<PAGE>
 
                                                                   EXHIBIT 10.27

                          VIKING OFFICE PRODUCTS, INC.
                        1997 INCENTIVE STOCK OPTION PLAN


          1.  PURPOSE.  This Viking Office Products, Inc., 1997 Incentive Stock
              -------                                                          
Option Plan (the "Plan") is intended to allow designated employees, executive
officers and other corporate and divisional officers (all of whom are sometimes
collectively referred to herein as "Employees") of Viking Office Products, Inc.,
a California corporation ("Viking"), and Subsidiaries which it may have from
time to time (Viking and such Subsidiaries being together referred to herein as
the "Company") to receive certain options under the Plan ("Stock Options") to
purchase Viking's common stock ("Common Stock") as herein provided.
"Subsidiary" shall mean each corporation which is a "subsidiary corporation" of
Viking, within the definition contained in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code").  The purpose of the Plan is to
provide Employees with additional incentives to make significant and
extraordinary contributions to the long-term perfor mance and growth of the
Company and to attract and retain Employees of exceptional ability.

          2.  ADMINISTRATION.
              -------------- 

              2.1  The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of Viking (the "Board"). Each member
of the Committee shall be a "Non-Employee Director" as that term is defined in
Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"), but no action of the Committee shall be invalid if this
requirement is not met. The Committee shall select one of its members as
Chairman and shall act by vote of a majority of a quorum or by unanimous written
consent. A majority of its members shall constitute a quorum. The Committee
shall be governed by the provisions of Viking's Bylaws and of California law
applicable to the Board, except as otherwise provided herein or determined by
the Board.

              2.2  The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of the Plan: to approve the
Employees nominated by the management of the Company to be granted Stock
Options; to determine the number of Stock Options to be granted to an Employee;
to determine the time or times at which Stock Options shall be granted; to
establish the terms and conditions upon which Stock Options may be exercised; to
remove or adjust any restrictions and conditions upon Stock Options; to specify,
at the time of grant, provisions relating to the exercisability of Stock Options
and to accelerate or otherwise modify the exercisability of any Stock Options;
to reprice Stock Options; and to adopt such rules and regulations and to make
all other determinations deemed necessary or desirable for the administration of
the Plan. All interpretations and constructions of the Plan by the Committee,
and all of its actions hereunder, shall be binding and conclusive on all persons
for all purposes.

              2.3  The Company hereby agrees to indemnify and hold harmless each
Committee member and each employee of the Company, and the estate and heirs of
such Committee member or employee, against all claims, liabilities, expenses,
penalties, damages or other pecuniary losses, including legal fees, which such
Committee member or employee or his or her estate or heirs may suffer as a
result of his or her responsibilities, obligations or duties in connection with
the Plan, to the extent that insurance, if any, does not cover the payment of
such items.

<PAGE>
 
          3.  ELIGIBILITY AND PARTICIPATION.  Employees eligible under the Plan
              -----------------------------                                    
shall be approved by the Committee from those Employees who, in the opinion of
the management of the Company, are in positions which enable them to make
significant and extraordinary contributions to the long-term performance and
growth of the Company.  In selecting Employees to whom Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and respon sibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.

          4.  GRANTS.  The Committee may grant Stock Options in such amounts, at
              ------                                                            
such times, and to such Employees nominated by the management of the Company as
the Committee, in its discretion, may determine; provided, however, that,
subject to adjustment as provided in paragraph 11, the maximum number of shares
of Common Stock for which Stock Options may be granted to any one Employee
during any one calendar year shall be 200,000.  Stock Options granted under the
Plan shall constitute "incentive stock options" within the meaning of Section
422 of the Code, if so designated by the Committee on the date of grant.  The
Committee shall also have the discretion to grant Stock Options which do not
constitute incentive stock options and any such Stock Options shall be
designated non-statutory stock options by the Committee on the date of grant.
The aggregate fair market value (determined as of the time an incentive stock
option is granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by any Employee during any one
calendar year (under all plans of the Company and any parent or sub sidiary of
the Company) may not exceed the maximum amount permitted under Section 422 of
the Code (currently $100,000.00).  Non-statutory stock options shall not be
subject to the limitations relating to incentive stock options contained in the
preceding sentence.  Subject to the provisions of paragraph 11 hereof, the
number of shares of Common Stock issued and issuable pursuant to the exercise of
Stock Options granted hereunder shall not exceed 5,000,000; provided, however,
that on the last business day of each fiscal year of the Company, commencing
with the last business day of the fiscal year ending June 26, 1998, such maximum
number shall be increased by a number equal to 1.30% of the number of shares of
Common Stock issued and outstanding on the close of business on such day;
provided, further, that in no event shall the aggregate number of shares issued
and issuable pursuant to the exercise of Stock Options granted hereunder exceed
10,000,000.  Each Stock Option shall be evidenced by a written agreement (the
"Option Agreement") in a form approved by the Committee, which shall be executed
on behalf of the Company and by the Employee to whom the Stock Option is
granted.  If a Stock Option expires, terminates or is cancelled for any reason
without having been exercised in full, the shares of Common Stock not purchased
thereunder shall again be available for purposes of the Plan.

