Document:

<PAGE>   1

                                                                   EXHIBIT 10.26

                                    AMENDMENT No. 8 AND AGREEMENT dated as of
                           December 26, 2000 (this "Amendment"), to the Credit
                           Agreement dated as of January 7, 1998, as amended by
                           Amendment No. 1 and Waiver dated as of March 16,
                           1998, Amendment No. 2 and Waiver dated as of May 21,
                           1998, Amendment No. 3 and Waiver dated as of July 16,
                           1998, Amendment No. 4 dated as of November 12, 1998,
                           Amendment No. 5 dated as of March 12, 1999, Amendment
                           No. 6 dated as of December 20, 1999, and Amendment
                           No. 7 dated as of June 20, 2000 (the "Credit
                           Agreement"), among DENNY'S, INC., a California
                           corporation, EL POLLO LOCO, INC., a Delaware
                           corporation, FLAGSTAR ENTERPRISES, INC., an Alabama
                           corporation, FLAGSTAR SYSTEMS, INC., a Delaware
                           corporation, QUINCY'S RESTAURANTS, INC., an Alabama
                           corporation (each of the foregoing, except for
                           FLAGSTAR ENTERPRISES, INC., QUINCY'S RESTAURANTS,
                           INC. and EL POLLO LOCO, INC., for purposes of this
                           Amendment and the Credit Agreement, individually, a
                           "Borrower" and, collectively, the "Borrowers"),
                           ADVANTICA RESTAURANT GROUP, INC., a Delaware
                           corporation ("Parent"), the Lenders (as defined in
                           Article I of the Credit Agreement) and THE CHASE
                           MANHATTAN BANK, a New York banking corporation, as
                           swingline lender (in such capacity, the "Swingline
                           Lender"), as issuing bank, as administrative agent
                           (in such capacity, the "Administrative Agent") and as
                           collateral agent (in such capacity, the "Collateral
                           Agent") for the Lenders.

                  A. The Lenders have extended credit to the Borrowers, and have
agreed to extend credit to the Borrowers, in each case pursuant to the terms and
subject to the conditions set forth in the Credit Agreement.

                  B. FRD and its subsidiaries are party to the New FRI-M Credit
Agreement, under which the borrowers thereunder may incur indebtedness in a
principal amount of up to $70,000,000.

                  C. Parent is party to the Advantica Guarantee, under which
Parent guarantees in full all indebtedness under the New FRI-M Credit Agreement.

                  D. Parent has advised the Administrative Agent that Parent
intends, subject to and in accordance with Section 6.04(n) of the Credit
Agreement, to satisfy its obligations under the Advantica Guarantee in full
prior to January 7, 2001.

                  E. Parent and the Borrowers have requested that the Required
Lenders agree to amend certain provisions of the Credit Agreement and amend
certain provisions of the Security Agreement.

                  F. The Required Lenders are willing to agree to such
amendments, on the terms and subject to the conditions set forth herein.

                  G. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Credit Agreement after giving effect to
this Amendment.

                  Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

                  SECTION 1. Amendment to Credit Agreement. (a) Article VII of
the Credit Agreement is hereby amended by adding the following new sentence at
the end of such Article:

<PAGE>   2

                                                                               2

                  "Notwithstanding the foregoing, no Event of Default or Default
under paragraph (a), (d), (e), (f), (g), (h) or (k) of this Article VII shall
occur or arise solely as a result of the occurrence of any event or the
existence of any circumstances (including any event or circumstances described
in paragraph (a), (d), (e), (f), (g), (h) or (k) of this Article VII) with
respect to FRD or any of its subsidiaries if the occurrence of such event or the
existence of such circumstances, as applicable, does not actually affect Parent
or any of the Specified Subsidiaries (other than solely because the references
to Subsidiaries in this Article VII include FRD and its subsidiaries) in a
manner that itself causes an Event of Default or a Default with respect to
Parent or any of its subsidiaries (other than FRD or any of its subsidiaries)."

                  (b) The amendment set forth in paragraph (a) of this Section 1
shall cease to be effective immediately following the payment by Parent of any
amount pursuant to the Advantica Guarantee unless prior to, substantially
simultaneous with or immediately following such payment, each of the following
requirements has been satisfied:

                  (i) The Advantica Guarantee shall be irrevocably terminated by
         an agreement in form and substance reasonably satisfactory to the
         Administrative Agent and signed by Credit Lyonnais New York Branch, as
         Administrative Agent for the lenders under the New FRI-M Credit
         Agreement (the "New FRI-M Agent"), which agreement shall be accompanied
         by an acknowledgment by the New FRI-M Agent and the lenders and issuing
         banks under the New FRI-M Credit Agreement that all principal, interest
         and fees owed thereunder have been paid in full and all cash
         collateralization requirements thereunder have been fully satisfied.

