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                                                                     EXHIBIT 2.1





                           MASTER SEPARATION AGREEMENT

                                   dated as of

                                December 7, 1999

                                      among

                       DAISYTEK INTERNATIONAL CORPORATION,

                             DAISYTEK, INCORPORATED,

                       PRIORITY FULFILLMENT SERVICES, INC.

                                       and

                                  PFSWEB, INC.




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                           MASTER SEPARATION AGREEMENT

         This Master Separation Agreement ("Agreement") is entered into on
December 7, 1999 among Daisytek International Corporation, a Delaware
corporation ("Daisytek International"), Daisytek, Incorporated, a Delaware
corporation ("Daisytek") and a wholly-owned subsidiary of Daisytek
International, Priority Fulfillment Services, Inc., a Delaware corporation
("PFS") and a wholly-owned subsidiary of Daisytek, and PFSweb, Inc., a Delaware
corporation ("PFSweb"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in Article 1 hereof.

                                    RECITALS

         WHEREAS, the Boards of Directors of Daisytek International and Daisytek
have determined that it would be appropriate and desirable to separate the PFS
Business from Daisytek; and

         WHEREAS, Daisytek has caused PFSweb to be incorporated in order to
effect such separation, Daisytek currently owns all of the issued and
outstanding common stock of PFSweb, and PFSweb currently conducts no business
operations and has no significant assets or liabilities;

         WHEREAS, the Boards of Directors of Daisytek and PFSweb have each
determined that it would be appropriate and desirable for Daisytek to contribute
and transfer to PFSweb, and for PFSweb to receive and assume, directly or
indirectly, substantially all of the assets and liabilities currently associated
with the PFS Business, including the stock currently held by Daisytek in PFS and
the PFS Subsidiaries, and in connection therewith, for PFSweb to (i) pay to
Daisytek the net book value of certain assets to be so transferred to it and
(ii) contribute certain assets to PFS; and

         WHEREAS, Daisytek and PFSweb intend that the contribution and
assumption of assets and liabilities and payment, together with the Distribution
(defined below) will qualify as a tax-free reorganization under Section
368(a)(1)(D) of the Code; and

         WHEREAS, Daisytek and PFSweb currently contemplate that, concurrently
with the contribution and assumption of assets and liabilities, PFSweb will
consummate an initial public offering (the "IPO") of an amount of its Common
Stock (the "PFSweb Common Stock") that will reduce Daisytek's ownership of
PFSweb to not less than 80%; and

         WHEREAS, Daisytek plans that, as soon as practicable following the
satisfaction of applicable conditions, and in no event later than 12 months
following the IPO Closing Date, Daisytek will distribute to Daisytek
International all of the shares of PFSweb common stock owned by Daisytek, and
Daisytek International will, in turn, distribute such shares to the holders of
its common stock, $.01 par value, by means of a pro rata distribution, (the
"Distribution"); and
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         WHEREAS, Daisytek, Daisytek International and PFSweb intend that the
Distribution will be tax-free to Daisytek, Daisytek International and its
stockholders under the Code; and

         WHEREAS, the parties intend in this Agreement to set forth the
principal arrangements between them regarding the separation of the PFS Business
from Daisytek.

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         Section 1.01. Defined Terms. The following terms, as used herein, shall
have the following meanings:

         "Affiliate" of any specified Person means any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, such
specified Person; provided, however, that for purposes of this Agreement, (i)
Daisytek and its subsidiaries (other than PFSweb, PFS and the PFS Subsidiaries)
shall not be considered Affiliates of PFSweb and (ii) PFSweb, PFS and the PFS
Subsidiaries shall not be considered Affiliates of Daisytek.

         "Ancillary Agreements" means each of the agreements to be entered into
by and among Daisytek International, Daisytek, PFSweb and/or PFS in connection
with the Distribution, including any exhibits, schedules, attachments, tables or
other appendices thereto, and each agreement and other instrument contemplated
therein.

         "Business Day " means a day other than a Saturday, a Sunday or a day on
which banking institutions located in the State of New York are authorized or
obligated by law or executive order to close.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.

         "Commission" means the Securities and Exchange Commission.

