Document:

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                                                                    Exhibit 10.6

                               SUBSIDIARY GUARANTY

         THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the 18th day
of December, 2000 by STEADI-SYSTEMS, LTD., a California corporation;
STEADI-SYSTEMS NEW YORK, LTD., a New York corporation; STEADI-SYSTEMS MIAMI,
INC., a Florida corporation; THE TAPE COMPANY, INC., an Illinois corporation;
THE TAPE COMPANY, INC., a Georgia corporation; THE TAPE COMPANY, INC., a
Pennsylvania corporation; TAPE DISTRIBUTORS OF TEXAS, INC., a Texas corporation;
TAPE DISTRIBUTORS OF MINNESOTA, INC., a Minnesota corporation; DAISYTEK LATIN
AMERICA, INC., a Florida corporation; ARLINGTON INDUSTRIES, INC., a Delaware
corporation; VIRTUAL DEMAND, INC., a Delaware corporation; TAPEBARGAINS.COM,
INC., a Delaware corporation; B.A. PARGH COMPANY, a Delaware corporation; and
BUSINESS SUPPLIES DISTRIBUTORS, INC., a Delaware corporation (collectively, the
"Subsidiary Guarantors") in favor of the Agent, for the benefit of the Lenders
and the LC Issuers, under the Credit Agreement referred to below.

                                   WITNESSETH:

         WHEREAS, Daisytek, Incorporated, a Delaware corporation (the
"Principal"), Daisytek International Corporation, a Delaware corporation, Bank
One, Texas, NA, a national banking association having its principal office in
Chicago, Illinois, as an LC Issuer and as Administrative Agent (the "Agent"),
Citizens Bank of Massachusetts, as Syndication Agent, Bank of America, N.A., as
Documentation Agent, Bank One, NA, as an LC Issuer and certain other Lenders
from time to time party thereto have entered into a certain Credit Agreement
dated as of even date herewith (as same may be amended or modified from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Lenders and the LC Issuers
to the Principal;

         WHEREAS, it is a condition precedent to the Agent, LC Issuers and the
Lenders executing the Credit Agreement that each of the Subsidiary Guarantors
execute and deliver this Guaranty whereby each of the Subsidiary Guarantors
shall guarantee the payment when due, subject to Section 9 hereof, of all
Guaranteed Obligations, as defined below; and

         WHEREAS, in consideration of the financial and other support that the
Principal has provided, and such financial and other support as the Principal
may in the future provide, to the Subsidiary Guarantors, and in order to induce
the Lenders, the LC Issuers and the Agent to enter into the Credit Agreement,
and the Lenders and their Affiliates to enter into one or more Rate Management
Transactions with the Principal, and because each Subsidiary Guarantor has
determined that executing this Guaranty is in its interest, in furtherance of
its business and to its financial benefit, and is necessary to the conduct,
promotion and attainment of its business and that of Principal's, each

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of the Subsidiary Guarantors is willing to guarantee the obligations of the
Principal under the Credit Agreement, any Note, any Rate Management Transaction,
and the other Loan Documents;

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         SECTION 1.1. Selected Terms Used Herein.

         "Guaranteed Obligations" is defined in Section 3 below.

         SECTION 1.2. Terms in Credit Agreement. Other capitalized terms used
herein but not defined herein shall have the meaning set forth in the Credit
Agreement.
         SECTION 2.1. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants (which representations and warranties shall
be deemed to have been renewed upon each Credit Extension under the Credit
Agreement) that:

                  (a) It is a corporation, duly and properly incorporated,
         validly existing and (to the extent such concept applies to such
         entity) in good standing under the laws of its jurisdiction of
         incorporation and has all requisite authority to conduct its business
         in each jurisdiction in which its business is conducted.

                  (b) It has the power and authority and legal right to execute
         and deliver this Guaranty and to perform its obligations hereunder. The
         execution and delivery by it of this Guaranty and the performance of
         its obligations hereunder have been duly authorized by proper corporate
         proceedings, and this Guaranty constitutes a legal, valid and binding
         obligation of such Subsidiary Guarantor enforceable against it in
         accordance with its terms, except as enforceability may be limited by
         bankruptcy, insolvency or similar laws affecting the enforcement of
         creditors' rights generally.

                  (c) Neither the execution and delivery by it of this Guaranty,
         nor the consummation of the transactions herein contemplated, nor
         compliance with the provisions hereof will violate (i) any law, rule,
         regulation, order, writ, judgment, injunction, decree or award binding
         on it or any of its Subsidiaries or (ii) its articles or certificate of
         incorporation, partnership agreement, certificate of partnership,
         articles or certificate of organization, by-laws, or operating or other
         management agreement, as the case may be, or (iii) the provisions of
         any indenture, instrument or agreement to which it or any of its
         subsidiaries is a party or is subject, or by which it, or its Property,
         is bound, or conflict with or constitute a default thereunder, or
         result in, or require, the creation or imposition of any Lien in, of or
         on the Property of such Subsidiary Guarantor or a subsidiary thereof
         pursuant to the terms of any such indenture, instrument or agreement.
         No order, consent, adjudication, approval, license, authorization, or
         validation of, or filing, recording or registration with, or exemption
         by, or other action in respect of any governmental or public body or
         authority, or any

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         subdivision thereof, which has not been obtained by it or any of its
         subsidiaries, is required to be obtained by it or any of its
         subsidiaries in connection with the execution and delivery of this
         Guaranty or the performance by it of its obligations hereunder or the
         legality, validity, binding effect or enforceability of this Guaranty.

                  (d) In the case of each Subsidiary Guarantor, the
         representations and warranties set forth in Article V of the Credit
         Agreement as they relate to such Subsidiary Guarantor or the Loan
         Documents to which such Subsidiary Guarantor is a party, each of which
         is hereby incorporated herein by reference, are true and correct, and
         the Agent, each LC Issuer and each Lender shall be entitled to rely
         upon them as if they were fully set forth herein; provided, however,
         that each reference in each such representation and warranty to the
         Borrower's or the Guarantor's knowledge shall, for the purposes of this
         Section 2.1, be deemed to be a reference to such Subsidiary Guarantor's
         knowledge.

         SECTION 2.2. Covenants. Each of the Subsidiary Guarantors covenants
that, so long as any Lender or any LC Issuer has any Credit Extension
outstanding under the Credit Agreement, any Rate Management Transaction remains
in effect or any of the Guaranteed Obligations shall remain unpaid, that it
will, and, if necessary, will enable the Principal to, fully comply with those
covenants and agreements set forth in the Credit Agreement.

