<PAGE>
                                                                       10(r)(ii)


                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT, dated as of February 25, 2002 (as restated,
amended, modified, or supplemented from time to time, this "AGREEMENT"), is
given, jointly and severally, by Big Lots Stores, Inc., an Ohio corporation
(formerly known as Consolidated Stores Corporation, an Ohio corporation), Big
Lots, Inc. (formerly known as Consolidated Stores Corporation, a Delaware
corporation), a Delaware corporation, Mac Frugal's Bargains o Close-Outs, Inc.,
a Delaware corporation, Capital Retail Systems, Inc., an Ohio corporation, PNS
Stores, Inc., a California corporation, West Coast Liquidators, Inc., a
California corporation, C.S. Ross Company, an Ohio corporation, CSC
Distribution, Inc., an Alabama corporation, Closeout Distribution, Inc., a
Pennsylvania corporation, Industrial Products of New England, Inc., a Maine
corporation, Tool and Supply Company of New England, Inc., a Delaware
corporation, Midwestern Home Products, Inc., a Delaware corporation, Midwestern
Home Products Company, Ltd., an Ohio corporation, Consolidated Property
Holdings, Inc., a Nevada corporation, Great Basin LLC, a Delaware limited
liability company, Sonoran LLC, a Delaware limited liability company, and Sahara
LLC, a Delaware limited liability company, and Durant DC, LLC (f/k/a DDC, LLC),
a Delaware limited liability company, and any other of the undersigned parties
listed as Debtors on the signature pages hereto and each of the other persons
and entities that become bound hereby as a Debtor from time to time by joinder,
assumption, or otherwise (each of the foregoing, a "DEBTOR" and all of the
foregoing, collectively the "DEBTORS"), in favor of the holders of Notes (as
hereinafter defined) listed in the attached Schedule 1 (the "Holders").

                                   WITNESSETH:

         WHEREAS, pursuant to the Note Purchase Agreement dated as of May 1,
2001 (as amended by First Amendment to Note Purchase Agreement dated as of
February 25, 2002 and as it may hereafter be amended or modified from time to
time, the "NOTE AGREEMENT"), among Big Lots Stores, Inc., (f/k/a Consolidated
Stores Corporation, a Ohio corporation) an Ohio corporation (the "Company"), Big
Lots, Inc. (f/k/a Consolidated Stores Corporation, a Delaware corporation), an
Ohio Corporation the "Parent"), and each of the Purchasers named in Schedule A
thereto, the Company issued $174,000,000 aggregate principal amount of 7.87%
Senior Notes, Series 2001-A, Tranche 1, due May 15, 2005, $15,000,000 aggregate
principal amount of 7.97% Senior Notes, Series 2001-A, Tranche 2, due May 15,
2006 and $15,000,000 aggregate principal amount of 8.07% Senior Notes, Series
2001-A, Tranche 3, due May 15, 2007 (collectively, the "Notes") and the Debtors
other than the Company, guaranteed the Notes pursuant to the Guaranties; and

         WHEREAS, to induce the Holders to enter into the First Amendment to
Note Purchase Agreement dated as of February 25, 2002, the parties desire that
all obligations, liabilities, and indebtedness of the Debtors under the Note
Agreement, the Notes and the Guaranties be secured by security interests in the
Collateral (defined below at Section 1(b)) as more fully set forth below.

         NOW, THEREFORE, intending to be legally bound hereby and incorporating
the above-defined terms herein, the parties hereto covenant and agree as
follows:

         1. Definitions. Except as set forth in this Agreement, terms defined in
the Note Agreement and not otherwise defined herein are used herein as defined
in the Note Agreement. The term "including" when used herein shall have the
meaning represented by the phrase "including without limitation". The following
words and terms shall have the following respective meanings unless the context
hereof otherwise clearly requires:



<PAGE>

                  (a) "Accounts" means all now owned or hereafter acquired or
arising accounts, as defined in the UCC, of each Debtor, including any rights to
payment for the sale or lease of goods or rendition of services, whether or not
they have been earned by performance, together with all products and proceeds of
any of the foregoing.

                  (b) "Collateral" means all Accounts, Inventory, and General
Intangibles of each Debtor together with all present and future business records
and information relating to any of the Accounts, Inventory, or General
Intangibles of each Debtor, including computer tapes and other storage media
containing the same and computer programs and software (including source code,
object code and related manuals and documentation and all licenses to use such
software) for accessing and manipulating such information.

