<PAGE>   1
                                                                    EXHIBIT 10.5

                                                               LETTER AGREEMENT

                                                               December 23, 1997


Daisytek (Canada) Inc.
35 Valley Wood Drive
Unit #1
Markham, Ontario
L3R 5L9

Attention:   Corporate Secretary

and

Daisytek, Inc.
500 North Central Expressway
Plano, Texas
75074-6763

Attention:   Mr. Thomas Graham

Dear Sirs:

We are pleased to inform you that First Chicago NBD Bank, Canada has approved a
revolving credit facility (the "SEGMENT 1 FACILITY") and a foreign exchange
facility (the "SEGMENT 2 FACILITY") to Daisytek (Canada) Inc. (the Segment 1
Facility and the Segment 2 Facility are collectively referred to as the "CREDIT
FACILITY").

The authorization is subject to the following terms and conditions:


BORROWER:                 DAISYTEK (CANADA) INC. (the "BORROWER")

LENDER:                   FIRST CHICAGO NBD BANK, CANADA (the "BANK").

GUARANTOR:                DAISYTEK, INC. (the "GUARANTOR")

PURPOSE OF
SEGMENT 1
FACILITY:                 To finance working capital for general corporate
                          purposes.


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PURPOSE OF
SEGMENT 2
FACILITY:                 To hedge against foreign exchange rate fluctuations.

SEGMENT 1
FACILITY:                 Committed revolving credit facility of up to a
                          maximum of Cdn $15,000,000 (or the Equivalent Amount
                          in US Dollars) (the "SEGMENT 1 AMOUNT").

                          The Segment 1 Facility is available by way of:

                          1.     loans in Canadian Dollars based on the Prime
                                 Rate ("PRIME LOANS"),
                          2.     the acceptance of bankers' acceptances in
                                 Canadian Dollars based on the Discount Rate
                                 ("B/AS"),
                          3.     loans in Canadian Dollars based on the Cost of
                                 Funds ("COF LOANS"),
                          4.     loans in US Dollars based on the US Base Rate
                                 ("US BASE LOANS"), and
                          5.     loans in US Dollars based on Libor ("LIBOR
                                 LOANS").

                          Each use of the Segment 1 Facility by way of any of
                          the foregoing methods is referred to as a
                          "BORROWING".  The maximum amount payable to the
                          holders of any B/A and the principal amount of all
                          Borrowings outstanding shall be used in determining
                          the amount outstanding under the Segment 1 Facility
                          from time to time.  Where a Borrowing is available in
                          US Dollars the amount outstanding from time to time
                          shall be determined in Canadian Dollars in accordance
                          with the Currency Conversion provision.

SEGMENT 2
FACILITY:                 Uncommitted foreign exchange facility of up to a
                          maximum notional amount of US$1,000,000 based on the
                          Bank's credit risk exposure determined by the Bank in
                          accordance with its standard practices relating to
                          Hedge Contracts as defined below (the "SEGMENT 2
                          AMOUNT").


                          The Segment 2 Facility is available by way of foreign
                          exchange rate hedging techniques such as currency
                          swaps, foreign exchange forward contracts and foreign
                          exchange options ("HEDGE CONTRACTS").

AVAILABILITY:             The Segment 1 Facility is available subject to the
                          following:

                          During the period (the "REVOLVING PERIOD") starting
                          on the date of this Agreement and ending on July 1,
                          1999 (the "MATURITY DATE"), the





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                                      -3-

                          Borrower may borrow, repay and reborrow up to the
                          Segment 1 Amount at any time and from time to time,
                          with respect to a Prime Loan or US Base Loan by
                          withdrawing the money in increments of Cdn$10,000, or
                          US$10,000, as applicable, from its Revolvement
                          Accounts, as defined below, and otherwise subject to
                          notice in accordance with Schedule "B".

                          Borrowings outstanding by way of Libor Loans, COF
                          Loans and B/As may only be repaid on their respective
                          maturity dates.

INTEREST
AND FEES:                 The following interest rates and fees apply to the
                          Credit Facility:

                          1.     Segment 1

                                 Prime Loan   - Prime Rate
                                 B/A - Discount Rate + an acceptance fee of 
                                   0.65 % per annum
                                 COF Loan   - Cost of Funds + 0.65 % per annum
                                 US Base Loan - US Base Rate
                                 Libor Loan - Libor + 0.65 % per annum

                          2.     Segment 2

                                 Hedge Contracts - rate indicated on issue

                          Prime Loans and US Base Loans

                          The Borrower shall, for value on the first Business
                          Day following each month, pay interest on any Prime
                          Loan in Canadian Dollars and interest on any US Base
                          Loan in US Dollars calculated monthly in arrears at
                          the rates set out above accruing daily on the actual
                          number of days elapsed and based on a year of 365
                          days.  Any change in the rates of interest applicable
                          to any Prime Loan or US Base Loan shall be effective
                          as of the opening of business on the day such change
                          takes place.

                          COF Loans

                          The Borrower shall, for value on each COF Interest
                          Date, pay interest on COF Loans in Canadian Dollars,
                          calculated in arrears at the rates set out above,
                          accruing daily on the actual number of days elapsed
                          and based on a year of 365 days.

                          Libor Loans

                          The Borrower shall, for value on each Libor Interest
                          Date, pay interest on Libor Loans in US Dollars,
                          calculated in arrears at the rates set out above,





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                          accruing daily on the actual number of days elapsed
                          and based on a year of 360 days.

                          Acceptance Fees

                          The Borrower shall pay acceptance fees in Canadian
                          Dollars at the rates set out above in advance on the
                          date of issue of each B/A.  Acceptance fees shall be
                          calculated on the face amount of the B/A issued and
                          based on the number of days in the term of such B/A
                          and a year of 365 days.

                          Arrangement Fee

                          The Bank is authorized to collect an arrangement fee
                          of Cdn.$15,000 by way of debit to the Borrower's
                          Revolvement Account, as defined below, following the
                          execution of this Agreement by the Bank and the
                          Borrower.

                          Commitment Fee

                          The Borrower shall pay a Commitment Fee, calculated
                          and payable quarterly in arrears for value on the
                          last Business Day of each quarter until the Maturity
                          Date and on the Maturity Date, of 0.25% per annum on
                          the unborrowed and uncancelled portion of the Segment
                          1 Amount, accruing daily from and including the date
                          of acceptance of this offer, and based on a year of
                          365 days.

                          Loan Administration Fee

                          The Borrower shall pay a loan administration fee of
                          US$500 on the first Business Day of each calendar
                          quarter.

