VIKING OFFICE PRODUCTS INC, 10-Q, 1997-05-14

VIKING OFFICE PRODUCTS INC
10-Q, 1997-05-14
CATALOG & MAIL-ORDER HOUSES

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<PAGE>

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1997

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 0-18237

VIKING OFFICE PRODUCTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

California 95-2082946
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

879 West 190th Street
P. O. Box 61144
Los Angeles, California 90061
----------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)

(310) 225-4500
----------------------------------------------------
(Registrant's Telephone Number, including area code)

--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES X NO
--- ---

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

CLASS OUTSTANDING AT MAY 12, 1997
----- ---------------------------

Common Stock 83,761,035

1
<PAGE>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
--------------------

VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)

ASSETS

<TABLE>
<CAPTION>
March 31, June 28,
1997 1996
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 46,499 $ 11,693
Short-term investments 29,512 33,068
Accounts receivable, net 149,681 121,061
Merchandise inventories 101,139 81,753
Prepaid catalog costs 12,388 17,831
Prepaid expenses and other current assets 3,568 3,430
--------- ---------
Total current assets 342,787 268,836
--------- ---------

Property and equipment, net 113,436 95,231

Other assets:
Deposits and other assets 7,167 6,590
Intangible assets, net 28,309 28,984
--------- ---------
Total other assets 35,476 35,574
--------- ---------

Total assets $ 491,699 $ 399,641
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses $ 126,490 $ 91,975
Sales and value added taxes payable 5,755 3,956
Income taxes payable 34,088 26,149
--------- ---------
Total current liabilities 166,333 122,080
--------- ---------

Deferred income taxes 2,532 2,532

Stockholders' equity:
Common stock 103,521 98,567
Unamortized value of long-term incentive stock grant (4,015) (4,346)
Retained earnings 235,287 181,722
Cumulative foreign currency translation adjustment (11,959) (914)
--------- ---------
Total stockholders' equity 322,834 275,029
--------- ---------

Total liabilities and stockholders' equity $ 491,699 $ 399,641
========= =========
</TABLE>

<PAGE>

VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $353,083 $306,828 $960,109 $787,275

Cost of goods sold, including delivery 231,890 202,287 625,766 517,277
-------- -------- -------- --------

Gross profit 121,193 104,541 334,343 269,998

Selling, general & administrative expenses 93,825 80,218 261,843 209,754
-------- -------- -------- --------

Operating income 27,368 24,323 72,500 60,244

Other income, net of interest expense 2,264 2,157 6,866 6,244
-------- -------- -------- --------

Income before income taxes 29,632 26,480 79,366 66,488

Provision for income taxes 8,884 8,335 25,801 22,231
-------- -------- -------- --------

Net income $ 20,748 $ 18,145 $ 53,565 $ 44,257
======== ======== ======== ========

Net income per common and common
equivalent share $ 0.24 $ 0.21 $ 0.62 $ 0.51
======== ======== ======== ========

Weighted average number of common
and common equivalent shares 87,000 87,250 87,050 86,330
======== ======== ======== ========
</TABLE>

<PAGE>

VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

Nine Months Ended
March 31,
----------------------
1997 1996
----------------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 921,923 $ 747,425
Cash paid to suppliers and employees (838,610) (707,247)
Interest received 1,267 1,564
Interest paid (93) (268)
Income taxes paid (18,665) (1,070)
----------------------
Net cash provided by operating activities 65,822 40,404

Cash flows from investing activities:
Capital expenditures (34,754) (44,693)
Short-term investments 3,556 17,889
Proceeds from sale of property and equipment 209 199
Issuance of notes receivable and other (581) (3,997)
----------------------
Net cash used in investing activities (31,570) (30,602)

Cash flows from financing activities:
Proceeds from issuance of common stock 5,745 4,551
----------------------
Net cash provided by financing activities 5,745 4,551

Effect of exchange rate changes on cash (5,191) (1,247)
----------------------
Net increase in cash and cash equivalents 34,806 13,106

Cash and cash equivalents, beginning of period 11,693 11,080
----------------------

Cash and cash equivalents, end of period $ 46,499 $ 24,186
======================

Reconciliation of net income to net cash provided by operating activities:
Net income $ 53,565 $ 44,257
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,074 9,869
Loss on sale of property and equipment 94 111
Provision for doubtful accounts and customer returns 9,343 8,290
Increase in accounts receivable (40,413) (40,950)
Increase in merchandise inventories (21,362) (25,942)
Decrease in prepaid expenses and other current assets 4,936 1,329
Increase in accounts payable and accrued expenses 34,171 20,528
Increase in other liabilities 11,414 22,912
----------------------
Total adjustments 12,257 (3,853)
----------------------

Net cash provided by operating activities $ 65,822 $ 40,404
======================
</TABLE>

<PAGE>

VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS
-----------------------------
(UNAUDITED)

1. FINANCIAL STATEMENTS

The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission and reflect all adjustments, consisting
only of normal recurring adjustments, which, in the opinion of management, are
necessary for a fair presentation of the results of the interim periods
presented.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that disclosures are adequate to make
the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report to
Shareholders for the year ended June 28, 1996.

The June 28, 1996 Consolidated Balance Sheet was derived from the
audited Consolidated Balance Sheet at June 28, 1996, which was incorporated by
reference in the Company's annual report on Form 10-K.

In October 1995, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation", which is effective for the Company beginning July 1,
1996. SFAS No. 123 requires expanded disclosure of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to
its stock based compensation awards to employees and will disclose the required
pro forma effect of SFAS No. 123 on net income and earnings per share.

5
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

Viking Office Products, Inc. ("Viking" or the "Company") operates ten
distribution centers throughout the United States, two in Australia and seven in
Europe. Operations in the foreign countries account for an increasing percentage
of the Company's consolidated revenues and expenses, and an increasing amount of
Viking's consolidated assets. The asset and liability accounts of Viking's
foreign subsidiaries are translated for consolidated financial reporting
purposes into United States Dollar amounts at period end exchange rates. Revenue
and expense accounts are translated at weighted average exchange rates for the
period. Foreign currency fluctuations did not materially impact the results of
operations for the three months and nine months ended March 31, 1997.