                  (c) "Debt" means (i) all now existing and hereafter arising
indebtedness, liabilities, and obligations of each and every of the Debtors to
each of the Holders under the Note Agreement, the Notes or the Guaranties,
whether for principal, interest, make-whole amounts, fees, expenses, or
otherwise of each and every of the Debtors to each of the Holders, now existing
or hereafter incurred or arising under the Note Agreement, the Notes or the
Guaranties and as any of the same may from time to time be amended, restated,
modified, or supplemented, together with any and all extensions, renewals,
refinancings, and refundings thereof in whole or in part; and (ii) any sums
advanced by any Holder or which may otherwise become due pursuant to the
provisions of the Note Agreement, the Notes, the Guaranties or this Agreement or
pursuant to any other document or instrument at any time delivered to any Holder
in connection therewith, including fees and charges and indemnification
obligations, and all interest payable on any of the foregoing in all cases,
whether such sums are advanced or otherwise become due before or after the entry
of any judgment for foreclosure or any judgment on the Notes, the Guaranties or
the Note Agreement or with respect to any default under any of the foregoing.

                  (d) "General Intangibles" means all now owned or hereafter
acquired or arising general intangibles, as defined in the UCC, of each Debtor,
together with all products and proceeds of any of the foregoing.

                  (e) "Inventory" means all now owned or hereafter acquired
inventory (as defined in the UCC), goods, merchandise, and other personal
property of each Debtor, wherever located, held for sale or lease or which are
or might be furnished under any contract of service, all raw materials, work in
process, finished goods (including embedded software), returned goods, and
materials and supplies of any kind, nature or description which are or might be
used or consumed in the business of each Debtor or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
such merchandise or such other personal property, and all documents of title or
other documents representing them, together with all products and proceeds of
any of the foregoing.

                  (f) "UCC" means the Uniform Commercial Code, as in effect from
time to time, of the State of Ohio or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests; provided, that to the extent that the UCC is
used to define any term herein or in any other documents and such term is
defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.

         2. Creation of Security Interests. As security for the due and punctual
payment and performance of the Debt in full, each Debtor hereby grants to and
creates in favor of the Holders a continuing lien on and security interest in
and to the Collateral. Without limiting the generality of any of the following
Sections below each Debtor hereby authorizes (i) the execution and filing of all
financing



                                       2
<PAGE>

statements by the Holders, without the execution thereof by any Debtor, naming
the Debtors as "debtors," and (ii) the exercise of "control," as such term is
defined in Article 9 of the UCC, over the Collateral in order to fully perfect
the security interests therein;

         3. Representations and Warranties. Each Debtor represents and warrants
to the Holders that (a) each Debtor owns its Collateral, (b) except for the
security interest granted to and created in favor of the Holders hereunder and
Permitted Liens, all the Collateral is free and clear of any Lien, (c) each
Debtor will defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein, (d) each material Account
is genuine and enforceable in accordance with its terms and such Debtor will
defend the same against all claims, demands, recoupment, setoffs, and
counterclaims at any time asserted and no material Account will be subject to
any material claim for credit, allowance, setoff, recoupment, defense,
counterclaim, or adjustment by any account debtor, and (e) the exact legal name,
the state of incorporation, formation or organization, as applicable, the
address and all other information of such Debtor is as set forth on Schedule B
hereto.

         4. Protection and Maintenance of Liens. Each Debtor will faithfully
preserve, defend, and protect the Holders' security interest in the Collateral
as a perfected security interest, superior and prior to the rights of all third
Persons, except for holders of Liens permitted under the Note Agreement, and
will do all such other acts and things and will, upon request therefor by the
Holders, execute, deliver, file and record, and such Debtor hereby authorizes
the Holders to so file, all such other documents and instruments, including
financing statements, security agreements, assignments and documents and powers
of attorney with respect to the Collateral, and pay all filing fees and taxes
related thereto (with prompt reimbursement by Borrower), as the Holders in their
reasonable discretion may deem necessary or advisable from time to time in order
to attach, continue, preserve, perfect, and protect said security interest; and,
each Debtor hereby irrevocably appoints each Holder, its officers, employees and
agents, or any of them, as attorneys-in-fact for such Debtor to execute,
deliver, file, and record such items for such Debtor and in such Debtor's name,
place and stead. This power of attorney, being coupled with an interest, shall
be irrevocable for the life of this Agreement.

