OFFICE DEPOT INC, DEF 14A, 1994-04-14

OFFICE DEPOT INC
DEF 14A, 1994-04-14
PAPER & PAPER PRODUCTS

Previous: CARMIKE CINEMAS INC, DEF 14A, 1994-04-14

Next: OFFICE DEPOT INC, ARS, 1994-04-14

<PAGE> 1

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Office Depot, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:
<PAGE> 2

OFFICE DEPOT, INC.
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FLORIDA 33445

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The annual meeting of stockholders of Office Depot, Inc. will be held on
May 18, 1994, at 10:00 a.m. EDT, at Marriott Crocker Center, 5140 Town Center
Circle, Boca Raton, Florida 33486, for the following purposes:

1. To elect eight directors to hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified;

2. To approve an amendment to the Office Depot, Inc. Stock Option and Stock
Appreciation Rights Plan;

3. To approve an amendment to the Office Depot, Inc. Directors Stock Option
Plan;

4. To ratify the appointment of Deloitte & Touche as independent public
accountants for the fiscal year ended December 31, 1994; and

5. To transact any other business that may come before the meeting.

Stockholders of record as of the close of business on April 8, 1994 are
entitled to notice of and to vote at the annual meeting of stockholders or any
adjournment thereof.

By order of the Board of Directors,

/s/ Barry Goldstein
-------------------
BARRY J. GOLDSTEIN
Secretary

April 14, 1994

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER YOU OWN. THEREFORE, EVEN IF YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN
AND RETURN YOUR PROXY IN THE ENCLOSED RETURN ENVELOPE PROMPTLY.
<PAGE> 3

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

OFFICE DEPOT, INC.
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FLORIDA 33445
TELEPHONE (407) 278-4800

This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of Office Depot, Inc.
("Office Depot" or the "Company") for use at the annual meeting of the Company's
stockholders to be held on May 18, 1994, at 10:00 a.m. EDT, at Marriott Crocker
Center, 5140 Town Center Circle, Boca Raton, Florida 33486, and at any
adjournment of that meeting (the "Annual Meeting"). The purpose of the Annual
Meeting is to elect eight directors to the Board, to approve an amendment to the
Office Depot, Inc. Stock Option and Stock Appreciation Rights Plan (the "Plan"),
to approve an amendment to the Office Depot, Inc. Directors Stock Option Plan
(the "Directors Plan") and to ratify the appointment of Deloitte & Touche as
independent public accountants for the fiscal year ending December 31, 1994.

If a proxy in the form distributed by the Company is properly executed and
returned to the Company, the shares represented by that proxy will be voted at
the Annual Meeting. Where a stockholder specifies a choice, the proxy will be
voted as specified. If no choice is specified, the shares represented by the
proxy will be voted for the election of all nominees, for the approval of the
amendment to the Plan, for the approval of the amendment to the Directors Plan
and for the ratification of the appointment of Deloitte & Touche as independent
public accountants for the Company.

The Company's management does not know of any matters other than those
discussed in this Proxy Statement that will be presented at the Annual Meeting.
If other matters are presented, all proxies will be voted in accordance with the
recommendations of the Company's management.

Solicitation of proxies will be made initially by mail. The Company's
directors, officers and employees may also solicit proxies in person or by
telephone without additional compensation. In addition, proxies may be solicited
by certain banking institutions, brokerage firms, custodians, trustees, nominees
and fiduciaries who will mail material to or otherwise communicate with the
beneficial owners of shares of the Company's Common Stock. The Company has also
engaged Corporate Investor Communications, Inc. to assist in communicating with
these institutions and forwarding solicitation materials for a fee of $5,500
plus the reimbursement of expenses. All expenses of solicitation of proxies will
be paid by the Company.

A proxy may be revoked at any time prior to its exercise at the Annual
Meeting by written notice delivered to the Corporate Secretary of the Company
prior to the Annual Meeting or by attending the Annual Meeting and voting by
ballot.

Holders of record of Common Stock as of the close of business on April 8,
1994, will be entitled to vote at the Annual Meeting. As of April 8, 1994, there
were 96,270,067 shares of Common Stock issued and outstanding. Each share of
Common Stock is entitled to one vote on each matter to come before the Annual
Meeting. Pursuant to Delaware law, abstentions are treated as present and
entitled to vote and thus have the
<PAGE> 4

effect of a vote against a matter. A broker non-vote on a matter is considered
not entitled to vote on that matter and thus (i) is not counted in determining
whether a matter requiring approval of a majority of the shares present and
entitled to vote has been approved or whether a plurality of the shares present
and entitled to vote has been voted and (ii) has the effect of a vote against a
matter requiring approval of a majority of all shares outstanding.

This Proxy Statement and the accompanying proxy are being sent to the
Company's stockholders on or about April 14, 1994.

ELECTION OF DIRECTORS

The Nominating Committee of the Board has nominated the following eight
persons for election to the Board at the Annual Meeting:

<TABLE>
<S> <C>
Mark D. Begelman John B. Mumford
Denis Defforey Michael J. Myers
David I. Fuente Peter J. Solomon
W. Scott Hedrick Alan L. Wurtzel
</TABLE>

Directors are to be elected at the Annual Meeting to serve until the next
Annual Meeting of Stockholders or until their successors are elected and
qualified. The nominees are willing to be elected and to serve. In the event
that any nominee is unable to serve or is otherwise unavailable for election,
which is not now contemplated, the incumbent Board may or may not select a
substitute nominee. If a substitute nominee is selected, all proxies will be
voted for the person selected. If a substitute nominee is not so selected, all
proxies will be voted for the election of the remaining nominees. Proxies will
not be voted for a greater number of persons than the number of nominees named.

Directors will be elected by a plurality of the shares present and voting
at the meeting.

YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS

APPROVAL OF THE AMENDMENT TO THE PLAN

Introduction

The Company's Stock Option and Stock Appreciation Plan (the "Plan") was
originally adopted by the Board in February 1989, and was amended in 1992 and
1993. In February 1994, the Board approved an amendment to the Plan (as so
amended, the "1994 Plan"), and directed the amendment be submitted to the
Company's stockholders for approval at the Annual Meeting. The amendment
increases the number of shares of Common Stock authorized under the 1994 Plan by
2,500,000 shares. The Board approved the amendment after evaluating the
Company's existing compensation programs and the Company's long-range goals and
expansion plans. The Board concluded that the amendment was necessary for the
Company to continue to attract, motivate and retain qualified employees. The
summary of the 1994 Plan that appears below is qualified by reference to the
full text of the 1994 Plan, a copy of which may be obtained from the Company at
no charge.

2
<PAGE> 5

Securities Subject to the 1994 Plan

The 1994 Plan permits the Company to grant options for and stock
appreciation rights with respect to the Company's Common Stock. The maximum
number of shares of Common Stock available for issuance upon exercise of options
granted to employees under the 1994 Plan is 14,142,136 (11,642,136 under the
Plan), in either case, less any shares for which options granted under the
Company's three prior option plans have been exercised or are outstanding at any
time. The last reported sales price of the Common Stock on April 8, 1994 was
$36.38. At April 8, 1994, there were approximately 1,766,000 shares of Common
Stock available for issuance under the Plan, and the market value of such shares
was $64,238,250.

Administration

The Plan is administered by a committee of the Board, which must consist of
two or more independent directors of the Company who meet certain eligibility
conditions. The Compensation Committee administers the 1994 Plan and currently
consists of Messrs. Hedrick and Wurtzel. The committee determines the grantees,
the dates options and SARs are granted, the number of shares of Common Stock
subject to options, the number of SARs granted, the exercise prices of options,
the duration of options and SARs, and the method of payment for SARs. The
committee has sole discretion to approve the terms of any Company financing of
the option price. The committee is authorized to construe and interpret the 1994
Plan and the options and SARs granted thereunder, to establish and amend rules
for the administration of the plan and to correct any defect or omission or
reconcile any inconsistency in the 1994 Plan or in any option or SAR to the
extent the committee deems desirable to carry the 1994 Plan and any option or
SAR into effect. The committee may, subject to specified limitations, advance
(i) the date on which an option shall become exercisable by the grantee and (ii)
the grantee's right to designate an Appreciation Date (defined below under "SAR
Awards") for any SAR.

Eligibility

The committee is authorized to grant options to purchase shares of Common
Stock or rights to earn compensation for the future performance of the Company's
common stock to such key employees, excluding directors who are not otherwise
employees, of the Company and its subsidiaries as the committee selects. There
is no limitation on the number of shares that may be covered by options or SARs
awarded to any one person. Approximately 750 employees are eligible to receive
options or SARs under the 1994 Plan.

Options

Options granted under the 1994 Plan may be Incentive Stock Options ("ISOs")
as described in Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or Non-Qualified Stock Options in such other form, consistent with
the 1994 Plan, as the committee determines ("NQOs"). The exercise price per
share of Common Stock is fixed by the committee and is set at not less than the
fair market value of a share of Common Stock on the date of grant. The fair
market value of options granted is determined by reference to the closing sale
price of the Common Stock as reported on the New York Stock Exchange. The term
of each option is fixed by the committee, however, no option may be exercisable
more than 10 years after the date of grant.

3
<PAGE> 6

Exercise of Options

Options may be made exercisable in one or more installments, upon the
happening of certain events, upon the passage of a specified period of time or
upon the fulfillment of a condition, as the committee may decide in each case
when the option is granted. Under the 1994 Plan, no option may be exercised
earlier than one year after the date of grant, except in the event of a change
in control of the Company or, at the committee's discretion, the death or
retirement of the grantee.

Options may be exercised by written notice to the Company (to the attention
of the Corporate Secretary) accompanied by payment in full of the option price.
Payment of the option price may be made, at the discretion of the optionee, (i)
in cash (including check, bank draft, or money order), (ii) by delivery of
Common Stock (valued at the fair market value thereof on the date of such
exercise), or (iii) by delivery of a combination of cash and Common Stock. The
committee may require the option price to be paid in cash in order to prevent
any possible violation of law. The right to deliver Common Stock in payment of
the option price may be limited or denied in any option agreement. The Company
shall have the right, in its sole discretion, to either (i) require the grantee
to remit to the Company or (ii) withhold from any salary, wages or other
compensation payable by the Company to the grantee, an amount sufficient to
satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. The Company has the
right to withhold from any salary, wages or compensation payable by the Company
to a grantee who makes a Disqualifying Disposition (as defined below under
"Certain Federal Income Tax Consequences -- Incentive Stock Options") an amount
sufficient to satisfy federal, state and local withholding tax requirements
attributable to such disposition.

Subject to the discretion of the committee, NQOs may provide that, in
connection with exercises thereof, the Company may make supplemental cash
payments to the holder thereof in the amounts necessary to reimburse such holder
for his or her income tax liability on the sum of (i) the number of shares as to
which the option is exercised multiplied by the excess of the fair market value
of a share of Common Stock (on the date the holder recognizes taxable income)
over the option price, and (ii) the payments described above. The purpose of
such cash payments is to assist the person exercising the NQO in paying income
taxes resulting from such exercise.

