KMART CORP, S-3/A, 1999-04-20

KMART CORP
S-3/A, 1999-04-20
VARIETY STORES

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As filed with the Securities and Exchange Commission on April 20, 1999.
Registration No.333-74665

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

KMART CORPORATION
(Exact name of Registrant as specified in its charter)

MICHIGAN
(State or other jurisdiction of
incorporation or organization)

38-0729500
(I.R.S. Employer Identification No.)

3100 West Big Beaver Road
Troy, Michigan 48084
(248) 643-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of each Registrant's Principal Executive Offices)

Anthony N. Palizzi
Executive Vice President and
General Counsel
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
(248) 643-1000

(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)

Copy to:

Vincent J. Pisano, Esq. Verne C. Hampton, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Dickinson Wright PLLC
919 Third Avenue 500 Woodward Avenue, Suite 4000
New York, New York 10022 Detroit, Michigan 48226
(212) 735-2790 (313) 223-3500

Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
registration statement.

If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the
following box. |_|

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following
box. |X|

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: |_|

The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.

Subject to completion, dated April 20, 1999

Prospectus

$1,000,000,000

KMART CORPORATION

Common Stock, Preferred Stock, Debt Securities, and Warrants

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

Kmart Corporation may sell to the public:

o common stock

o preferred stock

o debt securities

o warrants to purchase common stock

o warrants to purchase preferred stock

We urge you to read this prospectus and the accompanying prospectus
supplement, which will describe the specific terms of the common stock, the
preferred stock, the debt securities, and the warrants, carefully before
you make your investment decision.

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

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus or the accompanying prospectus supplement is truthful or
complete. Any representation to the contrary is a criminal offense.

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

This prospectus may not be used to sell securities unless accompanied
by a prospectus supplement.

The date of this prospectus is April __, 1999

We may not sell these securities or accept any offer to buy these
securities until we deliver this prospectus and an accompanying prospectus
supplement in final form. We are not using this prospectus and any
accompanying prospectus supplement to offer to sell these securities or to
solicit offers to buy these securities in any place where the offer or sale
is not permitted.

No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this prospectus and any accompanying
prospectus supplement in connection with the offer contained in this
prospectus and any accompanying prospectus supplement and, if given or
made, such information or representations must not be relied upon as having
been authorized by Kmart Corporation or any Underwriters. Neither the
delivery of this prospectus and any accompanying prospectus supplement, nor
any sale made hereunder shall under any circumstances create an implication
that there has been no change in the affairs of Kmart since the date
hereof. This prospectus and any accompanying prospectus supplement do not
constitute any offer or solicitation by anyone in any jurisdiction in which
such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make such offer or solicitation.

TABLE OF CONTENTS

Page

ABOUT THIS PROSPECTUS......................................................1

WHERE YOU CAN FIND MORE INFORMATION........................................1

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS........................................................2

KMART CORPORATION..........................................................3

USE OF PROCEEDS............................................................3

RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF
EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS ........................................4

DESCRIPTION OF SECURITIES..................................................4

DESCRIPTION OF CAPITAL STOCK ..............................................4

DESCRIPTION OF DEBT SECURITIES.............................................9

PLAN OF DISTRIBUTION......................................................16

LEGAL OPINIONS............................................................17

EXPERTS ..................................................................17

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed
with the Securities and Exchange Commission using a "shelf" registration
process. Under this shelf process, we may sell any combination of the
securities described in this prospectus in one of more offerings up to a
total dollar amount of proceeds of $1 billion. This prospectus provides you
with a general description of the securities we may offer. Each time we
sell securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus
supplement may also add, update, or change information contained in this
prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information."

WHERE YOU CAN FIND MORE INFORMATION

Kmart Corporation files reports, proxy statements, and other
information with the SEC. Such reports, proxy statements, and other
information concerning Kmart can be read and copied at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. The SEC maintains an internet site at http://www.sec.gov
that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC,
including Kmart. Kmart's common stock is listed on the New York Stock
Exchange, the Chicago Stock Exchange, and the Pacific Stock Exchange under
the trading symbol "KM." These reports, proxy statements, and other
information are also available for inspection at the offices of the NYSE,
20 Broad Street, New York, New York 10005 and at the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104.

This prospectus is part of a registration statement filed with the
SEC by Kmart. The full registration statement can be obtained from the SEC
as indicated above, or from Kmart.

The SEC allows Kmart to "incorporate by reference" the information
it files with the SEC. This permits Kmart to disclose important information
to you by referencing these filed documents. Any information referenced
this way is considered part of this prospectus, and any information filed
with the SEC subsequent to this prospectus will automatically update and
supersede this information. Kmart incorporates by reference its Annual
Report on Form 10-K for the fiscal year ended January 27, 1999 which has
been filed with the SEC.

Kmart incorporates by reference any future filings made with the
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 from the date of this prospectus until Kmart files a
post-effective amendment which indicates the termination of the
offering of the securities made by this prospectus.

Any statement contained in a document incorporated or considered to
be incorporated by reference in this registration statement shall be
considered to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this registration statement or in
any subsequently filed document that is or is considered to be incorporated
by reference modifies or supersedes such statement. Any statement that is
modified or superseded shall not, except as so modified or superseded,
constitute a part of this prospectus.

Kmart will provide without charge, upon written or oral request, a
copy of any or all of the documents which are incorporated by reference in
this prospectus, other than exhibits which are specifically incorporated by
reference into such documents. Requests should be directed to Investor
Relations, Kmart Corporation, 3100 West Big Beaver Road, Troy, Michigan
48084 (telephone number (248) 643-1040).

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Some statements contained in this document or incorporated by
reference in this document constitute forward-looking statements as such
term is defined in Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. Some factors could cause actual results to differ
materially from those in the forward-looking statements. Factors that might
cause such a material difference include, but are not limited to:

o changes in the general economic climate,

o economic and weather conditions which affect buying patterns
of Kmart's customers,

o changes in consumer spending,

o Kmart's ability to anticipate buying patterns and implement
appropriate inventory strategies,

o continued availability of capital and financing,

o interest rate fluctuations, and

o competitive and other factors affecting business beyond
Kmart's control.

KMART CORPORATION

Kmart Corporation is the nation's second largest discount retailer
and the world's third largest general merchandise retailer. Kmart was
incorporated under the laws of the State of Michigan on March 9, 1916, as
the successor to the business developed by its founder, S.S. Kresge, who
opened his first store in 1899. After operating Kresge department stores
for over 45 years, the Kmart store program commenced with the opening of
the first Kmart store in March 1962. The principal executive offices of
Kmart are located at 3100 West Big Beaver Road, Troy, Michigan 48084, and
its telephone number is (248) 643-1000.

Kmart operates in the general merchandise retailing industry
through 2,161 Kmart discount stores with locations in each of the 50 United
States, Puerto Rico, the U.S. Virgin Islands and Guam. Kmart's general
merchandise retail operations are located in 311 of the 316 Metropolitan
Statistical Areas in the United States. Kmart stores are generally
one-floor, free-standing units ranging in size from 40,000 to 180,000
square feet.

In 1995, Kmart converted 29 of its traditional stores to feature a
new, high-frequency format. In April 1997, this design was renamed Big
Kmart. Big Kmart offers customers an increased mix of frequently-purchased,
everyday basics and consumables in a "Pantry" area located near the front
of each store. A total of 1,245 traditional Kmart stores had been converted
to the Big Kmart format at year-end 1998, with another 586 stores scheduled
for conversion during fiscal 1999. At year-end 1999, including new stores
built in the Big Kmart format, it is expected that approximately 1,840
stores will be in the Big Kmart format.

Super Kmart Centers represent the Company's supercenter concept.
Super Kmart Centers combine a full grocery assortment, including fresh and
frozen food, bakery, meats, and other items, with a broad selection of
general merchandise found at Big Kmart and traditional Kmart stores. Open
24 hours a day, seven days a week, the 102 Super Kmart Centers are the
third-largest supercenter operation in the nation.

USE OF PROCEEDS

Unless otherwise specified in a prospectus supplement, Kmart
intends to use the net proceeds of any securities sold for general
corporate purposes.

RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

The following table shows Kmart's (1) ratio of earnings to fixed
charges and (2) ratio of earnings to combined fixed charges and preferred
stock dividends for each of the five most recent fiscal years.

Year Ended

1/27/99 1/28/98 1/29/97 1/31/96(1) 1/25/95

<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............ 2.4 1.6 1.5 - 1.1

Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends................. 2.1 1.5 1.4 - 1.1

(1) The deficiency of income from continuing retail operations versus
fixed charges was $305 million for 1995.
</TABLE>

In computing the ratios, earnings consist of pre-tax income from
continuing retail operations before extraordinary item and the effect of
accounting changes, less undistributed equity income of unconsolidated
affiliated retail companies, plus fixed charges (excluding capitalized
interest). Fixed charges represent total interest charges, a portion of
operating rentals representative of the interest factor, and amortization
of debt discount and expense. Certain prior year amounts have been restated
for the effect of discontinued operations

DESCRIPTION OF SECURITIES

This prospectus contains a summary of the common stock, preferred
stock, debt securities, and warrants to purchase common stock or preferred
stock of Kmart. These summaries are not meant to be a complete description
of each security. However, this prospectus and the accompanying prospectus
supplement contain the material terms and conditions for each security.

DESCRIPTION OF CAPITAL STOCK

Under Kmart's restated articles of incorporation, the authorized
capital stock of Kmart consists of 1,500,000,000 shares of common stock,
$1.00 par value, and 10,000,000 shares of preferred stock, no par value. As
of March 1, 1999, there were outstanding:

o 493,723,269 shares of common stock,

o 20,000,000 shares of convertible preferred stock of Kmart
Financing I (a statutory business trust formed under
Delaware law) which are convertible into 66,666,000 shares
of common stock;

o no shares of preferred stock, and

o employee stock options to purchase an aggregate of
approximately 24,339,791 shares of common stock.

Common Stock

Voting Rights. At every meeting of stockholders, the common stock
holders will have the right with the preferred stock holders, voting as a
single class, to vote in the election of directors and on any other matter
coming before any meeting of the stockholders on the basis of one vote for
each share of common stock or preferred stock held.

Dividends. The holders of outstanding shares of common stock,
subject to any preferences that may be applicable to any outstanding series
of preferred stock, are entitled to receive ratably such dividends out of
assets legally available therefor at such times and in such amounts as the
board of directors may at various times determine.

Liquidation and Dissolution. Upon liquidation or dissolution of
Kmart, the holders of the common stock will be entitled to share ratably in
the assets of Kmart legally available for distribution to stockholders
after payment of, or provision for, all known debts and liabilities and
subject to the prior rights of any holders of any preferred stock then
outstanding.

Other Rights. Common stock holders generally have equal dividend,
distribution, liquidation, and other rights, and shall have no preference,
conversion, exchange, appraisal, preemptive or cumulative voting rights.
All outstanding shares of the common stock are, and any common shares
offered by a prospectus supplement upon issuance, will be duly authorized,
fully paid and non-assessable by Kmart.

Listing, Transfer Agent and Registrar

The common stock is listed on the New York Stock Exchange, the
Chicago Stock Exchange, and the Pacific Stock Exchange. BankBoston, N.A. is
the Transfer Agent, Registrar, and Dividend Paying Agent for the common
stock.

Preferred Stock

General. Under the restated articles of incorporation, Kmart's
board of directors is authorized, without further stockholder action, to
provide for the issuance of up to 10,000,000 shares of preferred stock. As
of March 1, 1999, no shares of preferred stock were outstanding. Kmart's
board of directors may at various times authorize the issuance of shares of
preferred stock in series, and each series shall have dividend and
liquidation preferences, redemption prices, conversion rights, and other
terms and provisions as may be contained in the resolutions of Kmart's
board of directors providing for their issuance. The shares of any series
of preferred stock will be, when issued, fully paid and non-assessable and
holders thereof will have no preemptive rights in connection therewith.

A prospectus supplement relating to any series of preferred stock
being offered will include specific terms relating to the offering. They
will include:

o the title and stated value of the preferred stock;

o the price or prices at which the preferred stock may be
purchased;

o the number of shares of the preferred stock offered, the
liquidation preference per share, and the offering price of
the preferred stock;

o the dividend rate(s), period(s), and/or payment date(s) or
method(s) of calculation thereof applicable to the preferred
stock;

o whether dividends shall be cumulative or non cumulative and,
if cumulative, the date from which dividends on the
preferred stock shall accumulate;

o the procedures for an auction and remarketing, if any, for
the preferred stock;

o the provisions for a sinking fund, if any, for the preferred
stock;

o the voting rights of the preferred stock;

o the provisions for redemption, if applicable, of the
preferred stock;

o any listing of the preferred stock on any securities
exchange;

o the terms and conditions, if applicable, upon which the
preferred stock will be convertible into common stock of
Kmart, including the conversion price, or the manner of
calculating the conversion price and conversion period;

o if appropriate, a discussion of United States federal income
tax considerations applicable to the preferred stock;

o all series of preferred stock rank on a parity with each
other and rank senior to common stock with respect to
payment of dividends and distributions of assets upon
liquidation.; and

o any other specific terms, preferences, rights, limitations,
or restrictions of the preferred stock.

Conversion or Exchange. The terms, if any, on which the preferred
stock may be convertible into or exchangeable for common stock or other
securities of Kmart will be detailed in the preferred stock prospectus
supplement. The terms will include provisions as to whether conversion or
exchange is mandatory, at the option of the holder, or at the option of
Kmart, and may include provisions pursuant to which the number of shares of
common stock or other securities of Kmart to be received by the holders of
preferred stock would be subject to adjustment.

Description of Warrants

Kmart may issue warrants, including warrants to purchase debt
securities, preferred stock, including preferred stock represented by
depositary shares, common stock, or any combination of the foregoing.
Warrants may be issued independently or together with any securities and
may be attached to or separate from the securities. The warrants will be
issued under warrant agreements to be entered into between Kmart and a bank
or trust company, as warrant agent, as detailed in the prospectus
supplement relating to warrants being offered.

The applicable prospectus supplement will describe the following
terms, where applicable, of the warrants in respect of which this
prospectus is being delivered:

o the title of the warrants;

o the aggregate number of the warrants;

o the price or prices at which the warrants will be issued;

o the currencies in which the price or prices of the warrants
may be payable;

o the designation, amount, and terms of the offered securities
purchasable upon exercise of the warrants;

o the designation and terms of the other offered securities,
if any, with which the warrants are issued and the number of
the warrants issued with each security;

o if applicable, the date on and after which the warrants and
the offered securities purchasable upon exercise of the
warrants will be separately transferable;

o the price or prices at which and currency or currencies in
which the offered securities purchasable upon exercise of
the warrants may be purchased;

o the date on which the right to exercise the warrants shall
commence and the date on which the right shall expire;

o the minimum or maximum amount of the warrants which may be
exercised at any one time;

o information with respect to book-entry procedures, if any;

o a discussion of any federal income tax considerations; and

o any other material terms of the warrants, including terms,
procedures, and limitations relating to the exchange and
exercise of the warrants.

Certain Provisions

The articles and bylaws of Kmart contain provisions, summarized
below, that could have the effect of delaying, deterring or preventing a
merger, tender offer, or other takeover attempt of Kmart. This summary is
subject to, and qualified in its entirety by, the provisions of the
articles and the bylaws, as well as the provisions of any applicable laws.

The board of directors is divided into three classes of directors
serving staggered three-year terms, with a minimum of seven directors and a
maximum of 21 directors constituting the entire board of directors. The
directors may be removed by the vote of the holders of a majority of the
shares entitled to vote at an election of directors only for cause. The
total number of directors and the number of directors constituting each
class of directors (with each of the three classes being required to be
equal as nearly as possible) can be fixed or changed, from time to time, by
the board of directors within such authorized limits. Incumbent directors
are delegated the power to fill any vacancies on the board of directors,
however occurring, whether by an increase in the number of directors,
death, resignation, retirement, disqualification, removal from office or
otherwise. In addition, provisions in Kmart's bylaws require stockholders
to give advance notice of proposals to be presented at meetings of
stockholders, including director nominations.

Kmart is subject to Chapter 7A of the Michigan Business Corporation
Act ("MBCA"), which provides that business combinations subject to Chapter
7A between a Michigan corporation and a beneficial owner of shares entitled
to 10% or more of the voting power of such corporation generally require
the affirmative vote of 90% of the votes of each class of stock entitled to
vote, and not less than 2/3 of each class of stock entitled to vote
(excluding voting shares owned by such 10% owner), voting as a separate
class.

Such requirements do not apply if:

o the corporation's board of directors approves the
transaction prior to the time the 10% owner becomes such, or

o the transaction satisfies fairness standards, other
specified conditions are met, and the 10% owner has been
such for at least five years.

Chapter 7B of the MBCA provides that, unless a corporation's
restated articles of incorporation or bylaws provide that Chapter 7B does
not apply, "control shares" of a corporation acquired in a control share
acquisition have no voting rights except as granted by the stockholders of
the corporation. "Control shares" are shares which, when added to shares
previously owned by a stockholder, increase such stockholder's ownership of
voting stock to:

o more than 20% but less than 33 1/3%,

o more than 33 1/3% but less than a majority, or

o more than a majority, of the votes to which all of the
capital stock of the corporation is entitled.

A control share acquisition must be approved by the affirmative
vote of a majority of all shares entitled to vote excluding voting shares
owned by the acquiror and some officers and directors. However, no such
approval is required for gifts or other transactions not involving
consideration, for a merger to which the corporation is a party, or other
specific transactions described in Chapter 7B. The bylaws of Kmart
currently contain a provision pursuant to which Kmart has opted not to be
subject to Chapter 7B, but the board of directors may, in its sole
discretion, elect to become subject to Chapter 7B by amending such bylaws.

DESCRIPTION OF DEBT SECURITIES

The following description sets forth some general terms and
provisions of the debt securities to which any prospectus supplement may
relate. The particular terms of the debt securities offered by any
prospectus supplement and the extent, if any, to which such general
provisions may not apply to the debt securities so offered will be
described in the prospectus supplement relating to such debt securities.
For more information please refer to the applicable indenture. Capitalized
terms used in this prospectus that are not defined will have the meanings
given them in these documents.

Any senior debt securities will be issued under a senior indenture
to be entered into between Kmart and the trustee named in the senior
indenture. Any subordinated debt securities will be issued under a
subordinated indenture to be entered into between Kmart and the trustee
named in the subordinated indenture. As used in this registration
statement, the term "indentures" refers to both the senior indenture and
the subordinated indenture, as applicable. The indenture(s) will be
qualified under the Trust Indenture Act. As used in this registration
statement, the term "debt trustee" refers to either the senior trustee or
the subordinated trustee, as applicable.

The following summaries of some material provisions of the senior
debt securities, the subordinated debt securities, and the indentures are
subject to, and qualified in their entirety by reference to, all the
provisions of the indenture applicable to a particular series of debt
securities, including the definitions in this registration statement of
some terms. Except as otherwise indicated, the terms of any senior
indenture and subordinated indenture, as applicable, will be identical.

General

Each prospectus supplement will describe the following terms
relating to a series of debt securities:

o the title of the debt securities;

o whether the debt securities are senior debt securities or
subordinated debt securities and the terms of subordination;

o any limit on the amount of debt securities that may be issued;

o whether any of the debt securities will be issuable in whole
or in part in temporary or permanent global form or in the
form of book-entry securities;

o the maturity date(s) of the debt securities;

o the annual interest rate(s) (which may be fixed or variable)
or the method for determining the rate(s) and the date(s)
interest will begin to accrue on the debt securities, the
date(s) interest will be payable, and the regular record
dates for interest payment dates or the method for
determining the date(s);

o the place(s) where payments with respect to the debt
securities shall be payable;

o Kmart's right, if any, to defer payment of interest on the
debt securities and the maximum length of any deferral
period;

o the date, if any, after which, and the price(s) at which,
the series of debt securities may, pursuant to any optional
redemption provisions, be redeemed at Kmart's option,
and other related terms and provisions;

o the date(s), if any, on which, and the price(s) at which
Kmart is obligated, pursuant to any mandatory sinking fund
provisions or otherwise, to redeem, or at the holder's
option to purchase, the series of debt securities and other
related terms and provisions;

o the denominations in which the series of debt securities
will be issued, if other than denominations of $1,000 and
any integral multiple thereof;

o any mandatory or optional sinking fund or similar provisions
respecting the debt securities;

o the currency or currency units in which payment of payment
of the principal of, premium, if any, and interest on the
debt securities shall be payable;

o any index used to determine the amount of payments of the
principal of, premium, if any, and interest on the debt
securities and the manner in which such amounts shall be
determined;

o the terms pursuant to which the debt securities are subject
to defeasance;

o the terms and conditions, if any, pursuant to which the debt
securities are secured; and

o any other terms (which terms shall not be inconsistent with
the applicable indenture) of the debt securities.