                          Miscellaneous

                          The annual rates of interest or fees to which the
                          rates calculated in accordance with the foregoing
                          paragraphs of this Interest and Fees provision are
                          equivalent, are the rates so calculated multiplied by
                          the actual number of days in the calendar year and
                          divided by 365 or, in the case of Libor Loans, 360.
                          Interest and fees payable under this provision are
                          payable both before and after any or all of default,
                          demand and judgement.

                          Overdue Payments

                          Any overdue payment in Canadian Dollars shall be
                          deemed to be a Prime Loan with interest payable at
                          the Prime Rate + 3% per annum.  Any





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                                      -5-

                          overdue payment in US Dollars shall bear interest
                          payable at the US Base Rate +3%.

EXCHANGE
RATE:                     If, due to exchange rate changes, the value of
                          Borrowings outstanding under the Segment 1 Facility,
                          when converted to Canadian Dollars, exceeds the
                          Segment 1 Amount, the Borrower shall repay, provide
                          cash cover for or otherwise retire or provide
                          collateral satisfactory to the Bank for outstanding
                          Borrowings to the extent of such excess.

REVOLVEMENT:              The Bank shall establish two accounts:  one
                          denominated in Canadian Dollars and the other in US
                          Dollars (each a "REVOLVEMENT ACCOUNT").  The
                          Revolvement Accounts shall record the Borrower's day
                          to day banking business other than pursuant to this
                          agreement.  If the balance in either Revolvement
                          Account:

                          (a)    is a credit, the Bank may apply the amount of
                                 such credit or any part thereof, rounded to
                                 the nearest Cdn$10,000 or US$10,000, as
                                 applicable, as a repayment of Borrowings
                                 outstanding under Segment 1, or

                          (b)    is a debit, the Bank shall make available a
                                 Borrowing under Segment 1 by way of  Prime
                                 Loan or US Base Loan, as applicable, in an
                                 amount, rounded to the nearest Cdn$10,000 or
                                 US$10,000, as applicable, required to place
                                 the Borrower in a minimum net credit position
                                 of zero, provided there are sufficient funds
                                 available under the Segment 1 Amount.

B/A
CONDITIONS:               Each B/A shall be issued and shall mature on a
                          Business Day in accordance with the following
                          conditions:

                          (a)    B/As shall be issued in minimum face amounts
                                 of Cdn$100,000 for terms of not less than 30
                                 and not more than 180 days with each issue
                                 being for an aggregate face amount of
                                 Cdn$1,000,000 or such larger amounts as are
                                 whole multiples of Cdn$100,000,

                          (b)    the proceeds of a B/A issue shall be credited
                                 to the Borrower's account,

                          (c)    the Borrower shall, on the day on which a B/A
                                 becomes payable only, by no later than noon,
                                 pay to the Bank an amount equal to the face
                                 amount of such B/A,





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                                      -6-


                          (d)    if the Borrower fails to fund a maturing B/A
                                 from other sources and has not notified the
                                 Bank of the method of Borrowing it intends to
                                 use to fund such maturing instrument, then the
                                 face amount of such maturing instrument shall
                                 be deemed to be a Prime Loan under the Segment
                                 1 Facility as of the maturity date of such
                                 instrument, and

                          (e)    B/As shall mature on or before the Maturity
                                 Date.

COF LOAN
CONDITIONS:               The Borrower may borrow by way of COF Loans in
                          minimum amounts of Cdn$1,000,000 or such larger
                          amounts as are whole multiples of Cdn$100,000.  The
                          Borrower may select COF Interest Periods and shall
                          notify the Bank of the COF Interest Periods so
                          selected.  The COF Interest Period may not be less
                          than 30 days and not more than one year and may not
                          expire after the Maturity Date.


LIBOR LOAN
CONDITIONS:               The Borrower may borrow by way of Libor Loans in
                          minimum amounts of US$1,000,000 or such larger
                          amounts as are whole multiples of US$100,000.  The
                          Borrower may select Libor Interest Periods and shall
                          notify the Bank of the Libor Interest Periods so
                          selected.  The Libor Interest Period may not be less
                          than 30 days and not more than 180 days and may not
                          expire after the Maturity Date.

                          Indemnity

                          The Borrower shall reimburse the Bank for any loss,
                          cost or expense (including without limitation the
                          cost to the Bank of redeploying funds obtained to
                          fund or maintain any Libor Loan) incurred as a result
                          of:

                          (a)    repayments or prepayments relative to Libor
                                 Loans effected on other than the last day of a
                                 Libor Interest Period applicable to the amount
                                 being repaid or prepaid, or

                          (b)    failure to draw down a Libor Loan on the
                                 requested date.

                          Availability

                          If the Bank determines, which determination is final,
                          conclusive and binding upon the Borrower, that:

                          (a)    adequate and fair means do not exist for
                                 ascertaining the rate of interest on a Libor
                                 Loan,





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                                      -7-


                          (b)    the making of a Libor Loan has become
                                 impracticable by reason of circumstances which
                                 materially or adversely affect the London
                                 interbank market,

                          (c)    deposits in US Dollars are not available to
                                 the Bank in the London interbank market in
                                 sufficient amounts in the ordinary course of
                                 business for the applicable period to make,
                                 fund or maintain a Libor Loan during such
                                 period, or

                          (d)    the relevant rate of interest referred to in
                                 the definition of "Libor" does not accurately
                                 reflect the cost to the Bank of funding Libor
                                 Loans for the relevant Libor Interest Period,

                          then Libor Loans shall not be available under this
                          Agreement.

                          Illegality

                          If it should become unlawful or prohibited for the
                          Bank to make or maintain Libor Loans, the Libor
                          Loans, together with all accrued but unpaid interest,
                          shall automatically be converted to US Base Loans and
                          the Borrower's ability to borrow by way of Libor Loan
                          shall terminate forthwith, unless such law or
                          prohibition is subsequently withdrawn.

HEDGE
CONTRACT
CONDITIONS:               Each Hedge Contract is subject to documentation in
                          form and substance satisfactory to the Bank.  The
                          Bank may, at its sole discretion, decline to make any
                          particular or all methods of hedging available to the
                          Borrower at any time.  If Hedge Contracts are entered
                          into over the telephone, the terms shall be confirmed
                          in writing.  The Borrower will indemnify the Bank for
                          and hold it harmless from any loss, cost or expense
                          suffered or incurred by the Bank as a result of
                          acting upon instructions given or agreements made
                          over the telephone with Responsible Officers
                          reasonably believed by the Bank to have been acting
                          on the Borrower's behalf.  The foregoing indemnity
                          applies to all instructions given or agreements made
                          with respect to Hedge Contracts, whether such
                          instructions or agreements relate to the Borrower and
                          the Bank only or involve crediting the accounts of
                          third parties.