         SECTION 3. The Guaranty. Subject to Section 9 hereof, each of the
Subsidiary Guarantors hereby absolutely and unconditionally guarantees, as
primary obligor and not as surety, the full and punctual payment (whether at
stated maturity, upon acceleration or early termination or otherwise, and at all
times thereafter) and performance of the Secured Obligations, including without
limitation any such Secured Obligations whatsoever incurred or accrued during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, whether or not allowed or allowable in such proceeding
(collectively, subject to the provisions of Section 9 hereof, being referred to
collectively as the "Guaranteed Obligations"). Upon failure by the Principal to
pay punctually any such amount, each of the Subsidiary Guarantors agrees that it
shall forthwith on demand pay to the Agent for the benefit of the Lenders, the
LC Issuers and, if applicable, their Affiliates, the amount not so paid at the
place and in the manner specified in the Credit Agreement, any Note, the Pledge
and Security Agreement, any Rate Management Transaction or the relevant Loan
Document, as the case may be. This Guaranty is a guaranty of payment and not of
collection. Each of the Subsidiary Guarantors waives any right to require the
Lender or the LC Issuer to sue the Principal, any other guarantor, or any other
Person obligated for all or any part of the Guaranteed Obligations, or otherwise
to enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.

         SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the
obligations of each of the Subsidiary Guarantors hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:

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                  (i) any extension, renewal, settlement, compromise, waiver or
         release in respect of any of the Guaranteed Obligations, by operation
         of law or otherwise, or any obligation of any other guarantor of any of
         the Guaranteed Obligations, or any default, failure or delay, willful
         or otherwise, in the payment or performance of the Guaranteed
         Obligations;

                  (ii) any modification or amendment of or supplement to the
         Credit Agreement, any Note, any Rate Management Transaction or any
         other Loan Document;

                  (iii) any release, nonperfection or invalidity of any direct
         or indirect security for any obligation of the Principal under the
         Credit Agreement, any Note, the Pledge and Security Agreement, any Rate
         Management Transaction, any other Loan Document, or any obligations of
         any other guarantor of any of the Guaranteed Obligations, or any action
         or failure to act by the Agent, any LC Issuer, any Lender or any
         Affiliate of any Lender with respect to any collateral securing all or
         any part of the Guaranteed Obligations;

                  (iv) any change in the corporate existence, structure or
         ownership of the Principal or any other guarantor of any of the
         Guaranteed Obligations, or any insolvency, bankruptcy, reorganization
         or other similar proceeding affecting the Principal, or any other
         guarantor of the Guaranteed Obligations, or its assets or any resulting
         release or discharge of any obligation of the Principal, or any other
         guarantor of any of the Guaranteed Obligations;

                  (v) the existence of any claim, setoff or other rights which
         the Subsidiary Guarantors may have at any time against the Principal,
         any other guarantor of any of the Guaranteed Obligations, the Agent,
         any LC Issuer, any Lender or any other Person, whether in connection
         herewith or any unrelated transactions;

                  (vi) any invalidity or unenforceability relating to or against
         the Principal, or any other guarantor of any of the Guaranteed
         Obligations, for any reason related to the Credit Agreement, the Pledge
         and Security Agreement, any Rate Management Transaction, any other Loan
         Document, or any provision of applicable law or regulation purporting
         to prohibit the payment by the Principal, or any other guarantor of the
         Guaranteed Obligations, of the principal of or interest on any Note or
         any other amount payable by the Principal under the Credit Agreement,
         the Pledge and Security Agreement, any Note, any Rate Management
         Transaction or any other Loan Document; or

                  (vii) any other act or omission to act or delay of any kind by
         the Principal, any other guarantor of the Guaranteed Obligations, the
         Agent, any LC Issuer, any Lender or any other Person or any other
         circumstance whatsoever which might, but for the provisions of this
         paragraph, constitute a legal or equitable discharge of any Subsidiary
         Guarantor's obligations hereunder.

         SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In
Certain Circumstances. Each of the Subsidiary Guarantor's obligations hereunder
shall remain in full force

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and effect until all Guaranteed Obligations shall have been indefeasibly paid in
full, the Commitments under the Credit Agreement shall have terminated or
expired and all Rate Management Transactions have terminated or expired. If at
any time any payment of the principal of or interest on any Note or any other
amount payable by the Principal or any other party under the Credit Agreement,
any Rate Management Transaction or any other Loan Document is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Principal or otherwise, each of the Subsidiary Guarantor's
obligations hereunder with respect to such payment shall be reinstated as though
such payment had been due but not made at such time.

         SECTION 6. Waivers. Each of the Subsidiary Guarantors irrevocably
waives acceptance hereof, presentment, demand, protest and, to the fullest
extent permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any Person against the
Principal, any other guarantor of any of the Guaranteed Obligations, or any
other Person.

         SECTION 7. Subrogation. Each of the Subsidiary Guarantors hereby agrees
not to assert any right, claim or cause of action, including, without
limitation, a claim for subrogation, reimbursement, indemnification or
otherwise, against the Principal arising out of or by reason of this Guaranty or
the obligations hereunder, including, without limitation, the payment or
securing or purchasing of any of the Guaranteed Obligations by any of the
Subsidiary Guarantors or any other Person unless and until the Guaranteed
Obligations are indefeasibly paid in full, any commitment to lend under the
Credit Agreement and any other Loan Documents is terminated and all Rate
Management Transactions have terminated or expired.

         SECTION 8. Stay of Acceleration. If acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Principal, all such amounts otherwise
subject to acceleration under the terms of the Credit Agreement, any Note, any
Rate Management Transaction or any other Loan Document shall nonetheless be
payable by each of the Subsidiary Guarantors hereunder forthwith on demand by
the Agent made at the request of the Required Lenders.

         SECTION 9. Limitation on Obligations.

                  (a) The provisions of this Guaranty are severable, and in any
         action or proceeding involving any state corporate law, or any state,
         federal or foreign bankruptcy, insolvency, reorganization or other law
         affecting the rights of creditors generally, if the obligations of any
         Subsidiary Guarantor under this Guaranty would otherwise be held or
         determined to be avoidable, invalid or unenforceable on account of the
         amount of such Subsidiary Guarantor's liability under this Guaranty,
         then, notwithstanding any other provision of this Guaranty to the
         contrary, the amount of such liability shall, without any further
         action by the Subsidiary Guarantors, the Agent, any LC Issuer or any
         Lender, be automatically limited and reduced to the highest amount that
         is valid and enforceable as determined in such action or proceeding
         (such highest amount determined hereunder being the relevant Subsidiary
         Guarantor's "Maximum Liability"). This Section 9(a) with respect to the
         Maximum

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         Liability of the Subsidiary Guarantors is intended solely to preserve
         the rights of the Agent hereunder to the maximum extent not subject to
         avoidance under applicable law, and neither the Subsidiary Guarantor
         nor any other person or entity shall have any right or claim under this
         Section 9(a) with respect to the Maximum Liability, except to the
         extent necessary so that the obligations of the Subsidiary Guarantor
         hereunder shall not be rendered voidable under applicable law.

