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                                                                    EXHIBIT 10uu
                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, made and entered into as of April 8, 2002 (the
"Effective Date"), by and between Kmart Corporation, a Michigan corporation
(together with its successors and assigns permitted under this Agreement, the
"Company"), and Michael T. Macik (the "Executive").

         WHEREAS, the Company desires to provide for the re-employment of the
Executive on the terms and conditions set forth herein, in the best interest of
the Company and its constituencies;

         WHEREAS, the Executive desires to be re-employed by the Company as
provided herein; and

         WHEREAS, the Executive and the Company desire to enter into this
Agreement to set forth the terms and conditions of the Executive's employment
with the Company;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:

                  1. Definitions.

                      (a) "Base Salary" shall mean the salary granted to the
Executive pursuant to Section 4.

                      (b) "Board" shall mean the Board of Directors of the
Company.

                      (c) "Cause" shall mean (i) the Executive is convicted of a
felony involving moral turpitude or any other felony (other than motor
vehicle-related) and, in the case of such other felony, the Executive is unable
to show that he (A) acted in good faith and in a manner he reasonably believed
to be in the best interests of the Company and (B) had no reasonable cause to
believe his conduct was unlawful; or (ii) the Executive engages in conduct that
constitutes willful gross neglect or willful misconduct in carrying out his
duties under this Agreement, resulting, in either case, in material harm to the
Company, unless the Executive believed in good faith that such act or nonact was
in, or was not opposed to, the best interests of the Company.

                      (d) "Committee" shall mean the Compensation and Incentives
Committee of the Board or any other committee of the Board performing similar
functions.

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                      (e) "Constructive Termination" by the Executive shall mean
termination based on the occurrence without the Executive's express written
consent of any of the following: (i) a material diminution or adverse change in
the Executive's responsibilities, duties, authorities or any reduction in title,
other than for Cause or Disability; (ii) a reduction in the Executive's Base
Salary or Target Bonus (as defined in Section 6) other than for Cause or
Disability and other than as part of an across-the-board salary reduction
generally imposed on executives of the Company; (iii) the relocation of the
Company's principal office to a location more than 35 miles from Troy, Michigan;
or (iv) the failure of the Company to obtain the assumption in writing of its
obligation to perform this Agreement by any successor to all or substantially
all of the assets of the Company on or prior to a merger, consolidation, sale or
similar transaction. The Executive shall further be required to comply with the
provisions of Section 10(d)(i) of this Agreement with respect to a Constructive
Termination.

                      (f) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under this Agreement by
reason of any physical or mental incapacity for a period of 180 consecutive
days.

                      (g) "Emergence" shall occur when a plan of reorganization
that is confirmed by the Bankruptcy Court becomes effective or the Company
otherwise emerges from Chapter 11, as a result of which the business of the
Company is maintained on an ongoing basis, whether maintained by the Company,
the debtor in possession or by an entity that has acquired all or substantially
all of the Company's or debtor in possession's assets.

                      (h) "KERP" shall mean the Company's Key Employee Retention
Plan, as in effect from time to time, any successor thereto, or such other
emergence bonus program as may be approved by the Bankruptcy Court.

                      (i) "Restructuring Date" shall mean the date on which any
Emergence occurs.

                      (j) "Severance Agreement" shall mean that certain Covenant
Not to Sue and Full and Complete Release of Liability, entered into by and
between the Company and the Executive with an effective date of November 3,
2000.

                  2. Term of Employment. Subject to Section 10, the Company
hereby employs the Executive, and the Executive hereby accepts such employment,
for the period commencing on the Effective Date and ending on April 30, 2004
(the "Term of Employment"); provided, however, that the Term of Employment shall
be automatically extended for an additional year on each anniversary of the
Effective Date thereafter, unless written notice of non-extension is provided by
either Party to the other Party at least 30 days prior to any such anniversary.

                  3. Position, Duties and Responsibilities.

                      (a) During the Term of Employment, the Executive shall be
employed and serve as the Executive Vice President, Human Resources of the
Company (or such other position

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or positions as may be agreed upon in writing by the Executive and the Company)
and be responsible for the Company's human resources functions, as directed by
the Board and/or the Chief Executive Officer ("CEO") consistent with such
position. The Executive shall report directly to the CEO. The Executive shall
have all authority commensurate with such position. The Executive shall devote
substantially all of his business time, attention and skill to the performance
of such duties and responsibilities, and shall use his best efforts to promote
the interests of the Company. However, the Executive shall be permitted to
complete reasonable transition services for his former employer. The Executive
shall not, without the prior written approval of the Board, engage in any other
business activity which is in violation of policies established from time to
time by the Company.

                      (b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving on the boards of directors
of a reasonable number of other corporations or the boards of a reasonable
number of trade associations and/or charitable organizations (subject to the
reasonable approval of the Board), (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal investments and affairs,
provided that such activities do not materially interfere with the proper
performance of his duties and responsibilities as an executive officer of the
Company.

                      (c) The Executive shall perform his services hereunder
primarily at the Company's headquarters. To that end, the Company shall provide
the Executive with office space and staff at its headquarters in Troy, Michigan
that are commensurate with his duties hereunder.

                  4. Base Salary. During the Term of Employment, the Executive
shall be paid an annualized Base Salary, payable in accordance with the regular
payroll practices of the Company, in the amount of $425,000. The Base Salary
shall be reviewed no less frequently than annually for increase in the
discretion of the Board and/or the Committee. The Base Salary, including any
increase, shall not be decreased during the Term of Employment.

                  5. Inducement Payment. The Executive shall receive from the
Company, within seven days following the approval by the Bankruptcy Court
referred to in Section 18 hereof, a lump sum cash payment equal to $425,000 (the
"Inducement Payment").

                  6. Annual Incentive Awards. During the Term of Employment, the
Executive shall be eligible for an annual target bonus ("Target Bonus") of 60%
of his then-current Base Salary under the annual incentive portion of the KERP
or, following the Restructuring Date, any other annual cash-based incentive
program of the Company, payable in any case if the performance goals thereunder
for the relevant fiscal year of the Company are met. Payment of the annual bonus
shall be made at the same time that other senior-level executives receive their
incentive awards.

                  7. Emergence Bonus; Other Long-Term Incentive Programs. The
Executive shall be entitled to receive an incentive payment with respect to the
Emergence (such payment, the "Emergence Bonus"). The amount of the Emergence
Bonus and any other terms and

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conditions applicable thereto shall be determined in connection with the process
during which the Company's plan of reorganization is developed and finalized.
Payment of the Emergence Bonus shall be made at the same time that other
senior-level executives receive their payment. Following Emergence, the
Executive shall participate in such long-term cash- and/or equity-based
incentive programs as the senior executives of the Company may participate from
time to time.

                  8. Employee Benefit Programs.

                      (a) General. During the Term of Employment, the Executive
shall be eligible to participate in all employee pension and welfare benefit
plans and programs made available generally to the Company's senior-level
executives (other than the CEO) or to its employees generally, as such plans or
programs may be in effect from time to time, including, without limitation,
pension, profit sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs and any other
employee welfare benefit plans or programs that may be sponsored by the Company
from time to time, including any plans that supplement the above-listed types of
plans or programs, whether funded or unfunded. Executive shall be enrolled in,
and such benefits shall become effective, immediately upon the Effective Date.

                      (b) Pension Benefits. The periodic pension benefits that
the Executive has been receiving prior to the Effective Date pursuant to Company
tax-qualified and non-qualified defined benefit pension plans in which Executive
had been participating prior to his previously termination of employment in
November 2000 (collectively, the "Pension Plans") shall cease as of the
Effective Date. Such payments shall resume in accordance with the terms of such
plans (adjusted as may be appropriate to reflect such earlier payments)
following the termination of the Executive's employment hereunder. The benefits
accrued by the Executive under the Pension Plans during his prior employment
with the Company shall not be affected by his re-employment with the Company
hereunder. For purposes of any Pension Plan that is a non-qualified plan, the
Executive's service credits under the Pension Plans shall be determined as if he
had remained continuously in the employ of the Company from his original date of
hire on or about September 1969 through the date of termination of his
employment hereunder. If, at the date of termination of the Executive's
employment hereunder for any reason (including a termination by reason of the
expiration of this Agreement), the Executive had not earned the so-called "90
point" pension under the Company's tax-qualified Pension Plan, the Company shall
pay to the Executive, in a cash lump sum, within ten days following such
termination, an amount equal to fifty percent (50%) of the present value of the
enhanced benefit to which Executive would have been entitled had he earned such
"90 point" pension.