INCREASED
COSTS:                    The Borrower shall reimburse the Bank that amount
                          which compensates the Bank for any additional cost,
                          reduction in income or reduction in the Bank's return
                          on capital or assets caused by:





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                                      -8-


                          (a)    an imposition of or increase in, or the
                                 withdrawal or termination of a previously
                                 granted exemption with respect to, any taxes
                                 on amounts payable by the Borrower to the Bank
                                 under this Agreement other than taxes on the
                                 capital or overall net income of the Bank,

                          (b)    a regulatory imposition of or increase in
                                 reserve, liquidity, cash margin, special
                                 deposit, deposit insurance or similar
                                 requirements against assets held or deposits
                                 in or for the account of, loans by or any
                                 other acquisition of funds related to
                                 Borrowings under this Agreement,

                          (c)    a change in the manner or the extent to which
                                 the Bank is required by the Superintendent of
                                 Financial Institutions to allocate capital to
                                 assets acquired or commitments made pursuant
                                 to this Agreement, or

                          (d)    the imposition of any other condition with
                                 respect to this Agreement by any governmental
                                 body or persons acting under the authority of
                                 any governmental body, through any law,
                                 statute, directive, regulation, request,
                                 order, judgement or requirement with which
                                 financial institutions operating in Canada are
                                 accustomed to or have generally complied,
                                 whether or not having the force of law.

                          The Bank shall provide the Borrower with 30 days
                          prior written notice of the Bank's intention to rely
                          on this provision. Such notice will give details of
                          the circumstances giving rise to the Bank's action
                          with copies of any relevant law, directive,
                          regulation, request or requirement, if available.
                          The notice will be accompanied by a certificate
                          signed by an officer of the Bank setting out the
                          manner in which the Bank has calculated any required
                          compensation which shall be, in the absence of
                          manifest error, conclusive evidence of the amount of
                          any compensation required.  The Borrower shall pay
                          the Bank the amount of any such required compensation
                          in accordance with the requirements of any such
                          notice.  The Bank will use its reasonable best
                          efforts to minimize the effect of any such required
                          compensation on the Borrower's cost of borrowing but
                          any costs or expenses associated with the early
                          termination of any Borrowing are for the account of
                          the Borrower.

REPAYMENT AND
REDUCTION OF
CREDIT
FACILITY:
                          1.     Segment 1 Facility - All outstanding
                                 Borrowings under the Segment 1 Facility shall
                                 be repaid in full on the Maturity Date.





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                                      -9-


                          2.     The Bank may, without notice, cancel any
                                 unused portions of the Segment 2 Amount at any
                                 time, from time to time.

CANCELLATION:             Upon 5 Business Days written notice to the Bank, the
                          Borrower may cancel any undrawn portion of the Credit
                          Facility without penalty.  Any such cancellation is
                          irrevocable and any portion of the Credit Facility
                          cancelled shall not be reinstated.

EVIDENCE OF
INDEBTEDNESS:             The Bank shall open and maintain accounts and records
                          evidencing the Borrowings and Hedge Contracts made
                          available to the Borrower by the Bank. The Bank shall
                          record the principal amount of such Borrowings, the
                          payment of principal, interest and fees, and all
                          other amounts becoming due to the Bank, including
                          amounts due under Hedge Contracts.

                          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.

                          The Borrower authorizes and directs the Bank to
                          automatically debit, by mechanical, electronic or
                          manual means, any bank account of the Borrower for
                          all amounts payable by the Borrower to the Bank
                          including, but not limited to, the repayment of
                          principal and the payment of interest, fees and all
                          charges for the keeping of such bank account.

                          This provision shall be interpreted as a separate
                          contract between the parties, independent of all
                          other terms of this Agreement and shall remain in
                          full force and effect notwithstanding that this
                          Agreement shall have otherwise ceased to have any
                          force or effect.

CONDITIONS
PRECEDENT:                The effectiveness of this Agreement is subject to and
                          conditional upon the receipt, in form and substance
                          satisfactory to the Bank of:

                          (a)    a duly executed copy of this Agreement,

                          (b)    a duly executed Promissory Note given by the
                                 Borrowers in favour of the Bank,

                          (c)    a duly executed guarantee given by the
                                 Guarantor, in favour of the Bank, of the
                                 Borrower's obligations under this Agreement
                                 (the "GUARANTEE"),

                          (d)    an opinion of legal counsel to the Guarantor
                                 in respect of the enforceability of the
                                 Guarantee,





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                                      -10-


                          (e)    an officer's certificate of the Borrower
                                 attaching copies of the articles of
                                 incorporation, by-laws, directors' resolutions
                                 and specimen signatures of the persons
                                 authorized to sign this Agreement,

                          (f)    an officer's certificate of the Guarantor
                                 attaching copies of the articles of
                                 incorporation, by-laws, directors' resolutions
                                 and specimen signatures of the persons
                                 authorized to sign the Guarantee,

                          (g)    a signing authorization package of the Bank
                                 (banking resolution, signature cards, list of
                                 officers and directors) completed by the
                                 Borrower,

                          (h)    a duly executed foreign exchange forward
                                 contract request,

                          (i)    a duly executed B/A undertaking, and

                          (j)    a copy of the executed loan agreement between
                                 First Chicago NBD Bank and the Guarantor (the
                                 "GUARANTOR LOAN AGREEMENT") along with any
                                 waivers, extensions or replacement facilities.

                          It shall be a condition precedent to each Borrowing
                          under the Segment 1 Facility and each Hedge Contract
                          under the Segment 2 Facility that no event or
                          condition has occurred which with the giving of
                          notice or lapse of time would constitute an Event of
                          Default.

REPRESENTATIONS
AND
WARRANTIES:               Borrower represents and warrants to the Bank, which
                          representations and warranties are repeated, mutatis
                          mutandis, with each Borrowing and each Hedge Contract
                          that:

                          1a     it is a corporation validly incorporated and
                                 subsisting under the laws of its jurisdiction
                                 of incorporation, and that it is duly
                                 registered or qualified to carry on business
                                 in all jurisdictions where the nature of its
                                 properties, assets or its business makes such
                                 registration or qualification necessary and is
                                 in compliance in all material respects with
                                 applicable laws;

                          2a     the execution and delivery of this Agreement
                                 has been duly authorized by all necessary
                                 actions and does not (i) violate any law,
                                 regulation or rule by which it is bound, (ii)
                                 violate any provision of its constating
                                 documents, by-laws or any unanimous
                                 shareholders' agreement to which it is
                                 subject, or (iii) result in a breach of, a
                                 default under, or the creation of any
                                 encumbrance on its properties





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<PAGE>   11
                                      -11-

