LOAN AND SECURITY AGREEMENT





                                 by and between





                    CONGRESS FINANCIAL CORPORATION (WESTERN)

                                    as Lender





                                       and





                              DAVID E. YOUNG, INC.



                                   as Borrower







                            Dated: February 22, 2001







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                           LOAN AND SECURITY AGREEMENT





         This Loan and Security Agreement dated February 22, 2001 is entered

into by and between CONGRESS FINANCIAL CORPORATION (WESTERN), a California

corporation ("Lender") and DAVID E. YOUNG, INC., a New York corporation

("Borrower").



                              W I T N E S S E T H:



         WHEREAS, Borrower has requested that Lender enter into certain

financing arrangements with Borrower pursuant to which Lender may make loans and

provide other financial accommodations to Borrower; and



         WHEREAS, International Periodical Distributors, Inc., a Nevada

corporation ("IPD"), which is an Affiliate of Borrower, has also requested that

Lender enter into certain financing arrangements with IPD pursuant to which

Lender may make loans and provide other financial accommodations to IPD, which

financing arrangements are to be documented in and governed by a separate

agreement; and



         WHEREAS, Lender is willing to make loans and provide financial

accommodations to Borrower on the terms and conditions set forth herein;



         NOW, THEREFORE, in consideration of the mutual conditions and

agreements set forth herein, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the parties hereto

agree as follows:



SECTION 1.        DEFINITIONS.



         All terms used herein which are defined in Article 1 or Article 9 of

the California Uniform Commercial Code shall have the respective meanings given

therein unless otherwise defined in this Agreement. All references to the plural

herein shall also mean the singular and to the singular shall also mean the

plural. All references to Borrower and Lender pursuant to the definitions set

forth in the recitals hereto, or to any other person herein, shall include their

respective successors and assigns. The words "hereof", "herein", "hereunder",

"this Agreement" and words of similar import when used in this Agreement shall

refer to this Agreement as a whole and not any particular provision of this

Agreement and as this Agreement now exists or may hereafter be amended,

modified, supplemented, extended, renewed, restated or replaced. Any accounting

term used herein unless otherwise defined in this Agreement shall have the

meaning customarily given to such term in accordance with GAAP. All references

in this Agreement to corporate officers or agents, corporate formation and

governing documents and/or corporate actions shall, to the extent applied to any

Person that is a limited liability company, be construed as a reference to the

appropriate counterpart for such term under the laws and norms governing or

related to limited liability companies.



         For purposes of this Agreement, the following terms shall have the

respective meanings given to them below:



         1.1 "Accounts" shall mean all present and future rights of Borrower to

payment for goods sold or leased or for services rendered, which are not

evidenced by instruments or chattel paper, and whether or not earned by

performance, other than RDA Claims.



         1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each

Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded

upwards, if necessary, to the next one-sixteenth (1/16) of one percent (1%))

determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a

percentage equal to: one (1) minus the Reserve Percentage. For purposes hereof,

"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,

prescribed by any United States or foreign







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banking authority for determining the reserve requirement which is or would be

applicable to deposits of United States dollars in a non-United States or an

international banking office of Reference Bank used to fund a Eurodollar Rate

Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether

or not the Reference Bank actually holds or has made any such deposits or loans.

The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of

any change in the Reserve Percentage.



         1.3 "Affiliate" shall mean any Person, except for DAC, controlled by,

controlling or under common control with Borrower, including (without

limitation) any Subsidiary of Borrower. For purposes of this definition,

"control," when used with respect to any specified Person, means the power to

direct the management and policies of such Person, directly or indirectly,

whether through the ownership of voting securities, by contract or otherwise.



         1.4 "Aggregate Excess Availability" shall mean Excess Availability of

Borrower under this Agreement plus Excess Availability (as defined in the IPD

Loan Agreement) of IPD under the IPD Loan Agreement.