SARs Attached to Options

The committee may award an SAR with respect to any shares covered by an
option granted under the 1994 Plan. Each such SAR is subject to the same terms
and conditions as the related option with respect to date of expiration,
limitations on transferability and eligibility to exercise. When an SAR is
awarded with respect to shares covered by an ISO, such SAR may be exercised only
when the related option is exercisable. The exercise of an SAR awarded with
respect to shares covered by an ISO must have the same economic and tax
consequences to the grantee as the exercise of the option followed by an
immediate sale of the option shares. Upon exercise of an SAR, the related option
ceases to be exercisable as to the shares with respect to which such right was
exercised, and upon exercise or expiration of an option, the related SAR
terminates. Any extension of the expiration date of an NQO shall also extend the
related SAR, and any acceleration of the exercise date of an option shall
accelerate the exercise date of the related SAR.

4
<PAGE> 7

SAR Awards

The committee has authority to award SARs to grantees and to determine the
number of SARs to be awarded to each grantee. The amount of additional
compensation that may be received pursuant to the award of one SAR is the excess
of the fair market value of one share of related stock on the applicable
Appreciation Date over that on the date the SAR was awarded. The determination
of the form of payment for SARs is solely within the discretion of the
committee, and absent a determination to the contrary by the committee, the
amount due will be payable half in cash and half in shares of Common Stock.
Shares of stock used as payment for SARs will be valued at their fair market
value on the date designated by the grantee in writing to the Company.

The grantee of an SAR may designate the date for measurement of the
appreciation of such SAR (the "Appreciation Date") by filing an irrevocable
written notice with the Company specifying such date, the number of SARs to
which such date relates, and the date on which such SARs were awarded. Except as
otherwise provided in the case of SARs granted in connection with options, an
SAR terminates, and all rights relating thereto expire on the expiration date
designated by the committee, which will be no later than ten years after the
date such SAR was awarded.

Plan Conditions

Options granted under the 1994 Plan are subject to such terms and
conditions and evidenced by agreements in such form as is determined from time
to time by the committee and are in any event subject to the terms and
conditions set forth in the 1994 Plan. Options granted under the 1994 Plan are
not transferable, except by will and the laws of descent and distribution and
pursuant to certain qualified domestic relations orders. Under the terms of the
1994 Plan, no transfer by will or the laws of descent and distribution will be
effective to bind the Company unless the committee has been furnished with a
copy of the deceased grantee's will or such other evidence as the committee may
deem necessary to establish the validity of the transfer, and only the grantee
or, in the event of a grantee's death, such grantee's legal representative or
beneficiary, may exercise options, designate Appreciation Dates and receive cash
payments and deliveries of shares.

The 1994 Plan does not create any employment rights in any grantee
thereunder, and the Company has no liability for terminating the employment of
any grantee prior to the exercise date of any option or the Appreciation Date
with respect to any SAR. A grantee of an option, an SAR or a transferee of such
grantee has no rights as a stockholder until the issuance of a stock certificate
in respect of such shares. No adjustment will be made for dividends or
distributions or other rights for which the record date occurs prior to the date
of issuance for such stock certificate.

Sales of Common Stock

The Company has filed registration statements under the Securities Act of
1933, as amended (the "Securities Act"), to register the Common Stock to be
issued to employees under the Plan. The Company will file an additional
registration statement with respect to the additional shares available for
issuance under the 1994 Plan. Persons who are not "affiliates" of the Company
and who acquire Common Stock pursuant to the 1994 Plan generally will be
entitled to resell such Common Stock without complying with Rule 144 or the
registration requirements of the Securities Act. Persons who are "affiliates" of
the Company (i.e., persons who are deemed to control the Company, directly or
indirectly) may resell Common Stock acquired under the Plan only by complying
with the requirements and limitations of Rule 144 under the Securities Act.

5
<PAGE> 8

Amendment and Termination

The 1994 Plan provides that the committee may, at any time, suspend or
terminate the 1994 Plan or make such additions or amendments as it deems
advisable, provided that such conditions or amendments are made in compliance
with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Section 422 of the Code (as such provisions may be amended
from time to time). Under Rule 16b-3, the committee may not, without approval of
the Company's stockholders, amend the 1994 Plan (i) to materially increase the
benefits accruing to participants under the 1994 Plan, (ii) to materially
increase the maximum amount of stock subject to the 1994 Plan (other than
pursuant to the adjustment provisions discussed below), or (iii) to materially
modify the requirements as to eligibility for participation in the 1994 Plan.

No options may be granted under the 1994 Plan after February 2, 1999,
although options previously granted under the 1994 Plan and outstanding on
February 2, 1999 shall remain outstanding in accordance with the terms of the
1994 Plan and the option agreement under which they were granted.

Adjustment

The 1994 Plan provides that in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation or other change in the Common Stock, appropriate changes to
prevent dilution or enlargement of options will be made by the committee in the
number and type of shares or other consideration represented by options and SARs
outstanding under the 1994 Plan and the prices specified therein.

Sale of the Company and Liquidation

The 1994 Plan provides that in the event of a merger of the Company with or
into another corporation constituting a change of control (as determined by the
committee), a sale of all or substantially all of the Company's assets or a sale
of a majority of the Company's outstanding voting securities (each, a "Sale of
the Company"), the committee may stipulate, in its sole discretion, that any one
or more of the following conditions shall apply: (i) the options or SARs shall
become immediately exercisable by any participants who are employed by the
Company or any of its subsidiaries at the time of the Sale of the Company and
that such options or SARs shall terminate if not exercised as of the date of the
Sale of the Company or other prescribed period of time; (ii) the options or SARs
shall be assumed by the successor corporation or a parent of such successor
corporation; or (iii) substantially equivalent options or SARs shall be
substituted by the successor corporation or a parent of such successor
corporation. In the event of a liquidation or dissolution of the Company, the
options and SARs shall terminate immediately prior to the liquidation or
dissolution unless the committee provides that options or SARs shall terminate
at a fixed date and shall be immediately exercisable.

Federal Income Tax Consequences

For a discussion of the Federal income tax rules relevant to stock options,
SARs and supplemental cash payment, see "Certain Federal Income Tax
Consequences" below.

6
<PAGE> 9

An affirmative vote of a majority of the shares present and voting at the
meeting is required for approval of the amendment of the Plan.

YOUR BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE AMENDMENT TO THE PLAN

APPROVAL OF THE AMENDMENT TO THE DIRECTORS PLAN

Introduction

The Board adopted the Directors Stock Option Plan (the "Directors Plan") in
March 1991. In February 1994, the Board approved an amendment to the Directors
Plan (as so amended, the "Amended Directors Plan"), and directed the amendment
be submitted to the Company's stockholders for approval at the Annual Meeting.
The amendment increases the number of shares of the Company's Common Stock
authorized under the Amended Directors Plan by 100,000 shares and provides that
each director who is not otherwise an employee of the Company or its
subsidiaries receives options to purchase 7,500 shares of Common Stock each
year, rather than a number of shares determined by dividing $50,000 by the fair
market value of a share of Common Stock on the date of grant ($150,000 in the
case of a director's first year of service). The Board approved the amendment in
order to implement a policy of increasing emphasis on performance based
compensation for directors while decreasing directors' cash compensation. The
summary of the Amended Directors Plan that appears below is qualified by
reference to the full text of the Amended Directors Plan, a copy of which may be
obtained from the Company at no charge.

Securities Subject to the Amended Directors Plan

The Amended Directors Plan permits the Company to grant options to purchase
Common Stock to directors who are not otherwise employees of the Company or its
subsidiaries. The maximum number of shares of Common Stock available for
issuance upon exercise of options granted to directors under the Amended
Directors Plan is 325,000 (225,000 under the Directors Plan). The last reported
sales price of the Common Stock on April 8, 1994 was $36.38. At April 8, 1994
there were approximately 151,000 shares of Common Stock available for issuance
under the Directors Plan, and the market value of such shares was $5,492,625.

Administration

The Amended Directors Plan is administered by a committee of the Board,
which consists of two or more independent directors of the Company who meet
certain eligibility conditions. The Compensation Committee administers the
Amended Directors Plan and currently consists of Messrs. Hedrick and Wurtzel.
The committee is authorized to construe and interpret the Amended Directors Plan
and options granted thereunder, to establish and amend rules for the
administration of the Amended Directors Plan and to correct any defect or
omission or reconcile any inconsistency in the Amended Directors Plan or in any
option to the extent the committee deems desirable with respect to the Amended
Directors Plan or any option.

7
<PAGE> 10

Eligibility

Under the Amended Directors Plan, options to purchase shares of Common
Stock are granted to such directors of the Company who are not otherwise
employees of the Company and its subsidiaries. Six directors are currently
eligible to receive options under the Amended Directors Plan.

Options

Options granted under the Amended Directors Plan are NQOs. The option price
per share of Common Stock is the fair market value of a share of Common Stock on
the date of grant, as determined by reference to the sale price of the Common
Stock as reported on the New York Stock Exchange. Grants are made on the date of
each annual meeting of the Company's stockholders. The term of each option is
ten years. Under the Amended Directors Plan, options to purchase 7,500 shares of
Common Stock are granted each year to each director who is not otherwise an
employee of the Company or its subsidiaries. Under the Directors Plan, an amount
of options equal to $150,000 divided by the fair market value of a share of
Common Stock on the date of grant for a participant's first year of service of
the Board and $50,000 divided by the fair market value of a share of Common
Stock on the date of grant for each subsequent year of service on the Board is
granted each year to each director who is not otherwise an employee of the
Company or its subsidiaries.

Options granted under the Amended Directors Plan are subject to such terms
and conditions and evidenced by agreements in such form as is determined from
time to time by the committee and are in any event subject to the terms and
conditions set forth in the Amended Directors Plan. Options granted under the
Amended Directors Plan are not transferable, except by will, the laws of descent
and distribution and pursuant to certain qualified domestic relations orders.

Exercise of Options

Under the Amended Directors Plan, no option may be exercised earlier than
one year after the date of grant, except in the event of a change in control of
the Company. An option granted under the Amended Directors Plan becomes
exercisable in equal proportions on the first, second and third anniversary of
the date of grant.

Amendment and Termination

The Amended Directors Plan provides that the Board or the committee may at
any time suspend or terminate the Amended Directors Plan or make such additions
or amendments as they deem advisable; provided, that such additions or
amendments are made in compliance with Rule 16b-3 of the Exchange Act (as such
rule may be amended from time to time). Under Rule 16b-3, the committee may not,
without approval of the Company's stockholders, amend the Amended Directors Plan
(i) to materially increase the benefits accruing to participants under the
Amended Directors Plan, (ii) to materially increase the maximum

8
<PAGE> 11

amount of stock subject to the Amended Directors Plan (other than pursuant to
the adjustment provisions discussed below) or (iii) to materially modify the
requirements as to eligibility for participation in the Amended Directors Plan.
No options may be granted under the Amended Directors Plan after March 4, 2001,
although options previously granted under the Amended Directors Plan and
outstanding on March 4, 2001 shall remain outstanding in accordance with the
terms of the Amended Directors Plan and the option agreement under which they
were granted.

Adjustment

The Amended Directors Plan provides that in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation or other change in the Common Stock, appropriate changes to
prevent dilution or enlargement of options will be made in the number and type
of shares or other consideration represented by options outstanding under the
Amended Directors Plan and the prices specified therein. The Company is entitled
to withhold the amount of any withholding or other tax due from the Company with
respect to shares issued upon adjustment and the Company may defer such issuance
unless indemnified to its satisfaction.

