Document:

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                                                                   EXHIBIT 10.42

                            INDEMNIFICATION AGREEMENT

         AGREEMENT between OM Group, Inc., a Delaware corporation (the
"Company"), and ___________ (the "Indemnitee") dated __________.

         WHEREAS, it is essential to the Company to retain and attract as
directors, officers and representatives the most capable persons available; and

         WHEREAS, Indemnitee is a director, officer or representative of the
Company; and

         WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors, officers and
representatives of public companies in today's environment; and

         WHEREAS, in recognition of the Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's continued
service to the Company in an effective manner, the Company wishes to provide in
this Agreement for the indemnification of and the advancing of expenses to
Indemnitee to the full extent (whether partial or complete) permitted by law and
as set forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies;

         NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:

         1. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:

                  (a) Change in Control shall be deemed to have occurred if (i)
         any "person" (as such term is used in Sections 13(d) and 14(d) of the
         Securities Exchange Act of 1934, as amended), other than a trustee or
         other fiduciary holding securities under an employee benefit plan of
         the Company or a corporation owned directly or indirectly by the
         stockholders of the Company in substantially the same proportions as
         their ownership of stock of the Company, is or becomes the "beneficial
         owner" (as defined in Rule 13d-3 under said Act), directly or
         indirectly, of securities of the Company representing 20% or more of
         the total voting power represented by the Company's then outstanding
         Voting Securities without the prior approval of the Board of Directors,
         or (ii) during any period of two consecutive years, individuals who at
         the beginning of such period constitute the Board of Directors of the
         Company and any new director whose election by the Board of Directors
         or nomination for election by the Company's stockholders was approved
         by a vote of at least two-thirds (2/3) of the directors then still in
         office who either were directors at the beginning of the period or
         whose election or nomination for election was previously so approved,
         cease for any reason to constitute a majority thereof, or (iii) the
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         stockholders of the Company approve a merger or consolidation of the
         Company with any other corporation, other than a merger or
         consolidation which would result in the Voting Securities of the
         Company outstanding immediately prior thereto continuing to represent
         (either by remaining outstanding or by being converted into Voting
         Securities of the surviving entity) at least 80% of the total voting
         power represented by the Voting Securities of the Company or such
         surviving entity outstanding immediately after such merger or
         consolidation, or the stockholders of the Company approve a plan of
         complete liquidation of the Company or an agreement for the sale or
         disposition by the Company of all or substantially all the Company's
         assets.

                  (b) Claim shall mean any threatened, pending or completed
         action, suit or proceeding, or any inquiry or investigation, whether
         conducted by the Company or any other party, that Indemnitee in good
         faith believes might lead to the institution of any such action, suit
         or proceeding, whether civil, criminal, administrative, investigative
         or other.

                  (c) Expenses shall mean all costs, expenses (including
         attorneys' fees) and obligations paid or incurred in connection with
         investigating, defending, being a witness in or participating in
         (including on appeal) or preparing to defend, be a witness in or
         participate in any Claim relating to any Indemnifiable Event (including
         all interest, assessments and other charges paid or payable in
         connection with or in respect of any of the foregoing).

                  (d) Judgments shall mean judgments, fines, penalties and
         amounts paid in settlement that are paid or payable in connection with
         any Claim relating to any Indemnifiable Event (including all interest,
         assessments and other charges paid or payable in connection with or in
         respect of any of the foregoing).

                  (e) Indemnifiable Event shall mean any event or occurrence
         related to the fact that Indemnitee is or was a director, director
         nominee, officer or representative of the Company, or is or was serving
         at the request of the Company as a director, trustee, officer,
         employee, agent or representative of another corporation, domestic or
         foreign, nonprofit or for profit, partnership, joint venture, employee
         benefit plan, trust or other enterprise, or by reason of anything done
         or not done by Indemnitee in any such capacity.

                  (f) Reviewing Party shall mean any appropriate person or body
         under Section 145 of the Delaware General Corporation Law, including a
         body consisting of a member or members of the Company's Board of
         Directors or any other person or body appointed by the Board (including
         the special, independent counsel referred to in Section 3) who is not a
         party to the particular Claim for which Indemnitee is seeking
         indemnification.

                  (g) Voting Securities shall mean any securities of the Company
         that vote generally in the election of directors.

                                      -2-

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         2.       Scope of Indemnification.

                  (a) Indemnification for Judgments and Expenses. In the event
         Indemnitee was, is or becomes a party to or witness or other
         participant in, or is threatened to be made a party to or witness or
         other participant in, a Claim by reason of (or arising in part out of)
         an Indemnifiable Event, the Company shall indemnify Indemnitee to the
         fullest extent permitted by law against any and all Expenses and
         Judgments arising from or relating to such Claim. Except as otherwise
         provided in Section 2(b), such indemnification shall be made as soon as
         practicable, but in any event not later than thirty (30) days, after
         written demand therefor is presented to the Company by or on behalf of
         the Indemnitee.

                  (b) Indemnification and Advance Payment of Expenses. Any and
         all Expenses and any and all expenses referred to in Section 2(c) shall
         be paid by the Company promptly as they are incurred by Indemnitee (any
         such payment of expenses by the Company is hereinafter referred to as
         an "Expense Advance"). Indemnitee shall be obligated, and hereby
         agrees, to repay the amount of Expenses so paid in the event that
         Indemnitee shall have been adjudged to be liable to the Company, unless
         and only to the extent that the Delaware Court of Chancery or the court
         in which such action or suit was brought shall determine upon
         application that, despite the adjudication of liability but in view of
         all the circumstances of the case, such person is fairly and reasonably
         entitled to indemnity for such expenses which the Delaware Court of
         Chancery or such other court shall deem proper. Indemnitee hereby
         further agrees to cooperate reasonably with the Company concerning any
         Claim.

                  (c) Indemnification for Additional Expenses. The Company shall
         indemnify Indemnitee against any and all expenses (including attorneys'
         fees) that are incurred by Indemnitee in connection with any claim
         asserted against or action brought by Indemnitee for (i)
         indemnification of Expenses or Judgments or advance payment of Expenses
         by the Company under this Agreement or under any other agreement, the
         Company's Certificate of Incorporation, statute or rule of law now or
         hereafter in effect relating to Claims for Indemnifiable Events and
         (ii) recovery under any directors' and officers' liability insurance
         policy or policies maintained by the Company, regardless of whether
         Indemnitee ultimately is determined to be entitled to such
         indemnification, advance expense payment or insurance recovery, as the
         case may be.

                  (d) Partial Indemnity. If Indemnitee is entitled under any
         provision of this Agreement to indemnification by the Company for some
         or a portion of the Judgments and Expenses arising from or relating to
         a Claim but not, however, for all of the total amount thereof, the
         Company shall nevertheless indemnify Indemnitee for the portion thereof
         to which Indemnitee is entitled.

                  (e) Indemnification of Successful Defense Expenses.
         Notwithstanding any other provision of this Agreement, to the extent
         that Indemnitee has been successful on the merits or otherwise in
         defense of any or all Claims relating in whole or in part to an
         Indemnifiable Event or in defense of any issue or matter therein,
         including dismissal

                                      -3-

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         without prejudice, Indemnitee shall be indemnified against all Expenses
         incurred in connection therewith.

         3.       Reviewing Party Determinations.

                  (a) General Rules. Notwithstanding the provisions of Section
         2, the obligations of the Company under Section 2(a) shall be subject
         to the condition that the Reviewing Party shall not have determined (in
         a written opinion, in any case in which the special, independent
         counsel referred to in Section 4 hereof is involved) that Indemnitee
         would not be permitted to be indemnified under applicable law;
         provided, however, that if Indemnitee has commenced legal proceedings
         in a court of competent jurisdiction to secure a determination that
         Indemnitee should be indemnified under applicable law, any
         determination made by the Reviewing Party that Indemnitee would not be
         permitted to be indemnified under applicable law shall not be binding
         until a final judicial determination is made with respect thereto (as
         to which all rights of appeal therefrom have been exhausted or lapsed)
         and any such determination by the Reviewing Party shall be modified, to
         the extent necessary, to conform to such final judicial determination.