         1.5 "Availability Reserves" shall mean, as of any date of

determination, such amounts as Lender may from time to time establish and revise

in good faith reducing the amount of Revolving Loans which would otherwise be

available to Borrower under the lending formula(s) provided for herein: (a) to

reflect events, conditions, contingencies or risks which, as determined by

Lender in good faith, do or may affect either (i) the Collateral or any other

property which is security for the Obligations or its value, (ii) the assets,

business or prospects of Borrower or any Obligor or (iii) the security interests

and other rights of Lender in the Collateral (including the enforceability,

perfection and priority thereof) or (b) to reflect Lender's good faith belief

that any collateral report or financial information furnished by or on behalf of

Borrower or any Obligor to Lender is or may have been incomplete, inaccurate or

misleading in any material respect or (c) except when Availability Reserves are

calculated for purposes of Section 2.1 or for calculating Aggregate Excess

Availability in Section 4.1(h), to reflect the amount of Excess Cash Flow For

Term Loan Repayment accrued but unpaid as of such date of determination or (d)

to reflect any state of facts which Lender determines in good faith constitutes

an Event of Default or may, with notice or passage of time or both, constitute

an Event of Default. Without limiting the generality of the foregoing, Lender

shall establish Availability Reserves (w) with respect to all Slotting Contracts

under which a publisher is obligated to pay any slotting or similar fees, but

for which Borrower may also be liable, in an amount equal to the aggregate

amount of slotting and similar fees payable under such Slotting Contracts during

the term thereof; provided, however, in the event Borrower obtains a non-offset

letter from the other contracting party to a Slotting Contract in form and

substance satisfactory to Lender, the Availability Reserve established by Lender

with respect to such Slotting Contract shall be suspended during the effective

term of such non-offset letter, (x) from time to time in such amounts as Lender

may determine to reflect the Dilution as of any date with respect to the

Accounts of Borrower for the immediately preceding three month period exceeding

two and one-half percent (2.5%), (y) from time to time in an amount equal to the

quarterly interest payments then due under the terms of the Seller Notes, and

(z) from time to time in an amount equal to the dividends then scheduled to be

made on the preferred stock issued by DAC to Source on the date hereof.



         1.6 "Blocked Account" shall have the meaning set forth in Section 6.3

hereof.



         1.7 "Book Reserve for Returns" shall mean, with respect to any Account,

the amount Borrower has reserved with respect to such Account for returned

Inventory, which amount or method for determining such amount, shall be

satisfactory to Lender in all respects.



         1.8 "Borders" shall mean Borders Group, Inc. and its Subsidiaries.



         1.9 "BWL Sublimit" shall have the meaning set forth in Section 2.1(a)

hereof.





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         1.10 "BWL Sublimit Expiration Date" shall have the meaning set forth in

Section 2.1(a) hereof.



         1.11 "Business Day" shall mean any day other than a Saturday, Sunday,

or other day on which commercial banks are authorized or required to close under

the laws of the State of New York or the State of North Carolina, and a day on

which the Reference Bank and Lender are open for the transaction of business,

except that if a determination of a Business Day shall relate to any Eurodollar

Rate Loans, the term Business Day shall also exclude any day on which banks are

closed for dealings in dollar deposits in the London interbank market or other

applicable Eurodollar Rate market.



         1.12 "Capital Expenditures" shall mean, for any period, any expenditure

of money under a Capital Lease or for the lease, purchase or other acquisition

of any capital asset, for the lease of any other asset, whether payable

currently or in the future, or for the purchase or construction of assets, or

for improvements or additions thereto, which are capitalized on Borrower's

balance sheet.



         1.13 "Capital Lease" shall mean, as applied to any Person, any lease of

(or any agreement conveying the right to use) any property (whether real,

personal or mixed) by such Person as lessee that, in accordance with GAAP, is

required to be reflected as a liability on the balance sheet of such Person.



