KMART MANAGEMENT CORPORATION

                           RESTRICTED STOCK AGREEMENT

                                  HAROLD LUEKEN



         THIS AGREEMENT, dated and effective as of September 3, 2003 (the

"Effective Date") by and between Kmart Management Corporation, a Michigan

corporation (the "Company"), and Harold Lueken (the "Executive"), is entered

into as follows:



         WHEREAS, the Company and the Executive are parties to an Employment

Agreement made and entered into on May 6, 2003 (the "Employment Agreement"); and



         WHEREAS, the Compensation Committee of the Board of Directors of Kmart

Holding Corporation ("Holding Corp."), a Delaware corporation and the Company's

parent corporation, has determined that, subject to the conditions and

restrictions stated below, the Executive should be granted shares of the Holding

Corp.'s $1.00 par value Common Stock (the "Restricted Stock");



         NOW, THEREFORE, the parties hereby agree as follows:



                  17. Grant of Stock.



         The Company and Executive hereby agree that, subject to the approval of

a majority of Holding Corp. shareholders ("Shareholder Approval") and the terms

and conditions of this Agreement, the Executive will be granted 17,109 shares of

Restricted Stock, said number of shares being determined as follows: (a) the

average of the highest ($29.66) and lowest ($28.79) fair market value of one

share of Holding Corp. Common Stock on the Effective Date is $29.225; and (b)

17,109 shares of Holding Corp. Common Stock, at a fair market value of $29.225,

would have a fair market value of $500,010.525.



                  18. Issuance of Stock.



         Subject to and as soon as practicable after Shareholder Approval, the

Company shall cause the shares of Restricted Stock to be issued in the

Executive's name. The Restricted Stock shall be held in the custody of the

Company or its designee for the Executive's account. The Restricted Stock shall

be subject to the restrictions described herein. The Restricted Stock shall bear

appropriate legends with respect to the restrictions described herein.



                  19. Vesting.



                  (a)      Subject to Shareholder Approval, the interest of the

         Executive in the Restricted Stock shall vest as to one-third of such

         Restricted Stock (5,703 shares) on September 4, 2004, as to an

         additional one-third (5,703 shares) on September 4, 2005, and as to the

         final one-third (5,703 shares) on September 4, 2006, so as to be 100%

         vested on September 4, 2006 conditioned upon the Executive's continued

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