EXPRESS CAPITAL CONCEPTS INC, S-4, 1998-10-21

EXPRESS CAPITAL CONCEPTS INC
S-4, 1998-10-21
BLANK CHECKS

Previous: CALIFORNIA COASTAL COMMUNITIES INC, SC 13G, 1998-10-21

Next: VINEYARD NATIONAL BANCORP, DEF 14A, 1998-10-21

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1998

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
------------------------

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

EXPRESS CAPITAL CONCEPTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 9999 84-1107140
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

EXPRESS CAPITAL CONCEPTS, INC.
26 WEST DRY CREEK CIRCLE, SUITE 600
LITTLETON, COLORADO 80120
TELEPHONE: (303) 794-9450
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

EARNEST MATHIS, JR.
PRESIDENT, CHAIRMAN OF THE BOARD AND TREASURER
EXPRESS CAPITAL CONCEPTS, INC.
26 WEST DRY CREEK CIRCLE, SUITE 600
LITTLETON, COLORADO 80120
TELEPHONE: (303) 794-9450
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
THOMAS A. COLL, ESQ. H. WAYNE TAYLOR, ESQ.
CARL R. SANCHEZ, ESQ. MITCHELL SILBERBERG & KNUPP LLP
COOLEY GODWARD LLP 11377 WEST OLYMPIC BOULEVARD
4365 EXECUTIVE DRIVE, SUITE 1100 LOS ANGELES, CALIFORNIA 90064
SAN DIEGO, CALIFORNIA 92121 TELEPHONE: (310) 312-3120
TELEPHONE: (619) 550-6000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As promptly as practicable after this Registration Statement becomes effective
and after the effective time of the proposed Merger described in this
Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.0001 par value.......... 14,217,713(1) (2) (2) $1,398.08
- ----------------------------------------------------------------------------------------------------------------------------
Warrants, each to purchase one share of
Common Stock.......................... 405,000 $4.95 $2,004,750 $591.40
- ----------------------------------------------------------------------------------------------------------------------------
Warrants, each to purchase one share of
Common Stock.......................... 38,250 $8.00 $306,000 $90.27
- ----------------------------------------------------------------------------------------------------------------------------
Warrants, each to purchase one share of
Common Stock.......................... 543,500 $10.00 $5,435,000 $1,603.33
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.0001 par value.......... (3)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Represents an estimate of the maximum number of shares of Common Stock of
Registrant which may be issued to former holders of shares of Common Stock
of GreyStone Technology, Incorporated ("GreyStone") pursuant to the Merger
described herein.
(2) The registration fee has been calculated pursuant to Rule 457(f)(2). As of
the filing of this Registration Statement, GreyStone had an accumulated
capital deficit. In addition, Greystone's Common Stock has no par value.
Accordingly, the proposed maximum offering price has been calculated by
multiplying one-third ( 1/3) of an assumed par value for GreyStone's Common
Stock of ($1.00 per share) pursuant to Section 205 of the California General
Corporation Law by the maximum number of shares to be issued to the holders
of GreyStone Common Stock in the Merger.
(3) No separate fee required pursuant to Rule 457(g).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

GREYSTONE TECHNOLOGY, INCORPORATED
4950 MURPHY CANYON ROAD
SAN DIEGO, CALIFORNIA 92123

, 1998

Dear Fellow Shareholder:

You are cordially invited to attend a Special Meeting of the Shareholders
of GreyStone Technology, Incorporated, a California corporation ("GreyStone"),
which will be held at 9:00 a.m. on , 1998 (the "Special Meeting"),
at the corporate offices of GreyStone at 4950 Murphy Canyon Road, San Diego,
California 92123.

At the Special Meeting, you will be asked to consider and vote upon a
proposal (the "Merger Proposal") to approve (i) the Agreement and Plan of Merger
and Reorganization dated as of August 11, 1997, as amended on October , 1998
(as amended, the "Merger Agreement") among GreyStone, Express Capital Concepts,
Inc., a Delaware corporation ("Express Capital"), Express Capital Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of Express Capital
("Express Capital Sub"), and Earnest Mathis, Jr., (ii) the merger of GreyStone
with and into Express Capital Sub, whereby GreyStone will cease to exist and
Express Capital Sub will remain a wholly owned subsidiary of Express Capital
(the "Merger") and (iii) the Certificate of Merger which will be filed with the
offices of the Secretaries of State of the States of Delaware and California to
effect the Merger. As a result of the Merger, each outstanding share of
GreyStone Common Stock (other than Dissenting Shares, as defined herein) will be
converted into the right to receive one (1) share of Express Capital Common
Stock (the "Exchange Ratio"). Immediately after the consummation of the Merger,
the former holders of GreyStone Common Stock will hold in the aggregate
14,217,713 shares of Express Capital Common Stock, or approximately 97% of the
shares of Express Capital Common Stock to be outstanding immediately after the
consummation of the Merger (calculated assuming the issuance of 14,217,713
shares of Express Capital Common Stock to the GreyStone shareholders in the
Merger (the "Merger Shares") and based upon 480,000 shares of Express Capital
Common Stock outstanding as of , 1998). The Merger Shares would
have an aggregate value of approximately $ based upon the high bid price
of Express Capital Common Stock as quoted on the Over-the-Counter Bulletin
Board(R) of the Nasdaq Stock Market, Inc. ("OTC-BB") on , 1998.
While fluctuations in the market price of Express Capital Common Stock will not
affect the Exchange Ratio, such fluctuations will affect the aggregate value of
the Merger Shares to be issued to the GreyStone shareholders in the Merger.