                  (b) Selection of Reviewing Party. If there has not been a
         Change in Control, the Reviewing Party shall be selected by the Board
         of Directors. If there has been such a Change in Control, the Reviewing
         Party shall be the special, independent counsel referred to in Section
         4 hereof.

                  (c) Judicial Review. If there has been no determination by the
         Reviewing Party or if the Reviewing Party determines that Indemnitee
         substantially would not be permitted to be indemnified in whole or in
         part under applicable law, Indemnitee shall have the right to commence
         litigation in any court in the State of Delaware having subject matter
         jurisdiction thereof and in which venue is proper seeking an initial
         determination by the court or challenging any such determination by the
         Reviewing Party or any aspect thereof, and the Company hereby consents
         to service of process and to appear in any such proceeding. Any
         determination by the Reviewing Party otherwise shall be conclusive and
         binding on the Company and Indemnitee.

                  (d) Burden of Proof. In connection with any determination by
         the Reviewing Party pursuant to Section 3(a), or by a court of
         competent jurisdiction pursuant to Section 3(c) or otherwise, as to
         whether Indemnitee is entitled to be indemnified hereunder, the burden
         of proof shall be on the Company to establish by clear and convincing
         evidence that Indemnitee is not so entitled.

         4.       Change in Control. The Company agrees that if there is a
Change in Control of the Company then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments under this
Agreement or under any other agreement, the Company's Certificate of
Incorporation, statute or rule of law now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
special, independent counsel selected by Indemnitee and approved by the Company
(which approval shall

                                      -4-

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not be unreasonably withheld), and who has not otherwise performed services for
the Company or Indemnitee within the last five years (other than in connection
with such matters); provided, however, a majority of the Company's Board of
Directors, which majority were directors immediately prior to such Change in
Control, may waive this requirement. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to indemnify
fully such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.

         5.       No Presumption. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law.

         6.       Nonexclusivity. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may now or hereafter have to
indemnification by the Company. More specifically, the Parties intend that
Indemnitee shall be entitled to indemnification to the maximum extent permitted
by any or all of the following:

                  (a) The fullest benefits provided by the Company's Certificate
         of Incorporation in effect on the date hereof, a copy of the relevant
         portions of which are attached hereto as Exhibit A;

                  (b) The fullest benefits provided by the Company's Certificate
         of Incorporation and Bylaws or their equivalent of the Company in
         effect at the time the Indemnifiable Event occurs or at the time
         Expenses are incurred by Indemnitee;

                  (c) The fullest benefits allowable under Delaware law in
         effect at the date hereof or as the same may be amended to the extent
         that such benefits are increased thereby;

                  (d) The fullest benefits allowable under the law of the
         jurisdiction under which the Company exists at the time the
         Indemnifiable Event occurs or at the time Expenses are incurred by the
         Indemnitee; and

                  (e) Such other benefits as are or may be otherwise available
         to Indemnitee pursuant to this Agreement, any other agreement or
         otherwise.

         The parties intend that combination of two or more of the benefits
referred to in (a) through (e) shall be available to Indemnitee to the extent
that the document or law providing for such benefits does not require that the
benefits provided therein be exclusive of other benefits. The Company hereby
undertakes to use its best efforts to assist Indemnitee, in all proper and legal
ways, to obtain all such benefits to which Indemnitee is entitled.

                                      -5-

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         7.       Liability Insurance. The rights of the Indemnitee hereunder
shall also be in addition to any other rights Indemnitee may now or hereafter
have under policies of insurance maintained by the Company or otherwise. To the
extent the Company maintains an insurance policy or policies providing
directors' and officers' liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company director, officer or
representative.

         The Company shall maintain such insurance coverage for so long as
Indemnitee's services are covered hereunder, provided and to the extent that
such insurance is available on a basis acceptable to the Company. In the event
that such insurance becomes unavailable in the amount of the present policy
limits or in the present scope of coverage at premium costs and on other terms
acceptable to the Company, then the Company may forego maintenance of all or a
portion of such insurance coverage. However, in the event of any reduction in
(or cancellation of) such insurance coverage (whether voluntary or involuntary),
the Company shall, and hereby agrees to, stand as a self-insurer with respect to
the coverage, or portion thereof, not retained, and shall indemnify the
Indemnitee against any loss arising out of the reduction in or cancellation of
such insurance coverage.

         8.       Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of legal action within such two-year
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter period shall
govern.

         9.       Amendments. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions thereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

         10       Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.

         11.      No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any claim made
against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, article or otherwise) of the amounts
otherwise indemnifiable hereunder.

         12.      Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any

                                      -6-

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direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company, spouses,
heirs, and personal and legal representatives. This Agreement shall continue in
effect regardless of whether Indemnitee continues to serve as a director,
officer or representative of the Company or any other enterprise at the
Company's request.

         13.      Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.

         14.      Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.

         Executed and effective as of this ____ day of _____, ____.

                                           OM GROUP, INC.

                                           By:
                                              ----------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                           INDEMNITEE:

                                           -------------------------------------
                                           Name:

                                      -7-EX-10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

BY AND AMONG

BIG LOTS, INC.,

BIG LOTS STORES, INC.

AND

KENT LARSSON

This employment agreement (“Agreement”) by and among Big Lots, Inc. (“BLI”), Big Lots Stores, Inc.
(“Big Lots”) and their affiliates, predecessor, successor, subsidiaries and other related companies
(collectively the “Company”) and Kent Larsson (“Executive”), collectively, the “Parties,” is
effective as of August 17, 2005 (“Effective Date”) and supersedes and replaces [1] any other oral
or written agreement or understanding concerning the terms of the Executive’s employment with the
Company including Executive’s Employment Agreement dated March 29, 2004, but does not supersede or
replace [2] any agreement or arrangement between the Executive or any Group Member (as defined in
Section 4.02[1]) relating to the payment of compensation or benefits earned (or deemed earned) on
account of services performed for a Group Member before the Effective Date.

1.00 Duration

This Agreement will remain in effect from the Effective Date until it terminates as provided in
Section 5.00 (“Term”). Any notice of termination required to be given under this Agreement must be
given as provided in Section 6.00 and will be effective on the date prescribed in Section 5.00.

2.00 Executive’s Employment Function

2.01 Position. The Executive agrees to serve the Company in an executive capacity. The Executive
agrees at all times to observe and to be bound by all Company rules, policies, practices,
procedures and resolutions which apply to Company employees with a similar title and position and
which do not conflict with the specific terms of this Agreement.

2.02 Place of Performance. Unless the Company requires the Executive to perform duties at another
location, the Executive’s duties will be performed principally in Columbus, Ohio, except for travel
on the business of any Group Member.

3.00 Compensation

The Company will pay the Executive the amounts described in Sections 3.00 and 5.00 as compensation
for the services described in this Agreement and in exchange for the duties and responsibilities
described in Section 4.00.

3.01 Base Salary. The Company will pay to the Executive an annualized base salary of $350,000,
which, at the discretion of the Company, may be adjusted from time to time in a manner that is
consistent with the Company’s compensation policies in effect for Company employees with a similar
title and position (“Base Amount”) but may not be adjusted to any amount lower than $350,000
without the Executive’s consent. The Executive’s Base Salary will be paid in installments that
correspond with the Company’s normal payroll practices.

