Document:

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                                                                    EXHIBIT 10.1

                FORM OF CONTRIBUTION AND DISTRIBUTION AGREEMENT

    This CONTRIBUTION AND DISTRIBUTION AGREEMENT (this "Agreement") is entered
into as of the __ day of ________, 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
_______ 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.
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    "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.

    "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.

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

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

    "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

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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 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.

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

    "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;

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

                                (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.

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                                  ARTICLE 3.
                          CLOSING OF THE CONTRIBUTION

         3.1  CLOSING.  The closing of the contribution transactions
contemplated hereby (the "Closing") shall be held on _____ __, 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:

                                (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.

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

                                (i)   a certificate representing the Shares;

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                                (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 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

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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.

         4.3  NO CONSENTS.  Except as disclosed on Schedule 5.3, 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 5.4, 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.

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         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 5.6, 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.

         4.7  LITIGATION.  Except as otherwise set forth in Schedule 5.7, (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 5.10 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 5.10.

         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.

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         4.12  PERMITS.  Except as set forth on Schedule 5.12, BRE has all
Permits necessary to conduct the Business as presently conducted. Except as
otherwise set forth in Schedule 5.12, 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 5.12, (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.

                                  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.

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         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.

         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.

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         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.

         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.

                                       13
<PAGE>

         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 $0.96.

         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;

                   (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.

                                       14
<PAGE>

                                  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
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

                                       15
<PAGE>

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.

                                  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

                                       16
<PAGE>

         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.

         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.

                                       17
<PAGE>

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

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

          VelocityHSI, Inc.
          44 Montgomery Street, 36th Floor
          San Francisco, California  94104
          Attn:  Charles P. Wingard
          Facsimile:  415-445-6577

    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.

                                       18
<PAGE>

         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.

                                    *  *  *

                                       19
<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:
                                    ---------------------------------------
                                    LeRoy Carlson
                                    Executive Vice President, Chief Financial
                                    Officer and Secretary

                                 VELOCITYHSI, INC.

                                 By:
                                    ---------------------------------------
                                    Charles P. Wingard
                                    Senior Vice President, Financial
                                    Reporting

                                       20
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                    Page
                                                                                                                    ----
<S>                                                                                                                 <C>
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..........................................................................     7

     3.1   CLOSING..............................................................................................     7
     3.2   DELIVERIES BY BRE....................................................................................     7
     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.......................................................................................    10
     4.6   COMPLIANCE WITH LAWS.................................................................................    10
     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..............................................................................................    11
     4.13  TAX MATTERS CERTIFICATE..............................................................................    11

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..............................................................................    12

ARTICLE 6. CONDITIONS TO BRE'S OBLIGATION TO CONSUMMATE THE CONTRIBUTION........................................    12
</TABLE>
<PAGE>

<TABLE>
<S>                                                                                                                 <C>
     6.1   REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING.......................................................    12
     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.............................................................................................    13
     7.3   NO ACTIONS OR COURT ORDERS...........................................................................    13
     7.4   DELIVERY OF DOCUMENTS AND INSTRUMENTS................................................................    13
     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....................................................................    14
     9.3   CONDITIONS PRECEDENT TO THE DISTRIBUTION.............................................................    14
     9.4   INSURANCE COVERAGE PRIOR TO DISTRIBUTION DATE........................................................    14
     9.5   INSURANCE COVERAGE ON AND AFTER DISTRIBUTION DATE....................................................    14

ARTICLE 10. COVENANTS...........................................................................................    15

     10.1   SECTION 351(a)......................................................................................    15
     10.2   TRANSFERS NOT EFFECTED PRIOR TO CLOSING; TRANSFERS DEEMED EFFECTIVE AS OF THE CLOSING...............    15
     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......................................................................    17
     12.2   CONFIDENTIALITY.....................................................................................    17
     12.3   COUNTERPARTS........................................................................................    17
     12.4   EXPENSES............................................................................................    17
     12.5   NOTICES.............................................................................................    18
     12.6   AMENDMENTS; WAIVERS.................................................................................    18
     12.7   SUCCESSORS AND ASSIGNS..............................................................................    18
     12.8   TERMINATION.........................................................................................    18
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                                                 <C>
     12.9   NO THIRD PARTY BENEFICIARIES........................................................................    19
     12.10  TITLE AND HEADINGS..................................................................................    19
     12.11  SCHEDULES; EXHIBITS.................................................................................    19
     12.12  GOVERNING LAW.......................................................................................    19
</TABLE>

