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VIDEOCART TO REALIZE $20 MILLION GAIN UPON TERMINATION OF IBM RELATIONSHIP

 CHICAGO, Feb. 17 /PRNewswire/-- VideOcart, Inc. (NASDAQ: VCRTC) today announced that its strategic alliance with IBM is being terminated by mutual agreement. Upon termination, the company will realize a one- time gain of approximately $20 million.
 The company first announced a strategic alliance with IBM in July 1991, with IBM agreeing to manufacture the company's ten button display unit. However, based upon in-market experience with this unit and extensive consumer research, during 1992 the company elected to stop production and proceed with a redesigned touchscreen unit. The company negotiated an end to the IBM manufacturing contract this past fall, with IBM agreeing to provide long term financing on the approximately $41 million owed by the company.
 In the second half of 1992, the company held discussions with IBM regarding manufacturing the new unit, but was unable to reach agreement on pricing. The company then sought third party bids. A large electronics firm with manufacturing facilities in the Far East provided a manufacturing quote at the company's price point. The company notified IBM that it would not be manufacturing the new unit; thereafter, the parties agreed to dissolve their alliance. The company is currently negotiating a manufacturing contract with the third party.
 Under the Close-Out agreement just signed, the company's $41 million of obligations to IBM will be completely fulfilled via a lump sum payment of $17 million and repricing of IBM's existing warrant to purchase 540,000 shares of the company's stock from $6.00 per share to $4.625 per share. Until such time as the company makes the $17 million lump sum payment, it will continue making monthly payments to IBM under the long term debt facility, but in the reduced amount of $1.0 million per month.
 The company recently completed a $15 million private offering; however, those funds are earmarked for network expansion. The company has retained Hambrecht & Quist to advise the company on raising funds for the close out payment.
 The company will retain sole ownership of all 50,000 display units manufactured by IBM as well as ownership of the electronic couponing software for IBM POS systems.
 The company notes that it will be virtually debt free upon completion of these transactions and have a book value in excess of $40 million.
 VideOcart is a micro-marketing media company, in its development stage, which installs and maintains a communication network consisting of programmable and targetable digital communications to video displays affixed to grocery shopping carts. This communications network, now installed in supermarkets across the country, allows consumer product goods manufacturers to reach consumers at the exact aisle location of the brand being advertised or promoted with a flexible video message.
 -0- 02/17/93
 /CONTACT: Randy S. Mueller, 312-987-5000, director of finance of VideOcart/
 (VCRTC)


CO: VideOcart, Inc. ST: Illinois IN: SU:

AH -- NY037 -- 7276 02/17/93 11:24 EST
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Publication:PR Newswire
Date:Feb 17, 1993
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