Sale of the Company and Liquidation

The Amended Directors Plan provides that in the event of a merger of the
Company with or into another corporation constituting a change of control, a
sale of all or substantially all of the Company's assets or a sale of a majority
of the Company's outstanding voting securities (a "Sale of the Company"), the
options may be assumed by the successor corporation or substantially equivalent
options substituted by the successor corporation, and if the successor
corporation does not assume the options or substitute options, then the options
shall become immediately exercisable and such options shall terminate if not
exercised as of the date of the Sale of the Company or other prescribed period
of time. In the event of a liquidation or dissolution of the Company, the
options shall terminate immediately prior to the liquidation or dissolution.

Federal Income Tax Consequences

For a discussion of the Federal income tax rules relevant to stock options,
SARs and supplemental cash payment, see "Certain Federal Income Tax
Consequences" below.

An affirmative vote of a majority of the shares present and voting at the
meeting is required for approval of the amendment of the Directors Plan.

YOUR BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE AMENDMENT TO THE DIRECTORS PLAN

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board recommends that the shareholders ratify the appointment of
Deloitte & Touche as independent public accountants to audit the Company's
consolidated financial statement for the fiscal year ending December 31, 1994.
Deloitte & Touche has audited the consolidated financial statements of the
Company each year since 1990. Representatives of Deloitte & Touche will be
present at the meeting with the opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate

9
<PAGE> 12

questions. If the stockholders do not ratify the appointment of Deloitte &
Touche, the Board will select other independent accountants.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is intended only as a brief summary of the Federal income tax
rules relevant to stock options, SARs and supplemental cash payments. These
rules are highly technical and subject to change in the future. Grantees should
consult their personal tax advisors with respect to the tax consequences
(including those under state and local tax laws) associated with stock options
and SARs.

Nonqualified Stock Options

An optionee does not recognize any taxable income, and the Company is not
entitled to a deduction, upon the grant of an NQO. Upon the exercise of an NQO,
the optionee recognizes ordinary income (subject to wage and employment tax
withholding) equal to the excess of the fair market value of the shares acquired
over the option price. The amount of such excess is generally determined by
reference to the fair market value of the Common Stock on the date of exercise.
However, in the case of an optionee subject to six month short-swing profit
liability under Section 16(b) of the Exchange Act (a "16(b) Person") (typically,
officers, directors and major stockholders of the Company), such excess is
determined by using the fair market value on the date of exercise (or, if later,
the date six months after the date of grant unless such optionee elects to be
taxed based on the fair market value of the Common Stock on the date of exercise
by filing an appropriate election with the Internal Revenue Service within 30
days after the exercise date ("Section 83(b) Election")). An optionee's basis in
the stock received is equal to such stock's fair market value on the date of
exercise (or on the date six months after the date of grant, if later, in the
case of an optionee who is a 16(b) Person and who makes no Section 83(b)
Election). The Company is entitled to a deduction equal to the compensation
taxable to the optionee.

If an optionee sells shares acquired pursuant to the exercise of an NQO,
the optionee will recognize capital gain or loss equal to the difference between
the selling price of the shares and the optionee's basis in the shares. Such
capital gain or loss is long-term or short-term, depending on whether the
optionee has held the shares for more than one year. In the case of an optionee
who is a 16(b) Person and who makes no Section 83(b) Election, any such capital
gain will be long-term only if the stock has been held for more than one year
after the later of the exercise date or the date six months after the date of
grant. The Company is not entitled to any deduction with respect to any capital
gain recognized by the optionee.

Capital losses on the sale of such shares may be used to offset capital
gains. For taxable years beginning after December 31, 1990, the net capital gain
of an individual taxpayer is subject to a maximum rate of 28%. The maximum tax
rate on ordinary income is 39.6%. If capital losses exceed capital gains, then
up to $3,000 of the excess losses may be deducted from ordinary income.
Remaining capital losses may be carried forward to future tax years.

10
<PAGE> 13

Incentive Stock Options

An optionee does not recognize taxable income on the grant or exercise of
an ISO. However, the excess of the stock's fair market value on the exercise
date (the fair market value on the exercise date or six months after the date of
grant, whichever is later, is likely to govern in the case of a 16(b) Person who
makes no Section 83(b) Election) over the option price will be included in the
optionee's alternative minimum taxable income and thereby may subject the
optionee to an alternative minimum tax. Such alternative minimum tax may be
payable even though the optionee receives no cash upon the exercise of his or
her ISO with which to pay such tax. Upon the disposition of shares of Common
Stock acquired pursuant to the exercise of an ISO (i) more than one year after
the date of exercise, and (ii) more than two years after the date of grant (the
"Required Holding Periods"), the optionee recognizes long-term capital gain or
loss, as the case may be, measured by the difference between the stock's selling
price and the exercise price. The Company is not entitled to any tax deduction
by reason of the grant or exercise of an ISO, or a disposition of stock received
upon the exercise of an ISO after the Required Holding Periods have been
satisfied.

If an optionee disposes of the shares of stock acquired pursuant to the
exercise of an ISO before the expiration of the Required Holding Periods (a
"Disqualifying Disposition"), the difference between the exercise price of such
shares and the lesser of (i) the fair market value of the shares upon the date
of exercise (the fair market value on the exercise date or six months after the
date of grant, whichever is later, is likely to govern in the case of a 16(b)
Person who makes no Section 83(b) Election), or (ii) the selling price, will
constitute compensation taxable to the optionee as ordinary income. The Company
is allowed a corresponding tax deduction equal to the amount of compensation
taxable to the optionee. If the selling price of the stock exceeds the fair
market value on the exercise date (or six months after the date of grant, if
later, in the case of a 16(b) Person who makes no Section 83(b) Election), the
excess will be taxable to the optionee as capital gain (long-term or short-term,
depending upon whether the optionee held the stock for more than one year). The
Company is not allowed a deduction with respect to any such capital gain
recognized by the optionee.

Use of Common Stock to Pay Option Price

If an optionee delivers previously-acquired Common Stock, however acquired,
in payment of all or part of the option price of an NQO, the optionee will not,
as a result of such delivery, be required to recognize as taxable income or loss
any appreciation or depreciation in the value of the previously-acquired Common
Stock after its acquisition date. The optionee's tax basis in, and holding
period for, the previously-acquired stock surrendered carries over to an equal
number of the option shares received on a share-for-share basis. The fair market
value of the shares received in excess of the shares surrendered constitutes
compensation taxable to the optionee as ordinary income. Such fair market value
is determined on the date of exercise, except in the case of 16(b) Persons as
discussed above. The tax basis for such shares is equal to their fair market
value as so determined, and with respect to such shares, the holding period
begins on the date on which the fair market value of such shares is determined.
The Company is entitled to a tax deduction equal to the compensation income
recognized by the optionee.

If an optionee delivers previously-acquired Common Stock (other than stock
acquired upon exercise of an ISO and not held for the Required Holding Periods)
in payment of all or part of the option price of an ISO, the optionee will not
be required to recognize as taxable income or loss any appreciation or
depreciation in the value of the previously-acquired Common Stock after its
acquisition date. The optionee's tax basis in, and holding period (for capital
gain, but not Disqualifying Disposition, purposes) for the previously-acquired
stock surrendered carries over to an equal number of the option shares received
on a share-for-share basis. Shares

11
<PAGE> 14

received in excess of the shares surrendered have a tax basis equal to the
amount paid (if any) in excess of the previously-acquired shares used to pay the
exercise price, and such shares' holding period will begin on the date of
exercise (with the possible exception of 16(b) Persons). Proposed regulations
provide that where an ISO is exercised using previously-acquired stock, a later
Disqualifying Disposition of the shares received will be deemed to have been a
disposition of the shares having the lowest basis first.

If an optionee pays the exercise price of an ISO in whole or in part with
previously-acquired Common Stock that was acquired upon the exercise of an ISO
and that has not been held for the Required Holding Periods, the optionee will
recognize ordinary income (but not capital gain) under the rules applicable to
Disqualifying Dispositions. The Company will be entitled to a corresponding
deduction. The optionee's basis in the shares received in exchange for the
shares surrendered will be increased by the amount of ordinary income recognized
by the optionee.

Supplemental Cash Payments

An optionee recognizes ordinary income, subject to income and employment
tax withholding, equal to any supplemental cash payment the Company makes to the
optionee. The Company is entitled to a corresponding tax deduction.

Stock Appreciation Rights

A grantee does not recognize any taxable income, and the Company is not
entitled to a deduction, upon the grant of an SAR. Upon the exercise of an SAR,
the grantee will recognize ordinary income equal to the amount of (i) cash
payable to the grantee (if any) and (ii) the fair market value of the Common
Stock distributed to the grantee (if any) by reason of such exercise.

12
<PAGE> 15

SECURITY OWNERSHIP

The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of April 8, 1994 by (i) each
stockholder known by the Company to own beneficially more than five percent (5%)
of the outstanding Common Stock, (ii) each director of the Company, (iii) the
Company's Chief Executive Officer and four other most highly compensated
executive officers and (iv) all executive officers and directors of the Company
as a group. Beneficial ownership of less than one percent is indicated by an
asterisk. Except as otherwise indicated below, each of the entities named in the
table has sole voting and investment power with respect to all shares of Common
Stock beneficially owned by such entity as set forth opposite such entity's
name. No effect has been given to shares reserved for issuance under outstanding
stock options except where otherwise indicated.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS
NAME OF INDIVIDUAL OR GROUP BENEFICIALLY OWNED OUTSTANDING
------------------------------------------------ ------------------ ----------------
<S> <C> <C>
The Equitable Companies Incorporated(1) 4,824,475 5.01%
787 Seventh Avenue
New York, New York 10019
Fourcar B.V.(2) 15,128,400 15.71%
Coolsingel 139
3012 AG Rotterdam
The Netherlands
Mark D. Begelman(3) 635,379 *
Richard M. Bennington(4) 82,799 *
Denis Defforey(2) 15,167,834 15.76%
Gary D. Foss(5) 195,717 *
David I. Fuente(6) 480,962 *
Samuel T. Gentles, Jr.(7) 199,297 *
W. Scott Hedrick(8) 29,532 *
John B. Mumford(9) 50,418 *
Michael J. Myers(10) 18,749 *
Peter J. Solomon(11) 60,434 *
Alan L. Wurtzel(12) 24,749 *
All Executive Officers and Directors as a Group 17,136,130 17.80%
(14 persons)(13)
</TABLE>

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

(1) Based solely upon a Schedule 13G dated February 9, 1994, certain
subsidiaries of The Equitable Companies Incorporated (i) may be deemed to
have sole power to vote or direct the vote of shares as follows: the
Equitable Life Assurance Society of the United States ("Equitable"),
716,290 shares; Alliance Capital Management, L.P. ("Alliance"), 3,204,082
shares; and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
14,651 shares; (ii) may be deemed to have shared power to vote or direct
the vote of shares as follows: Alliance, 17,800 shares; Wood, Struthers &
Winthrop Management Corporation ("WS&W"), 452 shares; and (iii) may be
deemed to have sole power to dispose or to direct the disposition of shares
as follows: Equitable, 716,290 shares; Alliance, 3,808,082 shares; DLJ,