                                      iii<PAGE>

                                                                    Exhibit 10.2

          FORM OF ADMINISTRATIVE SERVICES AND REIMBURSEMENT AGREEMENT

     This ADMINISTRATIVE SERVICES AND REIMBURSEMENT AGREEMENT (this "Agreement")
is dated as of            , 2000, by and between BRE PROPERTIES, INC., a
               -------- --
Maryland corporation ("BRE"), and VELOCITYHSI, INC., a Delaware corporation
("VelocityHSI," and collectively with BRE, the "Parties").

                                R E C I T A L S
                                ---------------

     A.  Pursuant to a Contribution and Distribution Agreement dated as of
          , 2000 (the "Contribution and Distribution Agreement"), BRE will
------- --
contribute (the "Contribution") to VelocityHSI the Contributed Assets (as
defined in the Contribution and Distribution Agreement).

     B.  In order to continue to operate the business of providing Internet
connectivity services, e-mail services, Web pages individualized for particular
communities, community-specific portals and related services (the "Business"),
VelocityHSI wishes to obtain from BRE, and BRE wishes to provide to VelocityHSI,
financial support and administrative services, such as use of office space;
management, accounting and payroll services; administration of benefits programs
and such other administrative services upon which VelocityHSI and BRE may agree
(collectively, the "Services") until the Termination Date (as defined herein).

     C.  A condition to the closing of the Contribution is that BRE and
VelocityHSI enter into this Agreement pursuant to which BRE shall provide
financial support and Services, the terms of which shall be effective (the
"Effective Date") concurrently with the Distribution (as defined in the
Contribution and Distribution Agreement).

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

     1.  Definitions. As used in this Agreement, the following terms shall have
         -----------
the meanings indicated below:

          "Advances" shall have the meaning set forth in Section 2 hereof.

          "Beneficial Ownership" shall have the meaning set forth in Section 3
     hereof.

          "Business" shall have the meaning set forth in the recitals to this
     Agreement.

          "BRE-Related Capital Expenditures" shall mean the cost of capital
     equipment installed or to be installed by VelocityHSI in multifamily
     dwelling units owned by BRE.

          "Change in Control of VelocityHSI" shall have the meaning set forth in
     Section 3 hereof.

          "Contribution and Distribution Agreement" shall mean the agreement
     described
<PAGE>

     in the Recitals to this Agreement.

          "Effective Date" shall mean effective the date of this Agreement as
     set forth in the Recitals to this Agreement.

          "Exchange Act" shall have the meaning set forth in Section 3 hereof.

          "Incumbent Board" shall have the meaning set forth in Section 3
     hereof.

          "Non-Control Acquisition" shall have the meaning set forth in Section
     3 hereof.

          "Non-Control Transaction" shall have the meaning set forth in Section
     3 hereof.

          "Parties" shall have the meaning set forth in the introductory
     paragraph hereof.

          "Person" shall have the meaning set forth in Section 3 hereof.

          "Proxy Contest" shall have the meaning set forth in Section 3 hereof.

          "Services" shall have the meaning set forth in the Recitals to this
     Agreement.

          "Subject Person" shall have the meaning set forth in Section 3 hereof.

          "Surviving Corporation" shall have the meaning set forth in Section 3
     hereof.

          "Termination Date" shall have the meaning set forth in Section 3
     hereof.

          "VelocityHSI and Third-Party Capital Expenditures" shall mean all
     capital expenditures incurred by VelocityHSI other than BRE-Related Capital
     Expenditures.

