<PAGE>

                                                                   EXHIBIT 10.38

                                                  [TD COMMERCIAL BANKING LOGO]
                                                  Mississauga Centre CBC Branch
                                                  20 Milverton Drive
                                                  Mississauga, Ontario
                                                  L5R 3G2
                                                  Telephone No.: (905) 890-4163
                                                  Fax No.: (905) 890-4136

March 15, 2001

DAISYTEK (CANADA) INC.
35 Valleywood Drive, Unit 1
Markham, ON L3R 5L9
CAN

Attn:  George Maney, Vice President Finance & Treasury

We are pleased to offer the Borrower the following credit facilities (the
"Facilities"), subject to the terms and conditions outlined below.

BORROWER                   Daisytek (Canada) Inc. (the "Borrower")

LENDER                     THE TORONTO-DOMINION BANK (the "Bank"), through its
                           20 Milverton Drive & Highway #10 branch, in
                           Mississauga, Ontario

CREDIT LIMIT               1)       CDN $10,000,000 [or its US$ Equivalent]

TYPE OF CREDIT
AND BORROWING
OPTIONS                    1)       3 YEAR COMMITTED REVOLVING LOAN available at
                                    the Borrower's option by way of:

                                                 o  Prime Rate Based Loans in
                                                    CDN$ ("Prime Based Loans")

                                                 o  Bankers Acceptances in CDN$
                                                    ("B/As")

                                                 o  United States Base Rate
                                                    Loans in US$ ("USBR Loans")

PURPOSE                    1)       Finance day-to-day working capital
                                    requirements

TENOR                      1)       Committed

TERM                       1)       3 years

INTEREST RATES             Advances shall bear interest and fees as follows:
AND FEES
                           1)       COMMITTED REVOLVING LOAN:

                                                 o  Prime Based Loans: Prime
                                                    Rate + .50% per annum



<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


                                                 o  B/As: Stamping Fee at 200
                                                    bps per annum

                                                 o  United States Base Rate
                                                    Loans: USBR + .50% per annum

                           Interest Payments will be made in accordance with
                           Schedule "A" attached hereto. Information on Interest
                           Rate and Fee Definitions, Interest Rate Calculations
                           and Payment is set out in the Schedule "A" attached
                           hereto.

ARRANGEMENT
FEE                        The Borrower has paid or will pay prior to any
                           drawdown hereunder a non-refundable arrangement fee
                           of $25,000.00.

COMMITMENT
FEE                        (For Committed Revolving Facilities only) On the
                           third Business Day following the last Business Day of
                           March, June, September, and December, in each year,
                           the Borrower shall pay to the Bank a Commitment Fee
                           for the Committed Revolving Loan in an amount equal
                           to 25 bps per annum calculated on a daily average
                           amount of the undrawn portion of the Committed
                           Revolving Loan during the quarter just ended.

ADMINISTRATION
FEE                        Waived

RENEWAL FEE                Waived

DRAWDOWN                   1)       On a revolving basis. Notice periods,
                                    minimum amounts of draws, interest periods,
                                    contract maturity, terms for Banker's
                                    Acceptances and other similar details are
                                    set out in the Schedule "A" attached hereto.

REPAYMENT                  1)       Advances under the facility can be repaid at
                                    any time, other than B/A Instruments which
                                    may be repaid at maturity.

PREPAYMENT                 1)       Prepayment charges referred to in Schedule
                                    "A" for Facilities where the Tenor is
                                    described as Committed and Drawdown is not
                                    on a revolving basis are waived for amounts
                                    outstanding that have been borrowed by way
                                    of Prime Based Loans or USBR Loans.

SECURITY                   The following security shall be provided, shall
                           support all present and future indebtedness and
                           liability of the Borrower and the grantor of the
                           security to the Bank including without limitation
                           indebtedness and liability under guarantees, foreign
                           exchange contracts, cash management products, and
                           derivative contracts, shall be registered in first
                           position, and shall be on the Bank's standard form,
                           supported by resolutions and solicitor's opinion, all
                           acceptable to the Bank:

                           a)       General Security Agreement, with an agreed
                                    delay of attachment until negotiated trigger
                                    events occur, over all present and future
                                    personal property.

                           b)       Postponement and Subordination of Daisytek,
                                    Incorporated, and any subsidiary of
                                    Daisytek, Incorporated identified by the
                                    Bank, as to intercorporate obligations
                                    including inventory return.

                           c)       Assignment of Fire Insurance.

                           d)       Inter-Creditor Agreement between the
                                    Toronto-Dominion Bank, and the Bank of Nova
                                    Scotia, covering but not limited to
                                    advances, repayment, security, defaults,
                                    cross default, realization, etc.


<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


                           e)       Bankers' Acceptance Agreement.

                           All of the above security and guarantees shall be
                           referred to collectively in this Agreement as "Bank
                           Security."

DISBURSEMENT               The obligation of the Bank to make any loan hereunder
CONDITIONS                 is subject to the Standard Disbursement Conditions
                           contained in Schedule "A" and the following
                           additional drawdown conditions:

                           Delivery to the Bank of:

                           a)       Receipt of Executed Copy of the December 18,
                                    2000 Syndicate Credit Arrangement with Banc
                                    One, Texas, N.A.