                      (c) Severance Payments. Severance payments that have been
made to the Executive pursuant to the terms of the Severance Agreement shall
cease as of the Effective Date.

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                  9. Reimbursement of Business and Other Expenses: Perquisites;
Vacations.

                      (a) The Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement
and the Company shall promptly reimburse him for all reasonable business
expenses incurred in connection with carrying out the business of the Company,
subject to documentation in accordance with the Company's policy.

                      (b) During the Term of Employment, the Company shall
reimburse the Executive for reasonable personal financial (including tax)
counseling (other than legal fees) by a firm or consultant to be chosen by the
Executive, such reimbursement to be no more than the amount authorized under
Company policy in effect from time to time. The Company shall pay to or
reimburse the Executive up to $10,000 for reasonable legal fees incurred by the
Executive in connection with the negotiation of his re-hire, including the
preparation of this Agreement.

                      (c) For purposes of the calculation of benefits under the
Company's vacation policy, the Company shall credit the Executive's prior
employment with the Company (from Executive's original date of hire on or about
September 1969 through his prior termination of employment in November 2000) and
the period of his absence from November 2000 through the Effective Date.

                  10. Termination of Employment.

                      (a) Termination Due to Death. In the event the Executive's
employment is terminated due to his death, his estate or his beneficiaries as
the case may be, shall be entitled to the following:

                           (i) Base Salary through the date of death;

                           (ii) a prorated annual bonus for the year in which
         death occurs, based on the actual performance for such year, the amount
         of which prorated bonus, if any, shall be determined and paid promptly
         following the end of the year to which such bonus relates;

                           (iii) the balance of any annual or long-term cash
         incentive awards (if any) earned (but not yet paid) pursuant to the
         terms of the applicable programs;

                           (iv) any amounts earned, accrued or owing to the
         Executive but not yet paid under this Agreement; and

                           (v) other or additional benefits in accordance with
         applicable plans and programs of the Company.

                      (b) Termination Due to Disability. In the event the
Executive's employment is terminated due to his Disability, he shall be entitled
in such case to the following:

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                           (i) Base Salary through the date of termination;

                           (ii) through the Company's long-term disability plans
         or otherwise, an amount equal to 60% of the Base Salary for the period
         beginning on the date of termination through the Executive's attainment
         of age 65;

                           (iii) a prorated annual bonus for the year in which
         termination due to Disability occurs, based on the actual performance
         for such year, the amount of which prorated bonus, if any, shall be
         determined and paid promptly following the end of the year to which
         such bonus relates;

                           (iv) the balance of any annual or long-term cash
         incentive awards (if any) earned (but not yet paid) pursuant to the
         terms of the applicable programs;

                           (v) any amounts earned, accrued or owing to the
         Executive but not yet paid under this Agreement; and

                           (vi) other or additional benefits in accordance with
         applicable plans and programs of the Company.

                  In no event shall a termination of the Executive's employment
for Disability occur unless the Party terminating his employment gives written
notice to the other Party in accordance with Section 17 below.

                      (c) Termination by the Company for Cause. In the event the
Company terminates the Executive's employment for Cause, he shall be entitled
to:

                           (i) Base Salary through the date of the termination
         of his employment;

                           (ii) the balance of any annual or long-term cash
         incentive awards (if any) earned (but not yet paid) pursuant to the
         terms of the applicable programs;

                           (iii) any amounts earned, accrued or owing to the
         Executive but not yet paid under this Agreement; and

                           (iv) other or additional benefits in accordance with
         applicable plans or programs of the Company;

                           (v) a termination for Cause shall not take effect
         unless the provisions of this paragraph (v) are complied with. The
         Executive shall be given written notice by the Board of the intention
         to terminate him for Cause, such notice (A) to state in detail the
         particular act or acts or failure or failures to act that constitute
         the grounds on which the proposed termination for Cause is based

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         and (B) to be given within six months of the Board learning of such act
         or acts or failure or failures to act. The Executive shall have 10 days
         after the date that such written notice has been given to the Executive
         in which to cure such conduct, to the extent such cure is possible. If
         he fails to cure such conduct, the Executive shall then be entitled to
         a hearing before the Board. Such hearing shall be held within 15 days
         of notice to the Company by the Executive, provided he requests such
         hearing within 10 days of the written notice from the Board of the
         intention to terminate him for Cause. If, within five days following
         such hearing, the Executive is furnished written notice by the Board
         confirming that, the Board has determined, by majority vote at a
         meeting of the Board duly called and held as to which termination of
         the Executive is an agenda item, that grounds for Cause on the basis of
         the original notice exist, he shall thereupon be terminated for Cause.

                      (d) Termination Without Cause; Constructive Termination;
Notice of Non-Extension.

                           (i) A Constructive Termination shall not take effect
         unless the provisions of this paragraph 10(d)(i) are complied with. The
         Company shall be given written notice by the Executive of the intention
         to terminate his employment on account of a Constructive Termination,
         such notice (A) to state in detail the particular act or acts or
         failure or failures to act that constitute the grounds on which the
         proposed Constructive Termination is based and (B) to be given within
         six months of the Executive learning of such act or acts or failure or
         failures to act. The Company shall have 30 days after the date that
         such written notice has been given to the Company in which to cure such
         conduct, to the extent such cure is possible.

                           (ii) In the event the Executive's employment is
         terminated (1) by the Company without Cause (other than due to
         Disability or death), (2) by reason of a Constructive Termination or
         (3) upon expiration of the Term of Employment following the Company's
         having given notice of non-extension of the Term of Employment, the
         Executive shall be entitled to:

                                               (A) Base Salary through the date
                           of termination of the Executive's employment;

                                               (B) Cash severance payments as
                           set forth below:

                                               (I) if such termination occurs on
                                   or prior to April 30, 2003 and prior to the
                                   Plan Confirmation Date (as defined below),
                                   promptly but in no event later than 10 days
                                   following the effective date of such
                                   termination, a cash lump sum payment equal to
                                   (A) minus (B), where (A) is equal to the sum
                                   of (x) 300% of the Executive's Base

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                                   Salary as in effect immediately prior to the
                                   effective date of such termination, plus (y)
                                   the Executive's Target Bonus as in effect
                                   with respect to the year in which such
                                   termination occurs, and where (B) equals
                                   $250,000;

                                               (II) if such termination (other
                                   than a termination under clause (3) above)
                                   occurs following April 30, 2003 but prior to
                                   the date (for purposes of this Section 10(d),
                                   the "Plan Confirmation Date") on which a
                                   confirmed plan of reorganization (other than
                                   a Plan of Liquidation (as defined below)) is
                                   approved by the Bankruptcy Court (as defined
                                   in Section 18), then (1) promptly, but in no
                                   event later than 10 days, following the
                                   effective date of such termination, a cash
                                   lump sum payment equal to the sum of (x) the
                                   Executive's Base Salary as in effect
                                   immediately prior to the effective date of
                                   such termination plus (y) the Executive's
                                   Target Bonus as in effect with respect to the
                                   year in which such termination occurs and (2)
                                   promptly, but in no event later than 10 days,
                                   following the Plan Confirmation Date, an
                                   amount equal to 200% of the Executive's Base
                                   Salary as in effect immediately prior to the
                                   effective date of such termination. For
                                   purposes of this Section 10(d)(ii), a "Plan
                                   of Liquidation" means a chapter 11 plan (A)
                                   under which less than 50% of the Debtors'
                                   operating business continues as a going
                                   concern, and (B) which does not result in a
                                   discharge of the Debtors under 11 U.S.C. ss.
                                   1141; provided, that a "Plan of Liquidation"
                                   shall not include any chapter 11 plan that
                                   results in a discharge and more than 50% of
                                   the Debtors' operating business continuing as
                                   a going concern, either through a stand-alone
                                   chapter 11 plan, one or more sales of assets,
                                   an investment from a third party, or any
                                   combination of the foregoing;

                                               (III) notwithstanding clauses
                                   (B)(I) and (B)(II) of this Section 10(d)(ii),
                                   if such termination (other than a termination
                                   under clause (3) above) occurs following the
                                   Plan Confirmation Date (or in contemplation
                                   of the Plan Confirmation Date in order to
                                   reduce the amounts payable hereunder),
                                   promptly but in no event later than 10 days
                                   following the effective date of such
                                   termination, a cash lump sum payment equal to
                                   the sum of (x) 300% of the Executive's Base
                                   Salary as in effect immediately prior to the
                                   effective date of such termination, plus (y)
                                   the

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                                   Executive's Target Bonus as in effect with
                                   respect to the year in which such termination
                                   occurs; and