The following table shows, for the periods indicated, the percentage
relationships to revenues of items included in the Consolidated Statements of
Income and the percentage changes in the dollar amounts of such items from
period to period.
[CAPTION]
<TABLE>

Percentage
Three Months Ended Nine Months Ended Increase (Decrease)
----------------------------
March 31, March 31, 3 Months 9 Months
---------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 vs. 1996 1997 vs. 1996
----- ----- ----- ----- ------------- -------------
Revenues 100.0% 100.0% 100.0% 100.0% 15.1% 22.0%

Cost of goods sold, including delivery 65.7% 65.9% 65.2% 65.7% 14.6% 21.0%
----- ----- ----- -----

Gross profit 34.3% 34.1% 34.8% 34.3% 15.9% 23.8%

Selling, general & administrative expenses 26.6% 26.2% 27.3% 26.6% 17.0% 24.8%
----- ----- ----- -----

Operating income 7.7% 7.9% 7.5% 7.7% 12.5% 20.3%

Other income, net of interest expense 0.7% 0.7% 0.7% 0.7% 5.0% 10.0%
----- ----- ----- ----- ----- -----

Income before income taxes 8.4% 8.6% 8.2% 8.4% 11.9% 19.4%

Income taxes 2.5% 2.7% 2.6% 2.8% 6.6% 16.1%
----- ----- ----- -----

Net income 5.9% 5.9% 5.6% 5.6% 14.3% 21.0%
===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
- ------------------------------------------------------------------------------
1996.
- -----

Revenues for the three months ended March 31, 1997 were $353.1 million, an
increase of $46.3 million, or 15.1%, over the three months ended March 31, 1996.
European revenues were $207.5 million, an increase of 19.0% over the comparable
period of the prior year. European operations included the United Kingdom, The
Republic of Ireland, France, Belgium, Luxembourg, The Netherlands, Germany and
Austria. Growth in Europe was affected by fewer billing days and a stronger
translated dollar. In Australia, revenues were $15.9 million, increasing 10.8%
over last year. International operations accounted for more than 63% of third
quarter revenues. Revenues in the United States were $129.7 million this
quarter, an increase of 9.8% versus the same period last year. U.S. growth rate
was impacted by one less billing day, and by lower selling prices of paper
products. On a day for day basis, revenues in the United States grew 11.5%. On a
company-wide basis, during the three months ended March 31, 1997, the number of
catalogs mailed increased 20.0%, the number of customers who purchased products
increased 15.0%, while the average revenue per customer was unchanged between
periods.

Gross profit for the three months ended March 31, 1997 increased by $16.7
million, or 15.9% over last year. As a percentage of revenues, gross profit
increased from 34.1% in the three months ended March 31, 1996 to 34.3% in the
current quarter. The increase in gross profit is primarily attributable to
decreases in the costs of paper products and higher volume rebates earned on
inventory purchases.

6
<PAGE>

Selling, general and administrative expenses for the three months ended
March 31, 1997 increased by $13.6 million, or 17.0% over the prior year. As a
percentage of revenues, these expenses increased slightly from 26.2% in the
three months ended March 31, 1996 to 26.6% in the three months ended March 31,
1997. This increase was primarily due to higher expenses in Germany compared to
other more established countries, lower than expected revenues in the United
States, the United Kingdom and France, as well as start up and early operating
expenses for new distribution centers in Europe and in the United States.

Income taxes for the three months ended March 31, 1997 increased by
$549,000 due to higher pretax earnings. The effective tax rate decreased from
31.5% for the three months ended March 31, 1996 to 30.0% for the current period.
This decrease is attributable to the implementation of tax strategies in certain
European countries.

Consolidated net income for the quarter ended March 31, 1997 was $20.7
million, an increase of 14.3% over the comparable period of the prior year.
Consolidated earnings per share were $.24 compared to $.21 last year.

NINE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE NINE MONTHS ENDED MARCH 31,
- ----------------------------------------------------------------------------
1996.
- -----

Revenues for the nine months ended March 31, 1997 were $960.1 million, an
increase of $172.8 million, or 22.0%, over the nine months ended March 31, 1996.
European revenues were $559.7 million, an increase of 32.4% over the prior year.
European operations included the United Kingdom, The Republic of Ireland,
France, Belgium, Luxembourg, The Netherlands, Germany and Austria. In
Australia, revenues were $46.5 million, increasing 20.4% over last year. United
States revenues were $353.9 million, an increase of 8.5% over last year. This
slower U.S. growth rate was due primarily to lower selling prices of paper
products versus last year. On a company-wide basis, during the nine months
ended March 31, 1997, the number of catalogs mailed increased 17.9%, the number
of customers who purchased products increased 17.6% and the average revenue per
customer increased by 3.7% since last year.

Gross profit for the nine months ended March 31, 1997 increased by $64.3
million, or 23.8% over last year. As a percentage of revenues, gross profit
increased from 34.3% in the nine months ended March 31, 1996 to 34.8% in the
current period. The increase in gross profit is primarily attributable to
decreases in the costs of paper products, higher gross profit in the newer
markets in Europe, and higher volume rebates earned on inventory purchases.

Selling, general and administrative expenses for the nine months ended
March 31, 1997 increased by $52.1 million, or 24.8% over the prior year. As a
percentage of revenues, these expenses increased from 26.6% in the nine months
ended March 31, 1996 to 27.3% in the nine months ended March 31, 1997. This
percentage increase was primarily due to higher expenses in Germany compared to
other more established countries, lower than expected revenues in the United
States, the United Kingdom and France, as well as start up and early operating
expenses for new distribution centers in Europe and in the United States.

Other income, net of interest expense, for the nine months ended March 31,
1997 increased by $622,000, or 10.0% over the comparable period of the prior
year. This year included more cash discounts received on higher inventory
purchases.

Income taxes for the nine months ended March 31, 1997 increased by $3.6
million due to higher pretax earnings. The effective tax rate decreased from
33.4% for the nine months ended March 31, 1996 to 32.5% for the current period.
This decrease is attributable to the implementation of tax strategies in certain
European countries.

Consolidated net income for the nine months ended March 31, 1997 was $53.6
million, an increase of 21.0% over the nine months ended March 31, 1996. On a
per share basis, earnings were $.62 compared to $.51 last year.

7
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

Viking's primary source of liquidity has been cash flow from operations.
Viking believes that its existing cash and short-term investments, funds
generated from operations and available credit under its revolving credit
facility will be sufficient to finance its working capital requirements for the
foreseeable future. At March 31, 1997, the Company had working capital of
$176.5 million compared to $146.8 million at June 28, 1996. The improved working
capital position primarily reflects increased cash provided by operations, net
of investing activities, which consisted primarily of capital expenditures.
Cash provided by operating and financing activities that exceeded current
working capital and capital expenditures requirements was invested in short-term
marketable securities.

Capital expenditures amounted to $34.8 million for first nine months of
fiscal 1997 as Viking continued to invest in domestic and international
operations, particularly in Europe. During this quarter, Viking began cross
border operations into Austria and opened a tenth U.S. distribution center in
Denver, Colorado. Later in calendar 1997, the Company plans to open a third
distribution center in the United Kingdom, and begin operations in Italy.
Capital expenditures related to expansion have been funded by cash from
operations. In fiscal 1997, capital expenditures are expected to be between $50
million and $60 million.

Viking has a revolving credit agreement which provides for an unsecured
revolving credit facility up to $60 million through June 2001. Advances under
this credit facility bear interest at the bank's base rate or, at the option of
Viking, the LIBOR rate plus a percentage spread based upon certain defined
ratios. In addition, Viking is required to pay a commitment fee of 1/8% on the
total amount of the revolving credit facility. The availability of the line of
credit is subject to Viking's maintenance of certain financial ratios. At March
31, 1997, no amounts were outstanding under this credit facility and the entire
$60 million was available for borrowing.