                           b)       Written Approval/Confirmation/Acknowledgment
                                    from Banc One, Texas, N.A. (Administrative
                                    Agent) that Daisytek (Canada) Inc.:

                                    1. Can enter into a "springing lien"
                                    security interest arrangement with its
                                    Canadian Lending Group

                                    2. Acknowledgment that upon payout of Banc
                                    One Canada's credit facilities, TD Bank will
                                    replace Banc One Canada

                                    3. Confirm that the aggregate level of
                                    non-US indebtedness does not exceed
                                    USD$40,000,000

                                    4. There is no upstream guarantee provided
                                    by Daisytek (Canada) Inc. to the US
                                    Syndicate

REPRESENTATIONS
AND WARRANTIES             All representations and warranties shall be deemed to
                           be continually repeated so long as any amounts remain
                           outstanding and unpaid under this Agreement or so
                           long as any commitment under this Agreement remains
                           in effect. The Borrower makes the Standard
                           Representations and Warranties set out in Schedule
                           "A."

POSITIVE                   So long as any amounts remain outstanding and unpaid
COVENANTS                  under this Agreement or so long as any commitment
                           under this Agreement remains in effect, the Borrower
                           will and will ensure that its subsidiaries and each
                           of the Guarantors will observe the Standard Positive
                           Covenants set out in Schedule "A" and in addition
                           will provide:

                           a)       Monthly Borrowing Base Compliance
                                    Certificate from Daisytek (Canada) Inc. to
                                    be received within 30 days of month end.

                           b)       Annual Review Engagement Financial
                                    Statements of Daisytek (Canada) Inc. within
                                    120 days of fiscal year end.

                           c)       Annual Audited Consolidated Financial
                                    Statements of Daisytek International
                                    Corporation, along with, Annual Internally
                                    Prepared Consolidated Financial Statements
                                    of Daisytek, Incorporated, and Annual
                                    Internally Prepared Financial Statements of
                                    BSD Holdings Inc., within 120 days of fiscal
                                    year end.

                           d)       Annual Unconsolidated Quarterly Projected
                                    Financial Statements of Daisytek (Canada)
                                    Inc., within 120 days of fiscal year end.

                           e)       Quarterly Internally Prepared Financial
                                    Statements of the Borrower, within 60 days
                                    of period end.

                           f)       Quarterly Prepared Consolidated Financial
                                    Statements from Daisytek International
                                    Corporation, within 60 days of period end.


<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


                           g)       Quarterly Compliance Certificate from
                                    Daisytek, Incorporated, and Daisytek
                                    (Canada) Inc. certifying compliance with all
                                    conditions of both the US & Canadian credit
                                    facilities, within 60 days of period end.

                           h)       A copy of any amendment to Daisytek,
                                    Incorporated Credit Agreement, or any new
                                    Credit Agreement in its entirety at the time
                                    of execution.

NEGATIVE
COVENANTS                  So long as any amounts remain outstanding and unpaid
                           under this Agreement or so long as any commitment
                           under this Agreement remains in effect, the Borrower
                           will and will ensure that its subsidiaries and each
                           of the Guarantors will observe the Standard Negative
                           Covenants set out in Schedule "A"."

                           a)       The Borrower is not permitted to negotiate
                                    any other outside financing arrangements
                                    without the prior written consent of both
                                    the Toronto-Dominion Bank, and the Bank of
                                    Nova Scotia.

                           b)       No change in ownership of the Borrower.

                           c)       The Borrower will not pledge their
                                    respective assets or provide a guarantee to
                                    another party unless otherwise agreed to in
                                    writing by the Bank

                           d)       No Dividends, withdrawals, advances to
                                    shareholders, or affiliates are permitted.

                           e)       No payments by the Borrower are to be made
                                    to any shareholder, and/or affiliate other
                                    than in the normal course of business.

                           f)       All advances in excess of CAD $1MM deemed
                                    the swingline will be shared on a 50/50
                                    basis with the Bank of Nova Scotia.

                           g)       Any default under the Credit Agreement dated
                                    December 18, 2000 and as subsequently
                                    amended of Daisytek, Incorporated and
                                    Daisytek International Corporation
                                    constitutes a default under the terms or
                                    credit outlined herein, notwithstanding of
                                    cure, amendment, or forbearance with regard
                                    to the US Syndicate lending arrangement.

                           h)       In the event of an extension, the Borrower
                                    is to provide written notice no less than 40
                                    days and up to 90 days prior to expiry,
                                    requesting an extension for a further
                                    period, subject to no event of default
                                    having occurred and with the extension
                                    subject to the Bank's approval.

                           i)       The Borrower agrees that the terms and
                                    conditions including without limitation any
                                    security granted by the borrower to any
                                    lender, including the Bank of Nova Scotia
                                    shall not be more favorable than the terms
                                    and conditions set out herein. In the event
                                    that the Borrower does grant more favorable
                                    terms, conditions or security to any other
                                    lender, the Borrower agrees that it shall
                                    grant the same terms and conditions
                                    including equal ranking security to the Bank
                                    hereunder.

                           Permitted Liens as referred to in Schedule "A"
                           include all liens related to current security
                           interests and all future liens for the replacement of
                           equipment for which a security interest currently
                           exists.

<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


FINANCIAL
COVENANTS                  The Borrower agrees at all times to:

                           a)       Advances under both the TD Bank and the Bank
                                    of Nova Scotia facilities are not to exceed
                                    the Borrowing Base which is defined as 80%
                                    of good quality under 90 day accounts
                                    receivable, net of intercompany accounts,
                                    plus 50% of inventory net of 0-30 day
                                    payables. Payables due to Daisytek,
                                    Incorporated, and any of its subsidiaries
                                    are not deducted from inventory for
                                    calculation purposes.

                           b)       Ratio of Current Assets to Current
                                    Liabilities is to be maintained at 1.20:1 or
                                    higher at all times.