                  (b) Each of the Subsidiary Guarantors agrees that the
         Guaranteed Obligations may at any time and from time to time exceed the
         Maximum Liability of each Subsidiary Guarantor, and may exceed the
         aggregate Maximum Liability of all other Subsidiary Guarantors, without
         impairing this Guaranty or affecting the rights and remedies of the
         Agent hereunder. Nothing in this Section 9(b) shall be construed to
         increase any Subsidiary Guarantor's obligations hereunder beyond its
         Maximum Liability.

                  (c) In the event any Subsidiary Guarantor (a "Paying
         Subsidiary Guarantor") shall make any payment or payments under this
         Guaranty or shall suffer any loss as a result of any realization upon
         any collateral granted by it to secure its obligations under this
         Guaranty, each other Subsidiary Guarantor (each a "Non-Paying
         Subsidiary Guarantor") shall contribute to such Paying Subsidiary
         Guarantor an amount equal to such Non-Paying Subsidiary Guarantor's
         "Pro Rata Share" of such payment or payments made, or losses suffered,
         by such Paying Subsidiary Guarantor. For the purposes hereof, each
         Non-Paying Subsidiary Guarantor's "Pro Rata Share" with respect to any
         such payment or loss by a Paying Subsidiary Guarantor shall be
         determined as of the date on which such payment or loss was made by
         reference to the ratio of (i) such Non-Paying Subsidiary Guarantor's
         Maximum Liability as of such date (without giving effect to any right
         to receive, or obligation to make, any contribution hereunder) or, if
         such Non-Paying Subsidiary Guarantor's Maximum Liability has not been
         determined, the aggregate amount of all monies received by such
         Non-Paying Subsidiary Guarantor from the Principal after the date
         hereof (whether by loan, capital infusion or by other means) to (ii)
         the aggregate Maximum Liability of all Subsidiary Guarantors hereunder
         (including such Paying Subsidiary Guarantor) as of such date (without
         giving effect to any right to receive, or obligation to make, any
         contribution hereunder), or to the extent that a Maximum Liability has
         not been determined for any Subsidiary Guarantors, the aggregate amount
         of all monies received by such Subsidiary Guarantors from the Principal
         after the date hereof (whether by loan, capital infusion or by other
         means). Nothing in this Section 9(c) shall affect any Subsidiary
         Guarantor's several liability for the entire amount of the Guaranteed
         Obligations (up to such Subsidiary Guarantor's Maximum Liability). Each
         of the Subsidiary Guarantors covenants and agrees that its right to
         receive any contribution under this Guaranty from a Non-Paying
         Subsidiary Guarantor shall be subordinate and junior in right of
         payment to all the Guaranteed Obligations. The provisions of this
         Section 9(c) are for the benefit of both the Agent and the Subsidiary
         Guarantors and may be enforced by any one, or more, or all of them in
         accordance with the terms hereof.

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         SECTION 10. Application of Payments. All payments received by the Agent
hereunder shall be applied by the Agent to payment of the Guaranteed Obligations
in the following order unless a court of competent jurisdiction shall otherwise
direct:

                  (a) FIRST, to payment of all costs and expenses of the Agent
         incurred in connection with the collection and enforcement of the
         Guaranteed Obligations or of any security interest granted to the Agent
         in connection with any collateral securing the Guaranteed Obligations;

                  (b) SECOND, to payment of that portion of the Guaranteed
         Obligations constituting accrued and unpaid interest and fees, pro rata
         among the Lenders, the LC Issuers and their Affiliates in accordance
         with the amount of such accrued and unpaid interest and fees owing to
         each of them;

                  (c) THIRD, to payment of the principal of the Guaranteed
         Obligations and the net early termination payments and any other Rate
         Management Obligations then due and unpaid from the Principal to any of
         the Lenders or their Affiliates, pro rata among the Lenders and their
         Affiliates in accordance with the amount of such principal and such net
         early termination payments and other Rate Management Obligations then
         due and unpaid owing to each of them; and

                  (d) FOURTH, to payment of any Guaranteed Obligations (other
         than those listed above) pro rata among those parties to whom such
         Guaranteed Obligations are due in accordance with the amounts owing to
         each of them.

         SECTION 11. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Agent in accordance with the provisions of Article XIII of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent by
certified mail return-receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such refusal), in each case given or
addressed as aforesaid.

         SECTION 12. No Waivers. No failure or delay by the Agent, any LC Issuer
or any Lender in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this Guaranty,
the Credit Agreement, any Note, any Rate Management Transaction and the other
Loan Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.

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         SECTION 13. No Duty to Advise. Each of the Subsidiary Guarantors
assumes all responsibility for being and keeping itself informed of the
Principal's financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that each of the Subsidiary Guarantors
assumes and incurs under this Guaranty, and agrees that neither the Agent, any
LC Issuer nor any Lender has any duty to advise any of the Subsidiary Guarantors
of information known to it regarding those circumstances or risks.

         SECTION 14. Successors and Assigns. This Guaranty is for the benefit of
the Agent, the LC Issuers and the Lenders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable under
the Credit Agreement, any Note, any Rate Management Transaction, or the other
Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, shall be transferred with such indebtedness. This
Guaranty shall be binding upon each of the Subsidiary Guarantors and their
respective successors and permitted assigns.

         SECTION 15. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Subsidiary Guarantors and the Agent with the
consent of the Required Lenders.

         SECTION 16. Costs of Enforcement. Each of the Subsidiary Guarantors
agrees to pay all costs and expenses including, without limitation, all court
costs and attorneys' fees and expenses paid or incurred by the Agent, any LC
Issuer, any Lender or any Affiliate of any Lender in endeavoring to collect all
or any part of the Guaranteed Obligations from, or in prosecuting any action
against, the Principal, the Subsidiary Guarantors or any other guarantor of all
or any part of the Guaranteed Obligations.