         1.14 "Capital Stock" shall mean, with respect to any Person, any and

all shares, interests, participations or other equivalents (however designated)

of such Person's capital stock, partnership interests or limited liability

company interests at any time outstanding, and any and all rights, warrants or

options exchangeable for or convertible into such capital stock or other

interests (but excluding any debt security that is exchangeable for or

convertible into such capital stock).



         1.15 "Code" shall mean the Internal Revenue Code of 1986, as the same

now exists or may from time to time hereafter be amended, modified, recodified

or supplemented, together with all rules, regulations and interpretations

thereunder or related thereto.



         1.16 "Collateral" shall have the meaning set forth in Section 5 hereof.



         1.17 "DAC" shall mean Deyco Acquisition Corp., a Delaware corporation.



         1.18 "Debt" shall mean, for any Person, all items of indebtedness which

in accordance with GAAP would be included in determining total liabilities as

shown on the liabilities side of a balance sheet of such Person as at the date

as of which Debt is to be determined. For purposes of determining a Person's

aggregate Debt at any time, "Debt" shall also include the aggregate payments

(corresponding to principal) required to be made by such Person at any time

under any Capital Lease.



         1.19 "Debt Service" shall mean, for any period, the sum for the

Borrower of the following: (a) all mandatory payments of principal of Debt

scheduled to be made during such period, excluding payments required by Section

3.6 hereof, plus (b) all Interest Expense for such period.



         1.20 "DEY Affiliates" shall mean, JNC, NNC, PNC, RJR, SMI and any other

Person controlled by Borrower, including (without limitation) any Subsidiary of

Borrower. For purposes of this definition, "control," when used with respect to

any specified Person, means the power to direct the management and policies of

such Person, directly or indirectly, whether through the ownership of voting

securities, by contract or otherwise.



         1.21 "Dilution" shall mean for any period, the fraction, expressed as a

percentage, the numerator of which is the aggregate amount of non-cash

reductions (other than reductions to Eligible Accounts in Section 1.49 or

amounts reserved for pursuant to Section 1.5) in the Accounts of Borrower for







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such period and the denominator of which is the aggregate dollar amount of the

sales of Borrower for such period.



         1.22 "DSUSA" shall mean Data Systems USA, a Nevada corporation.



         1.23 "EBITDA" shall mean, as to any Person, with respect to any period,

an amount equal to: (a) the Net Income of such Person and its Subsidiaries for

such period on a consolidated basis determined in accordance with GAAP (which

amount may include payments received for RDA Claims, exclusive of interest and

amortization, in an amount not to exceed One Hundred Thousand Dollars ($100,000)

per fiscal year), plus (b) depreciation, amortization and other non-cash charges

(including, but not limited to, imputed interest and deferred compensation) of

such Person for such period (to the extent deducted in the computation of Net

Income), all in accordance with GAAP, plus (c) Interest Expense (excluding,

however, for this purpose, clauses (b) and (c) of the definition of such term)

of such Person for such period (to the extent deducted in the computation of Net

Income), plus (d) the Provision for Taxes for such period (to the extent

deducted in the computation of Net Income), plus (e) any charge or expense

arising out of the sale, discount or factoring of RDA Claims during such period

(to the extent deducted in the computation of Net Income and not included in

Interest Expense), but in no event more than One Hundred Thousand Dollars

($100,000) during such period.



         1.24 "EDS" shall mean Eastern Distribution Services, Inc., a Nevada

corporation.



