and sale in such jurisdictions of
         the Securities covered by such Registration Statement; provided,
         however, that the Company shall not be required to (i) qualify
         generally to do business in any jurisdiction where it is not then
         so qualified or (ii) take any action which would subject it to
         general service of process or to taxation in any jurisdiction
         where it is not then so subject.

                  (i) The Company shall cooperate with the Holders of the
         Securities to facilitate the timely preparation and delivery of
         certificates representing the Securities to be sold pursuant to
         any Registration Statement free of any restrictive legends and in
         such denominations and registered in such names as the Holders may
         request a reasonable period of time prior to sales of the
         Securities pursuant to such Registration Statement.

                  (j) Upon the occurrence of any event contemplated by
         paragraphs (ii) through (v) of Section 3(b) above during the
         period for which the Company is required to maintain an effective
         Registration Statement, the Company shall promptly prepare and
         file a post-effective amendment to the Registration Statement or a
         supplement to the related prospectus and any other required
         document so that, as thereafter delivered to Holders of the
         Securities or purchasers of Securities, the prospectus will not
         contain an untrue statement of a material fact or omit to state
         any material fact required to be stated therein or necessary to
         make the statements therein, in light of the circumstances under
         which they were made, not misleading. If the Company notifies the
         Initial Purchasers, the Holders of the Securities and any known
         Participating Broker-Dealer in accordance with paragraphs (ii)
         through (v) of Section 3(b) above to suspend the use of the
         prospectus until the requisite changes to the prospectus have been
         made, then the Initial Purchasers, the Holders of the Securities
         and any such Participating Broker-Dealers shall suspend use of
         such prospectus, and the period of effectiveness of the Shelf
         Registration Statement provided for in Section 2(b) above and the
         Exchange Offer Registration Statement provided for in Section 1
         above shall each be extended by the number of days from and
         including the date of the giving of such notice to and including
         the date when the Initial Purchasers, the Holders of the
         Securities and any known Participating Broker-Dealer shall have
         received such amended or supplemented prospectus pursuant to this
         Section 3(j).

                  (k) Not later than the effective date of the applicable
         Registration Statement, the Company will provide a CUSIP number
         for the Initial Securities, the Exchange Securities or the Private
         Exchange Securities, as the case may be, and provide the
         applicable trustee with printed certificates for the Initial
         Securities, the Exchange Securities or the Private Exchange
         Securities, as the case may be, in a form eligible for deposit
         with The Depository Trust Company.

                  (l) The Company will comply with all rules and
         regulations of the Commission to the extent and so long as they
         are applicable to the Registered Exchange Offer or the Shelf
         Registration and will make generally available to its security
         holders (or otherwise provide in accordance with Section 11(a) of
         the Securities Act) an earnings statement satisfying the
         provisions of Section 11(a) of the Securities Act, no later than
         45 days after the end of a 12-month period (or 90 days, if such
         period is a fiscal year) beginning with the first month of the
         Company's first fiscal quarter commencing after the effective date
         of the Registration Statement, which statement shall cover such
         12-month period.

                  (m) The Company shall cause the Indenture to be qualified
         under the Trust Indenture Act of 1939, as amended, in a timely
         manner and containing such changes, if any, as shall be necessary
         for such qualification. In the event that such qualification would
         require the appointment of a new trustee under the Indenture, the
         Company shall appoint a new trustee thereunder pursuant to the
         applicable provisions of the Indenture.

                  (n) The Company may require each Holder of Securities to
         be sold pursuant to the Shelf Registration Statement to furnish to
         the Company such information regarding the Holder and the
         distribution of the Securities as the Company may from time to
         time reasonably require for inclusion in the Shelf Registration
         Statement, and the Company may exclude from such registration the
         Securities of any Holder that unreasonably fails to furnish such
         information within a reasonable time after receiving such request.

                  (o) The Company shall enter into such customary
         agreements (including, if requested, an underwriting agreement in
         customary form) and take all such other action, if any, as any
         Holder of the Securities shall reasonably request in order to
         facilitate the disposition of the Securities pursuant to any Shelf
         Registration.