 

 

3.02 Bonus. The Executive will be eligible to receive bonus compensation (“Bonus”) under and
subject to the terms of the Company’s 1998 Big Lots, Inc. Key Associate Annual Compensation Plan,
as amended (or any such successor plan, hereinafter, “Bonus Program”) for the fiscal year beginning
January 30, 2005 and for each subsequent fiscal year during the Term of this Agreement. The
Executive’s Bonus will be an amount equal to the Base Salary at the end of each fiscal year
multiplied by the Bonus Payout percentage as determined under the Bonus Program. The Bonus Program
is based upon the achievement of the Company’s annual financial plan. The Executive’s Bonus Payout
percentage consists of a Target Bonus of 50 percent of Base Salary and a Stretch Bonus of 100
percent of Base Salary. Both “Target Bonus” and a “Stretch Bonus” are defined in the Bonus Program
and are subject to adjustment as provided in the Bonus Program; provided, however, the Executive’s
Target Bonus will never be set at less than 50 percent of Base Salary and the Executive’s Stretch
Bonus will never be set at less than 100 percent of Base Salary. The Payment of any earned Bonuses
is subject to the terms of the Bonus Program and any agreements issued thereunder. The term “fiscal
year” means the period beginning on the first Sunday after the Saturday closest to January
31st of each calendar year and ending on the Saturday closest to January 31st
of the following calendar year.

3.03 Benefit and Other Compensatory Plans. Subject to their terms (which the Company may amend at
any time), the Executive may participate in any Company-sponsored employee pension or welfare
benefit plan at a level commensurate with the Executive’s title and position. The Executive also
may participate in any other deferred incentive or similar compensation program maintained by the
Company and generally made available to Company employees with a similar title and position.

3.04 Vacation and Sick Leave. The Executive will be entitled to the same periods of vacation and
sick leave each year that the Company provides under its vacation and sick leave policy to other
Company employees with a similar title and position.

3.05 Expenses. Consistent with the terms of its business expense reimbursement policies and
procedures, the Company will reimburse Executive for all normal and reasonable expenses incurred
while performing services under this Agreement, including reasonable travel expenses.
Reimbursement for these expenses will be made as soon as administratively feasible after the date
the Executive submits appropriate evidence of the expenditure and otherwise complies with the
Company’s business expense reimbursement policies and procedures.

3.06 Automobile Allowance. The Company will provide the Executive with an automobile or a monthly
automobile allowance in accordance with applicable Company policies for employees with a similar
title and position; provided, however, that the automobile allowance may not be adjusted to a value
lower than the value the Executive is entitled to receive as of the Effective Date.

3.07 Termination Benefits. The Company will provide the Executive with only those termination
benefits described in Section 5.00.

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4.00 Executive’s Obligations

The amounts described in Sections 3.00 and 5.00 of this Agreement are provided by the Company in
exchange for (and have a value to the Company equivalent to) the Executive’s performance of the
obligations described in this Agreement, including performance of the duties and the covenants made
and entered into by and between the Executive and the Company in this Agreement.

4.01 Scope of Duties. The Executive will:

[1] Devote all available business time, best efforts and undivided attention to the
Company’s business and affairs; and

[2] Not engage in any other business activity, whether for gain, profit or other pecuniary
benefit except for services benefiting the Group or any Group Member.

However, the restrictions described in Sections 4.01[1] and [2] will not preclude the Executive
from:

[3] Making or holding passive investments; or

[4] Serving on corporate, civic, religious, educational and/or charitable boards or
committees but only if this activity [a] does not interfere with the Executive’s performance
of the duties assumed under this Agreement and [b] is approved in writing by the Company.

4.02 Confidential Information.

[1] Obligation to Protect Confidential Information. The Executive acknowledges that the
Company, its parent, affiliates, predecessor, successor, subsidiaries and other related
companies, including entities that become related entities after the Effective Date
(collectively, “Group” and separately, “Group Member”) have a legitimate and continuing
proprietary interest in the protection of Confidential Information (as defined in Section
4.02[2]) and Intellectual Property (as defined in Section 4.02[3]) and have invested, and
will continue to invest, substantial sums of money to develop, maintain and protect
Confidential Information and Intellectual Property. The Executive agrees [a] during and
after employment with the Company and as to all Group Members [i] that any Confidential
Information and Intellectual Property will be held in confidence and treated as proprietary
to the Group, [ii] not to use or disclose any Confidential Information or Intellectual
Property except to promote and advance the Group’s business interests and [b] immediately
upon termination for any reason from employment with the Company, to return to the Company
any Confidential Information and Intellectual Property.

[2] Definition of Confidential Information. For purposes of this Agreement, Confidential
Information includes any confidential data, figures, projections, estimates, pricing data,
customer lists, buying manuals or procedures, distribution manuals or procedures, other
policy and procedure manuals or handbooks, supplier information, tax

3

 

records, personnel
histories and records, information regarding sales, information regarding properties and any
other information of a similar confidential nature regarding the business, operations,
properties or personnel of the Group, the Company or any other Group Member which are
disclosed to or learned by the Executive while employed by a Group Member, but will not
include [a] the Executive’s own personal personnel records or [b] any information that [i]
the Executive possessed before the date of initial employment (including periods before the
Effective Date) with the Group that was a matter of public knowledge, [ii] became or becomes
a matter of public knowledge through authorized sources independent of the Executive, [iii]
has been or is disclosed by any Group Member without restriction on its use, [iv] has been
or is required to be disclosed by law or governmental order or regulation or [v] is germane
(but only to the extent that it is germane) to enforcement of the Executive’s rights under
this Agreement and only if its disclosure is a necessary part of any proceedings described
in Section 9.00. The Executive also agrees that, if there is any reasonable doubt whether
an item is public knowledge, to not regard the item as public knowledge until and unless the
Company’s General Counsel or Chief Executive Officer confirms to the Executive that the
information is public knowledge or an adjudicator finally decides that the information is
public knowledge.

[3] Intellectual Property. The Executive expressly acknowledges that all right, title and
interest to all inventions, designs, discoveries, works of authorship, and ideas conceived,
produced, created, discovered, authored or reduced to practice during the Executive’s
performance of services under this Agreement, whether individually or jointly with any Group
Member and whether or not it is deemed to be “work made for hire” (the “Intellectual
Property”) will be owned solely by the Group, and will be subject to the restrictions set
forth in Section 4.02[1]. All Intellectual Property that constitutes copyrightable subject
matter under the copyright laws of the United States will, from its conception, be deemed to
be a “work made for hire” under the United States copyright laws and all right, title and
interest in and to such copyrightable works will vest in the Company or the Group. All
right, title and interest in and to all Intellectual Property developed or produced under
this Agreement by the Executive, whether constituting patentable subject matter or
copyrightable subject matter (to the extent deemed not to be a “work made for hire”) or
otherwise, will be assigned and is hereby irrevocably assigned to the Company or the Group
by the Executive. Without any additional consideration, the Executive will execute all
documents and take all other actions the Company reasonably believes are needed to convey
the Executive’s complete ownership interest in any Intellectual Property to the Company or
the Group so that the Company or the Group will own and may protect the Intellectual
Property and obtain patent, copyright and trademark registrations for it. The Executive
agrees that any Group Member may alter or modify the Intellectual Property at the Group
Member’s sole discretion, and the Executive waives all right to claim or disclaim ownership.

4.03 Solicitation of Employees. The Executive agrees that during employment, and for two years
after terminating employment with all Group Members [1] not, directly or indirectly, to solicit (or
facilitate the solicitation of) any employee of any Group Member to leave employment with the Group
or any Group Member, [2] not, directly or indirectly, to employ, seek to employ or facilitate the
employment of any employee of any Group Member by an entity that is not a

4

 

Group Member and [3] not
to cause or induce any entity described in Section 4.05[1] to solicit or employ (or to facilitate
the solicitation or employment of ) any employee of any Group Member.

4.04 Solicitation of Third Parties. The Executive agrees that during employment, and for two years
after terminating employment with all Group Members not, directly or indirectly, to recruit,
solicit or otherwise induce or influence any customer, supplier, sales representative, lender,
lessor, lessee or any other person having a business relationship with the Group, the Company or
any other Group Member to discontinue or reduce the extent of that relationship except in the
course of discharging the duties described in this Agreement and with the good faith objective of
advancing the Company’s or the Group’s (or any other Group Member’s) business interests.