The debt securities may be issued as Original Issue Discount
Securities. An Original Issue Discount Security is a debt security,
including any zero-coupon debt security, which:

o is issued at a price lower than the amount payable upon its
stated maturity; and

o provides that upon redemption or acceleration of the
maturity, an amount less than the amount payable upon the
stated maturity, shall become due and payable.

United States federal income tax considerations applicable to debt
securities sold at an original issue discount will be described in the
applicable prospectus supplement. In addition, United States federal income
tax or other considerations applicable to any debt securities which are
denominated in a currency or currency unit other than United States dollars
may be described in the applicable prospectus supplement.

Under the indentures, Kmart will have the ability, in addition to
the ability to issue debt securities with terms different from those of
debt securities previously issued, without the consent of the holders, to
reopen a previous issue of a series of debt securities and issue additional
debt securities of that series, unless the such reopening was restricted
when the series was created, in an aggregate principal amount determined by
Kmart.

Conversion or Exchange Rights

The terms, if any, on which a series of debt securities may be
convertible into or exchangeable for common stock or other securities of
Kmart will be detailed in the prospectus supplement relating thereto. Such
terms will include provisions as to whether conversion or exchange is
mandatory, at the option of the holder, or at the option of Kmart, and may
include provisions pursuant to which the number of shares of common stock
or other securities of Kmart to be received by the holders of such series
of debt securities would be subject to adjustment.

Consolidation, Merger or Sale

The indentures do not contain any covenant which restricts the
ability of Kmart to merge or consolidate, or sell, convey, transfer, or
otherwise dispose of all or substantially all of their assets. However, any
successor or acquirer of such assets must assume all of the obligations of
Kmart under the indentures or the debt securities, as appropriate.

Events of Default Under the Indenture

The following are events of default under the indentures with
respect to any series of debt securities issued:

o failure to pay interest on the debt securities when due and
such failure continues for 30 days and the time for payment
has not been extended or deferred;

o failure to pay the principal or premium of the debt
securities , if any, when due;

o failure to deposit any sinking fund payment, when due, for
any debt security and in the case of the subordinated
indenture, whether or not the deposit is prohibited by the
subordination provisions;

o failure to observe or perform any other covenant contained
in the debt securities or the indentures other than a
covenant specifically relating to another series of debt
securities, and such failure continues for 90 days after
Kmart receives notice from the debt trustee or holders of at
least 25% in aggregate principal amount of the outstanding
debt securities of that series;

o if the debt securities are convertible into shares of common
stock, failure by Kmart to deliver common stock when the
holder or holders of the debt securities elect to convert
the debt securities into shares of common stock; and

o particular events of bankruptcy, insolvency, or
reorganization of Kmart.

If an event of default with respect to debt securities of any
series occurs and is continuing, the debt trustee or the holders of at
least 25% in aggregate principal amount of the outstanding debt securities
of that series, by notice in writing to Kmart and to the debt trustee if
notice is given by such holders, may declare the unpaid principal of,
premium, if any, and accrued interest, if any, due and payable immediately.

The holders of a majority in principal amount of the outstanding
debt securities of an affected series may waive any default or event of
default with respect to such series and its consequences, except defaults
or events of default regarding payment of principal, premium, if any, or
interest on the debt securities. Any such waiver shall cure such default
or event of default.

Subject to the terms of the indentures, if an event of default
under an indenture shall occur and be continuing, the debt trustee will be
under no obligation to exercise any of its rights or powers under such
indenture at the request or direction of any of the holders of the
applicable series of debt securities, unless such holders have offered the
debt trustee reasonable indemnity. The holders of a majority in principal
amount of the outstanding debt securities of any series will have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the debt trustee, or exercising any trust or power
conferred on the debt trustee, with respect to the debt securities of that
series, provided that:

o it is not in conflict with any law or the applicable indenture;

o the debt trustee may take any other action deemed proper by
it which is not inconsistent with such direction; and

o subject to its duties under the Trust Indenture Act, the
debt trustee need not take any action that might involve it
in personal liability or might be unduly prejudicial to the
holders not involved in the proceeding.

A holder of the debt securities of any series will only have the
right to institute a proceeding under the indentures or to appoint a
receiver or trustee, or to seek other remedies if:

o the holder has given written notice to the debt trustee of a
continuing event of default with respect to that series;

o the holders of at least 25% in aggregate principal amount of
the outstanding debt securities of that series have made
written request, and such holders have offered reasonable
indemnity to the debt trustee to institute such proceedings
as trustee; and

o the debt trustee does not institute such proceeding, and
does not receive from the holders of a majority in aggregate
principal amount of the outstanding debt securities of that
series other conflicting directions within 60 days after
such notice, request, and offer.

These limitations do not apply to a suit instituted by a holder of
debt securities if Kmart defaults in the payment of the principal, premium,
if any, or interest on, the debt securities.

Kmart will periodically file statements with the debt trustee
regarding its compliance with some of the covenants in the indentures.

Modification of Indenture; Waiver

Kmart and the debt trustee may change an indenture without the
consent of any holders with respect to specific matters, including:

o to fix any ambiguity, defect, or inconsistency in such
indenture; and

o to change anything that does not materially adversely affect
the interests of any holder of debt securities of any
series.

In addition, under the indentures, the rights of holders of a
series of debt securities may be changed by Kmart and the debt trustee with
the written consent of the holders of at least a majority in aggregate
principal amount of the outstanding debt securities of each series that is
affected. However, the following changes may only be made with the consent of
each holder of any outstanding debt securities affected:

o extend the fixed maturity of such series of debt securities;

o reducing the principal amount, reducing the rate of, or
extending the time of payment of interest, or any premium
payable upon the redemption of any such debt securities;

o reduce the amount of principal of an Original Issue Discount
Security or any other debt security payable upon
acceleration of the maturity thereof,

o change currency in which any debt security or any premium or
interest payable,

o impair the right to enforce any payment on or with respect
to any debt security,

o adversely change the right to convert or exchange, including
decreasing the conversion rate or increasing the conversion
price of, such debt security (if applicable),

o in the case of the subordinated indenture, modify the
subordination provisions in a manner adverse to the holders
of the subordinated debt securities,

o if the debt securities are secured, change the terms and
conditions pursuant to which the debt securities are secured
in a manner adverse to the holders of the secured debt
securities,

o reduce the percentage in principal amount of outstanding
debt securities of any series, the consent of whose holders
is required for modification or amendment of the applicable
indenture or for waiver of compliance with certain
provisions of the applicable indenture or for waiver of
certain defaults,

o reduce the requirements contained in the applicable
indenture for quorum or voting,

o change any obligations of Kmart to maintain an office or
agency in the places and for the purposes required by the
indentures, or

o modify any of the above provisions.

Form, Exchange, and Transfer

The debt securities of each series will be issuable only in fully
registered form without coupons and, unless otherwise specified in the
applicable prospectus supplement, in denominations of $1,000 and any
integral multiple thereof. The indentures will provide that debt securities
of a series may be issuable in temporary or permanent global form and may
be issued as book-entry securities that will be deposited with, or on
behalf of, The Depository Trust Company or another depository named by
Kmart and identified in a prospectus supplement with respect to such
series.

At the option of the holder, subject to the terms of the indentures
and the limitations applicable to global securities described in the
applicable prospectus supplement, debt securities of any series will be
exchangeable for other debt securities of the same series, in any
authorized denomination and of like tenor and aggregate principal amount.

Subject to the terms of the indentures and the limitations
applicable to global securities detailed in the applicable prospectus
supplement, debt securities may be presented for exchange or for
registration of transfer (duly endorsed or with the form of transfer
endorsed thereon duly executed if so required by Kmart or the Security
Registrar) at the office of the Security Registrar or at the office of any
transfer agent designated by Kmart for such purpose. Unless otherwise
provided in the debt securities to be transferred or exchanged, no service
charge will be made for any registration of transfer or exchange, but Kmart
may require payment of any taxes or other governmental charges. The
Security Registrar and any transfer agent (in addition to the Security
Registrar) initially designated by Kmart for any debt securities will be
named in the applicable prospectus supplement. Kmart may at any time
designate additional transfer agents or rescind the designation of any
transfer agent or approve a change in the office through which any transfer
agent acts, except that Kmart will be required to maintain a transfer agent
in each place of payment for the debt securities of each series.

If the debt securities of any series are to be redeemed, Kmart will
not be required to:

o issue, register the transfer of, or exchange any debt
securities of that series during a period beginning at the
opening of business 15 days before the day of mailing of a
notice of redemption of any such debt securities that may be
selected for redemption and ending at the close of business
on the day of such mailing; or

o register the transfer of or exchange any debt securities so
selected for redemption, in whole or in part, except the
unredeemed portion of any such debt securities being
redeemed in part.

Information Concerning the Debt Trustee

The debt trustee, other than during the occurrence and continuance
of an event of default under an indenture, undertakes to perform only such
duties as are specifically detailed in the indentures and, upon an event of
default under an indenture, must use the same degree of care as a prudent
person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the debt trustee is under no obligation to
exercise any of the powers given it by the indentures at the request of any
holder of debt securities unless it is offered reasonable security and
indemnity against the costs, expenses, and liabilities that it might incur.
The debt trustee is not required to spend or risk its own money or
otherwise become financially liable while performing its duties unless it
reasonably believes that it will be repaid or receive adequate indemnity.

Payment and Paying Agents

Unless otherwise indicated in the applicable prospectus supplement,
payment of the interest on any debt securities on any interest payment date
will be made to the person in whose name such debt securities (or one or
more predecessor securities) are registered at the close of business on the
regular record date for such interest.

Principal of and any premium and interest on the debt securities of
a particular series will be payable at the office of the paying agents
designated by Kmart, except that unless otherwise indicated in the
applicable prospectus supplement, interest payments may be made by check
mailed to the holder. Unless otherwise indicated in such prospectus
supplement, the corporate trust office of the debt trustee in The City of
New York will be designated as Kmart's sole paying agent for payments with
respect to debt securities of each series. Any other paying agents
initially designated by Kmart for the debt securities of a particular
series will be named in the applicable prospectus supplement. Kmart will be
required to maintain a paying agent in each place of payment for the debt
securities of a particular series.

All moneys paid by Kmart to a paying agent or the debt trustee for
the payment of the principal of or any premium or interest on any debt
securities which remains unclaimed at the end of two years after such
principal, premium, or interest has become due and payable will be repaid
to Kmart, and the holder of the security thereafter may look only to Kmart
for payment thereof.

Governing Law

The indentures and the debt securities will be governed by and
construed in accordance with the laws of the State of New York except for
conflicts of laws provisions and to the extent that the Trust Indenture Act
shall be applicable.

Subordination of Subordinated Debt Securities

Any subordinated debt securities will be unsecured and will be
subordinate and junior in priority of payment to some of Kmart's other
indebtedness to the extent described in a prospectus supplement. The
subordinated indenture will not limit the amount of subordinated debt
securities which Kmart may issue, nor will it limit Kmart from issuing any
other secured or unsecured debt.

PLAN OF DISTRIBUTION

Kmart may sell common stock, preferred stock, warrants for common
or preferred stock, or any series of debt securities being offered hereby
in one or more of the following ways at various times:

o to underwriters for resale to the public or to institutional
investors;

o directly to institutional investors; or

o through agents to the public or to institutional investors.

The prospectus supplements will detail the terms of the offering of
the securities, including the name or names of any underwriters or agents,
the purchase price of such securities, and the proceeds to Kmart from such
sale, any underwriting discounts or agency fees and other items
constituting underwriters' or agents' compensation, any initial public
offering price, any discounts or concessions allowed or reallowed or paid
to dealers, and any securities exchanges on which such securities may be
listed.

If underwriters are used in the sale, the securities will be
acquired by the underwriters for their own account and may be resold at
various times in one or more transactions, including negotiated
transactions, at a fixed public offering price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, or at negotiated prices.

Unless otherwise detailed in a prospectus supplement, the
obligations of the underwriters to purchase any series of securities will
be subject to specific conditions precedent and the underwriters will be
obligated to purchase all of such series of securities, if any are
purchased.

Underwriters and agents may be entitled under agreements entered
into with Kmart to indemnification by Kmart against specific civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution with respect to payments which the underwriters or agents may
be required to make in respect thereof. Underwriters and agents may be
customers of, engage in transactions with, or perform services for Kmart
and its affiliates in the ordinary course of business.

Each series of securities will be a new issue of securities and
will have no established trading market other than the common stock which
is listed on the NYSE, the Chicago Stock Exchange, and the Pacific Stock
Exchange. Any common stock sold pursuant to a prospectus supplement will be
listed on the NYSE, the Chicago Stock Exchange, and the Pacific Stock
Exchange, subject to official notice of issuance. Any underwriters to whom
securities are sold by Kmart for public offering and sale may make a market
in the securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. The
securities, other than the common stock, may or may not be listed on a
national securities exchange.

LEGAL OPINIONS

Legal matters relating to the securities offered hereby will be
passed upon for Kmart by Skadden, Arps, Slate, Meagher & Flom LLP. Legal
matters as to Michigan law relating to the validity of the securities being
offered hereby will be passed upon for Kmart by Dickinson Wright
PLLC.

EXPERTS

The consolidated financial statements incorporated in this
Prospectus by reference to the Annual Report on Form 10-K for the year
ended January 27, 1999, have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table sets forth the expenses to be borne by Kmart in
connection with the offerings described in this registration statement. All
such expenses other than the Securities and
Exchange Commission registration fee are estimates.

Securities and Exchange Commission Registration Fee $180,700
Transfer Agents, Trustees and Depositary's
Fees and Expenses................................... 10,000
Printing and Engraving Fees and Expenses............... 6,000
Accounting Fees and Expenses........................... 3,500
Legal Fees............................................. 50,000
Miscellaneous (including Listing
Fees, if applicable)................................ 6,000

Total........................................ $ 256,200
===========

Item 15. Indemnification of Directors and Officers

Kmart's bylaws and the Michigan Business Corporation Act permit
Kmart's officers and directors to be indemnified under certain
circumstances for expenses and, in some instances, for judgments, fines, or
amounts paid in settlement of civil, criminal, administrative, and
investigative suits or proceedings, including those involving alleged
violations of the Securities Act of 1933 (the "Act"). In addition, Kmart
maintains directors' and officers' liability insurance which, under certain
circumstances, would cover alleged violations of the Act. Insofar as
indemnification for liabilities arising under the Act may be permitted to
officers and directors pursuant to the foregoing provisions, Kmart has been
informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. Therefore, in the event that a claim for such
indemnification is asserted by any officer or director Kmart (except
insofar as such claim seeks reimbursement by Kmart of expenses paid or
incurred by an officer or director in the successful defense of any action,
suit or proceeding ) will, unless the matter has theretofore been
adjudicated by precedent deemed by Kmart to be controlling, submit to a
court of appropriate jurisdiction the question of whether or not
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

Item 16. Exhibits

The following is a list of all exhibits filed as a part of this
registration statement on Form S-3, including those incorporated in this
registration statement by reference.

Exhibit
Number Description of Exhibits
- ------- -----------------------

1.1 The form of underwriting agreement will be filed as an
exhibit to a current report of the registrant and
incorporated in this registration statement by reference.
4.1 Form of senior indenture.
4.2 Form of subordinated indenture.
4.3 The form of any senior debt security with respect to each
particular series of senior debt securities issued hereunder
will be filed as an exhibit to a current report of the
registrant and incorporated in this registration statement
by reference.
4.4 The form of any subordinated debt security with respect to
each particular series of subordinated debt securities
issued hereunder will be filed as an exhibit to a current
report of the registrant and incorporated in this
registration statement by reference.
4.5 The form of any certificate of designation with respect to
any preferred stock issued hereunder will be filed as an
exhibit to a current report of the registrant and
incorporated in this registration statement by reference.
4.6 The form of warrant agreement will be filed as an exhibit to
a current report of the registrant and incorporated in this
registration statement by reference.
4.7 The form of any warrant with respect to each series of
warrants will be filed as an exhibit to a current report of
the registrant and incorporated in this registration
statement by reference.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
5.2 Opinion of Dickinson Wright PLLC.
12.1 Statement re: Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in Exhibit 5.1).
23.3 Consent of Dickinson Wright PLLC (included in Exhibit 5.2).
25.1 A Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of the trustee under the
senior indenture, will be filed as an exhibit to a current
report of the registrant and incorporated in this
registration statement by reference.
25.2 A Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of the trustee under the
subordinated indenture, will be filed as an exhibit to a
current report of the registrant and incorporated in this
registration statement by reference.

Item 17. Undertakings

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement,

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered in
this registration statement, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned registrant hereby further undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered in this
registration statement, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the provisions detailed
in Item 15, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in
the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Kmart
Corporation has duly caused this registration statement or amendment
thereto to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, in the State of New York on April
20, 1999.

KMART CORPORATION

By /s/ Martin E. Welch III
-----------------------------------
Name: Martin E. Welch III
Title: Senior Vice President and Chief
Financial Officer

KMART CORPORATION

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the capacities indicated on April 20, 1999.

Signatures Title

/s/ Floyd Hall Chairman of the Board, President and
_________________________ Chief Executive Officer (Principal
Floyd Hall Executive Officer) and Director

/s/ Martin E. Welch III Senior Vice President and Chief
_________________________ Financial Officer (Principal
Martin E. Welch III Financial Officer)

/s/ Lois M. Connelly Vice President, Controller
___________________________ (Principal Accounting Officer)
Lois M. Connelly

/s/ James B. Adamson Director
__________________________
James B. Adamson

/s/ Lilyan H. Affinito Director
__________________________
Lilyan H. Affinito

/s/ Stephen F. Bollenbach Director
__________________________
Stephen F. Bollenbach

/s/ Joseph A. Califano, Jr. Director
___________________________
Joseph A. Califano, Jr.

/s/ Richard G. Cline Director
___________________________
Richard G. Cline

_________________________ Director
Willie D. Davis

/s/ Joseph P. Flannery Director
_________________________
Joseph P. Flannery

/s/ Robert D. Kennedy Director
_________________________
Robert D. Kennedy

/s/ J. Richard Munro Director
_________________________
J. Richard Munro

/s/ Robin B. Smith Director
_________________________
Robin B. Smith

/s/ William P. Weber Director
_________________________
William P. Weber

/s/ James O. Welch, Jr. Director
__________________________
James O. Welch, Jr.

EXHIBIT INDEX

Exhibit
Number Description of Exhibits
- ------- -----------------------

Exhibit 4.1

KMART CORPORATION
Issuer

AND

[ ],
Trustee

___________________________________

INDENTURE

Dated as of [ ], 1999

___________________________________

Senior Debt Securities

CROSS-REFERENCE TABLE*

Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
------------------- ----------

310(a) . . . . . . . . . . . . . . . . . . . . . 7.09
310(b) . . . . . . . . . . . . . . . . . . . . . 7.08
7.10
310(c) . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . 7.13
311(b) . . . . . . . . . . . . . . . . . . . . . 7.13
311(c) . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . 5.01
5.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . 5.02(c)
312(c) . . . . . . . . . . . . . . . . . . . . . 5.02(c)
313(a) . . . . . . . . . . . . . . . . . . . . . 5.04(a)
313(b) . . . . . . . . . . . . . . . . . . . . . 5.04(b)
313(c) . . . . . . . . . . . . . . . . . . . . . 5.04(a)
5.04(b)
313(d) . . . . . . . . . . . . . . . . . . . . . 5.04(c)
314(a) . . . . . . . . . . . . . . . . . . . . . 5.03
314(b) . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . 13.07
314(d) . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . 13.07
314(f) . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . 7.01
315(b) . . . . . . . . . . . . . . . . . . . . . 7.14
315(c) . . . . . . . . . . . . . . . . . . . . . 7.01(a)
315(d) . . . . . . . . . . . . . . . . . . . . . 7.01(b)
315(e) . . . . . . . . . . . . . . . . . . . . . 6.07
316(a) . . . . . . . . . . . . . . . . . . . . . 6.06
8.04
316(b) . . . . . . . . . . . . . . . . . . . . . 6.04
316(c) . . . . . . . . . . . . . . . . . . . . . 8.01
317(a) . . . . . . . . . . . . . . . . . . . . . 6.02
317(b) . . . . . . . . . . . . . . . . . . . . . 4.03
318(a) . . . . . . . . . . . . . . . . . . . . . 13.09

--------------------
* This Cross-Reference Table does not constitute part of the
Indenture and shall not have any bearing on the interpretation of
any of its terms or provisions.