         "Confidential Information" means with respect to any party hereto, (i)
any Information concerning such party, its business or any of its Affiliates
that was obtained by another party hereto prior to the Contribution Date, (ii)
any Information concerning such party that is obtained by another party under
the provisions of this Agreement, or (iii) any other Information obtained by, or
furnished to, another party hereto prior to the Contribution Date, in each case
that (a) was marked "Proprietary" or "Company Private" or words of similar
import by the party owning such Information, or any Affiliate of such party, or
(b) the party owning such

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Information notified such other party in writing was confidential or secret by
the Contribution Date.

         "Contribution Date" means the IPO Closing Date.

         "Contribution Schedule" means the schedule identified by Daisytek and
PFSweb as the "Contribution Schedule" which sets forth (i) the assets, rights
and benefits to be transferred by Daisytek to PFSweb, (ii) the liabilities,
commitments and obligations of Daisytek to be assumed, discharged, paid or
performed by PFSweb, and (iii) the PFS Intercompany Obligation.

         "Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management of the policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"controlling" and "controlled" have the corollary meanings ascribed thereto.

         "Distribution" has the meaning set forth in the preamble to this
Agreement.

         "Distribution Date" means any date or dates, as the case may be,
determined by Daisytek, in its sole and absolute discretion, to be a date on
which shares of PFSweb Common Stock held by Daisytek are distributed in
connection with the Distribution.

         "Indemnifying Party" means any party hereto which, pursuant to the
terms hereof, is obligated to indemnify any other party hereto.

         "Indemnitee" means any party hereto which, pursuant to the terms
hereof, is entitled to indemnification from any other party hereto.

         "Information" means all records, books, contracts, instruments,
computer data and other data.

         "IPO" has the meaning set forth in the preamble to this Agreement.

         "IPO Closing Date" means the date on which the consummation of the IPO
shall occur.

         "IPO Prospectus" means the Prospectus of PFSweb that forms a part of
the IPO Registration Statement, together with all amendments and supplements
thereto.

         "IPO Registration Statement" means the registration statement on Form
S-1, Registration No. 333-87657 filed by PFSweb with the Commission in
connection with the IPO, together with all amendments and supplements thereto.

         "Person" means an individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated association, any other entity,
or a government or any

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department or agency or other unit thereof.

         "PFS Business" means the business conducted by PFS and the PFS
Subsidiaries at any time on or before the Contribution Date, including (i) all
business operations of PFSweb described in the IPO Prospectus, (ii) all business
operations initiated or acquired by PFS or any of the PFS Subsidiaries after the
date of the IPO Prospectus and (iii) all business operations that were conducted
at any time in the past by PFS or any of the PFS Subsidiaries or by any
predecessor thereto (including, without limitation, Working Capital of America,
Inc.) whether or not discontinued or disposed of prior to the date of the IPO
Prospectus.

         "PFS Intercompany Obligation" means the intercompany obligation owing
by PFS to Daisytek as set forth in the Contribution Schedule.

         "PFS Liabilities" means the liabilities, commitments and obligations of
Daisytek designated as the "PFS Liabilities" in the Contribution Schedule.

         "PFS Memphis Assets" means the assets, rights and benefits designated
as the "PFS Memphis Assets" in the Contribution Schedule.

         "PFS Subsidiaries" means, collectively, PFS, Priority Fulfillment
Services Europe, B.V., a Netherlands corporation; and Priority Fulfillment
Services Canada, Inc., a Canadian corporation.

         "Prior Relationship" means the ownership relationship between Daisytek
and PFSweb at any time prior to the Contribution Date.

         "Representatives" means directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.

         "Subsidiary" means with respect to any specified Person, any
corporation, any limited liability company, any partnership or other legal
entity of which such Person or any of its Subsidiaries Controls or owns,
directly or indirectly, more than 50% of the stock of other equity interest
entitled to vote on the election of the members to the board of directors or
similar governing body.

         "Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than any party hereto or their respective Affiliates
which gives rise to a right of indemnification hereunder.

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                                    ARTICLE 2

                           CONTRIBUTION AND ASSUMPTION

         Section 2.01. Contribution of PFS Assets.