4.05 Non-Competition. The Executive acknowledges the nature of the Group’s Business (as defined in
Section 4.05[3][a] and that the Group is one of the limited number of entities which has developed
this type of business; that the Group’s Business is national in scope and the Executive’s work for
the Group, the Company and other Group Members will give Executive access to the confidential
affairs of the Company and other Group Members, to Confidential Information and to Intellectual
Property as defined in Sections 4.02[2] and 4.02[3] respectively; and that the agreements and
covenants of the Executive contained in Section 4.00 are essential to preserving the Group’s
Business and good will. Accordingly, the Executive covenants and agrees that:

[1] During the Restriction Period (as defined in Section 4.05[3][c]) and within the
Restricted Area (as defined in Section 4.05[3][b]) the Executive will not [a] engage in the
Group’s Business for the Executive’s own account, [b] render any services to any person
engaged in the Group’s Business (other than to an entity that is a Group Member when those
services are rendered); or [c] become employed in any manner by, or consult with, Wal-Mart,
Sam’s Club, Kmart, Target, Dollar General, Family Dollar, Dollar Tree, Value
City/Schottenstein Stores Corporation, Fred’s, 99¢ Stores, Canned Foods, Tuesday Morning and
TJX Corporation. Further, the Executive agrees during the Restricted Period to not become
employed in any manner by or to act as consultant to any successor, parent or subsidiary of
the entities (or types of entities) listed above other than in the course of discharging the
duties described in this Agreement.

[2] Maximum Enforceable Restriction. If any or all of the covenants set forth in this
Section 4.05 are determined by a court of competent jurisdiction to be unenforceable by
reason of the temporal restrictions being too great, the geographic areas covered too great,
the range of activities too great or for any other reason, the Court is authorized and will
interpret them to extend over the maximum period of time, the maximum geographic area and
the maximum range of activities or, as to any provision, in such a manner that all
provisions may be given maximum restrictive effect in accordance with applicable law.

[3] Definition Relating to Section 4.05.

[a] Group Business. For purposes of this Agreement, “Group Business” includes the
operation of Big Lots retail outlets, the inventories of which are

5

 

acquired
primarily through special purchases such as overstocks, close-outs, liquidations,
bankruptcies, wholesale distribution of overstock, distress, liquidation and other
volume inventories, the operation of Big Lots furniture stores, and related
wholesale operations and other lines of business any Group Member develops during
the Term of this Agreement.

[b] Restricted Area. For purposes of this Agreement, “Restricted Area” means the 50
mile radius surrounding any location in which the Group’s Business is conducted
during the Term of this Agreement.

[c] Restriction Period. For purposes of this Agreement, “Restriction Period” means
the Term of this Agreement and one year following termination of the Executive’s
employment with all Group Members, regardless of the reason for termination;
provided, however, that in the event of a Change of Control as defined in Section
5.07[3] of this Agreement, the Restricted Period shall be for a period of six (6)
months.

4.06 Post-Termination Cooperation. The Executive agrees that during and after employment with the
Group and without additional compensation (other than reimbursement for reasonable associated
expenses), to cooperate with the Group, the Company and any other Group Member in the following
areas:

[1] Cooperation With the Group, the Company and Other Group Members. The Executive agrees
[a] to be reasonably available to answer questions for any Group Member’s officers or
directors regarding any matter, project, initiative or effort with which the Executive was
involved while employed by any Group Member and [b] to cooperate with the Group, the Company
and any other Group Member during the course of all proceedings arising out of the Group’s
Business about which the Executive has knowledge or information. For purposes of this
Agreement, [c] “proceedings” includes internal investigations, administrative investigations
or proceedings and lawsuits (including pre-trial discovery and trial testimony) and [d]
“cooperation” includes [i] the Executive’s being reasonably available for interviews,
meetings, depositions, hearings and/or trials without the need for subpoena or assurances by
the Group, the Company or any other Group Member, [ii] providing any and all documents in
the Executive’s possession that relate to the proceeding and [iii] providing assistance in
locating any and all relevant notes and/or documents relevant to any proceedings.

[2] Cooperation With Third Parties. Unless compelled to do so by lawfully-served subpoena
or court order or to the extent it is germane (but only to the extent that it is germane) to
enforcement of the Executive’s rights under this Agreement and only as a necessary part of
any proceedings under this Agreement, the Executive agrees not to communicate with, or give
statements or testimony to, any opposing attorney, opposing attorney’s representative
(including a private investigator) or current or former employee relating to any matter
(including pending or threatened lawsuits or administrative investigations) about which the
Executive has knowledge or information except in cooperation with the Group, the Company and
other Group Members. The Executive also agrees to notify the Company’s Chief Executive
Officer or General Counsel

6

 

immediately after being contacted by a third party or receiving a
subpoena or court order to appear and testify with respect to any matter affected by this
section.

[3] Cooperation With Media. The Executive agrees not to communicate with, or give
statements to, any member of the media (including print, television, radio or electronic
media) relating to any matter (including pending or threatened lawsuits or administrative
investigations) about which the Executive has knowledge or information except in cooperation
with the Group, the Company or any other Group Member. The Executive also agrees to notify
the Company’s Chief Executive Officer or General Counsel immediately after being contacted
by any member of the media with respect to any matter affected by this section.

4.07 Non-Disparagement. The Executive and the Company agree (on its behalf and in behalf of the
Group and other Group Members) that after the Executive’s employment with the Group has ended
neither will make any disparaging remarks about the other and the Executive will not make any
disparaging remarks about the Company, the Company’s Chairman, Chief Executive Officer or any of
the Company’s executives or directors or any other Group Member or their executives and directors.
However, this section will not preclude [1] any remarks that may be made by the Executive [a] under
the terms of Section 4.06[2], [b] that are required to discharge the duties described in this
Agreement or [c] are germane (but only to the extent that it is germane) to enforcement of the
Executive’s rights under this Agreement and only as a necessary part of any proceedings under this
Agreement or [2] the Company or any other Group Member from making (or eliciting from any person)
disparaging remarks about the Executive [a] concerning any conduct that may have led to a
termination for Cause, as defined in Section 5.04[3] (including initiating an inquiry or
investigation that may result in a termination for Cause) or [b] that are germane (but only to the
extent that it is germane) to defending against any action begun by the Executive under this
Agreement.

4.08 Notice of Subsequent Employment. The Executive agrees to notify the Company of any subsequent
employment during the Restriction Period and any period during which any payment described in
Section 5.00 is due or is being paid.

4.09 Remedies. The Executive:

[1] Acknowledges that the obligations and restrictions described in Sections 4.02 through
4.08 are reasonable in light of the nature of the Group’s Business and the nature of the
Executive’s relationship with the Group and the Company; that the Group, the Company and all
other Group Members have legitimate business reasons for requiring the Executive’s agreement
to all provisions of Section 4.00; and that the Executive understands these restrictions,
has had an opportunity to fully discuss these restrictions with the Company and accepts the
restrictions.

[2] Agrees that if any of the obligations to the Company under Sections 4.02 through 4.08
are breached, the periods during which the obligations described in Sections 4.02 through
4.08 apply will be extended for the length of time that the Executive failed to fulfill the
obligations under Sections 4.02 through 4.08.

