<PAGE>

                                                                    Exhibit 10.1


                    CONTRIBUTION AND DISTRIBUTION AGREEMENT

                                by and between

                             BRE Properties, Inc.

                                      and

                               VelocityHSI, Inc.
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                               TABLE OF CONTENTS

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                                                                                       Page
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DEFINITIONS........................................................................       1

     1.1   GENERAL.................................................................       1
     1.2   REFERENCES; INTERPRETATION..............................................       5

ARTICLE 2. CONTRIBUTION OF ASSETS, ISSUANCE OF SHARES AND ASSUMPTION OF
             LIABILITIES...........................................................       5

     2.1   CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES.......................       5
     2.2   EXCLUDED ASSETS.........................................................       6
     2.3   ASSUMPTION OF LIABILITIES...............................................       6

ARTICLE 3. CLOSING OF THE CONTRIBUTION.............................................       6

     3.1   CLOSING.................................................................       6
     3.2   DELIVERIES BY BRE.......................................................       6
     3.3   DELIVERIES BY VELOCITYHSI...............................................       7

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BRE...................................       8

     4.1   CORPORATE EXISTENCE AND QUALIFICATION...................................       8
     4.2   AUTHORITY, APPROVAL AND ENFORCEABILITY..................................       8
     4.3   NO CONSENTS.............................................................       9
     4.4   NO VIOLATIONS...........................................................       9
     4.5   NO PROCEEDINGS..........................................................       9
     4.6   COMPLIANCE WITH LAWS....................................................       9
     4.7   LITIGATION..............................................................      10
     4.8   OWNERSHIP OF CONTRIBUTED ASSETS.........................................      10
     4.9   TRANSFERRED CONTRACTS...................................................      10
     4.10  INSURANCE...............................................................      10
     4.11  EQUIPMENT AND OTHER TANGIBLE PROPERTY...................................      10
     4.12  PERMITS.................................................................      10
     4.13  TAX MATTERS CERTIFICATE.................................................      10

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF VELOCITYHSI...........................      11

     5.1   CORPORATE EXISTENCE.....................................................      11
     5.2   AUTHORITY, APPROVAL AND ENFORCEABILITY..................................      11
     5.3   NO VIOLATIONS...........................................................      11
     5.4   NO PROCEEDINGS..........................................................      11
     5.5   TAX MATTERS CERTIFICATE.................................................      11

ARTICLE 6. CONDITIONS TO BRE'S OBLIGATION TO CONSUMMATE THE CONTRIBUTION...........      11
</TABLE>
<PAGE>

<TABLE>
<S>                                                                                      <C>
     6.1   REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING..........................      11
     6.2   CONSENTS................................................................      12
     6.3   NO ACTIONS OR COURT ORDERS..............................................      12
     6.4   DELIVERY OF DOCUMENTS AND INSTRUMENTS...................................      12
     6.5   OTHER TRANSACTIONS......................................................      12

ARTICLE 7. CONDITIONS TO VELOCITYHSI'S OBLIGATION TO CONSUMMATE THE CONTRIBUTION...      12

     7.1   REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING..........................      12
     7.2   CONSENTS................................................................      12
     7.3   NO ACTIONS OR COURT ORDERS..............................................      12
     7.4   DELIVERY OF DOCUMENTS AND INSTRUMENTS...................................      12
     7.5   OTHER TRANSACTIONS......................................................      13

ARTICLE 8. ACCESS TO INFORMATION...................................................      13

     8.1   PROVISION OF CORPORATE RECORDS..........................................      13

ARTICLE 9. THE DISTRIBUTION........................................................      13

     9.1   THE DISTRIBUTION........................................................      13
     9.2   CASH IN LIEU OF FRACTIONAL SHARES.......................................      13
     9.3   CONDITIONS PRECEDENT TO THE DISTRIBUTION................................      13
     9.4   INSURANCE COVERAGE PRIOR TO DISTRIBUTION DATE...........................      14
     9.5   INSURANCE COVERAGE ON AND AFTER DISTRIBUTION DATE.......................      14

ARTICLE 10. COVENANTS..............................................................      14

     10.1  SECTION 351(a)..........................................................      14
     10.2  TRANSFERS NOT EFFECTED PRIOR TO CLOSING; TRANSFERS DEEMED EFFECTIVE
           AS OF THE CLOSING.......................................................      14
     10.3  COOPERATION PRIOR TO THE DISTRIBUTION...................................      15
     10.4  FURTHER ASSURANCES......................................................      15

ARTICLE 11. DISPUTE RESOLUTION.....................................................      16

ARTICLE 12. MISCELLANEOUS..........................................................      16

     12.1  ENTIRE AGREEMENT; CONSTRUCTION..........................................      16
     12.2  CONFIDENTIALITY.........................................................      17
     12.3  COUNTERPARTS............................................................      17
     12.4  EXPENSES................................................................      17
     12.5  NOTICES.................................................................      17
     12.6  AMENDMENTS; WAIVERS.....................................................      18
     12.7  SUCCESSORS AND ASSIGNS..................................................      18
     12.8  TERMINATION.............................................................      18
</TABLE>

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<TABLE>
<S>                                                                                      <C>
     12.9   NO THIRD PARTY BENEFICIARIES...........................................      18
     12.10  TITLE AND HEADINGS.....................................................      18
     12.11  SCHEDULES; EXHIBITS....................................................      18
     12.12  GOVERNING LAW..........................................................      18
</TABLE>

                                      iii
<PAGE>

                    CONTRIBUTION AND DISTRIBUTION AGREEMENT

     This CONTRIBUTION AND DISTRIBUTION AGREEMENT (this "Agreement") is entered
into as of the 7th day of August, 2000, by and between BRE Properties, Inc., a
corporation organized under the laws of the State of Maryland ("BRE"), and
VelocityHSI, Inc., a corporation organized under the laws of the State of
Delaware ("VelocityHSI").