                  (p) In the case of any Shelf Registration, the Company
         shall (i) make reasonably available for inspection by the Holders
         of the Securities, any underwriter participating in any
         disposition pursuant to the Shelf Registration Statement and any
         attorney, accountant or other agent retained by the Holders of the
         Securities or any such underwriter all relevant financial and
         other records, pertinent corporate documents and properties of the
         Company and (ii) cause the Company's officers, directors,
         employees, accountants and auditors to supply all relevant
         information reasonably requested by the Holders of the Securities
         or any such underwriter, attorney, accountant or agent in
         connection with the Shelf Registration Statement, in each case, as
         shall be reasonably necessary to enable such persons, to conduct a
         reasonable investigation within the meaning of Section 11 of the
         Securities Act; provided, however, that the foregoing inspection
         and information gathering shall be coordinated on behalf of the
         Initial Purchasers by you and on behalf of the other parties, by
         one counsel designated by and on behalf of such other parties as
         described in Section 4 hereof.

                  (q) In the case of any Shelf Registration, the Company,
         if requested by any Holder of Securities covered thereby, shall
         cause (i) its counsel to deliver an opinion and updates thereof
         relating to the Securities in customary form addressed to such
         Holders and the managing underwriters, if any, thereof and dated,
         in the case of the initial opinion, the effective date of such
         Shelf Registration Statement (it being agreed that the matters to
         be covered by such opinion shall include, without limitation, the
         due incorporation and good standing of the Company and its
         subsidiaries; the qualification of the Company and its
         subsidiaries to transact business as foreign corporations; the due
         authorization, execution and delivery of the relevant agreement of
         the type referred to in Section 3(o) hereof; the due
         authorization, execution, authentication and issuance, and the
         validity and enforceability, of the applicable Securities; the
         absence of material legal or governmental proceedings involving
         the Company and its subsidiaries; the absence of governmental
         approvals required to be obtained in connection with the Shelf
         Registration Statement, the offering and sale of the applicable
         Securities, or any agreement of the type referred to in Section
         3(o) hereof; the compliance in all material respects as to form of
         such Shelf Registration Statement and any documents incorporated
         by reference therein and of the Indenture with the requirements of
         the Securities Act and the Trust Indenture Act, respectively; and,
         as of the date of the opinion and as of the effective date of the
         Shelf Registration Statement or most recent post-effective
         amendment thereto, as the case may be, the absence from such Shelf
         Registration Statement and the prospectus included therein, as
         then amended or supplemented, and from any documents incorporated
         by reference therein of an untrue statement of a material fact or
         the omission to state therein a material fact required to be
         stated therein or necessary to make the statements therein not
         misleading (in the case of any such documents, in the light of the
         circumstances existing at the time that such documents were filed
         with the Commission under the Exchange Act); (ii) its officers to
         execute and deliver all customary documents and certificates and
         updates thereof requested by any underwriters of the applicable
         Securities and (iii) its independent public accountants to provide
         to the selling Holders of the applicable Securities and any
         underwriter therefor a comfort letter in customary form and
         covering matters of the type customarily covered in comfort
         letters in connection with primary underwritten offerings, subject
         to receipt of appropriate documentation as contemplated, and only
         if permitted, by Statement of Auditing Standards No. 72.

                  (r) In the case of the Registered Exchange Offer, if
         requested by any Initial Purchaser or any known Participating
         Broker-Dealer, the Company shall cause (i) its counsel to deliver
         to such Initial Purchaser or such Participating Broker-Dealer a
         signed opinion in the form set forth in Section 6(c)-(d) of the
         Purchase Agreement with such changes as are customary in
         connection with the preparation of a Registration Statement and
         (ii) its independent public accountants to deliver to such Initial
         Purchaser or such Participating Broker-Dealer a comfort letter, in
         customary form, meeting the requirements as to the substance
         thereof as set forth in Section 6(a) of the Purchase Agreement,
         with appropriate date changes.

                  (s) If a Registered Exchange Offer or a Private Exchange
         is to be consummated, upon delivery of the Initial Securities by
         Holders to the Company (or to such other Person as directed by the
         Company) in exchange for the Exchange Securities or the Private
         Exchange Securities, as the case may be, the Company shall mark,
         or caused to be marked, on the Initial Securities so exchanged
         that such Initial Securities are being canceled in exchange for
         the Exchange Securities or the Private Exchange Securities, as the
         case may be; in no event shall the Initial Securities be marked as
         paid or otherwise satisfied.

                  (t) The Company will use its best efforts to (a) if the
         Initial Securities have been rated prior to the initial sale of
         such Initial Securities, confirm such ratings will apply to the
         Securities covered by a Registration Statement, or (b) if the
         Initial Securities were not previously rated, cause the Securities
         covered by a Registration Statement to be rated with the
         appropriate rating agencies, if so requested by Holders of a
         majority in aggregate principal amount of Securities covered by
         such Registration Statement, or by the managing underwriters, if
         any.