7

 

[3] Agrees that [a] any breach of any of the terms of this Section 4.00 would result in
irreparable injury and damage to the Group, the Company and all other Group Members for
which none would have an adequate remedy at law, [b] in the event of a breach or any threat
of breach by the Executive, the Group, the Company and any Group Member will be entitled to
an immediate injunction and restraining order to prevent that breach and/or threatened
breach and/or continued breach by the Executive and/or any and all persons and/or entities
acting for, with and/or through the Executive, without having to prove damages [c] no bond
will be required of the Group, the Company or any other Group Member in connection with an
action described in Section 4.09[3][a] and [d] not to defend any action seeking injunctive
or other equitable relief on the basis that the Group, the Company or any other Group Member
has an adequate remedy at law in money damages or otherwise. The terms of this Section 4.09
will not prevent the Company from pursuing any other available remedies for any breach or
threatened breach by the Executive of Section 4.00, including, but not limited to, the
recovery of monetary damages from the Executive or specific performance. In addition to any
other available remedies, the Group, the Company or any Group Member may require the
Executive to account for and pay over to the Company all compensation, profits, accruals,
increments or other benefits derived or received by the Executive as a result of any
transaction constituting a breach of any portion of Section 4.00. The Company may set off
any amounts finally determined by a court of competent jurisdiction to be due under this
section against any amount that may be owed to the Executive under this Agreement or under
any other compensatory arrangement (other than a tax-qualified retirement plan) between the
Executive and the Group, the Company or any other Group Member. The Parties agree that any
action for breach of any of the provisions of Section 4.00 and/or injunctive relief will be
venued in the Court of Common Pleas, Franklin County, Ohio.

4.10 Return of Group Property. Upon termination of employment, the Executive agrees to promptly
return to the Company all property belonging to the Group or any Group Member; provided, however,
that in the event the Executive’s employment is terminated pursuant to Section 5.06 and the
Executive is then utilizing an automobile provided by the Company, the Executive shall retain the
automobile in accordance with the terms of Section 5.06[5].

4.11 Effect of Termination of Agreement. The provisions of Section 4.00 will survive any
termination of this Agreement and the existence of any claim or cause of action by the Executive
against the Company or any Group Member, whether predicated on this Agreement or otherwise, will
not constitute a defense to the enforcement by the Group, the Company or any other Group Member of
the covenants and agreements of this Section 4.00; provided, however, that this Section 4.11 will
not, in and of itself, preclude the Executive from defending against the enforceability of the
covenants and agreements of Section 4.00.

8

 

5.00 Termination and Related Benefits

This Agreement will terminate upon the occurrence of any of the events described in this section,
although all of the obligations, restrictions and duties described in Sections 4.02 through 4.08
will continue after the Agreement terminates and will apply and continue to apply to the Executive
and the Executive’s estate, heirs and assigns for the period described in Sections 4.02 through
4.08.

5.01 Rules of General Application. The following rules apply generally to the implementation of
Section 5.00:

[1] Method of Payment. The Company, at its option and at any time, may elect to pay, as a
lump sum, any installment payments due under Section 5.00. If the Company decides to pay
any installment obligation due under Section 5.00 as a lump sum, the amount paid will be
reduced to reflect the value of the acceleration. This reduction will be based on the rate
paid on 90-day U.S. Treasury Bills issued on the last issue date before the lump sum payment
is made.

[2] Application of Pro Rata. Any pro rata amount to be paid under Section 5.00 [a] will be
calculated as provided in the program through which the payment is due or [b] if the payment
obligation arises solely under this Agreement, will be based on the number of days between
the first day of the fiscal year during which the Executive terminates employment and the
date that the Executive terminates employment divided by the number of days in the fiscal
year during which the Executive terminates employment.

[3] Limit on Time and Form of Payment. Subject to Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), the payments described in this section will be made at the
time and in the form described in this section. Any amount deferred by application of
Section 409A of the Code will be paid as a lump sum on the first payment date permitted
under Section 409A of the Code and will be increased by interest calculated as described in
Section 5.01[1][b] or on another basis permitted under Section 409A of the Code.

5.02 Termination Due to Executive’s Death. This Agreement will terminate automatically on the date
the Executive dies. If all requirements of this Agreement are met (including those described in
Section 7.00), as of the Executive’s date of death, and subject to Section 5.04[5], the Company
will make the following payments to the beneficiary the Executive designates on a form acceptable
to the Company. If the Executive has not made an effective beneficiary designation (or has revoked
all beneficiary designations), these payments will be made to the Executive’s surviving spouse or,
if the Executive dies without a surviving spouse, to the Executive’s estate.

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.
This amount will be paid on the Company’s next regularly schedule payroll date for similarly
situated employees.

9

 

[2] Bonus. The Bonus (or pro rata share of any Bonus) due under the terms of the Bonus
Program and Section 3.02.

[3] Other. Any rights accruing to the Executive under any other compensatory program and
any employee benefit plan, fund or program maintained by the Company will be distributed or
made available as required by the terms of the program, plan or fund or as required by law.

5.03 Termination Due to Executive’s Disability. The Company may terminate this Agreement after
ascertaining that the Executive is Disabled (as defined in Section 5.03[4]) by delivering to the
Executive a written notice of termination for Disability that includes the date termination for
Disability is to be effective. If all requirements of this Agreement are met (including those
imposed under Section 7.00) and subject to Section 5.04[5], the Company will make the following
payments to the Executive.

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.
This amount will be paid on the Company’s next regularly schedule payroll date for similarly
situated employees.

[2] Bonus. The Bonus (or pro rata share of any Bonus) due under the terms of the Bonus
Program and Section 3.02.

[3] Other. Any rights accruing to the Executive under any other compensatory program and
employee benefit plan, fund or program maintained by the Company will be distributed or made
available as required by the terms of the program, plan or fund or as required by law.

[4] Definition of Disability. For purposes of this Agreement, “Disability” (and any of its
forms) means that, for more than six consecutive months, the Executive is unable, with
reasonable accommodation, to perform the duties described in Section 4.01 on a full-time
basis due to a physical or mental disability or infirmity.

5.04 Termination for Cause. The Company may terminate the Executive’s employment for Cause (as
defined in Section 5.04[3]). A termination for Cause shall only be effective after [a] the Company
has delivered a written notice to the Executive stating that in the Company’s opinion, the
Executive may be terminated for Cause, specifying the details and [b] if the failure or action is
one that can be cured, the Executive does not cure the issue giving rise to the Cause determination
within 30 days after receiving notice. If the Executive is terminated for Cause and if all
requirements of this Agreement are met (including those imposed under Section 7.00), the Company
will make the following payments to the Executive:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.
This amount will be paid on the Company’s next regularly schedule payroll date for similarly
situated employees.

[2] Other. Any rights accruing to the Executive under any other compensatory program and
employee benefit plan, fund or program maintained by the Company will be

10

 

distributed or made
available as required by the terms of the program, plan or fund or as required by law.

[3] Definition of Cause. For purposes of this Agreement, Cause means the Executive’s [a]
failure to comply with Company’s policies and procedures which the Company reasonably
determines has had or is likely to have a material adverse effect on the Group, the Company
or any other Group Member; [b] willful or illegal misconduct or grossly negligent conduct
that is materially injurious to the Group, the Company or any other Group Member, monetarily
or otherwise; [c] violation of laws or regulations governing the Group, the Company or any
other Group Member (including the Sarbanes-Oxley Act of 2002) or violation of the Company’s
code of ethics; [d] breach of any fiduciary duty owed to the Group, the Company or any other
Group Member; [e] misrepresentation or dishonesty which the Company reasonably determines
has had or is likely to have a material adverse effect on the Group, the Company or any
other Group Member; [f] breach of any provision of Section 4.00 of this Agreement; [g]
involvement in any act of moral turpitude that has a materially injurious effect on the
Group, the Company or any other Group Member or their reputation; or [h] breach of the terms
of any non-solicitation or confidentiality clauses contained in an employment agreement(s)
with a former employer.

[4] Date of Termination for Cause. Subject to Section 5.04[5], termination for Cause
will be deemed to have occurred on the date the Company specifies in the notice described in
Section 5.04[a] or, if later and if applicable the end of the period described in Section
5.04[b].

[5] Subsequent Information. The terms of Section 5.04 also will apply if, within 6
consecutive calendar months beginning after the Executive terminates under any other
provision of Section 5.00, the Company learns of an event that, had it been known before the
Executive terminated employment, would have justified a termination for Cause. In this
case, the Company will be entitled to recover any amounts that the Executive or any
beneficiary received under any other provision of Section 5.00, reduced by the amount the
Executive is entitled to receive under this Section 5.04 and any other legally protected
benefits paid or made available under this Agreement that originally was applied when the
Executive terminated.