                  (ii) The Board of Directors of Parent shall designate FRD and
         its subsidiaries as "Unrestricted Subsidiaries" for purposes of the New
         Senior Notes Indenture in accordance with the terms thereof, and the
         Administrative Agent shall have received a copy of the resolutions of
         the Board of Directors of Parent authorizing such designation.

                  (iii) Parent shall (A) ensure that any payment that is made by
         Parent pursuant to the Advantica Guarantee is made directly by Parent
         to the New FRI-M Agent and is accompanied by a written statement by
         Parent that such payment is being made pursuant to the Advantica
         Guarantee, (B) deliver to the Administrative Agent a written
         acknowledgment, in form and substance reasonably satisfactory to the
         Administrative Agent, duly executed and delivered by the New FRI-M
         Agent, pursuant to which the New FRI-M Agent acknowledges and agrees
         that the payments made by Parent to or for the benefit of the lenders
         or issuing banks under the New FRI-M Credit Agreement were made in
         satisfaction of Parent's guarantee obligations pursuant to the
         Advantica Guarantee, (C) endeavor in good faith to have included in the
         written acknowledgment referred to in clause (B) above an
         acknowledgment by the New FRI-M Agent that Parent is subrogated to all
         rights (the "Subrogation Rights") of the lenders and issuing banks
         under the New FRI-M Credit Agreement against each Borrower and
         Guarantor (in each case, as defined in the New FRI-M Credit Agreement)
         other than Parent (each such Borrower and Guarantor, a "New FRI-M
         Credit Party"), including but not limited to all rights of such lenders
         and issuing banks under or in respect of the FRD Guarantee Agreement,
         Subsidiary Guarantee Agreements, Security Documents and Collateral
         (each as defined in the New FRI-M Credit Agreement) and all voting
         rights of such lenders and issuing banks thereunder, (D) deliver to the
         Administrative Agent an assignment to the Administrative Agent or
         another party designated by Parent as directed by the Administrative
         Agent, as the Collateral Agent, and reasonably satisfactory to Parent
         signed by the New FRI-M Agent, of each promissory note or UCC-1
         Financing Statement, filing with the United States Patent and Trademark
         Office, Mortgage (as defined in the New FRI-M Credit Agreement) or
         similar filing filed by the New FRI-M Agent in respect of the New FRI-M
         Credit Agreement, (E) deliver to the Administrative Agent the written
         resignation by the New FRI-M Agent as administrative agent and
         collateral agent for the lenders under the New FRI-M Credit Agreement
         and the guarantee and collateral documents entered into pursuant
         thereto and the appointment of the Administrative Agent or another
         party designated by Parent as directed by the Administrative Agent and
         reasonably satisfactory to Parent to act as the successor

<PAGE>   3

                                                                               3

         administrative agent and collateral agent thereunder, (F) deliver to
         the Administrative Agent all stock certificates and instruments pledged
         to and in the possession of the New FRI-M Agent in connection with the
         New FRI-M Credit Agreement and all stock or note powers or other
         instruments of transfer held by the New FRI-M Agent in connection
         therewith and (G) deliver to the Administrative Agent amendments to
         UCC-1 Financing Statements, duly executed and delivered by the
         appropriate Loan Parties, reasonably requested by the Administrative
         Agent to reflect the amendment pursuant to Section 2 of this Amendment
         of the definition of the term Collateral.

                  (iv) Parent shall assign the Subrogation Rights to Denny's,
         Inc. as a capital contribution.

                  (c) The amendment set forth in paragraph (a) of this Section 1
shall immediately cease to be effective if (i) any event or circumstances
described in Article VII that, with or without the giving of notice, would
constitute an Event of Default under and as described in the New Senior Notes
Indenture shall occur or arise with respect to FRD or any of its subsidiaries
and (ii) at the time such event occurs or such circumstances arise, FRD and its
subsidiaries have not previously been designated as "Unrestricted Subsidiaries"
for purposes of the New Senior Notes Indenture in accordance with the terms
thereof.

                  SECTION 2. Amendment to Security Agreement. The defined term
"Collateral" in Section 1.02 of the Security Agreement is hereby amended as
follows by substituting the text ", (e) any and all rights of any Grantor,
including all rights to payments from FRD or any of its subsidiaries, existing
as a result of rights of subrogation or otherwise that arose in connection with
Parent's payment and performance under the Advantica Guarantee, including all
rights in respect of any and all collateral securing the Obligations under the
New FRI-M Credit Agreement, and (f) Proceeds" for the existing text "and (e)
Proceeds.".