                                R E C I T A L S

     WHEREAS, the Board of Directors of BRE (the "BRE Board") has determined
that it is in the best interest of its shareholders to transfer certain assets
and liabilities of BRE to VelocityHSI, a wholly-owned subsidiary (which is
subsequently to become an independent public company); and

     WHEREAS, BRE desires to effect the Asset Transfer and Liability Transfer
(as those terms are defined in this Agreement) to VelocityHSI in exchange for
10,432,752 shares of common stock of VelocityHSI, par value $.01 per share (the
"Shares"), representing 100% of the outstanding shares of VelocityHSI.

     WHEREAS, BRE intends that the Asset Transfer and Liability Transfer shall
constitute a contribution (the "Contribution") under Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code").

     WHEREAS, BRE intends to distribute a portion of the Shares to the BRE
shareholders on a pro rata basis (the "Distribution"), upon completion and
effectiveness of certain filings with the Securities and Exchange Commission
(the "Commission"); and

     WHEREAS, the parties hereto wish to set forth the terms and conditions upon
which the Contribution and the Distribution will take place.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:

                                  DEFINITIONS

          1.1 GENERAL. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

     "Action" shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative official, agency, body or commission or any
arbitration tribunal, including any claims or contract disputes concerning any
governmental contract.

     "Administrative Services and Reimbursement Agreement" shall mean the
Administrative Services and Reimbursement Agreement to be entered into between
BRE and VelocityHSI prior to the Closing and which shall become effective
concurrently with the Distribution.
<PAGE>

     "Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the person
specified.

     "Agent" shall mean ChaseMellon Shareholder Services, as transfer agent for
BRE and VelocityHSI and distribution agent for BRE in connection with the
Distribution.

     "Agreement Disputes" shall have the meaning set forth in Article 11 hereof.

     "Ancillary Agreements" shall mean all of the written agreements,
instruments (including the Conveyancing and Assumption Instruments),
understandings, assignments or other arrangements (other than this Agreement)
entered into in connection with the transactions contemplated hereby, including,
without limitation, the Administrative Services and Reimbursement Agreement.

     "Asset Transfer" shall mean the transfer of assets to VelocityHSI as
described in Article 2 of this Agreement.

     "Assumed Liabilities" shall have the meaning set forth in Section 2.3
hereof. "BRE Board" shall have the meaning set forth in the Recitals hereto.

     "BRE Retained Business" shall mean the businesses of any division,
Subsidiary or investment of BRE (other than the VelocityHSI Business) managed or
operated by BRE, including, without limitation, the acquisition, development,
and operation of real estate assets.

     "BRE Retained Company Policies" shall mean all Policies, current or past,
under which BRE or any Subsidiary, affiliate or predecessor of BRE is a named
insured. "BRE Retained Liabilities" shall have the meaning set forth in Section
2.3 hereof.

     "BRE Tax Matters Certificate" shall have the meaning set forth in Section
3.2(v) hereof.

     "Business" shall mean BRE's provision of Internet connectivity services, e-
mail services, Web pages individualized for particular communities, community-
specific portals and related services, otherwise known as "Project Velocity."

     "Closing" shall have the meaning set forth in Section 3.1 hereof.

     "Closing Date" shall have the meaning set forth in Section 3.1 hereof.

     "Code" shall have the meaning set forth in the Recitals hereto.

     "Commission" shall mean the Securities and Exchange Commission.

     "Contributed Assets" shall have the meaning set forth in Section 2.1
hereof.

     "Contribution" shall have the meaning set forth in the Recitals hereto.

                                       2
<PAGE>

     "Conveyancing and Assumption Instruments" shall mean, collectively, the
various agreements, instruments and other documents to be entered into to effect
the Asset Transfer and Liability Transfer in the manner contemplated by this
Agreement.

     "Distribution" shall have the meaning set forth in the Recitals hereto.

     "Distribution Date" shall mean the date on which the Distribution occurs.

     "Excluded Assets" shall have the meaning set forth in Section 2.2 hereof.

     "Form 8-A Registration Statement" shall have the meaning set forth in
Section 9.3(d) hereof.

     "Form S-1 Registration Statement" shall have the meaning set forth in
Section 9.3c) hereof.

     "Governmental Authorities" shall mean any nation or country (including but
not limited to the United States) and any commonwealth, territory or possession
thereof and any political subdivision of any of the foregoing, including but not
limited to courts, departments, commissions, boards, bureaus, agencies,
ministries or other instrumentalities.

     "Intellectual Property Rights" shall mean the rights and interests of BRE
in:

                    (a)  all worldwide patents, patent applications, trademarks,
          trade names, service marks, trade dress, domain names and copyrights
          and any renewal rights therefor, mask works, trade secrets, know-how,
          moral rights and applications and registrations for any of the
          foregoing;

                    (b)  all documents, records and files relating to design,
          end user documentation, manufacturing, quality control, sales,
          schematics, software, firmware, technology, manufacturing processes,
          vendor lists, customer lists, marketing or customer support for all
          intellectual property of the type described in clause (a) above; and

                    (c)  all license and similar rights in any third party
          product or any third party intellectual property of the type described
          in clause (a) and (b) above; and that are owned or held by BRE or and
          that are being or have been used or are currently under development
          for use in the Business as it has been, is currently or is currently
          planned to be conducted.

     "Legal Requirements" when described as being applicable to any Person,
shall mean any and all laws (statutory, judicial or otherwise), ordinances,
regulations, judgments, orders, directives, injunctions, writs, decrees or
awards of, and any contracts with, any Governmental Authority, in each case as
and to the extent applicable to such Person or such Person's business,
operations or properties.

     "Liabilities" shall mean any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or

                                       3
<PAGE>

unknown, whenever arising, including all costs and expenses relating thereto,
and including, without limitation, those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order or
consent decree of any court, any governmental or other regulatory or
administrative agency or commission or any award of any arbitration tribunal,
and those arising under any contract, guarantee, commitment or undertaking.

     "Liability Transfer" shall mean the transfer of liabilities to, and the
assumption of liabilities by, VelocityHSI as described in Section 2.3 hereof.
"Permits" shall mean any and all permits, legal status or orders under any Legal
Requirement or otherwise granted by any Governmental Authority.