13
<PAGE> 16

14,651 shares; and WS&S, 452 shares. In addition, based solely upon the
Schedule 13G described above, Equity and Law PLC, a company affiliated with
The Equitable Companies Incorporated, may be deemed to have sole power to
vote or to direct the vote of 285,000 shares and may be deemed to have sole
power to dispose or to direct the disposition of 285,000 shares.
(2) Includes options to purchase 39,434 shares issued to Mr. Defforey as a
director of the Company. Mr. Defforey, a director of the Company and a
member of the supervisory board of Carrefour S.A. ("Carrefour"), which
indirectly owns all of the outstanding capital stock of Fourcar B.V.
("Fourcar"), may be deemed to share voting and dispositive power as to
15,128,400 shares held of record by Fourcar. Mr. Defforey disclaims
beneficial ownership of these shares.
(3) Includes options to purchase 380,717 shares issued to Mr. Begelman pursuant
to the Plan, 15,000 shares held of record by Mark Zwerner and Joel Koeppel
Trustees, Mark D. Begelman Irrevocable Trust f/b/o Matthew Bryan Begelman
and 15,000 shares held of record by Mark Zwerner and Joel Koeppel Trustees,
Mark D. Begelman Irrevocable Trust f/b/o Loren Andrea Begelman.
(4) Includes options to purchase 82,502 shares issued to Mr. Bennington
pursuant to the Plan.
(5) Includes options to purchase 120,837 shares issued to Mr. Foss pursuant to
the Plan.
(6) Includes options to purchase 230,591 shares issued to Mr. Fuente pursuant
to the Plan and 37,720 shares held of record by his children, Alan D.
Fuente and Steven M. Fuente. Mr. Fuente disclaims beneficial ownership of
the shares held by his children.
(7) Includes options to purchase 116,394 shares issued to Mr. Gentles pursuant
to the Plan.
(8) Includes options to purchase 7,851 shares issued to Mr. Hedrick as a
director of the Company.
(9) Includes options to purchase 7,851 shares issued to Mr. Mumford as a
director of the Company and 38,028 shares held of record by the John Brese
Mumford and Christine Joyce Mumford Family Trust dated October 13, 1983.
(10) Includes options to purchase 18,749 shares issued to Mr. Myers as a
director of the Company.
(11) Includes options to purchase 39,434 shares granted to Mr. Solomon as a
director of the Company.
(12) Includes options to purchase 18,749 shares issued to Mr. Wurtzel as a
director of the Company.
(13) Includes options to purchase 1,196,895 shares.

14
<PAGE> 17

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Directors are elected at the Annual Meeting of Stockholders to serve during
the ensuing year or until a successor is duly elected and qualified. Executive
officers are elected annually by the Board and serve at the discretion of the
Board.

The following table sets forth certain information concerning each of the
Company's directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------- --- ---------------------------------------------------
<S> <C> <C>
David I. Fuente........... 48 Chairman of the Board and Chief Executive Officer
Mark D. Begelman.......... 46 Director, President and Chief Operating Officer
Barry J. Goldstein........ 51 Executive Vice President -- Finance, Chief
Financial Officer and Secretary
F. Terry Bean............. 46 Executive Vice President -- Human Resources
Richard M. Bennington..... 53 Executive Vice President -- Store Operations
Gary D. Foss.............. 51 Executive Vice President -- Merchandising and
Marketing
Samuel T. Gentles, Jr..... 39 Executive Vice President -- Strategic Planning
William P. Seltzer........ 55 Executive Vice President -- Systems and
Distribution
Denis Defforey............ 68 Director
W. Scott Hedrick.......... 48 Director
John B. Mumford........... 50 Director
Michael J. Myers.......... 53 Director
Peter J. Solomon.......... 55 Director
Alan L. Wurtzel........... 60 Director
</TABLE>

DAVID I. FUENTE has been Chairman of the Board and Chief Executive Officer
since he joined the Company in December 1987. For five years prior to that time,
he was employed by The Sherwin-Williams Co. ("Sherwin-Williams") as President of
its Paint Stores Group, a chain of over 1,800 paint stores. Prior positions
included Vice President of Marketing of the Paint Stores Group and Vice
President of Marketing, Consumer Division, and Vice President of Marketing,
Automotive Aftermarket Division of Sherwin-Williams. Mr. Fuente is a director of
National Vision Associates Ltd.

MARK D. BEGELMAN has been a director, President and Chief Operating Officer
since he joined the Company in April 1991. He has substantial experience in the
office products industry and over 20 years in retail merchandising. Prior to
joining the Company, he was Chairman of the Board of The Office Club, Inc.
("Office Club") from August 1990 until April 1991 and Chief Executive Officer of
Office Club from April 1986 until April 1991, when Office Club became a
subsidiary of the Company. From May 1981 to May 1986, he served as Senior Vice
President of John Bruener Company, a home furnishings retailer. From June 1976
to May 1981, Mr. Begelman was Divisional Merchandise Manager of Jordan Marsh
Stores Corporation, a general merchandise retailer.

BARRY J. GOLDSTEIN has been Chief Financial Officer since he joined the
Company in May 1987, has served as Executive Vice President -- Finance since
July 1991 and has served as Secretary since January 1988. From May 1987 until
June 1991, he served as Vice President -- Finance. Prior to joining the Company,

15
<PAGE> 18

he spent 22 years in public accounting, the most recent 18 of which were with
Grant Thornton, a national accounting firm. He became a partner of Grant
Thornton in 1976.

F. TERRY BEAN has been Executive Vice President -- Human Resources since he
joined the Company in January 1994. Prior to joining the Company, he was
employed by Roses Stores Inc., a mass merchandiser, as Senior Vice President of
Human Resources. From 1978 to 1989, he was employed by Federal Express Corp., a
shipping company, where he held the position of Vice President of Personnel
Services from 1982 through 1989. Prior to 1973, Mr. Bean held human resource
management positions with Eaton Corp. and Johnson & Johnson Corp.

RICHARD M. BENNINGTON has been Executive Vice President -- Store Operations
since July 1991. He joined the Company as a store manager in June 1986 and has
served as the Company's Executive Vice President -- Office Depot Store
Operations, Vice President -- Operations, District Manager and Director of Store
Operations. Prior to joining the Company, he was employed for one year by Mr.
How, a chain of home products stores, as a Zone Manager and held various field
operations positions with other specialty and mass merchandise chains.

GARY D. FOSS has been Executive Vice President -- Merchandising and
Marketing since April 1993. He served as Executive Vice President -- Marketing
from the time he joined the Company in April 1991 until March 1993. From July
1990 until April 1991, he was the Executive Vice President -- Merchandising of
Office Club, a subsidiary of the Company since April 1991. From 1985 to 1990, he
was Chief Executive Officer and President of Home Express, Inc., a
California-based home furnishing retailer. From 1962 to 1985, Mr. Foss held
various merchandising, marketing and management positions with Dayton Hudson
Corporation, including Chief Executive Officer and President of the R.G.
Brandens Home Store Division.

SAMUEL T. GENTLES, JR. has been Executive Vice President -- Strategic
Planning since January 1994. Mr. Gentles served as President of the
Commercial/Contract Division from September 1993 to December 1993 and was
Executive Vice President of the Commercial Contract Division from April 1993 to
August 1993. He served as Executive Vice President -- Merchandising from July
1991 to March 1993. Mr. Gentles joined the Company as Executive Vice
President -- Office Club Store Operations in April 1991. Prior to joining the
Company, he served for four years as Executive Vice President -- Operations and
for a year as Executive Vice President of Merchandising of Office Club, a
subsidiary of the Company since April 1991. From March 1983 to July 1986, Mr.
Gentles held various merchandising management positions, most recently as
Executive Vice President and Chief Operating Officer of Warehouse Club, Inc., a
warehouse membership club.

WILLIAM P. SELTZER has been Executive Vice President -- Systems and
Distribution since joining the Company in August 1992. Prior to joining the
Company, he was Senior Vice President -- Distribution and Systems of Revco D.S.
Inc. from November 1987 to July 1992. Mr. Seltzer was Vice President of Systems
for the H.E. Butt Grocery Company from 1977 to 1987, and was Corporate Manager
of Information Processing from 1972 to 1977 with SCM Corporation.

DENIS DEFFOREY has been a director since April 1990. He is a member of the
supervisory board ("Conseil de Surveillance") of Carrefour, a French hypermarket
chain that he co-founded in 1959 and is a director of DeNoyange S.A., the
principal shareholder of Carrefour. Mr. Defforey is a director of Editions, S.A.
and PetsMart, Inc.

16
<PAGE> 19

W. SCOTT HEDRICK has been a director since April 1991. From November 1986
until April 1991, he was a director of Office Club, a subsidiary of the Company
since April 1991. He was a founder and has been a general partner of InterWest
Partners, a venture capital fund, since 1979.

JOHN B. MUMFORD has been a director since April 1991. He was a co-founder
of Office Club, a subsidiary of the Company since April 1991, and served as
Chairman of the Board of Directors of Office Club from its inception in February
1986 to August 1990, at which time he was named Vice Chairman. He has been
president of Crosspoint Corporation, a venture capital firm, since 1972 and
managing general partner of Crosspoint Venture Partners, a venture capital fund,
since 1982. Mr. Mumford is Chairman of the Board of Photonics Corporation and a
director of INMAC Corporation.

MICHAEL J. MYERS has been a director since July 1987. He is the President
and a director of First Century Partners Management Company, an advisor to
private venture capital equity funds, and a director of Smith Barney Venture
Corp., a wholly-owned subsidiary of Smith Barney, Inc., which acts as the
managing general partner of two private venture capital equity funds. Until
January 1992, he was a Senior Vice President and Managing Director of Smith
Barney, Harris Upham & Co., Incorporated ("Smith Barney"). He joined Smith
Barney's venture capital group in 1972 and has had a senior operating
responsibility for that group since 1976. Prior to 1972, he spent three years
with J.H. Whitney & Co., a private venture capital firm. Mr. Myers is a director
of Vista Environmental Information, Inc. and Wynstar Inc.

PETER J. SOLOMON has been a director since April 1990. He is Chairman and
Chief Executive Officer of Peter J. Solomon Company Limited, an investment
banking firm which provided services to the Company in fiscal 1993. From 1985 to
1989, he was a Vice Chairman and a member of the board of directors of Shearson
Lehman Hutton Inc. ("Shearson"). From 1981 to 1985, he was a Managing Director
at Shearson. Mr. Solomon is a director of Centennial Cellular Corporation,
Century Communications, Inc., Monro Muffler/Brake, Inc., Phillips-VanHeusen
Corporation, Ralphs Grocery Company, Bradlees, Inc. and Culbro Corporation.

ALAN L. WURTZEL has been a director since February 1989. Since June 1984,
he has been the Chairman of the Board of Circuit City Stores, Inc. ("Circuit
City"), a large consumer electronics retailing chain. From 1965 to 1986, he
served in several other capacities with Circuit City, including Chief Executive
Officer, President and Vice President. From December 1986 to April 1988, he
served as President of Operation Independence, a nonprofit organization.