                  (u) In the event that any broker-dealer registered under
         the Exchange Act shall underwrite any Securities or participate as
         a member of an underwriting syndicate or selling group or "assist
         in the distribution" (within the meaning of the Conduct Rules (the
         "Rules") of the National Association of Securities Dealers, Inc.
         ("NASD")) thereof, whether as a Holder of such Securities or as an
         underwriter, a placement or sales agent or a broker or dealer in
         respect thereof, or otherwise, the Company will assist such
         broker-dealer in complying with the requirements of such Rules,
         including, without limitation, by (i) if such Rules, including
         Rule 2720, shall so require, engaging a "qualified independent
         underwriter" (as defined in Rule 2720) to participate in the
         preparation of the Registration Statement relating to such
         Securities, to exercise usual standards of due diligence in
         respect thereto and, if any portion of the offering contemplated
         by such Registration Statement is an underwritten offering or is
         made through a placement or sales agent, to recommend the yield of
         such Securities, (ii) indemnifying any such qualified independent
         underwriter to the extent of the indemnification of underwriters
         provided in Section 5 hereof and (iii) providing such information
         to such broker-dealer as may be required in order for such
         broker-dealer to comply with the requirements of the Rules.

                  (v) The Company shall use its best efforts to take all
         other steps necessary to effect the registration of the Securities
         covered by a Registration Statement contemplated hereby.

         4. Registration Expenses. (a) All expenses incident to the
Company's performance of and compliance with this Agreement will be borne
by the Company, regardless of whether a Registration Statement is ever
filed or becomes effective, including without limitation;

                  (i) all registration and filing fees and expenses;

                  (ii) all fees and expenses of compliance with federal
         securities and state "blue sky" or securities laws;

                  (iii) all expenses of printing (including printing
         certificates for the Securities to be issued in the Registered
         Exchange Offer and the Private Exchange and printing of
         Prospectuses), messenger and delivery services and telephone;

                  (iv) all fees and disbursements of counsel for the
         Company;

                  (v) all application and filing fees in connection with
         listing the Exchange Securities on a national securities exchange
         or automated quotation system pursuant to the requirements hereof;
         and

                  (vi) all fees and disbursements of independent certified
         public accountants of the Company (including the expenses of any
         special audit and comfort letters required by or incident to such
         performance).

The Company will bear its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and
expenses of any person, including special experts, retained by the Company.

         (b) In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities who are tendering Initial
Securities in the Registered Exchange Offer and/or selling or reselling
Securities pursuant to the "Plan of Distribution" contained in the Exchange
Offer Registration Statement or the Shelf Registration Statement, as
applicable, for the reasonable fees and disbursements of not more than one
counsel, who shall be Dewey Ballantine LLP unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is
being prepared.

         5. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and
each person, if any, who controls such Holder or such Participating
Broker-Dealer within the meaning of the Securities Act or the Exchange Act
(each Holder, any Participating Broker-Dealer and such controlling persons
are referred to collectively as the "Indemnified Parties") from and against
any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of
the Securities) to which each Indemnified Party may become subject under
the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in a Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Shelf Registration,
or arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action in respect thereof;
provided, however, that (i) the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement or prospectus
or in any amendment or supplement thereto or in any preliminary prospectus
relating to a Shelf Registration in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion therein and (ii)
with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus relating to a
Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or
Participating Broker-Dealer from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities concerned, to the
extent that a prospectus relating to such Securities was required to be
delivered by such Holder or Participating Broker-Dealer under the
Securities Act in connection with such purchase and any such loss, claim,
damage or liability of such Holder or Participating Broker-Dealer results
from the fact that there was not sent or given to such person, at or prior
to the written confirmation of the sale of such Securities to such person,
a copy of the final prospectus if the Company had previously furnished
copies thereof to such Holder or Participating Broker-Dealer; provided
further, however, that this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such Indemnified Party.
The Company shall also indemnify underwriters, their officers and directors
and each person who controls such underwriters within the meaning of the
Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.