8
<PAGE>

PART II - OTHER INFORMATION

ITEM 5. OTHER INFORMATION

Viking Office Products, Inc. ("Viking") has begun entering into agreements
with each of its officers and certain other employees, which provide for
payments to them in the event of a change in control of Viking. Under the
agreements, the officer or employee will be entitled to certain payments from
Viking if such person's employment is terminated following a change in control
of Viking, unless such termination is (i) because of such person's death or
disability, (ii) by Viking for "Cause" (as defined in the agreements) or (iii)
by the officer or employee other than for "Good Reason" (as defined in the
agreements). No termination benefit is required to be paid if the officer's or
employee's employment terminates prior to a change in control of Viking.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS REPORT:

10.1 Form of Letter Agreement, dated May 12, 1997, between the registrant
and Irwin Helford.

10.2 Form of Letter Agreement, dated May 12, 1997, between the registrant
and Bruce Nelson.

10.3 Form of Letter Agreement, dated May 12, 1997, between the registrant
and Frank R. Jarc.

10.4 Form of Letter Agreement, dated May 12, 1997, between the registrant
and certain of its officers.

10.5 Form of Letter Agreement, dated May 12, 1997, between the registrant
and certain employees.

27 Financial Data Schedule

(b) REPORTS ON FORM 8-K.

On January 31, 1997, the Company filed a report on Form 8-K containing a
report on Item 5 with respect to the adoption of a Shareholder Rights Plan,
which was adopted by the Board of Directors on January 20, 1997.

9
<PAGE>

SIGNATURE
- ---------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

VIKING OFFICE PRODUCTS, INC.

DATE: May 12, 1997 BY: /s/ Frank R. Jarc
--------------------------------
Frank R. Jarc
Executive Vice President,
Chief Financial Officer

By: /s/ Keith Bjelajac
---------------------------------
Keith Bjelajac
Corporate Controller

<PAGE>

Exhibit 10.1

VIKING OFFICE PRODUCTS, INC.
879 W. 190th Street, Suite 1100
Gardena, California 90248

May 12, 1997
Mr. Irwin Helford
c/o Viking Office Products, Inc.
879 W. 190th Street, Suite 1100
Gardena, CA 90248

Dear Irwin:

The purpose of this letter agreement ("Agreement") is to document the terms
and conditions of the severance package to which you shall be entitled in
certain circumstances should your employment with Viking Office Products, Inc.
(the "Company"), terminate following a change in control.

Part One of this Agreement sets forth certain definitional provisions to be in
effect for purposes of determining your benefit entitlements. Part Two hereof
specifies benefits in connection with a change in control of the Company. Part
Three hereof concludes this Agreement with a series of general terms and
conditions applicable to your severance benefits.

PART ONE -- DEFINITIONS

For purposes of this Agreement, the following definitions shall be in effect:

1. "BASE SALARY" means the annual rate of base salary in effect for you
immediately prior to termination of your employment or immediately prior to a
Change in Control, whichever is greater.

2. "BENEFICIAL OWNER" has the meaning set forth in subdivision (d) of
Paragraph 4 of this Part One.

3. "BOARD" means the Company's Board of Directors.

4. "CHANGE IN CONTROL" means any of the following transactions or events
effecting a change in ownership or control of the Company:

(a) A merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

(b) The sale, transfer or other disposition of all or substantially all of
the assets of the Company;
<PAGE>

(c) Any merger or reverse merger in which the Company ceases to exist as
an independent corporation or becomes the subsidiary of another
corporation;

(d) If any Person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) becomes the Beneficial Owner (as defined in Rule 13(d)-3
under the Exchange Act), of securities possessing more than twenty percent
(20%) of the total combined voting power of the Company's outstanding
securities;

(e) If any Person becomes the Beneficial Owner of securities of the
Company possessing sufficient voting power in the aggregate to elect an
absolute majority of the members of the Board (rounded up to the nearest
whole number); or

(f) A change in the composition of the Board over a period of twenty-four
(24) consecutive months or less such that a majority of the Board ceases,
by reason of one or more contested elections for Board membership, to
consist of individuals who either (i) have been members of the Board
continuously since the beginning of such period or (ii) have been elected
or nominated for election as Board members during such period by at least a
majority of Board members described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.

5. "CIC SEVERANCE PAYMENT" means the severance payments to which you may
become entitled under Paragraph 1 of Part Two hereof.

6. "CODE" means the Internal Revenue Code of 1986, as amended.

7. "COMMON STOCK" means the Company's common stock.

8. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

9. "FAIR MARKET VALUE" means, with respect to any shares of Common Stock
subject to any of your Options, the closing selling price per share of Common
Stock on the date in question, as reported on the Nasdaq National Market (if
there is no reported sale of Common Stock on such date, then the closing selling
price on the Nasdaq National Market on the next preceding day for which there
does exist such quotation shall be determinative of Fair Market Value).

10. "INDEPENDENT ARBITER" has the meaning set forth in subdivision (b) of
Paragraph 5 of Part Two of this Agreement.

11. "NET AFTER TAX PAYMENT AMOUNT" has the meaning set forth in subdivision
(a) of Paragraph 5 of Part Two of this Agreement.

12. "OPTION" means any option granted to you under the Plan (or any
installment thereof) which is outstanding at the time of the Change in Control
which automatically accelerates, pursuant to the Plan or the acceleration
provisions of the agreement evidencing that Option.

2
<PAGE>

13. "OPTION PARACHUTE PAYMENT" means the portion of an Option which is
treated as a payment described in Code Section 280G(b)(2)(A) and the Treasury
Regulations thereunder. The portion of such Option which is categorized as an
Option Parachute Payment shall be calculated in accordance with the valuation
provisions established under Code Section 280G and the applicable Treasury
Regulations and shall include an appropriate dollar adjustment to reflect the
lapse of your obligation to remain in the Company employ as a condition to the
vesting of the accelerated installment. In no event, however, shall the Option
Parachute Payment exceed the spread (the excess of the Fair Market Value of the
accelerated option shares over the option exercise price payable for those
shares) existing at the time of acceleration.

14. "OTHER PARACHUTE PAYMENT" means any payment in the nature of compensation
which is made to you in connection with the Change in Control and which are
payments described in Code Section 280G(b)(2)(A) and the Treasury Regulations
issued thereunder. Your Other Parachute Payments shall include the Present
Value, measured as of the Change in Control, of the aggregate Option Parachute
Payment.

15. "PERSON" has the meaning set forth in subdivision (d) of Paragraph 4 of
this Part One.

16. "PLAN" means (i) the Company's 1989 Amended and Restated Incentive Stock
Option Plan, (ii) the Company's 1991 Amended and Restated Nonstatutory Stock
Option Plan (iii) the Company's Long Term Stock Incentive Plan and (iv) any
further or replacement stock option plan or restricted stock plan hereafter
implemented by the Company.

17. "PRESENT VALUE" means the value, determined as of the date of the Change
in Control, of any payment in the nature of compensation to which you become
entitled in connection with the Change in Control or your subsequent Termination
Without Cause or Resignation for Good Reason. The Present Value of such payment
shall be determined in accordance with the provisions of Code Section 280G.