                  SECTION 3. Agreements. (a) The parties to this Amendment
hereby agree that Parent will not permit FRD or its subsidiaries to effect the
sale of any capital stock or all or substantially all the assets of FRD or any
of its subsidiaries, except that Parent may permit FRD or any of its
subsidiaries to effect any such sale on terms determined reasonably and in good
faith by the Board of Directors of Parent to be fair (the "Coco's/Carrows
Sale"); provided that (i) at the time of the Coco's/Carrows Sale, and
immediately after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing and (ii) prior to or simultaneously with the
Coco's/Carrows Sale, the Advantica Guarantee shall, pursuant to an agreement in
form and substance reasonably satisfactory to the Administrative Agent, be
irrevocably terminated.

                  (b) The parties to this Amendment hereby further agree that
Parent shall (i) use commercially reasonable efforts to cause a Coco's/Carrows
Sale that complies with paragraph (a) above to be consummated as soon as
reasonably practicable and (ii) update the Lenders on a reasonable basis in
respect of all material developments in connection with (A) any potential
Coco's/Carrows Sale and (B) negotiations with the holders of the FRD Senior
Notes.

                  (c) The parties to this Amendment hereby further agree that,
notwithstanding anything in the Credit Agreement to the contrary, neither Parent
nor the Borrowers will, nor will they cause or permit any of the Specified
Subsidiaries to, voluntarily or involuntarily (A) surrender or forgive or
otherwise fail to be entitled to any rights to payment to which, immediately
prior to Parent's first payment of any amount pursuant to the Advantica
Guarantee, the lenders and issuing banks under the New FRI-M Credit Agreement
were entitled (other than pursuant to the Advantica Guarantee), or (B) allow the
subordination of or otherwise in any way allow any limitation of any such rights
to payment (other than a temporary delay in payment arising by operation of law
and other than subordination (or any other limitation) resulting from a judicial
order that has not become final and is subject to a stay), or (C) allow the
release or subordination of or otherwise in any way allow any limitation of
their rights with respect to the security interests that, immediately prior to
Parent's first payment of any amount pursuant to the Advantica Guarantee,
secured such rights to payment (other than a temporary delay in realizing upon
such security interests arising by operation of law and other than subordination
(or any

<PAGE>   4

                                                                               4

other limitation) resulting from a judicial order that has not become final and
is subject to a stay).

                  (d) The parties to this Amendment hereby further agree that,
following a request by the Administrative Agent, Parent will use commercially
reasonable efforts to cause to be taken any actions reasonably requested by the
Administrative Agent to cause (i) the resignation of Credit Lyonnais New York
Branch as the administrative agent and collateral agent under the New FRI-M
Credit Agreement and the guarantee and collateral documents entered into
pursuant thereto and (ii) the appointment of Chase or another party designated
by Parent as directed by Chase and reasonably satisfactory to Chase as the
successor administrative agent and collateral agent thereunder to become
effective.

                  (e) Parent and the Borrowers hereby agree that not later than
three Business Days following the receipt by Parent or any of the Specified
Subsidiaries of any payment (a "Subrogation Payment") in respect of the payments
made by Parent under the Advantica Guarantee, the Borrowers will repay Swingline
Loans (and, after all then outstanding Swingline Loans have been repaid,
Revolving Loans) in an aggregate principal amount equal to the amount of such
Subrogation Payment to the extent Swingline Loans or Revolving Loans are then
outstanding; provided, however, that (i) no repayment of Loans pursuant to this
paragraph (e) shall be required to comply with the minimum prepayment
requirements set forth in the Credit Agreement, (ii) no repayment of Loans
pursuant to this paragraph (e) shall be required until the aggregate amount of
the Subrogation Payments received by Parent and the Specified Subsidiaries that
were not previously applied pursuant to this paragraph (e) to repay Loans equals
at least $1,000,000 and (iii) if at any time the aggregate amount of Subrogation
Payments required to be applied to repay Loans pursuant to this paragraph (e)
exceeds the aggregate principal amount of ABR Loans outstanding at such time,
then the Borrowers shall not be required to apply such excess to repay Loans
pursuant to this paragraph (e) until the end of the first Interest Period or
Interest Periods applicable to Eurodollar Borrowings that end after the date of
receipt of such Subrogation Payment; provided further that commencing on the
third Business Day following the receipt by Parent or the applicable Specified
Subsidiary of the applicable Subrogation Payments and continuing until such
repayment amounts referred to in clause (iii) above become due and payable
pursuant to this paragraph (e), such amounts shall be deposited in a Repayment
Account (as defined below). For purposes of this Amendment, the term "Repayment
Account" shall mean an account established by one of the Borrowers with the
Administrative Agent and over which the Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal for
application in accordance with this paragraph (e). If the maturity of the Loans
has been accelerated pursuant to Article VII of the Credit Agreement, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Repayment Account to satisfy any of the Obligations under the Credit
Agreement. The Borrowers hereby grant to the Administrative Agent, for its
benefit and the benefit of the Lenders, a security interest in the Repayment
Account to secure the Obligations under the Credit Agreement.