5.05 Voluntary Termination by Executive. The Executive may voluntarily terminate employment with
the Company at any time. In this case, and if all other requirements of this Agreement are met,
and subject to Section 5.04[5], the Company will make the following payments to the Executive:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.
This amount will be paid in a single lump sum on the Company’s next regularly schedule
payroll date for similarly situated employees.

[2] Other. Any rights accruing to the Executive under any other compensatory program and
employee benefit plan, fund or program maintained by the Company will be

11

 

distributed or made
available as required by the terms of the program, plan or fund or as required by law.

5.06 Involuntary Termination Without Cause. Beginning September 1, 2006, the Company may terminate
the Executive’s employment at any time without Cause by delivering to the Executive a written
notice specifying the date termination is to be effective. If all requirements of this Agreement
are met (including those imposed under Section 7.00) and subject to Section 5.04[5], the Company
will make the following payments to the Executive:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.
This amount will be paid in a single lump sum on the Company’s next regularly schedule
payroll date for similarly situated employees.

[2] Bonus. The bonus (or pro rata share of any Bonus) due under the terms of the Bonus
Program and Section 3.02.

[3] Income Continuation. The Executive will be entitled to continue to receive his Base
Salary until the last day of the twenty-eighth complete calendar week beginning after the
termination date.

[4] Health Care. The Company will reimburse the Executive for the cost of continuing health
coverage under COBRA, less the amount the Executive is expected to pay as an employee
premium for this coverage, if any, until the earlier of [a] the last day of the
twenty-eighth complete calendar week beginning after the termination date or [b] the date
the Executive becomes eligible for the same or similar coverage under another benefit
program. The amounts payable under this section will be increased to reimburse the
Executive for federal, state and local income, employment and wage taxes associated with
that reimbursement.

[5] Transportation. The Executive will be entitled to continue to receive the automobile
benefits described in Section 3.06 until the last day of the twenty-eighth complete calendar
week beginning after the termination date.

[6] Other. Any rights accruing to the Executive under any other compensatory program and
employee benefit plan, fund or program maintained by the Company will be distributed or made
available as required by the terms of the program, plan or fund or as required by law.

	5.07	 	Termination in Connection With Change of Control. If the Executive is Terminated in
Connection With a Change of Control (as defined in Section 5.07[5]) at any time during the
Protection Period (as defined in Section 5.07[4]) and if all other conditions of this
Agreement have been met (including those imposed under Section 7.00) and subject to Section
5.04[5], the Change Entity (as defined in Section 5.07[2] will pay or make available the
Change Benefits (as defined in Section 5.07[1]) in lieu of any other amounts of benefits that
might otherwise be due under this Agreement on account of that termination.

12

 

[1] Change Benefits. For purposes of this Agreement, “Change Benefits” means the aggregate
of the following, adjusted if appropriate under Sections 5.07[6] and [7]:

[a] Base Salary. The sum of [i] the Base Salary earned to the date of termination
plus [ii] 200 percent of the Executive’s Base Salary at the highest rate in effect
at any time during the Protection Period. This amount will be paid in a lump sum
cash payment on the Change Entity’s first regular payroll date for employees with a
similar title or position following the effective date of the Executive’s
Termination in Connection With a Change of Control.

[b] Bonus. Two hundred percent of the Executive’s Stretch Bonus opportunity as it
existed on the Effective Date of this Agreement under the Bonus Program. This
amount will be paid in a single lump sum on the Change Entity’s next regularly
scheduled payroll date for executives of similar title and position following the
date of the Executive’s Termination in Connection With a Change of Control.

[c] Health Care. The Change Entity will reimburse the Executive for the cost of
continuing health coverage under COBRA, less the amount the Executive is expected to
pay as an employee premium at the lowest rate in effect at any time during the
Protection Period for this coverage, until the earlier of [i] the last day of the
24th complete calendar month beginning after the date the Executive is Terminated in
Connection With a Change of Control or [ii] the date the Executive becomes eligible
for comparable benefits at comparable costs to the Executive under another employer
sponsored benefit program. The amounts payable under this section will be increased
to reimburse the Executive for federal, state and local income, employment and wage
taxes associated with that reimbursement.

[d] Other. Any rights (including those arising on account of the Change of Control)
accruing to the Executive under any other compensatory program and employee benefit
plan, fund or program maintained by the Change Entity will be distributed or made
available as required by the terms of the program, plan or fund or as required by
law.

[2] Change Entity. For purposes of this Agreement, “Change Entity” means the Company, BLI
and any other entity that is a party to the Change of Control.

[3] Definition of Change of Control. For purposes of this Agreement, “Change of Control”
means [a] any person or group [as defined for purposes of Section 13(d) of the Securities
Exchange Act of 1934] that becomes the beneficial owner of, or has the right to acquire (by
contract, option, warrant, conversion of convertible securities or otherwise), 20 percent or
more of the outstanding equity securities of BLI entitled to vote for the election of
directors; [b] a majority of the Board of Directors of BLI is replaced within any 24
consecutive month period or less by directors not nominated and approved by a majority of
the directors of BLI in office at the beginning of such period (or their successors so
nominated and approved), or a majority of the Board of Directors of BLI at any date consists
of persons not so nominated and approved; [c] the stockholders of BLI

13

 

approve an agreement
to reorganize, merge or consolidate with another corporation (other than Big Lots Stores,
Inc. or an affiliate); [d] the stockholders of BLI adopt a plan or approve an agreement to
sell or otherwise dispose of all or substantially all of BLI’s assets (including without
limitation, a plan of liquidation or dissolution), in a single transaction or series of
related transactions. The effective date of any such Change of Control will be the date
upon which the last event occurs or last action is taken such that the definition of such
Change of Control (as set forth above) has been met. For purposes of this Agreement, the
term “affiliate” will mean: [i] any person or entity qualified as part of an affiliated
group which includes BLI pursuant to Section 1504 of the Internal Revenue Code of 1986, as
amended (the “Code”); or [ii] any person or entity qualified as part of a parent-subsidiary
group of trades and businesses under common control within the meaning of Treasury
Regulation Section 1.414(c)(2)(b). Determination of affiliate will be tested as of the date
immediately prior to any event constituting a Change of Control. The other provisions of
this Section 5.07 notwithstanding, the term “Change of Control” will not mean any
transaction, merger, consolidation or reorganization in which BLI exchanges or offers to
exchange newly issued or treasury shares in an amount less than 50 percent of the
then-outstanding equity securities of BLI entitled to vote for the election of directors,
for 51 percent or more of the outstanding equity securities entitled to vote for the
election of at least the majority of the directors of a corporation other than BLI or an
affiliate thereof (the “Acquired Corporation”), or for all or substantially all of the
assets of the Acquired Corporation.

[4] Protection Period. For purposes of this Agreement, “Protection Period” means the period
beginning on the first day of the third full consecutive calendar month beginning before the
date of the Change of Control and ending on the last day of the twenty-fourth consecutive
full calendar month beginning after the date of the Change of Control.