     "Person" shall mean any natural person, corporation, limited liability
company, trust, estate, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.

     "Policies" shall mean insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts) relating to the
VelocityHSI Business or the BRE Retained Business as conducted prior to the date
of this Agreement, including, without limitation, primary, excess and umbrella
policies, commercial general liability policies, fiduciary liability,
environmental impairment, director and officer, health, automobile, aircraft,
property and, casualty, workers' compensation and employee dishonesty insurance
policies, bonds and self- insurance and captive insurance company arrangements,
together with the rights, benefits and privileges thereunder.

     "Records" shall have the meaning set forth in Section 3.2(iii) hereof.
"Rules" shall have the meaning set forth in Article 11 hereof. "Shares" shall
have the meaning set forth in the Recitals hereto.

     "Subsidiary" of an entity shall mean any corporation, partnership, limited
liability company or other entity of which the entity (i) owns, directly or
indirectly, ownership interests sufficient to elect a majority of the board of
directors (or persons performing similar functions) (irrespective of whether at
the time any other class or classes of ownership interests of such corporation,
partnership, limited liability company or other entity shall or might have such
voting power upon the occurrence of any contingency) or (ii) is a general
partner or managing member or an entity performing similar functions (e.g., a
trustee).

     "Tax" shall mean all Federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect to such amounts.

     "Transferred Contracts" shall have the meaning set forth in Section 2.1(c)
hereof.

     "VelocityHSI Business" shall mean the Business heretofore conducted by BRE,
and any other business activities acquired, developed or established by or for
VelocityHSI.

                                       4
<PAGE>

     "VelocityHSI Tax Matters Certificate" shall have the meaning set forth in
Section 3.3(iv) hereof.

          1.2 REFERENCES; INTERPRETATION. References to an "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules
attached to this Agreement, and references to a "Section" are, unless otherwise
specified, to one of the Sections of this Agreement.

                                  ARTICLE 2.
                      CONTRIBUTION OF ASSETS, ISSUANCE OF
                     SHARES AND ASSUMPTION OF LIABILITIES

     2.1  CONTRIBUTION OF ASSETS; ISSUANCE OF SHARES. Upon the terms and subject
to the conditions set forth in this Agreement, on the Closing Date, BRE shall
convey, assign, transfer and deliver to VelocityHSI, and VelocityHSI shall
acquire and accept delivery of, an undivided 100% interest in the Contributed
Assets, free and clear of all liens, claims, and encumbrances, and, in exchange,
VelocityHSI shall issue the Shares to BRE. "Contributed Assets" means all of the
assets of BRE, other than the Excluded Assets (as defined in Section 2.2), used
by BRE in connection with or otherwise related to the Business, including,
without limitation, all of the right, title and interest of BRE in, to, and
under the following:

                    (a)  all inventories, raw materials, parts and other
          materials owned by BRE, wherever located, which relate to the
          Business, including all inventory in transit or on order and not yet
          delivered, as set forth on Schedule 2.1(a)(i);

                    (b)  all supplies, equipment, machinery, furniture,
          computers, hardware, routers, fixtures and other tangible property
          owned by BRE and which are used in the Business, including, but not
          limited to, the tangible assets listed on Schedule 2.1(a)(ii);

                    (c)  all of BRE's rights and entitlements under the
          contracts listed on Schedule 2.1(a)(iii) (the "Transferred
          Contracts");

                    (d)  the Business as a going concern, including the
          following:

                         (i)   BRE's customer lists, vendor lists, referral
               lists, rights of endorsement, advertising, promotional materials
               and data relating to the Business;

                         (ii)  restrictive covenants and similar obligations
               owing to BRE in connection with the Business;

                         (iii) all books, schematics, computer software,
               firmware, technology, files, papers, records and other data of
               BRE used to operate the Business; and

                                       5
<PAGE>

                         (iv)  franchises, permits and licenses relating to the
               conduct of the Business as set forth in Schedule 2.1(a)(iv),
               except those franchises, permits and licenses identified on
               Schedule 2.1(a)(iv) which, by their terms, are not transferable
               to VelocityHSI;

                    (e)  all of BRE's accounts receivable attributable to the
          Business;

                    (f)  all of BRE's technology and other intangible rights
          which are used in connection with or otherwise related to the conduct
          of the Business, including, but not limited to, all Intellectual
          Property Rights, confidential or proprietary information, and all
          documentation or other repositories containing such technology,
          including, without limitation, the technology and rights set forth in
          Schedule 2.1(a)(vii); and

                    (g)  all claims, causes of action, and rights (whether known
          or unknown and whether absolute, contingent, or otherwise) relating to
          the foregoing assets.

          2.2  EXCLUDED ASSETS. Notwithstanding anything contained in this
Agreement to the contrary, BRE shall not assign or transfer to VelocityHSI under
this Agreement, and VelocityHSI shall not acquire or accept from BRE under this
Agreement, any of the assets ("Excluded Assets") specifically described in
Schedule 2.2.

          2.3  ASSUMPTION OF LIABILITIES. On and as of the Closing Date, BRE
shall transfer to VelocityHSI and VelocityHSI shall assume all Liabilities (the
"Assumed Liabilities") with respect to the Contributed Assets and the
VelocityHSI Business arising out of or relating to events or occurrences
happening on or after the Closing Date. BRE and VelocityHSI agree that BRE will
be responsible for all Liabilities (the "BRE Retained Liabilities") with respect
to (i) the Contributed Assets and the Business arising out of or relating to
events or occurrences happening prior to the Closing Date and (ii) the BRE
Retained Business. BRE agrees to jointly and severally indemnify, defend and
hold VelocityHSI harmless from and against any and all claims and liabilities
relating to the BRE Retained Liabilities, and VelocityHSI hereby agrees to
indemnify, defend and hold BRE harmless from and against any and all claims and
liabilities relating to the Assumed Liabilities.