18. "RESIGNATION FOR GOOD REASON" means your voluntary resignation subsequent
to a Change in Control following (a) a change in your position with the Company
which materially reduces your duties or level of responsibility, (b) a reduction
in your level of compensation (including base salary, fringe benefits and
participation in non-discretionary bonus programs under which awards are payable
pursuant to objective financial or other performance standards) by an amount in
excess of ten percent (10%) or (c) a change in your place of employment which is
more than thirty (30) miles from your place of employment prior to the Change in
Control, but only if such change or reduction is effected without your written
concurrence.

In no event shall Resignation for Good Reason be deemed to occur should your
employment terminate by reason of your permanent disability as defined under the
Company's long-term disability program or your death.

19. "TERMINATION FOR CAUSE" means the termination of your employment by the
Company upon your:

3
<PAGE>

(a) dishonesty resulting, or intending to result, directly or indirectly,
in gain or personal enrichment at the expense of the Company; or

(b) gross misconduct, including, without limitation, fraud, sexual
harassment or misappropriation of Company property or confidential
information; or

(d) wilful and continued failure substantially to perform your duties with
the Company (other than any such failure resulting from your incapacity due
to physical or mental illness), which is not remedied within a reasonable
period after a written demand for substantial performance is delivered to
you which specifically identifies the manner in which it is believed that
you have not substantially performed your duties.

20. "TERMINATION WITHOUT CAUSE" means the Company's termination of your
employment with the Company other than a Termination for Cause.

PART TWO -- CHANGE IN CONTROL BENEFITS

Upon your Termination Without Cause or Resignation for Good Reason within
twenty-four (24) months following a Change in Control you shall become entitled
to receive the special benefits provided in this Part Two.

1. CIC SEVERANCE PAYMENTS. You shall be entitled to CIC Severance Payments in
----------------------
an aggregate amount equal to three times your Total Compensation. The CIC
Severance Payments shall be in lieu of all damages and other compensation to
which you may be entitled by reason of termination of your employment and shall
also be in lieu of further salary payments to you for periods subsequent to the
termination of your employment, provided, however, that, if your employment was
terminated by the Company and at the time of termination there was in effect a
written employment agreement between you and the Company (the "Employment
Agreement"), you shall have the right, at your irrevocable election, (a) to
waive all of your rights under this Agreement and retain all of your rights
under the Employment Agreement or (b) to waive all of your rights under the
Employment Agreement and retain your rights under this Agreement. If you have
not notified the Company in writing within ten days after termination of your
employment by the Company that you elect to waive your rights under this
Agreement, you shall

4
<PAGE>

be deemed irrevocably to have elected clause (b), i.e., to waive your rights
under the Employment Agreement and retain your rights under this Agreement. The
CIC Severance Payments shall not be considered compensation for any benefit
calculation or other purpose under any retirement plan or other benefit plan
maintained by the Company.

The CIC Severance Payments will be paid to you in a lump sum, net of all
applicable withholding taxes, within 15 days after your date of termination,
and, if not timely paid, will bear interest at the lower of ten percent per
annum and the maximum rate permitted by California law.

In the event your employment terminates by reason of your death or permanent
and total disability as defined by the Company's long-term disability program
before you become eligible for CIC Severance Payments, or your Termination for
Cause or resignation other than Resignation for Good Reason, you shall not be
entitled to receive any CIC Severance Payments or other benefits under this
Agreement, except as provided in Paragraph 8 of this Part
Two.

2. ADDITIONAL BENEFITS. You will receive payment for all unpaid vacation
-------------------
benefits, time off and sick days that you have accrued through the date of your
termination. In addition, you will receive a payment equal to the target bonus
amount for which you are eligible for the year in which your employment
terminates. Such payments will be paid to you in a lump sum, net of all
applicable withholding taxes, within 15 days after your date of termination,
and, if not timely paid, will bear interest at the lower of ten percent per
annum and the maximum rate permitted by California law.

3. OUTPLACEMENT SERVICES. You will be eligible for outplacement services
---------------------
through a third party selected by the Company.

4. OPTION ACCELERATION. The provisions of your outstanding Options and the
-------------------
applicable Plans shall govern the acceleration of the exercise thereof in the
event of a Change in Control, including but not limited to the effect on such
acceleration of your death or disability or termination of employment. This
Agreement is not intended to amend any of your Options.

5. BENEFIT TAX PROTECTION. In the event of a Change in Control, the following
----------------------
protection against taxation shall become applicable:

5
<PAGE>

Net After Tax Payment Amount means the excess of the total amounts paid
hereunder reduced by the sum of (i) the amount of any excise tax payable
under Code Section 4999 and (ii) any and all applicable local, state and/or
federal income taxes payable with respect to the payments made hereunder.

(b) In the event there is any disagreement between you and the Company as
to the amount of any payment required hereunder, the amount of income or
excise tax liability incurred or which would be incurred if the payments
were exempt from Code Section 4999, or the application of applicable
provisions of the Code, Treasury Regulations or applicable tax laws, such
disputes shall be submitted for resolution to an independent certified
public accountant ("Independent Arbiter") mutually acceptable to you and
the Company. The resolution reached by the Independent Arbiter shall be
binding on you and the Company. You and the Company shall prepare all
returns and reports to relevant tax authorities in a manner consistent with
determination of the Independent Arbiter. Notwithstanding the above, if
your liability for income or estate taxes is redetermined, the actual
amount of such redetermined tax liability shall be substituted for the
amount of tax liability agreed to or otherwise determined by Independent
Arbiter provided that you have reasonably endeavored to maintain the
positions reflected in your original returns and shall have afforded the
Company a reasonable opportunity to assist you in resisting any such
redetermination. All expenses incurred in connection with the retention of
the Independent Arbiter and (if applicable) responding to any audit or
resisting any redetermination of the tax liability involving the payments
to be made hereunder shall be paid by the Company.

6. MITIGATION. You will not be required to mitigate payments received under
----------
this Agreement when employed by another company.

7. COSTS, EXPENSES AND LEGAL FEES. The Company will pay or reimburse you for
------------------------------
all costs and expenses incurred by you on behalf of the Company, consistent with
the Company's reimbursement policy in effect prior to the Change in Control, and
will also pay or reimburse you for all legal fees and expenses, if any, incurred
by you in seeking to obtain or enforce any right or benefit provided by this
Agreement, including such fees and expenses incurred in connection with any
arbitration proceeding. Such payments and reimbursements will be made within
five business days after your request for payment, accompanied by evidence of
such costs, fees and expenses, is received by the Company, and, if not timely
paid, will bear interest at the lower of ten percent per annum and the maximum
rate permitted by California law.

8. DELAYED TERMINATION. One year after the date that a Change in Control is
-------------------
effective you will have 30 days to resign your employment (whether or not such
resignation qualifies as a Resignation for Good Reason) and receive (a) fifty
percent of the CIC Severance Payments and (b) the payments contemplated by
Paragraph 2 of this Part Two. In addition, Paragraphs 3, 5, 6 and 7 of this
Part Two shall apply when applicable. All payments required hereunder shall be
made at the times provided in the Paragraphs referred to herein.