The Board met seven times during the 1993 fiscal year. The Board has
standing Audit, Compensation, Executive and Nominating Committees. Mr. Defforey
attended 71% of the Board meetings and 66% of the Audit Committee meetings. All
other directors attended at least 75% of the aggregate of the total number of
meetings of the Board and the total number of meetings of all committees on
which they served.

The Audit Committee is composed of three directors (currently Messrs.
Defforey, Mumford and Myers). This committee recommends to the Board the
appointment of the Company's independent accountants. The committee meets with
the independent accountants to discuss the scope of the audit, any nonaudit
related assignments, fees, the independence of the accountants, the results of
the audit and the effectiveness of the Company's internal accounting controls.
The committee reports to the Board. The independent accountants have access to
the committee, with or without advising management, to discuss auditing and any
other accounting matters. The Audit Committee met three times during the 1993
fiscal year.

17
<PAGE> 20

The Compensation Committee is currently composed of two directors
(currently Messrs. Hedrick and Wurtzel). This committee recommends action by the
Board regarding the salaries and incentive compensation of elected officers of
the Company. The committee also reviews the compensation of certain other
principal management employees and administers the Company's employee benefit
plans. The Compensation Committee met two times during the 1993 fiscal year.

The Executive Committee was established in February 1992 and is composed of
four directors (currently Messrs. Begelman, Fuente, Solomon and Wurtzel). This
committee handles matters arising between regularly scheduled meetings of the
Board. The Executive Committee did not meet during the 1993 fiscal year.

The Nominating Committee is composed of four directors (currently Messrs.
Begelman, Fuente, Solomon and Wurtzel). This committee evaluates the performance
of incumbent directors, considers nominees recommended by management or
stockholders of the Company and develops its own recommendations. The committee
will consider nominees recommended by stockholders, although it has not adopted
any procedures to be followed by stockholders in submitting such
recommendations. In February 1994, the Nominating Committee adopted a charter
formalizing the duties of the committee and evidencing the Company's commitment
to increasing the diversity of the Board. In accordance with its charter, the
Nominating Committee has initiated a search to identify qualified candidates,
with a view to increasing the diversity of the Board at the earliest feasible
date. The Nominating Committee met once during the 1993 fiscal year.

COMPENSATION

Directors Compensation. In fiscal 1993, directors who were not salaried
officers of the Company received $18,000 per year for serving on the Board and
were reimbursed for costs incurred in attending meetings. No additional amounts
were paid for attendance at special meetings or for service on any committee of
the Board. Directors who were not salaried officers of the Company also each
received a number of options equal to $150,000 divided by the fair market value
of Common Stock on the date of grant for their first year of service on the
Board after election by the Company's stockholders and a number of options equal
to $50,000 divided by the fair market value of Common Stock on the date of grant
for each subsequent year of service on the Board. All such options become
exercisable in equal proportions on the first, second and third anniversary of
the date of grant. Directors who are salaried officers of the Company receive no
compensation other than their compensation for such service as officers.

Effective April 1994, directors who are not salaried officers of the
Company will receive $8,000 per year plus $1,000 per Board meeting attended for
serving on the Board and will be reimbursed for costs incurred in attending
meetings. No additional amounts will be paid for service on any committee of the
Board. Directors who are not salaried officers of the Company also will each
receive options to purchase 7,500 shares of Common Stock per year, exercisable
at fair market value on the date of grant. All such options will be exercisable
in equal proportions on the first, second and third anniversary of their date of
grant. Directors who are salaried officers of the Company will receive no
compensation other than their compensation for such service as officers.

18
<PAGE> 21

Executive Officers Compensation. The following table sets forth the
aggregate cash compensation paid by the Company for services rendered during the
1993 fiscal year by the Company's Chief Executive Officer and the Company's four
other most highly compensated executive officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ -----------------------------------
AWARDS PAYOUTS
----------------------- -------
SECURITIES
UNDER-
OTHER RESTRICTED LYING ALL
ANNUAL STOCK OPTIONS/ LTIP OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)(2) ($) ($)(3)
- ----------------------- ---- ------- ------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David I. Fuente, 1993 550,000 864,981 -0- -0- 75,000 -0- 4,497
Chief Executive 1992 475,000 335,350 -0- -0- 181,770 -0- 4,364
Officer 1991 425,000 281,973 -0- 450,000 -0-
Mark D. Begelman, 1993 450,000 651,384 -0- -0- 60,000 -0- 4,497
President and Chief 1992 400,000 256,000 -0- -0- 68,220 -0- 4,364
Operating Officer(4) 1991 239,985 200,292 -0- 900,000 -0-
Samuel T. Gentles, 1993 263,077 352,523 -0- -0- 35,000 -0- 3,970
Executive Vice 1992 225,000 137,250 -0- -0- 51,855 -0- 899
President -- 1991 140,625 109,355 -0- 150,000 -0-
Strategic Planning(4)
Gary D. Foss, 1993 250,000 344,469 -0- -0- 35,000 -0- 4,322
Executive Vice 1992 225,000 135,900 -0- -0- 41,025 -0- 1,211
President -- 1991 124,366 98,449 -0- 30,000 -0-
Merchandising and
Marketing(4)
Richard M. Bennington, 1993 250,000 339,477 -0- -0- 35,000 -0- 4,355
Executive Vice 1992 225,000 128,250 -0- -0- 22,500 -0- 2,700
President -- Store 1991 200,000 103,500 -0- 150,000 -0-
Operations
</TABLE>

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

(1) Other Annual Compensation items for persons named in the summary
compensation table were not reportable in 1993 and 1992 and are not
required to be presented for years prior to 1992.
(2) Options granted in 1991 and 1992 have been adjusted to reflect a two-for-one
stock split in 1992 and a three-for-two stock split in 1993.
(3) All other compensation is not required to be presented for years prior to
1992. Amounts reported for 1993 and 1992 represent matching contributions
under the Company's Retirement Savings Plan, a defined contribution plan.
(4) Messrs. Begelman, Gentles and Foss joined the Company on April 10, 1991 upon
consummation of the acquisition of Office Club by the Company.

19
<PAGE> 22

The following table sets forth information with respect to all options
granted in fiscal 1993 under the Plan to the Company's Chief Executive Officer
and the Company's four other most highly compensated executive officers.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
- ------------------------------------------------------------------------------------------- ----------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/ GRANTED TO EXERCISE OR GRANT DATE
SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE ($)
- -------------------------------------- --------- ------------ ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
David I. Fuente....................... 75,000 5.1 26.88 7/20/03 1,105,610
Mark D. Begelman...................... 60,000 4.1 26.88 7/20/03 884,488
Samuel T. Gentles, Jr................. 35,000 2.4 26.88 7/20/03 515,951
Gary D. Foss.......................... 35,000 2.4 26.88 7/20/03 515,951
Richard M. Bennington................. 35,000 2.4 26.88 7/20/03 515,951
</TABLE>

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

(1) All options granted in fiscal 1993 vest in three equal installments on July
20, 1994, July 20, 1995 and July 20, 1996 and were not awarded with tandem
stock appreciation rights ("SARs"). In the event of a Sale of the Company
(as defined in the Company's employee stock option plan), the committee
administering the option plan may stipulate in its sole discretion, that
(i) outstanding options and SARs will become immediately exercisable; (ii)
outstanding options and SARs shall be assumed by the successor corporation;
or (iii) substantially equivalent options and SARs shall be substituted by
the successor corporation. In order to prevent dilution or enlargement of
rights under the options, in the event of a reorganization,
recapitalization, stock split, stock dividend, combinations of shares,
merger, consolidation or other change in the Common Stock, the number of
shares available upon exercise and the exercise price will be adjusted
accordingly.
(2) The Black-Scholes option pricing model was used to determine the grant date
present value of the stock options granted in 1993 by the Company to the
executive officers listed above. Under the Black-Scholes option pricing
model, the grant date present value of each stock option referred to in the
table was calculated to be $14.74. The following facts and assumptions were
used in making such calculation: (i) an exercise price of $26.875 for each
such stock option; (ii) a fair market value of $26.875 for one share of
Common Stock on the date of grant; (iii) a dividend yield of 0%; (iv) a
stock option term of 10 years; (v) a stock volatility of 30.72%, based on
an analysis of weekly stock closing prices of Common Stock during the
fourth quarter of 1993; and (vi) an assumed risk-free interest rate of
5.73%, which is equivalent to the yield on a ten-year treasury note on the
date of grant. No other discounts or restrictions related to vesting or the
likelihood of vesting of stock options were applied. The resulting grant
date present value of $14.74 for each stock option was multiplied by the
total number of stock options granted to each of the executive officers
listed above to determine the total grant date present value of such stock
options granted to each such executive officer, respectively.

20
<PAGE> 23

The following table sets forth information with respect to all options
exercised in fiscal 1993 and the year-end value of unexercised options held by
the Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END
--------------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) ($)
- --------------------------------------- --------------- -------- --------------------- ----------------
<S> <C> <C> <C> <C>
David I. Fuente........................ 9,000 263,625 230,591 4,994,014
346,180 5,681,298
Mark D. Begelman....................... -0- -0- 380,717 9,409,260
405,480 8,345,007
Samuel T. Gentles, Jr.................. -0- -0- 116,394 2,916,678
119,570 1,884,125
Gary D. Foss........................... -0- -0- 108,300 3,006,918
105,786 1,851,028
Richard M. Bennington.................. -0- -0- 82,502 2,038,468
100,000 1,666,409
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board is comprised of two directors,
currently Messrs. Hedrick and Wurtzel. Neither of such directors is or was an
officer of the Company or any of its subsidiaries, no executive officer of the
Company (other than Mr. Fuente, who serves on the compensation committee of
National Vision Associates Ltd.) serves or served on the compensation committee
of another entity, and no executive officer of the Company serves or served as a
director of another entity who has or had an executive officer serving on the
compensation committee of the Company.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's compensation philosophy is to motivate employees to enhance
shareholder value. The Company's compensation practices are designed to attract,
motivate and retain key personnel by recognizing individual contributions as
well as the achievement of specific pre-determined goals and objectives
primarily through the use of "at risk" compensation strategies.

The Company's compensation program for executive officers consists of three
main components: (1) competitive base salaries, (2) annual cash incentives based
on overall Company performance as well as individual performance, and (3) stock
option awards intended to encourage the achievement of superior results over
time and to align executive officer and shareholder interests. The second and
third components constitute "at risk" elements of each executive's total
compensation.

21
<PAGE> 24

Base Salary. The Compensation Committee determines base salaries for
executive officers utilizing market data from generally available executive
compensation surveys. The Compensation Committee retained an independent outside
consultant to assist in the analysis of all three salary components for the 1993
fiscal year. The particular surveys used include both retail and general
industry companies with annual revenues in the $2-$4 billion range. The
companies included in the comparison base for establishing executive pay levels
were also included in the S&P Retail Composite and S&P 500 which the Company
utilized in the performance graph elsewhere in this proxy statement. The
Committee targets the median level of the executive market for comparably sized
companies within these surveys in determining executive base pay levels.

The base salary for Mr. Fuente, Chairman and Chief Executive Officer,
increased by $75,000, a 15.8% increase over his 1992 base salary. Salaries for
the next four highest compensated officers as a group rose by $138,077, or
12.8%, over 1992 base pay. These increases in salaries reflect the increase in
responsibilities consistent with the Company's rapid growth and were awarded in
recognition of the contributions these individuals have made to the success of
the Company.