                                 and assets or under any agreement or
                                 instrument to which it is a party or by which
                                 it or any of its properties and assets may be
                                 bound or affected;

                          3a     this Agreement constitutes a legal valid and
                                 binding obligation of the Borrower subject to
                                 bankruptcy, insolvency, winding up,
                                 re-organization, moratorium or other laws
                                 affecting creditors' rights generally and that
                                 equitable remedies such as specific
                                 performance and injunction are available at
                                 the discretion of the court;

                          4a     there are no proceedings that have been
                                 commenced or that are pending or threatened
                                 which if determined adversely would have a
                                 material adverse effect on the business or
                                 financial condition of the Borrower or its
                                 ability to meet its obligations under this
                                 Agreement;

                          5a     its income statements and balance sheets for
                                 the fiscal quarter ended September 30, 1997
                                 are materially correct and complete in all
                                 respects and no material adverse change has
                                 taken place in its financial condition since
                                 the date of such statements and balance
                                 sheets; and

                          6a     no event has occurred which constitutes, or
                                 which with giving of notice, lapse of time or
                                 other condition would constitute, a default
                                 having a material adverse effect on its
                                 financial condition under or in respect of any
                                 agreement, undertaking or instrument to which
                                 it or any of its properties or assets may be
                                 subject.

REPORTING
REQUIREMENTS:             The Borrower shall provide the Bank with the
                          following statements and reports, each of which shall
                          be signed by an officer of the Borrower or the
                          Guarantor, as applicable:

                          1a     Quarterly income statements and balance sheets
                                 of the Borrower not later than 60 days
                                 subsequent to each quarter-end;

                          2a     Annual audited financial statements of the
                                 Guarantor not later than 120 days subsequent
                                 to each fiscal year-end;

                          3a     Quarterly financial statements of the
                                 Guarantor not later than 60 days subsequent to
                                 each quarter end;

                          4a     Quarterly compliance letters from the
                                 Guarantor confirming that it is not in breach
                                 of any covenants under any of its Debt; and





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<PAGE>   12
                                      -12-


                          5a     Such other financial information as the Bank
                                 may reasonably request.

COVENANTS:                The Borrower covenants and agrees with the Bank,
                          while this Agreement is in effect or any Borrowings
                          or Hedge Contracts are outstanding:

                          1a     to pay all sums of money when due under this
                                 Agreement as applicable;

                          2a     to do or cause to be done all things necessary
                                 to keep in full force and effect its corporate
                                 existence and all material rights, franchises,
                                 licences and qualifications to carry on its
                                 businesses or own its properties and assets in
                                 each jurisdiction in which it carries on
                                 business or owns property or assets from time
                                 to time;

                          3a     to provide the Bank with copies of all
                                 amendments, waivers, extensions or replacement
                                 facilities to the Guarantor Loan Agreement;

                          4a     to comply in all material respects with all
                                 applicable laws required for it to carry on
                                 its business;

                          5a     to conduct its business in a proper, efficient
                                 and business-like manner and maintain its
                                 property, plant, and equipment used in the
                                 conduct of its business and which is neither
                                 obsolete nor unnecessary in a good and
                                 workmanlike manner;

                          6a     to insure and to keep insured its properties
                                 customarily insured by companies carrying on a
                                 similar business in similar locations, or
                                 owning or operating similar properties,
                                 against all risks, including but not limited
                                 to business interruption insurance;

                          7a     to notify the Bank of any proceedings that are
                                 pending, threatened or commenced seeking
                                 damages from it in excess of $150,000 in
                                 respect of a single proceeding or $500,000 in
                                 the aggregate for all such proceedings;

                          8a     to give the Bank prompt notice of any Event of
                                 Default or any event which, with notice or
                                 lapse of time, or both, would constitute an
                                 Event of Default;

                          9a     to file all material income tax returns which
                                 are or will be required to be filed, to pay or
                                 make provision for payment of all material
                                 taxes (including interest and penalties) which
                                 are or will become





                                                                LETTER AGREEMENT
<PAGE>   13
                                      -13-

                                 due and payable and to provide adequate
                                 reserves for the payment of any tax the
                                 payment of which is being contested; and

                          10a    to maintain a system of accounting established
                                 and administered in accordance with GAAP
                                 consistently applied and to permit the Bank or
                                 its representatives to examine its books and
                                 financial records and to discuss its affairs,
                                 finances and accounts with the auditors of the
                                 Borrower at such reasonable times and as may
                                 reasonably be requested by the Bank.

EVENTS OF
DEFAULT:                  Upon the occurrence of any one or more of the
                          following events ("EVENTS OF DEFAULT") the Bank may,
                          by written notice to the Borrower, declare an Event
                          of Default:

                          (a)    the non-payment when due of principal,
                                 interest, fee, or any other amounts due under
                                 this Agreement;

                          (b)    the breach by the Borrower of any provision of
                                 this Agreement or any other agreement with the
                                 Bank and such breach is not remedied within 15
                                 days after the earlier of: (1) a Responsible
                                 Offer of a Daisytek Corporation becoming aware
                                 thereof or (2) notice thereof being given by
                                 the Bank to the Borrower, provided that the
                                 breach is capable of being of being remedied;

                          (c)    the breach by the Guarantor of any provision
                                 of the Guarantor Loan Agreement or any other
                                 agreement with First Chicago NBD Bank and such
                                 breach is not remedied within 15 days provided
                                 that the breach is capable of being remedied;

                          (d)    termination, for any reason, of the Guarantor
                                 Loan Agreement;


                          (e)    if any representation or warranty made herein
                                 or in any document, agreement or certificate
                                 delivered pursuant hereto shall be false or
                                 inaccurate in any material respect;

                          (f)    if a distress or execution or any similar
                                 process be levied or enforced against any
                                 material property or assets of the Borrower or
                                 the Guarantor having an aggregate market value
                                 of $100,000 or more unless such distress or
                                 execution is being contested in good faith by
                                 appropriate legal proceedings and the person
                                 levying or enforcing the distress or execution
                                 is stayed during the course of such
                                 proceedings;





                                                                LETTER AGREEMENT
<PAGE>   14
                                      -14-


                          (g)    if Borrower or Guarantor:

                                 (1)   institutes proceedings for its
                                       winding-up, liquidation, or dissolution
                                       or consents to the filing of any
                                       petition with respect thereto including,
                                       without limitation, taking any action in
                                       furtherance of the foregoing under the
                                       Winding- Up Act (Canada) or its
                                       incorporating statute or similar act
                                       applicable to it in any applicable
                                       jurisdiction,