                                  ARTICLE 3.
                          CLOSING OF THE CONTRIBUTION

          3.1  CLOSING. The closing of the contribution transactions
contemplated hereby (the "Closing") shall be held on August __, 2000 at the
offices of Latham & Watkins, 505 Montgomery Street, Suite 1900, San Francisco,
California 94111, or at such other time and place as mutually agreed upon by BRE
and VelocityHSI. For the purposes hereof, the date upon which the Closing
actually occurs is referred to as the "Closing Date."

          3.2  DELIVERIES BY BRE. At the Closing, BRE shall deliver (or cause to
be delivered) to VelocityHSI:

                                       6
<PAGE>

                         (i)   such transfer documentation as shall reasonably
               be requested by VelocityHSI, including but not limited to the
               Conveyancing and Assumption Instruments;

                         (ii)  a certificate of the Secretary of BRE certifying
               that all necessary corporate action has been taken on behalf of
               BRE approving the execution, delivery and performance of this
               Agreement;

                         (iii) possession of all originals and copies of
               agreements, instruments, documents, deeds, books, records, files,
               tax returns and other data and information within the possession
               of BRE, any Affiliate of BRE, or any representative or advisor of
               BRE pertaining to the Business (collectively, the "Records");
               provided, however, that BRE may retain (a) copies of any tax
               returns and copies of Records relating thereto; (b) copies of any
               Records that BRE is reasonably likely to need in order to comply
               with requirements of law; and (c) copies of any Records that in
               the reasonable opinion of BRE will be required in connection with
               the performance of its indemnification obligations under this
               Agreement;

                         (iv)  the Ancillary Agreements, executed by BRE;

                         (v)   such other instruments and documents as are
               required by BRE to be delivered at the Closing by BRE pursuant to
               the provisions of this Agreement or as are reasonably required by
               VelocityHSI to evidence compliance by BRE with the
               representations, warranties and covenants of BRE contained in
               this Agreement; and

                         (vi)  such other documents, and shall perform such
               other acts, as VelocityHSI shall reasonably require in order to
               perfect the right, title and interest of VelocityHSI to and in
               the Contributed Assets.

          3.1  DELIVERIES BY VELOCITYHSI. At the Closing, VelocityHSI shall
deliver (or cause to be delivered) to BRE:

                         (i)   a certificate representing the Shares;

                         (ii)  a certificate of the Secretary of VelocityHSI,
               certifying that all necessary corporate action has been taken on
               behalf of VelocityHSI approving the execution, delivery and
               performance of the Agreement;

                         (iii) the Ancillary Agreements, executed by
               VelocityHSI; and

                         (iv)  such other instruments and documents as are
               required to be delivered by VelocityHSI at Closing pursuant to
               the provisions of this Agreement or are reasonably required by
               BRE to

                                       7
<PAGE>

               evidence compliance with the representations, warranties and
               covenants of VelocityHSI contained in this Agreement.

          3.4  OTHER DELIVERIES.

                    (a)  In connection with Latham & Watkins' opinion to be
          rendered in connection with the filing of the Registration Statement
          regarding the material tax consequences of the transactions described
          therein:

                         (i)   BRE shall deliver to Latham & Watkins a
               certificate of an officer of BRE containing certain
               representations and agreements with respect to the Contribution
               and Distribution (the "BRE Tax Matters Certificate")
               substantially in the form of Exhibit A attached hereto; and

                         (ii)  VelocityHSI shall deliver to Latham & Watkins a
               certificate of an officer of VelocityHSI containing certain
               representations and agreements with respect to the Contribution
               and Distribution (the "VelocityHSI Tax Matters Certificate")
               substantially in the form of Exhibit B attached hereto.

                    (b)  The BRE Tax Matters Certificate and the VelocityHSI Tax
          Matters Certificate may be modified upon the request of Latham &
          Watkins and the agreement of BRE and VelocityHSI.

                                  ARTICLE 4.
                     REPRESENTATIONS AND WARRANTIES OF BRE

     BRE hereby represents and warrants to VelocityHSI that:

          4.1  CORPORATE EXISTENCE AND QUALIFICATION. BRE is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland; BRE has the corporate power to own, manage, lease and hold its assets
and to carry on its business as and where such assets are presently located and
such business is presently conducted.

          4.2  AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by BRE. BRE has the corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which BRE is
a party and to perform its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and the Ancillary Agreements to which
BRE is a party have been authorized by proper corporate action on the part of
BRE. This Agreement and each Ancillary Agreement to which BRE is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of BRE, enforceable in accordance with its terms, except
as such enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors' rights generally.

                                       8
<PAGE>

          4.3  NO CONSENTS. Except as disclosed on Schedule 4.3, the execution
and delivery of this Agreement and the Ancillary Agreements by BRE and the
performance by BRE of its obligations hereunder and thereunder will not violate
any Legal Requirements or require the consent under any indenture, agreement or
other instrument to which BRE is a party, or by which BRE or any properties or
assets of BRE are bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, or
accelerate or permit any acceleration of the performance required by, or give
any other party the right to terminate, any such indenture, agreement or other
instrument.

          4.4  NO VIOLATIONS. Except as provided in Schedule 4.4, neither the
execution and delivery of this Agreement or the Ancillary Agreements nor the
carrying out of any of the transactions contemplated hereby or thereby will:

                         (i)   violate or conflict with any of the terms,
               conditions or provisions of BRE's charter documents;

                         (ii)  violate, conflict with, result in a breach of,
               constitute a default under (whether with or without notice or the
               lapse of time or both), or accelerate or permit the acceleration
               of the performance required by, or give any other party the right
               to terminate, any Transferred Contract;

                         (iii) result in the creation of any lien, charge or
               other encumbrance on any Contributed Asset;

                         (iv)  constitute a violation of any Legal Requirement
               or Permit; or

                         (v)   other than the filing and effectiveness of the
               Form S-1 Registration Statement and the Form 8-A Registration
               Statement, require BRE to obtain or make any waiver, consent,
               action, approval or authorization of, or registration,
               declaration, notice or filing with any Governmental Authority.