TABLE OF CONTENTS*

ARTICLE I.

DEFINITIONS

SECTION 1.01 Definitions of Terms . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . 2
Corporate Trust Office . . . . . . . . . . . . . . . . . . 2
Custodian . . . . . . . . . . . . . . . . . . . . . . . . 2
Default . . . . . . . . . . . . . . . . . . . . . . . . . 2
Depositary . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . 3
Global Security . . . . . . . . . . . . . . . . . . . . . 3
Governmental Obligations . . . . . . . . . . . . . . . . . 3
herein", "hereof" and "hereunder . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest Payment Date . . . . . . . . . . . . . . . . . . 3
Officers' Certificate . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 4
Original Issue Discount Security . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 4
Person . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Predecessor Security . . . . . . . . . . . . . . . . . . . 4
Responsible Officer . . . . . . . . . . . . . . . . . . . 5
Securities . . . . . . . . . . . . . . . . . . . . . . . . 5
Securityholder . . . . . . . . . . . . . . . . . . . . . . 5
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Indenture Act . . . . . . . . . . . . . . . . . . . 5
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . 5
Yield to Maturity . . . . . . . . . . . . . . . . . . . . 5

ARTICLE II.

ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES

SECTION 2.01 Designation and Terms of Securities . . . . . . . . . . . 6
SECTION 2.02 Form of Securities and Trustee's Certificate . . . . . . . 8
SECTION 2.03 Denominations: Provisions for Payment . . . . . . . . . . 9
SECTION 2.04 Execution and Authentication . . . . . . . . . . . . . . 10
SECTION 2.05 Registration of Transfer and Exchange . . . . . . . . . 11
SECTION 2.06 Temporary Securities . . . . . . . . . . . . . . . . . . 13
SECTION 2.07 Mutilated, Destroyed, Lost or Stolen Securities . . . . 13
SECTION 2.08 Cancellation . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.09 Benefits of Indenture . . . . . . . . . . . . . . . . . 14
SECTION 2.10 Authenticating Agent . . . . . . . . . . . . . . . . . . 15
SECTION 2.11 Global Securities . . . . . . . . . . . . . . . . . . . 15

ARTICLE III.

REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

SECTION 3.01 Redemption. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.02 Notice of Redemption . . . . . . . . . . . . . . . . . . 17
SECTION 3.03 Payment Upon Redemption . . . . . . . . . . . . . . . . 18
SECTION 3.04 Sinking Fund . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.05 Satisfaction of Sinking Fund Payments with Securities . 19
SECTION 3.06 Redemption of Securities for Sinking Fund . . . . . . . 19

ARTICLE IV.

CERTAIN COVENANTS

SECTION 4.01 Payment of Principal, Premium and Interest . . . . . . . 20
SECTION 4.02 Maintenance of Office or Agency . . . . . . . . . . . . 20
SECTION 4.03 Paying Agents . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.04 Appointment to Fill Vacancy in Office of Trustee . . . . 22
SECTION 4.05 Compliance with Consolidation Provisions . . . . . . . . 22
SECTION 4.06 Statement by Officers as to Default. . . . . . . . . . . 22

ARTICLE V.

SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 5.01 Company to Furnish Trustee Names and Addresses of
Securityholders . . . . . . . . . . . . . . . . . . 22
SECTION 5.02 Preservation of Information; Communications with
Securityholders . . . . . . . . . . . . . . . . . . . 23
SECTION 5.03 Reports by the Company . . . . . . . . . . . . . . . . . 23
SECTION 5.04 Reports by the Trustee . . . . . . . . . . . . . . . . . 24

ARTICLE VI.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 6.01 Events of Default . . . . . . . . . . . . . . . . . . . 24
SECTION 6.02 Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.03 Application of Moneys Collected . . . . . . . . . . . . 28
SECTION 6.04 Limitation on Suits . . . . . . . . . . . . . . . . . . 28
SECTION 6.05 Rights and Remedies Cumulative; Delay or Omission
Not Waiver . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.06 Control by Securityholders . . . . . . . . . . . . . . . 30
SECTION 6.07 Undertaking to Pay Costs . . . . . . . . . . . . . . . . 30

ARTICLE VII.

CONCERNING THE TRUSTEE

SECTION 7.01 Certain Duties and Responsibilities of Trustee . . . . . 31
SECTION 7.02 Certain Rights of Trustee . . . . . . . . . . . . . . . 32
SECTION 7.03 Trustee Not Responsible for Recitals or Issuance or
Securities . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.04 May Hold Securities . . . . . . . . . . . . . . . . . . 34
SECTION 7.05 Moneys Held in Trust . . . . . . . . . . . . . . . . . . 34
SECTION 7.06 Compensation and Reimbursement . . . . . . . . . . . . . 34
SECTION 7.07 Reliance on Officers' Certificate . . . . . . . . . . . 35
SECTION 7.08 Disqualification; Conflicting Interests . . . . . . . . 35
SECTION 7.09 Corporate Trustee Required; Eligibility . . . . . . . . 35
SECTION 7.10 Resignation and Removal; Appointment of Successor . . . 36
SECTION 7.11 Acceptance of Appointment By Successor. . . . . . . . . 37
SECTION 7.12 Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.13 Preferential Collection of Claims Against the Company . 39
SECTION 7.14 Notice of Defaults. . . . . . . . . . . . . . . . . . . 39

ARTICLE VIII.

CONCERNING THE SECURITYHOLDERS

SECTION 8.01 Evidence of Action by Securityholders . . . . . . . . . 39
SECTION 8.02 Proof of Execution by Securityholders . . . . . . . . . 40
SECTION 8.03 Who May be Deemed Owners . . . . . . . . . . . . . . . . 40
SECTION 8.04 Certain Securities Owned by Company Disregarded . . . . 41
SECTION 8.05 Actions Binding on Future Securityholders . . . . . . . 41

ARTICLE IX.

SUPPLEMENTAL INDENTURES

SECTION 9.01 Supplemental Indentures Without the Consent of
Securityholders . . . . . . . . . . . . . . . . . . . 42
SECTION 9.02 Supplemental Indentures With Consent of Securityholders 43
SECTION 9.03 Effect of Supplemental Indentures . . . . . . . . . . . 44
SECTION 9.04 Securities Affected by Supplemental Indentures . . . . . 44
SECTION 9.05 Execution of Supplemental Indentures . . . . . . . . . . 44
SECTION 9.06 Conformity with Trust Indenture Trust . . . . . . . . . 44

ARTICLE X.

SUCCESSOR CORPORATION

SECTION 10.01 Company May Consolidate, Etc. . . . . . . . . . . . . . 45
SECTION 10.02 Successor Substituted . . . . . . . . . . . . . . . . . 45
SECTION 10.03 Evidence of Consolidation, Etc. to Trustee . . . . . . . 46

ARTICLE XI.

SATISFACTION AND DISCHARGE

SECTION 11.01 Satisfaction and Discharge of Indenture . . . . . . . . 46
SECTION 11.02 Discharge of Obligations . . . . . . . . . . . . . . . . 47
SECTION 11.03 Deposited Moneys to be Held in Trust . . . . . . . . . . 47
SECTION 11.04 Payment of Moneys Held by Paying Agents . . . . . . . . 47
SECTION 11.05 Repayment to Company. . . . . . . . . . . . . . . . . . 48

ARTICLE XII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 12.01 No Recourse. . . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE XIII.

MISCELLANEOUS PROVISIONS

SECTION 13.01 Effect on Successors and Assigns. . . . . . . . . . . . 49
SECTION 13.02 Actions by Successor . . . . . . . . . . . . . . . . . . 49
SECTION 13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 13.04 Notice to Holders of Securities; Waiver. . . . . . . . . 49
SECTION 13.05 Governing Law . . . . . . . . . . . . . . . . . . . . . 50
SECTION 13.06 Effect of Headings and Table of Contents. . . . . . . . 50
SECTION 13.07 Compliance Certificates and Opinions . . . . . . . . . . 50
SECTION 13.08 Payments on Business Days . . . . . . . . . . . . . . . 51
SECTION 13.09 Conflict with Trust Indenture Act . . . . . . . . . . . 51
SECTION 13.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.11 Separability. . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.12 Assignment . . . . . . . . . . . . . . . . . . . . . . . 52

---------------------
* This Table of Contents does not constitute part of the Indenture
and shall not have any bearing upon the interpretation of any of
its terms or provisions.

INDENTURE, dated as of [ ], 1999, among Kmart Corporation, a
Michigan corporation (the "Company"), and [ ], as trustee (the
"Trustee"):

WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of unsecured debt securities (hereinafter referred to as the
"Securities"), in an unlimited aggregate principal amount to be issued from
time to time in one or more series as in this Indenture provided, as
registered Securities without coupons, to be authenticated by the
certificate of the Trustee;

WHEREAS, to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered, the Company has
duly authorized the execution of this Indenture; and

WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, in consideration of the premises and the purchase
of the Securities by the holders thereof, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the holders of
Securities:

ARTICLE I.

DEFINITIONS

SECTION 1.01 Definitions of Terms.

The terms defined in this Section (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for
all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section and shall
include the plural as well as the singular. All other terms used in this
Indenture that are defined in the Trust Indenture Act of 1939, as amended,
or that are by reference in such Act defined in the Securities Act of 1933,
as amended (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the
date of the execution of this instrument.

"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to
vote 10% or more of the outstanding voting securities or other ownership
interests of the specified Person, (b) any Person 10% or more of whose
outstanding voting securities or other ownership interests are directly or
indirectly owned, controlled or held with power to vote by the specified
Person, (c) any Person directly or indirectly controlling, controlled by,
or under common control with the specified Person, (d) a partnership in
which the specified Person is a general partner, (e) any officer or
director of the specified Person, and (f) if the specified Person is an
individual, any entity of which the specified Person is an officer,
director or general partner.

"Authenticating Agent" means an authenticating agent with respect
to all or any of the series of Securities appointed with respect to all or
any series of the Securities by the Trustee pursuant to Section 2.10.

"Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.

"Board of Directors" means the Board of Directors of the Company
or any duly authorized committee of such Board.

"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification.

"Business Day" means, with respect to any series of Securities,
any day other than a day on which Federal or State banking institutions in
the Borough of Manhattan, The City of New York, are authorized or obligated
by law, executive order or regulation to close.

"Certificate" means a certificate signed by the principal
executive officer, the principal financial officer, the Treasurer or the
principal accounting officer of the Company. The Certificate need not
comply with the provisions of Section 13.07.

"Company" means Kmart Corporation, a corporation duly organized
and existing under the laws of the State of Michigan, and, subject to the
provisions of Article Ten, shall also include its successors and assigns.

"Corporate Trust Office" means the office of the Trustee at
which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof is located at
[ ], except that whenever a
provision herein refers to an office or agency of the Trustee in the
Borough of Manhattan, The City of New York, such office is located, at the
date hereof, at [ ].

"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.

"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.

"Depositary" means, with respect to Securities of any series, for
which the Company shall determine that such Securities will be issued as a
Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to either Section 2.01 or 2.11.

"Event of Default" means, with respect to Securities of a
particular series any event specified in Section 6.01, continued for the
period of time, if any, therein designated.

"Global Security" means, with respect to any series of
Securities, a Security executed by the Company and delivered by the Trustee
to the Depositary or pursuant to the Depositary's instruction, all in
accordance with the Indenture, which shall be registered in the name of the
Depositary or its nominee.

"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States of America, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America that, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depositary receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as
custodian with respect to any such Governmental Obligation or a specific
payment of principal of or interest on any such Governmental Obligation
held by such custodian for the account of the holder of such depositary
receipt; provided, however, that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the
holder of such depositary receipt from any amount received by the custodian
in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.

"herein", "hereof" and "hereunder", and other words of similar
import, refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.

"Interest" when used with respect to an Original Issue Discount
Security which by its terms bears interest only after maturity, means
interest payable after maturity.

"Interest Payment Date", when used with respect to any
installment of interest on a Security of a particular series, means the
date specified in such Security or in a Board Resolution or in an indenture
supplemental hereto with respect to such series as the fixed date on which
an installment of interest with respect to Securities of that series is due
and payable.

"Officers' Certificate" means a certificate signed by the
Chairman of the Board of Directors, the Vice Chairman, the President or any
Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant
Secretary of the Company that is delivered to the Trustee in accordance
with the terms hereof. Each such certificate shall include the statements
provided for in Section 13.07, if and to the extent required by the
provisions thereof.

"Opinion of Counsel" means an opinion in writing of legal
counsel, who may be an employee of or counsel for the Company that is
delivered to the Trustee in accordance with the terms hereof. Each such
opinion shall include the statements provided for in Section 13.07, if and
to the extent required by the provisions thereof.

"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 6.01.

"Outstanding", when used with reference to Securities of any
series, means, subject to the provisions of Section 8.04, as of any
particular time, all Securities of that series theretofore authenticated
and delivered by the Trustee under this Indenture, except (a) Securities
theretofore canceled by the Trustee or any paying agent, or delivered to
the Trustee or any paying agent for cancellation or that have previously
been canceled; (b) Securities or portions thereof for the payment or
redemption of which moneys or Governmental Obligations in the necessary
amount shall have been deposited in trust with the Trustee or with any
paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own
paying agent); provided, however, that if such Securities or portions of
such Securities are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as in Article Three provided, or
provision satisfactory to the Trustee shall have been made for giving such
notice; and (c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to the
terms of Section 2.07.

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

"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.07 in
lieu of a lost, destroyed or stolen Security shall be deemed to evidence
the same debt as the lost, destroyed or stolen Security.

"Responsible Officer" when used with respect to the Trustee means
the Chairman of the Board of Directors, the Vice Chairman, the President,
Vice President, the Secretary, the Treasurer, any trust officer, any
corporate trust officer or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his or her knowledge of
and familiarity with the particular subject.

"Securities" means the debt Securities authenticated and
delivered under this Indenture.

"Securityholder", "holder of Securities", "registered holder", or
other similar term, means the Person or Persons in whose name or names a
particular Security shall be registered on the books of the Company kept
for that purpose in accordance with the terms of this Indenture.

"Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at
the time be owned, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries,
(ii) any general partnership, joint venture or similar entity, at least a
majority of whose outstanding partnership or similar interests shall at the
time be owned by such Person, or by one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner.

"Trustee" means [ ], and, subject to the provisions of
Article Seven, shall also include its successors and assigns, and, if at
any time there is more than one Person acting in such capacity hereunder,
"Trustee" shall mean each such Person. The term "Trustee" as used with
respect to a particular series of the Securities shall mean the trustee
with respect to that series.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, subject to the provisions of Sections 9.01, 9.02, and 10.01, as in
effect at the date of execution of this instrument.

"Voting Stock", as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.

"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series,
and calculated in accordance with accepted financial practice.

ARTICLE II.

ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES

SECTION 2.01 Designation and Terms of Securities.

(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The
Securities may be issued in one or more series up to the aggregate
principal amount of Securities of that series from time to time authorized
by or pursuant to a Board Resolution of the Company or pursuant to one or
more indentures supplemental hereto. Prior to the initial issuance of
Securities of any series, there shall be established in or pursuant to a
Board Resolution of the Company, and set forth in an Officers' Certificate
of the Company, or established in one or more indentures supplemental
hereto:

(1) the title of the Security of the series (which shall
distinguish the Securities of the series from all other Securities);

(2) any limit upon the aggregate principal amount of the
Securities of that series that may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of that series);

(3) the date or dates on which the principal of the Securities
of the series is payable;

(4) the rate or rates at which the Securities of the series
shall bear interest or the manner of calculation of such rate or
rates, if any;

(5) the place or places where payments with respect to the
Securities of the series shall be payable;

(6) the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable or the
manner of determination of such Interest Payment Dates and the record
date for the determination of holders to whom interest is payable on
any such Interest Payment Dates;

(7) the right, if any, to extend the interest payment periods
and the duration of such extension;

(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which, Securities of the
series may be redeemed, in whole or in part, at the option of the
Company;

(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions (including payments made in cash in participation of future
sinking fund obligations) or at the option of a holder thereof and the
period or periods within which, the price or prices at which, and the
terms and conditions upon which, Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;

(10) the form of the Securities of the series including the form
of the Certificate of Authentication for such series;

(11) if other than denominations of one thousand U.S. dollars
($1,000) or any integral multiple thereof, the denominations in which
the Securities of the series shall be issuable;

(12) the currency or currency units in which payment of the
principal of and any premium and interest on the Securities of the
series shall be payable;

(13) the terms pursuant to which the Securities of the series are
subject to defeasance;

(14) the terms and conditions, if any, pursuant to which the
Securities of the series are secured;

(15) whether any of the Securities of the series will be issuable
in whole or in part in temporary or permanent global form or in the
form of book-entry securities and, in such case, the identity for the
Depositary for such series;

(16) whether the Securities of the series will be convertible
into shares of common stock or other securities of the Company and, if
so, the terms and conditions upon which such Securities will be so
convertible, including the conversion price, the conversion period and
any provisions pursuant to which the number of shares of common stock
or other securities of the Company to be received by the holders of
such series of Securities would be subject to adjustment;

(17) if the amount of payments of principal of and any premium or
interest on the Securities of the series may be determined with
reference to an index, the manner in which such amounts shall be
determined;

(18) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof
pursuant to Section 6.01;

(19) any additional or different Events of Default or restrictive
covenants provided for with respect to the Securities of the series;

(20) any provisions granting special rights to holders when a
specified event occurs;

(21) any special tax implications of the Securities of the
series, including provisions for Original Issue Discount Securities,
if offered; and

(22) any and all other terms with respect to such series (which
terms shall not be inconsistent with the terms of this Indenture)
including any terms which may be required by or advisable under United
States laws or regulations or advisable in connection with the
marketing of Securities of that series.

All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to any such Board Resolution or in any indentures supplemental
hereto.

If any of the terms of the series are established by action taken
pursuant to a Board Resolution of the Company, a copy of an appropriate
record of such action shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Officers' Certificate of the Company setting forth the
terms of the series.

Securities of any particular series may be issued at various
times, with different dates on which the principal or any installment of
principal is payable, with different rates of interest, if any, or
different methods by which rates of interest may be determined, with
different dates on which such interest may be payable and with different
redemption dates. Unless otherwise provided, a series may be reopened for
issuances of additional Securities of such series.

SECTION 2.02 Form of Securities and Trustee's Certificate.

The Securities of any series and the Trustee's certificate of
authentication to be borne by such Securities shall be substantially of the
tenor and purport as set forth in one or more indentures supplemental
hereto or as provided in a Board Resolution of the Company and as set forth
in an Officers' Certificate of the Company and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Securities of that series may be listed, or to
conform to usage.

SECTION 2.03 Denominations: Provisions for Payment.

The Securities shall be issuable as registered Securities and in
the denominations of one thousand U.S. dollars ($1,000) or any integral
multiple thereof, subject to Section 2.01(11). The Securities of a
particular series shall bear interest payable on the dates and at the rate
specified with respect to that series. Unless otherwise provided pursuant
to Section 2.01, the principal of and the interest on the Securities of any
series, as well as any premium thereon in case of redemption thereof prior
to maturity, shall be payable in the coin or currency of the United States
of America that at the time is legal tender for public and private debt, at
the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, the City and State of New York. Each Security shall
be dated the date of its authentication. Unless otherwise provided
pursuant to Section 2.01, interest on the Securities shall be computed on
the basis of a 360-day year composed of twelve 30-day months.

The interest installment on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for
Securities of that series shall be paid to the Person in whose name said
Security (or one or more Predecessor Securities) is registered at the close
of business on the regular record date for such interest installment. In
the event that any Security of a particular series or portion thereof is
called for redemption and the redemption date is subsequent to a regular
record date with respect to any Interest Payment Date and prior to such
Interest Payment Date, interest on such Security will be paid upon
presentation and surrender of such Security as provided in Section 3.03.

Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date for
Securities of the same series (herein called "Defaulted Interest") shall
forthwith cease to be payable to the registered holder on the relevant
regular record date by virtue of having been such holder; and such
Defaulted Interest shall be paid by the Company, at its election, as
provided in clause (1) or clause (2) below:

(1) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix
a special record date for the payment of such Defaulted Interest which
shall not be more than 15 nor less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such special record date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first class postage prepaid, to each
Securityholder at his or her address as it appears in the Security
Register (as hereinafter defined), not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names such Securities (or their respective Predecessor
Securities) are registered on such special record date and shall be no
longer payable pursuant to the following clause (2).

(2) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.