         SECTION 17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF TEXAS. EACH OF THE SUBSIDIARY GUARANTORS HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN DALLAS, TEXAS
AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS) OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE SUBSIDIARY GUARANTORS IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE SUBSIDIARY
GUARANTORS, AND THE AGENT, THE LC ISSUERS, AND THE LENDERS ACCEPTING THIS
GUARANTY, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

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         SECTION 18. Taxes. etc. All payments required to be made by any of the
Subsidiary Guarantors hereunder shall be made without setoff or counterclaim and
free and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof
(but excluding Excluded Taxes), provided, however, that if any of the Subsidiary
Guarantors is required by law to make such deduction or withholding, such
Subsidiary Guarantor shall forthwith (i) pay to the Agent, any LC Issuer or any
Lender, as applicable, such additional amount as results in the net amount
received by the Agent, any LC Issuer or any Lender, as applicable, equaling the
full amount which would have been received by the Agent, any LC Issuer or any
Lender, as applicable, had no such deduction or withholding been made, (ii) pay
the full amount deducted to the relevant authority in accordance with applicable
law, and (iii) furnish to the Agent, any LC Issuer or any Lender, as applicable,
certified copies of official receipts evidencing payment of such withholding
taxes within 30 days after such payment is made.

         SECTION 19. Setoff. Without limiting the rights of the Agent, the LC
Issuers or the Lenders under applicable law, if all or any part of the
Guaranteed Obligations is then due, whether pursuant to the occurrence of a
Default or otherwise, then each of the Subsidiary Guarantors authorizes the
Agent, the LC Issuers, and the Lenders to apply any sums standing to the credit
of the Subsidiary Guarantor with the Agent, the LC Issuers or any Lender or any
Lending Installation of the Agent or any Lender toward the payment of the
Guaranteed Obligations.

         SECTION 20. ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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         IN WITNESS WHEREOF, each of the Subsidiary Guarantors has caused this
Guaranty to be duly executed, under seal, by its authorized officer as of the
day and year first above written.

SUBSIDIARY GUARANTORS:

STEADI-SYSTEMS, LTD.
STEADI-SYSTEMS NEW YORK, LTD.
STEADI-SYSTEMS MIAMI, INC.
THE TAPE COMPANY, INC. (an Illinois corporation)
THE TAPE COMPANY, INC. (a Georgia corporation)
THE TAPE COMPANY, INC. (a Pennsylvania corporation)
TAPE DISTRIBUTORS OF TEXAS, INC.
TAPE DISTRIBUTORS OF MINNESOTA, INC.
DAISYTEK LATIN AMERICA, INC.
ARLINGTON INDUSTRIES, INC.
VIRTUAL DEMAND, INC.
TAPEBARGAINS.COM, INC.
B.A. PARGH COMPANY
BUSINESS SUPPLIES DISTRIBUTORS, INC.

By: /s/ Ralph Mitchell
    ----------------------------------
         Ralph Mitchell
         Executive Vice President-Finance
         of each subsidiary above listed

Address for Notice:
1025 Central Expressway, Suite 200
Allen, Texas 75013
Attention:  Ralph Mitchell
Telephone:  (972) 881-4700
Telecopier: (972) 423-1108

                                      -10-<PAGE>   1
                                                                    Exhibit 10.7

                          PLEDGE AND SECURITY AGREEMENT

         THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement") is entered
into as of December 18, 2000, by and between Daisytek, Incorporated, a Delaware
corporation (the "Borrower"), Steadi-Systems, Ltd., a California corporation
(the "Co-Pledgor"; and together with the Borrower, the "Pledgors") and Bank One,
Texas, NA, a national banking association having its principal office in
Chicago, Illinois, in its capacity as administrative agent (the "Agent") for the
LC Issuer and the Lenders party to the Credit Agreement referred to below.

                              PRELIMINARY STATEMENT

         The Borrower, the Agent, the Documentation Agent, Co-Lead Arrangers,
the LC Issuer and the Lenders party thereto are entering into a Credit Agreement
dated the date hereof (as the same may be amended, restated or modified from
time to time, the "Credit Agreement"). The Pledgors are entering into this
Pledge and Security Agreement (as it may be amended, restated or modified from
time to time, the "Pledge Agreement") in order to induce the Lenders and the LC
Issuer to enter into and extend credit to the Borrower under the Credit
Agreement.

         ACCORDINGLY, the Pledgors and the Agent, on behalf of the LC Issuer and
the Lenders, hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.

         1.2. Terms Defined in Texas Uniform Commercial Code. Terms defined in
the Texas Uniform Commercial Code which are not otherwise defined in this Pledge
Agreement are used herein as defined in the Texas Uniform Commercial Code as in
effect from time to time.

         1.3. Definitions of Certain Terms Used Herein. As used in this Pledge
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:

         "Article" means a numbered article of this Pledge Agreement, unless
another document is specifically referenced.

         "Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, each class of partnership interest
(including, without limitation, general, limited and preference units) in

<PAGE>   2

any Person that is a partnership, and each class of member interest in any
Person that is a limited liability company and any and all warrants to purchase
any of the foregoing.

         "Collateral" means all of the following, whether now owned or existing
or hereafter arising or acquired as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations:

         (a) the Pledged Stock and the certificates representing the Pledged
Stock and any interest of the Pledgors or the Co-Pledgor in the entries on the
books of any financial intermediary pertaining to the Pledged Stock, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Stock;

         (b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock or
other equity securities of any issuer of the Pledged Stock from time to time
acquired by the Pledgors in any manner (which shares and other securities shall
be deemed to be part of the Pledged Stock), the certificates or other
instruments representing such additional shares, securities, warrants, options
or other rights and any interest of the Pledgors in the entries on the books of
any financial intermediary pertaining to such additional shares, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such additional shares, securities, warrants,
options or other rights;

         (c) to the extent not covered by clauses (a) and (b) above, all
Proceeds of any or all of the foregoing Collateral.

         "Control" shall have the meaning set forth in Article 8 of the Texas
Uniform Commercial Code as in effect from time to time.

         "Domestic Subsidiaries" means all Subsidiaries of the Pledgors and the
Co-Pledgor organized under the laws of the United States of America or a State
thereof and shall include those Subsidiaries set forth on Schedule 1 attached
hereto, as the same may be amended or supplemented from time to time.

         "Investment Property" shall have the meaning set forth in the Texas
Uniform Commercial Code as in effect from time to time.

         "Pledged Stock" means all Capital Stock in the Borrower's or the
Co-Pledgor's Domestic Subsidiaries and 65% of the Borrower's Capital Stock in
Daisytek (Canada) Inc., an Ontario company, and shall include the shares of
Capital Stock listed on Schedule 1 together with all stock certificates, options
or rights of any nature whatsoever that may be issued or granted by any issuer
of the Pledged Stock to the Borrower or the Co-Pledgor in respect of the Pledged
Stock while this Pledge Agreement is in effect.