                                               (IV) if the Executive's
                                   employment is terminated under clause (3)
                                   above, promptly but in no event later than 10
                                   days following the effective date of such
                                   termination, a cash lump sum payment equal to
                                   200% of the Executive's Base Salary as in
                                   effect immediately prior to the effective
                                   date of such termination;

                                               (C) a prorated annual bonus for
                           the year in which such termination occurs, based on
                           the actual performance for such year, the amount of
                           which prorated bonus, if any, shall be determined and
                           paid promptly following the end of the year to which
                           such bonus relates;

                                               (D) the balance of any annual or
                           long-term cash incentive awards earned (but not yet
                           paid) pursuant to the terms of the applicable
                           programs;

                                               (E) any amounts earned, accrued
                           or owing to the Executive but not yet paid under this
                           Agreement;

                                               (F) continued participation to
                           the extent provided in medical, dental,
                           hospitalization and life insurance coverage and in
                           all other employee welfare plans and programs in
                           which he was participating on the date of termination
                           for a period of two years following the effective
                           date of his termination hereunder; provided, that the
                           Company's obligations under this clause (F) shall be
                           reduced to the extent that the Executive receives
                           similar coverage and benefits under the plans and
                           programs of a subsequent employer: and provided,
                           further, that (x) if the Executive is precluded from
                           continuing his participation in any employee benefit
                           plan or program as provided in this clause, he shall
                           be provided with the after-tax economic equivalent of
                           the benefits provided under the plan or program in
                           which he is unable to participate for the period
                           specified in this clause (F) of this Section 10(d),
                           (y) the economic equivalent of any benefit foregone
                           shall be deemed to be the lowest cost that would be
                           incurred by the Executive in obtaining such benefit
                           himself on an individual basis, and (z) payment of
                           such after-tax economic equivalent shall be made
                           quarterly in advance; and

                                               (G) other or additional benefits
                           in accordance with applicable plans and programs of
                           the Company.

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                      (e) Voluntary Termination. In the event of a termination
of employment by the Executive on his own initiative, other than a termination
due to death or Disability or a Constructive Termination, the Executive shall
have the same entitlements as provided in Section 10(c) above for a termination
for Cause. A voluntary termination under this Section 10(e) shall be effective
upon 30 days' prior written notice to the Company and shall not be deemed a
breach of this Agreement.

                      (f) No Mitigation: No Offset. In the event of any
termination of employment under this Section 10, the Executive shall be under no
obligation to seek other employment and there shall be no offset against amounts
due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain except as
specifically provided in this Section 10.

                      (g) Nature of Payments. Any amounts due under this Section
10 are in the nature of severance payments considered to be reasonable by the
Company. Failure to qualify for any such payment is not in the nature of a
penalty.

                      (h) Exclusivity of Severance Payments. Upon termination of
the Executive's employment during the Term of Employment, he shall not be
entitled to any payments or benefits from the Company, other than as provided
herein, or any payments by the Company on account of any claim by him of
wrongful termination, including claims under any federal, state or local human
and civil rights or labor laws, other than the payments and benefits provided
hereunder, except for any benefits which may be due the Executive in normal
course under any employee benefit plan of the Company which provides benefits
after termination of employment.

                      (i) Non-competition. The Executive agrees that any right
to receive any payments and/or benefits hereunder, other than Base Salary and/or
any pension, and/or any other compensation already earned by the Executive and
required to be paid by state law other than under this Agreement, will cease and
be immediately forfeited if the Executive breaches the provisions of Section 11
below. The Executive agrees that any violation of the provisions of Section 11
below will result in the immediate forfeiture of any rights to exercise or
receive stock options or restricted stock. The foregoing is in addition to the
rights of the Company under Section 11.

                      (j) Release of Claims. As a condition of the Executive's
entitlement to the payment and/or delivery of any of the severance rights and
benefits provided in this Section 11 (other than in the event of the Executive's
death), the Executive shall be required to execute and honor a release of claims
in the form reasonably requested by the Company.

                      (k) Termination at Will. Notwithstanding anything herein
to the contrary, the Executive's employment with the Company is terminable at
will with or without Cause; provided, however, that a termination of the
Executive's employment shall be governed in accordance with the terms hereof.

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                  11. Restrictive Covenants.

                      (a) Non-Compete. By and in consideration of the
substantial compensation and benefits provided by the Company hereunder, and
further in consideration of the Executive's exposure to the proprietary
information of the Company, the Executive agrees that he shall not, during the
Term of Employment and for a period ending 24 months following termination of
employment for any reason, directly or indirectly own, manage, operate, join,
control, be employed by, or participate in the ownership, management, operation
or control of or be connected in any manner, including, but not limited to,
holding the positions of officer, director, shareholder, consultant, independent
contractor, employee, partner, or investor, with any Competing Enterprise;
provided, however, that the Executive may invest in stocks, bonds or other
securities of any corporation or other entity (but without participating in the
business thereof) if such stocks, bonds, or other securities are listed for
trading on a national securities exchange or NASDAQ-National Market and the
Executive's investment does not exceed 1% of the issued and outstanding shares
of capital stock, or in the case of bonds or other securities, 1% of the
aggregate principal amount thereof issued and outstanding. For purposes of this
Section 11, "Competing Enterprise" shall mean any and/or all of the following:
(i) Albertson's Inc., American Retail Group, Inc., Carrefour se, Fleming
Companies, Inc., Kohl's Corporation, The May Department Store Company, J.C.
Penny Company, Royal Ahold, Safeway, Inc., Sears, Roebuck and Co., ShopKo
Stores, Inc., Supervalue Inc., Target Corp., The Home Depot, Inc., Toys R Us
Inc., TJX Companies, Inc., and Wal-Mart Stores, Inc., and (ii) an entity or
enterprise whose business is in competition with the business of the Company
which operates retail stores selling general merchandise and/or food if at least
10 of such stores have an area of 50,000 or more square feet and at least 10 of
such stores with 50,000 or more square feet are within 25 miles of any one or
more Kmart stores.

                      (b) Nonsolicitation. By and in consideration of the
substantial compensation and benefits to be provided by the Company hereunder,
and further in consideration of the Executive's exposure to the proprietary
information of the Company, the Executive agrees that he shall not, during the
Term of Employment and for a period of 24 months following termination of
employment for any reason, without the express prior written approval of the
Company, (i) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint venturer,
investor, lessor, supplier, agent, representative or any other person which has
a business relationship with the Company, or had a business relationship with
the Company within the 24-month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or business
relationship with the Company, or (ii) directly or indirectly, employ or seek to
employ (including through any employer of the Executive) or cause any Competing
Enterprise to employ or seek to employ any person or agent who is then (or was
at any time within six months prior to the date the Executive or the Competing
Enterprise employs or seeks to employ such person) employed or retained by the
Company.

                      (c) Confidential Information. During the Term of
Employment and at all times thereafter, Executive agrees that he will not
divulge to anyone or make use of any

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Confidential Information except in the performance of his duties as an executive
of the Company or when legally required to do so (in which case the Executive
shall give prompt written notice to the Company in order to allow the Company
the opportunity to object or otherwise resist such disclosure). "Confidential
Information" shall mean any knowledge or information of any type relating to the
business of the Company or any of its subsidiaries or affiliates, as well as any
information obtained from customers, clients or other third parties, including,
without limitation, all types of trade secrets and confidential commercial
information. The Executive agrees that he will return to the Company immediately
upon termination, any and all documents, records or reports (including
electronic information) that contain any Confidential Information. Confidential
Information shall not include information (i) that is or becomes part of the
public domain, other than through the breach of this Agreement by the Executive
or (ii) regarding the Company's business or industry properly acquired by the
Executive in the course of his career as an executive in the Company's industry
and independent of the Executive's employment by the Company. The Executive
acknowledges that the Company has expended, and will continue to expend,
significant amounts of time, effort and money in the procurement of its
Confidential Information, that the Company has taken all reasonable steps in
protecting the secrecy of the Confidential Information, that said Confidential
Information is of critical importance to the Company.

                      (d) Non-Disparagement. The Parties agree that, during the
term of employment and thereafter (including following the Executive's
termination of employment for any reason), neither Party will not make
statements or representations, or otherwise communicate, directly or indirectly,
in writing, orally, or otherwise, or take any action which may, directly or
indirectly, disparage the Company or any subsidiary or affiliate or their
respective officers, directors, employees, advisors, businesses or reputations.
Notwithstanding the foregoing, nothing in this Agreement shall preclude either
the Executive or the Company from making truthful statements or disclosures that
are required by applicable law, regulation or legal process.