                           c)       Minimum Shareholder's Equity of $10MM is to
                                    be maintained at all times

                                    Shareholder's Equity is defined as the sum
                                    of Share Capital, Earned and Contributed
                                    Surplus

                           d)       Ratio of Senior Debt to EBITDA is to be
                                    lower than 3:1.

                                    EBITDA is defined as Earnings Before
                                    Interest, Income Taxes, Depreciation, and
                                    Amortization, and is calculated on a rolling
                                    4 quarters basis.

                                        Senior Debt is defined as amounts
                                        outstanding on both the TD Bank, and the
                                        Bank of Nova Scotia facilities.
EVENTS OF
DEFAULT                    The Bank may accelerate the payment of principal and
                           interest under any committed credit facility
                           hereunder and cancel any undrawn portion of any
                           committed credit facility hereunder, at any time
                           after the occurrence of any one of the Standard
                           Events of Default contained in Schedule "A" attached
                           hereto

SCHEDULE "A" -
STANDARD
TERMS AND
CONDITIONS                 Schedule "A" sets out the Standard Terms and
                           Conditions ("Standard Terms and Conditions") which
                           apply to these credit facilities. The Standard Terms
                           and Conditions, including the defined terms set out
                           therein, form part of this Agreement, unless this
                           letter states specifically that one or more of the
                           Standard Terms and Conditions do not apply or are
                           modified.

AMENDMENTS TO
SCHEDULE "A" -
TERMS AND
CONDITIONS                 The following amendments to the Standard Terms and
                           Conditions apply:

                           o        Remove Clause "c" in Section 8 Standard
                                    Negative Covenants.

                           o        Add the following sentence "Subject to
                                    written approval by the Borrower which will
                                    not be unreasonably withheld" to the
                                    beginning of Paragraph 2 Section 9
                                    Environmental.

                           o        Add the following sentence "The Bank agrees
                                    to provide prior written notice of any such
                                    increased costs" at the end of Section 15
                                    Added Cost.

We trust you will find these facilities helpful in meeting your ongoing
financing requirements. We ask that if you wish to accept this offer of
financing (which includes the Standard Terms and Conditions), please do so by
signing and returning the attached duplicate copy of this letter to the
undersigned. Please have the Guarantor(s) sign the letter


<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


below where indicated. This offer will expire if not accepted in writing and
received by the Bank on or before MARCH 23, 2001.


Yours truly,

<Table>
<S>                                <C>             <C>                                <C>
/S/ JOHN A. NEATE                    N496          /S/ SELINIA CHIU                    C1321
--------------------------------   -------         --------------------------------   -------
John A. Neate                      Signing         Selina Chiu                        Signing
Relationship Manager               No.             Analyst, Commercial Banking        No.

/S/ MASON COATES                    P682
--------------------------------   -------
Mason Coates                       Signing
Vice President                     No.
</Table>



<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


TO THE TORONTO-DOMINION BANK:

Daisytek (Canada) Inc. hereby accepts the foregoing offer

this 20th day of March, 2000.

<Table>
<S>                                         <C>
/S/ R. MITCHELL                             /S/ GEORGE MANEY
----------------------------------------    ----------------------------------------
Signature                                   Signature

R. Mitchell       EVP&CFO                   George Maney    VP Finance and Treasurer
----------------------------------------    ----------------------------------------
</Table>



<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


                                   SCHEDULE A
                          STANDARD TERMS AND CONDITIONS



1. INTEREST RATE DEFINITIONS

Prime Rate means the rate of interest per annum (based on a 365/365 day year)
established and reported by the Bank to the Bank of Canada from time to time as
the reference rate of interest for determination of interest rates that the Bank
charges to customers of varying degrees of creditworthiness in Canada for
Canadian dollar loans made by it in Canada.

The Stamping Fee rate per annum is based on a 365/366 day year and the Stamping
Fee is calculated on the Face Amount of each B/A presented to the Bank for
acceptance.

LIBOR means the rate of interest per annum (based on a 360 day year) as
determined by the Bank (rounded upwards, if necessary to the nearest whole
multiple of 1/18th of 1%) at which the Bank may make available United States
dollars which are obtained by the Bank in the Interbank Euro Currency Market,
London, England at approximately 11:00 a.m. (Toronto time) on the second
Business Day before the first day of, and in an amount similar to, and for the
period similar to the interest period of, such advance.

USBR means the rate of interest per annum (based on a 365/366 day year)
established by the Bank from time to time as the reference rate of interest for
the determination of interest rates that the Bank charges to customers of
varying degrees of creditworthiness for US dollar loans made by it in Canada.

Any interest rate based on a period of less than a year expressed as an annual
rate for the purposes of he Interest Act (Canada) is equivalent to such
determined rate multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by the number of days in the
period upon which it is based.

2. INTEREST CALCULATION AND PAYMENT

Interest on Prime Based Loans and USBR Loans is calculated daily and payable
monthly in arrears based on the number of days the subject loan is outstanding.

The Stamping Fee is calculated based on the amount and the term of the B/A and
payable upon acceptance by the Bank of the B/A. The net proceeds received by the
Borrower on a B/A advance will be equal to the Face Amount of the B/A discounted
at the Bank's then prevailing B/A discount rate for the specified term of the
B/A less the B/A Stamping Fee.

Interest on LIBOR Loans is calculated and payable on the earlier of contract
maturity or quarterly in arrears, for the number of days in the LIBOR interest
period.

L/C and L/G fees are payable at the time of issuance of the L/C or L/G.

Interest on Fixed Rate Loans is compounded monthly and payable monthly in
arrears unless otherwise noted.