6
<PAGE>

PART THREE -- MISCELLANEOUS PROVISIONS

1. TERMINATION FOR CAUSE. Should termination of your employment constitute
---------------------
Termination for Cause, then the Company shall be required to pay you only (i)
any unpaid compensation earned for services previously rendered through the date
of such termination and (ii) any accrued but unpaid vacation benefits or sick
days, and no other benefits shall be payable to you under Part Two of this
letter.

2. DEATH. Should you die after your Termination Without Cause or Resignation
-----
for Good Reason under Part Two of this Agreement but before receipt of the CIC
Severance Payments to which you have become entitled under Part Two of this
Agreement, then those payment(s) shall be made to the executors or
administrators of your estate.

3. DISABILITY. Should you become totally and permanently disabled as defined
----------
in the Company's long-term disability program after your Termination Without
Cause or Resignation for Good Reason under Part Two of this Agreement but before
receipt of the CIC Severance Payments to which have become entitled under Part
Two, then those payment(s) shall be made to you in accordance with the
provisions of this Agreement.

4. GENERAL CREDITOR STATUS. The payments and benefits to which you become
-----------------------
entitled hereunder shall be paid, when due, from the general assets of the
Company, and no trust fund, escrow arrangement or other segregated account shall
be established as a funding vehicle for such payments. Accordingly, your right
(or the right of the personal representatives or beneficiaries of your estate)
to receive any payments or benefits hereunder shall at all times be that of a
general creditor of the Company and shall have no priority over the claims of
other general creditors.

5. INDEMNIFICATION. If applicable, the indemnification provisions for
---------------
officers and directors under the Company's Articles of Incorporation and Bylaws
and the provisions of any written Indemnification Agreement between you and the
Company shall be extended to you (to the maximum extent permitted by law),
during the period following your Termination Without Cause or Resignation for
Good Reason under Part Two, with respect to any and all matters, events or
transactions occurring or effected during your employment with the Company.

6. CONTRACTUAL RIGHTS. Except as expressly provided in Paragraph 1 of Part
------------------
Two, none of the provisions of this Agreement is intended to curtail or limit in
any way any contractual rights which you may have under any Company plan in
which you are eligible to participate, and all such contractual rights shall
survive the execution of this Agreement and any Change in Control.

7. BINDING AGREEMENT. This Agreement shall be binding upon the Company, its
-----------------
successors and assigns (including, without limitation, the surviving entity in
any Change in Control).

7
<PAGE>

8. LAW GOVERNING. This Agreement shall be construed and interpreted under the
-------------
laws of the State of California applicable to agreements executed and to be
wholly performed within the State of California.

9. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements between
----------------
you and the Company relating to the subject of severance benefits payable to you
upon the cessation of your employment with the Company and may be amended only
by a written instrument signed by you and an authorized officer of the Company.

10. SEVERABILITY. If any provision of this Agreement as applied to you or the
------------
Company or to any circumstance should be adjudged by a court of competent
jurisdiction to be void or unenforceable for any reason, the invalidity of that
provision shall in no way affect (to the maximum extent permissible by law) the
application of such provision under circumstances different from those
adjudicated by the court, the application of any other provision of this
Agreement, or the enforceability or validity of this Agreement as a whole.
Should any provision of this Agreement become or be deemed invalid, illegal or
unenforceable in any jurisdiction by reason of the scope, extent or duration of
its coverage, then such provision shall be deemed amended to the extent
necessary to conform to applicable law so as to be valid and enforceable or, if
such provision cannot be so amended without materially altering the intention of
the parties, then such provision shall be stricken and the remainder of this
Agreement shall continue in full force and effect.

11. REMEDIES. All rights and remedies provided pursuant to this Agreement or
--------
by law will be cumulative, and no such right or remedy will be exclusive of any
other. A party may pursue any one or more rights or remedies hereunder or may
seek damages or specific performance in the event of another party's breach
hereunder or may pursue any other remedy by law or equity, whether or not stated
in this Agreement.

12. ARBITRATION. Any controversy which may arise between you and the Company
-----------
with respect to the construction, interpretation or application of any of the
terms, provisions or conditions of this agreement or any monetary claim arising
from or relating to this agreement will be submitted to final and binding
arbitration in Los Angeles, California, in accordance with the rules of the
American Arbitration Association then in effect.

13. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement is intended
---------------------------------
to provide you with any right to continue in the employ of the Company (or any
subsidiary) for any period of or interfere with or otherwise restrict in any way
your rights or the rights of the Company (or any subsidiary), which rights are
hereby expressly reserved by each. The Company reserves the right to terminate
your employment at any time for any reason whatsoever, with or without cause,
except as otherwise provided in any written employment agreement between you and
the Company.

8
<PAGE>

Please indicate your acceptance of the foregoing provisions of this Agreement
by signing the enclosed copy of this Agreement and returning it to the Company.

VIKING OFFICE PRODUCTS, INC.

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

ACCEPTANCE

I hereby agree to all the terms and provisions of the foregoing Agreement
governing the special benefits to which I may become entitled in connection with
the cessation of my employment with Viking Office Products, Inc., under certain
specified conditions following a Change in Control.

Signature:
--------------------------------------------
Dated: ______, 1997

<PAGE>

Exhibit 10.2

VIKING OFFICE PRODUCTS, INC.
879 W. 190th Street, Suite 1100
Gardena, California 90248
May 12, 1997

Mr. Bruce Nelson
Viking Office Products, Inc.
879 W. 190th Street, Suite 1100
Gardena, CA 90248

Dear Bruce:

PART ONE -- DEFINITIONS

For purposes of this Agreement, the following definitions shall be in effect:

1. "BASE SALARY" means the annual rate of base salary in effect for you
immediately prior to termination of your employment or immediately prior to a
Change in Control, whichever is greater.

2. "BENEFICIAL OWNER" has the meaning set forth in subdivision (d) of
Paragraph 4 of this Part One.

3. "BOARD" means the Company's Board of Directors.

4. "CHANGE IN CONTROL" means any of the following transactions or events
effecting a change in ownership or control of the Company:

(a) A merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

(b) The sale, transfer or other disposition of all or substantially all of
the assets of the Company;

(c) Any merger or reverse merger in which the Company ceases to exist as
an independent corporation or becomes the subsidiary of another
corporation;
<PAGE>

5. "CIC SEVERANCE PAYMENT" means the severance payments to which you may
become entitled under Paragraph 1 of Part Two hereof.

6. "CODE" means the Internal Revenue Code of 1986, as amended.

7. "COMMON STOCK" means the Company's common stock.

8. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

10. "INDEPENDENT ARBITER" has the meaning set forth in subdivision (b) of
Paragraph 5 of Part Two of this Agreement.

11. "NET AFTER TAX PAYMENT AMOUNT" has the meaning set forth in subdivision
(a) of Paragraph 5 of Part Two of this Agreement.

-2-
<PAGE>

calculated in accordance with the valuation provisions established under Code
Section 280G and the applicable Treasury Regulations and shall include an
appropriate dollar adjustment to reflect the lapse of your obligation to remain
in the Company employ as a condition to the vesting of the accelerated
installment. In no event, however, shall the Option Parachute Payment exceed
the spread (the excess of the Fair Market Value of the accelerated option shares
over the option exercise price payable for those shares) existing at the time of
acceleration.