                  (f) The parties to this Amendment hereby further acknowledge
and agree that, notwithstanding anything in the Credit Agreement to the
contrary, neither Parent nor the Borrowers will, nor will they cause or permit
any of the Specified Subsidiaries to, make any investments in, or any loans or
advances to, FRD or any of its subsidiaries after the date of this Amendment
other than pursuant to the Advantica Guarantee as in effect on the date hereof.

                  SECTION 4. Amendment Fee. In consideration of the agreements
of the Required Lenders contained in this Amendment, the Borrowers agree to pay
to the Administrative Agent, for the account of each Lender that delivers an
executed counterpart of this Amendment by 5:00 p.m., New York City time, on
December 26, 2000, an amendment (the "Amendment Fee") in an amount equal to 1/8
of 1.00% of such Lender's Commitment as of such date, provided that the
Amendment Fee shall not be payable unless and until this Amendment becomes
effective as provided in Section 6 below.

<PAGE>   5

                                                                               5

                  SECTION 5. Representations and Warranties. Parent and the
Borrowers represent and warrant to the Administrative Agent and to each of the
Lenders that:

                  (a) This Amendment has been duly authorized, executed and
         delivered by Parent, each of the Borrowers and each of the Subsidiary
         Guarantors and constitutes their legal, valid and binding obligations,
         enforceable in accordance with its terms except as such enforceability
         may be limited by bankruptcy, insolvency, reorganization, moratorium or
         other similar laws affecting creditors' rights generally and by general
         principles of equity (regardless of whether such enforceability is
         considered in a proceeding at law or in equity).

                  (b) Before and after giving effect to this Amendment, the
         representations and warranties set forth in Article III of the Credit
         Agreement are true and correct in all material respects with the same
         effect as if made on the date hereof, except to the extent such
         representations and warranties expressly relate to an earlier date.

                  (c) After giving effect to this Amendment, no Event of Default
         or Default has occurred and is continuing.

                  (d) As of the date hereof, (i) no investments in FRD or its
subsidiaries have been made and are outstanding pursuant to Section 6.04(j) of
the Credit Agreement and (ii) not more than $75,000,000 of investments in FRD
and its subsidiaries have been made and are outstanding pursuant to Section
6.04(1) of the Credit Agreement.

                  SECTION 6. Conditions to Effectiveness. This Amendment shall
become effective as of the date first above written (the "Effective Date") when
the following conditions have been satisfied:

                  (a) The Administrative Agent shall have received, on behalf of
         itself, the Lenders and the Issuing Bank, a favorable written opinion
         of Fried, Frank, Harris, Shriver & Jacobson or other counsel for Parent
         and the Borrowers reasonably satisfactory to the Administrative Agent,
         substantially to the effect set forth in Exhibit A hereto, (i) dated
         the Effective Date, (ii) addressed to the Issuing Bank, the
         Administrative Agent, the Collateral Agent and the Lenders and (iii)
         covering such other matters relating to the Loan Documents as the
         Administrative Agent shall reasonably request, and Parent and the
         Borrowers hereby request such counsel to deliver such opinions.

                  (b) All legal matters incident to this Amendment and the other
         documents to be entered into in connection herewith shall be
         satisfactory to the Lenders, to the Issuing Bank and to Cravath, Swaine
         & Moore, counsel for the Administrative Agent.

                  (c) The Administrative Agent shall have received (i)
         counterparts of this Amendment that, when taken together, bear the
         signatures of Parent, each of the Borrowers, each of the Subsidiary
         Guarantors and the Required Lenders and (ii) the Amendment Fees.

                  (d) The representations and warranties set forth in Section 5
         hereof shall be true and correct with the same effect as if made on the
         Effective Date, except to the extent such representations and
         warranties expressly relate to an earlier date, and the Administrative
         Agent shall have received a certificate, dated the Effective Date and
         signed by a Financial Officer of Parent, confirming compliance with
         such condition.

                  SECTION 7. Credit Agreement. Except as specifically waived or
amended hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. On
and after the Effective Date, any reference to the Credit Agreement shall mean
the Credit Agreement as amended hereby.

<PAGE>   6

                                                                               6

                  SECTION 8. Loan Document. This Amendment shall be a Loan
Document for all purposes.