Interest is payable both before and after maturity or demand, default and
judgment.

Each payment under this Agreement shall be applied first in payment of costs and
expenses, then interest and fees and the balance, if any, shall be applied in
reduction of principal.

For loans not secured by real property, all overdue amounts of principal and
interest shall bear interest from the date on which the same became due until
the date of payment at the All-In Rate plus 2% per annum.

3. DRAWDOWN PROVISIONS

Prime Based and USBR Loans

There is no minimum amount of drawdown by way of Prime Based Loans and USBR
Loans, except as stated in the section of the Agreement titled "Business Credit
Services Agreement", if that section of the Agreement has not been deleted. The
Borrower shall provide the Bank with 3 Business Day's notice of a requested
Prime Based Loan or USBR Loan over $1,000,000.

B/As

The Borrower shall advise the Bank of the requested term or maturity date for
B/As issued hereunder. The Bank shall have the discretion to restrict the term
or maturity dates of B/As. In no event shall the term of the B/A exceed the
Maturity Date. The minimum amount of a drawdown by way of B/As is $500,000 and
in multiples of $100,000 thereafter. The Borrower shall provide the Bank with 3
Business Day's notice of a requested B/A drawdown.

The Borrower shall pay to the bank the final amount of the B/A at the maturity
date of the B/A.

LIBOR

The Borrower shall advise the Bank of the requested LIBOR contract maturity
period. The Bank shall have the discretion to restrict the LIBOR contract
maturity. In no event shall the term of the LIBOR contract exceed the Maturity
Date. The minimum amount of a drawdown by way of a LIBOR Loan is $1,000,000, and
shall be in multiples of $100,000 thereafter. The Borrower will provide the Bank
with 3 Business Day's notice of a requested LIBOR Loan.

L/C and/or L/G

The Bank shall have the discretion to restrict the maturity date of L/Gs or
L/Cs.

B/A - Prime Conversion

The Borrower will provide the Bank with at least 3 Business Days notice of its
intention either to convert a B/A to a Prime Based Loan or vice versa, failing
which, the Bank may decline to accept such additional B/As or may charge
interest on the amount of Prime Based Loans resulting from maturity of B/As at
the rate of 115% of the rate applicable to Prime Based Loans for the 3 Business
Day period immediately following such maturity. Thereafter, the rate shall
revert to the date applicable to Prime Based Loans.

4. PREPAYMENT

For Facilities available on a "revolving" basis, prepayment is not applicable.

For Facilities where the Tenor is described as "Committed" and Drawdown is not
on a revolving basis, when not in default, the Borrower may prepay all or any
part of the principal then outstanding upon payment of interest accrued to the
date of prepayment ("Prepayment Date") and prepayment charges equal to the
greater of:

(a) three months' interest on the amount of the prepayment using the interest
rate applicable to the loan facility being prepaid; and

(b) the Interest Rate Differential. "Interest Rate Differential" means the
amount, by which (i) the total amount of interest the Bank would have received
on the amount prepaid had it not been prepaid but remained outstanding to the
Maturity Date exceeds (ii) the total amount of interest the Bank would receive
on the amount prepaid on a Fixed Rate Loan made for a term from the date of
prepayment until the Maturity Date using the interest rate applicable to a Fixed
Rate Loan the Bank would make to a borrower for a comparable facility on the
Prepayment Date for a term expiring on the Maturity Date.

<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


5. STANDARD DISBURSEMENT CONDITIONS

The obligation of the Bank to make any loan or advance hereunder at any time is
subject to the following conditions precedent:

a)       The Bank shall have received the following documents which shall be in
         form and substance satisfactory to the Bank:

         i) A copy of a duly executed resolution of the Board of Directors of
         the Borrower empowering the Borrower to enter into this Agreement;

         ii) A copy of any necessary government approvals authorizing the
         Borrower to enter into this Agreement;

         iii) All of the Bank Security and supporting resolutions and
         solicitors' letter of opinion required hereunder;

         iv) The Borrower's compliance certificate certifying compliance with
         all terms and conditions hereunder; and

         v) all operation of account documentation;

b)       The representations and warranties contained in this Agreement are
         correct.

c)       No event has occurred and is continuing which constitutes an Event of
         Default or would constitute an Event of Default, but for the
         requirement that notice be given or time elapse or both.

d)       The Bank has received the arrangement fee payable hereunder (if any)
         and the Borrower has paid all legal and other expenses incurred by the
         Bank in connection with the Agreement or the Bank security.

6. STANDARD REPRESENTATIONS AND WARRANTIES

The Borrower hereby represents and warrants, which representations and
warranties shall be deemed to be continually repeated so long as any amounts
remain outstanding and unpaid under this Agreement or so long as any commitment
under this Agreement remains in effect, that:

a)       The Borrower is a corporation duly incorporated and organized, validly
         existing and in good standing under the laws of the jurisdiction where
         the Branch/Centre is located and each other jurisdiction where the
         Borrower has property or assets or carries on business and the Borrower
         has adequate corporate power and authority to carry on its business,
         own property, borrow monies and enter into agreements therefor, execute
         and deliver the Agreement, the Bank Security, and documents required
         hereunder, and observe and perform the terms and provisions of this
         Agreement.

b)       There are no laws, statutes or regulations applicable to or binding
         upon the Borrower and no provisions in its charter documents or in any
         by-laws, resolutions, contracts, agreements, or arrangements which
         would be contravened, breached, violated as a result of the execution,
         delivery, performance, observance, of any terms of this Agreement.