         (a) On the Contribution Date, Daisytek shall contribute and transfer to
PFSweb, all of Daisytek's right, title and interest in, to and under the
following (collectively, the "PFS Assets"): (i) the PFS Memphis Assets, (ii) all
of the issued and outstanding shares of capital stock or other equity interests
in each of the PFS Subsidiaries, whereupon each of the PFS Subsidiaries shall
become wholly-owned Subsidiaries of PFSweb and (iii) the sole outstanding
limited liability company membership interest (the "Membership Interest") in PFS
Texas, L.L.C., a Delaware limited liability company. PFSweb acknowledges and
agrees that, except as set forth herein or in any of the Ancillary Agreements,
the foregoing transfers are made "AS IS WHERE IS" and Daisytek has not made nor
will make any warranty, express or implied, including without limitation any
warranty of merchantability of fitness for a particular purpose, with respect to
any PFS Asset.

         (b) Immediately following the contribution and transfer of the PFS
Assets as provided above, PFSweb shall contribute and transfer to PFS the PFS
Memphis Assets and the Membership Interest.

         Section 2.02. Assumption of Liabilities; Payment to Daisytek. As part
of the Contribution, effective as of the Contribution Date, PFSweb and/or the
PFS Subsidiaries, as directed by PFSweb, shall assume and on a timely basis
shall pay, perform, satisfy and discharge in accordance with their terms the PFS
Liabilities. As part of the Contribution, on the IPO Closing Date, or as soon
thereafter as practicable, PFSweb shall pay to Daisytek the net book value of
the PFS Assets as set forth in the Contribution Schedule. As part of the
Contribution, on the IPO Closing Date, or as soon thereafter as practicable,
PFSweb shall contribute to PFS sufficient funds for PFS to repay the then
outstanding balance, both principal and interest, of the PFS Intercompany
Obligation.

         Section 2.03. Methods of Transfer and Assumption.

         (a) The parties intend to complete the transfer of all PFS Assets and
the assumption of all PFS Liabilities effective as of the Contribution Date;
provided, however, that to the extent any such transfers or assumptions are not
completed as of the Contribution Date, each party shall take all actions
reasonably necessary or appropriate to complete such transactions as promptly
thereafter as possible. In addition, the parties acknowledge that there may
exist (i) PFS Assets or other assets that the parties discover were, by mistake
or omission, transferred to PFSweb or retained by Daisytek, respectively, or
(ii) PFS Liabilities or other liabilities that the parties discover were, by
mistake or omission, assumed by PFSweb or not assumed by PFSweb, respectively.
The parties shall, between the Contribution Date and the Distribution Date,

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cooperate in good faith to effect the transfer or re-transfer of such PFS Assets
or other assets, and/or the assumption or re-assumption of such PFS Liabilities
or other liabilities, to or by the appropriate party and shall not use such
mistake or omission to alter the original intent of the parties hereto with
respect to the PFS Assets to be transferred to or PFS Liabilities to be assumed
by PFSweb. Each party shall reimburse the other or make such other financial or
other adjustments as may be equitable to remedy any mistakes or omissions
relating to any of the PFS Assets transferred hereby or any of the PFS
Liabilities assumed hereby.

         (b) Each party shall execute and deliver to the relevant other party
all such documents, instruments, certificates and agreements in appropriate
form, and make all filings and recordings and take all such other actions, as
shall be necessary or reasonably requested by such other party, whether before
or after the Contribution Date, in order to give full effect to and evidence and
perfect the transfer and contribution of the PFS Assets and assumption of the
PFS Liabilities as contemplated hereby. However, the parties acknowledge and
agree that no party shall be required to comply with the provisions of any bulk
transfer law of any jurisdiction in connection with the transfer of any PFS
Asset.

         (c) Any Subsidiary of PFSweb that will receive any PFS Asset or assume
any PFS Liability shall for all purposes be deemed to be a party to this
Agreement.