                                 (2)   files a notice, plan, petition, answer
                                       or consent seeking reorganization,
                                       readjustment, arrangement, composition
                                       or similar relief under any applicable
                                       law or consents to the filing of any
                                       such plan or petition or to the
                                       appointment of a receiver, liquidator,
                                       trustee or similar officer of itself or
                                       any part of its property, including,
                                       without limitation, taking or consenting
                                       to others taking any action pursuant to
                                       the Bankruptcy and Insolvency Act
                                       (Canada), or the Companies' Creditors
                                       Arrangement Act (Canada),

                                 (3)   makes an assignment for the benefit of
                                       creditors,

                                 (4)   is unable or admits in writing its
                                       inability to pay its Debts as they
                                       become due or otherwise acknowledges its
                                       insolvency, or

                                 (5)   is deemed for the purposes of any
                                       applicable law to be insolvent,

                                 or takes any action in furtherance of any of
                                 the foregoing;

                          (h)    if, with respect to Borrower or Guarantor or
                                 both of them, any third party:

                                 (1)   makes any application under the
                                       Companies' Creditors Arrangement Act
                                       (Canada), or similar act applicable to
                                       it in any jurisdiction,

                                 (2)   files a proposal and/or notice of
                                       intention to file a proposal under the
                                       Bankruptcy and Insolvency Act (Canada)
                                       or similar act applicable to it in any
                                       jurisdiction,

                                 (3)   institutes a winding-up proceeding under
                                       the Winding-Up Act (Canada), any
                                       relevant incorporating statute or any
                                       similar act applicable to it in any
                                       jurisdiction, or





                                                                LETTER AGREEMENT
<PAGE>   15
                                      -15-


                                 (4)   presents a petition in bankruptcy under
                                       the Bankruptcy and Insolvency Act
                                       (Canada) or similar act applicable to it
                                       in any jurisdiction,

                                 (each of which shall be treated as a default
                                 hereunder) and if any such application,
                                 filing, proceeding or petition is not
                                 dismissed, stayed or withdrawn within 30 days
                                 of the Borrower or Guarantor, as applicable,
                                 receiving notice or otherwise having knowledge
                                 of the institution thereof or if relief is
                                 granted or judgement entered to or in favour
                                 of any third person in respect of any such
                                 application, filing, proceeding or petition;
                                 or

                          (i)    the seizure of all or any material part of the
                                 Borrower's or Guarantor's assets by any
                                 creditor or creditor's representative,
                                 including without limitation, a privately
                                 appointed receiver or sheriff.

                          Upon the declaration of an Event of Default, the
                          ability of the Borrower to make further Borrowings or
                          Hedge Contracts under the Credit Facility shall
                          immediately terminate and the Bank may, by written
                          notice to the Borrower, declare the Borrowings and
                          Hedge Contracts outstanding under the Credit Facility
                          to be immediately due and payable. The Borrower shall
                          immediately pay to the Bank all amounts outstanding
                          under Credit Facility.

INDEMNITY:                The Borrower shall indemnify the Bank from and
                          against all losses, damages, expenses and liabilities
                          which the Bank sustains or incurs as a consequence of
                          any default by the Borrower under any of the
                          provisions of this Agreement or any misrepresentation
                          by the Borrower contained in, or delivered in writing
                          in connection with, this Agreement.

SCHEDULES:                The Schedules attached to this Agreement are
                          incorporated in this Agreement by reference as if set
                          out in full herein.

WHOLE
AGREEMENT:                This Agreement and any agreements delivered pursuant
                          to or referenced in this Agreement constitute the
                          whole and entire agreement between the parties and
                          cancel and supersede any prior agreements including
                          undertakings, declarations or representations,
                          written or verbal, in respect of the Credit Facility.

EXPENSES:                 The Borrower shall pay the reasonable fees
                          (including, but not limited to, all fees of the
                          Bank's counsel on a solicitor and client basis) and
                          expenses incurred by the Bank in connection with the
                          preparation, negotiation,





                                                                LETTER AGREEMENT
<PAGE>   16
                                      -16-

                          documentation and operation of the Credit Facility
                          whether or not any amounts are advanced under the
                          Credit Facility.

CURRENCY
CONVERSION:               If, for the purpose of obtaining judgement in any
                          court, determining the amount outstanding under this
                          Agreement or for any other purpose, it is necessary
                          to convert an amount in one currency (the "ORIGINAL
                          CURRENCY") into another currency (the "SECOND
                          CURRENCY"), the Equivalent Amount of the Second
                          Currency shall be used.  If the conversion relates to
                          a judgement, the conversion shall be performed as of
                          the date 2 Business Days preceding that on which
                          judgement is given.  For all other purposes, the
                          conversion shall be performed as of the date and time
                          of determination.

                          The Borrower agrees that any obligations in respect
                          of any Original Currency due from it to the Bank
                          shall, notwithstanding any judgement or payment in
                          any Second Currency, be discharged only to the extent
                          that, on the Business Day following receipt of any
                          sum so paid or adjudged to be due in the Second
                          Currency, the Bank may, in accordance with normal
                          banking procedures, purchase, in the Toronto foreign
                          exchange market, the Original Currency with the
                          amount of the Second Currency so paid or so adjudged
                          to be due; and if the amount of the Original Currency
                          so purchased is less than the amount of the Original
                          Currency due to the Bank, the Borrower agrees, as a
                          separate obligation and notwithstanding any such
                          payment or judgement, to pay the Bank the amount of
                          the Second Currency required to purchase the amount
                          of the Original Currency necessary to make up such
                          difference on such date together with interest (at
                          the Prime Rate per annum) and expenses (including
                          legal fees on a solicitor and client basis) from such
                          date to the date of payment.

NO DEDUCTION:             All payments to be made by the Borrower under this
                          Agreement shall be made in full, without any set-off
                          or counterclaim whatsoever.

GROSSING-UP
FOR TAXES:                If at any time the Borrower is required to make any
                          deduction or withholding in respect of Taxes,
                          excluding Taxes on income, from any payment due under
                          this Agreement for the account of the Bank, the sum
                          due from the Borrower in respect of such payment
                          shall be increased to the extent necessary to ensure
                          that, after the making of such deduction or
                          withholding, the Bank receives on the due date for
                          such payment (and retains, free from any liability in
                          respect of such deduction or withholding) a net sum
                          equal to the sum which it would have received had no
                          such deduction or withholding been required to be
                          made and the Borrower shall indemnify the Bank
                          against any losses or costs incurred by reason of any
                          failure of the Borrower to make any such deduction or
                          withholding or by





                                                                LETTER AGREEMENT
<PAGE>   17
                                      -17-

                          reason of any increased payment not being made on the
                          due date for such payment.  The Borrower shall
                          promptly deliver to the Bank any receipts,
                          certificates or other proof evidencing the amounts
                          (if any) paid or payable in respect of any deduction
                          or withholding as aforesaid.