          5.  PURCHASE PRICE.  The purchase price (the "Exercise Price") of
              --------------                                               
shares of Common Stock subject to each Stock Option ("Option Shares") shall
equal the fair market value ("Fair Market Value") of such shares on the date of
grant of such Stock Option.  Notwithstanding the foregoing, the Exercise Price
of Option Shares subject to an incentive stock option granted to an Employee who
at the time of grant owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or
Subsidiary shall be at least equal to 110% of the Fair Market Value of such
shares on the date of grant of such Stock Option.  The Fair Market Value of a
share of Common Stock on any date shall be equal to the closing price of the
Common Stock for the last preceding day on which Viking's shares were traded,
and the method for determining the closing price shall be determined by the
Committee.

                                       2
<PAGE>
 
          6.  OPTION PERIOD.  The Stock Option period (the "Term") shall
              -------------                                             
commence on the date of grant of the Stock Option and shall be ten years or such
shorter period as is determined by the Committee.  Notwithstanding the
foregoing, the Term of an incentive stock option granted to an Employee who at
the time of grant owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or
subsidiary shall not exceed five years.  Each Stock Option shall provide that it
is exercisable over its term in such periodic installments as the Committee in
its sole discretion may determine.  Such provisions need not be uniform.  If an
Employee shall not in any period purchase all of the Option Shares which the
Employee is entitled to purchase in such period, the Employee may purchase all
or any part of such Option Shares at any time prior to the expiration of the
Stock Option.

          7.  EXERCISE OF OPTIONS.
              ------------------- 

              7.1  Each Stock Option may be exercised in whole or in part (but
not as to fractional shares) by delivering it for surrender or endorsement to
the Company, attention of the Vice President, Administration, at the principal
office of the Company, together with payment of the Exercise Price and an
executed Notice and Agreement of Exercise in the form prescribed by paragraph
7.2. Payment may be made in cash, by cashier's or certified check or by
surrender of previously owned shares of the Company's Common Stock valued
pursuant to paragraph 5 (if the Committee authorizes payment in stock).

              7.2  Exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan and of such
Stock Option as evidenced by the Employee's execution and delivery of a Notice
and Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that: (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933 (the "Securities Act") or any other
applicable federal or state securities laws, (b) each Option Share certificate
may be imprinted with legends reflecting any applicable federal and state
securities law restrictions and conditions, (c) the Company may comply with said
securities law restrictions and issue "stop transfer" instructions to its
Transfer Agent and Registrar without liability, (d) if the Employee is subject
to the reporting requirements of Section 16(a) of the Exchange Act (a "Section
16 Reporting Person"), the Employee will furnish to the Company a copy of each
Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.

              7.3  No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. The Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration State ment will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is neces
sary to preclude violation of any requirements of applicable law or regulatory
bodies having jurisdiction over the Company. If any Stock Option would expire
for any reason except the end of its term during such a suspension, then, if the
exercise of such Stock Option is duly tendered before its expiration, such Stock
Option shall be exercisable and exercised (unless the attempted exercise is

                                       3
<PAGE>
 
withdrawn) as of the first day after the end of such suspension.  The Company
shall have no obligation to file any Registration Statement covering resales of
Option Shares.

          8.  CONTINUOUS EMPLOYMENT.  Except as provided in paragraph 10 below,
              ---------------------                                            
an Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise such Employee remains continuously in the employ of the
Company.  For purposes of this paragraph 8, the period of continuous employment
of an Employee with the Company shall be deemed to include (without extending
the term of the Stock Option) any period during which such Employee is on leave
of absence with the consent of the Company, provided that such leave of absence
shall not exceed three (3) months and that such Employee returns to the employ
of the Company at the expiration of such leave of absence.  If such Employee
fails to return to the employ of the Company at the expiration of such leave of
absence, such Employee's employment with the Company shall be deemed terminated
as of the date such leave of absence commenced.  The continuous employment of an
Employee with the Company shall also be deemed to include any period during
which such Employee is a member of the Armed Forces of the United States,
provided that such Employee returns to the employ of the Company within ninety
(90) days (or such longer period as may be prescribed by law) from the date such
Employee first becomes entitled to discharge.  If an Employee does not return to
the employ of the Company within ninety (90) days (or such longer period as may
be prescribed by law) from the date such Employee first becomes entitled to
discharge, such Employee's employment with the Company shall be deemed to have
terminated as of the date such Employee's military service ended.