          "Voting Securities" shall have the meaning set forth in Section 3
     hereof.

     2.  Services and Advancement of Expenses. From the Effective Date through
         ------------------------------------
the Termination Date, BRE shall provide the Services to VelocityHSI and make
advances (the "Advances") to VelocityHSI to fund operating expenses and capital
expenditures, subject to the limits set forth in Section 5 hereof, as
VelocityHSI may reasonably request from time to time in connection with the
operation of the Business.

     3.  Term; Termination. This Agreement shall commence as of the Effective
         -----------------
Date and continue until the date this agreement is terminated (the "Termination
Date"), which shall be July 30, 2001 unless earlier terminated by VelocityHSI
for any reason upon not less than thirty (30) days prior written notice or by
BRE by written notice after a Change in Control of VelocityHSI (as defined below
in this Section 3). For purposes of this Agreement, "Change in Control of
VelocityHSI" shall mean any of the following events:

          (A)  An acquisition (other than directly from VelocityHSI) of any
               voting securities of VelocityHSI (the "Voting Securities") by any
               "Person" (as the term person is used for purposes of Section
               13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
               (the "Exchange Act")),

                                       2
<PAGE>

               immediately after which such Person has "Beneficial Ownership"
               (within the meaning of Rule 13d-3 promulgated under the Exchange
               Act) of thirty percent (30%) or more of the combined voting power
               of VelocityHSI's then outstanding Voting Securities; provided,
               however, in determining whether a Change in Control has occurred,
               Voting Securities which are acquired in a Non-Control Acquisition
               shall not constitute an acquisition which would cause a Change in
               Control. A "Non-Control Acquisition" shall mean an acquisition by
               (i) an employee benefit plan (or a trust forming a part thereof)
               maintained by (A) VelocityHSI or (B) any corporation or other
               Person of which a majority of its voting power or its voting
               equity securities or equity interest is owned, directly or
               indirectly, by VelocityHSI (for purposes of this definition, a
               "Subsidiary"), (ii) VelocityHSI or its Subsidiaries, or (iii) any
               Person in connection with a "Non-Control Transaction" (as
               hereinafter defined);

          (B)  The individuals who, immediately after the Distribution are
               members of the Board of Directors of VelocityHSI (the "Incumbent
               Board"), cease for any reason to constitute at least two-thirds
               of the members of the Board of Directors of VelocityHSI;
               provided, however, that if the election, or nomination for
               election by VelocityHSI's common stockholders, of any new
               director was approved by a vote of at least two-thirds of the
               Incumbent Board, such new director shall, for purposes of this
               Agreement, be considered to be a member of the Incumbent Board;
               provided, further, however, that no individual shall be
               considered a member of the Incumbent Board if such individual
               initially assumed office as a result of either an actual or
               threatened election contest or other actual or threatened
               solicitation of proxies or consents by or on behalf of a Person
               other than the Board of Directors of VelocityHSI (a "Proxy
               Contest") including by reason of any agreement intended to avoid
               or settle any election contest or Proxy Contest; or

          (C)  Approval by the stockholders of VelocityHSI of:

               (i)  A merger, consolidation or reorganization involving
                    VelocityHSI, unless such merger, consolidation or
                    reorganization is a "Non-Control Transaction." A "Non-
                    Control Transaction" shall mean a merger, consolidation or
                    reorganization of VelocityHSI where:

                    (a)  the stockholders of VelocityHSI, immediately before
                         such merger, consolidation or reorganization, own
                         directly or indirectly immediately following such
                         merger, consolidation or reorganization, at least
                         seventy percent (70%) of the combined voting power of
                         the outstanding voting securities of the corporation
                         resulting from such merger or consolidation or
                         reorganization (the "Surviving Corporation") in
                         substantially the same proportion as their

                                       3
<PAGE>

                         ownership of the Voting Securities immediately before
                         such merger, consolidation or reorganization,