         5. Covenants. Each Debtor covenants and agrees that:

                  (a) it will not suffer or permit to exist on any Collateral
any Lien except for Permitted Liens;

                  (b) it shall bear the full risk of any loss of any nature
whatsoever with respect to the Collateral owned by it and at its own cost and
expense in amounts and with financially sound and reputable insurers, and each
Debtor shall (a) keep its Inventory insured against such hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Debtor's (it is acknowledged by the Holders that the insurance presently
maintained by the Debtors is acceptable for such purposes); (b) furnish the
Holders with (i) evidence of the maintenance of such insurance and (ii)
appropriate loss payable endorsements in form and substance satisfactory to the
Holders, naming each Holder (or any collateral agent for the Holders) as a loss
payee as its interests may appear with respect to all insurance coverage of the
Inventory, and providing (A) that such policy and loss payable clauses may not
be cancelled, amended or terminated unless at least thirty (30) days' prior
written notice is given to each Holder; and, if any Debtor fails to obtain
insurance as hereinabove provided, or to keep the same in force, the Holders, if
they so elect, may obtain such insurance and pay the premium therefor on behalf
of such Debtor, and add all liabilities, obligations, costs, and expenses
reasonably incurred in connection with such insurance to the Debt, to be paid by
the Debtors to the Holders upon demand;



                                       3
<PAGE>

                  (c) it will not sell, assign or otherwise dispose of any
portion of the Collateral except as permitted in Section 10.5 of the Note
Agreement and Section 7.2.7 of the Credit Agreement;

                  (d) it will maintain materially accurate and complete books
and records concerning the Collateral and such other books and records as the
Holders may from time to time reasonably require;

                  (e) it will promptly furnish to the Holders such documents and
papers relating to the Collateral as the Holders may reasonably request,
including all invoices, documents of title and other shipping and related
documents, contracts, and other writings pertaining to such Debtor's Inventory
or contracts or the performance thereof;

                  (f) to the extent Inventory held for sale or lease has been
produced by any Debtor, it has been and will be produced by such Debtor in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.

                  (g) if any material Account arises out of contracts with the
United States or any department, agency, or instrumentality thereof or any one
or more of the states of the United States or any department, agency, or
instrumentality thereof, it will upon request of the Holders, execute any
instruments and take any steps required by the Holders so that all monies due
and to become due under such contract shall be assigned (to the extent permitted
by Law and taking into account any necessity for consent as required by the
contracts and not otherwise made ineffective by Law) to the Holders and notice
of the assignment given to and acknowledged by the appropriate government agency
or authority under the Federal Assignment of Claims Act or similar applicable
state law; and

                  (h) such Debtor will not change its name or state of
incorporation, formation, or organization, as applicable, from that set forth on
Schedule B hereto without providing thirty (30) days prior written notice to the
Holders.

         6. Custody. The Holders shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in their possession, if
any, if the Holders take such action for that purpose as such Debtor shall
request in writing, provided that such requested action shall not, in the
judgment of the Holders, impair the security interest in or lien on the
Collateral or the Holders' rights in, or the value of, the Collateral, and
provided further that such written request is received by the Holders in
sufficient time to permit the Holders to take the requested action.

         7. Protection of Liens and Collateral.

                  (a) At any time and from time to time whether or not an Event
of Default then exists and without prior notice to or consent of any Debtor, the
Holders may at their option take such actions as the Holders deem appropriate
(i) to attach, perfect, continue, and preserve the Holders' perfected security
interest in or lien on the Collateral, and (ii) to add all liabilities,
obligations, costs, and expenses reasonably incurred in connection with clause
(i) to the Debt, to be paid by the Debtors to the Holders upon demand; and

                  (b) At any time and from time to time after an Event of
Default exists and is continuing and without prior notice to or consent of any
Debtor, the Holders may at their option take such action as the Holders deem
appropriate (i) to maintain, repair, protect, and insure the Collateral, (ii) to
perform, keep, observe, and render true and correct any and all covenants,
agreements, representations, and warranties of any Debtor hereunder, and (iii)
to add all liabilities, obligations, costs,



                                       4
<PAGE>

and expenses reasonably incurred in connection with the foregoing clauses (i)
and (ii) to the Debt, to be paid by any Debtor to the Holders upon demand.