                  SECTION 9. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 10. Counterparts. This Amendment may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one agreement. Delivery of an
executed counterpart of a signature page of this Amendment by telecopy shall be
effective as delivery of a manually executed counterpart of this Amendment.

                  SECTION 11. Expenses. Parent and the Borrowers agree to
reimburse the Administrative Agent for its out-of-pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
Cravath, Swaine & Moore, counsel for the Administrative Agent.

<PAGE>   7

                                                                               7

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.

                                 ADVANTICA RESTAURANT GROUP, INC.,

                                     by    /s/ Kenneth E. Jones
                                         -------------------------------
                                         Name:  Kenneth E. Jones
                                         Title:    Vice President and Treasurer

                                 DENNY'S, INC.,

                                     by    /s/ Kenneth E. Jones
                                        -------------------------------
                                        Name:  Kenneth E. Jones
                                        Title:    Vice President and Treasurer

                                 ADVANTICA SYSTEMS, INC.,

                                     by     /s/ Kenneth E. Jones
                                        -------------------------------
                                        Name:  Kenneth E. Jones
                                        Title:    Vice President and Treasurer

                                 EACH OF THE SUBSIDIARY GUARANTORS LISTED ON
                                 SCHEDULE I HERETO,

                                     by     /s/ Kenneth E. Jones
                                        -------------------------------
                                        Name:  Kenneth E. Jones
                                        Title:    Vice President and Treasurer

                                 THE CHASE MANHATTAN BANK, individually and
                                 as Administrative Agent, Collateral Agent,
                                 Swingline Lender and Issuing Bank,

                                     by    /s/ Barry K. Bergman
                                        -------------------------------
                                        Name: Barry K. Bergman
                                        Title:   Vice President

<PAGE>   8

                                                                               8

                                                               SIGNATURE PAGE TO
                                                             AMENDMENT NO. 8 AND
                                                           AGREEMENT DATED AS OF
                                                               DECEMBER 26, 2000

      DENNY'S HOLDINGS, INC.

      by   /s/ James H. Allyn
           ---------------------------
         Name:  James H. Allyn
         Title: Director

To approve Amendment No. 8 and Agreement:

      Name of institution: Foothill Income Trust II, L.P.

       by FIT II GP, LLC, its general partner

       by    /s/ Dennis R. Ascher
           -------------------------------
           Name:  Dennis R. Ascher
           Title: Managing Member

To approve Amendment No. 8 and Agreement:

      Name of institution: AmSouth Bank

       by    /s/ Kathleen F. Kerlinger
           -------------------------------
           Name:  Kathleen F. Kerlinger
           Title: Attorney-In-Fact

To approve Amendment No. 8 and Agreement:

      Name of institution: Farallon Dining Investors, LLC

       by    /s/ Meridee Moore
           -------------------------------
           Name:  Meridee Moore
           Title: Managing Member
                  Farallon Capital Management, LLC
                  Farallon Dining Investors, LLC

To approve Amendment No. 8 and Agreement:

      Name of institution: BHF (USA) Capital Corporation

       by    /s/ Christopher J. Ruzzi                 by  /s/ Nina Zhou
            -------------------------------               ----------------------
           Name:  Christopher J. Ruzzi                    Name:  Nina Zhou
           Title: Vice President                          Title:    Associate

<PAGE>   9

                                                                               9

To approve Amendment No. 8 and Agreement:

      Name of institution: Transamerica Business Credit Corporation

       by    /s/ Steve Goetschins
           -------------------------------
           Name:  Steve Goetschins
           Title: SVP

To approve Amendment No. 8 and Agreement:

      Name of institution: Fleet Business Credit Corporation

       by    /s/ Mark Flamm
           -------------------------------
           Name:  Mark Flamm
           Title: Vice President

To approve Amendment No. 8 and Agreement:

      Name of institution: KZH CNC LLC

       by    /s/ Kimberly Rowe
           -------------------------------
           Name:  Kimberly Rowe
           Title: Authorized Agent

To approve Amendment No. 8 and Agreement:

      Name of institution: Swaps CSLT

       by    /s/ Tina Ruyter
           -------------------------------
           Name:  Tina Ruyter
           Title: Vice President

<PAGE>   10

                                                                      SCHEDULE I

                              SUBSIDIARY GUARANTORS

      Denny's Holdings, Inc.
      Spartan Holdings, Inc.
      TWS 500 Corp.
      TWS 600 Corp.
      TWS 700 Corp.
      DFO, Inc.
      Denny's Realty, Inc.<PAGE>   1
                                                                   Exhibit 10.13

                         EXECUTIVE EMPLOYMENT AGREEMENT
 (For Executive Officers Who Also Have a Change of Control Employment Agreement)

         THIS AGREEMENT is made as of January 30, 2001 between Office Depot,
Inc., a Delaware corporation (the "Company"), and Jerry Colley ("Executive").