Unless otherwise set forth in a Board Resolution of the Company
or one or more indentures supplemental hereto establishing the terms of any
series of Securities pursuant to Section 2.01 hereof, the term "regular
record date" as used in this Section with respect to a series of Securities
with respect to any Interest Payment Date for such series shall mean either
the fifteenth day of the month immediately preceding the month in which an
Interest Payment Date established for such series pursuant to Section 2.01
hereof shall occur, if such Interest Payment Date is the first day of a
month, or the last day of the month immediately preceding the month in
which an Interest Payment Date established for such series pursuant to
Section 2.01 hereof shall occur, if such Interest Payment Date is the
fifteenth day of a month, whether or not such date is a Business Day.

Subject to the foregoing provisions of this Section, each
Security of a series delivered under this Indenture upon transfer of or in
exchange for or in lieu of any other Security of such series shall carry
the rights to interest accrued and unpaid, and to accrue, that were carried
by such other Security.

SECTION 2.04 Execution and Authentication.

The Securities shall be signed on behalf of the Company by its
Chairman of the Board of Directors, the Vice Chairman, the President or any
Vice President, together with its Treasurer, or one of its Assistant
Treasurers, or its Secretary, or one of its Assistant Secretaries, under
its corporate seal which may, but need not be, attested by its Secretary or
one of its Assistant Secretaries. Signatures may be in the form of a
manual or facsimile signature. Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication
and delivery of such Securities or did not hold such offices at the date of
such Securities. The seal of the Company may be in the form of a facsimile
of such seal and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. The Securities may contain such notations,
legends or endorsements required by law, stock exchange rule or usage.
Each Security shall be dated the date of its authentication by the Trustee.

A Security shall not be valid until authenticated manually by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Security so authenticated
has been duly authenticated and delivered hereunder and that the holder is
entitled to the benefits of this Indenture.

At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any
series executed by the Company to the Trustee for authentication, together
with a written order of the Company for the authentication and delivery of
such Securities, signed by its Chairman of the Board of Directors, the Vice
Chairman, the President or any Vice President, together with its Treasurer,
or one of its Assistant Treasurers, or its Secretary, or one of its
Assistant Secretaries, and the Trustee in accordance with such written
order shall authenticate and deliver such Securities.

In authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall
be fully protected in relying upon, an Opinion of Counsel stating that the
form and terms thereof have been established in conformity with the
provisions of this Indenture.

The Trustee shall not be required to authenticate such Securities
if the issue of such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.

SECTION 2.05 Registration of Transfer and Exchange.

(a) Securities of any series may be exchanged upon presentation
thereof at the office or agency of the Company designated for such purpose
in the Borough of Manhattan, the City and State of New York, for other
Securities of such series of authorized denominations, and for a like
aggregate principal amount, upon payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, all as provided in
this Section. In respect of any Securities so surrendered for exchange,
the Company shall execute, the Trustee shall authenticate and such office
or agency shall deliver in exchange therefor the Security or Securities of
the same series that the Securityholder making the exchange shall be
entitled to receive, bearing numbers not contemporaneously outstanding.

(b) The Company shall keep, or cause to be kept, at its office
or agency designated for such purpose in the Borough of Manhattan, the City
and State of New York, or such other location designated by the Company a
register or registers (herein referred to as the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the
Company shall register the Securities and the transfers of Securities as in
this Article provided and which at all reasonable times shall be open for
inspection by the Trustee. Unless otherwise specified in a supplemental
indenture, the Trustee is hereby appointed as "Security Registrar" for the
purpose of registering Securities and transfer of Securities of each
series.

Upon surrender for transfer of any Security at the office or
agency of the Company designated for such purpose, the Company shall
execute, the Trustee shall authenticate and such office or agency shall
deliver in the name of the transferee or transferees a new Security or
Securities of the same series as the Security presented for a like
aggregate principal amount.

All Securities presented or surrendered for exchange or
registration of transfer, as provided in this Section, shall be accompanied
(if so required by the Company or the Security Registrar) by a written
instrument or instruments of transfer, in form satisfactory to the Company
or the Security Registrar, duly executed by the registered holder or by
such holder's duly authorized attorney in writing.

(c) No service charge shall be made for any exchange or
registration of transfer of Securities, or issue of new Securities in case
of partial redemption of any series, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge in relation
thereto, other than exchanges pursuant to Section 2.06, the second
paragraph of Section 3.03 and Section 9.04 not involving any transfer.

(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Securities during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of less than all the Outstanding Securities of the same series
and ending at the close of business on the day of such mailing, nor (ii) to
register the transfer of or exchange any Securities of any series or
portions thereof called for redemption except the unredeemed portion of any
Securities of any series being redeemed in part. The provisions of this
Section 2.05 are, with respect to any Global Security, subject to Section
2.11 hereof.

SECTION 2.06 Temporary Securities.

Pending the preparation of definitive Securities of any series,
the Company may execute, and the Trustee shall authenticate and deliver,
temporary Securities (printed, lithographed or typewritten) of any
authorized denomination. Such temporary Securities shall be substantially
in the form of the definitive Securities in lieu of which they are issued,
but with such omissions, insertions and variations as may be appropriate
for temporary Securities, all as may be determined by the Company. Every
temporary Security of any series shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially
the same manner, and with like effect, as the definitive Securities of such
series. Without unnecessary delay the Company will execute and will
furnish definitive Securities of such series and thereupon any or all
temporary Securities of such series may be surrendered in exchange therefor
(without charge to the holders), at the office or agency of the Company
designated for the purpose in the Borough of Manhattan, the City and State
of New York, and the Trustee shall authenticate and such office or agency
shall deliver in exchange for such temporary Securities an equal aggregate
principal amount of definitive Securities of such series, unless the
Company advises the Trustee to the effect that definitive Securities need
not be executed and furnished until further notice from the Company. Until
so exchanged, the temporary Securities of such series shall be entitled to
the same benefits under this Indenture as definitive Securities of such
series authenticated and delivered hereunder.

SECTION 2.07 Mutilated, Destroyed, Lost or Stolen Securities.

In case any temporary or definitive Security shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon the Company's request the
Trustee (subject as aforesaid) shall authenticate and deliver, a new
Security of the same series, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Security, or in
lieu of and in substitution for the Security so destroyed, lost or stolen.
In every case the applicant for a substituted Security shall furnish to the
Company and the Trustee such security or indemnity as may be required by
them to save each of them harmless, and, in every case of destruction, loss
or theft, the applicant shall also furnish to the Company and the Trustee
evidence to their satisfaction of the destruction, loss or theft of the
applicant's Security and of the ownership thereof. The Trustee may
authenticate any such substituted Security and deliver the same upon the
written request or authorization of any officer of the Company. Upon the
issuance of any substituted Security, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith. In case any Security
that has matured or is about to mature shall become mutilated or be
destroyed, lost or stolen, the Company may, instead of issuing a substitute
Security, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Security) if the applicant for
such payment shall furnish to the Company and the Trustee such security or
indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company and
the Trustee of the destruction, loss or theft of such Security and of the
ownership thereof.

Every replacement Security issued pursuant to the provisions of
this Section shall constitute an additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen Security
shall be found at any time, or be enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of the same series duly issued hereunder.
All Securities shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities, and shall
preclude (to the extent lawful) any and all other rights or remedies,
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

SECTION 2.08 Cancellation.

All Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer shall, if surrendered to
the Company or any paying agent, be delivered to the Trustee for
cancellation, or, if surrendered to the Trustee, shall be cancelled by it,
and no Securities shall be issued in lieu thereof except as expressly
required or permitted by any of the provisions of this Indenture. On
request of the Company at the time of such surrender, the Trustee shall
deliver to the Company canceled Securities held by the Trustee. In the
absence of such request the Trustee may dispose of canceled Securities in
accordance with its standard procedures and deliver a certificate of
disposition to the Company. If the Company shall otherwise acquire any of
the Securities, however, such acquisition shall not operate as a redemption
or satisfaction of the indebtedness represented by such Securities unless
and until the same are delivered to the Trustee for cancellation.

SECTION 2.09 Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or
implied, shall give or be construed to give to any Person, other than the
parties hereto and the holders of the Securities any legal or equitable
right, remedy or claim under or in respect of this Indenture, or under any
covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto
and of the holders of the Securities.

SECTION 2.10 Authenticating Agent.

So long as any of the Securities of any series remain Outstanding
there may be an Authenticating Agent for any or all such series of
Securities which the Trustee, with the consent of the Company, shall have
the right to appoint. Said Authenticating Agent shall be authorized to act
on behalf of the Trustee to authenticate Securities of such series issued
upon exchange, transfer or partial redemption thereof, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. All references in this Indenture to the authentication of
Securities by the Trustee shall be deemed to include authentication by an
Authenticating Agent for such series. Each Authenticating Agent shall be a
corporation that has a combined capital and surplus, as most recently
reported or determined by it, sufficient under the laws of any jurisdiction
under which it is organized or in which it is doing business to conduct a
trust business, and that is otherwise authorized under such laws to conduct
such business and is subject to supervision or examination by Federal or
State authorities. If at any time any Authenticating Agent shall cease to
be eligible in accordance with these provisions, it shall resign
immediately.

Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may
at any time (and upon request by the Company shall) terminate the agency of
any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may
appoint an eligible successor Authenticating Agent acceptable to the
Company. Any successor Authenticating Agent, upon acceptance of its
appointment hereunder, shall become vested with all the rights, powers and
duties of its predecessor hereunder as if originally named as an
Authenticating Agent pursuant hereto.

SECTION 2.11 Global Securities.

(a) If the Company shall establish pursuant to Section 2.01 that
the Securities of a particular series are issuable as a Global Security,
then the Company shall execute and the Trustee shall, in accordance with
Section 2.04, authenticate and deliver, a Global Security that (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, such of the Outstanding Securities of such series as
shall be specified therein and that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or
reduced to reflect exchanges, (ii) shall be registered in the name of the
Depositary or its nominee, (iii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear
a legend substantially to the following effect: "Except as otherwise
provided in Section 2.11 of the Indenture, this Security may be
transferred, in whole but not in part, only to another nominee of the
Depositary or to a successor Depositary or to a nominee of such successor
Depositary." Any endorsement of a Security in global form to reflect the
amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner
and upon instructions given by such Person or Persons as shall be specified
therein or in the written request signed in the name of the Company, by the
Chairman of the Board of Directors, the Vice Chairman, the President or any
Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer thereof to be delivered to the Trustee
pursuant to Section 2.04 or Section 2.06.

(b) Notwithstanding the provisions of Section 2.05, the Global
Security of a series may be transferred, in whole but not in part and in
the manner provided in Section 2.05, only to another nominee of the
Depositary for such series, or to a successor Depositary for such series
selected or approved by the Company or to a nominee of such successor
Depositary.

(c) If at any time the Depositary for a series of the Securities
notifies the Company that it is unwilling or unable to continue as
Depositary for such series or if at any time the Depositary for such series
shall no longer be registered or in good standing under the Exchange Act,
or other applicable statute or regulation, and a successor Depositary for
such series is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as the
case may be, this Section 2.11 shall no longer be applicable to the
Securities of such series and the Company will execute, and subject to
Section 2.05, the Trustee will authenticate and deliver the Securities of
such series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such series in exchange for such Global
Security. In addition, the Company may at any time determine that the
Securities of any series shall no longer be represented by a Global
Security and that the provisions of this Section 2.11 shall no longer apply
to the Securities of such series. In such event the Company will execute
and subject to Section 2.05, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate
and deliver the Securities of such series in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Security of such series
in exchange for such Global Security. Upon the exchange of the Global
Security for such Securities in definitive registered form without coupons,
in authorized denominations, the Global Security shall be canceled by the
Trustee. Such Securities in definitive registered form issued in exchange
for the Global Security pursuant to this Section 2.11(c) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Securities to the Depositary for delivery to the Persons in
whose names such Securities are so registered.

ARTICLE III.

REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

SECTION 3.01 Redemption.

The Company may redeem the Securities of any series issued
hereunder on and after the dates and in accordance with the terms
established for such series pursuant to Section 2.01 hereof.

SECTION 3.02 Notice of Redemption.

(a) In case the Company shall desire to exercise such right to
redeem all or, as the case may be, a portion of the Securities of any
series in accordance with the right reserved so to do, the Company shall,
or shall cause the Trustee to, give notice of such redemption to holders of
the Securities of such series to be redeemed by mailing, first class
postage prepaid, a notice of such redemption not less than 30 days and not
more than 90 days before the date fixed for redemption of that series to
such holders at their last addresses as they shall appear upon the Security
Register unless a shorter period is specified in the Securities to be
redeemed. Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the
registered holder receives the notice. In any case, failure duly to give
such notice to the holder of any Security of any series designated for
redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Securities of such series or any other series. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with any such restriction.

Each such notice of redemption shall specify the date fixed for
redemption and the redemption price (or the manner of calculation thereof)
at which Securities of that series are to be redeemed, and shall state that
payment of the redemption price of such Securities to be redeemed will be
made at the office or agency of the Company in the Borough of Manhattan,
the City and State of New York, upon presentation and surrender of such
Securities, that interest accrued to the date fixed for redemption will be
paid as specified in said notice, that from and after said date interest
will cease to accrue and that the redemption is for a sinking fund, if such
is the case. If less than all the Securities of a series are to be
redeemed, the notice to the holders of Securities of that series to be
redeemed in whole or in part shall specify the particular Securities to be
so redeemed. In case any Security is to be redeemed in part only, the
notice that relates to such Security shall state the portion of the
principal amount thereof to be redeemed, and shall state that on and after
the redemption date, upon surrender of such Security, a new Security or
Securities of such series in principal amount equal to the unredeemed
portion thereof will be issued.

(b) If less than all the Securities of a series are to be
redeemed, the Company shall give the Trustee at least 45 days' notice in
advance of the date fixed for redemption as to the aggregate principal
amount of Securities of the series to be redeemed, and thereupon the
Trustee shall select, by lot or in such other manner as it shall deem
appropriate and fair in its discretion and that may provide for the
selection of a portion or portions (equal to one thousand U.S. dollars
($1,000) or any integral multiple thereof) of the principal amount of such
Securities of a denomination larger than $1,000, the Securities to be
redeemed and shall thereafter promptly notify the Company in writing of the
numbers of the Securities to be redeemed, in whole or in part.

The Company may, if and whenever it shall so elect, by delivery
of instructions signed on its behalf by its Chairman of the Board of
Directors, the Vice Chairman, the President or any Vice President, instruct
the Trustee or any paying agent to call all or any part of the Securities
of a particular series for redemption and to give notice of redemption in
the manner set forth in this Section, such notice to be in the name of the
Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent,
as the case may be, such Security Register, transfer books or other
records, or suitable copies or extracts therefrom, sufficient to enable the
Trustee or such paying agent to give any notice by mail that may be
required under the provisions of this Section.

SECTION 3.03 Payment Upon Redemption.

(a) If the giving of notice of redemption shall have been
completed as above provided, the Securities or portions of Securities of
the series to be redeemed specified in such notice shall become due and
payable on the date and at the place stated in such notice at the
applicable redemption price, together with interest accrued to the date
fixed for redemption and interest on such Securities or portions of
Securities shall cease to accrue on and after the date fixed for
redemption, unless the Company shall default in the payment of such
redemption price and accrued interest with respect to any such Security or
portion thereof. On presentation and surrender of such Securities on or
after the date fixed for redemption at the place of payment specified in
the notice, said Securities shall be paid and redeemed at the applicable
redemption price for such series, together with interest accrued thereon to
the date fixed for redemption (but if the date fixed for redemption is an
interest payment date, the interest installment payable on such date shall
be payable to the registered holder at the close of business on the
applicable record date pursuant to Section 2.03).

(b) Upon presentation of any Security of such series that is to
be redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Security is presented shall
deliver to the holder thereof, at the expense of the Company, a new
Security of the same series of authorized denominations in principal amount
equal to the unredeemed portion of the Security so presented.

SECTION 3.04 Sinking Fund.

The provisions of Sections 3.04, 3.05 and 3.06 shall be
applicable to any sinking fund for the retirement of Securities of a
series, except as otherwise specified as contemplated by Section 2.01 for
Securities of such series.

The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 3.05. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.

SECTION 3.05 Satisfaction of Sinking Fund Payments with
Securities.

The Company (i) may deliver Outstanding Securities of a series
(other than any Securities previously called for redemption) and (ii) may
apply as a credit Securities of a series that have been redeemed either at
the election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments
pursuant to the terms of such Securities, in each case in satisfaction of
all or any part of any sinking fund payment with respect to the Securities
of such series required to be made pursuant to the terms of such Securities
as provided for by the terms of such series, provided that such Securities
have not been previously so credited. Such Securities shall be received
and credited for such purpose by the Trustee at the redemption price
specified in such Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.

SECTION 3.06 Redemption of Securities for Sinking Fund.

Not less than 45 days prior to each sinking fund payment date for
any series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of the series, the
portion thereof, if any, that is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 3.05 and the basis
for such credit and will, together with such Officers' Certificate, deliver
to the Trustee any Securities to be so delivered. Not less than 30 days
before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.02 and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the manner
provided in Section 3.02. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the
manner stated in Section 3.03.

ARTICLE IV.

CERTAIN COVENANTS

SECTION 4.01 Payment of Principal, Premium and Interest.

The Company will duly and punctually pay or cause to be paid the
principal of and any premium and interest on the Securities of that series
at the time and place and in the manner provided herein and established
with respect to such Securities.

SECTION 4.02 Maintenance of Office or Agency.

So long as any series of the Securities remain Outstanding, the
Company agrees to maintain an office or agency in the Borough of Manhattan,
the City and State of New York, with respect to each such series and at
such other location or locations as may be designated as provided in this
Section 4.02, where (i) Securities of that series may be presented for
payment, (ii) Securities of that series may be presented as hereinabove
authorized for registration of transfer and exchange, and (iii) notices and
demands to or upon the Company in respect of the Securities of that series
and this Indenture may be given or served, such designation to continue
with respect to such office or agency until the Company shall, by written
notice signed by its Chairman of the Board of Directors, the Vice Chairman,
the President or any Vice President and delivered to the trustee, designate
some other office or agency for such purposes or any of them. If at any
time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, notices and demands may be made or served at the Corporate
Trust Office of the Trustee, and the Company hereby appoints the Trustee as
its agent to receive all such presentations, notices and demands.

SECTION 4.03 Paying Agents.

(a) If the Company shall appoint one or more paying agents for
all or any series of the Securities, other than the Trustee, the Company
will cause each such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:

(1) that it will hold all sums held by it as such agent for the
payment of the principal of and any premium or interest on the
Securities of that series (whether such sums have been paid to it by
the Company or by any other obligor of such Securities) in trust for
the benefit of the Persons entitled thereto;

(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor of such Securities) to make any
payment of the principal of and any premium or interest on the
Securities of that series when the same shall be due and payable;

(3) that it will, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(2) above, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such paying agent; and

(4) that it will perform all other duties of paying agent as set
forth in this Indenture.

(b) If the Company shall act as its own paying agent with
respect to any series of the Securities, it will on or before each due date
of the principal of and any premium or interest on Securities of that
series, set aside, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay such principal and any
premium or interest so becoming due on Securities of that series until such
sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of such action, or any
failure (by it or any other obligor on such Securities) to take such
action. Whenever the Company shall have one or more paying agents for any
series of Securities, it will, prior to each due date of the principal of
and any premium or interest on any Securities of that series, deposit with
the paying agent a sum sufficient to pay the principal and any premium or
interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, and (unless
such paying agent is the Trustee) the Company will promptly notify the
Trustee of this action or failure so to act.

(c) Notwithstanding anything in this Section to the contrary,
(i) the agreement to hold sums in trust as provided in this Section is
subject to the provisions of Section 11.05, and (ii) the Company may at any
time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any paying agent to pay,
to the Trustee all sums held in trust by the Company or such paying agent,
such sums to be held by the Trustee upon the same terms and conditions as
those upon which such sums were held by the Company or such paying agent;
and, upon such payment by any paying agent to the Trustee, such paying
agent shall be released from all further liability with respect to such
money.

SECTION 4.04 Appointment to Fill Vacancy in Office of Trustee.

The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.10, a
Trustee, so that there shall at all times be a Trustee hereunder.

SECTION 4.05 Compliance with Consolidation Provisions.

The Company will not, while any of the Securities remain
Outstanding, consolidate with, or merge into, or merge into itself, or sell
or convey all or substantially all of its property to any other company
unless the provisions of Article Ten hereof are complied with.

SECTION 4.06 Statement by Officers as to Default.

The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate signed by its principal executive officer, principal
financial officer or principal accounting officer stating whether or not to
the best knowledge of the signer thereof the Company is in default in the
performance and observance of any of the terms, provisions and conditions
of this Indenture, and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge.