15. "PERSON" has the meaning set forth in subdivision (d) of Paragraph 4 of
this Part One.

19. "TERMINATION FOR CAUSE" means the termination of your employment by the
Company upon your:

(a) dishonesty resulting, or intending to result, directly or indirectly,
in gain or personal enrichment at the expense of the Company; or

-3-
<PAGE>

(b) gross misconduct, including, without limitation, fraud, sexual
harassment or misappropriation of Company property or confidential
information; or

20. "TERMINATION WITHOUT CAUSE" means the Company's termination of your
employment with the Company other than a Termination for Cause.

21. "TOTAL COMPENSATION" means the aggregate of (a) Base Salary, (b) the
average cash bonuses paid to you by the Company for services rendered during the
two (2) Company fiscal years immediately preceding the fiscal year of
termination of your employment or the fiscal year immediately preceding the
fiscal year in which the Change in Control occurred, whichever is greater, and
(c) the total costs to the Company of any other benefits, including but not
limited to life, disability, accident and health insurance and employee
assistance plan benefits, automobile allowances and other executive benefits and
perquisites, made available to you by the Company in the Company fiscal year
immediately preceding the year of termination of your employment. In the event
that you were not employed during the entire two (2) Company fiscal years, any
of the bonuses or benefits (including executive benefits and perquisites)
described in (b) and (c) above for a partial year of employment shall be
annualized in accordance with the frequency which such compensation is paid
during such partial year.

PART TWO -- CHANGE IN CONTROL BENEFITS

-4-
<PAGE>

3. OUTPLACEMENT SERVICES. You will be eligible for outplacement services
---------------------
through a third party selected by the Company.

5. BENEFIT TAX PROTECTION. In the event of a Change in Control, the following
----------------------
protection against taxation shall become applicable:

(a) To the extent that you incur any tax liability under Code Section 4999
as a result of payments hereunder, the Option Parachute Payment or the
Other Parachute Payments (or any portion of any such amount) being treated
as an excess parachute payment within the meaning of Code Section 280G, the
amount of your severance payment under Paragraph 1 of this Part Two shall
be increased to the extent necessary to assure that the "Net After Tax
Payment Amount" (as defined below) will be equal to the Net After Tax
Payment Amount which you would have received pursuant to this Agreement if
all payments hereunder had been exempt from the application of Code Section
4999. The Net After Tax Payment Amount means the excess of the total
amounts paid hereunder reduced by the sum of (i) the amount of any excise
tax payable under Code Section 4999 and (ii) any and all applicable local,
state and/or federal income taxes payable with respect to the payments made
hereunder.

-5-
<PAGE>

and the Company. You and the Company shall prepare all returns and reports
to relevant tax authorities in a manner consistent with determination of
the Independent Arbiter. Notwithstanding the above, if your liability for
income or estate taxes is redetermined, the actual amount of such
redetermined tax liability shall be substituted for the amount of tax
liability agreed to or otherwise determined by Independent Arbiter provided
that you have reasonably endeavored to maintain the positions reflected in
your original returns and shall have afforded the Company a reasonable
opportunity to assist you in resisting any such redetermination. All
expenses incurred in connection with the retention of the Independent
Arbiter and (if applicable) responding to any audit or resisting any
redetermination of the tax liability involving the payments to be made
hereunder shall be paid by the Company.

6. MITIGATION. You will not be required to mitigate payments received under
----------
this Agreement when employed by another company.

PART THREE -- MISCELLANEOUS PROVISIONS

-6-
<PAGE>

7. BINDING AGREEMENT. This Agreement shall be binding upon the Company, its
-----------------
successors and assigns (including, without limitation, the surviving entity in
any Change in Control).

-7-
<PAGE>

of this Agreement become or be deemed invalid, illegal or unenforceable in any
jurisdiction by reason of the scope, extent or duration of its coverage, then
such provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot be
so amended without materially altering the intention of the parties, then such
provision shall be stricken and the remainder of this Agreement shall continue
in full force and effect.

Please indicate your acceptance of the foregoing provisions of this Agreement
by signing the enclosed copy of this Agreement and returning it to the Company.

VIKING OFFICE PRODUCTS, INC.

By:
---------------------------------------------------

Title:
------------------------------------------------
ACCEPTANCE

Signature:
--------------------------------------------

Dated: ______, 1997

-8-

<PAGE>

Exhibit 10.3

VIKING OFFICE PRODUCTS, INC.
879 W. 190th Street, Suite 1100
Gardena, California 90248
May 12, 1997

Mr. Frank R. Jarc
c/o Viking Office Products, Inc.
879 W. 190th Street, Suite 1100
Gardena, CA 90248

Dear Frank:

PART ONE -- DEFINITIONS

For purposes of this Agreement, the following definitions shall be in effect:

1. "BASE SALARY" means the annual rate of base salary in effect for you
immediately prior to termination of your employment or immediately prior to a
Change in Control, whichever is greater.

2. "BENEFICIAL OWNER" has the meaning set forth in subdivision (d) of
Paragraph 4 of this Part One.

3. "BOARD" means the Company's Board of Directors.

4. "CHANGE IN CONTROL" means any of the following transactions or events
effecting a change in ownership or control of the Company:

(a) A merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

(b) The sale, transfer or other disposition of all or substantially all of
the assets of the Company;

(c) Any merger or reverse merger in which the Company ceases to exist as
an independent corporation or becomes the subsidiary of another
corporation;
<PAGE>

5. "CIC SEVERANCE PAYMENT" means the severance payments to which you may
become entitled under Paragraph 1 of Part Two hereof.

6. "CODE" means the Internal Revenue Code of 1986, as amended.

7. "COMMON STOCK" means the Company's common stock.

8. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

10. "INDEPENDENT ARBITER" has the meaning set forth in subdivision (b) of
Paragraph 5 of Part Two of this Agreement.

11. "NET AFTER TAX PAYMENT AMOUNT" has the meaning set forth in subdivision
(a) of Paragraph 5 of Part Two of this Agreement.

2
<PAGE>

15. "PERSON" has the meaning set forth in subdivision (d) of Paragraph 4 of
this Part One.

19. "TERMINATION FOR CAUSE" means the termination of your employment by the
Company upon your:

(a) dishonesty resulting, or intending to result, directly or indirectly,
in gain or personal enrichment at the expense of the Company; or

3
<PAGE>

(b) gross misconduct, including, without limitation, fraud, sexual
harassment or misappropriation of Company property or confidential
information; or

20. "TERMINATION WITHOUT CAUSE" means the Company's termination of your
employment with the Company other than a Termination for Cause.

PART TWO -- CHANGE IN CONTROL BENEFITS

4
<PAGE>

3. OUTPLACEMENT SERVICES. You will be eligible for outplacement services
---------------------
through a third party selected by the Company.