                      (e) Cooperation. The Executive agrees to cooperate with
the Company, during the term of employment and thereafter (including following
the Executive's termination of employment for any reason), by being reasonably
available to testify on behalf of the Company or any subsidiary or affiliate in
any action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, and to assist the Company, or any subsidiary or affiliate, in any
such action, suit or proceeding, by providing information and meeting and
consulting with the Board or its representatives or counsel, or representatives
or counsel to the Company, or any subsidiary or affiliate, as reasonably
requested. The Company agrees to reimburse the Executive for all expenses
actually incurred in connection with his provision of testimony or assistance
(including attorneys' fees incurred in connection therewith) upon submission of
appropriate documentation to the Company.

                      (f) Remedies. The Executive agrees that any breach of the
terms of this Section 11 would result in irreparable injury and damage to the
Company for which the Company would have no adequate remedy at law; the
Executive therefore also agrees that in the event of said breach or any
reasonable threat of breach, the Company shall be entitled to an

                                       12
<PAGE>

immediate injunction and restraining order to prevent such breach and/or
threatened breach and/or continued breach by the Executive and/or any and all
persons and/or entities acting for and/or with the Executive. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including, but not limited
to, remedies available under this Agreement and the recovery of damages. The
Executive and the Company further agree that the provisions of the covenant not
to compete are reasonable. Should a court or arbitrator determine, however, that
any provision of the covenant not to compete is unreasonable, either in period
of time, geographical area, or otherwise, the parties hereto agree that the
covenant shall be interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable.

                      (g) Continuing Operation. The provisions of this Section
11 shall survive any termination of this Agreement and the Term of Employment,
and the existence of any claim or cause of action by the Executive against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants and agreements of
this Section.

                      (h) Notice to Employer. The Executive agrees that as long
as the provisions of Section 11(a) or 11(b) continue to bind the Executive, he
will provide written notice of the terms and provisions of this Section 11 to
any prospective employer.

                  12. Indemnification.

                      (a) The Company agrees that if the Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director or employee of the Company or is
or was serving at the request of the Company as a director, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is the Executive's alleged action in an official
capacity while serving as a director, employee or agent, the Executive shall be
indemnified and held harmless by the Company to the fullest extent legally
permitted or authorized by the Company's certificate of incorporation or bylaws
or resolutions of the Company's Board of Directors or, if greater, by the laws
of the State of Michigan against all cost, expense, liability and loss
(including, without limitation, attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if he has ceased to be a
director, employee or agent of the Company or other entity and shall inure to
the benefit of the Executive's heirs, executors and administrators. The Company
shall advance to the Executive all reasonable costs and expenses incurred by him
in connection with a Proceeding within 20 days after receipt by the Company of a
written request for such advance. Such request shall include an undertaking by
the Executive to repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such costs and
expenses.

                                       13
<PAGE>

                      (b) Neither the failure of the Company (including its
board of directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any Proceeding concerning payment of
amounts claimed by the Executive under Section 12(a) above that indemnification
of the Executive is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its board of directors,
independent legal counsel or stockholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption that the Executive
has not met the applicable standard of conduct.

                  The Company agrees to continue and/or maintain a directors and
officers' liability insurance policy covering the Executive to the same extent
the Company provides such coverage for its other executive officers and
directors and for not less than the amounts in effect for its other executive
officers and directors.

                  13. Assignability; Binding Nature. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors, heirs (in the case of the Executive) and assigns. No rights or
obligations of the Company under this Agreement may be assigned or transferred
by the Company except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which the Company is not
the continuing entity, or the sale or liquidation of all or substantially all of
the assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company further agrees that, in the event of a sale or reorganization
transaction as described in the preceding sentence, it shall take whatever
action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of the Company hereunder. No
rights or obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than his rights to compensation and benefits,
which may be transferred only by will or operation of law, except as otherwise
provided herein.

                  14. Miscellaneous Provisions.

                      (a) This Agreement contains the final and entire
understanding and agreement between the Parties concerning the subject matter
hereof and supersedes all prior representations, agreements, discussions,
negotiations and undertakings, whether written or oral, between the Parties with
respect thereto (including but not limited to the Severance Agreement);
provided, however, that this Agreement shall not supersede any separate written
commitments by the Company with respect to indemnification.

                      (b) No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by the Executive and an
authorized officer of the Company. No waiver by either Party of any breach by
the other Party of any condition or provision contained in this Agreement to be
performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent

                                       14
<PAGE>

time. Any waiver must be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.

                      (c) In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.

                      (d) The respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and obligations.

                      (e) The Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
the Executive's death by giving the Company written notice thereof. In the event
of the Executive's death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where appropriate,
to refer to his beneficiary, estate or other legal representative.

                      (f) All amounts required to be paid by the Company shall
be subject to reduction in order to comply with applicable Federal, state and
local tax withholding requirements, except as otherwise provided herein.

                      (g) The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.

                      (h) This Agreement may be executed in two or more
counterparts.

                  15. Governing Law/Jurisdiction. This Agreement shall be
governed by and construed and interpreted in accordance with the laws of
Michigan without reference to principles of conflict of laws. Subject to Section
16, the Company and the Executive hereby consent to the jurisdiction of any or
all of the following courts for purposes of resolving any dispute under this
Agreement: (i) the United States District Court of Detroit, Michigan or (ii) the
State of Michigan Courts of Oakland County, Michigan. The Company and the
Executive further agree that any service of process or notice requirements in
any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied. The Company and the Executive hereby
waive, to the fullest extent permitted by applicable law, any objection which it
or the Executive may now or hereafter have to such jurisdiction and any defense
of inconvenient forum.

                  16. Resolution of Disputes. Any disputes arising under or in
connection with this Agreement shall be resolved by binding arbitration, to be
held in Detroit, Michigan in accordance with the rules and procedures of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction

                                       15
<PAGE>

thereof. All costs and expenses of any arbitration or court proceeding
(including fees and disbursements of counsel) shall be borne by the respective
Party incurring such costs and expenses, but the Company shall reimburse the
Executive for such reasonable costs and expenses in the event he substantially
prevails in such arbitration or court proceeding. Notwithstanding the foregoing,
the Company shall be entitled to seek equitable relief pursuant to Section 11(f)
hereof without otherwise waiving the right to exclusive arbitration of all other
disputes.

                  17. Notices. Any notice given to a Party shall be in writing
and shall be deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt requested, duly
addressed to the Party concerned at the address indicated below or to such
changed address as such Party may subsequently give such notice of:

                  If to the Company:        Kmart Corporation
                                            3100 West Big Beaver Road
                                            Troy, MI  48084-3163
                                            Attention:  General Counsel

                  If to the Executive:      Michael T. Macik
                                            Executive Vice President, Human
                                                Resources
                                            c/o Kmart Corporation
                                            3100 West Big Beaver Road
                                            Troy, MI  48084-3163

                  With a copy to:           Joseph J. DeVito, Esq.
                                            Butzel Long
                                            100 Bloomfield Hills Parkway,
                                            Second Floor
                                            Bloomfield Hills, MI  48304

                  18. Approval of Agreement. Notwithstanding anything in this
Agreement to the contrary, the effectiveness of this Agreement is subject to the
approval of the United States Bankruptcy Court for the Northern District of
Illinois (the "Bankruptcy Court"). The Company shall use its reasonable best
efforts to seek Bankruptcy Court approval of this Agreement and to obtain a
Bankruptcy Court order approving this Agreement as soon as practicable following
the execution of this Agreement, such order and the supporting motion or motions
to be in form and substance reasonably satisfactory to the Executive. If this
Agreement is not approved by the Bankruptcy Court, the provisions of this
Agreement shall be null and void.

                                       16
<PAGE>

                  IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.

                                     KMART CORPORATION

                                     By: ____________________________
                                     Title:

                                     ________________________________
                                              MICHAEL T. MACIK

                                       17<PAGE>
                                                                            10VV

                               JA&A SERVICES, LLC
                                2000 Town Center
                                   Suite 2400
                              Southfield, MI 48075

March 10, 2002

Mr. James Adamson
Chairman and CEO
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan  48084

Re: Interim Management and Restructuring Services

Dear Mr. Adamson:

This letter outlines the understanding between JA&A Services, LLC ("JAS") and
Kmart Corporation (the "Company") for the engagement of JAS to provide certain
temporary employees to the Company to assist it in its restructuring as
described below. Generally, the engagement of JAS, including any JAS employees
who serve in Executive Officer positions, shall be under the approval of the
Board of Directors of the Company and the direct supervision of you as Chairman
and CEO.

JAS will provide the individuals set forth on Exhibit A, herein referred to as
the temporary employees ("Temporary Employees"), subject to the terms and
conditions of this letter, with the titles, pay rates, and other descriptions
set forth therein.