c)       No Event of Default has occurred nor has any event occurred which, with
         the passage of time or the giving of notice, would constitute an Event
         of Default under this Agreement or which would constitute a default
         under any other agreement.

d)       There are no actions, suits or proceedings, including appeals or
         applications for review, or any knowledge of pending actions, suits or
         proceedings against the Borrower and its subsidiaries, before any court
         or administrative agency which would result in any material adverse
         change in the property, assets, financial condition, business or
         operations of the Borrower.

e)       All material authorizations, approvals, consents, licenses, exemptions,
         filings, registrations and other requirements of governmental, judicial
         and public bodies and authorities required to carry on its business
         have been or will be obtained or effected and are or will be in full
         force and effect.

f)       The financial statements and forecasts delivered to the Bank fairly
         present the present financial position of the Borrower, and have been
         prepared by the Borrower and its auditors in accordance with Canadian
         Generally Accepted Accounting Principals consistently applied.

g)       All of the remittances required to be made by the Borrower to the
         federal government and all provincial and municipal governments have
         been made, are currently up to date and there are no outstanding
         arrears. Without limiting the foregoing, all employee source deductions
         (including income taxes, Employment Insurance and Canada Pension Plan),
         sales taxes (both provincial and federal), corporate income taxes,
         corporate capital taxes, payroll taxes and worker's compensation dues
         are currently paid and up to date.

7. STANDARD POSITIVE COVENANTS

So long as any amounts remain outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains in effect, the Borrower
will, and will ensure that its subsidiaries and each of the Guarantors will:

a)       Pay all amounts of principal, interest and fees on the dates, times and
         place specified herein and under any other agreement between the Bank
         and the Borrower.

b)       Advise the Bank of any change in the amount and the terms of any credit
         arrangement made with other lenders or nay action taken by another
         lender to recover amounts outstanding with such other lender.

c)       Advise promptly after the happening of any event which will result in a
         material adverse change in the financial condition, business,
         operations, or prospects of the Borrower or the occurrence of any Event
         of Default or default under this Agreement or under any other agreement
         for borrowed money.

d)       Do all things necessary to maintain in good standing its corporate
         existence and preserve and keep all material agreements, rights,
         franchises, licenses, operations, contracts or other arrangements in
         full force and effect.

e)       Take all necessary actions to ensure that the Bank Security and its
         obligations hereunder will rank ahead of all other indebtedness of and
         all other security granted by the Borrower.

f)       Pay all taxes, assessments and governmental charges unless such taxes,
         assessments, or charges are being contested in good faith and
         appropriate reserves shall be made with funds set aside in a separate
         trust fund.

g)       Provide the Bank with information and financial data as it may request
         from time to time.

h)       Maintain property, plant and equipment in good repair and working
         condition.

i)       Inform the Bank of any actual or probable litigation and furnish the
         Bank with copies of details of any litigation or other proceedings,
         which might affect the financial condition, business, operations, or
         prospects of the Borrower.

j)       Provide such additional security and documentation as may be required
         from time to time by the Bank or its solicitors.

k)       Continue to carry on the business currently being carried on by the
         Borrower its subsidiaries and each of the Guarantors at the date
         hereof.

l)       Maintain adequate insurance on all of its assets, undertakings, and
         business risks.

m)       Permit the Bank or its authorized representatives full and reasonable
         access to its premises, business, financial and computer records and
         allow the duplication or extraction of pertinent information therefrom.

8. STANDARD NEGATIVE COVENANTS

So long as any amounts remain outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains in effect, the Borrower will
not and will ensure that its subsidiaries and each of the Guarantors will not:

a)       Create, incur, assume, or suffer to exist, any mortgage, deed of trust,
         pledge, lien, security interest, assignment, charge, or encumbrance
         (including without limitation, any conditional sale, or other title
         retention agreement, or finance lease) of any nature, upon or with
         respect to any of its assets or undertakings, now owned or hereafter
         acquired, except for those Permitted Liens, if any, set out in the
         Letter.

b)       Create, incur, assume or suffer to exist any other indebtedness for
         borrowed money (except for indebtedness resulting from Permitted


<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


         Liens, if any) or guarantee or act as surety or agree to indemnify the
         debts of any other Person.

c)       Merge or consolidate with any other Person, or acquire all or
         substantially all of the shares, assets, or business of any other
         Person.

d)       Sell, lease, assign, transfer, convey or otherwise dispose of any of
         its now owned or hereafter acquired assets (including, without
         limitation, shares of stock and indebtedness of subsidiaries,
         receivables and leasehold interests), except for inventory disposed of
         in the ordinary course of business.

e)       Terminate or enter into a surrender of any lease of any property
         mortgaged under the Bank Security.

f)       Cease to carry on the business currently being carried on by each of
         the Borrower, its subsidiaries, and the Guarantors at the date hereof.

g)       Permit any change of ownership or change in the capital structure of
         the Borrower.

9. ENVIRONMENTAL

The Borrower represents and warrants (which representation and warranty shall
continue throughout the term of this Agreement) that the business of the
Borrower, its subsidiaries and each of the Guarantors is being operated in
compliance with applicable laws and regulations respecting the discharge,
omission, spill or disposal of any hazardous materials and that any and all
enforcement actions in respect thereto have been clearly conveyed to the Bank.

The Borrower shall, at the request of the Bank from time to time, and at the
Borrower's expense, obtain and provide to the Bank an environmental audit or
inspection report of the property from auditors or inspectors acceptable to the
Bank.