         Section 2.04. Nonassignable Contracts. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any PFS Asset or PFS Liability if an assignment or attempted assignment
of the same without the consent of another Person would constitute a breach
thereof or in any way impair the rights of a party thereunder or give to any
third party any rights with respect thereto. If any such consent is not obtained
or if an attempted assignment would be ineffective or would impair such party's
rights under any such PFS Asset or PFS Liability so that the party entitled to
the benefits and responsibilities of such purported transfer (the "Intended
Transferee") would not receive all such rights and responsibilities, then (i)
the party purporting to make such transfer (the "Intended Transferor") shall use
commercially reasonable efforts to provide or cause to be provided to the
Intended Transferee, to the extent permitted by law, the benefits of any such
PFS Asset or PFS Liability and the Intended Transferor shall promptly pay or
cause to be paid to the Intended Transferee when received all moneys received by
the Intended Transferor with respect to any such PFS Asset and (ii) in
consideration thereof the Intended Transferee shall pay, perform and discharge
on behalf of the Intended Transferor all of the Intended Transferor's
liabilities thereunder in a timely manner and in accordance with the terms
thereof which it may do without breach. In addition, the Intended Transferor
shall take such other actions as may reasonably be requested by the Intended
Transferee in order to place the Intended Transferee, insofar as reasonably
possible, in the same position as if such PFS Asset had been transferred as
contemplated hereby and so all the benefits and burdens relating thereto,
including possession, use, risk of loss, potential for gain and dominion,
control and command, shall inure to the Intended Transferee. If and when such
consents and approvals are obtained, the transfer of the applicable PFS Asset
shall be effected in accordance with the terms of this Agreement. To the extent
that the PFS Liabilities include liabilities, obligations or commitments
pursuant to any


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contract, permit, license, franchise or other right, Daisytek shall, to the
extent such contract, permit, license, franchise or other right is not a PFS
Asset, upon request by PFSweb either assign the same to PFSweb or assert and
seek to enforce the same for the benefit of PFSweb.

                                    ARTICLE 3

                              ANCILLARY AGREEMENTS

         Section 3.01. Ancillary Agreements. Daisytek and PFSweb shall, and
shall take all steps reasonably necessary to cause their respective Subsidiaries
and Affiliates to, enter into and perform all Ancillary Agreements in accordance
with their terms. To the extent that any Ancillary Agreement expressly addresses
any matters addressed by this Agreement, the terms and conditions of such
Ancillary Agreement shall govern the rights and obligations of the parties with
respect to such matters.

                                    ARTICLE 4

                                 INDEMNIFICATION

         Section 4.01. Indemnification by PFSweb. PFSweb and each Subsidiary of
PFSweb which shall receive any PFS Asset or PFS Liability transferred pursuant
to the terms of this Agreement and their respective successors-in-interest and
assigns shall jointly and severally indemnify, defend and hold harmless Daisytek
and each of its Subsidiaries and their respective successors-in-interest, and
each of their respective past and present Representatives against any loss,
claim, damage, liability or action, including any reasonable attorneys' fees or
any other expenses reasonably incurred by any of them in connection with
investigating and/or defending any such loss, claim, damage, liability or
action, resulting from, relating to or arising, out of or in connection with the
PFS Business, including without limitation, the PFS Liabilities, to the extent
that any such loss, claim, damage, liability or action shall arise from and
after the Contribution Date or shall relate to any period from and after the
Contribution Date.

         Section 4.02. Indemnification by Daisytek. Daisytek and each Subsidiary
of Daisytek which shall transfer any PFS Asset or PFS Liability pursuant to the
terms of this Agreement and their respective successors-in-interest and assigns
shall jointly and severally indemnify, defend and hold harmless PFSweb and each
of its Subsidiaries and their respective successors-in-interest, and each of
their respective past and present Representatives against any loss, claim,
damage, liability or action, including any reasonable attorneys' fees or any
other expenses reasonably incurred by any of them in connection with
investigating and/or defending any such loss, claim, damage, liability or
action, resulting from, relating to or arising, out of or in connection with the
PFS Business, including without limitation, the PFS Liabilities, to the extent
that any such loss, claim, damage, liability or action shall arise prior to the
Contribution Date or shall relate to any period prior to the Contribution Date.

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         Section 4.03. Indemnification Procedures.