Albert A. Koch will serve as the Company's Chief Financial Officer reporting to
the Company's Chairman and Chief Executive Officer. Additionally, Ted Stenger
will serve as the Company's Treasurer and will report to Al. Al and Ted will
work collaboratively with the senior management team, the Board of Directors and
other case professionals in assisting the Company in evaluating and implementing
strategic and tactical options through the restructuring process. Al and Ted's
roles will include the following:

-     Managing the Company's financial and treasury functions.

-     Providing leadership to the financial function including, without
      limitation, assisting the Company in (i) strengthening the core
      competencies in the finance organization, particularly cash management,
      planning, general accounting and financial reporting information
      management and (ii) formulation and negotiation with respect to a plan of
      reorganization.

<PAGE>

Mr. James Adamson
March 13, 2002
Page 2

-     Assisting the Company's Chief Restructuring Officer, as appropriate, in
      overseeing development of an operating business plan to be used in
      managing the Company for the current year as well as for future years.

-     Assisting in overseeing and driving financial performance in conformity
      with the Company's business plan.

-     Supervising the preparation of regular reports required by the Bankruptcy
      Court or which are customarily issued by the Company's Chief Financial
      Officer as well as providing assistance in such areas as testimony before
      the Bankruptcy Court on matters that are within our areas of expertise.

-     Assisting with such other matters as may be requested that fall within
      our expertise.

Other Temporary Employees will include Maggie L. Anderson, Laurence E. Leonard
and Thomas A. Morrow with responsibility for filling needed roles in assisting
Al and Ted with fulfilling the aforementioned engagement tasks. We will keep you
informed as to our staffing and will not add additional Temporary Employees to
the assignment without first consulting with you to obtain your concurrence that
such additional resources are required and do not duplicate the activities of
other employees or professionals. Moreover, we will attempt to utilize Company
personnel to fulfill such roles and will take such steps as may be necessary to
avoid duplication with the Company's other professionals. Furthermore, we will
keep you informed as to the areas of responsibility being filled by all the
Temporary Employees and will adjust the staffing level upwards or downwards as
you direct.

JAS shall be compensated for its services under this agreement at the rates set
forth on Exhibit A. The Temporary Employees expected to be provided as of the
date of this letter along with the nature of their commitment to the Company is
set forth on Exhibit A, unless JAS and the Company agree to modify the terms of
this agreement.

We commenced this engagement on March 4, 2002 with the understanding that the
Company will promptly seek to have us retained by the bankruptcy court nunc pro
tunc to March 4, 2002.

Other JAS professionals at various levels may assist the Temporary Employees, as
the tasks require, and would also become Temporary Employees. For purposes of
monthly billings, our fees will be based on the hours charged at our hourly
rates, which are:

                  Principals                              $520 - $640
                  Senior Associates                       $400 - $500

<PAGE>

Mr. James Adamson
March 13, 2002
Page 3

                  Associates                              $285 - $385
                  Accountants and Consultants             $210 - $280
                  Analysts                                $125 - $185

We review and revise our billing rates effective January 1 of each year.

In addition to the fees set forth above, the Company shall pay directly or
reimburse JA&A upon receipt of periodic billings, for all reasonable
out-of-pocket expenses incurred in connection with this assignment such as
travel, lodging, postage, telephone and facsimile charges.

JAS will be compensated in accordance with the above rates by filing a report of
compensation with the Court, with service to the Debtors, the United States
Trustee, and the Official Unsecured Creditors' Committee. If no objection is
filed to the report of compensation within 20 days, the Debtors will be
authorized to pay the amount incurred by JAS for services of the Temporary
Employees in the ordinary course of its business. If an objection is filed, a
hearing and order of the Court will be necessary to authorize compensation.

In addition to the hourly fees and expenses, the Company agrees to pay JAS an
Annual Performance Fee equal to the following:

A)     Actual EBITDA for each year multiplied by .75% will be the Base Amount.

B)     The Base Amount will be adjusted for the EBITDA performance levels of
       Threshold Amount, Target Amount, and Stretch Amount as defined in the
       company's Corporate Annual Performance Plan. The Annual Performance Fee
       will be equal to the Base Amount multiplied by 50% for achieving the
       Threshold Amount EBITDA performance increasing ratably to 150% for
       achieving or exceeding the Stretch Amount.

C)     The Annual Performance Fee will be multiplied by a fraction, the
       numerator of which is the number of months in the fiscal year that JAS
       serves the Company and the denominator of which is 12 to calculate the
       fee earned.

We will require a retainer of $500,000 to be applied against the time charges
and expenses specific to the engagement. We will submit monthly invoices for
services rendered and expenses incurred as described above, and we will offset
such invoices against the retainer. Payment will be due upon receipt of the
invoices to replenish the retainer to the agreed upon amount. Any unearned
portion of the retainer will be returned to you at the termination of the
engagement.

The parties intend that an independent contractor relationship will be created
by this agreement. As an independent contractor, JAS will have complete and
exclusive charge of the management and

<PAGE>

Mr. James Adamson
March 13, 2002
Page 4

operation of its business, including hiring and paying the wages and other
compensation of all its employees and agents, and paying all bills, expenses and
other charges incurred or payable with respect to the operation of its business.
Of course, as an independent contractor, neither the Temporary Employees nor JAS
will be entitled to receive from the Company any vacation pay, sick leave,
retirement, pension, or social security benefits, workers' compensation,
disability, unemployment insurance benefits, or any other employee benefits. JAS
will be responsible for all employment, withholding, income and other taxes
incurred in connection with the operation and conduct of its business. Temporary
Employees will not be considered employees of the Company except for purposes of
this agreement.

JAS agrees to keep confidential all information obtained from the Company, and
neither JAS nor the Temporary Employees will disclose to any other person or
entity, or use for any purpose other than specified herein, any information
pertaining to the Company which is either non-public, confidential, or
proprietary in nature ("Information") which it obtains or is given access to
during the performance of the services provided hereunder. The foregoing is not
intended to nor shall be construed as prohibiting JAS or the Temporary Employees
from disclosure pursuant to a valid subpoena or court order, but neither JAS nor
such Temporary Employees shall encourage, suggest, invite or request, or assist
in securing, any such subpoena or court order, and the Temporary Employees shall
immediately give notice of any such subpoena or court order by fax transmission
to the Company. Furthermore, JAS and the Temporary Employees may make reasonable
disclosures of Information to third parties in connection with their performance
of their obligations and assignments hereunder. In addition, JAS will have the
right to disclose to others in the normal course of business their involvement
with the Company.

Information includes data, plans, reports, schedules, drawings, accounts,
records, calculations, specifications, flow sheets, computer programs, source or
object codes, results, models, or any work product relating to the business of
the Company, its subsidiaries, distributors, affiliates, vendors, customers,
employees, contractors and consultants.

The Company acknowledges that all information (written or oral) generated by the
Temporary Employees in connection with their engagement is intended solely for
the benefit and use of the Company (limited to its management, including its
Board of Directors) in considering the transactions to which it relates. The
Company agrees that no such information shall be used for any other purpose or
reproduced, disseminated, quoted or referred to with attribution to JAS at any
time in any manner or for any purpose other than accomplishing the tasks
referred to herein, without JAS's prior approval (which shall not be
unreasonably withheld) except as required by law. This agreement will survive
the termination of the engagement.

The Company acknowledges that it is hiring the Temporary Employees purely to
assist the Company and its Board of Directors in the management and
restructuring of the Company. This engagement shall not constitute an audit,
review or compilation, or any other type of financial

<PAGE>
Mr. James Adamson
March 13, 2002
Page 5

statement reporting or consulting engagement that is subject to the rules of the
AICPA, the SSCS, or other such state and national professional bodies.

JAS employees serving as officers of the Company will be entitled to the benefit
of the indemnities provided by the Company to its officers and directors,
whether under the Company's by-laws, certificates of incorporation, by contract
or otherwise. In the event that other JAS employees become officers of the
Company, such individuals will be entitled to the same benefit.

The Company agrees that it will use its best efforts to specifically include and
cover JAS employees serving as officers of the Company under the Company's
policy for directors' and officers' insurance. In the event that the Company is
unable to include JAS employees serving as officers of the Company under the
Company's policy or does not have first dollar coverage as outlined in the
preceding paragraph in effect for at least $10 million, it is agreed that JAS
will attempt to purchase a separate directors' and officers' policy that will
cover JAS employees serving as officers of the Company only and that the cost of
same shall be invoiced to the Company as an out-of-pocket cash expense. If JAS
is unable to purchase such directors' and officers' insurance then we reserve
the right to terminate this agreement. In the event that other Temporary
Employees become officers of the Company such individuals will be entitled to
the same benefit. The obligations of the parties as reflected herein shall
survive the termination of the engagement.