         (b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act or the
Exchange Act from and against any losses, claims, damages or liabilities or
any actions in respect thereof, to which the Company or any such
controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in a Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Shelf Registration, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity
with written information pertaining to such Holder and furnished to the
Company by or on behalf of such Holder specifically for inclusion therein;
and, subject to the limitation set forth immediately preceding this clause,
shall reimburse, as incurred, the Company for any legal or other expenses
reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity agreement will be in
addition to any liability which such Holder may otherwise have to the
Company or any of its controlling persons.

         (c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action or proceeding
(including a governmental investigation), such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 5, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not, in any
event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above, unless and to the extent the indemnifying party
did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof the indemnifying party will
not be liable to such indemnified party under this Section 5 for any legal
or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the
defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the
subject matter of such action, and does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party..

         (d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other
from the exchange of the Securities, pursuant to the Registered Exchange
Offer, or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party or parties on the one
hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or such Holder or such other indemnified party, as
the case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding any other provision of this Section 5(d),
the Holders of the Securities shall not be required to contribute any
amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to a Registration
Statement exceeds the amount of damages which such Holders have otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as the Company.

         (e) The agreements contained in this Section 5 shall survive the
sale of the Securities pursuant to a Registration Statement and shall
remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of
any indemnified party.

         6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Securities shall
be assessed as follows if any of the following events occur (each such
event in clauses (i) through (iv) below being herein called a "Registration
Default"):

         (i)      any Registration Statement required by this Agreement is
                  not filed with the Commission on or prior to the
                  applicable Filing Deadline;

         (ii)     any Registration Statement required by this Agreement is
                  not declared effective by the Commission on or prior to
                  the applicable Effectiveness Deadline;

         (iii)    the Registered Exchange Offer has not been consummated on
                  or prior to the Consummation Deadline; or

         (iv)     any Registration Statement required by this Agreement has
                  been declared effective by the Commission but (A) such
                  Registration Statement thereafter ceases to be effective
                  or (B) such Registration Statement or the related
                  prospectus ceases to be usable in connection with resales
                  of Transfer Restricted Securities during the periods
                  specified herein because either (1) any event occurs as a
                  result of which the related prospectus forming part of
                  such Registration Statement would include any untrue
                  statement of a material fact or omit to state any
                  material fact necessary to make the statements therein in
                  the light of the circumstances under which they were made
                  not misleading, or (2) it shall be necessary to amend
                  such Registration Statement or supplement the related
                  prospectus, to comply with the Securities Act or the
                  Exchange Act or the respective rules thereunder.

Each of the foregoing will constitute a Registration Default whatever the
reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a
result of any action or inaction by the Commission .

         Additional Interest shall accrue on the Securities over and above
the interest set forth in the title of the Securities from and including
the date on which any such Registration Default shall occur to but
excluding the date on which all such Registration Defaults have been cured,
at a rate of 0.50% per annum (the "Additional Interest Rate") for the first
90-day period immediately following the occurrence of such Registration
Default. The Additional Interest Rate shall thereafter increase by an
additional 0.50% per annum until all Registration Defaults have been cured,
up to a maximum Additional Interest Rate of 1.0% per annum.

         (b) A Registration Default referred to in Section 6(a)(iv) hereof
shall be deemed not to have occurred and be continuing in relation to a
Shelf Registration Statement or the related prospectus if (i) such
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Shelf Registration Statement to
incorporate annual audited financial information with respect to the
Company where such post-effective amendment is not yet effective and needs
to be declared effective to permit Holders to use the related prospectus or
(y) other material events, with respect to the Company that would need to
be described in such Shelf Registration Statement or the related prospectus
and (ii) in the case of clause (y), the Company is proceeding promptly and
in good faith to amend or supplement such Shelf Registration Statement and
related prospectus to describe such events; provided, however, that in any
case if such Registration Default occurs for a continuous period in excess
of 30 days, Additional Interest shall be payable in accordance with the
above paragraph from the day such Registration Default occurs until such
Registration Default is cured.

         (c) Any amounts of Additional Interest due pursuant to Section
6(a) will be payable in cash on the regular interest payment dates with
respect to the Securities. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest Rate by the
principal amount of the Securities and further multiplied by a fraction,
the numerator of which is the number of days such Additional Interest Rate
was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is
360.

         (d) "Transfer Restricted Securities" means each Security until (i)
the date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the
Registered Exchange Offer of an Initial Security for an Exchange Note, the
date on which such Exchange Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii)
the date on which such Security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Security is distributed to the
public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.

