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                                                                    EXHIBIT 10.3

                              DEMAND NOTE AGREEMENT

               (Fixed or Floating Rate, Canadian or U.S. Dollars)


DATE: December 14, 2000


In consideration of BANK ONE CANADA (the "Bank") providing the Borrower with a
DEMAND LOAN FACILITY (the "Loan Facility") in the principal amount of up to
CANADIAN FIVE MILLION DOLLARS (CAD $5,000,000) in lawful currency of CANADA (or
its equivalent in other currencies approved by the Bank), the Borrower agrees
(and each of them, if more than one, jointly and severally agrees) with the Bank
as follows:

1.       The Borrower promises to pay to the Bank on demand in accordance with
         the terms and conditions required by the Bank from time to time at our
         office all amounts outstanding under the Loan Facility, including
         principal, which is the aggregate of all advances made, together with
         interest thereon at the rate of:


NYL               per annum above the rates announced from time to time by the
                  Bank as its "Canadian Prime Rate" in the case of Canadian
                  Dollar advances or is "U.S. Prime Rate" in the case of U.S.
                  Dollar advances (the "Note Rate") and at the rate of 3.00% per
                  annum above the Note Rate after maturity, whether by
                  acceleration or otherwise; or such rate or rates as may be
                  agreed to or confirmed in writing by the Bank from time to
                  time.


         Interest shall be calculated monthly in arrears, both before and after
         maturity, default and judgement, on the daily balance outstanding based
         on the actual number of days clasped, divided by 365, in the case of a
         Canadian Dollar advances, or by 360, in the case of a U.S. Dollar
         advances, with interest on overdue interest at the same rate as on the
         principal, and shall be payable on the last day of each month.


         Any change in the Canadian Prime Rate or U.S. Prime Rate will be
         effective on the date such change is established without notice by the
         Bank to the Borrower. On the date hereof, Canadian Prime Rate is 7.500%
         per annum and U.S. Prime Rate is 9.500% per annum.

2.       The Borrower authorizes the Bank, but the Bank is not obliged, from
         time to time to debit the account or accounts maintained by the
         Borrower with the Bank from time to time (collectively, the "Account")
         with the amount of interest accrued and unpaid by the Borrower and any
         other fees or charges of any kind.

3.       Provided that the Bank has not demanded payment of any amount
         outstanding under the Loan Facility, or has not terminated this
         agreement, the Borrower may borrow, repay and reborrow up to the amount
         available under the Loan Facility at any time and from time to time in
         the following manner:


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         a.       The Borrower will advise and direct the Bank as to the
                  individual amounts the Borrower wishes to borrow, repay or
                  reborrow under the Loan Facility


                                       OR

         b.       The Borrower authorizes the Bank, daily or otherwise as and
                  when determined by the Bank from time to time, to ascertain
                  the position or net position (as the case may be) between the
                  Borrower and the Bank in respect of the Account and that

                  i)       if such position is a credit in favour of the
                           Borrower, the Bank will apply the amount of such
                           credit or any part thereof, rounded to the nearest
                           integral amount established by the Bank from time to
                           time, as a repayment of the Loan Facility, and the
                           Bank will debit the Account with the amount of such
                           repayment, and

                  ii)      if such position or net position is a debit in favour
                           of the Bank, the Bank will make an advance under the
                           Loan Facility of such amount, rounded to the nearest
                           integral amount established by the Bank from time to
                           time, as is required to place the Account in such
                           credit or net credit position as has been agreed
                           between the Borrower and the Bank from time to time,
                           provided that no time shall the balance owing exceed
                           the amount of the Loan Facility.

4.       The Bank shall maintain on the books of its unit of account, accounts
         and records evidencing the outstanding principal amount of the loan of
         the Bank to the Borrower under the Loan Facility together with any
         interest in respect thereof. The Bank shall maintain a record of the
         amount of the balance, each advance, and each payment of principal and
         interest on account of the loan. The Bank's accounts and records
         constitute in the absence of manifest error prima facie evidence of the
         indebtedness of the Borrower to the Bank under the Loan Facility.

5.       Where a statement of account for the Account is to be rendered by the
         Bank, it is agreed that:

         a.       the Borrower will verify the correctness and completeness of
                  each statement of account received from the Bank.

         b.       if a statement of account and relevant vouchers are not
                  received on or before the 10th day after the end of the cycle
                  agreed on for their preparation, the Borrower shall notify the
                  Bank in writing not later than 5 days thereafter.

         c.       the Borrower shall within 30 days and not thereafter following
                  the end of the cycle agreed on for the statement of account
                  preparation, notify the Bank in writing, at the branch of
                  account for the Account, of any alleged omissions from or
                  inaccurate entries in the Account as so stated.



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         d.       at the end of the said 30 days, the statement of account for
                  the Account as kept by the Bank shall be conclusive evidence
                  without any further proof that, provided that this shall not
                  apply with respect to any credits to the Account made in
                  error, any alleged errors of which the Bank has been so
                  notified or any payments made in error, any alleged errors of
                  which the Bank has been so notified or any payments made on
                  forged or unauthorized endorsements, the Account contains all
                  credits that should be contained therein and no debits that
                  should not be contained therein and all the entries therein
                  are correct and, subject to the above exception, the Bank
                  shall be free from all claims in respect of the Account.

6.       The Borrower acknowledges that the terms of this agreement are in
         addition to and not in substitution for any terms and conditions of any
         other agreements between the Borrower and the Bank.

7.       This agreement is delivered in Toronto, Ontario and is governed by the
         laws of the Province of Ontario.


ADDRESS:                                 BORROWER:


                                         DAISYTEK CANADA
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                                         By:   /s/
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                                         (Authorized Signature)




                                         By: /s/
------------------------------              --------------------------------
                                         (Authorized Signature)