The Borrower hereby indemnifies the Bank, its officers, directors, employees,
agents and shareholders, and agrees to hold each of them harmless from all loss,
claims, damages and expenses (including legal and audit expenses) which may be
suffered or incurred in connection with the indebtedness under this Agreement or
in connection with the Bank Security.

10. STANDARD EVENTS OF DEFAULT

The Bank may accelerate the payment of principal and interest under any
committed credit facility hereunder and cancel any undrawn portion of any
committed credit facility hereunder, at any time after the occurrence of any one
of the following Events of Default:

a)       Non-payment of principal outstanding under this Agreement when due or
         non-payment of interest or fees outstanding under this Agreement within
         3 Business Days of when due.

b)       If any representation, warranty or statement made hereunder or made in
         connection with the execution and delivery of this Agreement or the
         Bank Security is false or misleading at any time.

c)       If there is a breach or non-performance or non-observance of any term
         or condition of this Agreement or the Bank Security and, if such
         default is capable to being remedied, the default continues unremedied
         for 5 Business Days after the occurrence.

d)       If the Borrower, any of its subsidiaries, or, if any of the Guarantors
         makes a general assignment for the benefit of creditors, files or
         presents a petition, makes a proposal or commits any act of bankruptcy,
         or if any action is taken for the winding up, liquidation or the
         appointment of a liquidator, trustee in bankruptcy, custodian, curator,
         sequestrator, receiver or any other officer with similar powers or if a
         judgment or order shall be entered by any court approving a petition
         for reorganization, arrangement or composition of or in respect of the
         Borrower, any of its subsidiaries, or any of the Guarantors or if the
         Borrower, any of its subsidiaries, or any of the Guarantors is
         insolvent or declared bankrupt.

e)       If there exists a voluntary or involuntary suspension of business of
         the Borrower, any of its subsidiaries, or any of the Guarantors.

f)       If action is taken by an encumbrancer against the Borrower, any of its
         subsidiaries, or any of the Guarantors to take possession of property
         or enforce proceedings against any assets.

g)       If any final judgment for the payment of monies is made against the
         Borrower, any of its subsidiaries, or any of the Guarantors and it is
         not discharged within 30 days from the imposition of such judgment.

h)       If there exists an event, the effect of which with lapse of time or the
         giving of notice, will constitute an event of default or a default
         under any other agreement for borrowed money in excess the Cross
         Default Threshold entered into by the Borrower, any of its
         subsidiaries, or any of the Guarantors.

i)       If the Bank Security is not enforceable or if any party to the Bank
         Security shall dispute or deny any liability or any of its obligations
         under the Bank Security.

j)       If, in the Bank's determination, a material adverse change occurs in
         the financial condition, business operations or prospects of the
         Borrower, any of the Borrower's subsidiaries, or any of the Guarantors.

11. ACCELERATION

If the Bank accelerates the payment of principal and interest hereunder, the
Borrower shall immediately pay to the Bank all amounts outstanding hereunder,
including without limitation, the amount of unmatured B/As and LIBOR Loans and
the amount of all drawn and undrawn L/Gs and L/Cs. All cost to the Bank of
unwinding LIBOR Loans and all loss suffered by the Bank in re-employing amounts
repaid will be paid by the Borrower.

The Bank may demand the payment of principal and interest under the Operating
Loan (and any other uncommitted facility) hereunder and cancel any undrawn
portion of the Operating Loan (and any other uncommitted facility) hereunder, at
any time whether or not an Event of Default has occurred.

12. CURRENCY INDEMNITY

US$ loans must be repaid with US$ and CDN$ loans must be repaid with CDN$ and
the Borrower shall indemnify the Bank for any loss suffered by the Bank if US$
loans are repaid with CDN$ or vice versa, whether such payment is made pursuant
to an order of a court or otherwise.

13. TAXATION ON PAYMENTS

All payments made by the Borrower to the Bank will be made free and clear of all
present and future taxes (excluding the Bank's income taxes), withholdings or
deductions of whatever nature. If these taxes, withholdings or deductions are
required by applicable law and are made, the Borrower, shall, as a separate and
independent obligation, pay to the Bank all additional amounts as shall fully
indemnify the Bank from any such taxes, withholdings or deductions.

14. REPRESENTATION

No representation or warranty or other statement made by the Bank concerning any
of the credit facilities shall be binding on the Bank unless made by it in
writing as a specific amendment to this Agreement.

15. ADDED COST

If the introduction of or any change in any present or future law, regulation,
treaty, official or unofficial directive, or regulatory requirement (whether or
not having the force of law) or in the interpretation or application thereof,
relates to:

i)       the imposition or exemption of taxation of payments due to the Bank or
         on reserves or deemed reserves in respect of the undrawn portion of any
         Facility or loan made available hereunder; or

ii)      any reserve, special deposit, regulatory or similar requirement against
         assets, deposits, or loans or other acquisition of funds for loans by
         the Bank; or

iii)     the amount of capital required or expected to be maintained by the Bank
         as a result of the existence of the advances or the commitment made
         hereunder.

and the result of such occurrence is, in the sole determination of the Bank, to
increase the cost of the Bank or to reduce the income received or receivable by
the Bank hereunder, the Borrower shall, on demand by the Bank, pay to the Bank
that amount which the Bank estimates will



<PAGE>

Daisytek (Canada), Inc.                                          March 15, 2001


compensate it for such additional cost or reduction in income and the Bank's
estimate shall be conclusive, absent manifest error.