                                       -2-
<PAGE>   3

         "Proceeds" shall have the meaning set forth in the Texas Uniform
Commercial Code as in effect from time to time and, in any event, shall include,
without limitation, all dividends or other income from the Collateral and all
collections thereon and all distributions with respect thereto.

         "Section" means a numbered section of this Pledge Agreement, unless
another document is specifically referenced.

         "Secured Obligations" is defined in the Credit Agreement.

         The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

                                   ARTICLE II

                           GRANT OF SECURITY INTEREST

         Each of the Borrower and the Co-Pledgor hereby pledges, assigns and
grants to the Agent, on behalf of and for the ratable benefit of the LC Issuer
and the Lenders and (to the extent specifically provided herein) their
Affiliates, a security interest in all of their right, title and interest in and
to the Collateral (whether now owned or hereafter acquired) to secure the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Secured Obligations.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         Each of the Borrower and the Co-Pledgor represents and warrants to the
Agent, the LC Issuer and the Lenders that as of the date hereof and on the date
of each Extension of Credit under the Credit Agreement:

         3.1. Title, Authorization, Validity and Enforceability. Each has good
and valid rights in and title to the Collateral with respect to which it has
purported to grant a security interest hereunder, free and clear of all Liens
(except Liens permitted under Section 6.15 of the Credit Agreement), and has
full power and authority to grant to the Agent the security interest in such
Collateral pursuant hereto. The execution and delivery of this Pledge Agreement
has been duly authorized by proper proceedings, and this Pledge Agreement
constitutes a legal, valid and binding obligation of such party and creates a
first priority security interest which is enforceable against the Borrower and
the Co-Pledgor, as applicable, in all now owned and hereafter acquired
Collateral.

         3.2. Conflicting Laws and Contracts. Neither the execution and delivery
by the Pledgors of this Pledge Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation,

                                       -3-
<PAGE>   4

order, writ, judgment, injunction, decree or award binding on it, the provisions
of any indenture, instrument or agreement to which it is a party or is subject,
or by which it, or its property, is bound, or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien pursuant
to the terms of any such indenture, instrument or agreement (other than any Lien
of the Agent on behalf of the LC Issuer and Lenders).

         3.3. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming it
as debtor has been filed in any jurisdiction.

         3.4. Pledged Stock and Other Investment Property. Schedule 1 sets forth
a complete and accurate list of the Pledged Stock delivered to the Agent on the
date hereof. From time to time upon the Agent's request, stock powers shall be
executed in blank for each security certificate representing the Capital Stock
so delivered. The Pledged Stock listed on Schedule 1 constitutes all of the
issued and outstanding shares of all classes of the Capital Stock of the
Domestic Subsidiaries of the Borrower and the Co-Pledgor on the date hereof and
constitutes 65% of the Capital Stock of Daisytek (Canada) Inc. The remaining 35%
of the Capital Stock of Daisytek (Canada) Inc. is owned by the Borrower.

                                   ARTICLE IV

                                    COVENANTS

         From the date of this Pledge Agreement, and thereafter until this
Pledge Agreement is terminated (except as otherwise permitted by the Credit
Agreement):

         4.1. General.

                  4.1.1. Taxes. The Pledgors will pay when due all taxes,
         assessments and governmental charges and levies upon the Collateral,
         except those which are being contested in good faith by appropriate
         proceedings and with respect to which no Lien exists.

                  4.1.2. Notification of Default. The Pledgors will give prompt
         notice in writing to the Agent and the Lenders of the occurrence of any
         Default or Unmatured Default and of any other development, financial or
         otherwise, which might materially and adversely affect the Collateral.

                  4.1.3. Financing Statements and Other Actions; Defense of
         Title. The Pledgors will execute and deliver to the Agent all financing
         statements and other documents and take such other actions as may from
         time to time be requested by the Agent in order to maintain a first
         perfected security interest in and, in the case of Investment Property
         constituting Collateral, Control of, the Collateral. The Pledgors will
         take any and all actions necessary to defend title

                                       -4-
<PAGE>   5

         to the Collateral against all persons and to defend the security
         interest of the Agent in the Collateral and the priority thereof
         against any Lien not expressly permitted hereunder.

                  4.1.4. Disposition of Collateral. The Pledgors shall not sell,
         lease or otherwise dispose of the Collateral.

                  4.1.5. Liens. The Pledgors will not create, incur, or suffer
         to exist any Lien on the Collateral except the security interest
         created by this Pledge Agreement.

                  4.1.6. Other Financing Statements. The Pledgors authorize the
         Agent and any Lender to file financing statements covering the
         Collateral. The Pledgors will not sign or authorize the signing on its
         behalf of any financing statement naming it as debtor covering all or
         any portion of the Collateral.

         4.2. Delivery of Collateral. All certificates or instruments
representing or evidencing Collateral shall from time to time be delivered to
and held by or on behalf of the Agent pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by the
Borrower's or the Co-Pledgor's endorsement, where necessary, or duly executed
stock powers or other appropriate instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent.

         4.3. Stock and Other Ownership Interests.

                  4.3.1. Changes in Capital Structure of Issuers. Neither the
         Borrower nor the Co-Pledgor will (i) permit or suffer any of its
         Subsidiaries to dissolve, or liquidate, retire or issue any Capital
         Stock, or reduce its capital or merge or consolidate with any other
         entity, or (ii) vote any of the Collateral in favor of any of the
         foregoing.

                  4.3.2. Issuance of Additional Securities. Neither the Borrower
         nor the Co-Pledgor will issue any Capital Stock or other ownership
         interests, any right to receive the same or any right to receive
         earnings.

                  4.3.3. Registration of Pledged Stock and other Investment
         Property. After the occurrence of a Default or Unmatured Default, the
         Pledgors will permit any registrable Collateral to be registered in the
         name of the Agent or its nominee at any time at the option of the Agent
         or the Required Lenders.

                  4.3.4. Exercise of Rights in Pledged Stock and other
         Investment Property. The Pledgors will permit the Agent or its nominee
         at any time after the occurrence of a Default, without notice, to
         exercise all voting and corporate rights relating to the Collateral,
         including, without limitation, exchange, subscription or any other
         rights, privileges, or options pertaining to any Capital Stock or other
         ownership interests or Investment Property in or of a

                                       -5-
<PAGE>   6

         corporation, partnership, joint venture or limited liability company
         constituting Collateral as if it were the absolute owner thereof.

                                    ARTICLE V

                                     DEFAULT

         5.1. Acceleration and Remedies. Upon the occurrence and during the
continuation of a Default under the Credit Agreement, the Agent may exercise any
or all of the following rights and remedies:

                  5.1.1. Those rights and remedies provided in this Pledge
         Agreement, the Credit Agreement, or any other Loan Document, provided
         that this Section 5.1.1 shall not be understood to limit any rights or
         remedies available to the Agent and the Lenders prior to a Default.