         In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         1.       Employment.

         (a)      The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Term").

         (b)      The parties hereto have entered into an Employment Agreement
dated as January 30, 2001 by and between the Company and the Executive (the
"Change of Control Employment Agreement") which, by its terms, takes effect
during the "Employment Period" as defined in such agreement. During any such
Employment Period under the Change of Control Employment Agreement, the terms
and provisions of the Change of Control Employment Agreement shall control to
the extent such terms and provisions are in conflict with the terms and
provisions of this Agreement. In addition, during such Employment Period, the
Employment Term hereunder shall be tolled and upon expiration of the Employment
Period under the Change of Control Employment Agreement the Employment Term
hereunder shall recommence.

         2.       Position and Duties.

         (a)      During the Employment Period, Executive shall serve as
President - North American Stores of the Company and shall have the normal
duties, responsibilities and authority attendant to such position, subject to
the power of the Company's [chief executive officer ("CEO") or] Board of
Directors (the "Board") to expand or limit such duties, responsibilities and
authority.

         (b)      Executive shall report to the CEO, and Executive shall devote
Executive's best efforts and Executive's full business time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company and its
Subsidiaries; provided that Executive shall, with the prior written approval of
the CEO, be allowed to serve as (i) a director or officer of any non-profit
organization including trade, civic, educational or charitable organizations, or
(ii) a director of any corporation which is not competing with the Company or
any of its Subsidiaries in the office product and office supply industry so long
as such duties do not materially interfere with the performance of Executive's
duties or

<PAGE>   2

responsibilities under this Agreement. Executive shall perform Executive's
duties and responsibilities under this Agreement to the best of Executive's
abilities in a diligent, trustworthy, businesslike and efficient manner.

         (c)      Executive shall be based at or in the vicinity of the
Company's headquarters but may be required to travel as necessary to perform
Executive's duties and responsibilities under this Agreement.

         (d)      For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.

         3.       Base Salary and Benefits.

         (a)      Initially, Executive's base salary shall be $500,000.00 per
annum (the "Base Salary"), which salary shall be payable in regular installments
in accordance with the Company's general payroll practices and shall be subject
to customary withholding. Executive's Base Salary shall be reviewed at least
annually by the Compensation Committee of the Board and shall be subject to
adjustment, but not reduction, as they shall determine based on among other
things, market practice and performance. In addition, during the Employment
Term, Executive shall be entitled to participate in the Company's Long Term
Incentive Plan.

         (b)      In addition to the Base Salary, Executive shall be entitled to
participate in the Company's Management Incentive Plan (the "Bonus Plan") as
administered by [the Board or] the Compensation Committee. If the Board or the
Compensation Committee modifies such Bonus Plan during the Employment Term,
Executive shall continue to participate at a level no lower than the highest
level established for any officer of the Company then at Executive's level. At
the discretion of the Board or the Compensation Committee, Executive may be
offered from time to time the opportunity to participate in other bonus plans of
the Company in lieu of the Bonus Plan and, if Executive chooses to participate
in such plan or plans, the provisions of this paragraph 3(b) shall be tolled
during the period of such participation.

         (c)      Executive shall be entitled to paid vacation in accordance
with the Company's general payroll practices for officers of the Company then at
Executive's level.

         (d)      The Company shall reimburse Executive for all reasonable
expenses incurred by Executive in the course of performing Executive's duties
under this Agreement which are consistent with the Company's policies in effect
from time to time with respect to travel, entertainment and other business
expenses, subject to the Company's requirements with respect to reporting and
documentation of such expenses.

                                      -2-
<PAGE>   3

         (e)      Executive will be entitled to all benefits as are, from time
to time, maintained for officers of the Company then at Executive's level,
including without limitation: medical, prescription, dental, disability,
employee life, group life, split-dollar life, accidental death and travel
accident insurance plans (collectively, "Insurance Benefits"), profit sharing
and retirement benefits.

         4.       Term.

         (a)      The Employment Term shall end on the twenty-fourth month (or
two year) anniversary of the date of this Agreement; provided that (i) the
Employment Term shall be extended for successive periods of one (1) year each
(each of which is referred to as an "extension term" of the Employment Term) in
the event that written notice of termination hereof is not given by one party
hereof to the other at least six months prior to the end of the Employment Term
or the then applicable extension term, as the case may be; provided further that
(ii) the Employment Term shall terminate prior to such date (A) upon Executive's
death or permanent disability or incapacity (as determined by the Board in its
good faith judgment), (B) upon the mutual agreement of the Company and
Executive, (C) by the Company's termination of this Agreement for Cause (as
defined below) or without Cause or (D) by Executive's termination of this
Agreement for Good Reason (as defined below) or without Good Reason.