          4.5  NO PROCEEDINGS. To BRE's knowledge, no suit, action or other
proceeding is pending or threatened before any Governmental Authority seeking to
restrain BRE from entering into this Agreement or the Ancillary Agreements, or
prohibiting the Closing or the Distribution, or seeking damages as a result of
the consummation of this Agreement or the Ancillary Agreements.

          4.6  COMPLIANCE WITH LAWS. Except as set forth on Schedule 4.6, BRE is
and has been in compliance in all respects with any and all Legal Requirements
applicable to the Business. BRE has not received or entered into any citations,
complaints, consent orders, compliance schedules, or other similar enforcement
orders or received any written notice from any Governmental Authority or any
other written notice that would indicate that there is not currently compliance
with all such Legal Requirements with respect to the Business.

                                       9
<PAGE>

          4.7  LITIGATION. Except as otherwise set forth in Schedule 4.7, (i)
there are no claims, actions, suits, investigations or proceedings against BRE
pending or, to the knowledge of BRE, threatened in any court or before or by any
Governmental Authority, or before any arbitrator (whether covered by insurance
or not), relating to the Business or the Contributed Assets and (ii) to the
knowledge of BRE, there is no basis for any such claim, action, suit,
investigation or proceeding that is likely to result in a judgment, decree or
order.

          4.8  OWNERSHIP OF CONTRIBUTED ASSETS. BRE has and will have as of the
Closing Date legal and beneficial ownership of the Contributed Assets, free and
clear of any and all liens, mortgages, pledges, adverse claims, encumbrances or
other restrictions or limitations whatsoever (other than restrictions currently
set forth in the Transferred Contracts).

          4.9  TRANSFERRED CONTRACTS. All of the Transferred Contracts are
valid, binding and in full force and effect, and BRE has not been notified or
advised by any party thereto of such party's intention or desire to terminate or
modify any such Transferred Contract in any respect. Neither BRE nor, to BRE's
knowledge, any other party is in breach of any of the terms or covenants of any
of the Transferred Contracts. Following the Closing, VelocityHSI will be
entitled to all of the benefits of BRE under the Transferred Contracts. True,
correct and complete copies of the Transferred Contracts have been delivered to
VelocityHSI.

          4.10 INSURANCE. Schedule 4.10 hereto sets forth a complete and correct
list of all insurance policies presently in effect that relate to the Business
or the Contributed Assets, all of which have been in full force and effect from
and after the date(s) set forth on Schedule 4.10.

          4.11 EQUIPMENT AND OTHER TANGIBLE PROPERTY. BRE's equipment,
furniture, machinery, structures, fixtures and other tangible property included
in the Contributed Assets, other than inventory, is suitable for the purposes
for which intended and in good operating condition and repair, except for
ordinary wear and tear.

          4.12 PERMITS. Except as set forth on Schedule 4.12, BRE has all
Permits necessary to conduct the Business as presently conducted. Except as
otherwise set forth in Schedule 4.12, all such Permits are in effect, no
proceeding is pending or threatened to modify, suspend or revoke, withdraw,
terminate, or otherwise limit any such Permits, and no administrative or
governmental actions have been taken or are threatened in connection with the
expiration or renewal of such Permits which could adversely affect the Business
as presently conducted. Except as otherwise set forth in Schedule 4.12, (i) no
material violations have occurred that remain uncured, unwaived, or otherwise
unresolved, or are occurring in respect of any such Permits.

          4.13 TAX MATTERS CERTIFICATE. The statements set forth in the BRE Tax
Matters Certificate shall be true, complete and correct as of the date such
certificate is delivered to Latham & Watkins and will continue to be true
through the date of the Distribution.

     The representations and warranties of BRE set forth in this Article 4 shall
survive the Closing for a period of six (6) months.

                                       10
<PAGE>

                                  ARTICLE 5.
                REPRESENTATIONS AND WARRANTIES OF VELOCITYHSI

     VelocityHSI hereby represents and warrants to BRE that:

          5.1  CORPORATE EXISTENCE. VelocityHSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.


          5.2  AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by VelocityHSI. VelocityHSI has the corporate power
and authority to execute and deliver this Agreement and the Ancillary Agreements
to which VelocityHSI is a party and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which VelocityHSI is a party have been authorized by
proper corporate action on the part of VelocityHSI. This Agreement and each
Ancillary Agreement to which VelocityHSI is a party constitutes, or upon
execution and delivery will constitute, the legal, valid and binding obligation
of VelocityHSI, enforceable in accordance with its terms, except as such
enforcement may be limited by general equitable principles or by applicable
bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from
time to time in effect which affect creditors' rights generally.

          5.3  NO VIOLATIONS. Neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions contemplated hereby
will violate or conflict with any of the terms, conditions or provisions of
VelocityHSI's charter documents.

          5.4  NO PROCEEDINGS. To VelocityHSI's knowledge, no suit, action or
other proceeding is pending or threatened before any Governmental Authority
seeking to restrain VelocityHSI from entering into this Agreement or the
Ancillary Agreements, prohibiting the Closing or the Distribution, or seeking
damages as a result of the consummation of this Agreement or the Ancillary
Agreements.

          5.5  TAX MATTERS CERTIFICATE. The statements set forth in the
VelocityHSI Tax Matters Certificate shall be true, complete and correct as of
the date such certificate is delivered to Latham & Watkins and will continue to
be true through the date of the Distribution.

     The representations and warranties of VelocityHSI set forth in this
Article 5 shall survive the Closing for a period of six (6) months.

                                  ARTICLE 6.
         CONDITIONS TO BRE'S OBLIGATION TO CONSUMMATE THE CONTRIBUTION

     The obligation of BRE to consummate the Contribution is subject, in the
discretion of BRE, to the satisfaction or waiver of each of the following
conditions:

          6.1  REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. VelocityHSI's
representations and warranties set forth in this Agreement shall be true and
correct as of the Closing Date.