         8. After Default. After there exists any Event of Default which is
continuing under the Note Agreement:

                  (a) The Holders may request, without limiting the rights and
remedies of the Holders otherwise provided hereunder or under the other Loan
Documents, that each Debtor do any of the following: (i) give the Holders
specific assignments of the material accounts receivable of such Debtor after
such accounts receivable come into existence, and schedules of such accounts
receivable, the form and content of such assignment and schedules to be
reasonably satisfactory to Holders, and (ii) in order to better secure the
Holders, to the extent permitted by Law, enter into such lockbox agreements and
establish such lockbox accounts as the Holders may require, with the local banks
in areas in which the Debtors may be operating (in such cases, all local lockbox
accounts shall be depositary transfer accounts titled in a manner acceptable to
the Holders to indicate that the accounts are established in trust for the
benefit of the Holders and the "Administrative Agent" and the "Banks" as defined
and referred to in the Credit Agreement) which local banks shall have agreed to
in writing to the Holders' requirements for the handling of such accounts and
the transfer of account funds to the Holders, all at the sole expense of such
Debtor, and shall direct all payments from all commercial payors and all other
payors due to such Debtor, to such lockbox accounts.

                  (b) in addition to the rights and remedies set forth herein,
the Holders: (a) may from time to time take such steps as the Holders deem
necessary to protect the Holders' interest in and to preserve the Collateral,
including the hiring of such security guards or the placing of other security
protection measures as the Holders may deem appropriate; (b) may employ and
maintain at any of any Debtor's premises a custodian who shall have full
authority to do all acts necessary to protect the Holders' interests in the
Collateral; (c) may lease warehouse facilities to which Holders may move all or
part of the Collateral; (d) may use any Debtor's owned or leased lifts, hoists,
trucks and other facilities or equipment for handling or removing the
Collateral; (e) may pursue landlords' or mortgagees' lien waivers with respect
to each premises on which any of the Collateral is now or hereafter located and,
in furtherance thereof, the Debtors agree to fully assist and cooperate with the
Holders in such endeavor, and (f) shall have, and is hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any of Debtor's owned or leased property; and, each
Debtor shall cooperate fully with all of the Holders' efforts to preserve the
Collateral and will take such actions to preserve the Collateral as the Holders
may direct; and, all of the Holders' expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be and
become a part of the Debt secured hereby.

                  (c) The Holders shall have and may exercise all the rights and
remedies available to a secured party under the UCC in effect at the time, and
such other rights and remedies as may be provided by Law and as set forth below,
including to take over and collect all of any Debtor's Collateral, and to this
end each Debtor hereby appoints each Holder, its officers, employees and agents,
as its irrevocable, true and lawful attorneys-in-fact with all necessary power
and authority to, after an Event of Default: (i) take possession immediately,
with or without notice, demand, or legal process, of any or all of the
Collateral wherever found, and for such purposes, enter upon any premises upon
which the Collateral may be found and remove the Collateral therefrom, (ii)
require any Debtor to assemble the Collateral and deliver it to the Holders or
to any place designated by the Holders at such Debtor's expense, (iii) demand
and direct account debtors to make payment to the Holders of the Accounts, (iv)
enforce payment of the material Accounts by legal proceedings or otherwise, (v)
exercise all of any Debtor's rights and remedies with respect to the collection
of material Accounts, (vi) settle, adjust,