JAS's engagement to provide temporary employees hereunder may be terminated at
any time by written notice by one party to the other; provided, however, that
notwithstanding such termination JAS will be entitled to any fees and expenses
due under the provisions of the agreement, including performance fees. If at any
time prior to the earlier of (i) the second anniversary of this engagement
letter or (ii) confirmation of a plan of reorganization, a new Chief Executive
Officer is employed and there is a material change in the responsibilities or
duties of Mr. Koch or Mr. Stenger without the consent of JAS, then the
engagement contemplated by this letter shall terminate and a fee of $2,000,000
will be due. Such payment obligation shall inure to the benefit of any successor
or assignee of JAS. The obligations of the parties as reflected herein shall
survive the termination of the engagement.

This letter agreement is governed by and construed in accordance with the laws
of the State of Michigan with respect to contracts made and to be performed
entirely therein and without regard to choice of law or principles thereof.

If we have any dispute arising between us, including any dispute with respect to
this agreement, its interpretation, performance or breach, and are unable to
agree on a mutually satisfactory resolution with 30 days, either party may
require the matter to be settled by binding arbitration. We shall attempt for
two weeks to agree on a single arbitrator. If that effort shall fail, each party
shall appoint one arbitrator. The two arbitrators so chosen shall attempt for
two weeks to select a third. If they are unable to agree, the American
Arbitration Association in New York City shall choose the third.

<PAGE>

Mr. James Adamson
March 13, 2002
Page 6

The arbitration shall occur using the rules and procedures of the American
Arbitration Association. The decision of the arbitrator(s) shall be final,
binding and non-appealable. However, JAS agrees that this arbitration provision
shall apply only to the extent that the United States Bankruptcy Court, or the
United States District Court if the reference is withdrawn, does not retain
jurisdiction over a controversy or claim.

WE RECENTLY RECEIVED A COMPREHENSIVE LIST OF INTERESTED PARTIES IN THIS CASE
AND, HAVE NOT COMPLETED CHECKING FOR CONNECTIONS OR RELATIONSHIPS THAT SHOULD BE
DISCLOSED HEREIN. WE WILL PROVIDE THE APPROPRIATE DISCLOSURES WITHIN 10 DAYS.

We confirm that JAS, its employees, and its affiliates(1) do not have any
financial interest or business connection with the Company other than as
contemplated by this agreement, and we know of no fact or situation that would
represent a conflict of interest for us with regard to the Company. While we are
not currently aware of any other relationships that connect us to any party in
interest, because JAS and its affiliates serve clients on a national basis in
numerous cases, both in and out of court, it is possible that JAS or its
affiliates may have rendered services to, or have business associations with,
other entities which had, or have, relationships with the Company, including
creditors of the Company. JAS and affiliates have not, and will not perform
services for, or have business connections with, any of these aforementioned
entities in this matter involving the Company.

The Company agrees to promptly notify JAS if it extends (or solicits the
possible interest in receiving) an offer of employment to an employee of JAS and
agrees that it will pay JAS a cash fee, upon hiring, equal to 50% of the
aggregate first year's annualized compensation, including any other
compensation, to be paid to any person working for the Company on behalf of JAS
that the Company or any of its subsidiaries or affiliates hires at any time up
to two years subsequent to the date of the final invoice rendered by JAS with
respect to this engagement. This agreement does not prohibit the Company from
making general solicitations for employment or from soliciting for employment
any individuals who have ceased to be employees or agents of JAS prior to such
solicitation.

If any portion of the letter agreement shall be determined to be invalid or
unenforceable, we each agree that the remainder shall be valid and enforceable
to the maximum extent possible. All of the above contains the entire
understanding of the parties relating to the services to be rendered by JAS and
may not be amended or modified in any respect except in writing signed by the
parties. JAS will not be responsible for performing any services not
specifically described in this letter or in a subsequent writing signed by the
parties.

--------
(1) JAS is a company that provides temporary employees. Affiliates of JAS
include Jay Alix & Associates, a financial advisory and consulting firm, The
System Advisory Group, providing information technology services, Partnership
Services, LLC, a company that provides temporary employees, and the Questor
funds, which are private equity funds that invest in special situations and
under-performing companies.

<PAGE>

Mr. James Adamson
March 13, 2002
Page 7

All notices required or permitted to be delivered under this letter agreement
shall be sent, if to us, to the address set forth at the head of this letter, to
the attention of Mr. Melvin R. Christiansen, and if to you, to the address for
you set forth above, to the attention of your General Counsel, or to such other
name or address as may be given in writing to the other party. All notices under
the agreement shall be sufficient if delivered by facsimile or overnight mail.
Any notice shall be deemed to be given only upon actual receipt.

If these terms meet with your approval, please sign and return the enclosed copy
of this proposal and wire transfer the amount to establish the retainer.

We look forward to working with you.

Sincerely yours,

JA&A SERVICES, LLC

A. A. Koch
Chairman

Acknowledged and Agreed to:

KMART CORPORATION

By:
        -------------------------------------------------------

Its:
        -------------------------------------------------------

Dated:
        -------------------------------------------------------

<PAGE>

                                JA&A SERVICES LLC
                         EMPLOYMENT BY KMART CORPORATION

                                    EXHIBIT A

                               TEMPORARY EMPLOYEES
                  INDIVIDUALS WITH EXECUTIVE OFFICER POSITIONS

<TABLE>
<CAPTION>
----------------------------- ------------------------------- ------------------- -----------------------------
            NAME                       DESCRIPTION               HOURLY RATE               COMMITMENT
                                                                                       FULL(1) OR PART TIME
----------------------------- ------------------------------- ------------------- -----------------------------
<S>                           <C>                             <C>                 <C>
Albert A. Koch                Chief Financial Officer                $640             Approx. 4 days/week
Ted Stenger                   Treasurer                              $620             Approx. 4 days/week
----------------------------- ------------------------------- ------------------- -----------------------------
</TABLE>

                         ADDITIONAL TEMPORARY EMPLOYEES

<TABLE>
<CAPTION>
----------------------------- ------------------------------- ------------------- -----------------------------
            NAME                       DESCRIPTION               HOURLY RATE               COMMITMENT
                                                                                       FULL(1) OR PART TIME
----------------------------- ------------------------------- ------------------- -----------------------------
<S>                           <C>                             <C>                 <C>
Maggie L. Anderson                         TBD                       $420                  Full Time
----------------------------- ------------------------------- ------------------- -----------------------------
Laurence E. Leonard                        TBD                       $400                  Full Time
----------------------------- ------------------------------- ------------------- -----------------------------
Thomas A. Morrow                           TBD                       $450                  Full Time
----------------------------- ------------------------------- ------------------- -----------------------------
</TABLE>

(1) Full time is defined as substantially full time.

<PAGE>

                               JA&A SERVICES, LLC
                                2000 Town Center
                                   Suite 2400
                              Southfield, MI 48075

April 1, 2002

Mr. James Adamson
Chairman and CEO
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084

Re: Interim Management and Restructuring Services - Supplement

Dear Mr. Adamson:

The purpose of this letter is to supplement our letter dated March 10, 2002
("Agreement") between JA&A Services, LLC ("JAS") and Kmart Corporation (the
"Debtors").

In the Agreement, we stated the following: "We recently received a
comprehensive list of interested parties in this case and have not completed
checking for connections or relationships that should be disclosed herein. We
will provide the appropriate disclosures within 10 days."

With the information we received from the Debtors, we have checked our database
for connections or relationships with any party in interest with regard to the
Debtors. The results of our search are presented below. While we know of no
fact or situation which would represent a conflict of interest for JAS and its
affiliates(1) with regard to the Debtors, we wish to disclose the following:

-  Questor Partners Fund, L.P. ("QPF") and Questor Partners Fund II, L.P. ("QPF
   II"), a $300 million fund and an $865 million fund, respectively, are private
   equity funds that invest in special situations and under-performing
   companies. Neither QPF not QPF II will make an investment in the Debtors for
   at least three years after the date that JA&A's engagement terminates.

-  Mr. Jay Alix, a principal in Jay Alix & Associates, is also the President
   and CEO of Questor Management Company, the entity that manages QPF and QPF
   II.

-------------
(1)JAS is a company that provides temporary employees. Affiliates of JAS
include Jay Alix & Associates, a financial advisory and consulting firm, The
System Advisory Group, providing information technology services, Partnership
Services, LLC, a company that provides temporary employees, and the Questor
funds, which are private equity funds that invest in special situations and
under-performing companies.