         (a) If any Indemnitee receives notice of the assertion of any
Third-Party Claim with respect to which an Indemnifying Party is obligated under
this Agreement to provide indemnification, such Indemnitee shall promptly give
such Indemnifying Party notice thereof (together with a copy of such Third-Party
Claim, process or other legal pleading) promptly after becoming aware of such
Third-Party Claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section shall not relieve any Indemnifying Party of
its obligations, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice. Such notice shall describe such
Third-Party Claim in reasonable detail.

         (b) An Indemnifying Party, at such Indemnifying Party's own expense and
through counsel chosen by such Indemnifying Party (which counsel shall be
reasonably acceptable to the Indemnitee), may elect to defend any Third-Party
Claim. If an Indemnifying Party elects to defend a Third-Party Claim, then,
within ten Business Days after receiving notice of such Third-Party Claim (or
sooner, if the nature of such Third Party claim so requires), such Indemnifying
Party shall notify the Indemnitee of its intent to do so, and such Indemnitee
shall cooperate in the defense of such Third-Party Claim. Such Indemnifying
Party shall pay such Indemnitee's reasonable out-of-pocket expenses incurred in
connection with such cooperation. Such Indemnifying Party shall keep the
Indemnitee reasonably informed as to the status of the defense of such
Third-Party Claim. After notice from an Indemnifying Party to an Indemnitee of
its election to assume the defense of a Third-Party Claim, such Indemnifying
Party shall not be liable to such Indemnitee under this Section for any
attorneys' fees or other expenses subsequently incurred by such Indemnitee in
connection with the defense thereof; provided, however, that such Indemnitee
shall have the right to employ one law firm as counsel ("Separate Counsel"), to
represent such Indemnitee in any action or group of related actions (which firm
or firms shall be reasonably acceptable to the Indemnifying Party) if, in such
Indemnitee's reasonable judgment at any time, either a conflict of interest
between such Indemnitee and such Indemnifying Party exists in respect of such
claim, or there may be defenses available to such Indemnitee which are
significantly different from or in addition to those available to such
Indemnifying Party and the representation of both parties by the same counsel
would, in the reasonable judgment of the Indemnitee, be inappropriate, and in
that event (i) the reasonable fees and expenses of such Separate Counsel shall
be paid by such Indemnifying Party (it being understood, however, that the
Indemnifying Party shall not be liable for the expenses of more than one
Separate Counsel with respect to any Third-Party Claim (even if against multiple
Indemnitees)) and (ii) each of such Indemnifying Party and such Indemnitee shall
have the right to conduct its own defense in respect of such claim. If an
Indemnifying Party elects not to defend against a Third-Party Claim, or fails to
notify an Indemnitee of its election as provided in this Section within the
period of ten Business Days described above, the Indemnitee may defend,
compromise, and settle such Third-Party Claim and shall be entitled to
indemnification hereunder (to the extent permitted hereunder); provided,
however, that no such Indemnitee may compromise or settle any such Third-Party
Claim without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
the Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (i) settle or compromise any Third-Party

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Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of such
Third-Party Claim or (ii) settle or compromise any Third-Party Claim in any
manner that would be reasonably likely to have a material adverse effect on the
Indemnitee.

         Section 4.04. Certain Limitations.

         (a) The amount of any indemnifiable losses or other liability for which
indemnification is provided under this Agreement shall be net of any amounts
actually recovered by the Indemnitee from third parties (including, without
limitation, amounts actually recovered under insurance policies) with respect to
such indemnifiable losses or other liability. Any Indemnifying Party hereunder
shall be subrogated to the rights of the Indemnitee upon payment in full of the
amount of the relevant indemnifiable loss. An insurer who would otherwise be
obligated to pay any claim shall not be relieved of the responsibility with
respect thereto or, solely by virtue of the indemnification provision hereof,
have any subrogation rights with respect thereto. If any Indemnitee recovers an
amount from a third party in respect of an indemnifiable loss for which
indemnification is provided in this Agreement after the full amount of such
indemnifiable loss has been paid by an Indemnifying Party or after an
Indemnifying Party has made a partial payment of such indemnifiable loss and the
amount received from the third party exceeds the remaining unpaid balance of
such indemnifiable loss, then the Indemnitee shall promptly remit to the
Indemnifying Party the excess (if any) of (i) the sum of the amount theretofore
paid by such Indemnifying Party in respect of such indemnifiable loss plus the
amount received from the third party in respect thereof, less (ii) the full
amount of such indemnifiable loss or other liability.