         1.25 "Eligible Accounts" shall mean Accounts created by Borrower which

are and continue to be acceptable to Lender based on the criteria set forth

below. In general, Accounts shall be Eligible Accounts if:



                  (a) such Accounts arise from the actual and bona fide sale and

delivery of goods by Borrower or rendition of services by Borrower in the

ordinary course of its business which transactions are completed in accordance

with the terms and provisions contained in any documents related thereto;



                  (b) such Accounts are not unpaid more than sixty (60) days

after the date on which payment is due, nor unpaid more than one hundred twenty

(120) days after the date of the original invoice therefor; provided, however,

until the BWL Sublimit Expiration Date, Accounts owed by Borders, Waldenbooks or

Lowes unpaid more than one hundred twenty (120) days after the date on which

payment is due but not unpaid more than one hundred fifty (150) days after the

date of the original invoice therefor may also be deemed Eligible Accounts;



                  (c) such Accounts comply with the terms and conditions

contained in Section 7.2(b) of this Agreement;



                  (d) other than in the ordinary course of Borrower's business,

such Accounts do not arise from sales on consignment, guaranteed sale, sale on

approval, or other terms (other than sale and return) under which payment by the

account debtor may be conditional or contingent;



                  (e) the chief executive office of the account debtor with

respect to such Accounts is located in the United States of America or outside

the United States of America, at Lender's option, if either: (i) the account

debtor has delivered to Borrower an irrevocable letter of credit issued or

confirmed by a bank satisfactory to Lender and payable only in the United States

of America and in U.S. dollars, sufficient to cover such Account, in form and

substance satisfactory to Lender and, if required by Lender, the original of

such letter of credit has been delivered to Lender or Lender's agent and the

issuer thereof notified of the assignment of the proceeds of such letter of

credit to Lender, or (ii) such Account is subject to credit insurance payable to

Lender issued by an insurer and on terms and in an amount acceptable to Lender,

or (iii) such Account is otherwise acceptable in all respects to Lender (subject

to such lending formula with respect thereto as Lender may determine);





{PAGE}



                  (f) such Accounts do not consist of progress billings, bill

and hold invoices or retainage invoices, except as to bill and hold invoices, if

Lender shall have received an agreement in writing from the account debtor, in

form and substance satisfactory to Lender, confirming the unconditional

obligation of the account debtor to take the goods related thereto and pay such

invoice;



                  (g) the account debtor with respect to such Accounts has not

asserted a counterclaim, defense or dispute and does not have, and does not

engage in transactions which may give rise to, any right of setoff against such

Accounts (but the portion of the Accounts of such account debtor in excess of

the amount at any time and from time to time owed by Borrower to such account

debtor or claimed owed by such account debtor may be deemed Eligible Accounts);



                  (h) there are no facts, events or occurrences which would

impair the validity, enforceability or collectability of such Accounts or reduce

the amount payable or delay payment thereunder;



                  (i) such Accounts are subject to the first priority, valid and

perfected security interest of Lender and any goods giving rise thereto are not,

and were not at the time of the sale thereof, subject to any liens except those

permitted in this Agreement;



                  (j) neither the account debtor nor any officer or employee of

the account debtor with respect to such Accounts is an officer, employee or

agent of or affiliated with Borrower directly or indirectly by virtue of family

membership, ownership, control, management or otherwise;



                  (k) the account debtors with respect to such Accounts are not

any foreign government, the United States of America, any State, political

subdivision, department, agency or instrumentality thereof, unless, if the

account debtor is the United States of America, any State, political

subdivision, department, agency or instrumentality thereof, upon Lender's

request, the Federal Assignment of Claims Act of 1940, as amended or any similar

State or local law, if applicable, has been complied with in a manner

satisfactory to Lender;



                  (l) to the knowledge of Borrower, there are no proceedings or

actions which are threatened or pending against the account debtors with respect

to such Accounts which might result in any material adverse change in any such

account debtor's financial condition;



                  (m) such Accounts of a single account debtor or its affiliates

do not constitute more than, in the case of Borders and Waldenbooks,

collectively, thirty-five percent (35%) of all otherwise Eligible Accounts, in

the case of Barnes & Noble, thirty-five percent (35%) of all otherwise Eligible

Accounts and in all other cases, fifteen percent (15%) of all otherwise Eligible

Accounts (but the portion of the Accounts not in excess of such percentages may

be deemed Eligible Accounts);