Annual Bonus. The bonus compensation of the Company's executive officers
is determined pursuant to the Office Depot, Inc. Management Incentive Plan (the
"Incentive Plan"). The Incentive Plan provides for cash awards to eligible
participants (generally salaried employees, including executive officers, who
have been employed by the Company through the end of the related fiscal year).
The objective of the Incentive Plan is to enhance shareholder value by rewarding
employees for the attainment of profit objectives, as well as the attainment of
specific individual goals linked to strategic elements of the business. By
extending annual bonuses deep into the organization, all managerial employees
are motivated to help achieve the Company's profit objectives as well as
individual performance goals.

Awards under the 1993 Incentive Plan are expressed as a percentage of base
salary. These awards are a function of (i) the participant's level of
responsibility, (ii) the Company's financial performance for the year, and (iii)
the participant's individual performance for the year.

Performance is measured in connection with attainment of specific earnings
per share objectives as well as individual goals that are established by the
participant and his or her immediate supervisor. Individual goals include
targets which are above and beyond the participant's normal job functions. The
goals of and awards to the Chief Executive Officer, the President, and the
executive officers of the Company are approved by the Compensation Committee.

For 1993, the Compensation Committee determined that the actual Incentive
Plan awards, for executive officers only, could be as much as twice the maximum
amount by including a "performance premium" if earnings per share exceeded the
prior year by at least 50%. This goal was significantly above the Company's
earnings forecast at the time the objective was established. Actual 1993
earnings per share were $.67 compared to $.41 in 1992 (excluding the
extraordinary credit of $.02 per share), or an increase of 63%, resulting in
premium bonus payments for the executive officer group.

For 1993, Mr. Fuente, Chairman and Chief Executive Officer, earned a bonus
of $864,981 which included a performance premium of $423,490 in recognition of
the earnings per share performance. It was also the Committee's assessment that
Mr. Fuente exceeded his nonfinancial objectives, which were primarily related to
the development of the commercial/contract business and the expansion of the
retail division into international markets. The "at risk" portion was 61.1% of
Mr. Fuente's 1993 total cash compensation.

22
<PAGE> 25

For 1993, the next four highest paid officers as a group earned bonuses
totalling $1,687,853. The "at risk" portion was 58.2% of the group's total 1993
cash compensation.

Stock Based Incentive Program. The objective of stock option awards is to
motivate grantees to maximize long-term growth and profitability of the Company.
Grantees can recognize value from options granted only if the Company's stock
price increases after the date on which such options are granted, since the
exercise price of options granted must at least equal the fair market value of
the Company's stock on the date of grant. The award of options thus aligns the
long-range interests of the grantees with those of shareholders.

Grants of options to the Company's executive officers and other key
employees are made pursuant to the Plan. Grants of options under the Plan are
generally made annually. In 1993, the Compensation Committee developed
guidelines regarding the size and conditions of grants to the Chief Executive
Officer, the President, and the executive officers of the Company. These
guidelines were developed after taking into consideration prior year's grants,
the organizational impact of the participant and the level of emphasis the
Company placed on participant retention. Stock option awards below the executive
officer level are a function of position within the organization. For 1993,
stock option awards for executive officers were consistent with the guidelines
established by the Compensation Committee.

Awards granted to Mr. Fuente and the next four highest compensated
executives for 1993 appear in the table on page 20. Based on the Black-Scholes
option pricing model, the present value at date of grant of Mr. Fuente's 1993
stock options represents 43.9% of his total 1993 compensation. The total "at
risk" portion, stock options plus annual bonus, was 78.2% of total 1993
compensation.

Stock option awards granted to the next four highest compensated executives
for 1993 represent 45.6% of total 1993 compensation. The total "at risk"
portion, stock plus annual bonus, for the next four highest compensated
executives was 77.3% of total 1993 compensation.

This emphasis of "at risk" compensation is consistent with the Company's
compensation philosophy and supports continued creation of shareholder value.

Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code, which took effect January 1, 1994, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the corporation's Chief Executive Officer and other most highly
compensated executive officers.

Qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. The Company currently intends
to structure the performance-based portion of the compensation of its executive
officers (which currently consists of stock option grants and annual bonus) in a
manner that complies with the new rules.

Compensation Committee

W. Scott Hedrick
Alan L. Wurtzel

23
<PAGE> 26

COMMON STOCK PERFORMANCE

The graph shown below compares the cumulative total shareholder return on
the Company's Common Stock since December 31, 1988 with the S&P 500 Index and
the S&P Retail Composite Index.

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG OFFICE DEPOT, S&P 500 INDEX AND S&P RETAIL COMPOSITE

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ODP S&P 500 S&P RETAIL
<S> <C> <C> <C>
1/1/89 100 100 100
12/31/89 169 132 128
12/31/90 146 129 128
12/31/91 473 166 203
12/31/92 635 179 239
12/31/93 946 197 229
</TABLE>

CERTAIN TRANSACTIONS

On April 24, 1991, the Company entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement") with Carrefour S.A., a societe anonyme organized
under the laws of France ("Carrefour"), pursuant to which the Company agreed to
sell to Carrefour 4,290,000 newly issued shares of the Company's Common Stock at
a price of $9.33 per share (the "Carrefour Transaction"). These shares are
currently held by an indirect wholly-owned subsidiary of Carrefour, Fourcar B.V.
The Carrefour Transaction was consummated on June 7, 1991 and resulted in
proceeds to the Company of $40,040,000. Under the terms of the Stock Purchase
Agreement, among other provisions, Carrefour and its affiliates may not, prior
to July 1, 1994, without the consent of the Board and subject to certain
conditions, (i) increase their percentage ownership of the Company's voting
securities above the greater of (A) 25% or (B) 1% more than the percentage
ownership of any other stockholder or stockholder group of the Company, (ii)
sell such shares without first offering such shares to the Company pursuant to a
right of first refusal, or (iii) form or encourage the formation of a group to
acquire control of the Company. In the event of any subsequent issuances of the
Company's securities prior to July 1, 1994, Carrefour has been granted the
preemptive right to purchase additional securities of the Company in order to
retain its percentage ownership in the Company. In connection with the Carrefour

24
<PAGE> 27

Transaction, the Company has also granted Carrefour certain registration rights
and has agreed to nominate, and to use reasonable efforts to elect, a
representative of Carrefour to the Board so long as Carrefour and its affiliates
hold at least 10% of the Company's outstanding voting securities. Mr. Defforey
was nominated to the Board in accordance with this agreement. In addition,
Carrefour has agreed not to compete with the Company in the retail office
products supply business in a large volume, warehouse or discount store format
in North America until the later of July 1, 1994 and one year after a
representative of Carrefour no longer serves on the Board.

SHAREHOLDER PROPOSALS

Shareholder proposals for inclusion in proxy materials for the Company's
1995 Annual Meeting of Stockholders should be addressed to the Corporate
Secretary at the Company's principal executive offices, 2200 Old Germantown
Road, Delray Beach, Florida 33445, and must be received by the Company on or
before December 15, 1994.

OTHER MATTERS

It is not presently expected that any matters other than those discussed
herein will be brought before the Annual Meeting. If, however, other matters do
come before the meeting, it is the intention of the persons named as
representatives in the accompanying proxy to vote in accordance with the
recommendation of the Company's management.

25
<PAGE> 28

OFFICE DEPOT, INC.

AMENDED DIRECTORS STOCK OPTION PLAN

1. Plan. Options to purchase shares of the Company's
Common Stock shall be granted to directors of the Company who are not otherwise
employees of the Company or its subsidiaries pursuant to the terms of this
Plan.

2. Limitation on Aggregate Shares. The number of shares
of Common Stock with respect to which options may be granted under this Plan
and which may be issued upon the exercise thereof shall not exceed, in the
aggregate, 325,000 shares; provided, however, that if any options granted under
this Plan expire unexercised or unpaid or are cancelled, terminated or
forfeited in any manner without the issuance of Common Stock thereunder, the
shares with respect to which such options were granted shall be available under
this Plan. Such shares of Common Stock may be either authorized and unissued
shares, treasury shares or a combination thereof, as the Committee shall
determine.

3. Options. Options granted under this Plan shall be
subject to such terms and conditions and evidenced by agreements in such form
as shall be determined from time to time by the Committee and shall in any
event be subject to the terms and conditions set forth below and in paragraph
4:

(a) Grant of Options. Options to purchase 7,500 shares
of Common Stock shall be granted to each director of the Company who is not
otherwise an employee of the Company or its subsidiaries once each year on the
date of the annual meeting of the Company's stockholders.

(b) Option Price. The option price per share of Common
Stock shall be 100% of the fair market value of a share of Common Stock on the
date of grant.

(d) Exercise of Options. Options shall be exercised by
written notice to the Company (to the attention of the Corporate Secretary)
accompanied by payment in full of the option price. Payment of the option
price may be made, at the discretion of the optionee, (i) in cash (including
check, bank draft or money order), (ii) by delivery of Common Stock (valued at
the fair market value thereof on the date of exercise) or (iii) by delivery of
a combination of cash and Common Stock; provided, however, that the

<PAGE> 29
Committee may, in any instance, in order to prevent any possible
violation of law, require the option price to be paid in cash; and provided,
further, that the right to deliver Common Stock in payment of the option price
may be limited or denied in any option agreement.

4. Additional Provisions.

(a) Conditions and Limitations on Exercise. No option
shall be exercisable earlier than one year after the date of grant, except as
otherwise provided in paragraph 4(f). Each option shall be exercisable with
respect to one-third of the shares of Common Stock subject to such option
commencing on the first, second and third anniversaries of the date of grant.

(b) Termination of Term of Directorship. Any option
shall be exercisable only during the holder's term as a director of the
Company, except that an option may be exercisable for a period of up to three
months after the death of a holder while a director of the Company (i) only to
the extent that the holder was entitled to exercise on the date of death and
(ii) only to the extent that the option would not have expired had the holder
continued to be a director of the Company.

(c) Listing, Registration, and Compliance with Laws and
Regulations. Each option shall be subject to the requirement that if at any
time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to the option upon any
securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
such option or the issuance or purchase of shares thereunder, no such option
may be exercised or paid in Common Stock, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
The holder of such option will supply the Company with such certificates,
representations and information as the Company shall request and shall
otherwise cooperate with the Company in obtaining such listing, registration,
qualification, consent or approval. The Committee may at any time impose any
limitations upon the exercise of an option or the sale of the Common Stock
issued upon exercise of an option that, in the Committee's discretion, are

- 2 -
<PAGE> 30
necessary or desirable in order to comply with such Section 16(b) of the
Exchange Act and the rules and regulations thereunder.

(d) Nontransferability of Options. Options may not be
transferred other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined by Section 1 et
seq. of the Code, Title I of ERISA or the rules thereunder, and, during the
lifetime of the person to whom they are granted, may be exercised only by such
person (or his guardian or legal representative).

(e) Adjustment for Change in Common Stock. In order to
prevent the dilution or enlargement of rights under options, in the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation or other change in the Common Stock, appropriate
changes shall be made in the number and type of shares or other consideration
represented by options outstanding under this Plan and the prices specified
therein.