         (b) The amount of any loss or other liability for which indemnification
is provided under this Agreement shall be (i) increased to take account of any
net tax cost incurred by the Indemnitee arising from the receipt or accrual of
an indemnification payment hereunder (grossed up for such increase) and (ii)
reduced to take account of any net tax benefit realized by the Indemnitee
arising from incurring or paying such loss or other liability. In computing the
amount of any such tax cost or tax benefit, the Indemnitee shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt or accrual of any indemnification
payment hereunder or incurring or paying any indemnified loss. Any
indemnification payment hereunder shall initially be made without regard to this
Section and shall be increased or reduced to reflect any such net tax cost
(including gross-up) or net tax benefit only after the Indemnitee has actually
realized such cost or benefit. For purposes of this Agreement, an Indemnitee
shall be deemed to have "actually realized" a net tax cost or a net tax benefit
to the extent that, and at such time as, the amount of taxes payable by such
Indemnitee is increased above or reduced below, as the case may be, the amount
of taxes that such Indemnitee would be required to pay but for the receipt or
accrual of the indemnification payment or the incurrence or payment of such
loss, as the case may be. Following such determination, the Indemnifying Party
shall pay any underpayment to the Indemnitee and the Indemnitee shall reimburse
the Indemnifying Party for any overpayment, respectively, as may arise from the
foregoing adjustment.

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         (c) Any indemnification payment made under this Agreement shall be
characterized for tax purposes as if such payment were made immediately prior to
the Contribution Date.

                                    ARTICLE 5

                              ACCESS TO INFORMATION

         Section 5.01  Restrictions on Disclosure of Information.

         (a) Without limiting any rights or obligations under any other
agreement between or among the parties hereto and/or any of their respective
Affiliates relating to confidentiality, for a period of three years following
the Contribution Date, each of the parties hereto agrees that it shall not, and
shall not permit any of its Affiliates or Representatives to, disclose any
Confidential Information to any Person, other than to such Affiliates or
Representatives on a need-to-know basis in connection with the purpose for which
the Confidential Information was originally disclosed. Notwithstanding the
foregoing, each of the parties hereto and its respective Affiliates and
Representatives may disclose such Confidential Information, and such Information
shall no longer be deemed Confidential Information, to the extent that such
party can demonstrate that such Confidential Information is or was (i) available
to such party outside the context of the Prior Relationship on a nonconfidential
basis prior to its disclosure by the other party, (ii) in the public domain
other than by the breach of this Agreement or by breach of any other agreement
between or among the parties hereto and/or any of their respective Affiliates
relating to confidentiality, or (iii) lawfully acquired outside the context of
the Prior Relationship on a nonconfidential basis or independently developed by,
or on behalf of, such party by Persons who do not have access to, or
descriptions of, any such Confidential Information. Additionally,
notwithstanding anything to the contrary herein, any Information provided by
Daisytek to PFSweb or by PFSweb to Daisytek shall, except as otherwise set forth
in any of the Ancillary Agreements, not be deemed Confidential Information with
respect to the use of such Information by PFSweb in the ordinary course of the
PFS Business or by Daisytek in the ordinary course of Daisytek's business,
respectively.

         (b) Each of the parties hereto shall maintain, and shall cause their
respective Affiliates to maintain, policies and procedures, and develop such
further policies and procedures as shall from time to time become necessary or
appropriate, to ensure compliance with this Section.

         Section 5.02. Legally Required Disclosure of Confidential Information.
If any of the parties to this Agreement or any of their respective Affiliates or
Representatives becomes legally required to disclose any Confidential
Information, such disclosing party shall promptly notify the party owning the
Confidential Information (the "Owning Party") and shall use all commercially
reasonable efforts to cooperate with the Owning Party so that the Owning Party
may seek a protective order or other appropriate remedy and/or waive compliance
with Section 5.01. All expenses reasonably incurred by the disclosing party in
seeking a protective order or

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other remedy shall be borne by the Owning Party. If such protective order or
other remedy is not obtained, or if the Owning Party waives compliance with
Section 5.01, the disclosing party or its Affiliate or Representative, as
applicable, shall (a) disclose only that portion of the Confidential Information
which its legal counsel advises it is compelled to disclose or else stand liable
for contempt or suffer other similar significant corporate censure or penalty,
(b) use all commercially reasonable efforts, at the Owning Party's expense, to
obtain such reliable assurance as may be reasonably requested by the Owning
Party that confidential treatment will be accorded such Confidential
Information, and (c) promptly provide the Owning Party with a copy of the
Confidential Information so disclosed, in the same form and format so disclosed,
together with a description of all Persons to whom such Confidential Information
was disclosed.