                                       5
<PAGE>

compromise, extend or renew the Accounts, (vii) settle, adjust or compromise any
legal proceedings brought to collect material Accounts, (viii) to the extent
permitted by applicable Law, sell or assign material Accounts upon such terms,
for such amounts and at such time or times as the Holders deem advisable, (ix)
discharge and release material Accounts, (x) take control, in any manner, of any
item of payment or proceeds from any account debtor, (xi) prepare, file and sign
any Debtor's name on any Proof of Claim in Bankruptcy or similar document
against any account debtor, (xii) prepare, file, and sign any Debtor's name on
any notice of Lien, assignment, or satisfaction of Lien or similar document in
connection with material Accounts, (xiii) do all acts and things necessary, in
the Holders' sole discretion, to fulfill any of any Debtor's obligations to the
Holders under the Note Agreement, the Notes, the Guaranties, hereunder or
otherwise, (xiv) endorse the name of any Debtor upon any check, chattel paper,
document, instrument, invoice, freight bill, bill of lading or similar document
or agreement relating to Inventory or material Accounts; (xv) access and use the
information recorded on or contained in any data processing equipment or
computer hardware or software relating to the Inventory, material Accounts, or
other Collateral or proceeds thereof to which any Debtor has access, (xvi)
demand, sue for, collect, compromise, and give acquittances for any and all
Collateral, (xix) prosecute, defend, or compromise any action, claim or
proceeding with respect to any of the Collateral, and (xx) take such other
action as the Holders may deem appropriate, including extending or modifying the
terms of payment of any Debtor's debtors. This power of attorney, being coupled
with an interest, shall be irrevocable for the life of this Agreement. To the
extent permitted by Law, each Debtor hereby waives all claims of damages due to
or arising from or connected with any of the rights or remedies exercised by the
Holders pursuant to this Agreement, except claims arising from gross negligence
or willful misconduct by the Holders. Each Holder hereby accepts this power of
attorney and all powers granted hereunder.

                  (d) The Holders shall have the right to lease, sell, or
otherwise dispose of all or any of the Collateral at public or private sale or
sales for cash, credit or any combination thereof, with such notice as may be
required by Law (it being agreed by each Debtor that, in the absence of any
contrary requirement of Law, ten (10) days' prior notice of a public or private
sale of Collateral shall be deemed reasonable notice, except as to that part of
the Collateral which is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market in which case no notice
shall be required,), in lots or in bulk, for cash or on credit, all as the
Holders, in its sole discretion, may deem advisable. Such sales may be adjourned
from time to time with or without notice. The Holders shall have the right to
conduct such sales on any Debtor's premises or elsewhere and shall have the
right to use any Debtor's premises without charge for such sales for such time
or times as the Holders may see fit.

         9. Application of Proceeds. Any of the Collateral or proceeds thereof
held or realized upon at any time by the Holders shall be applied in accordance
with the terms of the Note Agreement. Each Debtor shall remain liable to the
Holders for and shall pay to the Holders any deficiency which may remain after
such sale or collection.

         10. Lease of Debtors Premises. If the Holders repossess or seek to
repossess any of the Collateral pursuant to the terms hereof because of the
occurrence of an Event of Default, then to the extent it is commercially
reasonable for the Holders to store any Collateral on any of any Debtor's
premises, each Debtor hereby agrees to lease to the Holders on a month-to-month
tenancy for a period not to exceed one hundred eighty (180) days at the Holders'
election, at a rental of One Dollar ($1.00) per month, the premises on which the
Collateral is located, provided it is located on premises owned or leased by
such Debtor.

         11. Termination. Upon indefeasible payment in full of the Debt, the
expiration of all commitments, and termination of the Note Agreement, this
Agreement shall terminate and be of no



                                       6
<PAGE>

further force or effect, and the Holders shall thereupon promptly return to each
Debtor such of the Collateral and such other documents delivered by such Debtor
hereunder as may then be in the Holders' possession subject to the rights of
third parties. Until such time, however, this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

         12. Waivers.

                  (a) No failure or delay on the part of the Holders in
exercising any right, remedy, power, or privilege hereunder shall operate as a
waiver thereof or of any other right, remedy, power, or privilege of the Holders
hereunder; nor shall any single or partial exercise of any such right, remedy,
power, or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. No waiver of a single
Event of Default shall be deemed a waiver of any other or subsequent Events of
Default. All waivers under this Agreement must be in writing and executed by the
Holders. The rights and remedies of the Holders under this Agreement are
cumulative and in addition to any rights or remedies which it may otherwise
have, and the Holders may enforce any one or more remedies hereunder
successively or concurrently at their option.

                  (b) Without releasing or diminishing any obligations of any
Debtor, the Holders at any time and from time to time may release or impair any
portion or portions of the Collateral from the liens and security interests of
Holders therein, may take, impair, or release any other collateral for any Debt
secured thereby, may release, impair, or discharge any Debt of any Debtor may
waive, impair, or fail to enforce any of the Holders' rights under this
Agreement, the Note Agreement, the Notes or any Guaranty may grant extensions,
renewals, indulgences, and leniencies with respect to any of the Debt or with
respect to any of the obligations of the Debtors and may apply to the Debt in
such order as the Holders shall elect the proceeds of Collateral or any amount
received in connection therewith or in connection with any other Loan Document,
without resort or regard to other Collateral or any Debtor, and each Debtor
hereby consents to all of the foregoing. Any and all defenses which any Debtor
may now or hereafter have based on principles of suretyship, impairment of
collateral, or the like are hereby waived. The Holders hereby expressly reserve
their rights against each Debtor.