          9.  RESTRICTIONS ON TRANSFER.  Incentive stock options granted under
              ------------------------                                        
this Plan shall be transferable only by will or the laws of descent and
distribution.  The Committee shall have discretion to grant non-statutory stock
options that are not subject to the restrictions on transfer relating to
incentive stock options contained in the preceding sentence; provided, however,
that non-statutory stock options granted to a Section 16 Reporting Person shall
be subject to such restrictions on transfer as may be required to qualify for
the exemption provided for in Rule 16b-3 or otherwise imposed by the Committee
in its sole and absolute discretion.  No interest of any Employee under the Plan
shall be subject to attachment, execution, garnishment, sequestration, the laws
of bankruptcy or any other legal or equitable process.  Each Stock Option shall
be exercisable during an Employee's lifetime only by such Employee and, in the
case of non-statutory stock options, such Employee's permitted transferees.

          10. TERMINATION OF EMPLOYMENT.
              ------------------------- 

              10.1  Subject to the discretion of the Committee with respect to
non-statutory Stock Options, upon termination of an Employee's employment with
the Company by reason of death, all outstanding Stock Options to the extent
exercisable on the date of death of the Employee shall remain in full force and
effect and may be exercised pursuant to the provisions thereof at any time prior
to expiration at the end of the fixed term thereof. Upon termination of an
Employee's employment with the Company by reason of Disability, all outstanding
Stock Options to the extent exercisable on the date of termination of employment
may be exercised pursuant to the provisions thereof at any time until the
earlier of the end of the fixed term thereof and the expiration of twelve months
following termination of the Employee's employment. Unless otherwise provided by
the Committee, all Stock Options to the extent not presently exercisable by such
Employee at the date of death or termination of employment by reason of
Disability shall terminate as of the date of death or such termination of
employment and shall not be exercisable thereafter.

                                       4
<PAGE>
 
               10.2  Subject to the discretion of the Committee with respect to
non-statutory Stock Options, upon the termination of the Employee's employment
with the Company for any reason other than the reasons set forth in paragraph
10.1 hereof, the Stock Option may be exercised during the period of three months
following the date of such termination of employment, but only to the extent
that such Stock Option was outstanding and exercisable on such date of
termination of employment. Unless otherwise provided by the Committee, all Stock
Options to the extent not then presently exercisable by such Employee shall
terminate as of the date of such termination of employment and shall not be
exercisable thereafter.

               10.3  For purposes of this Plan, "Disability" shall mean total
and permanent incapacity of an Employee, due to physical impairment or legally
established mental incompetence, to perform the usual duties of such Employee's
employment with the Company, which disability shall be determined: (i) on
medical evidence by a licensed physician designated by the Committee, or (ii) on
evidence that the Employee has become entitled to receive primary benefits as a
disabled employee under the Social Security Act in effect on the date of such
disability.

          11.  ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
               -----------------------------------------

               11.1  The number and class of shares subject to each outstanding
Stock Option, the Exercise Price thereof (but not the total price) and the
maximum number of Stock Options that may be granted under the Plan shall be
proportionately adjusted in the event of any increase or decrease in the number
of the issued shares of Common Stock which results from a split-up or
consolidation of shares, payment of a stock dividend or dividends exceeding a
total of two and one-half percent (2.5%) for which the record dates occur in any
one fiscal year, a recapitalization (other than the conversion of convertible
securities according to their terms), a combination of shares or other like
capital adjustment, so that upon exercise of the Stock Option, the Employee
shall receive the number and class of shares such Employee would have received
had such Employee been the holder of the number of shares of Common Stock for
which the Stock Option is being exercised upon the date of such change or
increase or decrease in the number of issued shares of the Company.

               11.2  Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which Viking is not the
surviving corporation or in which Viking survives as a wholly-owned subsidiary
of another corporation, or upon a sale of all or substantially all of the
property of the Company to another corporation, or any dividend or distribution
to shareholders of more than ten percent (10%) of the Company's assets, adequate
adjustment or other provisions shall be made by the Company or other party to
such transaction so that there shall remain and/or be substituted for the Option
Shares provided for herein, the shares, securities or assets which would have
been issuable or payable in respect of or in exchange for such Option Shares
then remaining, as if the Employee had been the owner of such Option Shares as
of the applicable date. Any securities so substituted shall be subject to
similar successive adjustments.

