PROMISSORY NOTE


$500,000                                                  AS OF DECEMBER 7, 2001
                                                                  TROY, MICHIGAN


         FOR VALUE RECEIVED, the undersigned, Janet Kelley, an individual with
an address of 533 Wallace Street, Birmingham, MI 48009 ("MAKER") hereby promises
to pay to the order of KMART CORPORATION, a Michigan corporation ("PAYEE") whose
address is 3100 West Big Beaver Road, Troy, Michigan 48084-3163, or to such
other person or place as the holder hereof may from time to time designate in
writing to Maker, the principal sum of five hundred thousand Dollars ($500,000),
together with interest, compounded annually, upon the balance of the principal
sum from time to time remaining unpaid at the rate of three and 97/100 percent
(3.97%) as hereinafter provided. Principal and interest and all other amounts
owing hereunder shall be payable in lawful money of the United States of
America.

         Payment of the principal sum together with all accrued interest thereon
shall be payable in full upon the termination of the Maker's employment with the
Payee; provided, however that the obligation of the Maker to repay this Note and
any and all accrued interest thereon shall be forgiven in full upon the earliest
of either of the following events: (i) the Maker's continued employment with the
Payee through January 31, 2005, or (ii) the termination of the Maker's
employment with the Payee in circumstances that are set forth in that certain
Special Retention Agreement between Maker and Payee dated today's date and in
which the Company has agreed to the forgiveness of all the amounts otherwise
payable hereunder.

         The Maker may prepay all or any part of this Note at any time and from
time to time without notice or any prepayment penalty or premium. If suit is
brought to collect this Note, the Note holder shall be entitled to collect all
reasonable costs and expenses of suit, including, but not limited to, reasonable
attorney fees and expenses.

         The Maker hereby waives presentment, demand, notice of protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. Maker further waives, to the
fullest extent permitted by law, the right to (a) plead any statutes of
limitations as a defense to any demand on this Note, and (b) a jury trial in
action brought by any Holder to enforce this Note.

         This Note shall be governed by and construed in accordance with the
laws of the State of Michigan. If any provision of this Note or any application
of such provision shall be declared by a court of competent jurisdiction to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other application of such provision or any other provisions hereof which
shall, to the fullest extent possible, remain in full force and effect and shall
not effect the




<PAGE>

Maker's obligation to make the required payments pursuant to the terms this
Note. Wherever used, the words "Payee" and "Maker" shall include their
respective successors and assigns. This Note may not be changed orally, but only
by an agreement in writing signed by the parties hereto.


         IN WITNESS WHEREOF, Maker has duly executed this Note at the place and
as of the date first above written.




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

Source: OneCLE Business Contracts.