                  5.1.2. Those rights and remedies available to a secured party
         under the Texas Uniform Commercial Code (whether or not the Texas
         Uniform Commercial Code applies to the affected Collateral) as in
         effect from time to time or under any other applicable law (including,
         without limitation, any law governing the exercise of a bank's right of
         setoff or bankers' lien) when a debtor is in default under a security
         agreement.

                  5.1.3. Without notice, except as specifically provided in
         Section 8.1 of this Pledge Agreement or elsewhere herein, sell, lease,
         assign, grant an option or options to purchase or otherwise dispose of
         the Collateral or any part thereof in one or more parcels at public or
         private sale, for cash, on credit or for future delivery, and upon such
         other terms as the Agent may deem commercially reasonable.

                  5.1.4. The Agent may cause any or all of the Collateral held
         by it to be transferred into the name of the Agent or the name or names
         of the Agent's nominee or nominees.

                  5.1.5. The Agent may exercise or cause to be exercised all
         voting rights and corporate powers in respect of the Collateral.

                  5.1.6. The Pledgors hereby acknowledge and confirm that the
         Agent may be unable to effect a public sale of any or all of the
         Collateral by reason of certain prohibitions contained in the
         Securities Act of 1933, as amended, and applicable state securities
         laws and may be compelled to resort to one or more private sales
         thereof to a restricted group of purchasers who will be obligated to
         agree, among other things, to acquire any shares of the Collateral for
         their own respective accounts for investment and not with a view to
         distribution or resale thereof. The Pledgors further acknowledge and
         confirm that any such private sale may result in prices or other terms
         less favorable to the seller than if such sale were a public sale and,
         notwithstanding such circumstances, agree that any such private sale
         shall be deemed to have

                                       -6-
<PAGE>   7

         been made in a commercially reasonable manner, and the Agent shall be
         under no obligation to take any steps in order to permit the Collateral
         to be sold at a public sale. Agent shall be under no obligation to
         delay a sale of any of the Collateral for any period of time necessary
         to permit any issuer thereof to register such Collateral for public
         sale under the Securities Act of 1933, as amended, or under applicable
         state securities laws.

                  5.1.7. On any sale of the Collateral, the Agent is hereby
         authorized to comply with any limitation or restriction with which
         compliance is necessary, in the view of the Agent's counsel, in order
         to avoid any violation of applicable law or in order to obtain any
         required approval of the purchaser or purchasers by any applicable
         governmental authority.

         5.2. Obligations Upon Default. Upon the request of the Agent after the
occurrence of a Default, the Pledgors will:

                  5.2.1. Assembly of Collateral. Assemble and make available to
         the Agent the Collateral and all records relating thereto at any place
         or places specified by the Agent.

                  5.2.2. Secured Party Access. Permit the Agent, by the Agent's
         representatives and agents, to enter any premises where all or any part
         of the Collateral, or the books and records relating thereto, or both,
         are located, to take possession of all or any part of the Collateral
         and to remove all or any part of the Collateral.

                                   ARTICLE VI

                        WAIVERS, AMENDMENTS AND REMEDIES

         6.1. Waivers, Remedies. No delay or omission of the Agent, the LC
Issuer or any Lender to exercise any right or remedy granted under this Pledge
Agreement shall impair such right or remedy or be construed to be a waiver of
any Default or an acquiescence therein, and any single or partial exercise of
any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. No waiver, amendment or
other variation of the terms, conditions or provisions of this Pledge Agreement
whatsoever shall be valid unless in writing signed by the Agent with the
concurrence or at the direction of the Lenders required under Section 8.2 of the
Credit Agreement and then only to the extent in such writing specifically set
forth. All rights and remedies contained in this Pledge Agreement or by law
afforded shall be cumulative and all shall be available to the Agent and the
Lenders until the Secured Obligations have been paid in full.

         6.2. Power of Attorney. The Pledgors hereby irrevocably constitute and
appoint the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of the Pledgors or in its own name, when a
Default exists, to take any and all action and to execute any and all documents
and instruments which the Agent at any time and from time to time deems
necessary or desirable to accomplish the purposes of this Pledge Agreement and,
without limiting the generality of the foregoing, the Pledgors hereby

                                       -7-
<PAGE>   8

give the Agent the power and right on their behalf and in their own name to do
any of the following, without notice to or the consent of either of them:

               6.2.1. to demand, sue for, collect, or receive in the name of the
         Pledgors, or in its own name, any money or property at any time payable
         or receivable on account of or in exchange for any of the Collateral
         and, in connection therewith, endorse checks, notes, drafts,
         acceptances, money orders, documents of title, or any other instruments
         for the payment of money under the Collateral or any policy of
         insurance;

               6.2.2. to pay or discharge taxes, liens, security interests,
         or other encumbrances levied or placed on or threatened against the
         Collateral;

               6.2.3. (A) to receive payment of and receipt for any and all
         monies, claims, and other amounts due and to become due at any time in
         respect of or arising out of any Collateral; (B) to sign and endorse
         any assignments, proxies, stock powers, verifications, notices and
         other documents relating to the Collateral; (C) to commence and
         prosecute any suit, action, or proceeding at law or in equity in any
         court of competent jurisdiction to collect the Collateral or any part
         thereof and to enforce any other right in respect of any Collateral;
         (D) to defend any suit, action, or proceeding brought against the
         Pledgors or either of them with respect to any Collateral; (E) to
         settle, compromise, or adjust any suit, action, or proceeding described
         above and, in connection therewith, to give such discharges or releases
         as the Agent may deem appropriate; (F) to exchange any of the
         Collateral for other property upon any merger, consolidation,
         reorganization, recapitalization, or other readjustment of the issuer
         thereof and, in connection therewith, deposit any of the Collateral
         with any committee, depositary, transfer agent, registrar, or other
         designated agency upon such terms as the Agent may determine; (G) to
         add or release any guarantor, endorser, surety, or other party to any
         of the Collateral or the Secured Obligations; (H) to insure, and to
         make, settle, compromise, or adjust claims under any insurance policy
         covering, any of the Collateral; and (I) to sell, transfer, pledge,
         make any agreement with respect to or otherwise deal with any of the
         Collateral as fully and completely as though the Agent were the
         absolute owner thereof for all purposes, and to do, at the Agent's
         option and Borrower's or the Co-Pledgor's expense, at any time, or from
         time to time, all acts and things which the Agent deems necessary to
         protect, preserve, or realize upon the Collateral and the Agent's
         security interest therein.