ASSIGNMENT
AND
PARTICIPATION:            This Agreement shall be binding upon and enure to the
                          benefit of the Bank and the Borrower and their
                          respective successors and permitted assigns.  The
                          Bank may assign or transfer its rights, benefits and
                          obligations under the Credit Facility to any other
                          financial institution ("ASSIGNEE") subject to the
                          prior consent of the Borrower, which consent shall
                          not be unreasonably withheld.  After any such
                          assignment or transfer, the term "Bank" as used in
                          this Agreement with respect to the Credit Facility
                          (as appropriate) shall be deemed to be the Assignee
                          to the extent of its interest.

                          The Bank may sell participation in the Credit
                          Facility to any third party, provided that no such
                          participant shall have any rights under this
                          Agreement as against the Borrower.

                          In assigning, transferring or participating all or
                          any part of its rights or obligations as aforesaid,
                          the Bank may reveal to potential Assignees or
                          participants all or any information regarding the
                          Borrower or the Guarantor and their Subsidiaries as
                          the Bank deems necessary or desirable.

                          The Borrower may not assign any of its rights under
                          this Agreement.

GAAP:                     Unless otherwise provided, all accounting terms used
                          in this Agreement shall be interpreted in accordance
                          with GAAP, consistently applied.

SEVERABILITY:             If any provision of this Agreement is or becomes
                          prohibited or unenforceable in any jurisdiction, such
                          prohibition or unenforceability shall not invalidate
                          or render unenforceable the provision concerned in
                          any other jurisdiction nor shall it invalidate,
                          affect or impair any of the remaining provisions.

GOVERNING
LAW:                      This Agreement shall be construed in accordance with
                          and governed by the laws of the Province of Ontario
                          and of Canada applicable therein and the parties
                          attorn to the non-exclusive jurisdiction of the
                          courts of the Province of Ontario.





                                                                LETTER AGREEMENT
<PAGE>   18
                                      -18-


COUNTERPARTS:             The parties may sign this Agreement in any number of
                          counterparts, all of which taken together and when
                          delivered to the Bank shall constitute one and the
                          same instrument.

If the above terms and conditions are acceptable to you, as they are to the
Bank, please sign and return the enclosed acknowledgement copy of this letter
no later than December 31, 1997.  This offer supersedes any previous offers of
credit.

Sincerely,                                                                    
                                                                              
                                       Acknowledged by:                       

FIRST CHICAGO NBD BANK, CANADA,  as    DAISYTEK (CANADA) INC., as Borrower    
the Bank                                                                      
                                                                              
                                                                              
By:                                    By: /s/ [ILLEGIBLE]
   --------------------------------       ------------------------------------
Name:                                  Name:   [ILLEGIBLE]
Title:                                 Title:  VP Admin
                                       Date:   12-31-97                       
                                                                              
                                                                              
By:                                    By: /s/ SUZANNE BARRETTE               
   --------------------------------       ------------------------------------
Name:                                  Name:   Suzanne Barrette               
Title:                                 Title:  Secretary                      
                                       Date:   December 31, 1997
              
                                       DAISYTEK, INC., as Guarantor           

                                       By: /s/ [ILLEGIBLE]                    
                                          ------------------------------------
                                       Name:   [ILLEGIBLE]
                                       Title:  VP Admin                       
                                       Date    12-31-97                       

                                       By:                                    
                                          ------------------------------------
                                       Name:                                  
                                       Title:                                 
                                                                              
                                                               LETTER AGREEMENT
<PAGE>   19
                                                                        
                                   SCHEDULE A                           
                                                                        
                                  DEFINITIONS                           
                                                                        
"BUSINESS DAY" means a day, excluding Saturday, Sunday, and any other day which
shall be in the City of Toronto a legal holiday or a day on which banking      
institutions are closed and, with respect to a Libor Loan, "Business Day" means
a day with the foregoing characteristics which is also a day on which dealings 
in US Dollar deposits by and between leading banks in the London interbank     
market may be conducted.                                                       
                                                                               
"CANADIAN DOLLARS" and "CDN$" and "$" each means lawful money of Canada.       
                                                                               
"COF INTEREST DATE" means the last day of each COF Interest Period and, if the 
Borrower selects a COF Interest Period longer than 90 days, the COF Interest   
Date shall also be the date falling every 90 days after the beginning of such  
COF Interest Period.                                                           
                                                                               
"COF INTEREST PERIOD" means, with respect to a COF Loan, the initial period    
(subject to availability) as selected by the Borrower in accordance with the 
terms hereof commencing with the date on which a COF Loan is made and          
thereafter each successive period commencing on the last day of the immediately
prior COF Interest Period.                                                     
                                                                               
"COST OF FUNDS" means the Bank's cost of funds as determined by it in          
accordance with its usual practice.                                            
                                                                               
"DAISYTEK CORPORATION" means Daisytek (Canada) Inc. or Daisytek, Inc.          
                                                                               
"DEBT" means (a) indebtedness for borrowed money or for the deferred purchase  
price of goods or services (including trade obligations), (b) obligations under
leases which are or should be, in accordance with GAAP, reported as capital    
leases, (c) obligations under letters of credit or guarantees or indemnities   
given in connection therewith, whether issued for the benefit of the Borrower  
or another or others, (d) obligations arising pursuant to bankers' acceptance  
facilities, (e) all other contingent obligations such as, without limitation,  
guarantees, endorsements of bills of exchange (other than for collection or    
deposit in the ordinary course of business), obligations to purchase assets and
obligations to make advances or otherwise provide financial assistance to any  
other entity.                                                                  
                                                                               
"DISCOUNT RATE" means the percentage discount rate of the Bank calculated on   
the basis of a year of 365 days, which it would, in accordance with normal     
practices at or about 10:30 a.m. on the date of drawdown of the B/A, be        
prepared to purchase bankers' acceptances accepted by it as having a comparable
face value and an identical issue and maturity date to the face value and issue
and maturity date of such B/A.                                                 
                                                                               
"EQUIVALENT AMOUNT" means, with respect to any given amount of any currency,   
the amount of any other currency required to purchase that amount of the first 
currency through the Bank in Toronto in accordance with the Bank's usual       
procedures.                                                                    
                                                                               
"GAAP" means generally accepted accounting principles as applied in Canada.    
                                                                               



                                    A - 1                       LETTER AGREEMENT
<PAGE>   20



"LIBOR" means, with respect to each Libor Interest Period, the average rates of
interest, rounded upwards, if necessary, to the nearest whole multiple of one
sixteenth of one percent (1/16th%), at which the Bank, in accordance with its
normal practice, would be prepared to offer US Dollar deposits to leading banks
in the London interbank market for delivery on the first day of such Libor
Interest Period for a period comparable to such Libor Interest Period based on
the number of days comprised therein, in aggregate amount comparable to the
amount of the Libor Loan to which such Libor Interest Period relates, at or
about 11:00 a.m. (Toronto time) 2 Business Days prior to the first day of such
Libor Interest Period, (the "INTEREST DETERMINATION DATE").