[5] Termination in Connection With a Change of Control. For purposes of this Agreement,
“Termination in Connection With a Change of Control” means, at any time during the
Protection Period, the Change Entity:

[a] Involuntarily terminates the Executive without Cause (as defined in Section
5.06), in which case, the termination will be deemed to have occurred on the date
the notice of termination is delivered to the executive;

[b] Breaches any term of this Agreement, in which case the termination will be
deemed to have occurred on the date of the breach, even if the breach became
apparent at a later date;

[c] Unsuccessfully attempts to terminate the Executive for Cause (as defined in
Section 5.04), in which case the termination will be deemed to have occurred on the
date the Change Entity gives the notice of termination for Cause described in
Section 5.04 even if the date on which it is determined that the Change Entity had
no basis for terminating the executive for Cause is beyond the Protection Period;

14

 

[d] Attempts to terminate the Executive for any reason without following the
procedures described in this Agreement (including an acceleration of the periods
described in Section 5.03[4] and 5.04[b]), in which case the termination will be
deemed to have occurred on the date the Change Entity first failed to comply with
those procedures;

[e] Revokes or attempts to revoke or accelerate the duration of any leave of absence
protected by law or authorized by the Company before the Protection Period or by the
Change Entity at any time during the Protection Period, in which case the
termination will be deemed to have occurred on the day the Company or the Change
Entity revoked or attempted to revoke or accelerate the leave of absence even if the
date on which it is determined that the Change Entity had no basis for revoking or
acceleration the leaves of absence is beyond the Protection Period; or

[f] Refuses to allow the Executive to return to active employment at the end of any
leave of absence protected by law or authorized by the Company before the Protection
Period or the Change Entity at any time during the Protection Period, in which case
the termination will be deemed to have occurred on the earlier of [i] the date the
Executive attempts to return to active employment or [ii] the last day or the leave
of absence.

[6] Treatment of Taxes. If payments under this Agreement, when combined with payments and
benefits under all other plans and programs maintained by the Company or the Change Entity,
constitute “excess” parachute payments as defined in Section 280G(b) of the Code, the Change
Entity, subject to Section 5.07[7], will either:

[a] Reimburse the Executive for the amount of any excise tax due under Code §4999,
if this procedure provides the Executive with an after-tax amount that is larger
than the after-tax amount produced under Section 5.07[6][b]; or

[b] Reduce the Executive’s benefits under this Agreement so that the Executive’s
total “parachute payment” as defined in Code §280G(b)(2)(A) under this Agreement and
all other agreements will be $1.00 less than the amount that would generate “excess”
parachute payment penalties if this procedure provides the Executive with an
after-tax amount that is larger than the after-tax amount produced under Section
5.07[6][a].

This comparison will be made as of the date of the corporate event generating the “parachute
payments” although any reimbursement provided under Section 5.07[6][a] will be made when the
parachute payment is actually made or distributed.

Within 10 business days of the date the Change Entity determines that Section 5.07[6][b]
should be applied, the Change Entity will apprise the Executive of the amount of the
reduction (“Notice of Reduction”). Within 10 business days of receiving that information,
the Executive may specify how (and against which benefit or payment source) the reduction is
to be applied (“Notice of Allocation”). The Change Entity will

15

 

be required to implement
these directions within 10 business days of receiving the Notice of Allocation. If the
Change Entity has not received a Notice of Allocation from the Executive within 10 business
days of the date of the Notice of Reduction or if the allocation provided in the Notice of
Allocation is not sufficient to fully implement Section 5.07[6][b], the Change Entity will
apply Section 5.07[6][b] proportionately based on the amounts otherwise payable under this
Agreement or, if a Notice of Allocation has been returned that does not sufficiently
implement Section 5.07[6][b], on the basis of the reductions specified in the Notice of
Allocation.

[7] Effect of Subsequent Tax Claim. The Change Entity will establish procedures that will
apply to any inquiries regarding the treatment of tax payments under this Section 5.07.
Within 30 days following the termination of the Executive’s employment under Section 5.07,
the Change Entity will provide the Executive with a copy of such procedures.

6.00 Notice

6.01 How Given. Any notice permitted or required to be given under this Agreement must be given in
writing and delivered in person or by registered, U.S. mail, return receipt requested, postage
prepaid; or through Federal Express, UPS, DHL or any other reputable professional delivery service
that maintains a confirmation of delivery system. Any delivery must be [1] in the case of notices
to the Company or the Change Entity, addressed to the Company’s Chief Executive Office at the
Company’s then-current corporate offices and [2] in the case of notices to the Executive, addressed
to the Executive’s last mailing address contained in the Executive’s personnel file.

6.02 Effective Date. Any notice permitted or required to be given under this Agreement will be
deemed to have been given and will be effective on the date it is delivered.

7.00 Execution of Release

The Executive agrees that as a condition of receiving any post-termination benefit as set forth in
Section 5.00 except for earned but unpaid Base Salary to the date of termination and any legally
protected rights the Executive has under any employee benefit plan maintained by the Company, the
Executive or, in the case of any amounts due after the Executive’s death, the person to whom those
amounts are payable (collectively, the “Payee”) must execute a comprehensive release in the form
determined from time to time by the Company in its sole discretion. Generally, the release will
require the Payee and the Payee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, legatees and assigns to release and forever discharge
the Group, the Company and all other Group Members, past, present and future, and their executives,
officers, directors, agents, attorneys, successors and assigns from any and all claims, suits
and/or causes of action that grow out of or are in any way related to the Executive’s recruitment
and employment with the Company that arose on or before the date of the release, other than any
claim that the Company has breached this Agreement. This release will include, but not be limited
to, any claim that the Company violated the Employee Retirement Income Security Act of 1974; the
Age Discrimination in Employment Act; the Older Worker’s Benefit Protection Act; the Americans with
Disabilities Act; Title VII of the Civil

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Rights Act of 1964, the Family and Medical Leave Act; any
state, federal law or local ordinance prohibiting discrimination, harassment or retaliation in
employment; any claim for wrongful discharge in violation of public policy, claims of promissory
estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the
public policy of any state; or any federal, state or local law (each as in effect on the Effective
Date and as subsequently amended) relating to any matter within the purview of this Agreement.
Upon the Executive’s termination of employment with all Group Members, the Payee will be presented
with a release and if the Payee fails to execute the release, the Payee agrees to forego any
payment described in the first sentence of this section. The Executive acknowledges that the
Executive is an experienced senior executive knowledgeable about the claims that might arise in the
course of employment with and termination from the Company and any other Group Member and knowingly
agrees that the payments upon termination provided for in this Agreement are satisfactory
consideration for the release of all possible claims described in the release.

8.00 Insurance

The Company will indemnify Executive (including his heirs, executors and administrators) to the
fullest extent permitted under the Company’s Regulations and Ohio law. This obligation to provide
insurance for the Executive will survive termination of this Agreement with respect to proceedings
or threatened proceedings based on acts or omissions occurring during the Executive’s employment
with or termination from the Group, the Company or with any other Group Member.

9.00 Arbitration

9.01 Acknowledgement of Arbitration. Unless stated otherwise in this Agreement or any other
compensatory or any employee benefit plan, fund or program maintained by the Company, the Parties
agree that arbitration is the sole and exclusive remedy for each of them to resolve (except as
specifically provided in Section 4.09) and redress any dispute, claim or controversy involving the
interpretation or application of this Agreement, the terms, conditions or termination of this
Agreement and the terms, conditions or termination of the Executive’s employment with the Company,
including any claims for any tort, breach of contract, violation of public policy or
discrimination, whether such claim arises under federal, state law or local law.

9.02 Scope of Arbitration. The Executive expressly understands and agrees that claims subject to
arbitration under this section include asserted violations of the Employee Retirement Income
Security Act of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit
Protection Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of 1964 (as
amended); the Family and Medical Leave Act; any federal, state or local law or ordinances
prohibiting discrimination, harassment or retaliation in employment; any claim for wrongful
discharge in violation of public policy, claims of promissory estoppel or detrimental reliance,
defamation, intentional infliction of emotional distress; or the public policy of any state, or any
federal, state or local law (each as in effect on the Effective Date or as subsequently amended)
relating to any matter within the purview of this Agreement.

9.03 Effect of Arbitration. The Parties intend that any arbitration award relating to any matter
described in Section 9.01 will be final and binding on them and that a judgment on the

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award may be
entered in any court of competent jurisdiction and that enforcement may be had according to the
terms of that award. This Section 9.03 will survive the termination of this Agreement.