5. BENEFIT TAX PROTECTION. In the event of a Change in Control, the following
----------------------
protection against taxation shall become applicable:

5
<PAGE>

4999, or the application of applicable provisions of the Code, Treasury
Regulations or applicable tax laws, such disputes shall be submitted for
resolution to an independent certified public accountant ("Independent
Arbiter") mutually acceptable to you and the Company. The resolution
reached by the Independent Arbiter shall be binding on you and the Company.
You and the Company shall prepare all returns and reports to relevant tax
authorities in a manner consistent with determination of the Independent
Arbiter. Notwithstanding the above, if your liability for income or estate
taxes is redetermined, the actual amount of such redetermined tax liability
shall be substituted for the amount of tax liability agreed to or otherwise
determined by Independent Arbiter provided that you have reasonably
endeavored to maintain the positions reflected in your original returns and
shall have afforded the Company a reasonable opportunity to assist you in
resisting any such redetermination. All expenses incurred in connection
with the retention of the Independent Arbiter and (if applicable)
responding to any audit or resisting any redetermination of the tax
liability involving the payments to be made hereunder shall be paid by the
Company.

6. MITIGATION. You will not be required to mitigate payments received under
----------
this Agreement when employed by another company.

PART THREE -- MISCELLANEOUS PROVISIONS

6
<PAGE>

Payments to which have become entitled under Part Two, then those payment(s)
shall be made to you in accordance with the provisions of this Agreement.

7. BINDING AGREEMENT. This Agreement shall be binding upon the Company, its
-----------------
successors and assigns (including, without limitation, the surviving entity in
any Change in Control).

7
<PAGE>

or, if such provision cannot be so amended without materially altering the
intention of the parties, then such provision shall be stricken and the
remainder of this Agreement shall continue in full force and effect.

Please indicate your acceptance of the foregoing provisions of this Agreement
by signing the enclosed copy of this Agreement and returning it to the Company.

VIKING OFFICE PRODUCTS, INC.

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

ACCEPTANCE

Signature:
---------------------------------------------

Dated: ______, 1997

<PAGE>

Exhibit 10.4

VIKING OFFICE PRODUCTS, INC.
879 W. 190th Street, Suite 1100
Gardena, California 90248

May 12, 1997
Mr. [Vice President]
c/o Viking Office Products, Inc.
879 W. 190th Street, Suite 1100
Gardena, CA 90248

Dear [ ]:

PART ONE -- DEFINITIONS

For purposes of this Agreement, the following definitions shall be in effect:

1. "BASE SALARY" means the annual rate of base salary in effect for you
immediately prior to termination of your employment or immediately prior to a
Change in Control, whichever is greater.

2. "BENEFICIAL OWNER" has the meaning set forth in subdivision (d) of
Paragraph 4 of this Part One.

3. "BOARD" means the Company's Board of Directors.

4. "CHANGE IN CONTROL" means any of the following transactions or events
effecting a change in ownership or control of the Company:

(a) A merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

(b) The sale, transfer or other disposition of all or substantially all of
the assets of the Company;

(c) Any merger or reverse merger in which the Company ceases to exist as
an independent corporation or becomes the subsidiary of another
corporation;
<PAGE>

5. "CIC SEVERANCE PAYMENT" means the severance payments to which you may
become entitled under Paragraph 1 of Part Two hereof.

6. "CODE" means the Internal Revenue Code of 1986, as amended.

7. "COMMON STOCK" means the Company's common stock.

8. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

10. "INDEPENDENT ARBITER" has the meaning set forth in subdivision (b) of
Paragraph 5 of Part Two of this Agreement.

11. "NET AFTER TAX PAYMENT AMOUNT" has the meaning set forth in subdivision
(a) of Paragraph 5 of Part Two of this Agreement.

2
<PAGE>

15. "PERSON" has the meaning set forth in subdivision (d) of Paragraph 4 of
this Part One.

19. "TERMINATION FOR CAUSE" means the termination of your employment by the
Company upon your:

(a) dishonesty resulting, or intending to result, directly or indirectly,
in gain or personal enrichment at the expense of the Company; or

3
<PAGE>

(b) gross misconduct, including, without limitation, fraud, sexual
harassment or misappropriation of Company property or confidential
information; or

20. "TERMINATION WITHOUT CAUSE" means the Company's termination of your
employment with the Company other than a Termination for Cause.

PART TWO -- CHANGE IN CONTROL BENEFITS

1. CIC SEVERANCE PAYMENTS. You shall be entitled to CIC Severance Payments in
----------------------
an aggregate amount equal to one and one-half (1.5) times your Total
Compensation. The CIC Severance Payments shall be in lieu of all damages and
other compensation to which you may be entitled, under any employment agreement
or otherwise, by reason of termination of your employment and shall also be in
lieu of further salary payments to you for periods subsequent to the termination
of your employment. The CIC Severance Payments shall not be considered
compensation for any benefit calculation or other purpose under any retirement
plan or other benefit plan maintained by the Company.

4
<PAGE>

3. OUTPLACEMENT SERVICES. You will be eligible for outplacement services
---------------------
through a third party selected by the Company.

5. BENEFIT TAX PROTECTION. In the event of a Change in Control, the following
----------------------
protection against taxation shall become applicable:

5
<PAGE>

6. MITIGATION. You will not be required to mitigate payments received under
----------
this Agreement when employed by another company.

PART THREE -- MISCELLANEOUS PROVISIONS

6
<PAGE>

Payments to which have become entitled under Part Two, then those payment(s)
shall be made to you in accordance with the provisions of this Agreement.

7. BINDING AGREEMENT. This Agreement shall be binding upon the Company, its
-----------------
successors and assigns (including, without limitation, the surviving entity in
any Change in Control).

7
<PAGE>

Please indicate your acceptance of the foregoing provisions of this Agreement
by signing the enclosed copy of this Agreement and returning it to the Company.

VIKING OFFICE PRODUCTS, INC.

By:
--------------------------------------------------

Title:
-----------------------------------------------

ACCEPTANCE

Signature:
-------------------------------------------

Dated: ______, 1997

<PAGE>

Exhibit 10.5

VIKING OFFICE PRODUCTS, INC.
879 W. 190th Street, Suite 1100
Gardena, California 90248

May 12, 1997
Mr. [Director]
c/o Viking Office Products, Inc.
879 W. 190th Street, Suite 1100
Gardena, CA 90248

Dear [ ]:

PART ONE -- DEFINITIONS

For purposes of this Agreement, the following definitions shall be in effect:

1. "BASE SALARY" means the annual rate of base salary in effect for you
immediately prior to termination of your employment or immediately prior to a
Change in Control, whichever is greater.

2. "BENEFICIAL OWNER" has the meaning set forth in subdivision (d) of
Paragraph 4 of this Part One.

3. "BOARD" means the Company's Board of Directors.

4. "CHANGE IN CONTROL" means any of the following transactions or events
effecting a change in ownership or control of the Company:

(a) A merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

(b) The sale, transfer or other disposition of all or substantially all of
the assets of the Company;

(c) Any merger or reverse merger in which the Company ceases to exist as
an independent corporation or becomes the subsidiary of another
corporation;
<PAGE>

5. "CIC SEVERANCE PAYMENT" means the severance payments to which you may
become entitled under Paragraph 1 of Part Two hereof.