                  (n) such Accounts owed by an account debtor, regardless of

whether otherwise eligible, if fifty percent (50%) or more of the total amount

due under Accounts from such debtor is ineligible under clause (b) above;



                  (o) such Accounts are owed by account debtors whose total

indebtedness to Borrower does not exceed the credit limit with respect to such

account debtors as determined by Lender from time to time and communicated to

Borrower (but the portion of the Accounts not in excess of such credit limit may

be deemed Eligible Accounts);



                  (p) such Accounts are not owed by a publisher, or any other

Person, with respect to Retail Display Allowances; and





{PAGE}





                  (q) such Accounts are owed by account debtors deemed

creditworthy at all times by Lender, as determined by Lender.



General criteria for Eligible Accounts may be established and revised from time

to time by Lender in good faith. Any Accounts which are not Eligible Accounts

shall nevertheless be part of the Collateral.



         1.26 "Environmental Laws" shall mean all federal, state, district,

local and foreign laws, rules, regulations, ordinances, and consent decrees

relating to health, safety, hazardous substances, pollution and environmental

matters, as now or at any time hereafter in effect, applicable to Borrower's

business and facilities (whether or not owned by it), including laws relating to

emissions, discharges, releases or threatened releases of pollutants,

contamination, chemicals, or hazardous, toxic or dangerous substances, materials

or wastes into the environment (including, without limitation, ambient air,

surface water, ground water, land surface or subsurface strata) or otherwise

relating to the generation, manufacture, processing, distribution, use,

treatment, storage, disposal, transport or handling of pollutants, contaminants,

chemicals, or hazardous, toxic or dangerous substances, materials or wastes.



         1.27 "Equipment" shall mean all of Borrower's now owned and hereafter

acquired equipment, machinery, computers and computer hardware and software

(whether owned or licensed), vehicles, tools, furniture, fixtures, all

attachments, accessions and property now or hereafter affixed thereto or used in

connection therewith, and substitutions and replacements thereof, wherever

located.



         1.28 "ERISA" shall mean the United States Employee Retirement Income

Security Act of 1974, as the same now exists or may hereafter from time to time

be amended, modified, recodified or supplemented, together with all rules,

regulations and interpretations thereunder or related thereto.



         1.29 "ERISA Affiliate" shall mean any Person required to be aggregated

with Borrower or any of its Affiliates under Sections 414(b), 414(c), 414(m) or

414(o) of the Code.



         1.30 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on

which interest is payable based on the Adjusted Eurodollar Rate in accordance

with the terms hereof.



         1.31 "Eurodollar Rate" shall mean with respect to the Interest Period

for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic

average of the rates of interest per annum (rounded upwards, if necessary, to

the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is

offered deposits of United States dollars in the London interbank market (or

other Eurodollar Rate market selected by Borrower and approved by Lender) on or

about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement

of such Interest Period in amounts substantially equal to the principal amount

of the Eurodollar Rate Loans requested by and available to Borrower in

accordance with this Agreement, with a maturity of comparable duration to the

Interest Period selected by Borrower.



         1.32 "Event of Default" shall mean the occurrence or existence of any

event or condition described in Section 10.1 hereof. An Event of Default shall

exist, continue or be continuing until such Event of Default is waived in

accordance with Section 11.3.



         1.33 "Excess Availability" shall mean the amount, as determined by

Lender, calculated at any time, equal to:



                  (a) the lesser of (i) the amount of the Revolving Loans

available to Borrower as of such time (based on the advance rate set forth in

Section 2.1 hereof), subject to the sublimits and Availability Reserves from

time to time established by Lender hereunder and (ii) the Maximum Credit (less

the then outstanding principal amount of the Term Loan), minus



                  (b) the sum of: (i) the amount of all then outstanding and

unpaid Obligations (but not including for this purpose the then outstanding

principal amount of the Term Loan), (ii) the aggregate







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amount of all trade payables of Borrower that are past due as of such time, in

accordance with Borrower's historical practices and as approved by Lender, (iii)

the aggregate amount of Borrower's book overdrafts, and (iv) the aggregate

amount of Borrower's past due lease and notes payable.