                                       11
<PAGE>

          6.2  CONSENTS. All Permits, consents, approvals and waivers from
Governmental Authorities and other third parties necessary for the consummation
of the Contribution shall have been obtained.


          6.3  NO ACTIONS OR COURT ORDERS. No Action shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby or by the Ancillary Agreements. There shall not be any Legal
Requirement that makes the transactions contemplated hereby illegal or otherwise
prohibited.

          6.4  DELIVERY OF DOCUMENTS AND INSTRUMENTS. VelocityHSI shall have
executed and delivered the documents and instruments required to be delivered by
it pursuant to Sections 3.3 and 3.4 hereof.

          6.5  OTHER TRANSACTIONS. At or prior to the Closing, BRE and
VelocityHSI shall have consummated such other transactions in connection with
the Contribution that are necessary to effect such Contribution.

     PROVIDED, HOWEVER, that the satisfaction of the conditions set forth
herein shall not in any way limit BRE's power of termination set forth in
Section 12.8.

                                  ARTICLE 7.
     CONDITIONS TO VELOCITYHSI'S OBLIGATION TO CONSUMMATE THE CONTRIBUTION

     The obligation of VelocityHSI to consummate the Contribution is subject, in
the discretion of VelocityHSI, to the satisfaction or waiver of each of the
following conditions:

          7.1  REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. BRE's
representations and warranties set forth in this Agreement shall be true and
correct as of the Closing Date.

          7.2  CONSENTS. All Permits, consents, approvals and waivers from
Governmental Authorities and other third parties necessary for the consummation
of the Contribution shall have been obtained.

          7.3  NO ACTIONS OR COURT ORDERS. No Action shall have been instituted
or threatened that questions the validity or legality of the transactions
contemplated hereby or by the Ancillary Agreements or that otherwise would have
a material adverse effect on the VelocityHSI Business. There shall not be any
Legal Requirement that makes the transactions contemplated hereby illegal or
otherwise prohibited or that otherwise would have a material adverse effect on
the VelocityHSI Business.

          7.4  DELIVERY OF DOCUMENTS AND INSTRUMENTS. BRE shall have executed
and delivered the documents and instruments required to be delivered by it
pursuant to Sections 3.2 and 3.4 hereof.

                                       12
<PAGE>

          7.5  OTHER TRANSACTIONS. At or prior to the Closing, BRE and
VelocityHSI shall have consummated such other transactions in connection with
the Contribution that are necessary to effect such Contribution.

                                  ARTICLE 8.
                             ACCESS TO INFORMATION

          8.1  PROVISION OF CORPORATE RECORDS. After the Closing Date, upon the
prior written request by one party for agreements, documents, books, records or
files including, without limitation, computer files, microfiche, tape recordings
and photographs, relating to or affecting the requesting party, the other party
shall arrange, as soon as reasonably practicable following the receipt of such
request, for the provision of appropriate copies thereof (or the originals
thereof if the party making the request has a reasonable need for such
originals) in the possession of such other party or any of its Affiliates, but
only to the extent such items are not already in the possession of the
requesting party. Except to the extent otherwise contemplated by any Ancillary
Agreement, a party providing information or access to information to the other
party under this Article 8 shall be entitled to receive from the recipient, upon
the presentation of invoices therefor, payments for such amounts relating to
supplies, disbursements and other out-of-pocket expenses as are reasonably
incurred in providing such information or access to information.

                                  ARTICLE 9.
                               THE DISTRIBUTION

          9.1  THE DISTRIBUTION. On the Distribution Date, subject to the
conditions and rights of termination set forth in this Agreement, BRE shall
deliver to the Agent share certificates representing one (1) Share for every
five (5) shares of BRE common stock outstanding on the record date for the
Distribution, subject to adjustment for fractional shares in the manner
described in Section 9.2, for distribution to the holders of record of shares of
BRE common stock on the record date for the Distribution. VelocityHSI agrees to
provide all share certificates that the Agent shall require in order to effect
the Distribution.


          9.2  CASH IN LIEU OF FRACTIONAL SHARES. No certificate or scrip
representing fractional shares of VelocityHSI common stock shall be issued as
part of the Distribution and in lieu thereof, each holder of BRE common stock
who would otherwise be entitled to receive a fractional share of VelocityHSI
common stock will receive an amount of cash (without interest) equal to the
fractional share multiplied by $1.00.

          9.3  CONDITIONS PRECEDENT TO THE DISTRIBUTION. The BRE Board shall, in
its discretion, establish any appropriate procedures in connection with the
Distribution. The Distribution shall not occur unless the following conditions
shall have been satisfied:


                    (a)  the other transactions contemplated by this Agreement
          to have occurred on or prior to the Distribution Date shall have been
          consummated in all material respects;

                                       13
<PAGE>

                    (b)  BRE and VelocityHSI shall have obtained all consents,
          approvals and waivers from Governmental Authorities and other third
          parties necessary for the Distribution;

                    (c)  the Registration Statement on Form S-1 filed by
          VelocityHSI pursuant to the Securities Act of 1933 in connection with
          the Distribution (the "Form S-1 Registration Statement") shall have
          been declared effective by the Commission; and

                    (d)  the Registration Statement on Form 8-A filed by
          VelocityHSI pursuant to the Securities Exchange Act of 1934 (the "Form
          8-A Registration Statement") shall have been declared effective by the
          Commission.

                    (e)  The statements set forth in the BRE Tax Matters
          Certificate and the VelocityHSI Tax Matters Certificate shall be true
          and correct as through the date of the Distribution.


     PROVIDED, HOWEVER, that (i) any such condition may be waived by the BRE
Board in its sole discretion, and (ii) the satisfaction of such conditions shall
not create any obligation on the part of BRE or any other party hereto to effect
the Distribution or in any way limit BRE's power of termination set forth in
Section 12.8.

          9.4  INSURANCE COVERAGE PRIOR TO DISTRIBUTION DATE. Subject to
applicable laws, prior to the Distribution Date, the BRE Retained Company
Policies shall provide general liability, property damage, director and officer,
and employment practices insurance coverage to VelocityHSI.