         This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Pledge Agreement, and shall not be
liable for any failure to do so or any delay in doing so. THE AGENT SHALL NOT BE
LIABLE FOR ANY ACT OR OMISSION OR FOR ANY ERROR OF JUDGMENT OR ANY MISTAKE OF
FACT OR LAW IN ITS INDIVIDUAL CAPACITY OR IN ITS CAPACITY AS ATTORNEY-IN-FACT
EXCEPT ACTS OR OMISSIONS RESULTING FROM ITS WILLFUL MISCONDUCT. This power of
attorney is conferred on the Agent solely to protect, preserve, and realize upon
its security interest in the Collateral. The Agent shall not be responsible

                                       -8-
<PAGE>   9

for any decline in the value of the Collateral and shall not be required to take
any steps to preserve rights against prior parties or to protect, preserve, or
maintain any security interest or lien given to secure the Collateral.

         6.3. Setoff; Property Held by Secured Party. Following the occurrence
and during the continuation of a Default, the Agent shall have the right to set
off and apply against the Secured Obligations, at any time and without notice to
the Pledgors, any and all deposits (general or special, time or demand,
provisional or final) or other sums at any time credited by or owing from the
Agent to Borrower or any Loan Party. As additional security for the Secured
Obligations, Borrower hereby grants the Agent a security interest in all money,
instruments, and other property of Borrower now or hereafter held by the Agent,
including, without limitation, property held in safekeeping. In addition to the
Agent's right of setoff and as further security for the Secured Obligations,
Borrower hereby grants the Agent a security interest in all deposits (general or
special, time or demand, provisional or final) and other accounts of Borrower
now or hereafter deposited with or held by the Agent and all other sums at any
time credited by or owing from the Agent to Borrower. The rights and remedies of
the Agent hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Agent may have.

         6.4. Assignment by Secured Party. The Agent may from time to time
assign the Secured Obligations and any portion thereof and/or the Collateral and
any portion thereof, and the assignee shall be entitled to all of the rights and
remedies of the Agent under this Pledge Agreement in relation thereto.

                                   ARTICLE VII

                                    PROCEEDS

         7.1. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:

                  (a) FIRST, to payment of all costs and expenses of the Agent
         (including reasonable attorneys fees) incurred in connection with the
         collection and enforcement of the Secured Obligations or of the
         security interest granted to the Agent pursuant to this Pledge
         Agreement;

                  (b) SECOND, to payment of that portion of the Secured
         Obligations constituting accrued and unpaid interest and fees, pro rata
         among the Agent, LC Issuer, Lenders and their Affiliates in accordance
         with the amount of such accrued and unpaid interest and fees owing to
         each of them;

                  (c) THIRD, to payment of the principal of the Secured
         Obligations and the net early termination payments and any other Rate
         Management Obligations then due and unpaid

                                       -9-
<PAGE>   10

         from the Borrower to any of the Lenders or their Affiliates, pro rata
         among the Lenders and their Affiliates in accordance with the amount of
         such principal and such net early termination payments and other Rate
         Management Obligations then due and unpaid owing to each of them;

                  (d) FOURTH, to payment of any Secured Obligations (other than
         those listed above) pro rata among those parties to whom such Secured
         Obligations are due in accordance with the amounts owing to each of
         them; and

                  (e) FIFTH, the balance, if any, after all of the Secured
         Obligations have been satisfied, shall be deposited by the Agent into
         the Borrower's general deposit account with the Agent.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

         8.1. Notice of Disposition of Collateral. The Pledgors hereby waive
notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral may be
made. To the extent such notice may not be waived under applicable law, any
notice made shall be deemed reasonable if sent to the Borrower or the
Co-Pledgor, addressed as set forth in Article IX hereof, at least ten days prior
to (i) the date of any such public sale or (ii) the time after which any such
private sale or other disposition may be made.

         8.2. Secured Party Performance of Debtor Obligations. Without having
any obligation to do so, the Agent may perform or pay any obligation which the
Borrower or the Co-Pledgor has agreed to perform or pay in this Pledge Agreement
and the Borrower or the Co-Pledgor shall reimburse the Agent for any amounts
paid by the Agent pursuant to this Section 8.2. The Borrower's and Co-Pledgor's
obligation to reimburse the Agent pursuant to the preceding sentence shall be
payable on demand.

         8.3. Authorization for Secured Party to Take Certain Action. The
Pledgors irrevocably authorize the Agent at any time and from time to time in
the sole discretion of the Agent and appoints the Agent as its attorney-in-fact
(i) to execute on behalf of the Borrower and the Co-Pledgor as debtor and to
file financing statements necessary or desirable in the Agent's sole discretion
to perfect and to maintain the perfection and priority of the Agent's security
interest in the Collateral, (ii) to indorse and collect any cash proceeds of the
Collateral following the occurrence of a Default, (iii) to file a carbon,
photographic or other reproduction of this Pledge Agreement or any financing
statement with respect to the Collateral as a financing statement in such
offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's security
interest in the Collateral, (iv) to apply the proceeds of any Collateral
received by the Agent to the Secured Obligations as provided in Article VII, and
(v) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically

                                      -10-
<PAGE>   11

permitted hereunder), and the Borrower and the Co-Pledgor agree to reimburse the
Agent on demand for any payment made or any expense incurred by the Agent in
connection therewith, provided that this authorization shall not relieve the
Borrower or the Co-Pledgor of any of its obligations under this Pledge Agreement
or under the Credit Agreement.

         8.4. Specific Performance of Certain Covenants. The Pledgors
acknowledge and agree that a breach of any of the covenants contained in Section
4.1 will cause irreparable injury to the Agent and the Lenders, that the Agent
and Lenders have no adequate remedy at law in respect of such breaches and
therefore agrees, without limiting the right of the Agent or the Lenders to seek
and obtain specific performance of other obligations of the Pledgors contained
in this Pledge Agreement, that the covenants of the Pledgors contained in
Section 4.1 shall be specifically enforceable against the Pledgors.

         8.5. Dispositions Not Authorized. Except as otherwise permitted by the
Credit Agreement, the Pledgors are not authorized to sell or otherwise dispose
of the Collateral, and notwithstanding any course of dealing between the
Borrower and the Agent or other conduct of the Agent, no authorization to sell
or otherwise dispose of the Collateral shall be binding upon the Agent or the
Lenders unless such authorization is in writing signed by the Agent with the
consent or at the direction of the Required Lenders.