                    (b)  the individuals who were members of the Incumbent Board
                         immediately prior to the execution of the agreement
                         providing for such merger, consolidation or
                         reorganization constitute at least two-thirds of the
                         members of the board of directors of the Surviving
                         Corporation, or a corporation beneficially directly or
                         indirectly owning a majority of the Voting Securities
                         of the Surviving Corporation, and

                    (c)  no Person other than (i) VelocityHSI, (ii) any
                         Subsidiary, (iii) any employee benefit plan (or any
                         trust forming a part thereof) maintained by
                         VelocityHSI, the Surviving Corporation, or any
                         Subsidiary, or (iv) any Person who, immediately prior
                         to such merger, consolidation or reorganization had
                         Beneficial Ownership of thirty percent (30%) or more of
                         the then outstanding Voting Securities, has Beneficial
                         Ownership of thirty percent (30%) or more of the
                         combined voting power of the Surviving Corporation's
                         then outstanding Voting Securities.

               (ii)  A complete liquidation or dissolution of VelocityHSI; or

               (iii) An agreement for the sale or other disposition of all or
                     substantially all of the assets of VelocityHSI to any
                     Person (other than a transfer to a Subsidiary).

          (4)  Notwithstanding the foregoing, a Change in Control shall not be
               deemed to occur solely because any Person (the "Subject Person")
               acquired Beneficial Ownership of more than the permitted amount
               of the then outstanding Voting Securities as a result of the
               acquisition of Voting Securities by VelocityHSI which, by
               reducing the number of Voting Securities then outstanding,
               increases the proportional number of shares Beneficially Owned by
               the Subject Person, provided that if a Change in Control would
               occur (but for the operation of this sentence) as a result of the
               acquisition of Voting Securities by VelocityHSI, and after such
                                                                ---
               share acquisition by VelocityHSI, the Subject Person becomes the
               Beneficial Owner of any additional Voting Securities which
               increases the percentage of the then outstanding Voting
               Securities Beneficially Owned by the Subject Person, then a
               Change in Control shall occur.

     4.  Statements and Service Warranty
         -------------------------------

         4.1  Statement from BRE. Promptly, and in any event not later than
              ------------------
twenty days following the end of each month, BRE shall provide to VelocityHSI a
statement setting forth the cost of all Services provided and Advances made to
VelocityHSI,

                                       4
<PAGE>

calculated as set forth in Section 6.1 hereof, itemized in the manner reasonably
requested by VelocityHSI.

         4.2  Service Warranty. BRE represents and warrants that the Services
              ----------------
will be timely provided, in a commercially reasonable manner, consistent with
BRE's past practices with regard to the Business. BRE agrees to indemnify and
hold harmless VelocityHSI from all claims, costs and losses attributable to
BRE's or BRE employees' negligent acts or omissions.

     5.  Limitation on Advances. Notwithstanding anything to the contrary
         -----------------------
herein, BRE shall not be obligated to make Advances to fund operating expenses
(including expenses for Services rendered by BRE pursuant to this Agreement) and
VelocityHSI and Third Party Capital Expenditures in an aggregate amount in
excess of $10,000,000. There shall be no limitation on the amount of Advances
BRE is obligated to make to VelocityHSI to fund BRE-Related Capital
Expenditures.

     6.  Reimbursement and Repayment by VelocityHSI.
         ------------------------------------------

         6.1  Payment.  Within five (5) business days of the Termination Date,
              -------
VelocityHSI shall reimburse BRE for the aggregate unreimbursed cost of all
Services rendered by BRE pursuant to this Agreement and shall repay the
aggregate unpaid amount of all Advances, together with simple interest on the
Advances from the date made to the date of repayment, at the rate of 8% per
annum.  Reimbursable costs for Services rendered by BRE will be computed based
upon hourly rates assigned to the BRE employees providing the Services which
reflect the employees' salary and benefit costs to BRE, plus 35% of the hourly
rate to cover indirect costs such as office space, equipment usage, supplies and
utilities.