(f) Sale of the Company. In the event of a merger of the
Company with or into another corporation constituting a change of control, a
sale of all or substantially all of the Company's assets or a sale of a
majority of the Company's outstanding voting securities (a "Sale of the
Company"), the options may be assumed by the successor corporation or a parent
of such successor corporation or substantially equivalent options may be
substituted by the successor corporation or a parent of such successor
corporation, and if the successor corporation does not assume the options or
substitute options, then the options shall become immediately exercisable and
such options shall terminate if not exercised as of the date of the Sale of the
Company or other prescribed period of time.

(g) Liquidation or Dissolution. In the event of the
liquidation or dissolution of the Company, options shall terminate immediately
prior to the liquidation or dissolution.

(h) Taxes. The Company shall be entitled, if necessary
or desirable, to withhold (or secure payment from the Plan participant in lieu
of withholding) the amount of any withholding or other tax due from the Company
with respect to any shares issuable under this Plan, and the Company may defer
such issuance unless indemnified to its satisfaction.

- 3 -
<PAGE> 31
5. Administration. This Plan shall be administered by
the Committee. The Committee shall consist of two or more directors designated
by the Board of Directors who shall meet the eligibility conditions provided in
Rule 16b-3(b)(2) of the Exchange Act (as such rule may be amended from time to
time).

The Committee shall have full power to construe and interpret
this Plan and options granted hereunder, to establish and amend rules for its
administration and to correct any defect or omission and to reconcile any
inconsistency in this Plan or in any option granted hereunder to the extent the
Committee deems desirable to carry this Plan or any option granted hereunder
into effect.

The Committee may act by a majority of a quorum present at a
meeting or by an instrument executed by all of its members. All actions taken
and decisions made by the Committee pursuant to this Plan shall be binding and
conclusive on all persons interested in this Plan.

6. Definitions. "The Code" means the Internal Revenue
Code of 1986, as amended. "Committee" means the Option Plan Administration
Committee of the Company's Board of Directors. "Common Stock" means shares of
the Company's Common Stock, $.01 par value, or such other shares as are
substituted pursuant to paragraph 4(e) or (f). "The Company" means Office
Depot, Inc. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. "Exchange Act" means the Securities Exchange Act of 1934, as
amended. The "fair market value" of the Common Stock on any given date means
(a) the mean between the highest and lowest reported sale prices on the New
York Stock Exchange--Composite Transactions Table (or, if not so reported, on
any domestic stock exchanges on which the Common Stock is then listed); or (b)
if the Common Stock is not listed on any domestic stock exchange, the closing
sale price or mean between the closing high bid and low asked prices as
reported by the National Association of Securities Dealers Automated Quotation
System (or, if not so reported, by the system then regarded as the most
reliable source of such quotations); or (c) if the Common Stock is listed on a
domestic exchange or quoted in the domestic over-the-counter market, but there
are no reported sales or quotations, as the case may be, on the given date, the
value determined pursuant to (a) or (b) using the reported sale prices or
quotations on the last previous date on which so reported; or (d) if none of
the foregoing clauses apply, the fair value as determined in good faith by the
Committee.

- 4 -
<PAGE> 32
"Subsidiary" means any corporation in which the Company owns, directly or
indirectly, stock possessing 50% or more of the total combined voting power.

7. Termination and Amendment. At any time the Committee
may suspend or terminate this Plan and make such additions or amendments as it
deems advisable; provided, that such additions or amendments are made in
compliance with Rule 16b-3 of the Exchange Act (as such rule may be amended
from time to time); and provided, further, that paragraphs 3 and 4(a) and (b)
shall not be amended more than once every six months (other than to comply with
the Code or ERISA). No options shall be granted hereunder after March 4, 2001.

- 5 -
<PAGE> 33
OFFICE DEPOT, INC.

STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN

1. Plan. Options to purchase shares of the Company's
Common Stock ("Options") and rights to earn compensation for the future
performance of the Company's Common Stock ("SARs") may be granted to such key
employees of the Company and its subsidiaries as may be selected by the
Committee.

2. Limitation on Aggregate Shares. The number of shares
of Common Stock with respect to which Options and SARs may be granted under
this Plan and which may be issued upon the exercise thereof shall not exceed,
in the aggregate, 14,142,136; provided, that if any Options or SARs granted
under this Plan expire unexercised or unpaid or are cancelled, terminated or
forfeited in any manner without the issuance of Common Stock thereunder, the
shares with respect to which such Options or SARs were granted shall be
available under this Plan. Such shares of Common Stock may be either
authorized and unissued shares, treasury shares or a combination thereof, as
the Committee shall determine.

3. Stock Options.

(a) Options. The Committee shall have the authority to
award Options to Grantees and to determine the dates Options are granted, the
number of shares of Common Stock subject to Options, the Option prices and the
duration of Options. Options to be granted under this Plan may be incentive
stock options within the meaning of Section 422 of the Code ("ISOs") or in such
other form, consistent with this Plan, as the Committee may determine
("Nonqualified Options"). Subject to the terms of this Plan, each Option
granted under this Plan shall state whether or not it is an ISO; provided, that
any Option granted under this Plan that does not state that it is an ISO shall
not be deemed to be an ISO.

(b) Option Price. The Option price per share of Common
Stock shall be fixed by the Committee at not less than 100% of the fair market
value of a share of Common Stock on the date of grant; provided, that if an
Option which is intended to be an ISO is granted to a Grantee who at the time
such Option is granted owns capital stock of the Company representing over 10%
of the total voting power of all classes of the Company's capital stock, the
Option price per share of Common Stock shall be fixed by the Committee at not
less than 110% of the fair market value of a share of Common Stock on the date
of grant.

(c) Term of Options. No ISO shall be made exercisable
more than ten years after the date of grant and, except as otherwise provided
in paragraph 6(d), no Nonqualified Stock Option shall be made exercisable more
than ten years after the date of grant; provided, that if an Option which is
intended to be an ISO is granted to a Grantee who at the time such Option is
granted owns capital stock of the Company representing over 10% of the total
voting power of all classes of the Company's capital stock, such

<PAGE> 34
Option shall not be made exercisable more than five years after the date of
grant.

(d) Exercise of Options. Options shall be exercised by
written notice to the Company (to the attention of the Corporate Secretary)
accompanied by payment in full of the Option price. Payment of the Option
price may be made, at the discretion of the Optionee, (i) in cash (including
check, bank draft or money order), (ii) by delivery of Common Stock (valued at
the fair market value thereof on the date of exercise) or (iii) by delivery of
a combination of cash and Common Stock; provided, that the Committee may, in
any instance, in order to prevent any possible violation of law, require the
Option price to be paid in cash; and provided, further, that the right to
deliver Common Stock in payment of the Option price may be limited or denied in
any Option agreement.

(e) Conditions and Limitations on Exercise. Options may
be made exercisable in one or more installments, upon the happening of certain
events, upon the passage of a specified period of time or upon the fulfillment
of a condition, as the Committee shall decide in each case when the Option is
granted. If an Option is intended to be an ISO, the aggregate fair market
value on the date of grant of the Common Stock with respect to which such
Option, and all other ISOs granted to the same Grantee by the Company and any
parent and subsidiary corporations, is exercisable for the first time during
any calendar year shall not exceed $100,000. No Option shall be exercisable
earlier than one year after the date of grant, except as otherwise provided in
paragraphs 6(d), (i) and (j).

(f) Financing. The Company may extend and maintain, or
arrange for the extension and maintenance of, financing to any Grantee to
purchase shares pursuant to exercise of an Option on such terms as may be
approved by the Committee in its sole discretion. In considering the terms for
extension or maintenance of credit by the Company, the Committee shall, among
other factors, consider the cost to the Company of any financing extended by
the Company.

(g) Disqualifying Dispositions. The Grantee shall
give prompt notice to the Company of any disposition of Common Stock acquired
upon exercise of an ISO (and such information regarding such disposition as the
Company may reasonably request) if such disposition occurs within either two
years after the date of grant or one year of the receipt of such Common Stock
by the Grantee.

4. SARs Attached to Options.

(a) SARs. The Committee may award an SAR with respect
to any shares covered by any Option granted under this Plan. Except as
otherwise provided in this paragraph 4, the terms and procedures set out in
paragraph 5 shall be applicable to SARs with respect to shares covered by a
related Option.

- 2 -
<PAGE> 35
(b) Terms and Conditions. Each SAR shall be subject to
the same terms and conditions as the related Option with respect to date of
expiration, limitations on transferability and eligibility to exercise. When
an SAR is awarded with respect to shares covered by a related ISO, such SAR may
be exercised only when the Option is exercisable. The exercise of an SAR
awarded with respect to shares covered by a related ISO must have the same
economic and tax consequences to the Grantee as the exercise of the Option
followed by an immediate sale of the Option shares.

(c) Exercise. Upon the exercise of an SAR, the related
Option shall cease to be exercisable as to the shares with respect to which
such right was exercised and the related Option shall be considered to have
been exercised to that extent. Upon the exercise or expiration date of a
related Option, the SAR granted with respect thereto shall terminate.

(d) Extension. Any extension of the expiration date of a
Nonqualified Option shall also extend the related SAR, and any acceleration of
the exercise date of an Option shall likewise accelerate the exercise date of
the related SAR.

5. SAR Awards

(a) SARs. The Committee shall have authority to award
SARs to Grantees and to determine the number of SARs to be awarded to each
Grantee. The amount of additional compensation that may be received pursuant to
the award of one SAR is the excess of the Fair Market Value of one share of
Common Stock at the Appreciation Date over that on the date the SAR was
awarded.

(b) Payment Terms. The Committee shall have sole
discretion to determine whether payment of SARs shall be made wholly in cash,
wholly in shares of Common Stock or by a combination of cash and shares of
Common Stock. In the event no action is taken by the Committee to determine
the method of payment, the amount due shall be paid half in cash and half in
shares of Common Stock. In the event that a payment is made to a Grantee
pursuant to an SAR in whole or in part in the form of shares of Common Stock,
the shares shall be valued at their Fair Market Value on the Appreciation Date.
In the event shares of Common Stock are issued, the Committee shall fix the
amount of consideration represented by the past services performed by the
Grantee with respect to such shares.

(c) Appreciation Date. A Grantee may designate an
Appreciation Date by filing an irrevocable written notice with the Company (to
the attention of the Corporate Secretary) specifying the Appreciation Date, the
number of SARs to which the Appreciation Date relates, and the date on which
such SARs were awarded; provided, that the designation of an Appreciation Date
shall be made in accordance with Rule 16b-3(e)(3) of the Exchange Act (as such
rule may be amended from time to time.

- 3 -
<PAGE> 36
(d) Expiration Date. Except as otherwise provided in the
case of SARs granted in connection with Options, the SAR expiration date shall
be a date designated by the Committee which is not later than ten years after
the date on which the SAR was awarded. On the SAR expiration date, the SAR shall
terminate, the amount of additional compensation represented thereby shall
become zero and all rights relating to the SAR shall expire.

6. Plan Conditions.

(a) Agreements. Options and SARs granted under this
Plan shall be subject to such terms and conditions and evidenced by agreements
in such form as shall be determined from time to time by the Committee and as
are consistent with this Plan.