9.04 Location and Conduct of Arbitration. Arbitration will be held in Columbus, Ohio, and will be
conducted by a retired federal judge or other qualified arbitrator. The arbitrator will be
mutually agreed upon by the Parties and the arbitration will be conducted in accordance with the
National Rules for the Resolution of Employment Disputes of the American Arbitration Association.
The Parties will have the right to conduct discovery pursuant to the Federal Rules of Civil
Procedure; provided, however, that the arbitrator will have the authority to establish an expedited
discovery schedule and cutoff and to resolve any discovery disputes. The arbitrator will have no
jurisdiction or authority to change any provision of this Agreement by alterations of, additions to
or subtractions from the terms of this Agreement. The arbitrator’s sole authority will be to
interpret or apply any provision(s) of this Agreement or any public law alleged to have been
violated. The arbitrator has the authority to award damages and other relief expressly provided by
law.

9.05 Time for Initiating Arbitration. Any claim or controversy relating to any matter described in
Section 9.01 not sought to be submitted to arbitration, in writing, within 60 days of the date the
Party asserting the claim knew, or through reasonable diligence should have known, of the facts
giving rise to that Party’s claim, will be deemed waived and the Party asserting the claim will
have no further right to seek arbitration or recovery with respect to that claim or controversy.
Both Parties agree to strictly comply with the time limitation specified in this section. For
purposes of this section, a claim or controversy is sought to be submitted to arbitration on the
date the complaining Party gives written notice to the other that [1] an issue has arisen or is
likely to arise that, unless resolved otherwise, may be resolved through arbitration under this
Section 9.00 and [2] unless the issue is resolved otherwise, the complaining Party intends to
submit the matter to arbitration under the terms of Section 9.00.

9.06 Costs of Arbitration and Attorney’s Fees. The Company will bear the arbitrator’s fee and
other costs associated with any arbitration, unless the arbitrator, acting under Federal Rule of
Civil Procedure 54(d)(1), elects to award these fees to the Company. Attorney’s fees [1] may be
awarded to the prevailing party if expressly authorized by statute, or otherwise each party will
bear its own attorney’s fees and costs but [2] Executive’s attorney’s fees and other associated
costs and expenses will be borne by the Change Entity with respect to any claim arising under
Section 5.07 but only if the arbitrator concludes the claim legitimately relates to matters within
the contemplation of Section 5.07 (otherwise, the rule described in Section 9.06[1] will apply).

9.07 Arbitration Exclusive Remedy. The Parties acknowledge that, because arbitration is the
exclusive remedy for resolving the issues described in Section 9.01, neither Party may resort to
any federal, state or local court or administrative agency concerning those issues and that the
decision of the arbitrator will be a complete defense to any suit, action or proceeding instituted
in any federal, state or local court before any administrative agency with respect to any
arbitrable claim or controversy.

9.08 Waiver of Jury. The Executive (personally and in behalf of all the Executive’s personal or
legal representatives, executors, administrators, successors,  heirs, distributees, devisees,

18

 

legatees and assigns) and the Company (on its own behalf’s and in behalf of its successors,
including any Change Entity) each waive the right to have a claim or dispute with one another
decided in a judicial forum or by a jury, except as otherwise provided in this Agreement.

10.00 General Provisions

10.01 Representation of Executive. The Executive represents and warrants that the Executive is an
experienced senior executive knowledgeable about the issues (and their effect) within the purview
of this Agreement and is not under any contractual or legal restraint that prevents or prohibits
the Executive from entering into this Agreement or performing the duties and obligations described
in this Agreement.

10.02 Modification or Waiver; Entire Agreement. No provision of this Agreement may be modified or
waived except in a document signed by the Executive and the Company’s Chief Executive Officer or
other person designated by the Company’s Board of Directors. This Agreement, and any attachments
referenced in the Agreement, constitute the entire agreement between the Parties regarding the
employment relationship described in this Agreement, and, except as otherwise specifically provided
in this Agreement, any other agreements are terminated and of no further force or legal effect.
No agreements or representations, oral or otherwise, with respect to the Executive’s employment
relationship with the Company have been made or relied upon by either Party which are not set forth
expressly in this Agreement.

10.03 Governing Law; Severability. This Agreement is intended to be performed in accordance with,
and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If
any provision of this Agreement, or the application of any provision of this Agreement to any
person or circumstance, is, for any reason and to any extent, held invalid or unenforceable, such
invalidity and unenforceability will not affect the remaining provisions of this Agreement of its
application to other persons or circumstances, all of which will be enforced to the greatest extent
permitted by law and the Parties agree that any invalid or enforceable provision may and will be
reformed and applied [1] as provided in Section 4.05, with respect to the matters specifically
contemplated in Section 4.00 and [2] with respect to other matters, [a] to the extent needed to
avoid that invalidity or unenforceability and [b] in a manner that is as similar as possible to the
Parties’ intent (as described in this Agreement). The validity, construction and interpretation of
this Agreement and the rights and duties of the Parties will be governed by the laws of the State
of Ohio, without reference to the Ohio choice of law rules.

10.04 No Waiver. Except as otherwise provided in Section 9.05, failure to insist upon strict
compliance with any term of this Agreement will not be considered a waiver of any such term or any
other term of this Agreement.

10.05 Withholding. All payments made to or on behalf of the Executive under this Agreement will be
reduced by any amount:

[1] That the Company is required by law to withhold in advance payment of the Executive’s
federal, state and local income, wage and employment tax liability; and

[2] To the extent allowed by law, that the Executive owes (or, after employment is deemed to
owe) to the Group, the Company or any other Group Member.

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Application of Section 10.05[2] will not extinguish the Company’s right to seek additional amounts
from the Executive (or to pursue other appropriate remedies) to the extent that the amount
recovered by application of Section 10.05[2] does not fully discharge the amount the Executive owes
to the Group, the Company or other Group Member and does not preclude the Group, the Company or any
other Group Member from proceeding directly against the Executive without first exhausting its
right of recovery under Section 10.05[2].

10.06 Survival. The Parties agree that the covenants and promises set forth in this Agreement will
survive the termination of this Agreement and continue in full force and effect after this
Agreement terminates to the extent that their performance is required to occur after this Agreement
terminates.

10.07 Miscellaneous.

[1] The Executive may not assign any right or interest to, or in, any payments payable under
this Agreement; provided, however, that this prohibition does not preclude the Executive
from designating in writing one or more beneficiaries to receive any amount that may be
payable after the Executive’s death and does not preclude the legal representative of the
Executive’s estate from assigning any right under this Agreement to the person or persons
entitled to it.

[2] This Agreement will be binding upon and will inure to the benefit of the Executive, the
Executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, legatees and assigns and the Company and its successors and, to the
extent applicable, the Group and all Group Members.

[3] The headings in this Agreement are inserted for convenience of reference only and will
not be a part of or control or affect the meaning of any provision of the Agreement.

10.08 Successors to Company. This Agreement may and will be assigned or transferred to, and will
be binding upon and will inure to the benefit of, any successor of the Company, including any
Change Entity, and any successor will be substituted for the Company under the terms of this
Agreement. As used in this Agreement, the term “successor” means any person, firm, corporation or
business entity which at any time, whether by merger, purchase or

20

 

otherwise, acquires all or essentially all of the assets of the business of the Company.
Notwithstanding any assignment, the Company will remain, with any successor, jointly and severally
liable for all its obligations under this Agreement.

IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement, which includes an
arbitration provision, and consists of 21 pages.

	 	 	 	 	 
	 	BIG LOTS, INC.

 	 
	 	By:  	/s/ Charles W. Haubiel II
 	 
	 
	 	Signed:  August 17, 2005 	 

	 	 	 	 	 
	 	BIG LOTS STORES, INC.

 	 
	 	By:  	/s/ Brad A. Waite
 
	 
	 
	 	Signed:  August 17, 2005 	 

	 	 	 	 	 
	 	KENT LARSSON

 	 
	 	/s/ Kent Larsson
 	 
	 
	 	Signed:  August 17, 2005 	 

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