         1.34 "Excess Cash Flow" of any Person shall mean, as of the date of

determination, for any period, the excess, if any, of (i) EBITDA for such period

less (ii) the sum of (a) Capital Expenditures made during the period, plus (b)

the aggregate amount of Debt Service for such period, plus (c) the Provision for

Taxes for such period, plus (d) the increase, if any, in such Person's non-cash

working capital from the first to the last day of such Period, plus (e) a

reasonable reserve established by such Person and acceptable to Lender in its

reasonable discretion.



         1.35 "Excess Cash Flow For Term Loan Repayment" shall mean for each

fiscal year of Borrower, twenty five percent (25%) of Borrower's cumulative

Excess Cash Flow for such fiscal year as reported in Borrower's quarterly

financial statements as acceptable to Lender.



         1.36 "Financing Agreements" shall mean, collectively, this Agreement,

the Term Note, the IPD Loan Agreement, the IPD Guaranty, the UCS Guaranty and

all other agreements, documents and instruments now or at any time hereafter

executed and/or delivered by Borrower or any Obligor in connection with this

Agreement, as the same now exist or may hereafter be amended, modified,

supplemented, extended, renewed, restated or replaced.



         1.37 "Fixed Charge Coverage Ratio" shall mean, for any period, the

ratio of (a) EBITDA less cash payments for taxes based on income for such period

less Capital Expenditures for such period to (b) Debt Service for such period.



         1.38 "GAAP" shall mean generally accepted accounting principles in the

United States of America as in effect from time to time as set forth in the

opinions and pronouncements of the Accounting Principles Board and the American

Institute of Certified Public Accountants and the statements and pronouncements

of the Financial Accounting Standards Boards which are applicable to the

circumstances as of the date of determination consistently applied, except that,

for purposes of Sections 9.15 and ERROR! REFERENCE SOURCE NOT FOUND. hereof,

GAAP shall be determined on the basis of such principles in effect on the date

hereof and consistent with those used in the preparation of the audited

financial statements delivered to Lender prior to the date hereof.



         1.39 "Hazardous Materials" shall mean any hazardous, toxic or dangerous

substances, materials and wastes, including, without limitation, hydrocarbons

(including naturally occurring or man-made petroleum and hydrocarbons),

flammable explosives, asbestos, urea formaldehyde insulation, radioactive

materials, biological substances, polychlorinated biphenyls, pesticides,

herbicides and any other kind and/or type of pollutants or contaminants

(including, without limitation, materials which include hazardous constituents),

sewage, sludge, industrial slag, solvents and/or any other similar substances,

materials, or wastes and including any other substances, materials or wastes

that are or become regulated under any Environmental Law (including, without

limitation any that are or become classified as hazardous or toxic under any

Environmental Law).



         1.40 "Information Certificate" shall mean the Information Certificate

of Borrower, constituting Exhibit A hereto, containing material information with

respect to Borrower, its business and assets provided by or on behalf of

Borrower to Lender in connection with the preparation of this Agreement and the

other Financing Agreements and the financing arrangements provided for herein.



         1.41 "Interest Expense" shall mean, for any period, as to any Person

and its Subsidiaries, all of the following as determined in accordance with

GAAP: total interest expense, whether paid or accrued (including the interest

component of Capital Leases for such period), including, without limitation, all

bank fees, commissions, discounts and other fees and charges owed with respect

to letters of credit, banker's acceptances or similar instruments, but excluding

(a) amortization of discount and amortization of deferred







{PAGE}



financing fees and closing costs paid in cash in connection with the

transactions contemplated hereby, (b) interest paid in property other than cash

and (c) any other interest expense not payable in cash.



         1.42 "Interest Period" shall mean for any Eurodollar Rate Loan, a

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