         Section 5.03. Record Retention. To the extent that books and records of
Daisytek or any of its Affiliates contain information relating to the PFS
Business and the same are not included in the PFS Assets, Daisytek agrees to
cooperate with PFSweb in providing PFSweb with any such information upon
PFSweb's reasonable request to the extent that any such information exists and
is reasonably separable from Daisytek information unrelated to the PFS Business.
PFSweb shall reimburse Daisytek for all of its reasonable out-of-pocket costs
incurred in connection with any such request. PFSweb shall preserve and keep all
books and records included in the PFS Assets, whether in electronic form or
otherwise, for no less than the period of time from the Contribution Date as may
be required by any governmental authority or agency or as may be considered good
business practice (the "Retention Period"). If PFSweb wishes to dispose of any
books and records or other documents which it is obligated to retain under this
Section after the Retention Period, then PFSweb shall first provide 90 days'
written notice to Daisytek and Daisytek shall have the right, at its option and
expense, upon prior written notice within such 90-day period, to take possession
of such books or records or other documents. Written notice of intent to dispose
of such books and records shall include a description of the books and records
in detail sufficient to allow Daisytek to reasonably assess its potential need
to retain such materials. In the event PFSweb enters into an agreement with a
third party to sell a portion of the PFS Business, together with the books and
records related thereto, Daisytek shall have the right to duplicate such books
and records prior to any such disposition and, should the purchaser of the PFS
Business be a competitor of Daisytek, Daisytek shall have the right to prohibit
the transfer or disclosure to such party of that portion of the former books and
records of Daisytek which Daisytek notifies PFSweb then contains Confidential
Information.

         Section 5.04. Production of Witnesses. Until the six-year anniversary
of the Contribution Date, each of the parties hereto shall use all commercially
reasonable efforts, and shall cause each of their respective Affiliates to use
all commercially reasonable efforts, to make available to each other, upon
written request, its directors, officers, employees and other Representatives as
witnesses to the extent that any such Person may reasonably be required (giving
consideration to the business demands upon such Persons) in connection with any
legal, administrative or other proceedings in which the requesting party may
from time to time be involved; provided, however, that with respect to any legal
or administrative proceedings relating to the tax liability of any of the
parties hereto or any of their respective Affiliates, each of the parties hereto
shall, and shall cause each of their respective Affiliates to, make their
directors,


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<PAGE>   13

officers, employees and other Representatives available as witnesses until such
time as the statute of limitations have expired with respect to all tax years
prior to and including the year in which the asset transfers contemplated by
this Agreement are consummated.

         Section 5.05. Reimbursement. Unless otherwise provided in this Article,
each party to this Agreement providing access, information or witnesses to
another party pursuant to this Agreement shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payment for all
reasonable out-of-pocket costs and expenses (excluding allocated compensation,
salary and overhead expense) as may be reasonably incurred in providing such
information or witnesses.

                                    ARTICLE 6

                                  MISCELLANEOUS

         Section 6.01. Entire Agreement. This Agreement, including all the
Ancillary Agreements, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior written and oral
and all contemporaneous oral agreements and understandings with respect to the
subject matter hereof.

         Section 6.02. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.

         Section 6.03. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

         Section 6.04. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopy with answer back, by express or overnight mail delivered
by a nationally recognized air courier (delivery charges prepaid), or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at their chief executive offices, or to such other address as
the party to whom notice is given may have previously furnished to the others in
writing in the manner set forth above. Any notice or communication delivered in
person shall be deemed effective on delivery. Any notice or communication sent
by telecopy or by air courier shall be deemed effective on the first Business
Day at the place at which such notice or communication is received following the
day on which such notice or communication was sent. Any notice or communication
sent by registered or certified mail shall be deemed effective on the fifth
Business Day at the place from which such notice or communication was mailed
following the day on which such notice or communication was mailed.