                  (c) Each Debtor hereby waives, surrenders, and agrees not to
claim or enforce, so long as any Debt exists: (a) any right to be subrogated in
whole or in part to any right or claim of any holder of any of the Debt, and (b)
any right to require the marshalling of any assets of any Debtor, which right of
subrogation or marshalling might otherwise arise for any reason including from
any payment upon any of the Debt arising out of the enforcement of the security
interest granted hereby to the Holders, or the liquidation of or realization
upon the Collateral, any other collateral granted by any Debtor or by any other
person or entity to the Holders, or any part thereof, or by the payment of any
amounts owing hereunder or under the Debt.

         13. Notices. All notices, statements, requests, and demands given to or
made upon either party hereto in accordance with the provisions of this
Agreement shall be given or made as provided in Section 18 of the Note
Agreement.

         14. Security Interest Data Schedule. Within thirty (30) days of the
date hereof, each Debtor agrees to provide the Holders with a listing of all of
its offices, stores, warehouses and other locations where any of the Collateral
is stored or maintained, stating in case (1) the address of such premises, (2)
whether the premises is owned or leased by such Debtor, (3) if the premises are
leased, the name and



                                       7
<PAGE>

address of the landlord, (4) the type and use of the facility, and (5) such
other information as may be reasonably requested by the Holders. Each Debtor
shall promptly notify the Holders of any changes in the information set forth
thereon.

         15. Specific Enforcement. Each Debtor acknowledges that the provisions
hereof and of the Note Agreement giving the Holders rights of access to books,
records, and information concerning the Collateral and such Debtor's operations
and providing the Holders access to such Debtor's premises are a material right
of the Holders. Each Debtor further acknowledges that, should such Debtor at any
time fail to promptly provide such information and access to the Holders as
provided for herein or in the Note Agreement, the Holders would have no adequate
remedy at Law to promptly obtain the same. Each Debtor agrees that such
provisions hereof and of the Note Agreement may be specifically enforced by the
Holders and waives any claim or defense in any such action or proceeding that
the Holders have an adequate remedy at Law.

         16. Exculpation of Liability. Nothing herein contained shall be
construed to constitute any Holder as any Debtor's agent for any purpose
whatsoever, nor shall the Holders be responsible or liable, in the absence of
the Holders' gross negligence or willful misconduct, for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof. No Holder, whether
by anything herein or in any assignment or otherwise, shall assume any of any
Debtor's obligations under any contract or agreement assigned to the Holders,
and no Holder shall be responsible in any way for the performance by any Debtor
of any of the terms and conditions thereof.

         17. Successors. This Agreement shall be binding upon and inure to the
benefit of the Holders and their respective successors and assigns, and each
Debtor and each of its respective successors and assigns, except that no Debtor
may assign or transfer such Debtor's obligations hereunder or any interest
herein. All obligations of the Debtors for the payment of money hereunder shall
be joint and several.

         18. Governing Law. This Agreement shall be deemed to be a contract
under the laws of the State of Ohio and for all purposes shall be governed by
and construed in accordance with the laws of said Commonwealth excluding its
rules relating to conflicts of law.

         19. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         20. Counterparts; Telecopy. This Agreement may be signed in any number
of counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of executed
signature pages by facsimile transmission will constitute effective and binding
execution and delivery.

         21. Collateral Agent. Upon notice to Debtors, the Holders may appoint a
collateral agent with respect to their rights and obligations hereunder and each
Debtor agrees to permit such appointment and shall execute and deliver any
documents or agreements reasonably necessary to accomplish the same.

                            [SIGNATURE PAGES FOLLOW]



                                       8
<PAGE>

                  [SIGNATURE PAGE 1 OF 4 TO SECURITY AGREEMENT]



                  IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Security Agreement to be executed and
delivered as of the day and year first above written.