               11.3  In the sole discretion of the Committee, Stock Options may
include provisions, on terms (which need not be uniform) authorized by the
Committee in its sole discretion, that accelerate the Employees' rights to
exercise Stock Options upon a "Change in Control" (as defined by the Committee
in its sole discretion) of the Company.

          12.  WITHHOLDING TAXES.  The Company shall have the right at the time
               -----------------                                               
of exercise of any Stock Option to make adequate provision for any federal,
state, local or foreign taxes which it

                                       5
<PAGE>
 
believes are or may be required by law to be withheld with respect to such
exercise ("Tax Liability"), to ensure the payment of any such Tax Liability.
The Company may provide for the payment of any Tax Liability by any of the
following means or a combination of such means, as determined by the Committee
in its sole and absolute discretion in the particular case:  (i) by requiring
the Employee to tender a cash payment to the Company, (ii) by withholding from
the Employee's salary, (iii) by withholding from the Option Shares which would
otherwise be issuable upon exercise of the Stock Option that number of Option
Shares having an aggregate fair market value (determined in the manner
prescribed by paragraph 5) as of the date the withholding tax obligation arises
that is equal to the Employee's Tax Liability or (iv) by any other method deemed
appropriate by the Committee.  Satisfaction of the Tax Liability of a Section 16
Reporting Person may be made by the method of payment specified in clause (iii)
above upon satisfaction of such additional conditions as the Committee shall
deem in its sole and absolute discretion as appropriate in order for such
withholding of Option Shares to qualify for the exemption provided for in
Section 16b-3 of the Exchange Act.

          13.  RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS.  Stock Options
               --------------------------------------------                
granted hereunder shall not be deemed to be salary or other compensation to any
Employee for purposes of any pension, thrift, profit-sharing, stock purchase or
any other employee benefit plan now maintained or hereafter adopted by the
Company.

          14.  AMENDMENTS AND TERMINATION.  The Board of Directors may at any
               --------------------------                                    
time suspend, amend or terminate this Plan.  No amendment or modification of
this Plan may be adopted, except subject to shareholder approval, which would
materially increase the number of securities which may be issued under this Plan
(except for adjustments pursuant to paragraph 11 hereof) or change the
designation of Employees eligible to receive incentive stock options under the
Plan.

          15.  SUCCESSORS IN INTEREST.  The provisions of this Plan and the
               ----------------------                                      
actions of the Committee shall be binding upon all heirs, successors and assigns
of the Company and of Employees.

          16.  OTHER DOCUMENTS.  All documents prepared, executed or delivered
               ---------------                                                
in connection with this Plan shall be, in substance and form, as established and
modified by the Committee or by persons under its direction and supervision;
provided, however, that all such documents shall be subject in every respect to
the provisions of this Plan, and in the event of any conflict between the terms
of any such document and this Plan, the provisions of this Plan shall prevail.
All Stock Options shall be evidenced by written agreements executed by the
Company and the Employees to whom the Stock Options have been granted.

          17.  NO OBLIGATION TO CONTINUE EMPLOYMENT.  This Plan and grants
               ------------------------------------                       
hereunder shall not impose any obligation on the Company to continue to employ
any Employee.  Moreover, no provision of this Plan or any document executed or
delivered pursuant to this Plan shall be deemed modified in any way by any
employment contract between an Employee (or other employee) and the Company.

          18.  MISCONDUCT OF AN EMPLOYEE.  Notwithstanding any other provision
               -------------------------                                      
of this Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
materially inimical to the best interests of the Company, as determined by the
Committee, in its sole and absolute discretion, such Employee shall forfeit all
rights and benefits under this Plan.

                                       6
<PAGE>
 
          19.  TERM OF PLAN.  This Plan was adopted by the Board effective July
               ------------                                                    
10, 1997.  No Stock Options may be granted under this Plan after July 9, 2007.

          20.  GOVERNING LAW.  This Plan shall be construed in accordance with,
               -------------                                                   
and governed by, the laws of the State of California.

          21.  SHAREHOLDER APPROVAL.  No Stock Option shall be exercisable
               --------------------                                       
unless and until the shareholders of the Company have approved this Plan and all
other legal requirements have been fully complied with.

          22.  PRIVILEGES OF STOCK OWNERSHIP.  The holder of a Stock Option
               -----------------------------                               
shall not be entitled to the privileges of stock ownership as to any shares of
the Company common stock not actually issued to such holder.

          IN WITNESS WHEREOF, this Plan has been executed effective as of the
10th day of July, 1997.

                                     VIKING OFFICE PRODUCTS, INC.



                                     By
                                       ----------------------------------------
                                       Irwin Helford, Chairman of the Board

                                       7