16. EXPENSES

The Borrower shall pay, within 5 Business Days following notification, all fees
and expenses (including, but not limited to all legal fees) incurred by the Bank
in connection with the preparation, registration, and ongoing administration of
this Agreement and the Bank Security and with the enforcement of the Bank's
rights and remedies under this Agreement or the Bank Security whether or not any
amounts are advanced under the Agreement. These fees and expenses shall include,
but not be limited to, all outside counsel fees and expenses and all in-house
legal fees and expenses. If in-house counsel are used, and all outside
professional advisory fees and expenses. The Borrower shall pay interest on
unpaid amounts due pursuant to this paragraph at the Prime Rate plus 2% per
annum.

17. NON-WAIVER

Any failure by the Bank to object to or take action with respect to a breach of
this Agreement or any Bank Security or upon the occurrence of an Event of
Default shall not constitute a waiver of the Bank's right to take action at a
later date on that breach. No course of conduct by the Bank will give rise to
any reasonable expectation which is in any way inconsistent with the terms and
conditions of this Agreement and the Bank Security or the Bank's rights
thereunder.


<PAGE>


                                                                          Page 1


                                   SCHEDULE A
                   ADDITIONAL TERMS AND CONDITIONS APPLICABLE
                                 TO ALL CREDITS


Calculation and Payment of Interest

1.       Interest on loans/advances made in Canadian dollars will be calculated
         on a daily basis and payable monthly on the 22nd day of each month
         (unless otherwise stipulated by the Bank). Interest shall be payable
         not in advance on the basis of a calendar year for the actual number of
         days elapsed both before and after demand of payment or default and/or
         judgment.

2.       Interest on loans/advances made in U.S. dollars will be calculated on a
         daily basis and payable monthly on the 22nd day of each month, (unless
         otherwise stipulated by the Bank). Interest shall be payable not in
         advance on the basis of a 360 day year for the actual number of days
         elapsed both before and after demand of payment or default and/or
         judgment. The rate of interest based on a 360 day year is equivalent to
         a rate based on a calendar year of 365 days of 365/360 times the rate
         of interest that applies to the U.S. dollar loans/advances.

Interest on Overdue Interest

3.       Interest on overdue interest shall be calculated at the same rate as
         interest on the loans/advances in respect of which interest is overdue,
         but shall be compounded monthly and be payable on demand, both before
         and after demand and judgment.

Indemnity Provision

4.       If the introduction or implementation of, or any change in, or in the
         interpretation of, or any change in its application to the Borrower of,
         any law or any regulation or guideline issued by any central bank or
         other governmental authority (whether or not having the force of law),
         including, without limitation, any reserve or special deposit
         requirement or any tax (other than tax on the Bank's general income) or
         any capital requirement, has due to the Bank's compliance the effect,
         directly or indirectly, of (i) increasing the cost to the Bank of
         performing its obligations hereunder or under any availment hereunder;
         (ii) reducing any amount received or receivable by the Bank or its
         effective return hereunder or in respect of any availment hereunder or
         on its capital; or (iii) causing the Bank to make any payment or to
         forgo any return based on any amount received or receivable by the Bank
         hereunder or in respect of any availment hereunder, then upon demand
         from time to time the Borrower shall pay such amount as shall
         compensate the Bank for any such cost, reduction, payment or forgone
         return (collectively "Increased Costs") as such amounts are calculated
         in a certificate reasonably prepared by the Bank. The Bank agrees to
         provide 90 day prior written notice of any such Increased Costs.

         In the event of the Borrower becoming liable for such Increased Costs,
         the Borrower shall have the right to prepay in full, without penalty,
         the outstanding principal balance under the affected credit other than
         the face amount of any document or instrument issued or accepted by the
         Bank for the account of the Borrower, including, without limitation, a
         Letter of Credit, a Letter of Guarantee or a Bankers' Acceptance. Upon
         any such prepayment, the Borrower shall also pay the then accrued
         interest on the amount prepaid and the Increased Costs to the date of
         prepayment together with such amount as will compensate the Bank for
         the cost of any early termination of its funding arrangements in
         accordance with its normal practices, as such amounts are calculated in
         a certificate reasonably prepared by the Bank.

Calculation and Payment of Bankers' Acceptance Fee

5.       The fee for the acceptance of each Bankers' Acceptance will be payable
         on the face amount of each Bankers' Acceptance at the time of
         acceptance of each draft calculated on the basis of a calendar year for
         the actual number of days elapsed from and including the date of
         acceptance to the due date of the draft.


<PAGE>

                                                                          Page 2


Calculation and Payment of Standby Fee

6.       Standby fees shall be calculated daily and payable monthly on the basis
         of a calendar year for Canadian dollar credits and on the basis of a
         360 day year for U.S. dollar credits from the date of acceptance by the
         Borrower of this Commitment Letter.

Environment

7. The Borrower agrees:

         (a)      to obey all applicable laws and requirements of any federal,
                  provincial, or any other governmental authority relating to
                  the environment and the operation of the business activities
                  of the Borrower;

         (b)      to allow the Bank upon reasonable prior notice and at
                  reasonable times access to the business premises of the
                  Borrower to monitor and inspect all property and business
                  activities of the Borrower;

         (c)      to notify the Bank from time to time of any business activity
                  conducted by the Borrower which involves the use or handling
                  of hazardous materials or wastes or which increases the
                  environmental liability of the Borrower in any material
                  manner;

         (d)      to notify the Bank of any proposed change in the use or
                  occupation of the property of the Borrower prior to any change
                  occurring;

         (e)      to provide the Bank with immediate written notice of any
                  environmental problem and any hazardous materials or
                  substances which have an adverse effect on the property,
                  equipment, or business activities of the Borrower and with any
                  other environmental information requested by the Bank from
                  time to time.