                             DEBTORS:

                             BIG LOTS STORES, INC. (formerly CONSOLIDATED STORES
                             CORPORATION, an Ohio corporation)


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Name:   Jeffrey G. Naylor
                             Title:  Senior Vice President, CFO


                             BIG LOTS, INC., an Ohio corporation (formerly
                             CONSOLIDATED STORES CORPORATION, a Delaware
                             corporation)


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             MAC FRUGAL'S BARGAINS o CLOSE-OUTS, INC., a
                             Delaware corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             CAPITAL RETAIL SYSTEMS, INC., an Ohio corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             PNS STORES, INC., a California corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO



<PAGE>

                  [SIGNATURE PAGE 2 OF 4 TO SECURITY AGREEMENT]



                             WEST COAST LIQUIDATORS, INC., a California
                             corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             C.S. ROSS COMPANY, an Ohio corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             CSC DISTRIBUTION, INC., an Alabama corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             CLOSEOUT DISTRIBUTION, INC., a Pennsylvania
                             corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             INDUSTRIAL PRODUCTS OF NEW ENGLAND, INC., a
                             Maine corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             TOOL AND SUPPLY COMPANY OF NEW ENGLAND, INC.,
                             a Delaware corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO



<PAGE>

                  [SIGNATURE PAGE 3 OF 4 TO SECURITY AGREEMENT]



                             MIDWESTERN HOME PRODUCTS, INC.,  a Delaware
                             corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             MIDWESTERN HOME PRODUCTS COMPANY, LTD., an
                             Ohio corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             CONSOLIDATED PROPERTY HOLDINGS, INC., a
                             Nevada corporation


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             GREAT BASIN LLC, a Delaware limited liability
                             company


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             SONORAN LLC, a Delaware limited liability company


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO


                             SAHARA LLC, a Delaware limited liability company


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO



<PAGE>

                  [SIGNATURE PAGE 4 OF 4 TO SECURITY AGREEMENT]



                             DURANT DC, LLC (formerly DDC, LLC), a Delaware
                             limited liability company


                             By: /s/ Jeffrey G. Naylor
                                 -----------------------------------------------
                             Title:  Senior Vice President, CFO




<PAGE>

                                   SCHEDULE 1
                                       TO
                               SECURITY AGREEMENT

                                     HOLDERS

<TABLE>
<S>                                                          <C>
----------------------------------------------------------------------------------------------------------------------
Allstate Life Insurance Company                              3075 Sanders Road, STE G5B
                                                             Northbrook, IL  60062-7172
----------------------------------------------------------------------------------------------------------------------
Transamerica Occidental Life Insurance Company               c/o AEGON USA Investment Management, Inc.
                                                             400 West Market Street
                                                             Louisville, KY  40202-5335
----------------------------------------------------------------------------------------------------------------------
GE Edison Life Insurance Company                             6620 West Broad Street
                                                             Richmond, VA  23230
----------------------------------------------------------------------------------------------------------------------
General Electric Capital Assurance Company                   6620 West Broad Street
                                                             Richmond, VA  23230
----------------------------------------------------------------------------------------------------------------------
Connecticut General Life Insurance Company                   c/o CIGNA Retirement & Investment Services
                                                             280 Trumbull Street, H16B
                                                             Hartford, CT  06103
----------------------------------------------------------------------------------------------------------------------
Life Insurance Company of North America                      c/o CIGNA Retirement & Investment Services
                                                             280 Trumbull Street, H16B
                                                             Hartford, CT  06103
----------------------------------------------------------------------------------------------------------------------
The Travelers Insurance Company                              242 Trumbull Street, 7th floor
                                                             Hartford, CT  06115-0449
----------------------------------------------------------------------------------------------------------------------
The Travelers Life and Annuity Company                       242 Trumbull Street, 7th floor
                                                             Hartford, CT  06115-0449
----------------------------------------------------------------------------------------------------------------------
Principal Life Insurance Company                             801 Grand Avenue
                                                             Des Moines, IA  50392-0301
----------------------------------------------------------------------------------------------------------------------
First Allmerica Financial Life Insurance Company             440 Lincoln Street
                                                             Worcester, MA  01653
----------------------------------------------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Company                  c/o Hartford Investment Management Company
                                                             55 Farmington Avenue
                                                             Hartford, CT  06105
----------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>
<TABLE>
<S>                                                          <C>
----------------------------------------------------------------------------------------------------------------------
Nationwide Life Insurance Company                            One Nationwide Plaza (1-33-07)
                                                             Columbus, OH  43215-2220
----------------------------------------------------------------------------------------------------------------------
American Family Life Insurance Company                       6000 American Parkway
                                                             Madison, WI  53783-0001
----------------------------------------------------------------------------------------------------------------------
Pacific Life Insurance Company                               700 Newport Center Drive
                                                             Newport Beach, CA  92660-6397
----------------------------------------------------------------------------------------------------------------------
Phoenix Life Insurance Company                               56 Prospect Street
                                                             Hartford, CT  06115
----------------------------------------------------------------------------------------------------------------------
Clarica Life Insurance Company - U.S.                        c/o Clarica U.S., Inc.
                                                             13890 Bishop's Drive, Suite 300
                                                             Brookfield, WI  53005
----------------------------------------------------------------------------------------------------------------------
MAC & CO., as nominee                                        120 Broadway
                                                             New York, NY  10271
----------------------------------------------------------------------------------------------------------------------
SALKELD & CO., as nominee                                    14 Wall Street
                                                             New York, NY  10005
----------------------------------------------------------------------------------------------------------------------
BAND & CO., as nominee                                       1555 N. Rivercenter Dr.
                                                             Suite 210
                                                             Milwaukee, WI  53212-3958
----------------------------------------------------------------------------------------------------------------------
CIG & CO., as nominee                                        c/o CIGNA Retirement & Investment Services
                                                             280 Trumbull Street, H16B
                                                             Hartford, CT  06103
----------------------------------------------------------------------------------------------------------------------
TRAL & CO., as nominee                                       One Chase Manhattan Plaza
                                                             New York, NY 10081
----------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>