         (b)      If the Employment Term is terminated by the Company without
Cause or is terminated by the Executive for Good Reason, Executive (and
Executive's family with respect to clause (iii) below) shall be entitled to
receive (i) Executive's Base Salary through the eighteenth month anniversary of
such termination and Executive's Pro Rata Bonus (as defined in paragraph (h)
below), if and only if Executive has not breached the provisions of paragraphs
5, 6 and 7 hereof, (ii) vested and earned (in accordance with the Company's
applicable plan or program) but unpaid amounts under incentive plans, deferred
compensation plans, and other employer programs of the Company in which
Executive is then participating (other than the Pro Rata Bonus), and (iii)
insurance Benefits through the eighteenth month anniversary of such termination
pursuant to the Company's insurance programs, as in effect from time to time, to
the extent Executive participated immediately prior to the date of such
termination; provided that any health insurance benefits which Executive becomes
entitled to receive as a result of any subsequent employment shall serve as
primary coverage for Executive and Executive's family. The amounts payable
pursuant to paragraph 4(b)(i) and (ii) shall be payable, at the Company's
discretion, in one lump sum payment within 30 days following termination of the
Employment Term or in any other manner consistent with the Company's normal
payment policies.

         (c)      If the Employment Term is terminated by the Company for Cause
or by the Executive without Good Reason, Executive shall be entitled to receive
(i) Executive's Base Salary through the date of such termination and (ii) vested
and earned (in accordance with the Company's applicable plan or program) but
unpaid amounts under incentive plans, health and welfare plans,

                                      -3-
<PAGE>   4

deferred compensation plans, and other employer programs of the Company which
Executive participates; provided, however, that Executive shall not be entitled
to payment of a Pro Rata Bonus.

         (d)     If the Employment Term is terminated upon Executive's death or
permanent disability or incapacity (as determined by the Board in its good faith
judgment), Executive, or Executive's estate if applicable, shall be entitled to
receive the sum of (i) Executive's Base Salary through the date of such
termination and Executive's Pro Rata Bonus (as defined in paragraph (h) below)
and (ii) vested and earned (in accordance with the Company's applicable plan or
program) but unpaid amounts under incentive plans, health and welfare plans,
deferred compensation plans, and other employer programs of the Company which
Executive participates. The amounts payable pursuant to this paragraph 4(d)
shall be payable, at the Company's discretion, in one lump sum payment within 30
days following termination of the Employment Term or in any other manner
consistent with the Company's normal payment policies.

         (e)     Except as otherwise provided herein, fringe benefits and
bonuses (if any) which accrue or become payable after the termination of the
Employment Term shall cease upon such termination.

         (f)      For purposes of this Agreement, "Cause" shall mean:

                  (i)      the willful and continued failure of the Executive to
         perform substantially the Executive's duties with the Company or one of
         its affiliates (other than any such failure resulting from incapacity
         due to physical or mental illness), after a written demand for
         substantial performance is delivered to the Executive by the CEO which
         specifically identifies the manner in which the CEO believes that the
         Executive has not substantially performed the Executive's duties, or

                  (ii)     the willful engaging by the Executive in illegal
         conduct or gross misconduct [which is materially and demonstrably
         injurious to the Company].

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the CEO or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than three
quarters of the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together

                                      -4-
<PAGE>   5

with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.

         (g)      For purposes of this Agreement, "Good Reason" shall mean:

                  (i)      the assignment to the Executive of any duties
         inconsistent with the Executive's position (including status, offices,
         titles and reporting requirements), authority, duties or
         responsibilities as contemplated by paragraph 2 of this Agreement, or
         any other action by the Company which results in a diminution in such
         position, authority, duties or responsibilities, excluding for this
         purpose an isolated, insubstantial and inadvertent action not taken in
         bad faith and which is remedied by the Company promptly after receipt
         of notice thereof given by the Executive;

                  (ii)     any failure by the Company to comply with any of the
         provisions of paragraph 3 of this Agreement, other than an isolated,
         insubstantial and inadvertent failure not occurring in bad faith and
         which is remedied by the Company promptly after receipt of notice
         thereof given by the Executive;

                  (iii)    the Company's requiring the Executive to be based at
         any location other than as provided in paragraph 2(c) hereof; or

                  (iv)     any purported termination by the Company of the
         Executive's employment otherwise than as expressly permitted by this
         Agreement.