ARTICLE V.

SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 5.01 Company to Furnish Trustee Names and Addresses of
Securityholders.

The Company will furnish or cause to be furnished to the Trustee
(a) semiannually on January 15 and July 15, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the holders
of each series of Securities as of such regular record date, provided that
the Company shall not be obligated to furnish or cause to furnish such list
at any time that the list shall not differ in any respect from the most
recent list furnished to the Trustee by the Company and (b) at such other
times as the Trustee may request in writing within 30 days after the
receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that, in either case, no such list need be
furnished for any series for which the Trustee shall be the Security
Registrar.

SECTION 5.02 Preservation of Information; Communications with
Securityholders.

(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of
the holders of Securities contained in the most recent list furnished to it
as provided in Section 5.01 and as to the names and addresses of holders of
Securities received by the Trustee in its capacity as Security Registrar
(if acting in such capacity).

(b) The Trustee may destroy any list furnished to it as provided
in Section 5.01 upon receipt of a new list so furnished.

(c) Securityholders may communicate as provided in Section
312(b) of the Trust Indenture Act with other Securityholders with respect
to their rights under this Indenture or under the Securities. The Company,
the Trustee, the Security Registrar and anyone else shall have the
protection of Section 312(c) of the Trust Indenture Act.

SECTION 5.03 Reports by the Company.

(a) The Company covenants and agrees to file with the Trustee,
within 30 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribe)
that the Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not
required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports that may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations.

(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and regulations prescribed
from to time by the Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to
time by such rules and regulations.

(c) The Company covenants and agrees to transmit by mail, first
class postage prepaid, or reputable over-night delivery service that
provides for evidence of receipt, to the Securityholders, as their names
and addresses appear upon the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.

SECTION 5.04 Reports by the Trustee.

(a) On or before July 15 in each year in which any of the
Securities are Outstanding, the Trustee shall transmit by mail, first class
postage prepaid, to the Securityholders, as their names and addresses
appear upon the Security Register, a brief report dated as of the preceding
May 15, if and to the extent required under Section 313(a) of the Trust
Indenture Act.

(b) The Trustee shall comply with Section 313(b) and 313(c) of
the Trust Indenture Act.

(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with the Company,
with each stock exchange upon which any Securities are listed (if so
listed) and also with the Commission. The Company agrees to notify the
Trustee when any Securities become listed on any stock exchange.

ARTICLE VI.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 6.01 Events of Default.

(a) Whenever used herein with respect to Securities of a
particular series, "Event of Default" means any one or more of the
following events that has occurred and is continuing:

(1) the Company defaults in the payment of any installment of
interest upon any of the Securities of that series, as and when the
same shall become due and payable, and continuance of such default for
a period of 30 days; provided, however, that a valid extension of an
interest payment period by the Company in accordance with the terms of
any indenture supplemental hereto, shall not constitute a default in
the payment of interest for this purpose;

(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any of the Securities of that series as and when
the same shall become due and payable whether at maturity, upon
redemption, by declaration or otherwise, or in any payment required by
any sinking or analogous fund established with respect to that series;

(3) the Company fails to observe or perform any other of its
covenants or agreements with respect to that series contained in this
Indenture or otherwise established with respect to that series of
Securities pursuant to Section 2.01 hereof (other than a covenant or
agreement that has been expressly included in this Indenture solely
for the benefit of one or more series of Securities other than such
series) for a period of 90 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that
such notice is a "Notice of Default" hereunder, shall have been given
to the Company by the Trustee, by registered or certified mail, or to
the Company and the Trustee by the holders of at least 25% in
principal amount of the Securities of that series at the time
Outstanding;

(4) if the Securities of the series are convertible into shares
of common stock, failure by the Company to deliver common stock when
the holder or holders of such Securities elect to convert such
Securities into shares of common stock;

(5) the Company pursuant to or within the meaning of any
Bankruptcy Law (i) commences a voluntary case, (ii) consents to the
entry of an order for relief against it in an involuntary case, (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property or (iv) makes a general assignment
for the benefit of its creditors;

(6) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company in an
involuntary case, (ii) appoints a Custodian of the Company for all or
substantially all of their respective property, or (iii) orders the
liquidation of the Company, and the order or decree remains unstayed
and in effect for 90 days; or

(7) any other Event of Default provided with respect to
Securities of that series.

(b) In each and every such case, unless the principal of all the
Securities of that series shall have already become due and payable, either
the Trustee or the holders of not less than 25% in aggregate principal
amount of the Securities of that series then Outstanding hereunder, by
notice in writing to the Company (and to the Trustee if given by such
Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of such series) of all
the Securities of that series to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, notwithstanding anything contained in this Indenture or in the
Securities of that series or established with respect to that series
pursuant to Section 2.01 to the contrary.

(c) At any time after the principal of the Securities of that
series shall have been so declared due and payable, and before any judgment
or decree for the payment of the moneys due shall have been obtained or
entered as hereinafter provided, the holders of a majority in aggregate
principal amount of the Securities of that series then Outstanding
hereunder, by written notice to the Company and the Trustee, may rescind
and annul such declaration and its consequences if: (i) the Company has
paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Securities of that series and the
principal of (and premium, if any, on) any and all Securities of that
series that shall have become due otherwise than by acceleration (with
interest upon such principal and premium, if any, and, to the extent that
such payment is enforceable under applicable law, upon overdue installments
of interest, at the rate per annum or Yield to Maturity (in the case of
Original Issue Discount Securities) expressed in the Securities of that
series (or at the respective rates of interest or Yields to Maturity of all
the Securities, as the case may be) to the date of such payment or deposit)
and the amount payable to the Trustee under Section 7.06, and (ii) any and
all Events of Default under the Indenture with respect to such series,
other than the non-payment of principal on Securities of that series that
(or, if any Securities are Original Issue Discount Securities, such portion
of the principal as may be specified in the terms thereof) shall not have
become due by their terms, shall have been remedied or waived as provided
in Section 6.06.

No such rescission and annulment shall extend to or shall affect
any subsequent default or impair any right consequent thereon.

(d) In case the Trustee shall have proceeded to enforce any
right with respect to Securities of that series under this Indenture and
such proceedings shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the
Company, and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceedings had
been taken.

SECTION 6.02 Collection of Indebtedness and Suits for
Enforcement by Trustee.

(a) The Company covenants that (1) in case it shall default in
the payment of any installment of interest on any of the Securities of a
series, or any payment required by any sinking or analogous fund
established with respect to that series as and when the same shall have
become due and payable, and such default shall have continued for a period
of 30 days, or (2) in case it shall default in the payment of the principal
of (or premium, if any, on) any of the Securities of a series when the same
shall have become due and payable, whether upon maturity of the Securities
of a series or upon redemption or upon declaration or otherwise, then, upon
demand of the Trustee, the Company will pay to the Trustee, for the benefit
of the holders of the Securities of that series, the whole amount that then
shall have been become due and payable on all such Securities for principal
(and premium, if any) or interest, or both, as the case may be, with
interest upon the overdue principal (and premium, if any) and (to the
extent that payment of such interest is enforceable under applicable law)
upon overdue installments of interest at the rate per annum expressed in
the Securities of that series; and, in addition thereto, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection, and the amount payable to the Trustee under Section 7.06.

(b) If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or other obligor upon the Securities of that series and collect the
moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or other obligor upon the Securities of that
series, wherever situated.

(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or
judicial proceedings affected the Company, or its creditors or property,
the Trustee shall have power to intervene in such proceedings and take any
action therein that may be permitted by the court and shall (except as may
be otherwise provided by law) be entitled to file such proofs of claim and
other papers and documents as may be necessary or advisable in order to
have the claims of the Trustee and of the holders of Securities of such
series allowed for the entire amount due and payable by the Company under
the Indenture at the date of institution of such proceedings and for any
additional amount that may become due and payable by the Company after such
date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the
deduction of the amount payable to the Trustee under Section 7.06; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the holders of Securities of such series to make such
payments to the Trustee, and, in the event that the Trustee shall consent
to the making of such payments directly to such Securityholders, to pay to
the Trustee any amount due it under Section 7.06.

(d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to Securities
of that series, may be enforced by the Trustee without the possession of
any of such Securities, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall, after provision for payment to
the Trustee of any amounts due under Section 7.06, be for the ratable
benefit of the holders of the Securities of such series.

In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any of such rights, either at
law or in equity or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in the Indenture or in
aid of the exercise of any power granted in this Indenture, or to enforce
any other legal or equitable right vested in the Trustee by this Indenture
or by law.

Nothing contained herein shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of that series or the rights of any
holder thereof or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.

SECTION 6.03 Application of Moneys Collected.

Any moneys collected by the Trustee pursuant to this Article with
respect to a particular series of Securities shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such moneys on account of principal (or premium, if
any) or interest, upon presentation of the Securities of that series, and
notation thereon the payment, if only partially paid, and upon surrender
thereof if fully paid:

FIRST: To the payment of costs and expenses of collection and of
all amounts payable to the Trustee under Section 7.06; and

SECOND: To the payment of the amounts then due and unpaid upon
Securities of such series for principal and any premium and interest,
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal and any premium and interest, respectively.

SECTION 6.04 Limitation on Suits.

No holder of any Security of any series shall have any right by
virtue or by availing of any provision of this Indenture to institute any
suit, action or proceeding in equity or at law upon or under or with
respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such holder previously shall
have given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Securities of such series
specifying such Event of Default, as hereinbefore provided; (ii) the
holders of not less than 25% in aggregate principal amount of the
Securities of such series then Outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own
name as trustee hereunder; (iii) such holder or holders shall have offered
to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby; and (iv)
the Trustee for 60 days after its receipt of such notice, request and offer
of indemnity, shall have failed to institute any such action, suit or
proceeding and (v) during such 60 day period, the holders of a majority in
principal amount of the Securities of that series do not give the Trustee a
direction inconsistent with the request.

Notwithstanding anything contained herein to the contrary, any
other provisions of this Indenture, the right of any holder of any Security
to receive payment of the principal of and any premium and (subject to
Section 2.03) interest on such Security, as therein provided, on or after
the respective due dates expressed in such Security (or in the case of
redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or
redemption date, shall not be impaired or affected without the consent of
such holder and by accepting a Security hereunder it is expressly
understood, intended and covenanted by the taker and holder of every
Security of such series with every other such taker and holder and the
Trustee, that no one or more holders of Securities of such series shall
have any right in any manner whatsoever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of
the holders of any other of such Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for
the equal, ratable and common benefit of all holders of Securities of such
series. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.

SECTION 6.05 Rights and Remedies Cumulative; Delay or Omission
Not Waiver.

(a) Except as otherwise provided in Section 2.07, all powers and
remedies given by this Article to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not
exclusive of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce
the performance or observance of the covenants and agreements contained in
this Indenture or otherwise established with respect to such Securities.

(b) No delay or omission of the Trustee or of any holder of any
of the Securities to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right
or power, or shall be construed to be a waiver of any such default or on
acquiescence therein; and, subject to the provisions of Section 6.04, every
power and remedy given by this Article or by law to the Trustee or the
Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Securityholders.

SECTION 6.06 Control by Securityholders.

The holders of a majority in aggregate principal amount of the
Securities of any series at the time Outstanding, determined in accordance
with Section 8.04, shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee with respect to
such series; provided, however, that such direction shall not be in
conflict with any rule of law or with this Indenture or be unduly
prejudicial to the rights of holders of Securities of such series not
consenting; and provided, further, that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction. Prior to the taking of any action hereunder, the Trustee shall
be entitled to reasonable indemnification satisfactory to the Trustee
against all losses and expenses caused by taking or not taking such action.
Subject to the provisions of Section 7.01, the Trustee shall have the right
to decline to follow any such direction if the Trustee in good faith shall,
by a Responsible Officer or Officers of the Trustee, determine that the
proceeding so directed would involve the Trustee in personal liability.
The holders of a majority in aggregate principal amount of the Securities
of any series at the time Outstanding affected thereby, determined in
accordance with Section 8.04, may on behalf of the holders of all of the
Securities of such series waive any past default in the performance of any
of the covenants contained herein or established pursuant to Section 2.01
with respect to such series and its consequences, except a default in the
payment of the principal of or any premium or interest on, any of the
Securities of that series as and when the same shall become due by the
terms of such Securities otherwise than by acceleration (unless such
default has been cured and a sum sufficient to pay all matured installments
of interest and principal and any premium has been deposited with the
Trustee (in accordance with Section 6.01(c)). Upon any such waiver, the
default covered thereby shall be deemed to be cured for all purposes of
this Indenture and the Company, the Trustee and the holders of the
Securities of such series shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.

SECTION 6.07 Undertaking to Pay Costs.

All parties to this Indenture agree, and each holder of any
Securities by such holder's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of
this Section shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Securityholder, or group of Securityholders, holding
more than 10% in aggregate principal amount of the Outstanding Securities
of any series, or to any suit instituted by any Securityholder for the
enforcement of the payment of the principal of (or premium, if any) or
interest on any Security of such series, on or after the respective due
dates expressed in such Security or established pursuant to this Indenture.

ARTICLE VII.

CONCERNING THE TRUSTEE

SECTION 7.01 Certain Duties and Responsibilities of Trustee.

(a) The Trustee, prior to the occurrence of an Event of Default
with respect to the Securities of a series and after the curing of all
Events of Default with respect to the Securities of that series that may
have occurred, shall undertake to perform with respect to the Securities of
such series such duties and only such duties as are specifically set forth
in this Indenture, and no implied covenants shall be read into this
Indenture against the Trustee. In case an Event of Default with respect to
the Securities of a series has occurred (that has not been cured or
waived), the Trustee shall exercise with respect to Securities of that
series such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.

(b) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

(1) prior to the occurrence of an Event of Default with respect
to the Securities of a series and after the curing or waiving of all
such Events of Default with respect to that series that may have
occurred:

(i) the duties and obligations of the Trustee shall
with respect to the Securities of such series be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable with respect to the Securities
of such series except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and

(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may with respect to the Securities of
such series conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirement of this Indenture;

(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee, was negligent
in ascertaining the pertinent facts;

(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the holders of not less than a majority in principal
amount of the Securities of any series at the time Outstanding
(determined as provided in Section 8.04) relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee
under this Indenture with respect to the Securities of that series;
and

(4) None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably
assured to it.

SECTION 7.02 Certain Rights of Trustee.

Except as otherwise provided in Section 7.01:

(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;

(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution or
an instrument signed in the name of the Company, by the Chairman of the
Board of Directors, the Vice Chairman, the President or any Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer thereof (unless other evidence in respect thereof is
specifically prescribed herein);

(c) The Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted hereunder in good faith and in reliance thereon;

(d) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to a series of the
Securities (that has not been cured or waived) to exercise with respect to
Securities of that series such of the rights and powers vested in it by
this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs;

(e) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture;

(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security, or other papers or documents, unless requested in writing
so to do by the holders of not less than a majority in principal amount of
the Outstanding Securities of the particular series affected thereby
(determined as provided in Section 8.04); provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such costs, expenses or liabilities as
a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand; and

(g) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.

SECTION 7.03 Trustee Not Responsible for Recitals or Issuance
or Securities.

(a) The recitals contained herein and in the Securities shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same.

(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities.

(c) The Trustee shall not be accountable for the use or
application by the Company of any of the Securities or of the proceeds of
such Securities, or for the use or application of any moneys paid over by
the Trustee in accordance with any provision of this Indenture or
established pursuant to Section 2.01, or for the use or application of any
moneys received by any paying agent other than the Trustee.

SECTION 7.04 May Hold Securities.

The Trustee or any paying agent or Security Registrar, in its
individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not Trustee,
paying agent or Security Registrar.

SECTION 7.05 Moneys Held in Trust.

Subject to the provisions of Section 11.05, all moneys received
by the Trustee shall, until used or applied as herein provided, be held in
trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any moneys received by
it hereunder except such as it may agree with the Company to pay thereon.

SECTION 7.06 Compensation and Reimbursement.

(a) The Company covenants and agrees to pay to the Trustee, and
the Trustee shall be entitled to, such reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), as the Company, and the Trustee may from time
to time agree in writing, for all services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of
the powers and duties hereunder of the Trustee, and, except as otherwise
expressly provided herein, the Company will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all Persons not regularly in its
employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Company also covenants to indemnify the
Trustee (and its officers, agents, directors and employees) for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust, including
the reasonable costs and expenses of defending itself against any claim of
liability in the premises.

(b) The obligations of the Company under this Section to
compensate and indemnify the Trustee and to pay or reimburse the Trustee
for reasonable expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be
secured by a lien prior to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Securities.

SECTION 7.07 Reliance on Officers' Certificate.

Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of this Indenture the Trustee shall deem
it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting to take any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of
the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted to be
taken by it under the provisions of this Indenture upon the faith thereof.

SECTION 7.08 Disqualification; Conflicting Interests.

If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the
Trustee and the Company shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.

SECTION 7.09 Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee with respect to the
Securities issued hereunder which shall at all times be a corporation
organized and doing business under the laws of the United States of America
or any State or Territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. The Company may
not, nor may any Person directly or indirectly controlling, controlled by,
or under common control with the Company, serve as Trustee. In case at any
time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 7.10.

SECTION 7.10 Resignation and Removal; Appointment of Successor.

(a) The Trustee or any successor hereafter appointed, may at any
time resign with respect to the Securities of one or more series by giving
written notice thereof to the Company and by transmitting notice of
resignation by mail, first class postage prepaid, to the Securityholders of
such series, as their names and addresses appear upon the Security
Register. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee with respect to Securities of such
series by or pursuant to a Board Resolution. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after
the mailing of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor trustee with respect to Securities of such series, or any
Securityholder of that series who has been a bona fide holder of a Security
or Securities for at least six months may on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any one of the following shall occur:

(1) the Trustee shall fail to comply with the provisions of
Section 7.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Security or
Securities for at least six months; or

(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder; or

(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
proceeding, or a receiver of the Trustee or of its property shall be
appointed or consented to, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such
case, the Company may remove the Trustee with respect to all
Securities and appoint a successor trustee by or pursuant to a Board
Resolution, or, unless the Trustee's duty to resign is stayed as
provided herein, any Securityholder who has been a bona fide holder of
a Security or Securities for at least six months may, on behalf of
that holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon after
such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.

(c) The holders of a majority in aggregate principal amount of
the Securities of any series at the time Outstanding may at any time remove
the Trustee with respect to such series by so notifying the Trustee and the
Company and may appoint a successor Trustee for such series with the
consent of the Company.

(d) Any resignation or removal of the Trustee and appointment of
a successor trustee with respect to the Securities of a series pursuant to
any of the provisions of this Section shall become effective upon
acceptance of appointment by the successor trustee as provided in Section
7.11.

(e) Any successor trustee appointed pursuant to this Section may
be appointed with respect to the Securities of one or more series or all of
such series, and at any time there shall be only one Trustee with respect
to the Securities of any particular series.

SECTION 7.11 Acceptance of Appointment By Successor.

(a) In case of the appointment hereunder of a successor trustee
with respect to all Securities, every such successor trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor
trustee, such retiring Trustee shall, upon payment of its charges, execute
and deliver an instrument transferring to such successor trustee all the
rights, powers, and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held
by such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor trustee with respect to
the Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor trustee relates, (2) shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust, that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee and that no Trustee shall
be responsible for any act or failure to act on the part of any other
Trustee hereunder; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein, such retiring Trustee shall with
respect to the Securities of that or those series to which the appointment
of such successor trustee relates have no further responsibility for the
exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture, and each such
successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor trustee relates; but, on request of
the Company or any successor trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor trustee, to the extent
contemplated by such supplemental indenture, the property and money held by
such retiring Trustee hereunder with respect to the Securities of that or
those series to which the appointment of such successor trustee relates.

(c) Upon request of any such successor trustee, the Company
shall execute any and all instruments for more fully and certainly vesting
in and confirming to such successor trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case may
be.

(d) No successor trustee shall accept its appointment unless at
the time of such acceptance such successor trustee shall be qualified and
eligible under this Article.

(e) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Company shall transmit notice of the
succession of such trustee hereunder by mail, first class postage prepaid,
to the Securityholders, as their names and addresses appear upon the
Security Register. If the Company fails to transmit such notice within ten
days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be transmitted at the expense
of the Company.

SECTION 7.12 Merger, Conversion, Consolidation or Succession to
Business.

Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 7.08
and eligible under the provisions of Section 7.09, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities.

SECTION 7.13 Preferential Collection of Claims Against the
Company.