         6.2  Prepayment. At any time during the term of this Agreement,
              ----------
VelocityHSI may prepay any or all of the amounts described in Section 6.1
hereof, without penalty or premium.

     7.  General.
         -------

         7.1  Relationship of Parties. Nothing in this Agreement shall be deemed
              -----------------------
or construed by the Parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the Parties, it being
understood and agreed that no provision contained herein, and no act of the
Parties, shall be deemed to create any relationship between the Parties other
than the relationship set forth herein.

         7.2  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 by either Party hereto without the
express written consent of the other Party hereto; provided, however, that BRE
may assign its rights and obligations under this Agreement, in whole or in part,
to an affiliate without the consent of VelocityHSI.

                                       5
<PAGE>

         7.3  Titles and Headings. Titles and headings of 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.

         7.4  Severability. In the event that one or more of the terms or
              ------------
provisions of this Agreement or the application thereof in any circumstance(s)
shall, for any reason and to any extent be found by a court of competent
jurisdiction to be invalid, illegal or unenforceable, such court shall have the
power, and hereby is directed, to substitute for or limit such invalid term(s),
provision(s) or application(s) and to enforce such substituted or limited terms
or provisions, or the application thereof. Subject to the foregoing, the
invalidity, illegality or enforceability of any one or more of the terms or
provisions of this Agreement, as the same may be amended from time to time,
shall not affect the validity, legality or enforceability of any other term or
provision hereof.

         7.5  Notices. Notices shall be sent to the Parties at the following
              -------
addresses:

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

               VelocityHSI, Inc.
               44 Montgomery Street, 36th Floor
               San Francisco, California  94104
               Attn:  Charles P. Wingard
               Facsimile:  415-445-6577

         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.

         7.6  Further Action. VelocityHSI and BRE each shall cooperate in good
              --------------
faith and take such steps and execute such papers as may be reasonably requested
by the other Party to implement the terms and provisions of this Agreement.

         7.7  Amendments; Waivers. No termination, cancellation, modification,
              -------------------
amendment, deletion, addition or other change in this Agreement, or any
provision hereof, or waiver of any right or remedy herein provided, shall be
effective for any purpose unless 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

                                       6
<PAGE>

occasion shall not be deemed a waiver of such right or remedy with respect to
such occurrence on any other occasion.

         7.8  Governing Law. This Agreement and the rights and obligations of
              -------------
the Parties hereunder shall be governed by the laws of the State of California,
without regard to the principles of choice of law thereof.

         7.9  Entire Agreement. Except with respect to the Contribution and
              ----------------
Distribution Agreement (and the Ancillary Agreements referenced therein), this
Agreement constitutes the entire agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, between
the Parties hereto with respect to the subject matter hereof, so that no such
external or separate agreement relating to the subject matter of this Agreement
shall have any effect or be binding, unless the same is referred to specifically
in this Agreement or is executed by the Parties after the date hereof.

         7.10  Dispute Resolution. Any dispute arising under this Agreement
               ------------------
shall be resolved by binding arbitration in the manner contemplated by Article
10 of the Contribution and Distribution Agreement, including the attorneys fees
provisions referred to therein.

         7.11  Counterparts. This Agreement may be executed in two or more
               ------------
counterparts, each of which together shall be deemed to be an original and all
of which together shall be deemed to constitute one and the same agreement.

         7.12  No Third Party Beneficiaries. This Agreement is solely for the
               ----------------------------
benefit of the Parties hereto and shall 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 this Agreement.

                                    *  *  *

                                       7
<PAGE>

     IN WITNESS WHEREOF, the Parties have duly executed this Administrative
Services and Reimbursement Agreement as of the date first written above.

                                      BRE PROPERTIES, INC.

                                      By:
                                          --------------------------------------
                                           LeRoy E. Carlson
                                           Executive Vice President,
                                           Chief Financial Officer and Secretary

                                      VELOCITYHSI, INC.

                                      By:
                                          --------------------------------------
                                           Charles P. Wingard
                                           Senior Vice President,
                                           Chief Financial Officer and Secretary

                                       8

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