(b) Employment Rights. This Plan shall not create any
employment rights in any Grantee and the Company shall have no liability for
terminating the employment of a Grantee before the exercise date of any Option
or before the Grantee becomes entitled to designate an Appreciation Date with
respect to any SAR.

(c) Rights as a Stockholder. A Grantee of an Option, an
SAR or a transferee of such Grantee shall have no rights as a stockholder with
respect to any shares of Common Stock until the issuance of a stock certificate
for such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash securities, or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued.

(d) Termination of Employment. Any Option or SAR shall
be exercisable only during the holder's employment by the Company or any
subsidiary of the Company, except that in the Committee's discretion, an Option
or an SAR may be exercisable for a period of up to two years after retirement
or death while an employee of the Company or any subsidiary of the Company, and
up to three months after the termination of such employment for any other
reason. An Option may be exercised after the termination of a Grantee's
employment with the Company for any reason (i) only to the extent that the
holder was entitled to do so on the date of termination (except that the
Committee may, in its discretion, include in any Option an acceleration of such
Option in the event of the holder's death or retirement) and (ii) only to the
extent that the Option would not have expired had the holder continued to be
employed by the Company or a subsidiary of the Company (except that the
Committee may, in its discretion, permit Nonqualified Options to be exercisable
within three months after a holder's death where the holder died prior to its
expiration). The Committee may, in its discretion, determine that an authorized
leave of absence shall be deemed to satisfy this Plan's employment
requirements.

(e) Listing, Registration, and Compliance with Laws and
Regulations. Each Option and SAR shall be subject to the

- 4 -
<PAGE> 37
requirement that if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to the Option or SAR upon any securities exchange or under any state or
federal securities or other law or regulation, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition to
or in connection with the award of such Option or SAR or the purchase or
issuance of shares thereunder, no such Option or SAR may be exercised or paid
in Common Stock, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee. The holder of such Option or
SAR will supply the Company with such certificates, representations and
information as the Company shall request and shall otherwise cooperate with the
Company in obtaining such listing, registration, qualification, consent or
approval. In the case of officers and other persons subject to Section 16(b)
of the Exchange Act, the Committee may at any time impose any limitations upon
the exercise of an Option or SAR or the purchase or issuance of shares
thereunder that, in the Committee's discretion, are necessary or desirable in
order to comply with Section 16(b) and the rules and regulations thereunder.
If the Company, as part of an offering of securities or otherwise, finds it
desirable because of federal or state regulatory requirements to suspend or
reduce the period during which any Options or SARs may be exercised, the
Committee may, in its discretion and without the holders' consent, so reduce
such period on not less than 15 days' written notice to the holders thereof.

(f) Cash Payments. Nonqualified Options may, in the
Committee's discretion, provide that in connection with exercises thereof the
holder thereof will receive cash payments in the amounts necessary to reimburse
such holder for such holder's income tax liability on the sum of (i) in the
case of an Option exercise, the number of shares as to which the Option is
exercised multiplied by the excess of the fair market value of a share of
Common Stock (on the date such holder recognizes taxable income) over the
Option price, and (ii) payments made pursuant to this paragraph 6(f).

(g) Nontransferability of Options and SARs. Options and
SARs may not be transferred other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined by
Section 1 et seq. of the Code, Title I of ERISA or the rules thereunder. Only
the Grantee or in the event of his death, his legal representative or
beneficiary, may exercise Options, designate Appreciation Dates and receive
cash payments and deliveries of shares or otherwise exercise rights under this
Plan. No transfer by will or by the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with a copy of the deceased Grantee's will or such other evidence as the
Committee may deem necessary to establish the validity of the transfer.

- 5 -
<PAGE> 38
(h) Adjustment for Change in Common Stock. In order to
prevent the dilution or enlargement of rights under Options, in the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation or other change in the Common Stock, the
Committee shall make appropriate changes in the number and type of shares or
other consideration represented by Options and SARs outstanding under this Plan
and the prices specified therein.

(i) Sale of the Company. In the event of a merger of the
Company with or into another corporation constituting a change of control (as
determined by the Committee), a sale of all or substantially all of the
Company's assets or a sale of a majority of the Company's outstanding voting
securities (a "Sale of the Company"), the Committee may stipulate, in its sole
discretion, that any one or more of the following conditions shall apply: (i)
the Options or SARs shall become immediately exercisable by any participants
who are employed by the Company or any of its subsidiaries at the time of the
Sale of the Company and that such Options or SARs shall terminate if not
exercised prior to the date of the Sale of the Company or other prescribed
period of time; (ii) the Options or SARs shall be assumed by the successor
corporation or a parent of such successor corporation; or (iii) substantially
equivalent Options or SARs shall be substituted by the successor corporation or
a parent of such successor corporation.

(j) Liquidation or Dissolution. In the event of the
liquidation or dissolution of the Company, Options and SARs shall terminate
immediately prior to the liquidation or dissolution unless the Committee, in
its sole discretion, stipulates that Options and SARs shall terminate at a
fixed date and shall become immediately exercisable.

(k) Taxes.

(i) Whenever shares are to be issued or delivered
pursuant to this Plan, the Company shall have the right, in its sole
discretion, to either (A) require the Grantee to remit to the Company or (B)
withhold from any salary, wages or other compensation payable by the Company to
the Grantee, an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Whenever payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy federal, state and
local withholding tax requirements and authorized deductions.

(ii) With respect to shares received by a Grantee pursuant
to the exercise of an ISO, if such Grantee disposes of any such shares within
two years from the date of grant of such Option or within one year after the
transfer of such shares to the Grantee, the Company shall have the right to
withhold from any

- 6 -
<PAGE> 39
salary, wages or other compensation payable by the Company to the Grantee
an amount sufficient to satisfy federal, state and local withholding tax
requirements attributable to such disposition.

7. Administration.

(a) The Committee. This Plan shall be administered by
the Committee. The Committee shall consist of two or more directors designated
by the Board of Directors who shall meet the eligibility conditions provided in
Rule 16b-3(b)(2) of the Exchange Act (as such rule may be amended from time to
time). The Committee may act by a majority of a quorum present at a meeting or
by an instrument executed by all of its members. All actions taken and
decisions made by the Committee pursuant to this Plan shall be binding and
conclusive on all persons interested in this Plan.

(b) Interpretation. The Committee shall have full power
to construe and interpret this Plan and Options and SARs granted hereunder, to
establish and amend rules for its administration, to correct any defect or
omission and to reconcile any inconsistency in this Plan or in any Option or
SAR granted hereunder to the extent the Committee deems desirable to carry this
Plan or any Option or SAR granted hereunder into effect.

(c) Amendment of Options and SARs. The Committee shall
have the authority to advance (i) the date on which an Option shall become
exercisable by the Grantee and (ii) the Grantee's right to designate an
Appreciation Date for any SAR; provided, that no Option shall be exercised and
no Appreciation Date shall be designed by an officer or director of the Company
until the expiration of one year from the date of grant. The Committee may,
with the consent of the person entitled to exercise any outstanding Option or
SAR, amend such Option or SAR, including, without limitation, reducing the
exercise price of any Option or the Fair Market Value of the Common Stock on
the date the SAR was awarded to not less than the fair market value of the
Common Stock at the time of the amendment and extending the duration thereof so
long as it is not more than ten years from the time of the amendment.

(d) Funding. No provision of this Plan shall
require or permit the Company, for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a trust or other
entity to which contributions are made or otherwise to segregate any assets,
nor shall the Company maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Grantees shall have no rights under the
Plan other than as unsecured general creditors of this Company.

8. Definitions. "Appreciation Date" means the date
designated by a Grantee of an SAR for measurement of the appreciation of such
SAR. "The Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the

- 7 -
<PAGE> 40
Company's Board of Directors designated by the Company's Board of Directors.
"Common Stock" means shares of the Company's Common Stock, $.01 par value, or
such other shares as are substituted pursuant to paragraph 6(i) or (j). "The
Company" means Office Depot, Inc. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended. "Exchange Act" means the Securities Exchange
Act of 1934, as amended. The "fair market value" of the Common Stock on any
given date means (a) the mean between the highest and lowest reported sale
prices on the New York Stock Exchange--Composite Transactions Table (or, if not
so reported, on any domestic stock exchanges on which the Common Stock is then
listed); or (b) if the Common Stock is not listed on any domestic stock
exchange, the closing sales price or the mean between the closing high bid and
low asked prices as reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so reported, by the system then regarded
as the most reliable source of such quotations); or (c) if the Common Stock is
listed on a domestic exchange or quoted in the domestic over-the-counter
market, but there are no reported sales or quotations, as the case may be, on
the given date, the value determined pursuant to (a) or (b) using the reported
sale prices or quotations on the last previous date on which so reported; or
(d) if none of the foregoing clauses apply, the fair value as determined in
good faith by the Committee. "Grantee" means any individual who is awarded
Options or SARs under this Plan. The term "key employees" shall mean officers
and employees of the Company and its subsidiaries and shall exclude directors
who are not otherwise employees of the Company. "Retirement" means voluntary
withdrawal from employment with the Company and its subsidiaries on or after
attaining the age of 62 years, without succeeding full time employment, or in
the event the Company or any subsidiary of the Company establishes a pension
plan, retirement pursuant to the terms of any such pension plan. "Subsidiary"
means any corporation in which the Company owns, directly or indirectly, stock
possessing 50% or more of the total combined voting power.

9. Termination and Amendment. At any time the Committee
may suspend or terminate this Plan and make such additions or amendments as it
deems advisable; provided, that such additions or amendments are made in
compliance with Rule 16b-3 of the Exchange Act and Section 422 of the Code (as
such provisions may be amended from time to time). No Options shall be granted
hereunder after February 2, 1999.

- 8 -
<PAGE> 41

PROXY OFFICE DEPOT, INC.
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FL 33445

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints David I. Fuente, Mark D. Begelman and Barry
J. Goldstein as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below all the
shares of common stock of Office Depot, Inc. held of record by the undersigned
on April 8, 1994, at the annual meeting of shareholders to be held on May 18,
1994 or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS
/ / FOR all of the nominees listed below (except / / WITHHOLD AUTHORITY
as marked in the space provided below) to vote for all of the nominees listed below
Mark D. Begelman, Denis Defforey, David I. Fuente, W. Scott
Hedrick, John B. Mumford, Michael J. Myers, Peter J. Solomon
and Alan L. Wurtzel
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name in the space provided below.)

</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<S> <C>

2. PROPOSAL TO APPROVE AMENDMENT OF THE OFFICE DEPOT, INC. STOCK OPTION AND SAR PLAN:
/ / FOR / / AGAINST / / ABSTAIN

3. PROPOSAL TO APPROVE AMENDMENT OF THE OFFICE DEPOT, INC. DIRECTORS STOCK OPTION PLAN:
/ / FOR / / AGAINST / / ABSTAIN

4. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT PUBLIC ACCOUNTANTS:
/ / FOR / / AGAINST / / ABSTAIN

</TABLE>
(over)

5. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.

Please sign exactly as name appears
below. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.

-------------------------------------
Signature

-------------------------------------
Signature if held jointly
DATED:
-------------------------------
1994

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.