         Section 6.05. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their legal
representatives and successors, and each

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<PAGE>   14

Subsidiary and each Affiliate of the parties hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except as otherwise expressly provided herein. Except as otherwise
expressly set forth herein, this Agreement may not be assigned or transferred to
any other Person without the prior written consent of each of the parties
hereto.

         Section 6.06. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

         Section 6.07. Dispute Resolution. Except as otherwise set forth in the
Ancillary Agreements, resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section. The parties hereto shall use all
commercially reasonable efforts to settle all Disputes without resorting to
mediation, arbitration, litigation or other third party dispute resolution
mechanisms. If any Dispute remains unsettled, a party hereto may commence
proceedings hereunder by first delivering a written notice from a Senior Vice
President or comparable executive officer of such party (the "Demand") to the
other parties providing a reasonable description of the Dispute to the others
and expressly requesting mediation hereunder. The parties hereby agree to submit
all Disputes to non-binding mediation before a mediator reasonably acceptable to
all parties involved in such Dispute. If the parties are unable to agree upon a
mediator or if, after such mediation, the parties subject to such mediation
disagree regarding the mediator's recommendation, such Dispute shall be
submitted to arbitration under the terms hereof, which arbitration shall be
final, conclusive and binding upon the parties, their successors and assigns.
The arbitration shall be conducted in Dallas, Texas by three arbitrators acting
by majority vote (the "Panel") selected by agreement of the parties, or, failing
such agreement, appointed pursuant to the commercial arbitration rules of the
American Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted pursuant to the Federal Arbitration Act and such procedures as the
parties subject to such arbitration (each, a "Party") may agree, or, in the
absence of or failing such agreement, pursuant to the AAA Rules. Notwithstanding
the foregoing: (i) each Party shall have the right to inspect the books and
records of the other Party that are reasonably related to the Dispute; (ii) each
Party shall provide to the other, reasonably in advance of any hearing, copies
of all documents which a Party intends to present in such hearing; and (iii)
each Party shall be allowed to conduct reasonable discovery through written
requests for information, document requests, requests for stipulation of fact
and depositions, the nature and extent of which discovery shall be determined by
the Parties; provided that if the Parties cannot agree on the terms of such
discovery, the nature and extent thereof shall be determined by the Panel which
shall take into account the needs of the Parties and the desirability of making
discovery expeditious and cost effective. The award shall be in writing and
shall specify the factual and legal basis for the award. The Panel shall
apportion all costs and expenses of arbitration, including the Panel's fees and
expenses and fees and expenses of experts, between the prevailing and
non-prevailing Party as the Panel deems fair and reasonable. The parties hereto
agree that monetary damages may be


                                       13
<PAGE>   15

inadequate and that any party by whom this Agreement is enforceable shall be
entitled to seek specific performance of the arbitrators' decision from a court
of competent jurisdiction, in addition to any other appropriate relief or
remedy. Notwithstanding the foregoing, in no event may the Panel award
consequential, special, exemplary or punitive damages. Any arbitration award
shall be binding and enforceable against the parties hereto and judgment may be
entered thereon in any court of competent jurisdiction.

         Section 6.08. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible.

         Section 6.09. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

         Section 6.10. Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to be bound by such change or amendment.

         Section 6.11. Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement and the Ancillary Agreements, (b)
the execution, delivery and performance of this Agreement and the Ancillary
Agreements by it have been duly authorized by all necessary corporate or other
action, (c) it has duly and validly executed and delivered this Agreement and
the Ancillary Agreements, and (d) this Agreement and each Ancillary Agreement is
a legal, valid and binding obligation, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.

         Section 6.12. Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated.

                          [remainder of page is blank]

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<PAGE>   16



         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.


                                  DAISYTEK INTERNATIONAL CORPORATION


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

                                  DAISYTEK, INCORPORATED


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

                                  PRIORITY FULFILLMENT SERVICES, INC.


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

                                  PFSWEB, INC.


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





                                       15