         8.6. Benefit of Agreement. The terms and provisions of this Pledge
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Agent, the LC Issuer and the Lenders and their respective successors and
assigns, except that the Pledgors shall not have the right to assign their
rights or delegate their obligations under this Pledge Agreement or any interest
herein, without the prior written consent of the Agent.

         8.7. Survival of Representations. All representations and warranties of
the Pledgors contained in this Pledge Agreement shall survive the execution and
delivery of this Pledge Agreement.

         8.8. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Pledge Agreement
shall be paid by the Borrower or the Co-Pledgor, together with interest and
penalties, if any. Subject to the terms of the Credit Agreement, the Borrower
shall reimburse the Agent for any and all out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent) paid or incurred by the Agent in connection with
the preparation, execution, delivery, administration, collection and enforcement
of this Pledge Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral. Any and all costs and expenses incurred
by the Pledgors in the performance of actions required pursuant to the terms
hereof shall be borne solely by the Pledgors.

                                      -11-
<PAGE>   12

         8.9. Headings. The title of and section headings in this Pledge
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Pledge Agreement.

         8.10. Termination. This Pledge Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the
Lenders which would give rise to any Secured Obligations are outstanding.

         8.11. CHOICE OF LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.

         8.12. Distribution of Reports. The Borrower authorizes the Agent, as
the Agent may elect in its sole discretion, to discuss with and furnish to its
affiliates and to the Lenders or to any other person or entity having an
interest in the Secured Obligations (whether as a guarantor, Borrower of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to the Borrower and its Subsidiaries whether
such information was provided by the Borrower or prepared or obtained by the
Agent. Neither the Agent nor any of its employees, officers, directors or agents
makes any representation or warranty regarding any audit reports or other
analyses of the Borrower's and its Subsidiaries' condition which the Agent may
in its sole discretion prepare and elect to distribute, nor shall the Agent or
any of its employees, officers, directors or agents be liable to any person or
entity receiving a copy of such reports or analyses for any inaccuracy or
omission contained in or relating thereto.

         8.13. Indemnity. The Borrower hereby agrees to indemnify the Agent and
the Lenders, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) imposed on, incurred by or asserted against the Agent or the
Lenders, or their respective successors, assigns, agents and employees, in any
way relating to or arising out of this Pledge Agreement, or the purchase,
acceptance, rejection, ownership, delivery, possession, use, operation,
condition, sale, return or other disposition of any Collateral.

         8.14. ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES

                                      -12-
<PAGE>   13

HERETO. The provisions of this Pledge Agreement may be amended or waived only by
an instrument in writing signed by the parties hereto.

                                   ARTICLE IX

                                     NOTICES

         9.1. Sending Notices. Any notice required or permitted to be given
under this Pledge Agreement shall be sent (and deemed received) in the manner
and to the addresses set forth in Article 13.1 of the Credit Agreement. For
purposes of this Pledge Agreement, the Co-Pledgor's notice address shall be the
same as the Borrower's as set forth in the Credit Agreement.

         9.2. Change in Address for Notices. Each of the Borrower, the
Co-Pledgor, the Agent and the Lenders may change the address for service of
notice upon it by a notice in writing to the other parties.

                                    ARTICLE X

                                    THE AGENT

         Bank One, Texas, NA has been appointed Agent for the Lenders hereunder
pursuant to Article 10 of the Credit Agreement. It is expressly understood and
agreed by the parties to this Pledge Agreement that any authority conferred upon
the Agent hereunder is subject to the terms of the delegation of authority made
by the Lenders to the Agent pursuant to the Credit Agreement, and that the Agent
has agreed to act (and any successor Agent shall act) as such hereunder only on
the express conditions contained in such Article 10. Any successor Agent
appointed pursuant to Article 10 of the Credit Agreement shall be entitled to
all the rights, interests and benefits of the Agent hereunder.

              [The Remainder of This Page Intentionally Left Blank]

                                      -13-
<PAGE>   14

         IN WITNESS WHEREOF, the Borrower, Co-Pledgor and the Agent have
executed this Pledge Agreement as of the date first above written.

                                    BORROWER:
                                    DAISYTEK, INCORPORATED

                                        By: /s/ Ralph Mitchell
                                            ------------------------------------
                                        Name: Ralph Mitchell
                                        Title: Executive Vice President-Finance

                                    CO-PLEDGOR:
                                    STEADI-SYSTEMS, LTD.

                                        By: /s/ Ralph Mitchell
                                            ------------------------------------
                                        Name: Ralph Mitchell
                                        Title: Executive Vice President-Finance

                                    AGENT:
                                    BANK ONE, TEXAS, NA

                                        By: /s/ Katherine M. Turner
                                            ------------------------------------
                                        Name: Katherine M. Turner
                                        Title: First Vice President

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>   15
                                                                      Schedule 1

<TABLE>
<CAPTION>
                                            Other States                   # of Shares
                                 State of   Qualified to      # of Auth.    Issued/
Name                             Incorp.    do Business       Shares        Pledged          Name of Stockholder
----                             -------    -----------       ------        -------          -------------------
<S>                              <C>        <C>               <C>          <C>               <C>
Steadi-Systems, Ltd.               CA       None                  15,000        8,820        Daisytek, Inc.
Steadi-Systems New York,           NY       None                     200          200        Steadi-Systems, Ltd.
Ltd.
Steadi-Systems Miami, Inc.         FL       None                     200          200        Steadi-Systems, Ltd.
The Tape Company, Inc.             IL       None                  10,000            1        Daisytek, Incorporated
The Tape Company, Inc.             GA       None                  10,000            1        Daisytek, Incorporated
The Tape Company, Inc.             PA       None                  10,000            1        Daisytek, Incorporated
Tape Distributors of Texas,        TX       None                  10,000            1        Daisytek, Incorporated
Inc.
Tape Distributors of               MN       None                  10,000            1        Daisytek, Incorporated
Minnesota, Inc.
Daisytek Latin America, Inc.       FL       None                     100          100        Daisytek, Incorporated
Arlington Industries, Inc.         DE       CA, FL, GA,              100          100        Daisytek, Incorporated
                                            IL, NJ
Virtual Demand, Inc.               DE       TX                       100          100        Daisytek, Incorporated
Tapebargains.com, Inc.             DE       IL                       100          100        Daisytek, Incorporated
B.A. Pargh Company, Inc.           DE       TN, TX                   100          100        Daisytek, Incorporated
Business Supplies                  DE       TX, TN                   100          100        Daisytek, Incorporated
Distributors, Inc.

Daisytek Canada, Inc.            Canada     None               3,150,000    2,047,506(1)     Daisytek, Incorporated
</TABLE>

----------

(1)  Represents the number of issued shares pledged.

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