The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section
311(b) of the Trust Indenture Act. A Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act to
the extent included therein.

SECTION 7.14 Notice of Defaults.

If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give the holders of Securities of such series
notice of such default as and to the extent provided by the Trust Indenture
Act; provided, however, that in the case of any default of the character
specified in Section 6.01(3) with respect to Securities of such series, no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to Securities of such series.

ARTICLE VIII.

CONCERNING THE SECURITYHOLDERS

SECTION 8.01 Evidence of Action by Securityholders.

Whenever in this Indenture it is provided that the holders of a
majority or specified percentage in aggregate principal amount of the
Securities of a particular series may take any action (including the making
of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action), the fact that at the time of taking any
such action the holders of such majority or specified percentage of that
series have joined therein may be evidenced by any instrument or any number
of instruments of similar tenor executed by such holders of Securities of
that series in Person or by agent or proxy appointed in writing.

If the Company shall solicit from the Securityholders of any
series any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company may, at its option, as evidenced by an
Officers' Certificate, fix in advance a record date for such series for the
determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action, but the
Company shall have no obligation to do so. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or
other action may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Securities of
that series have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for
that purpose the Outstanding Securities of that series shall be computed as
of the record date; provided, however, that no such authorization,
agreement or consent by such Securityholders on the record date shall be
deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record
date.

SECTION 8.02 Proof of Execution by Securityholders.

Subject to the provisions of Section 7.01, proof of the execution
of any instrument by a Securityholder (such proof will not require
notarization) or his agent or proxy and proof of the holding by any Person
of any of the Securities shall be sufficient if made in the following
manner:

(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the
Trustee.

(b) The ownership of Securities shall be proved by the Security
Register of such Securities or by a certificate of the Security Registrar
thereof.

SECTION 8.03 Who May be Deemed Owners.

Prior to the due presentment for registration of transfer of any
Security, the Company, the Trustee, any paying agent and any Security
Registrar may deem and treat the Person in whose name such Security shall
be registered upon the books of the Company as the absolute owner of such
Security (whether or not such Security shall be overdue and notwithstanding
any notice of ownership or writing thereon made by anyone other than the
Security Registrar) for the purpose of receiving payment of or on account
of the principal of, premium, if any, and (subject to Section 2.03)
interest on such Security and for all other purposes; and neither the
Company nor the Trustee nor any paying agent nor any Security Registrar
shall be affected by any notice to the contrary.

SECTION 8.04 Certain Securities Owned by Company Disregarded.

In determining whether the holders of the requisite aggregate
principal amount of Securities of a particular series have concurred in any
direction, consent of waiver under this Indenture, the Securities of that
series that are owned by the Company or any other obligor on the Securities
of that series or by any Person directly or indirectly controlling or
controlled by or under common control with the Company or any other obligor
on the Securities of that series shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Securities of such series that
the Trustee actually knows are so owned shall be so disregarded. The
Securities so owned that have been pledged in good faith may be regarded as
Outstanding for the purposes of this Section, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not a Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other obligor. In
case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee.

SECTION 8.05 Actions Binding on Future Securityholders.

At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 8.01, of the taking of any action by the
holders of the majority or percentage in aggregate principal amount of the
Securities of a particular series specified in this Indenture in connection
with such action, any holder of a Security of that series that is shown by
the evidence to be included in the Securities the holders of which have
consented to such action may, by filing written notice with the Trustee,
and upon proof of holding as provided in Section 8.02, revoke such action
so far as concerns such Security. Except as aforesaid any such action
taken by the holder of any Security shall be conclusive and binding upon
such holder and upon all future holders and owners of such Security, and of
any Security issued in exchange therefor, on registration of transfer
thereof or in place thereof, irrespective of whether or not any notation in
regard thereto is made upon such Security. Any action taken by the holders
of the majority or percentage in aggregate principal amount of the
Securities of a particular series specified in this Indenture in connection
with such action shall be conclusively binding upon the Company, the
Trustee and the holders of all the Securities of that series.

ARTICLE IX.

SUPPLEMENTAL INDENTURES

SECTION 9.01 Supplemental Indentures Without the Consent of
Securityholders.

In addition to any supplemental indenture otherwise authorized by
this Indenture, the Company and the Trustee may from time to time and at
any time enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as then in
effect), without the consent of the Securityholders, for one or more of the
following purposes:

(a) to cure any ambiguity, defect, or inconsistency herein or in
the Securities of any series;

(b) to comply with Article Ten;

(d) to add to the covenants of the Company for the benefit of
the holders of all or any series of Securities (and if such covenants are
to be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company;

(e) to add to, delete from, or revise the conditions,
limitations, and restrictions on the authorized amount, terms, or purposes
of issue, authentication, and delivery of Securities, as herein set forth;

(f) to make any change that does not adversely affect the rights
of any Securityholder in any material respect; or

(g) to provide for the issuance of and establish the form and
terms and conditions of the Securities of any series as provided in Section
2.01, to establish the form of any certifications required to be furnished
pursuant to the terms of this Indenture or any series of Securities, or to
add to the rights of the holders of any series of Securities.

The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations that may be therein contained, but
the Trustee shall not be obligated to enter into any such supplemental
indenture that affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this
Section may be executed by the Company and the Trustee without the consent
of the holders of any of the Securities at the time Outstanding,
notwithstanding any of the provisions of Section 9.02.

SECTION 9.02 Supplemental Indentures With Consent of
Securityholders.

With the consent (evidenced as provided in Section 8.01) of the
holders of not less than a majority in aggregate principal amount of the
Securities of each series affected by such supplemental indenture or
indentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto (which shall conform to
the provisions of the Trust Indenture Act as then in effect) for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner not covered by Section 9.01 the
rights of the holders of the Securities of such series under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the holders of each Security then Outstanding
affected thereby, (i) extend the fixed maturity of any Securities of any
series, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof; (ii) reduce the amount of principal of
an Original Issue Discount Security or any other Security payable upon
acceleration of the maturity thereof; (iii) change the currency in which
any Security or any premium or interest is payable; (iv) impair the right
to enforce any payment on or with respect to any Security; (v) adversely
change the right to convert or exchange, including decreasing the
conversion rate or increasing the conversion price of, such Security (if
applicable); (vi) if the Securities are secured, change the terms and
conditions pursuant to which the Securities are secured in a manner adverse
to the holders of the secured Securities; (vii) reduce the percentage in
principal amount of outstanding Securities of any series, the consent of
whose holders is required for modification or amendment of this Indenture
or for waiver of compliance with certain provisions of this Indenture or
for waiver of certain defaults; (viii) reduce the requirements contained in
this Indenture for quorum or voting; (ix) change any obligations of the
Company to maintain an office or agency in the places and for the purposes
required by the indentures; or (x) modify any of the above provisions.

It shall not be necessary for the consent of the Securityholders
of any series affected thereby under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if
such consent shall approve the substance thereof.

SECTION 9.03 Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture pursuant to the
provisions of this Article or of Section 10.01, this Indenture shall, with
respect to such series, be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Company and
the holders of Securities of the series affected thereby shall thereafter
be determined, exercised and enforced hereunder subject in all respects to
such modifications and amendments, and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.

SECTION 9.04 Securities Affected by Supplemental Indentures.

Securities of any series, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental
indenture pursuant to the provisions of this Article or of Section 10.01,
may bear a notation in form approved by the Company, provided such form
meets the requirements of any exchange upon which such series may be
listed, as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities of that series so modified
as to conform, in the opinion of the Trustee and the Company, to any
modification of this Indenture contained in any such supplemental indenture
may be prepared and executed by the Company, authenticated by the Trustee
and delivered in exchange for the Securities of that series then
Outstanding.

SECTION 9.05 Execution of Supplemental Indentures.

Upon the request of the Company, accompanied by its Board
Resolutions authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of
Securityholders required to consent thereto as aforesaid, the Trustee shall
join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee
may in its discretion but shall not be obligated to enter into such
supplemental indenture. The Trustee, subject to the provisions of Section
7.01, may receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article is authorized or
permitted by, and conforms to, the terms of this Article and that it is
proper for the Trustee under the provisions of this Article to join in the
execution thereof; provided, however, that such Opinion of Counsel need not
be provided in connection with the execution of a supplemental indenture
that establishes the terms of a series of Securities pursuant to Section
2.01 hereof.

SECTION 9.06 Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act of 1939, as
amended, in effect on such date.

ARTICLE X.

SUCCESSOR CORPORATION

SECTION 10.01 Company May Consolidate, Etc.

Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of the Company with or into any
other Person (whether or not affiliated with the Company) or successive
consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company or
its successor or successors as an entirety, or substantially as an
entirety, to any other Person (whether or not affiliated with the Company
or its successor or successors) authorized to acquire and operate the same;
provided, however, the Company hereby covenants and agrees that, upon any
such consolidation, merger, sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of and any
premium and interest on all of the Securities of all series in accordance
with the terms of each series, according to their tenor and the due and
punctual performance and observance of all the covenants and conditions of
this Indenture with respect to each series or established with respect to
such series pursuant to Section 2.01 to be kept or performed by the Company
shall be expressly assumed, by supplemental indenture satisfactory in form
to the Trustee executed and delivered to the Trustee by the entity formed
by such consolidation, or into which the Company shall have been merged, or
by the entity which shall have acquired such property.

SECTION 10.02 Successor Substituted.

(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
Person, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual payment of
the principal of and any premium and interest on all of the Securities of
all series Outstanding and the due and punctual performance of all of the
covenants and conditions of this Indenture or established with respect to
each series of the Securities pursuant to Section 2.01 to be performed by
the Company with respect to each series, such successor Person shall
succeed to and be substituted for the Company with the same effect as if it
had been named as the Company herein, and thereupon the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and
the Securities.

(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not
in substance) may be made in the Securities thereafter to be issued as may
be appropriate.

(c) Nothing contained in this Indenture or in any of the
Securities shall prevent the Company from merging into itself or acquiring
by purchase or otherwise all or any part of the property of any other
Person (whether or not affiliated with the Company).

SECTION 10.03 Evidence of Consolidation, Etc. to Trustee.

The Trustee, subject to the provisions of Section 7.01, may
receive an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance, transfer or other disposition, and
any such assumption, comply with the provisions of this Article.

ARTICLE XI.

SATISFACTION AND DISCHARGE

SECTION 11.01 Satisfaction and Discharge of Indenture.

If at any time: (a) the Company shall have delivered to the
Trustee for cancellation all Securities of a series theretofore
authenticated (other than any Securities that shall have ben destroyed,
lost or stolen and that shall have been replaced or paid as provided in
Section 2.07 and Securities for whose payment money or Governmental
Obligations have theretofore been deposited in trust or segregated and held
in trust by the Company and thereupon repaid to the Company or discharged
from such trust, as provided in Section 11.05); or (b) all such Securities
of a particular series not theretofore delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the
giving of notice of redemption, and the Company shall deposit or cause to
be deposited with the Trustee as trust funds an amount of money in U.S.
dollars sufficient, or non-callable Governmental Obligations, the
principal of and interest on which when due, will be sufficient or a
combination thereof, sufficient in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay at maturity or upon redemption all
Securities of that series not theretofore delivered to the Trustee for
cancellation, including principal and any premium and interest due or to
become due to such date of maturity or date fixed for redemption, as the
case may be, and if the Company shall also pay or cause to be paid all
other sums payable hereunder with respect to such series by the Company
then this Indenture shall thereupon cease to be of further effect with
respect to such series except for the provisions of Sections 2.03, 2.05,
2.07, 4.01, 4.02, 4.03 and 7.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 7.06 and
11.05, that shall survive to such date and thereafter, and the Trustee, on
demand of the Company and at the cost and expense of the Company shall
execute proper instruments acknowledging satisfaction of and discharging
this Indenture with respect to such series.

SECTION 11.02 Discharge of Obligations.

If at any time all such Securities of a particular series not
heretofore delivered to the Trustee for cancellation or that have not
become due and payable as described in Section 11.01 shall have been paid
by the Company by depositing irrevocably with the Trustee as trust funds
money in U.S. dollars sufficient or an amount of non-callable Governmental
Obligations, the principal of and interest on which when due, will be
sufficient or a combination thereof, sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay at maturity
or upon redemption all such Securities of that series not theretofore
delivered to the Trustee for cancellation, including principal and any
premium and interest due or to become due to such date of maturity or date
fixed for redemption, as the case may be, and if the Company shall also
pay or cause to be paid all other sums payable hereunder by the Company
with respect to such series, then after the date such moneys or
Governmental Obligations, as the case may be, are deposited with the
Trustee the obligations of the Company under this Indenture with respect
to such series shall cease to be of further effect except for the
provisions of Sections 2.03, 2.05, 2.07, 4,01, 4.02, 4,03, 7.06, 7.10 and
11.05 hereof that shall survive until such Securities shall mature and be
paid. Thereafter, Sections 7.06 and 11.05 shall survive.

SECTION 11.03 Deposited Moneys to be Held in Trust.

All moneys or Governmental Obligations deposited with the Trustee
pursuant to Sections 11.01 or 11.02 shall be held in trust and shall be
available for payment as due, either directly or through any paying agent
(including the Company acting as its own paying agent), to the holders of
the particular series of Securities for the payment or redemption of which
such moneys or Governmental Obligations have been deposited with the
Trustee.

SECTION 11.04 Payment of Moneys Held by Paying Agents.

In connection with the satisfaction and discharge of this
Indenture all moneys or Governmental Obligations then held by any paying
agent under the provisions of this Indenture shall, upon demand of the
Company, be paid to the Trustee and thereupon such paying agent shall be
released from all further liability with respect to such moneys or
Governmental Obligations.

SECTION 11.05 Repayment to Company.

Any moneys or Governmental Obligations deposited with any paying
agent or the Trustee, or then held by the Company, in trust for payment of
principal of or premium or interest on the Securities of a particular
series that are not applied but remain unclaimed by the holders of such
Securities for at least two years after the date upon which the principal
of and any premium or interest on such Securities shall have respectively
become due and payable, shall be repaid to the Company on May 31 of each
year or (if then held by the Company) shall be discharged from such trust;
and thereupon the paying agent and the Trustee shall be released from all
further liability with respect to such moneys or Governmental Obligations,
and the holder of any of the Securities entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the
Company for the payment thereof.

ARTICLE XII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 12.01 No Recourse.

No recourse under or upon any obligation, covenant or agreement
of this Indenture, or of any Security, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or of any predecessor or successor corporation, either directly or
through the Company or any such predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are
solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors as such, of the Company or of any
predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of
the obligations, covenants or agreements contained in this Indenture or in
any of the Securities or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer or director
as such, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any of the Securities or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issuance of such Securities.

ARTICLE XIII.

MISCELLANEOUS PROVISIONS

SECTION 13.01 Effect on Successors and Assigns.

All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company shall bind their
respective successors and assigns, whether so expressed or not.

SECTION 13.02 Actions by Successor.

Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force
and effect by the corresponding board, committee or officer of any Person
that shall at the time be the lawful sole successor of the Company.

SECTION 13.03 Notices.

Except as otherwise expressly provided herein any notice or
demand that by any provision of this Indenture is required or permitted to
be given or served by the Trustee or by the holders of Securities to or on
the Company may be given or served by being deposited first class postage
prepaid in a post-office letterbox addressed (until another address is
filed in writing by the Company with the Trustee), as follows: Kmart
Corporation, 3100 West Big Beaver Road, Troy, Michigan 48084, Attention:
Treasurer, with copies of any notice of an Event of Default to the
attention of the General Counsel at the same address. Any notice, election,
request or demand by the Company or any Securityholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.

SECTION 13.04 Notice to Holders of Securities; Waiver.

Except as otherwise expressly provided herein, where this
Indenture provides for notice to holders of Securities of any event, such
notice shall be sufficiently given to holders of Securities if in writing
and mailed, first-class postage prepaid, to each holder of a Security
affected by such event, at the address of such holder as it appears in the
Security Register, not earlier than the earliest date, and not later than
the latest date, prescribed for the giving of such notice.

In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give
such notice to holders of Securities by mail, then such notification as
shall be made with the approval of the Trustee shall constitute sufficient
notice to such holder for every purpose hereunder. In any case where notice
to holders of Securities is given by mail, neither the failure to mail such
notice, nor any defect in any notice mailed to any particular holder of a
Security shall affect the sufficiency of such notice with respect to other
holders of Securities given as provided herein.

Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by holders of Securities shall
be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

SECTION 13.05 Governing Law.

This Indenture and each Security shall be deemed to be a contract
made under the internal laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State.

SECTION 13.06 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.

SECTION 13.07 Compliance Certificates and Opinions.

(a) Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the
Company, shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent have been
complied with, except that in the case of any such application or demand as
to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or
demand, no additional certificate or opinion need be furnished.

(b) Each certificate or opinion provided for in this Indenture
and delivered to the Trustee with respect to compliance with a condition or
covenant in this Indenture shall include (1) a statement that the Person
making such certificate or opinion has read such covenant or condition; (2)
a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of
such Person, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to
whether or not, in the opinion of such Person, such condition or covenant
has been complied with.

SECTION 13.08 Payments on Business Days.

Except as provided pursuant to Section 2.01 pursuant to a Board
Resolution, and as set forth in an Officers' Certificate, or established in
one or more indentures supplemental to this Indenture, in any case where
the date of maturity of interest or principal of any Security or the date
of redemption of any Security shall not be a Business Day, then payment of
interest or principal (and premium, if any) may be made on the next
succeeding Business Day with the same force and effect as if made on the
nominal date of maturity or redemption, and no interest shall accrue for
the period after such nominal date.

SECTION 13.09 Conflict with Trust Indenture Act.

If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Section 318(c) of the
Trust Indenture Act, such imposed duties shall control.

SECTION 13.10 Counterparts.

This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.

SECTION 13.11 Separability.

In case any one or more of the provisions contained in this
Indenture or in the Securities of any series shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of
this Indenture or of such Securities, but this Indenture and such
Securities shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

SECTION 13.12 Assignment.

The Company will have the right at all times to assign any of its
rights or obligations under this Indenture to a direct or indirect wholly-
owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company, will remain liable for all such obligations.
Subject to the foregoing, the Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns.
This Indenture may not otherwise be assigned by the parties thereto.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed all as of the day and year first above written.

KMART CORPORATION

By:________________________________
Name:
Title:

[ ],
as Trustee

By:_______________________________
Name:
Title:

Exhibit 4.2

==========================================================================

KMART CORPORATION,
Issuer

AND

[ ],
Trustee

___________________________________

INDENTURE

Dated as of [ ], 1999

___________________________________

Subordinated Debt Securities

==========================================================================

CROSS-REFERENCE TABLE(1)

Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
------------------- ----------

310(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.09
310(b) . . . . . . . . . . . . . . . . . . . . . . . . 7.08
7.10
310(c) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.13
311(b) . . . . . . . . . . . . . . . . . . . . . . . . 7.13
311(c) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . 5.01
5.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . 5.02(c)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . 5.02(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a)
313(b) . . . . . . . . . . . . . . . . . . . . . . . . 5.04(b)
313(c) . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a)
5.04(b)
313(d) . . . . . . . . . . . . . . . . . . . . . . . . 5.04(c)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . 5.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . 13.07
314(d) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . 13.07

- -----------------------
(1) This Cross-Reference Table does not constitute part of the
Indenture and shall not have any bearing on the interpretation of
any of its terms or provisions.

314(f) . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.01
315(b) . . . . . . . . . . . . . . . . . . . . . . . . 7.14
315(c) . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
315(e) . . . . . . . . . . . . . . . . . . . . . . . . 6.07
316(a) . . . . . . . . . . . . . . . . . . . . . . . . 6.06
8.04
316(b) . . . . . . . . . . . . . . . . . . . . . . . . 6.04
316(c) . . . . . . . . . . . . . . . . . . . . . . . . 8.01
317(a) . . . . . . . . . . . . . . . . . . . . . . . . 6.02
317(b) . . . . . . . . . . . . . . . . . . . . . . . . 4.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . 13.09

TABLE OF CONTENTS(1)

Page
----
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DEFINITIONS

SECTION 1.01 Definitions of Terms. . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Corporate Trust Office . . . . . . . . . . . . . . . . . . 2
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . 2
Default . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . 3
Global Security . . . . . . . . . . . . . . . . . . . . . . 3
Governmental Obligations . . . . . . . . . . . . . . . . . 3
"herein", "hereof" and "hereunder" . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest Payment Date . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 4
Original Issue Discount Security . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 4
Person . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Predecessor Security . . . . . . . . . . . . . . . . . . . 4
Responsible Officer . . . . . . . . . . . . . . . . . . . . 5
Securities . . . . . . . . . . . . . . . . . . . . . . . . 5
Securityholder . . . . . . . . . . . . . . . . . . . . . . 5
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . 5
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . 5
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . 6

- ----------------------
(1) This Table of Contents does not constitute part of the Indenture
and shall not have any bearing upon the interpretation of any of
its terms or provisions.