                                   SCHEDULE A
                                       TO
                               SECURITY AGREEMENT

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                  STATE OF                                 ORGANIZATIONAL
ENTITY                                           INCORPORATION                  EIN             ID#
-----------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                     <C>              <C>
Big Lots, Inc.                                       Ohio                    06-111-9097      1215332
-----------------------------------------------------------------------------------------------------------------------
Big Lots Stores, Inc.                                Ohio                    31-1186811       669545
-----------------------------------------------------------------------------------------------------------------------
Mac Frugal's Bargains o Close-outs, Inc.             Delaware                95-2745285
-----------------------------------------------------------------------------------------------------------------------
Capital Retail Systems, Inc.                         Ohio                    31-1602827       1009905
-----------------------------------------------------------------------------------------------------------------------
PNS Stores, Inc.                                     California              95-2745262       C0636909
-----------------------------------------------------------------------------------------------------------------------
West Coast Liquidators, Inc.                         California              95-1813424       C0293778
-----------------------------------------------------------------------------------------------------------------------
C.S. Ross Company                                    Ohio                    31-1286182       763455
-----------------------------------------------------------------------------------------------------------------------
CSC Distribution, Inc.                               Alabama                 06-1108785
-----------------------------------------------------------------------------------------------------------------------
Closeout Distribution, Inc.                          Pennsylvania            31-1650309       2878048
-----------------------------------------------------------------------------------------------------------------------
Industrial Products of New England, Inc.             Maine                   01-0392472       19840699D
-----------------------------------------------------------------------------------------------------------------------
Tool and Supply Company of New England, Inc.         Delaware                51-0316540
-----------------------------------------------------------------------------------------------------------------------
Midwestern Home Products, Inc.                       Delaware                51-0316542
-----------------------------------------------------------------------------------------------------------------------
Midwestern Home Products Company, Ltd.               Ohio                    31-1455723       928329
-----------------------------------------------------------------------------------------------------------------------
Consolidated Property Holdings, Inc.                 Nevada                  86-0860984       C1345-1997
-----------------------------------------------------------------------------------------------------------------------
Great Basin LLC                                      Delaware                31-1686158
-----------------------------------------------------------------------------------------------------------------------
Sonoran LLC                                          Delaware                31-1686155
-----------------------------------------------------------------------------------------------------------------------
Sahara LLC                                           Delaware                31-1686162
-----------------------------------------------------------------------------------------------------------------------
Durant DC, LLC                                       Delaware                01-0562033
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                                           <C>
Address for Debtors:                                          300 Phillipi Road
(except Consolidated Property Holdings, Inc.)                 Columbus, OH  43228

Address for Consolidated Property Holdings, Inc.:             2835 South Jones Blvd., Suite 8
                                                              Las Vegas, NV 89146
</TABLE>