"LIBOR INTEREST DATE" means the last day of each Libor Interest Period and, if
the Borrower selects a Libor Interest Period longer than 90 days, the Libor
Interest Date shall also be the date falling every 90 days after the beginning
of such Libor Interest Period.

"LIBOR INTEREST PERIOD" means, with respect to a Libor Loan, the initial period
(subject to availability) as selected by the Borrower in accordance with the
terms hereof commencing with the date on which a Libor Loan is made and
thereafter each successive period commencing on the last day of the immediately
prior Libor Interest Period.

"PRIME RATE" means the annual rate of interest announced by the Bank from time
to time as being a reference rate then in effect for determining interest rates
on Canadian Dollar commercial loans in Canada.

"RESPONSIBLE OFFICER" means the Chief Executive Officer Chief Financial
Officer, Vice President Finance, Treasurer, Chief Accounting Officer, Director
of Cash Management and  Corporate Controller.

"SUBSIDIARY" means a corporation which the Borrower, alone or together with any
other Subsidiary or Subsidiaries, controls, whether by way of direct ownership
or control of the corporation or corporations having direct ownership (such
control being derived from direct or indirect share ownership, contract or
otherwise) voting securities of the first mentioned corporation carrying at
least 51% of the votes for the election of the directors of such corporation.

"TAXES" means all present and future taxes, levies, imposts, duties, fees or
charges of whatever nature together with any interest thereon and penalties in
respect thereof.

"US BASE RATE" means the annual rate of interest announced by the Bank from
time to time as being a reference rate then in effect for determining interest
rates on US Dollar commercial loans made in Canada.

"US DOLLARS" and "US$" each means lawful money of the United States of America
in same day immediately available funds or, if such funds are not available,
the form of money of the United States of America that is customarily used in
the settlement of international banking transactions on the day payment is due
hereunder.




                                    A - 2                       LETTER AGREEMENT
<PAGE>   21


                                   SCHEDULE B

                              NOTICE REQUIREMENTS


                          LIBOR LOANS

                          Prior Notice

                          by 10:00 a.m. on the Interest Determination Date



                          B/AS, COF LOANS, PRIME LOANS AND US BASE LOANS*

                          PRIOR NOTICE

                          BY 10:00 A.M. ON THE DAY OF DRAWDOWN


--------------------
        *With respect to Prime Loans and US Base Loans, notice is required only
for those drawdowns not made by way of cheques on the Revolvement Accounts.





                                    B - 1                       LETTER AGREEMENT
<PAGE>   22

                                                             CONTINUING GUARANTY
--------------------------------------------------------------------------------

GUARANTY: To induce FIRST CHICAGO NBD BANK, CANADA (the "Bank"), of 161 Bay
Street, #4240, Toronto, Ontario M5J 2S1 at its option, to make loans, extend or
continue credit or some other benefit, including letters of credit and foreign
exchange contracts as set out in the loan agreement date December 23, 1997, as
amended, extended or replaced from time to time, whether several, joint or
joint and several (referred to collectively as "Liabilities"), to Daisytek
(Canada) Inc. and its successors (the "Borrower").

                                        (Name of Borrower)

and because the undersigned (the "Guarantor") has determined that executing
this Guaranty is in its interest and to its financial benefit, the Guarantor
absolutely and unconditionally guaranties to the Bank, as primary obligor and
not merely as surety, that the Liabilities will be paid when due, whether by
acceleration or otherwise. The Guarantor will not only pay the Liabilities, but
will also reimburse the Bank for accrued and unpaid interest, and any expenses
including reasonable attorneys' fees, that the Bank may pay in collecting from
the Borrower or the Guarantor and for liquidating any collateral.

LIMITATION: The Guarantor's obligation under this Guaranty is UNLIMITED.
Notwithstanding the foregoing, if these blank lines are completed, regardless
of the amount of Liabilities outstanding at any time, the Guarantor's
obligation under this Guaranty shall not exceed the principal amount of Fifteen
Million Canadian Dollars (CAD$15,000,000), plus interest, expenses, fees, and
any additional amount relating to exposure under a US$1 million foreign
exchange credit facility.

CONTINUED RELIANCE: The Bank may continue to make loans or extend credit to the
Borrower based on this Guaranty until it receives written notice of termination
from the Guarantor. That notice shall be effective at the opening of the Bank
for business on the day after receipt of the notice. If terminated, the
Guarantor will continue to be liable to the Bank for any Liabilities created,
assumed or committed to at the time the termination becomes effective, and all
subsequent renewals, extensions, modifications and amendments of the
Liabilities.

INCORPORATION: (This paragraph applies if the blanks are filled in.) The
Guarantor agrees that so long as any Liability remains outstanding, the
covenants and events of default set forth in the Loan Agreement dated December
23, 1997 between Texas Commerce Bank National Association, State Street Bank
and Trust Company, and the Guarantor, as amended (the "Agreement"), are
incorporated by reference. Those covenants and events shall remain in force
until this Guaranty is no longer in force, notwithstanding any termination of
the Agreement.

NEGATIVE PLEDGE: The Guarantor will not allow any lien to exist on any of its
property, except liens known to the Bank and existing on the date of this
Guaranty, and new liens which, in aggregate, total less than US$7,000,000.

     For purposes of the following paragraphs, "any collateral" shall include
the Guarantor's Collateral and any other collateral securing the Liabilities.

ACTION REGARDING BORROWER: The Bank may take any action against the Borrower,
any collateral, or any other person liable for any of the Liabilities. The Bank
may release the Borrower or anyone else from the Liabilities, either in whole
or in part, or release any collateral, and need not perfect a security interest
in any collateral. The Bank does not have to exercise any rights that it has
against the Borrower or anyone else, or make any effort to realize on any
collateral or right of set-off. If the Borrower requests more credit or any
other benefit, the Bank may grant it and the Bank may grant renewals,
extensions, modifications and amendments of the Liabilities and otherwise deal
with the Borrower or any other person as the Bank sees fit and as if this
Guaranty were not in effect. The Guarantor's obligations under this Guaranty
shall not be released or affected by (a) any act or omission of the Bank, (b)
the voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of the Borrower, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings affecting
the Borrower or any of its assets, or (c) any change in the composition or
structure of the Borrower or Guarantor, including a merger or consolidation
with any other person or entity.

NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank may insist that the Guarantor pay immediately,
and the Bank is not required to attempt to collect first from the Borrower, any
collateral, or any other person liable for the Liabilities. The obligation of
the Guarantor shall be subject to no conditions of any kind, and shall be
absolute, regardless of the unenforceability of any provision of any agreement
between the Borrower and the Bank, or the existence of any defense, setoff or
counterclaim which the Borrower may assert.

OTHER GUARANTORS: If there is more than one Guarantor, their obligations under
this Guaranty shall be joint and several. In addition, each Guarantor shall be
jointly and severally liable with any other guarantor of the Liabilities. If
the Bank elects to enforce its rights against less than all guarantors of the
Liabilities, that election shall not release Guarantor from its obligations
under this Guaranty. The compromise or release of any of the obligations of any
of the other guarantors or the Borrower shall not serve to waive, alter or
release the Guarantor's obligations. This Guaranty is not conditioned or anyone
else executing this or any other guaranty.

WAIVER OF SUBROGATION: The Guarantor expressly waives any and all rights of
subrogation, contribution, reimbursement, indemnity, exoneration, implied
contract, recourse to security or any other claim (including and claim, as that
term is defined in the federal Bankruptcy Code, and any amendments) which the
Guarantor may now have or later acquire against the Borrower, any other entity
directly or contingently liable for the Liabilities or against the Collateral,
arising, from the existence or performance of the Guarantor's obligations under
this Guaranty until such time as the Liabilities have been repaid in full.

The Guarantor further agrees that should any payments to the Bank on the
Liabilities be in whole or in part invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act or code, state or federal law, common law
or equitable doctrine, this Guaranty and any Collateral shall remain in full
force and effect (or be reinstated as the case may be) until payment in full of
any such amounts, which payment shall be due on demand.

WAIVERS: The Guarantor waives any right it may have to receive notice of the
following matters before the Bank enforces any of its rights: (a) the Bank's
acceptance of this Guaranty, (b) any credit that the Bank extends to the
Borrower, (c) the Borrower's default, (d) any demand, or (e) any action that
the Bank takes regarding the Borrower, anyone else, any collateral, or any
Liability, which it might be entitled to by law or under, any other agreement.
Any waiver shall affect only the specific terms and time period stated in the
waiver. The Bank may waive or delay enforcing any of its rights without losing
them. No modification or waiver of this Guaranty shall be effective unless it
is in writing and signed by the party against whom it is being enforced.

REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the execution
and delivery of this Guaranty and the performance of the obligations it imposes
do not violate any law, conflict with any agreement by which it is bound, or
require the consent or approval of any governmental authority, or any third
party; that this Guaranty is a valid and binding agreement, enforceable
according to its terms, and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to the Bank fairly reflect
the financial condition of the organizations and persons to which they apply on
their effective dates, including contingent liabilities of every type, which
financial condition has not changed materially and adversely since those dates.
Each Guarantor, if other than a natural person, further represents: (a) that it
is duly organized, existing and in good standing under the laws where it is
organized; and (b) that the execution and delivery of this Guaranty and
<PAGE>   23
the performance of the obligations it imposes (i) are within its powers; (ii)
have been duly authorized by all necessary action of its governing body; and
(iii) do not contravene the terms of its articles of incorporation or
organization, its by-laws, or any agreement governing its affairs.

NOTICES: Notice from one party to another relating to this Guaranty shall be
deemed effective if made in writing (including telecommunications) and delivered
to the recipient's address, telex number of facsimile number set forth under its
name by any of the following means: a) hand delivery, b) registered or certified
mail, postage prepaid, with return receipt requested, c) first class or express
mail, postage prepaid, d) Federal Express, Purolator Courier or like overnight
courier service, or (c) facsimile, telex or other wire transmission with request
for assurance of receipt in a manner typical with respect to communications of
that type. Notice made in accordance with this section shall be deemed delivered
on receipt if delivered by hand or wire transmission, on the third business day
after mailing if mailed by first class, registered or certified mail, or on the
next business day after mailing or deposit with an overnight courier service if
delivered by express mail or overnight courier. Notwithstanding, the foregoing,
notice of termination of this Guaranty shall be deemed received only upon the
receipt of actual written notice by the Bank in accordance with the paragraph
above labelled "Continued Reliance."

LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by Illinois law.
The Guarantor agrees that any legal action or proceeding against it with respect
to any of its obligations under this Guaranty may be brought in any state or
federal court located in the State of Illinois, as the Bank in its sole
discretion may elect. By the execution and delivery of this Guaranty, the
Guarantor submits to and accepts, with regard to any such action or proceeding,
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of those courts. The Guarantor waives any claim that the State of
Illinois is not a convenient forum or the proper venue for any such suit, action
or proceeding.

FOREIGN CURRENCY: (This paragraph applies if the blanks are filled in.) This
Guaranty arises in the context of an international transaction, and the
specification of payment in the following currency
CANADIAN DOLLARS____________________________________________________________
                                        (Name of Currency)

("Foreign Currency") at TORONTO, CANADA__________________("Conversion Location")
                                       (City and Country)

is of the essence. The Foreign Currency shall be the currency of account and
payment under this Guaranty. The obligation of the Guarantor shall not be
discharged by an amount paid in any other currency or at another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid, on
prompt conversion into the Foreign Currency and transfer to the Conversion
Location under normal banking procedure, does not yield the amount of Foreign
Currency due under this Guaranty.
               
MISCELLANEOUS: The Guarantor's liability under this Guaranty is independent of
its liability under any other guaranty previously or subsequently executed by
the Guarantor or any one of them, singularly or together with others, as to all
or any part of the Liabilities, and may be enforced for the full amount of this,
Guaranty regardless of the Guarantor's liability under any other guaranty. This
Guaranty is binding on the Guarantor's heirs, successors and assigns, and will
operate to the benefit of the Bank and its successors and assigns. The use of
headings shall not limit the provisions of this Guaranty. All discussions and
documents arising between this Guaranty and the last guaranty signed by the
Guarantor as to the Borrower are merged into this Guaranty.

WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or having 
had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Guaranty or any related instrument
or agreement, or any of the transactions contemplated by this Guaranty, or any
course of conduct, dealing, statement (whether oral or written), or actions of
either of them. Neither the Bank nor the Guarantor shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived with
any other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Guarantor except by a written instrument
executed by both of them.

Dated: December 31, 1997                                              GUARANTOR:

                                             DAISYTEK, INC.

Address:                                     /s/ THOMAS J. MUDDEN
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