          9.5  INSURANCE COVERAGE ON AND AFTER DISTRIBUTION DATE. On and after
the Distribution Date, coverage of VelocityHSI shall cease under the BRE
Retained Company Policies. From and after the Distribution Date, VelocityHSI and
its Subsidiaries will be responsible for obtaining and maintaining insurance
coverages for their own account.

                                  ARTICLE 10.
                                   COVENANTS

          10.1 SECTION 351(a). BRE and VelocityHSI each acknowledges that upon
the Contribution, VelocityHSI will be a "qualified REIT subsidiary" of BRE which
will be disregarded for federal income tax purposes and, consequently, the
Contribution will be disregarded for federal income tax purposes. BRE and
VelocityHSI each further acknowledges that at the time VelocityHSI ceases to be
wholly-owned by BRE, there shall be a deemed contribution for federal income tax
purposes of the assets then owned by VelocityHSI to a new corporation by BRE.
Each of BRE and VelocityHSI each agrees to take all actions necessary to cause
such deemed contribution to qualify as, and will not take or agree to take any
action that would prevent such deemed contribution from qualifying as, an
exchange under Section 351(a) of the Code.

          10.2 TRANSFERS NOT EFFECTED PRIOR TO CLOSING; TRANSFERS DEEMED
EFFECTIVE AS OF THE CLOSING. To the extent that any transfers contemplated

                                       14
<PAGE>

hereby shall not have been consummated at or prior to the Closing, the parties
shall cooperate to effect such transfers as promptly following the Closing as
shall be practicable. Nothing herein shall be deemed to require the transfer of
any assets which by their terms or operation of law cannot be transferred;
provided, however, that the parties hereto and their respective Subsidiaries
shall cooperate to seek to obtain any necessary consents or approvals for the
transfer of all assets contemplated to be transferred pursuant hereto. In the
event that any such transfer of assets has not been consummated, from and after
the Closing, BRE shall hold such asset in trust for the use and benefit of
VelocityHSI and take such other action as may be reasonably requested by
VelocityHSI, insofar as is reasonably possible, in the same position as would
have existed had such asset been transferred as contemplated hereby. As and when
any such asset becomes transferable, such transfer shall be effected forthwith.
The parties agree that, as of the Closing, VelocityHSI shall be deemed to have
acquired complete and sole beneficial ownership over all of the Contributed
Assets, together with all rights, powers and privileges incident thereto, and
shall be deemed to have assumed in accordance with the terms of this Agreement
all of the Assumed Liabilities, and all duties, obligations and responsibilities
incident thereto.

          10.3 COOPERATION PRIOR TO THE DISTRIBUTION. BRE and VelocityHSI
shall (i) cooperate in preparing, filing with the Commission and causing to
become effective any registration statements or amendments thereof relating to
the Distribution; (ii) take all such action as may be necessary or appropriate
under the securities or blue sky laws of states or other political subdivisions
of the United States in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements; (iii) use all reasonable efforts to
obtain all third-party consents or approvals necessary or desirable in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements; and (iv) use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary or
desirable under applicable law, to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements.

          10.4 FURTHER ASSURANCES. In case at any time any further action is
reasonably necessary or desirable to carry out the purposes of this Agreement
and the Ancillary Agreements, the proper officers of each party to this
Agreement shall take all such necessary action. Without limiting the foregoing,
BRE and VelocityHSI shall use commercially reasonable efforts to obtain all
consents and approvals, to enter into all amendments to this or any Ancillary
Agreements and to make all filings and applications that may be required for the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, including, without limitation, all applicable governmental
and regulatory filings and novations.

                                       15
<PAGE>

                                  ARTICLE 11.
                              DISPUTE RESOLUTION

     In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or any of the Ancillary
Agreements or otherwise arising out of, or in any way related to this Agreement
or any of the Ancillary Agreements, including, without limitation, any claim
based on contract, tort, statute or constitution (collectively, "Agreement
Disputes"), the Chief Executive Officers (or their designees) of the respective
parties shall negotiate in good faith for a reasonable period of time to settle
such Agreement Dispute.

     If, after such reasonable period, such Chief Executive Officers (or their
designees) are unable to settle such Agreement Dispute (and in any event after
60 days have elapsed from the time the parties began such negotiations), such
Agreement Dispute shall be determined, at the request of either party, by
arbitration before a single arbitrator conducted in San Francisco, California,
before and in accordance with the then-existing Rules of Practice and Procedure
(the "Rules") of the San Francisco office of JAMS/Endispute, Inc. ("JAMS") and
any judgment or award rendered by the arbitrator shall be final, binding and
nonappealable (except upon grounds specified in 9 U.S.C. Section 10 or
California Code of Civil Procedure Section 1285 et seq. as in effect on the date
hereof), and judgment may be entered by any state or Federal court having
jurisdiction thereof. Any controversy concerning whether an Agreement Dispute is
an arbitrable Agreement Dispute, whether arbitration has been waived, whether an
assignee of this Agreement is bound to arbitrate, or as to the interpretation of
enforceability of this Article 11 shall be determined by the arbitrator. The
arbitrator shall be a retired or former judge of any Federal or California trial
or appellate court or such other qualified person as the parties may agree to
designate. The arbitrator shall be entitled, if appropriate, to award any remedy
in such proceedings, including, without limitation, monetary damages, specific
performance and all other forms of legal and equitable relief; provided,
however, the arbitrator shall not be entitled to award punitive damages and
shall not reform, modify or materially change this Agreement or any of the
Ancillary Agreements. In his or her award the arbitrator shall allocate, in his
or her discretion, among the parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of the
arbitrator and reasonable attorneys' fees, costs and expert witness expenses of
the parties. The parties hereto agree to comply with any award made in any such
arbitration proceedings that has become final in accordance with the Rules and
agree to the entry of a judgment in any jurisdiction upon any award rendered in
such proceedings becoming final under the Rules.

                                  ARTICLE 12.
                                 MISCELLANEOUS

          12.1 ENTIRE AGREEMENT; CONSTRUCTION. This Agreement and the Ancillary
Agreements shall constitute the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.