         7. Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and
the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder of
Securities, make publicly available other information so long as necessary
to permit sales of their securities pursuant to Rules 144 and 144A. The
Company covenants that it will take such further action as any Holder of
Securities may reasonably request, all to the extent required from time to
time to enable such Holder to sell Securities without registration under
the Securities Act within the limitation of the exemptions provided by
Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The
Company will provide a copy of this Agreement to prospective purchasers of
Initial Securities identified to the Company by the Initial Purchasers upon
request. Upon the request of any Holder of Initial Securities, the Company
shall deliver to such Holder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of
its securities pursuant to the Exchange Act.

         8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering ("Managing
Underwriters") will be selected by the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities to be included in
such offering with the consent of the Company (which consent shall not be
unreasonably withheld).

         No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.

         9. Miscellaneous.

         (a) Remedies. The Company acknowledges and agrees that any failure
by the Company to comply with its obligations under Section 1 and 2 hereof
may result in material irreparable injury to the Initial Purchasers or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may obtain
such relief as may be required to specifically enforce the Company's
obligations under Sections 1 and 2 hereof.

         (b) No Inconsistent Agreements. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.

         (c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, except by the
Company and the written consent of the Holders of a majority in principal
amount of the Securities affected by such amendment, modification,
supplement, waiver or consents.

         (d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:

                  (1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.

                  (2) if to the Initial Purchasers;

                           Credit Suisse First Boston Corporation
                           Eleven Madison Avenue
                           New York, NY 10010-3629
                           Fax No.:  (212) 325-8278
                           Attention:  Transactions Advisory Group

         with a copy to:

                           Dewey Ballantine LLP
                           1301 Avenue of Americas
                           New York, NY 10019
                           Fax No.:  (212) 259-6333
                           Attention:  Morton A. Pierce, Esq.

                  (3) if to the Company, at its address as follows:

                           Kmart Corporation
                           3100 West Big Beaver Road
                           Troy, MI 48084-3163
                           Fax No.:  (248) 463-1054
                           Attention:  General Counsel

         with a copy to:

                           Skadden, Arps, Slate, Meagher & Flom LLP
                           Four Times Square
                           New York, NY 10036
                           Fax No.:  (212) 735-2000
                           Attention:  Vince Pisano, Esq.

         All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if
mailed; when receipt is acknowledged by recipient's facsimile machine
operator, if sent by facsimile transmission; and on the day delivered, if
sent by overnight air courier guaranteeing next day delivery.

         (e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder.

         (f) Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns.

         (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

         (h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.

         (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

         (j) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

         (k) Securities Held by the Company. Whenever the consent or
approval of Holders of a specified percentage of principal amount of
Securities is required hereunder, Securities held by the Company or its
affiliates (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of
such Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a
binding agreement among the several Initial Purchasers and the Company in
accordance with its terms.

                                            Very truly yours,

                                            KMART CORPORATION

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

The foregoing Registration
Rights Agreement is hereby
confirmed and accepted as of
the date first above written.

CREDIT SUISSE FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
BNY CAPITAL MARKETS, INC.
FLEET SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.

By CREDIT SUISSE FIRST BOSTON CORPORATION

By  /s/  Joseph D. Fashano
  ------------------------------------
    Name:   Joseph D. Fashano
    Title:  Director

                                                                    ANNEX A

       Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Initial Securities where such Initial Securities
were acquired by such broker-dealer as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of
180 days after the Expiration Date (as defined herein), it will make this
Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."

                                                                    ANNEX B

       Each broker-dealer that receives Exchange Securities for its own
account in exchange for Initial Securities, where such Initial Securities
were acquired by such broker-dealer as a result of market-making activities
or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. See
"Plan of Distribution."

                                                                    ANNEX C

                            PLAN OF DISTRIBUTION

       Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of
Exchange Securities received in exchange for Initial Securities where such
Initial Securities were acquired as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180
days after the Expiration Date, it will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until             , 20__ , all dealers effecting
transactions in the Exchange Securities may be required to deliver a
prospectus.(1)

       The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be
sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the
Exchange Securities or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states
that, by acknowledging that it will deliver and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.

       For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one
counsel for the Holders of the Securities) other than commissions or
concessions of any brokers or dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.

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

(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.

                                                                    ANNEX D

[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.

           Name:
                     --------------------------------------------------
           Address:
                     --------------------------------------------------

If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will
receive Exchange Securities for its own account in exchange for Initial
Securities that were acquired as a result of market-making activities or
other trading activities, it acknowledges that it will deliver a prospectus
in connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.

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