<PAGE>

Mr. James Adamson
April 1, 2002
Page 2

-    Questor and JA&A are separate companies. JA&A, pursuant to contract,
     performs certain accounting and back-room services for Questor. From time
     to time, Questor hires JA&A as a contractor to advise it regarding a
     potential acquisition, and occasionally investee companies of QPF and
     QPF II hire JA&A.

-    Mr. Jay Alix owns interests in the general partners of QPF and QPF II. Mr.
     Albert Koch and Mr. Michael Grindfors, Chairman and President of JA&A,
     respectively, each own interests in the general partner of QPF II.

-    Substantially all of the other principals of JA&A own limited partnership
     interests in one or more of the following entities: Questor Side-by-Side
     Partners, L.P., Questor Side-by-Side Partners II, L.P., and Questor
     Side-by-Side Partners II 3(c)(1), L.P. JA&A principals, except for Mr.
     Alix and Mr. Koch, are passive investors and have no voice in approving
     Questor's investments.

-    Some of the limited partners of QPF and QPF II are affiliates of financial
     institutions that are also lenders to companies that may have retained
     JA&A. The affiliates of such financial institutions are passive investors
     in QPF and QPF II and have no voice in approving Questor's investments.
     Where such situations occur, the lending relationship and investment in QPF
     and/or QPF II is detailed in JA&A's disclosures.

-    QPF, QPF II, Questor Side-by-Side Partners, L.P., Questor Side-by-Side
     Partners II, L.P., and Questor Side-by-Side Partners II 3(c)(1), L.P. are
     all related entities. The Side-by-Side funds contain, in the aggregate,
     6.3% of the total Questor funds, which are in excess of $1.17 billion.

-    Mr. James B. Adamson, Chairman, CEO and Director of the Debtors, was a
     Director of Oxford Health Plans at a time when JA&A was retained to perform
     certain professional services.

-    Allard & Fish, a professional that represents JA&A in a client matter that
     is unrelated to the Debtors, represents Combine International, Inc. in the
     Debtors' case.

-    American General Investment Management, a major bondholder of the Debtors,
     is the subsidiary of a former JA&A  client in a matter unrelated to the
     Debtors.

-    Bank of America, a lender to the Debtors, is a current client of JA&A in
     matters unrelated to the Debtors. Also, Bank of America is and has been a
     lender to certain current and/or former JA&A clients in matters unrelated
     to the Debtors.
<PAGE>

Mr. James Adamson
April 1, 2002
Page 3

-    The Bank of New York, a lender and indentured trustee to the Debtors, is a
     bondholder, lessor, and trustee of certain other current and/or former
     JA&A clients in matters unrelated to the Debtors. Also, The Bank of New
     York has previously employed a JA&A employee.

-    Bank One (f/k/a/ National Bank of Detroit), a lender, underwriter and
     indentured trustee to the Debtors, is a current client of JA&A in matters
     unrelated to the Debtors. In addition, Bank One provides commercial
     banking services to JA&A, has previously employed a JA&A employee and is a
     lender to certain other current and/or former JA&A clients in matters
     unrelated to the Debtors.

-    Banker's Trust and its affiliated entities, lenders to the Debtors, are
     affiliated with an entity that is a limited partner in QPF II and is a
     lender to certain other current and/or former JA&A clients in matters
     unrelated to the Debtors.

-    Barclays Bank Plc is affiliated with a shareholder of the Debtors and is
     adverse to a current JA&A client in a matter unrelated to the Debtors. In
     addition, Barclays Bank Plc is a shareholder and lender to certain current
     and/or former JA&A clients in matters unrelated to the Debtors.

-    Borders, a lessor of the Debtors, is a vendor to JA&A. Also, Borders has
     previously employed a JA&A employee.

-    Burlington Industries, Inc, a creditor to the Debtors, has retained JA&A
     to assist in its restructuring.

-    Little Caesars Enterprises, a counter party to a major contract with the
     Debtors, is a former client of JA&A in a matter unrelated to the Debtors.

-    Citibank and its affiliated entities, lenders to the Debtors, are
     affiliated with limited partners in QPF and/or QPF II. Also, Citibank and
     its affiliated entities are lenders, bondholders, and shareholders to
     certain other current and/or former JA&A clients in matters unrelated to
     the Debtors. JA&A was a client of Salomon Smith Barney in a matter
     unrelated to the Debtors that has been concluded.

-    Comerica, a lender to the Debtors, is a limited partner in QPF and QPF II,
     and is also a former JA&A client in matters unrelated to the Debtors.
     Comerica is a lender to certain other current and/or former JA&A clients
     and to QPF portfolio companies in matters unrelated to the Debtors. Also,
     Comerica is a lender to Mr. Jay Alix personally, and Mr. Koch maintains a
     banking relationship with Comerica and an investment account with Comerica
     Securities.

<PAGE>

Mr. James Adamson
April 1, 2002
Page 4

-    Credit Suisse First Boston and its affiliated entities are lenders and
     underwriters to the Debtors and are affiliated with a current JA&A client
     in a matter unrelated to the Debtors. CS First Boston and its affiliated
     entities are creditors, lenders and/or bondholders to certain other
     current and/or former JA&A clients in matters unrelated to the Debtors.
     Also, Credit Suisse First Boston is affiliated with an entity that is a
     limited partner in QPF and/or QPF II.

-    Ernst & Young, an advisor to the Debtors, is the former employer of Albert
     Koch, Ted Stenger and various JA&A employees.

-    An unsecured creditor of the Debtors has retained JA&A to assist in its
     restructuring.

-    Fidelity and its affiliated entities are shareholders and bondholders of
     the Debtors and a current vendor of JA&A.

-    First Union National Bank, a lender to the Debtors, is a current and
     former JA&A client in matters unrelated to the Debtors and is a lender or
     affiliated with lenders to certain other current and/or former JA&A clients
     in matters unrelated to the Debtors.

-    Firstar Bank, US Bank, and Mercantile Bank are all lenders to the Debtors
     and now operate under the US Bank name. The present US Bank and its
     affiliated and/or former entities are clients, clients through a bank
     group, lessors, lenders, bondholders, and trustees to certain other
     current and/or former JA&A clients in matters unrelated to the Debtors.
     Also, Firstar Bank has previously employed a JA&A employee.

-    Fleet National Bank and its affiliated entities are lenders and
     underwriters to the Debtors and are affiliated with an entity that is a
     limited partner in QPF II.

-    Frito Lay Inc., an unsecured creditor of the Debtors, has previously
     employed two JA&A employees.

-    Fuji Bank, Limited/The Fuji Bank, Limited is a participant in the bank
     group for Lason, Inc. JA&A has been retained by the bank group in this
     matter.

-    GE Financial Assurance Holdings, a major bondholder of the Debtors, is
     affiliated with a limited partner in QPF II. General Electric and its
     affiliated entities are creditors, lenders, lessors, bondholders, vendors
     and adverse parties to certain other current and/or former JA&A clients in
     matters unrelated to the Debtors. Also, the parent company of GE Financial
     previously employed a JA&A employee.

<PAGE>

Mr. James Adamson
April 1, 2002
Page 5

-  Michelle Gluck, VP Associate General Counsel & Assistant Secretary of the
   Debtors, is married to a former JA&A employee.

-  GMAC Commercial Credit is a member of the unsecured creditors committee.
   Entities affiliated with GMAC Commercial Credit, have been clients of JA&A,
   have previously employed certain JA&A employees and have been lenders and
   creditors to various JA&A clients in matters unrelated to the Debtors.

-  Hartford Investment Management Company, a major bondholder of the Debtors, is
   affiliated with an entity which was previously an adverse party in two
   distinct litigation engagements of JA&A unrelated to the Debtors.

-  ING Investment Management, Inc. is a major bondholder of the Debtors and is
   affiliated with ING Capital, an investment banker/underwriter for the
   Debtors. ING Capital is also a client of JA&A through a bank group in a
   matter unrelated to the Debtors.

-  JP Morgan Chase and its affiliated entities are lenders, underwriters and
   bondholders of the Debtors and are limited partners in QPF and QPF II. JP
   Morgan Chase and its affiliated entities are lenders and shareholders of
   certain other current and/or former JA&A clients in matters unrelated to the
   Debtors. A current employee of JA&A worked for Chase Manhattan Bank more than
   20 years ago. In addition, a unit of Morgan Stanley Dean Witter employs a
   relative of a JA&A employee.

-  Jefferson Pilot Financial is a major bondholder of the Debtors. An officer
   of Jefferson Pilot Corp., an affiliate of Jefferson Pilot Financial, is a
   director of a current client of JA&A.