                                       16
<PAGE>

          12.2 CONFIDENTIALITY. Each of BRE and its Affiliates and VelocityHSI
and its Affiliates shall not use or permit the use of (without the consent of
the other) and shall hold, and shall cause its consultants and advisors to hold,
in strict confidence, all information concerning the other party in its
possession, its custody or under its control (except to the extent that (A) such
information has been in the public domain or becomes part of the public domain
through no fault of such party, (B) such information has been later lawfully
acquired by such party, without an obligation of confidence, from a third party
who is legally free to disclose such information, (C) this Agreement or any
other Ancillary Agreement or any other agreement entered into pursuant hereto
permits such use or disclosure of such information or (D) such information is
independently developed by such party without reference to such information) to
the extent such information relates to the period up to the Closing, relates to
any Ancillary Agreement or is obtained in the course of performing services for
the other party pursuant to any Ancillary Agreement, and each party shall not
(without the prior written consent of the other) otherwise release or disclose
such information to any other person, except such party's auditors, attorneys
and other representatives, unless compelled to disclose such information by
judicial or administrative process or unless such disclosure is required by law
and such party has used commercially reasonable efforts to consult with the
other affected party or parties prior to such disclosure. To the extent that a
party hereto is compelled by judicial or administrative process to disclose such
information under circumstances in which any evidentiary privilege would be
available, such party agrees to assert such privilege in good faith prior to
making such disclosure. Each of the parties hereto agrees to consult with each
relevant other party in connection with any such judicial or administrative
process, including, without limitation, in determining whether any privilege is
available, and further agrees to allow each such relevant party and its counsel
to participate in any hearing or other proceeding (including, without
limitation, any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.


          12.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.

          12.4 EXPENSES. All costs and expenses incurred on or prior to the
Distribution in connection with the preparation, execution, delivery and
implementation of this Agreement and any Ancillary Agreement and the
consummation of the transactions contemplated hereby and thereby shall be the
responsibility of BRE.

          12.5 NOTICES. Notices shall be sent to the Parties at the following
addresses:


          BRE Properties, Inc.
          44 Montgomery Street, 36/th/ Floor
          San Francisco, California 94104
          Attn:  LeRoy E. Carlson
          Facsimile:  415-445-6505

          VelocityHSI, Inc.
          2175 North California Boulevard, Suite 810
          Walnut Creek, California 94596

                                       17
<PAGE>

          Attn:  Charles P. Wingard
          Facsimile:  925-952-5697

     Notices may be hand-delivered or sent by certified mail, return receipt
requested, Federal Express or comparable overnight delivery service, or
facsimile. Notice shall be deemed received at the time delivered by hand, on the
fourth business day following deposit in the U.S. mail, on the first business
day following deposit with Federal Express or other delivery service, or if
given by facsimile when confirmation of transmission is indicated by the
sender's facsimile machine. Any party to this Agreement may change its address
for notice by giving written notice to the other party at the address and in
accordance with the procedures provided above.

          12.6  AMENDMENTS; WAIVERS. No modification or amendment to this
Agreement, or waiver of any right or remedy herein provided, shall be effective
for any purpose unless such modification, amendment or waiver is specifically
set forth in a writing signed by the party or parties to be bound thereby. The
waiver of any right or remedy with respect to any occurrence on one occasion
shall not be deemed a waiver of such right or remedy with respect to such
occurrence on any other occasion.

          12.7  SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement shall not be assigned without the express
written consent of each of the parties hereto.

          12.8  TERMINATION. This Agreement may be terminated, and the Asset
Transfers may be amended, modified or abandoned at any time prior to the Closing
Date by and in the sole discretion of BRE without the approval of VelocityHSI or
the shareholders of BRE. In the event of such termination, no party shall have
any liability of any kind to any other party or any other person. After the
Closing Date, this Agreement may not be terminated except by an agreement in
writing signed by the parties.

          12.9  NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and their respective Subsidiaries and Affiliates
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.

          12.10 TITLE AND HEADINGS. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

          12.11 SCHEDULES; EXHIBITS. Any Schedule or Exhibit shall be construed
with and as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.

          12.12 GOVERNING LAW. This agreement shall be governed by and construed
in accordance with the laws of the state of California without regard to the
principles of choice of law thereof.

                                     * * *

                                       18
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Contribution and
Distribution Agreement to be duly executed as of the day and year first above
written.

                                       BRE PROPERTIES, INC.


                                       By: /s/ LeRoy E. Carlson
                                          --------------------------------------
                                          LeRoy E. Carlson
                                          Executive Vice President and Chief
                                          Operating Officer


                                       VELOCITYHSI, INC.


                                       By: /s/ Charles P. Wingard
                                          --------------------------------------
                                          Charles P. Wingard
                                          Senior Vice President, Chief Financial
                                          Officer

                                       19
<PAGE>

                              Schedule 2.1(a)(i)
                              ------------------

None.
<PAGE>

                              Schedule 2.1(a)(ii)
                              -------------------

See the attached.
<PAGE>

                              Schedule 2.1(a)(iii)
                              --------------------

None.
<PAGE>

                              Schedule 2.1(a)(iv)
                              -------------------

None.
<PAGE>

                              Schedule 2.1(a)(vii)
                              --------------------

     All of technology and other intangible rights which are used in connection
with or otherwise related to KLIKLANE and ZIPPITYKLIK.
<PAGE>

                                  Schedule 2.2
                                  ------------

None.
<PAGE>

                                  Schedule 4.3
                                  ------------

Not Applicable.
<PAGE>

                                  Schedule 4.4
                                  ------------

Not Applicable.
<PAGE>

                                  Schedule 4.6
                                  ------------

Not Applicable.
<PAGE>

                                  Schedule 4.7
                                  ------------

Not Applicable.
<PAGE>

                                 Schedule 4.10
                                 -------------

See the attached.
<PAGE>

                                 Schedule 4.12
                                 -------------

Not Applicable.