         (h)      For purposes of this Agreement, "Pro Rata Bonus" shall mean
the sum of (i) the pro rata portion (calculated as if the "target" amount under
such plan has been reached) under any current annual incentive plan from the
beginning of the year of termination through the date of termination and (ii) if
and to the extent Executive is vested, the pro rata portion (calculated as if
the "target" amount under such plan has been reached) under any long-term
incentive plan or performance plan from the beginning of the period of
determination through the date of termination.

         5.       Confidential Information. Executive acknowledges that the
information, observations and data obtained by Executive while employed by the
Company and its Subsidiaries concerning the business or affairs of the Company
or any other Subsidiary ("Confidential Information") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that Executive shall not
disclose to any unauthorized person or use for Executive's own purposes any
Confidential Information without the prior written consent of the CEO, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions. Executive shall deliver to the Company at the termination of the
Employment Term, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and other

                                      -5-
<PAGE>   6

documents and data (and copies thereof) in any form or medium relating to the
Confidential Information, Work Product (as defined below) or the business of the
Company or any Subsidiary that Executive may then possess or have under
Executive's control.

         6.       Inventions and Patents. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) that relate to the Company's or any of its Subsidiaries' actual or
anticipated business, research and development or existing or future products or
services and that are conceived, developed or made by Executive while employed
by the Company and its Subsidiaries ("Work Product") belong to the Company or
such Subsidiary. Executive shall promptly disclose such Work Product to the CEO
and perform all actions reasonably requested by the CEO (whether during or after
the Employment Term) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).

         7.       Non-Compete, Non-Solicitation.

         (a)      In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of Executive's
employment with the Company Executive shall become familiar with the Company's
trade secrets and with other Confidential Information concerning the Company and
its Subsidiaries and that Executive's services shall be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive
agrees that, during the Employment Term and for one year thereafter (the
"Noncompete Period"), Executive shall not directly or indirectly own any
interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any business competing with the businesses of the
Company or its Subsidiaries, as such businesses exist or are in process on the
date of the termination of Executive's employment, within any geographical area
in which the Company or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation which
is publicly traded, so long as Executive has no active participation in the
business of such corporation.

         (b)      During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment Term
or (iii) induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company or any Subsidiary to cease
doing business with the Company or such Subsidiary, or in any way interfere with
the relationship between any such customer, supplier, licensee, licensor,
franchisee, or business relation and the Company or any Subsidiary (including,

                                      -6-
<PAGE>   7

without limitation, making any negative statements or communications about the
Company or its Subsidiaries).

         (c)      If, at the time of enforcement of this paragraph 7, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this paragraph 7 are reasonable.

         (d)      In the event of the breach or a threatened breach by Executive
of any of the provisions of this paragraph 7, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
paragraph 7, the Noncompete Period shall be tolled until such breach or
violation has been duly cured.

         8.       Executive's Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which Executive is bound, (ii)
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity and (iii)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of Executive, enforceable in
accordance with its terms. Executive hereby acknowledges and represents that
Executive has had an opportunity to consult with independent legal counsel
regarding Executive's rights and obligations under this Agreement and that
Executive fully understands the terms and conditions contained herein.

         9.       Survival. Paragraphs 5, 6 and 7 and paragraphs 9 through 16
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Term.

         10.      Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:

                                      -7-
<PAGE>   8

         Notices to Executive:

         Name:
              ---------------------
         Address:
                 ------------------

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

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

         Notices to the Company:

         Office Depot, Inc.
         2200 Germantown Road
         Delray Beach, Florida 33445
         Attention: Chief Financial Officer

         and

         Office Depot, Inc.
         2200 Germantown Road
         Delray Beach, Florida 33445
         Attention: Executive Vice President - Human Resources

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.

         11.      Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

         12.      Complete Agreement. This Agreement and those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way (provided, however that during the "Employment Period," as defined in
the Change of Control Employment Agreement, the terms and provision of the
Change of Control Employment Agreement shall be effective and shall control to
the extent there is any conflict between such agreement and this Agreement).

                                      -8-
<PAGE>   9

         13.      No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.

         14.      Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

         15.      Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
Executive's rights or delegate Executive's obligations hereunder without the
prior written consent of the Company.

         16.      Choice of Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Florida, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Florida or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Florida.

         17.      Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

                                   * * * * *

                                      -9-
<PAGE>   10

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                     OFFICE DEPOT, INC.

                                     By: /s/ Thomas Kroeger
                                        ------------------------------------
                                     Name: THOMAS KROEGER
                                     Its: Executive Vice President,
                                          Organization & People

                                     EXECUTIVE

                                     /s/ Jerry Colley
                                     ---------------------------------------
                                     Name:
                                                1-30-01
                                     ---------------------------------------
                                     Date:

                                      -10-

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