         (f)      to conduct all environmental remedial activities which a
                  commercially reasonable person would perform in similar
                  circumstances to meet its environmental responsibilities and
                  if the Borrower fails to do so, the Bank may perform such
                  activities; and

         (g)      to pay for any environmental investigations, assessments or
                  remedial activities with respect to any property of the
                  Borrower that may be performed for or by the Bank from time to
                  time, subject to written approval by the Borrower, which will
                  not be unreasonably withheld.

                  If the Borrower notifies the Bank of any specified activity or
                  change or provides the Bank with any information pursuant to
                  subsections (c), (d), or (e), or if the Bank receives any
                  environmental information from other sources, the Bank, in its
                  sole discretion, may decide that an adverse change in the
                  environmental condition of the Borrower or any of the
                  property, equipment, or business activities of the Borrower
                  has occurred which decision will constitute, in the absence of
                  manifest error, conclusive evidence of the adverse change.
                  Following this decision being made by the Bank, the Bank shall
                  notify the Borrower of the Bank's decision concerning the
                  adverse change.

                  If the Bank decides or is required to incur expenses in
                  compliance or to verify the Borrower's compliance with
                  applicable environmental or other regulations, the Borrower
                  shall indemnify the Bank in respect of such expenses, which
                  will constitute further advances by the Bank to the Borrower
                  under this Agreement, subject to the stipulations noted in
                  subsection (g).

Initial Drawdown

8.       The right of the Borrower to obtain the initial drawdown under the
         Credit(s) is subject to the condition precedent that there shall not
         have been any material adverse changes in the financial condition or
         the environmental condition of the Borrower or any guarantor of the
         Borrower.


<PAGE>

                                                                          Page 3


Evidence of Indebtedness

9.       The Bank's accounts, books and records constitute, in the absence of
         manifest error, conclusive evidence of the advances made under this
         Credit, repayments on account thereof and the indebtedness of the
         Borrower to the Bank.

Acceleration

10.      (a)      All indebtedness and liability of the Borrower to the Bank
                  payable on demand, is repayable by the Borrower to the Bank at
                  any time on demand;

         (b)      All indebtedness and liability of the Borrower to the Bank not
                  payable on demand, shall, at the option of the Bank, become
                  immediately due and payable, the security held by the Bank
                  shall immediately become enforceable, and the obligation of
                  the Bank to make further advances or other accommodation
                  available under the Credits shall terminate, if any one of the
                  following Events of Default occurs:

                  (i)      the Borrower or any guarantor fails to make when due,
                           whether on demand or at a fixed payment date, by
                           acceleration or otherwise, any payment of interest,
                           principal, fees, commissions or other amounts payable
                           to the Bank;

                  (ii)     there is a breach by the Borrower or any guarantor of
                           any other term or condition contained in this
                           Commitment Letter or in any other agreement to which
                           the Borrower and/or any guarantor and the Bank are
                           parties;

                  (iii)    any default occurs under any security listed in this
                           Commitment Letter under the headings "Specific
                           Security" or "General Security" or under any other
                           credit, loan or security agreement to which the
                           Borrower and/or any guarantor is a party;

                  (iv)     any bankruptcy, re-organization, compromise,
                           arrangement, insolvency or liquidation proceedings or
                           other proceedings for the relief of debtors are
                           instituted by or against the Borrower or any
                           guarantor and, if instituted against the Borrower or
                           any guarantor, are allowed against or consented to by
                           the Borrower or any guarantor or are not dismissed or
                           stayed within 60 days after such institution;

                  (v)      a receiver is appointed over any property of the
                           Borrower or any guarantor or any judgement or order
                           or any process of any court becomes enforceable
                           against the Borrower or any guarantor or any property
                           of the Borrower or any guarantor or any creditor
                           takes possession of any property of the Borrower or
                           any guarantor;

                  (vi)     any course of action is undertaken by the Borrower or
                           any guarantor or with respect to the Borrower or any
                           guarantor which would result in the Borrower's or
                           guarantor's reorganization, amalgamation or merger
                           with another corporation or the transfer of all or
                           substantially all of the Borrower's or any
                           guarantor's assets;

                  (vii)    any guarantee of indebtedness and liability under the
                           Credit Line is withdrawn, determined to be invalid or
                           otherwise rendered ineffective;

                  (viii)   any adverse change occurs in the environmental
                           condition of:

                           (A)      the Borrower or any guarantor of the
                                    Borrower; or

                           (B)      any property, equipment, or business
                                    activities of the Borrower or any guarantor
                                    of the Borrower.


<PAGE>

                                                                          Page 4


Costs

11.      All costs, including legal and appraisal fees incurred by the Bank
         relative to security and other documentation and the enforcement
         thereof, shall be for the account of the Borrower and may be charged to
         the Borrower's deposit account when submitted.

Judgment Currency

12.      The obligations of the Borrower or any Guarantor shall be payable in
         (Canadian/US) Dollars. Such obligations shall not be discharged or
         satisfied by any tender or recovery pursuant to any judgment expressed
         in or converted into any other currency except to the extent to which
         such tender or recovery shall result in the effective receipt by the
         Bank of the full amount of (Canadian/US) Dollars so payable.
         Accordingly, the obligation of the Borrower shall be enforceable as an
         alternate or additional cause of action for the purpose of recovery in
         (Canadian/US) Dollars of the amount (if any) by which such effective
         receipt shall fall short of the full amount of (Canadian/U.S.) Dollars
         so payable and shall not be affected by any judgment being obtained for
         any other sum due hereunder.