ARTICLE II.

ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES

SECTION 2.01 Designation and Terms of Securities. . . . . . . . . . . 6
SECTION 2.02 Form of Securities and Trustee's Certificate. . . . . . 9
SECTION 2.03 Denominations: Provisions for Payment. . . . . . . . . 9
SECTION 2.04 Execution and Authentication. . . . . . . . . . . . . . 11
SECTION 2.05 Registration of Transfer and Exchange. . . . . . . . . . 12
SECTION 2.06 Temporary Securities. . . . . . . . . . . . . . . . . . 13
SECTION 2.07 Mutilated, Destroyed, Lost or Stolen Securities . . . . 13
SECTION 2.08 Cancellation . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.09 Benefits of Indenture . . . . . . . . . . . . . . . . . 15
SECTION 2.10 Authenticating Agent . . . . . . . . . . . . . . . . . . 15
SECTION 2.11 Global Securities . . . . . . . . . . . . . . . . . . . 15

ARTICLE III.

REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

SECTION 3.01 Redemption . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.02 Notice of Redemption . . . . . . . . . . . . . . . . . . 17
SECTION 3.03 Payment Upon Redemption . . . . . . . . . . . . . . . . 18
SECTION 3.04 Sinking Fund . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.05 Satisfaction of Sinking Fund Payments with Securities . 19
SECTION 3.06 Redemption of Securities for Sinking Fund . . . . . . . 19

ARTICLE IV.

CERTAIN COVENANTS

SECTION 4.01 Payment of Principal, Premium and Interest . . . . . . . 20
SECTION 4.02 Maintenance of Office or Agency . . . . . . . . . . . . 20
SECTION 4.03 Paying Agents . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.04 Appointment to Fill Vacancy in Office of Trustee . . . . 22
SECTION 4.05 Compliance with Consolidation Provisions . . . . . . . . 22
SECTION 4.06 Statement by Officers as to Default. . . . . . . . . . . 22

ARTICLE V.

SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 5.01 Company to Furnish Trustee Names and Addresses of
Securityholders . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.02 Preservation of Information; Communications with
Securityholders . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.03 Reports by the Company . . . . . . . . . . . . . . . . . 23
SECTION 5.04 Reports by the Trustee . . . . . . . . . . . . . . . . . 24

ARTICLE VI.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 6.01 Events of Default . . . . . . . . . . . . . . . . . . . 24
SECTION 6.02 Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.03 Application of Moneys Collected . . . . . . . . . . . . 28
SECTION 6.04 Limitation on Suits . . . . . . . . . . . . . . . . . . 29
SECTION 6.05 Rights and Remedies Cumulative; Delay or Omission
Not Waiver . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.06 Control by Securityholders . . . . . . . . . . . . . . . 30
SECTION 6.07 Undertaking to Pay Costs . . . . . . . . . . . . . . . . 31

ARTICLE VII.

CONCERNING THE TRUSTEE

SECTION 7.01 Certain Duties and Responsibilities of Trustee . . . . . 31
SECTION 7.02 Certain Rights of Trustee . . . . . . . . . . . . . . . 33
SECTION 7.03 Trustee Not Responsible for Recitals or Issuance or
Securities . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.04 May Hold Securities . . . . . . . . . . . . . . . . . . 34
SECTION 7.05 Moneys Held in Trust . . . . . . . . . . . . . . . . . . 34
SECTION 7.06 Compensation and Reimbursement . . . . . . . . . . . . . 35
SECTION 7.07 Reliance on Officers' Certificate . . . . . . . . . . . 35
SECTION 7.08 Disqualification; Conflicting Interests . . . . . . . . 36
SECTION 7.09 Corporate Trustee Required; Eligibility . . . . . . . . 36
SECTION 7.10 Resignation and Removal; Appointment of Successor . . . 36
SECTION 7.11 Acceptance of Appointment By Successor. . . . . . . . . 37
SECTION 7.12 Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.13 Preferential Collection of Claims Against the
Company . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.14 Notice of Defaults. . . . . . . . . . . . . . . . . . . 39

ARTICLE VIII.

CONCERNING THE SECURITYHOLDERS

SECTION 8.01 Evidence of Action by Securityholders . . . . . . . . . 40
SECTION 8.02 Proof of Execution by Securityholders . . . . . . . . . 40
SECTION 8.03 Who May be Deemed Owners . . . . . . . . . . . . . . . . 41
SECTION 8.04 Certain Securities Owned by Company Disregarded . . . . 41
SECTION 8.05 Actions Binding on Future Securityholders . . . . . . . 42

ARTICLE IX.

SUPPLEMENTAL INDENTURES

SECTION 9.01 Supplemental Indentures Without the Consent of
Securityholders . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.02 Supplemental Indentures With Consent of
Securityholders . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.03 Effect of Supplemental Indentures . . . . . . . . . . . 44
SECTION 9.04 Securities Affected by Supplemental Indentures . . . . . 44
SECTION 9.05 Execution of Supplemental Indentures. . . . . . . . . . 45
SECTION 9.06 Conformity with Trust Indenture Act. . . . . . . . . . . 45

ARTICLE X.

SUCCESSOR CORPORATION

SECTION 10.01 Company May Consolidate, Etc. . . . . . . . . . . . . . 45
SECTION 10.02 Successor Substituted . . . . . . . . . . . . . . . . . 46
SECTION 10.03 Evidence of Consolidation, Etc. to Trustee . . . . . . . 46

ARTICLE XI.

SATISFACTION AND DISCHARGE

SECTION 11.01 Satisfaction and Discharge of Indenture . . . . . . . . 46
SECTION 11.02 Discharge of Obligations . . . . . . . . . . . . . . . . 47
SECTION 11.03 Deposited Moneys to be Held in Trust . . . . . . . . . . 48
SECTION 11.04 Payment of Moneys Held by Paying Agents . . . . . . . . 48
SECTION 11.05 Repayment to Company. . . . . . . . . . . . . . . . . . 48

ARTICLE XII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 12.01 No Recourse. . . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE XIII.

MISCELLANEOUS PROVISIONS

SECTION 13.01 Effect on Successors and Assigns. . . . . . . . . . . . 49
SECTION 13.02 Actions by Successor . . . . . . . . . . . . . . . . . . 49
SECTION 13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 13.04 Notice to Holders of Securities; Waiver. . . . . . . . . 50
SECTION 13.05 Governing Law . . . . . . . . . . . . . . . . . . . . . 50
SECTION 13.06 Effect of Headings and Table of Contents. . . . . . . . 51
SECTION 13.07 Compliance Certificates and Opinions . . . . . . . . . . 51
SECTION 13.08 Payments on Business Days . . . . . . . . . . . . . . . 51
SECTION 13.09 Conflict with Trust Indenture Act . . . . . . . . . . . 52
SECTION 13.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.11 Separability. . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.12 Assignment . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE XIV.

SUBORDINATION OF SECURITIES

SECTION 14.01 Subordination Terms . . . . . . . . . . . . . . . . . . 52

INDENTURE, dated as of [ ], 1999, among Kmart Corporation, a
Michigan corporation (the "Company"), and [ ], as trustee (the "Trustee"):

WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of unsecured subordinated debt securities (hereinafter referred to
as the "Securities"), in an unlimited aggregate principal amount to be
issued from time to time in one or more series as in this Indenture
provided, as registered Securities without coupons, to be authenticated by
the certificate of the Trustee;

WHEREAS, to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered, the Company has
duly authorized the execution of this Indenture; and

WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been done.

ARTICLE I.

DEFINITIONS

SECTION 1.01 Definitions of Terms.

"Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.

"Board of Directors" means the Board of Directors of the Company
or any duly authorized committee of such Board.

"Corporate Trust Office" means the office of the Trustee at
which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof is located at
[ ], except that whenever a provision herein refers
to an office or agency of the Trustee in the Borough of Manhattan, The
City of New York, such office is located, at the date hereof, at
[ ].

"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.

"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.

"Event of Default" means, with respect to Securities of a
particular series any event specified in Section 6.01, continued for the
period of time, if any, therein designated.

"herein", "hereof" and "hereunder", and other words of similar
import, refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

"Interest" when used with respect to an Original Issue Discount
Security which by its terms bears interest only after maturity, means
interest payable after maturity.

"Securities" means the debt Securities authenticated and
delivered under this Indenture.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, subject to the provisions of Sections 9.01, 9.02, and 10.01, as in
effect at the date of execution of this instrument.

ARTICLE II.

ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES

SECTION 2.01 Designation and Terms of Securities.

(1) the title of the Security of the series (which shall
distinguish the Securities of the series from all other Securities);

(3) the date or dates on which the principal of the Securities
of the series is payable;

(4) the rate or rates at which the Securities of the series
shall bear interest or the manner of calculation of such rate or
rates, if any;

(5) the place or places where payments with respect to the
Securities of the series shall be payable;

(7) the right, if any, to extend the interest payment periods
and the duration of such extension;

(10) the subordination terms of the Securities of the series;

(11) the form of the Securities of the series including the form
of the Certificate of Authentication for such series;

(12) if other than denominations of one thousand U.S. dollars
($1,000) or any integral multiple thereof, the denominations in which
the Securities of the series shall be issuable;

(13) the currency or currency units in which payment of the
principal of and any premium and interest on the Securities of the
series shall be payable;

(14) the terms pursuant to which the Securities of the series are
subject to defeasance;

(15) the terms and conditions, if any, pursuant to which the
Securities of the series are secured;

(16) whether any of the Securities of the series will be issuable
in whole or in part in temporary or permanent global form or in the
form of book-entry securities and, in such case, the identity for the
Depositary for such series;

(17) whether the Securities of the series will be convertible
into shares of common stock or other securities of the Company and, if
so, the terms and conditions upon which such Securities will be so
convertible, including the conversion price, the conversion period and
any provisions pursuant to which the number of shares of common stock
or other securities of the Company to be received by the holders of
such series of Securities would be subject to adjustment;

(18) if the amount of payments of principal of and any premium or
interest on the Securities of the series may be determined with
reference to an index, the manner in which such amounts shall be
determined;

(19) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof
pursuant to Section 6.01;

(20) any additional or different Events of Default or restrictive
covenants provided for with respect to the Securities of the series;

(21) any provisions granting special rights to holders when a
specified event occurs;

(22) any special tax implications of the Securities of the
series, including provisions for Original Issue Discount Securities,
if offered; and

(23) any and all other terms with respect to such series (which
terms shall not be inconsistent with the terms of this Indenture)
including any terms which may be required by or advisable under United
States laws or regulations or advisable in connection with the
marketing of Securities of that series.

SECTION 2.02 Form of Securities and Trustee's Certificate.

SECTION 2.03 Denominations: Provisions for Payment.

The Securities shall be issuable as registered Securities and in
the denominations of one thousand U.S. dollars ($1,000) or any integral
multiple thereof, subject to Section 2.01(11). The Securities of a
particular series shall bear interest payable on the dates and at the rate
specified with respect to that series. Unless otherwise provided pursuant
to Section 2.01, the principal of and the interest on the Securities of any
series, as well as any premium thereon in case of redemption thereof prior
to maturity, shall be payable in the coin or currency of the United States
of America that at the time is legal tender for public and private debt, at
the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, the City and State of New York. Each Security shall
be dated the date of its authentication. Unless otherwise provided pursuant
to Section 2.01, interest on the Securities shall be computed on the basis
of a 360-day year composed of twelve 30-day months.

SECTION 2.04 Execution and Authentication.

SECTION 2.05 Registration of Transfer and Exchange.

SECTION 2.06 Temporary Securities.

SECTION 2.07 Mutilated, Destroyed, Lost or Stolen Securities.

SECTION 2.08 Cancellation.

SECTION 2.09 Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or
implied, shall give or be construed to give to any Person, other than the
parties hereto and the holders of the Securities (and, with respect to the
provisions of Article Fourteen, the holders of senior indebtedness) any
legal or equitable right, remedy or claim under or in respect of this
Indenture, or under any covenant, condition or provision herein contained;
all such covenants, conditions and provisions being for the sole benefit of
the parties hereto and of the holders of the Securities (and, with respect
to the provisions of Article Fourteen, the holders of senior indebtedness).

SECTION 2.10 Authenticating Agent.

SECTION 2.11 Global Securities.

ARTICLE III.
REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

SECTION 3.01 Redemption.

The Company may redeem the Securities of any series issued
hereunder on and after the dates and in accordance with the terms
established for such series pursuant to Section 2.01 hereof.

SECTION 3.02 Notice of Redemption.

SECTION 3.03 Payment Upon Redemption.

SECTION 3.04 Sinking Fund.

SECTION 3.05 Satisfaction of Sinking Fund Payments with
Securities.

SECTION 3.06 Redemption of Securities for Sinking Fund.

ARTICLE IV.

CERTAIN COVENANTS

SECTION 4.01 Payment of Principal, Premium and Interest.

SECTION 4.02 Maintenance of Office or Agency.

SECTION 4.03 Paying Agents.

(4) that it will perform all other duties of paying agent as set
forth in this Indenture.

SECTION 4.04 Appointment to Fill Vacancy in Office of Trustee.

SECTION 4.05 Compliance with Consolidation Provisions.

SECTION 4.06 Statement by Officers as to Default.

The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate signed by its principal executive officer, principal
financial officer or principal accounting officer stating whether or not to
the best knowledge of the signer thereof the Company is in default in the
performance and observance of any of the terms, provisions and conditions
of this Indenture, and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge.

ARTICLE V.

SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 5.01 Company to Furnish Trustee Names and Addresses of
Securityholders.

SECTION 5.02 Preservation of Information; Communications with
Securityholders.

(b) The Trustee may destroy any list furnished to it as provided
in Section 5.01 upon receipt of a new list so furnished.

SECTION 5.03 Reports by the Company.

SECTION 5.04 Reports by the Trustee.

(b) The Trustee shall comply with Section 313(b) and 313(c) of
the Trust Indenture Act.

ARTICLE VI.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 6.01 Events of Default.

(a) Whenever used herein with respect to Securities of a
particular series, "Event of Default" means any one or more of the
following events that has occurred and is continuing:

(7) any other Event of Default provided with respect to
Securities of that series.

No such rescission and annulment shall extend to or shall affect
any subsequent default or impair any right consequent thereon.

SECTION 6.02 Collection of Indebtedness and Suits for
Enforcement by Trustee.

SECTION 6.03 Application of Moneys Collected.

FIRST: To the payment of costs and expenses of collection and of
all amounts payable to the Trustee under Section 7.06;

SECOND: To the payment of all senior indebtedness of the Company
if and to the extent required by Article Fourteen; and

THIRD: To the payment of the amounts then due and unpaid upon
Securities of such series for principal and any premium and interest,
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal and any premium and interest, respectively.

SECTION 6.04 Limitation on Suits.

SECTION 6.05 Rights and Remedies Cumulative; Delay or Omission
Not Waiver.

SECTION 6.06 Control by Securityholders.

SECTION 6.07 Undertaking to Pay Costs.

ARTICLE VII.

CONCERNING THE TRUSTEE

SECTION 7.01 Certain Duties and Responsibilities of Trustee.

(b) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

SECTION 7.02 Certain Rights of Trustee.

Except as otherwise provided in Section 7.01:

SECTION 7.03 Trustee Not Responsible for Recitals or Issuance
or Securities.

(a) The recitals contained herein and in the Securities shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same.

(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities.

SECTION 7.04 May Hold Securities.

SECTION 7.05 Moneys Held in Trust.

SECTION 7.06 Compensation and Reimbursement.

SECTION 7.07 Reliance on Officers' Certificate.

SECTION 7.08 Disqualification; Conflicting Interests.

SECTION 7.09 Corporate Trustee Required; Eligibility.

SECTION 7.10 Resignation and Removal; Appointment of Successor.

(b) In case at any time any one of the following shall occur:

(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder; or

SECTION 7.11 Acceptance of Appointment By Successor.

(d) No successor trustee shall accept its appointment unless at
the time of such acceptance such successor trustee shall be qualified and
eligible under this Article.

SECTION 7.12 Merger, Conversion, Consolidation or Succession to
Business.

SECTION 7.13 Preferential Collection of Claims Against the
Company.

SECTION 7.14 Notice of Defaults.

ARTICLE VIII.

CONCERNING THE SECURITYHOLDERS

SECTION 8.01 Evidence of Action by Securityholders.

SECTION 8.02 Proof of Execution by Securityholders.

(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the
Trustee.

(b) The ownership of Securities shall be proved by the Security
Register of such Securities or by a certificate of the Security Registrar
thereof.

SECTION 8.03 Who May be Deemed Owners.

SECTION 8.04 Certain Securities Owned by Company Disregarded.

SECTION 8.05 Actions Binding on Future Securityholders.

ARTICLE IX.

SUPPLEMENTAL INDENTURES

SECTION 9.01 Supplemental Indentures Without the Consent
of Securityholders.

(a) to cure any ambiguity, defect, or inconsistency herein or in
the Securities of any series;

(b) to comply with Article Ten;

(f) to make any change that does not adversely affect the rights
of any Securityholder in any material respect; or

pursuant to the terms of this Indenture or any series of Securities, or to
add to the rights of the holders of any series of Securities.

SECTION 9.02 Supplemental Indentures With Consent of
Securityholders.

With the consent (evidenced as provided in Section 8.01) of the
holders of not less than a majority in aggregate principal amount of the
Securities of each series affected by such supplemental indenture or
indentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto (which shall conform to
the provisions of the Trust Indenture Act as then in effect) for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner not covered by Section 9.01 the
rights of the holders of the Securities of such series under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the holders of each Security then Outstanding
affected thereby, (i) extend the fixed maturity of any Securities of any
series, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof; (ii) reduce the amount of principal of
an Original Issue Discount Security or any other Security payable upon
acceleration of the maturity thereof; (iii) change the currency in which
any Security or any premium or interest is payable; (iv) impair the right
to enforce any payment on or with respect to any Security; (v) adversely
change the right to convert or exchange, including decreasing the
conversion rate or increasing the conversion price of, such Security (if
applicable); (vi) modify the subordination provisions in a manner adverse
to the holders of such Securities; (vii) if the Securities are secured,
change the terms and conditions pursuant to which the Securities are
secured in a manner adverse to the holders of the secured Securities;
(viii) reduce the percentage in principal amount of outstanding Securities
of any series, the consent of whose holders is required for modification or
amendment of this Indenture or for waiver of compliance with certain
provisions of this Indenture or for waiver of certain defaults; (ix) reduce
the requirements contained in this Indenture for quorum or voting; (x)
change any obligations of the Company to maintain an office or agency in
the places and for the purposes required by the indentures; or (xi) modify
any of the above provisions.

SECTION 9.03 Effect of Supplemental Indentures.

SECTION 9.04 Securities Affected by Supplemental Indentures.

SECTION 9.05 Execution of Supplemental Indentures.

SECTION 9.06 Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act of 1939, as
amended, in effect on such date.

ARTICLE X.

SUCCESSOR CORPORATION

SECTION 10.01 Company May Consolidate, Etc.

SECTION 10.02 Successor Substituted.

SECTION 10.03 Evidence of Consolidation, Etc. to Trustee.

ARTICLE XI.

SATISFACTION AND DISCHARGE

SECTION 11.01 Satisfaction and Discharge of Indenture.

SECTION 11.02 Discharge of Obligations.

SECTION 11.03 Deposited Moneys to be Held in Trust.

SECTION 11.04 Payment of Moneys Held by Paying Agents.

SECTION 11.05 Repayment to Company.

ARTICLE XII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 12.01 No Recourse.

ARTICLE XIII.

MISCELLANEOUS PROVISIONS

SECTION 13.01 Effect on Successors and Assigns.

All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company shall bind their
respective successors and assigns, whether so expressed or not.

SECTION 13.02 Actions by Successor.

SECTION 13.03 Notices.

SECTION 13.04 Notice to Holders of Securities; Waiver.

SECTION 13.05 Governing Law.

SECTION 13.06 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.

SECTION 13.07 Compliance Certificates and Opinions.

SECTION 13.08 Payments on Business Days.

SECTION 13.09 Conflict with Trust Indenture Act.

If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Section 318(c) of the
Trust Indenture Act, such imposed duties shall control.

SECTION 13.10 Counterparts.

This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.

SECTION 13.11 Separability.

SECTION 13.12 Assignment.