6. "CODE" means the Internal Revenue Code of 1986, as amended.

7. "COMMON STOCK" means the Company's common stock.

8. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

10. "INDEPENDENT ARBITER" has the meaning set forth in Paragraph 5 of Part
Two of this Agreement.

11. "OPTION" means any option granted to you under the Plan (or any
installment thereof) which is outstanding at the time of the Change in Control
which automatically accelerates, pursuant to the Plan or the acceleration
provisions of the agreement evidencing that Option.

12. "OPTION PARACHUTE PAYMENT" means the portion of an Option which is
treated as a payment described in Code Section 280G(b)(2)(A) and the Treasury
Regulations thereunder. The portion of such Option which is categorized as an
Option Parachute Payment shall be calculated in accordance with the valuation
provisions established under Code Section 280G and the applicable Treasury
Regulations and shall include an appropriate dollar adjustment to reflect the
lapse of your obligation to remain in the Company employ as a condition to the
vesting of

2
<PAGE>

the accelerated installment. In no event, however, shall the Option Parachute
Payment exceed the spread (the excess of the Fair Market Value of the
accelerated option shares over the option exercise price payable for those
shares) existing at the time of acceleration.

13. "OTHER PARACHUTE PAYMENT" means any payment in the nature of compensation
which is made to you in connection with the Change in Control and which are
payments described in Code Section 280G(b)(2)(A) and the Treasury Regulations
issued thereunder. Your Other Parachute Payments shall include the Present
Value, measured as of the Change in Control, of the aggregate Option Parachute
Payment.

14. "PERSON" has the meaning set forth in subdivision (d) of Paragraph 4 of
this Part One.

15. "PLAN" means (i) the Company's 1989 Amended and Restated Incentive Stock
Option Plan, (ii) the Company's 1991 Amended and Restated Nonstatutory Stock
Option Plan (iii) the Company's Long Term Stock Incentive Plan and (iv) any
further or replacement stock option plan or restricted stock plan hereafter
implemented by the Company.

16. "PRESENT VALUE" means the value, determined as of the date of the Change
in Control, of any payment in the nature of compensation to which you become
entitled in connection with the Change in Control or your subsequent Termination
Without Cause or Resignation for Good Reason. The Present Value of such payment
shall be determined in accordance with the provisions of Code Section 280G.

17. "RESIGNATION FOR GOOD REASON" means your voluntary resignation subsequent
to a Change in Control following (a) a change in your position with the Company
which materially reduces your duties or level of responsibility, (b) a reduction
in your level of compensation (including base salary, fringe benefits and
participation in non-discretionary bonus programs under which awards are payable
pursuant to objective financial or other performance standards) by an amount in
excess of ten percent (10%) or (c) a change in your place of employment which is
more than thirty (30) miles from your place of employment prior to the Change in
Control, but only if such change or reduction is effected without your written
concurrence.

18. "TERMINATION FOR CAUSE" means the termination of your employment by the
Company upon your:

(a) dishonesty resulting, or intending to result, directly or indirectly,
in gain or personal enrichment at the expense of the Company; or

(b) gross misconduct, including, without limitation, fraud, sexual
harassment or misappropriation of Company property or confidential
information; or

3
<PAGE>

19. "TERMINATION WITHOUT CAUSE" means the Company's termination of your
employment with the Company other than a Termination for Cause.

20. "TOTAL COMPENSATION" means the aggregate of (a) Base Salary, (b) the
average cash bonuses paid to you by the Company for services rendered during the
two (2) Company fiscal years immediately preceding the fiscal year of
termination of your employment or the fiscal year immediately preceding the
fiscal year in which the Change in Control occurred, whichever is greater, and
(c) the total costs to the Company of any other benefits, including but not
limited to life, disability, accident and health insurance and employee
assistance plan benefits, automobile allowances and other executive benefits and
perquisites, made available to you by the Company in the Company fiscal year
immediately preceding the year of termination of your employment. In the event
that you were not employed during the entire two (2) Company fiscal years, any
of the bonuses or benefits (including executive benefits and perquisites)
described in (b) and (c) above for a partial year of employment shall be
annualized in accordance with the frequency which such compensation is paid
during such partial year, and in the event that you were not employed by the
Company for at least one full fiscal year prior to termination of your
employment, such bonuses shall be based on your target bonus for the fiscal year
in which your employment terminated or the prior year, whichever is greater.

PART TWO -- CHANGE IN CONTROL BENEFITS

1. CIC SEVERANCE PAYMENTS. You shall be entitled to CIC Severance Payments in
----------------------
an aggregate amount equal to one (1) times your Total Compensation. The CIC
Severance Payments shall be in lieu of all damages and other compensation to
which you may be entitled, under any employment agreement or otherwise, by
reason of termination of your employment and shall also be in lieu of further
salary payments to you for periods subsequent to the termination of your
employment. The CIC Severance Payments shall not be considered compensation for
any benefit calculation or other purpose under any retirement plan or other
benefit plan maintained by the Company.

4
<PAGE>

3. OUTPLACEMENT SERVICES. You will be eligible for outplacement services
---------------------
through a third party selected by the Company.

5. BENEFIT REDUCTION. In the event of a Change in Control, the first dollar
-----------------
amount of the CIC Severance Payment and, if necessary, other payments required
hereunde, shall be reduced to the extent necessary to assure that the payments
that you receive hereunder or otherwise which are "parachute payments" under
Code Section 280G (or any successor section) and the Treasury Regulations issued
thereunder do not exceed the maximum amount which may be paid hereunder without
such amounts being treated as an "excess parachute payment" under Code Section
280G.

In the event there is any disagreement between you and the Company as to the
amount of any payment required hereunder, or the application of applicable
provisions of the Code, Treasury Regulations or applicable tax laws, such
disputes shall be submitted for resolution to an independent certified public
accountant ("Independent Arbiter") mutually acceptable to you and the Company.
The decision of the Independent Arbiter shall be binding on you and the Company.
All expenses incurred in connection with the retention of Independent Arbiter
shall be paid by the Company.

6. MITIGATION. You will not be required to mitigate payments received under
----------
this Agreement when employed by another company.

5
<PAGE>

with any arbitration proceeding. Such payments and reimbursements will be made
within five business days after your request for payment, accompanied by
evidence of such costs, fees and expenses, is received by the Company, and, if
not timely paid, will bear interest at the lower of ten percent per annum and
the maximum rate permitted by California law.

PART THREE -- MISCELLANEOUS PROVISIONS

6
<PAGE>

7. BINDING AGREEMENT. This Agreement shall be binding upon the Company, its
-----------------
successors and assigns (including, without limitation, the surviving entity in
any Change in Control).

7
<PAGE>

Please indicate your acceptance of the foregoing provisions of this Agreement
by signing the enclosed copy of this Agreement and returning it to the Company.

VIKING OFFICE PRODUCTS, INC.

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

ACCEPTANCE

Signature:
----------------------------------------------

Dated: 1997
----,

<PAGE>

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