-  Jones, Day, Reavis & Pogue ("Jones Day"), counsel to the creditors, is a
   current and former JA&A client, has served as legal counsel to various JA&A
   clients, and has served as opposing counsel in various other matters
   involving JA&A's clients in matters unrelated to the Debtors. Also, Jones Day
   has previously provided services to Questor Management Company.

-  KPMG, LLP, accountants to the creditors' committee, has previously employed
   several JA&A employees and has been an adverse party in current and former
   client situations in matters unrelated to the Debtors.

-  Los Angeles County Employees Retirement System, a major bondholder of the
   Debtors, is a limited partner in QPF and QPF II.

<PAGE>
Mr. James Adamson
April 1, 2002
Page 6

-  Lehman Brothers is an investment banker/underwriter for the Debtors and
   Lehman Commercial Paper Inc. is a prepetition lender of the Debtors. An
   affiliate, Lehman Syndicated Loans, Inc., is a client of JA&A in a matter
   unrelated to the Debtors.

-  Loomis, Sayles & Company, a major bondholder of the Debtors, is a
   significant shareholder and bondholder of current clients of JA&A  and is
   also a significant shareholder of a former JA&A client, all of which are in
   matters unrelated to the Debtors.

-  Mellon Bank, N.A., a lender to the Debtors, is a significant shareholder of
   a former client of JA&A and is also a client through two bank groups of
   current JA&A clients in matters unrelated to the Debtors. Mellon Bank, N.A.
   is also a lender to certain current and former JA&A clients in matters
   unrelated to the Debtors.

-  Merrill Lynch is an investment banker/underwriter for the Debtors and
   Merrill Lynch Capital Corporation is a prepetition lender to the Debtors.
   Merrill Lynch Capital Corporation is a former client of JA&A in a matter that
   has been completed for over five years. Merrill Lynch and its affiliated
   entities are also a lender, significant shareholder and bondholder to certain
   other current and/or former JA&A clients in matters unrelated to the Debtors.
   Merrill Lynch is a former client of JA&A in a matter unrelated to the
   Debtors. Also, Merrill Lynch previously employed a JA&A employee.

-  Michigan National Bank (of Detroit), lenders of the Debtors, is a current
   and former client of JA&A, a client through a bank group, and lender to
   several JA&A clients, all unrelated to the Debtors. Also, Michigan National
   Bank previously employed a JA&A employee.

-  National City Bank, a lender to the Debtors, is affiliated with an entity
   that is a limited partner in QPF II  and is a former JA&A client in a matter
   unrelated to the Debtors. Also, National City Bank is a client through a
   bank group, client through an affiliate, and lender to certain other current
   and/or former JA&A clients in matters unrelated to the Debtors.

-  Oak Hill Securities and its affiliated entities, lenders to the Debtors, are
   also lenders and bondholders of certain other current and/or former JA&A
   clients in matters unrelated to the Debtors. Also, an officer of a current
   JA&A client is a managing partner of an affiliate entity of Oak Hill
   Securities.

-  PPM America, a major shareholder of the Debtors, is a shareholder of a
   former JA&A client and a lender to a current JA&A client in matters
   unrelated to the Debtors, and has filed an objection for the payment of
   fees to JA&A in another matter unrelated to the Debtors.

<PAGE>

Mr. James Adamson
April 1, 2002
Page 7

- PriceWaterhouseCoopers ("PWC"), a professional of the Debtors, is the auditor
  for QPF and QPF II. In addition, JA&A has been retained by PWC in both current
  and former matters unrelated to the Debtors. In addition, PWC has previously
  employed several JA&A employees.

- Prudential Securities and its affiliated entities are bondholders,
  underwriters and lenders to the Debtors, and have been adverse parties in a
  litigation engagement, and lenders and bondholders of certain other current
  and/or former JA&A clients, all in matters unrelated to the Debtors.

- Skadden, Arps, Slate, Meagher & Flom, counsel to the Debtors, is a former JA&A
  client, has served as legal counsel to various JA&A clients, and has served as
  opposing counsel in various other matters involving JA&A's clients in matters
  unrelated to the Debtors.

- Smith Barney Asset Management, a major bondholder of the Debtors, is
  affiliated with an entity that is a limited partner in QPF and QPF II and is
  affiliated with lenders and bondholders of certain other current and/or former
  JA&A clients in matters unrelated to the Debtors. Also, an affiliate of Smith
  Barney is a vendor to JA&A.

- Mr. Thomas T. Stallkamp, member of the board of directors of the Debtors, is
  the father of a current JA&A employee who will not be party to this
  engagement.

- State Street Global Advisors, a major shareholder of the Debtors, is a lender
  to a current JA&A client and is affiliated with a company that is a trustee
  for a limited partner in QPF II in matters unrelated to the Debtors. Also,
  affiliates of State Street Global Advisors are creditors, shareholders,
  bondholders, lenders and vendors of certain other current and/or former JA&A
  clients in matters unrelated to the Debtors.

- Transamerica and its affiliated entities are bondholders and underwriters to
  the Debtors. An affiliate of Transamerica is a current and former client of
  JA&A in a matter unrelated to the Debtors. Also, affiliates of Transamerica
  have been clients through a creditors committee, creditors, lenders,
  bondholders and lessors to certain other current and/or former JA&A clients in
  matters unrelated to the Debtors.

- Travelers Asset Management and The Travelers Insurance Co., major bondholders
  of the Debtors, are affiliated with a company that is a limited partner in QPF
  and QPF II. Affiliates of the above were clients and vendors of JA&A and were
  adverse to JA&A's clients in litigation engagements unrelated to the Debtors.
  Also, affiliates of Travelers are creditors, and bondholders, lenders and
  vendors of certain other current and/or former JA&A clients in matters
  unrelated to the Debtors. Travelers previously employed a JA&A employee.

<PAGE>
Mr. James Adamson
April 1, 2002
Page 8

- Union Bank of California, lenders to the Debtors, is a former client through
  a bank group of JA&A in a matter unrelated to the Debtors. Also, Union Bank of
  California has been a lender to certain other current and/or former JA&A
  clients in matters unrelated to the Debtors.

- Van Kampen, investment banker/underwriter to the Debtors, is affiliated with
  former clients of JA&A in matters unrelated to the Debtors. An affiliate of
  Van Kampen is a lender to a current client of JA&A in matters unrelated to the
  Debtors. Van Kampen and its affiliated entities are also lenders and
  bondholders to certain other current and/or former JA&A clients in matters
  unrelated to the Debtors.

- The Vanguard Group, Inc. is a major shareholder and bondholder of the
  Debtors. The Vanguard Group, Inc. may be affiliated with parties that are
  adverse to JA&A clients in matters unrelated to the Debtors. Also, affiliates
  of Vanguard Group, Inc. are lenders and vendors to certain other current
  and/or former JA&A clients in matters unrelated to the Debtors.

- Winston & Strawn, counsel to the creditors' committee, is a former JA&A
  client, has served as legal counsel and opposing counsel involving JA&A's
  clients in matters unrelated to the Debtors.

- Wells Fargo Bank, N.A., a lender to the Debtors, is a client through a
  creditor's committee, lender and creditor to certain other current and/or
  former JA&A clients in matters unrelated to the Debtors.

- Zurich Scudder Investments, Inc., a major bondholder of the Debtors, is a
  lender to a current client of JA&A. Zurich Scudder Investments, Inc. is
  affiliated with entities that are also vendors to JA&A, adverse to JA&A's
  clients in litigation engagements, and have underwritten premium financing for
  certain other current and/or former JA&A clients in matters unrelated to the
  Debtors.

- An employee of JA&A is a director of a company that has a lease(s) with the
  Debtors.

We confirm that JAS, its employees, and its affiliates do not have any
financial interest or business connection with the Debtors other than as
contemplated by this agreement, and we know of no fact or situation that would
represent a conflict of interest for us with regard to the Debtors. While we
are not currently aware of any other relationships that connect us to any party
in interest, because JAS and its affiliates serve clients on a national basis
in numerous cases, both in and out of court, it is possible that JAS or its
affiliates may have rendered services to, or have business associations with,
other entities which had, or have, relationships with the Debtors, including
creditors of the Debtors. JAS and affiliates have
<PAGE>

Mr. James Adamson
April 1, 2002
Page 9

not, and will not perform services for, or have business connections with, any
of these aforementioned entities in this matter involving the Debtors.

Should you have any questions regarding the above, please contact me to
discuss your questions.

Sincerely yours,

JA&A SERVICES, LLC

/s/ A.A. Koch/T.S.

A. A. Koch
Chairman

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