ARTICLE XIV.

SUBORDINATION OF SECURITIES

SECTION 14.01 Subordination Terms.

The payment by the Company of the principal of and any premium
and interest on any series of Securities issued hereunder shall be
subordinated to the extent set forth in an indenture supplemental hereto
relating to such Securities.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed all as of the day and year first above written.

KMART CORPORATION

By:_____________________________
Name:
Title:

[ ],
as Trustee

By:____________________________
Name:
Title:

Exhibit 5.1

Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022

April 20, 1999

Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084

Re: Kmart Corporation
Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as special counsel to Kmart Corporation, a Michigan
corporation (the "Company"), in connection with the Registration Statement
on Form S-3 (the "Registration Statement") filed by the Company with the
Securities and Exchange Commission (the "Commission") on March 19, 1999
under the Securities Act of 1933, as amended (the "Act"). The Registration
Statement relates to the issuance and sale from time to time, pursuant to
Rule 415 of the General Rules and Regulations promulgated under the Act, of
the following securities of the Company with an aggregate public offering
price of up to $1,000,000,000 or the equivalent thereof, based on the
applicable exchange rate at the time of sale, in one or more foreign
currencies, currency units or composite currencies as shall be designated
by the Company: (i) senior or subordinated debt securities, which may be
secured or unsecured, in one or more series (the "Debt Securities"), which
may be issued under one or more indentures relating to either senior debt
securities or subordinated debt securities, as applicable (the "Indenture"
or "Indentures"), proposed to be entered into between the Company and
trustees to be named (the "Trustee" or "Trustees"); (ii) shares of
preferred stock, no par value (the "Preferred Stock"), in one or more
series; (iii) shares of common stock, $1.00 par value per share, of the
Company ("Common Stock"); (iv) warrants ("Warrants") to purchase Debt
Securities, Preferred Stock, Common Stock or other securities of the
Company as shall be designated by the Company at the time of offering
issued pursuant to one or more warrant agreements (each a "Warrant
Agreement") proposed to be entered into between the Company and a warrant
agent to be named (the "Warrant Agent"); and (v) such indeterminate amount
of Debt Securities and number of shares of Preferred Stock or Common Stock,
as may be issued upon conversion, exchange or exercise of any Debt
Securities, Preferred Stock or Warrants, including such shares of Preferred
Stock or Common Stock as may be issued pursuant to anti-dilution
adjustments, in amounts, at prices and on terms to be determined at the
time of offering (the "Indeterminate Stock"). The Debt Securities, the
Preferred Stock, the Common Stock, the Warrants, and the Indeterminate
Stock are collectively referred to herein as the "Offered Securities."

This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.

In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the
Registration Statement relating to the Offered Securities; (ii) the forms
of Indentures; (iii) the Restated Articles of Incorporation of the Company,
as amended to the date hereof (the "Articles of Incorporation"); (iv) the
By-laws of the Company, as currently in effect (the "By-laws"); and (v)
certain resolutions adopted to date by the Board of Directors of the
Company (the "Board of Directors") relating to the registration of the
Offered Securities. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other documents,
certificates and records as we have deemed necessary or appropriate as a
basis for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed,
photostatic or facsimile copies and the authenticity of the originals of
such latter documents. In making our examination of executed documents or
documents to be executed, we have assumed that the parties thereto, other
than the Company, had or will have the power, corporate or other, to enter
into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution
and delivery by such parties of such documents and that such documents
constitute or will constitute valid and binding obligations of such
parties. We have assumed that the Indentures will be duly authorized,
executed and delivered by the applicable Trustees and that any Debt
Securities that may be issued will be manually signed by duly authorized
officers of the Trustees. In addition, we have assumed that the terms of
the Offered Debt Securities (defined below) and Offered Warrants (as
defined below) will have been established so as not to violate, conflict
with or constitute a default under (i) any agreement or instrument to which
the Company or its properties is subject, (ii) any law, rule or regulation
to which the Company is subject (except that we do not make the assumption
set forth in this clause (ii) with respect to those laws, rules and
regulations of the States of New York and of the United States of America,
in each case, that, in our experience, are normally applicable to
transactions of the type provided for by, but without our having made any
special investigation with respect to any other laws, rules or
regulations), (iii) any judicial or regulatory order or decree of any
governmental authority or (iv) any consent, approval, license,
authorization or validation of, or filing, recording or registration with
any governmental authority. We have also assumed that (i) the Company has
duly authorized the issuance of the Offered Securities and the filing of
the Registration Statement under Michigan law; (ii) the Indentures and the
Warrant Agreement will be duly authorized, executed and delivered by the
Company under Michigan law; (iii) the choice of New York law in the
Indentures and the Warrant Agreement is legal and valid under the laws of
other applicable jurisdictions; and (iv) the execution by the Company of
the Indentures and the Warrant Agreement and the performance by the Company
of its obligations thereunder will not violate or conflict with any laws of
the State of Michigan. Reference is made to the opinion of Dickinson
Wright PLLC filed as Exhibit 5.2 to the Registration Statement with respect
to matters under the laws of the State of Michigan and our opinions set
forth herein are subject to the same limitations, qualifications and
assumptions set forth in such opinion. As to any facts material to the
opinions expressed herein which were not independently established or
verified, we have relied upon oral or written statements and
representations of officers and other representatives of the Company and
others.

Members of our firm are admitted to the bar in the State of New York
and we do not express any opinion as to the laws of any other jurisdiction
other than the laws of the United States of America to the extent referred
to specifically herein.

Based on and subject to the foregoing and to the other qualifications
and limitations set forth herein, we are of the opinion that:

1. With respect to any series of Debt Securities (the "Offered
Debt Securities"), when (i) the Registration Statement, as finally amended
(including all necessary post-effective amendments), has become effective
under the Act and the applicable Indenture has been qualified under the
Trust Indenture Act of 1939, as amended; (ii) an appropriate prospectus
supplement or term sheet with respect to the Offered Debt Securities has
been prepared, delivered and filed in compliance with the Act and the
applicable rules and regulations thereunder; (iii) if the Offered Debt
Securities are to be sold pursuant to a firm commitment underwritten
offering, the underwriting agreement with respect to the Offered Debt
Securities has been duly authorized, executed and delivered by the Company
and the other parties thereto; (iv) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the
Company have taken all necessary corporate action to approve the issuance
and terms of the Offered Debt Securities and related matters; (v) the terms
of the Offered Debt Securities and of their issuance and sale have been
duly established in conformity with the applicable Indenture so as not to
violate any applicable law, the Articles of Incorporation or By-laws of the
Company or result in a default under or breach of any agreement or
instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company; and (vi) the Offered Debt Securities have
been duly executed and authenticated in accordance with the provisions of
the applicable Indenture and duly delivered to the purchasers thereof upon
payment of the agreed-upon consideration therefor, the Offered Debt
Securities (including any Debt Securities duly issued upon exercise of any
Warrants), when issued and sold in accordance with the applicable Indenture
and the applicable underwriting agreement, if any, or any other duly
authorized, executed and delivered valid and binding purchase or agency
agreement, will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally, (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity), (c)
public policy considerations which may limit the rights of parties to
obtain further remedies, (d) requirements that a claim with respect to any
Offered Debt Securities denominated other than in United States dollars (or
a judgment denominated other than in United States dollars in respect of
such claim) be converted into United States dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law, and (e)
governmental authority to limit, delay or prohibit the making of payments
outside the United States or in foreign currencies, currency units or
composite currencies.

2. With respect to any series of Warrants (the "Offered
Warrants"), when (i) the Registration Statement, as finally amended
(including all necessary post-effective amendments), has become effective
under the Act; (ii) an appropriate prospectus supplement or term sheet with
respect to the Offered Warrants has been prepared, delivered and filed in
compliance with the Act and the applicable rules and regulations
thereunder; (iii) if the Offered Warrants are to be sold pursuant to a firm
commitment underwritten offering, an underwriting agreement with respect to
the Offered Warrants has been duly authorized, executed and delivered by
the Company and the other parties thereto; (iv) the Board of Directors,
including any appropriate committee appointed thereby, and appropriate
officers of the Company have taken all necessary corporate action to
approve the issuance and terms of the Offered Warrants and related matters;
(v) the terms of the Offered Warrants and of their issuance and sale have
been duly established in conformity with the Warrant Agreement so as not to
violate any applicable law, the Articles of Incorporation or By-laws of the
Company or result in a default under or breach of any agreement or
instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company by the Company and the applicable Warrant
Agent; and (vi) the Offered Warrants have been duly executed, delivered and
countersigned in accordance with the provisions of the Warrant Agreement
and duly issued and sold in the applicable form to be filed as an exhibit
to the Registration Statement or any amendment thereto and in the manner
contemplated in the Registration Statement or any prospectus supplement or
term sheet relating thereto, the Offered Warrants, when issued and sold in
accordance with the applicable Warrant Agreement and the applicable
underwriting agreement or any other duly authorized, executed and delivered
valid and binding purchase or agency agreement, will be valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms, except to the extent that enforcement thereof
may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity); and (c) public policy considerations which may limit the
rights of parties to obtain further remedies.

Dickinson Wright PLLC is permitted to rely upon this opinion for
the purpose of delivering its opinion to the Company in its capacity as
counsel to the Company in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act. We hereby consent to the filing
of this opinion with the Commission as an exhibit to the Registration
Statement. We also hereby consent to the use of our name under the heading
"Legal Matters" in the prospectus which forms a part of the Registration
Statement. In giving this consent, we do not thereby admit that we are
within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission promulgated
thereunder. This opinion is expressed as of the date hereof unless
otherwise expressly stated, and we disclaim any undertaking to advise you
of any subsequent changes in the facts stated or assumed herein or of any
subsequent changes in applicable law.

Very truly yours,

/s/ Skadden, Arps, Slate, Meagher & Flom LLP

Exhibit 5.2

DICKINSON WRIGHT PLLC
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226-3425

April 20, 1999

Kmart Corporation
3100 West Big Beaver Road
Troy, MI 48084

RE: KMART CORPORATION
REGISTRATION STATEMENT ON FORM S-3

Gentlemen:

This opinion is furnished by us as counsel for Kmart Corporation, a
Michigan corporation (the "Company"), in connection with the Registration
Statement on Form S-3 (the "Registration Statement") filed March 19, 1999
by the Company with the Securities and Exchange Commission (the
"Commission"). The Registration Statement relates to the issuance and sale
from time to time, pursuant to Rule 415 of the General Rules and
Regulations promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), of the following securities of the Company with an
aggregate initial public offering price of up to $1,000,000,000: (i)
senior or subordinated debt securities, which may be secured or unsecured,
in one or more series (the "Debt Securities"), which may be issued under
Indentures (the "Indenture" or "Indentures") proposed to be entered into
between the Company and trustees to be named (the "Trustee" or "Trustees");
(ii) shares of preferred stock, no par value (the "Preferred Stock"), in
one or more series; (iii) shares of common stock, par value $1.00 per
share, of the Company ("Common Stock"); (iv) warrants ("Warrants") to
purchase Debt Securities, Preferred Stock, Common Stock or other securities
of the Company as shall be designated by the Company at the time of
offering issued pursuant to one or more warrant agreements (each a "Warrant
Agreement") proposed to be entered into between the Company and a warrant
agent to be named (the "Warrant Agent"); and (v) such indeterminate amount
of Debt Securities and number of shares of Preferred Stock or Common Stock,
as may be issued upon conversion, exchange or exercise of any Debt
Securities, Preferred Stock or Warrants, including such shares of Preferred
Stock or Common Stock as may be issued pursuant to anti-dilution
adjustments, in amounts, at prices and on terms to be determined at the
time of offering (the "Indeterminate Stock"). The Debt Securities, the
Preferred Stock, the Common Stock, the Warrants, and the Indeterminate
Stock are collectively referred to herein as the "Offered Securities."

This opinion is delivered in accordance with the requirements of Items
601(b)(5) of Regulation S-K under the Securities Act.

We have examined and are familiar with originals or copies of such
documents, corporate records and other instruments as we have deemed
necessary or appropriate in connection with this opinion, including (i) the
form of Registration Statement relating to the Offered Securities; (ii) the
forms of Indentures; (iii) the Restated Articles of Incorporation of the
Company, as amended; (iv) the By-laws of the Company as currently in
effect; and (v) resolutions adopted to date by the Board of Directors of
the Company (the "Board of Directors") relating to the registration of the
Offered Securities.

We are members of the Bar in the State of Michigan and we do not
express any opinion as to the laws of any other jurisdiction other than the
laws of the United States of America to the extent referred to specifically
herein. The Offered Securities may be issued from time to time on a
delayed or continuous basis, and this opinion is limited to the laws,
including the rules and regulations, as in effect on the date hereof.

Based upon and subject to the foregoing, we are of the opinion that:

1. With respect to the shares of any series of Preferred Stock, (the
"Offered Preferred Stock"), when (i) the Registration Statement, as finally
amended (including all necessary post-effective amendments), has become
effective; (ii) an appropriate prospectus supplement or term sheet with
respect to the shares of the Offered Preferred Stock has been prepared,
delivered and filed in compliance with the Securities Act and the
applicable rules and regulations thereunder; (iii) if the Offered Preferred
Stock is to be sold pursuant to a firm commitment underwritten offering,
the underwriting agreement with respect to the shares of the Offered
Preferred Stock has been duly authorized, executed and delivered by the
Company and the other parties thereto; (iv) the Board of Directors,
including any appropriate committee appointed thereby, and appropriate
officers of the Company have taken all necessary corporate action to
approve the issuance and terms of the shares of the Offered Preferred Stock
and related matters, including the adoption of a Certificate of Designation
for the Offered Preferred Stock in accordance with the applicable
provisions of Michigan law (the "Certificate of Designation") in the form
to be filed as an exhibit to the Registration Statement; any amendment
thereto or any document incorporated by reference therein; (v) the filing
of the Certificate of Designation with the Michigan Department of Consumer
and Industry Services has duly occurred; (vi) the terms of the Offered
Preferred Stock and of their issuance and sale have been duly established
in conformity with the Company's Restated Articles of Incorporation,
including the Certificate of Designation relating to the Offered Preferred
Stock, and the By-laws of the Company so as not to violate any applicable
law, the Restated Articles of Incorporation or By-laws of the Company or
result in a default under or breach of any agreement or instrument binding
upon the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the
Company; and (vii) certificates representing the shares of the Offered
Preferred Stock are duly executed, countersigned, registered and delivered
upon payment of the agreed-upon consideration therefor (1) the shares of
the Offered Preferred Stock (including any Preferred Stock duly issued upon
exercise of any Warrants), when issued and sold in accordance with the
applicable underwriting agreement or any other duly authorized, executed
and delivered valid and binding purchase or agency agreement, will be duly
authorized, validly issued, fully paid and nonassessable; and (2) if the
Offered Preferred Stock is convertible or exchangeable into Common Stock,
the Common Stock issuable upon conversion or exchange of the Offered
Preferred Stock will be duly authorized, validly issued, fully paid and
nonassessable, assuming the execution, authentication, issuance and
delivery of the Offered Preferred Stock and the conversion or exchange of
the Offered Preferred Stock in accordance with the terms of the Certificate
of Designation.

2. With respect to any offering of Common Stock, when (i) the
Registration Statement, as finally amended (including all necessary post-
effective amendments), has become effective; (ii) an appropriate prospectus
supplement or term sheet with respect to the Common Stock has been
prepared, delivered and filed in compliance with the Securities Act and the
applicable rules and regulations thereunder; (iii) if the Common Stock is
to be sold pursuant to a firm commitment underwritten offering, the
underwriting agreement with respect to the Common Stock has been duly
authorized, executed and delivered by the Company and the other parties
thereto; (iv) the Board of Directors, including any appropriate committee
appointed thereby, and appropriate officers of the Company have taken all
necessary corporate action to approve the issuance of the Common Stock and
related matters; (v) the terms of the issuance and sale of the Common Stock
have been duly established in conformity with the Restated Articles of
Incorporation and By-laws of the Company so as not to violate any
applicable law, the Restated Articles of Incorporation or By-laws of the
Company or result in a default under or breach of any agreement or
instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company; and (vi) certificates representing the
shares of Common Stock are duly executed, countersigned, registered and
delivered upon payment of the agreed upon consideration therefor, the
shares of Common Stock (including any duly issued upon exercise of any
Warrants), when issued and sold in accordance with the applicable
underwriting agreement with respect to the Common Stock or any other duly
authorized, executed and delivered valid and binding purchase or agency
agreement, will be duly authorized, validly issued, fully paid and
nonassessable.

We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.2 to the Registration Statement. We also consent to the
reference to our firm under the heading "Legal Opinions" in the
Registration Statement. In giving this consent, we do not thereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or the Rules and Regulations of the
Commission.

Very truly yours,

/s/ Dickinson Wright PLLC

Exhibit 12.1
<TABLE>
<CAPTION>

KMART CORPORATION AND SUBSIDIARY COMPANIES
STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

Fiscal Year Ended
----------------------------------------------------------------
January 27, January 28, January 29, January 31, January 25,
($ Millions) 1999 1998 1997 1996 1995
------------ ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net income (loss) from continuing
retail operations before
extraordinary items and the effect
of accounting changes $ 518 $ 249 $ 231 $ (230) $ 96
Dividends on trust convertible
preferred, net 50 49 31 - -
Income taxes 230 120 68 (83) 6
------------ --------- --------- --------- ---------
Pretax income (loss) from continuing
retail operations $ 798 $ 418 $ 330 $ (313) $ 102

Distributions from unconsolidated
affiliated retail companies
that exceed equity income (42) 1 28 14 (14)

Fixed charges per below 579 660 733 641 651
Less: Interest capitalized during
the period (13) (8) (9) (6) (14)
Preferred dividends of wholly owned
trust subsidiary not
deducted in the determination of
pre-tax income (78) (75) (47) - -
------------ --------- --------- --------- ---------
Earnings (loss) from continuing
retail operations $ 1,244 $ 996 $ 1,035 $ 336 $ 725

Fixed Charges:
Interest expense 281 378 498 483 504
Rent expense - portion of operating
rentals representative
of the interest factor 173 159 146 151 131
Preferred dividends of wholly owned
trust subsidiary 78 75 47 -- --
Other 47 48 42 7 16
------------ --------- --------- --------- ---------
Total fixed charges $ 579 $ 660 $ 733 $ 641 $ 651
============ ========= ========= ========= =========

Ratio of earnings to combined fixed
charges and preferred stock
dividends 2.1 1.5 1.4 -- 1.1
</TABLE>

KMART CORPORATION AND SUBSIDIARY COMPANIES
STATEMENT REGARDING COMPUTATION OF RATIOS
OF EARNINGS TO FIXED CHARGES

Fiscal Year Ended
------------------------------------------------------------------
January 27, January 28, January 29, January 31, January 25,
($ Millions) 1999 1998 1997 1996 1995
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net income (loss) from continuing
retail operations before
extraordinary items and the effect
of accounting changes $ 518 $ 249 $ 231 $ (230) $ 96
Income taxes 230 120 68 (83) 6
------------ --------- --------- --------- ---------
Pretax income (loss) from continuing
retail operations $ 748 $ 369 $ 299 $ (313) $ 102

Distributions from unconsolidated
affiliated retail companies
that exceed equity income (42) 1 28 14 (14)

Fixed charges per below 501 585 686 641 651
Less: Interest capitalized during
the period (13) (8) (9) (6) (14)
------------ --------- --------- --------- ---------
Earnings (loss) from continuing
retail operations $ 1,194 $ 947 $ 1,004 $ 336 $ 725
============ ========= ========= ========= =========

Fixed charges:
Interest expense 281 378 498 483 504

Rent expense - portion of operating
rentals representative of the
interest factor 173 159 146 151 131
Other 47 48 42 7 16
------------ -------- --------- --------- ---------
Total fixed charges $ 501 $ 585 $ 686 $ 641 $ 651
============ ======== ========= ========= =========
Ratio of earnings to fixed
charges(1) 2.4 1.6 1.5 -- 1.1
</TABLE>

(1) The deficiency of earnings from continuing retail operations versus
fixed charges was $305 million for the fiscal year ended January 31, 1996.

Exhibit 23.1

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Prospectus
constituting part of Amendment No. 1 to this Registration Statement on Form
S-3 of our report dated March 1, 1999, which appears on page 21 of the 1998
Annual Report to Shareholders of Kmart Corporation, which is incorporated
by reference in Kmart Corporation's Annual Report on Form 10-K for the year
ended January 27, 1999. We also consent to the reference to us under the
heading "Experts" in such Prospectus.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Detroit, Michigan
April 19, 1999