Prior to consummation of the Merger, Express Capital will (A) file an
amended and restated certificate of incorporation (the "Express Capital Restated
Certificate") to, among other things, (i) establish its authorized capital stock
as 30,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock,
(ii) change its name to "GreyStone Digital Technology, Inc.," (iii) effect a
1-for-41.66667 reverse split of its outstanding Common Stock and (iv) adopt a
classified board of directors, (B) amend and restate its bylaws (the "Express
Capital Restated Bylaws") and (C) elect, effective upon the effectiveness of the
merger, a new Board of Directors to consist of Richard A. Smith, Thomas D.
Aldern and Jon M. Reynolds. In addition, in connection with the Merger, Express
Capital will become subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). A copy of the Express
Capital Restated Certificate and a copy of the Express Capital Restated Bylaws
are set forth in their entirety as Annex C and Annex D to this Proxy
Statement/Prospectus.

Upon consummation of the Merger, Express Capital will seek to change to
"GSTN" the symbol under which its Common Stock is quoted on the OTC-BB. In
addition, the GreyStone shareholders will hold shares of a publicly-traded
Delaware corporation subject to compliance with the reporting requirements of
the Exchange Act. As stockholders of a Delaware corporation following the
Merger, the rights or GreyStone shareholders will differ from their current
rights as holders of shares of a California corporation.
<PAGE> 3

GreyStone shareholders who vote against the Merger may, by otherwise
complying with Chapter 13 of the California General Corporation Law (the
"CGCL"), be entitled to dissenters' rights with respect to the proposed Merger
and the receipt of a cash payment for their shares of GreyStone Common Stock as
set forth therein.

In the materials accompanying this letter, you will find a Notice of
Special Meeting of Shareholders, a Proxy Statement/Prospectus relating to the
Merger Proposal and a form of proxy. The Proxy Statement/ Prospectus more fully
describes the proposed Merger and includes information about Express Capital,
Express Capital Sub and GreyStone. I urge you to read the information contained
in the accompanying Proxy Statement/Prospectus including the Annexes thereto.

If the requisite approvals of the shareholders of GreyStone are received
and all other conditions to the consummation of the Merger are satisfied or
waived, the Merger is anticipated to close by , 1998.

THE BOARD OF DIRECTORS OF GREYSTONE HAS DETERMINED THAT THE MERGER IS FAIR
TO GREYSTONE AND IN THE BEST INTERESTS OF THE GREYSTONE SHAREHOLDERS.
ACCORDINGLY, THE BOARD OF DIRECTORS OF GREYSTONE HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN
FAVOR OF THESE ITEMS.

Your vote is important regardless of how many shares you own. Please take a
few minutes now to review the Proxy Statement/Prospectus and to sign and date
your proxy and return it in the envelope provided. You may attend the GreyStone
Special Meeting and vote in person even if you have previously returned your
proxy.

I URGE YOU TO VOTE FOR APPROVAL OF THE MERGER PROPOSAL. ON BEHALF OF YOUR
BOARD OF DIRECTORS, I THANK YOU FOR YOUR SUPPORT.

Sincerely,

Richard A. Smith
Chairman of the Board and Chief
Executive Officer
<PAGE> 4

GREYSTONE TECHNOLOGY, INCORPORATED
4950 MURPHY CANYON ROAD
SAN DIEGO, CALIFORNIA 92123
------------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1998

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of GreyStone Technology, Incorporated, a California corporation
("GreyStone"), will be held on , 1998 at 9:00 a.m., California
Time, at GreyStone's executive offices located at 4950 Murphy Canyon Road, San
Diego, California 92123.

The Special Meeting is being called to consider and vote upon a proposal
(the "Merger Proposal") to approve (i) the Agreement and Plan of Merger and
Reorganization dated as of August 11, 1997, as amended as of October 1, 1998 (as
amended, the "Merger Agreement") among GreyStone, Express Capital Concepts,
Inc., a Delaware corporation ("Express Capital"), Express Capital Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of Express Capital
("Express Capital Sub"), and Earnest Mathis, Jr., (ii) the merger of GreyStone
with and into Express Capital Sub, whereby GreyStone will cease to exist and
Express Capital Sub will remain a wholly owned subsidiary of Express Capital
(the "Merger") and (iii) the Certificate of Merger which will be filed with the
offices of the Secretaries of State of the States of Delaware and California to
effect the Merger (the "Certificate of Merger"). As a result of the Merger, each
outstanding share of GreyStone Common Stock (other than Dissenting Shares, as
defined herein) will be converted into the right to receive one (1) share of
Express Capital Common Stock (the "Exchange Ratio"). A copy of the Merger
Agreement and a copy of the Certificate of Merger are set forth in their
entirety as Annex A and Annex B, respectively, to this Proxy
Statement/Prospectus.

Immediately after the consummation of the Merger (the "Effective Time"),
the former holders of GreyStone Common Stock will hold in the aggregate
14,217,713 shares of Express Capital Common Stock, or approximately 97% of the
shares of Express Capital Common Stock to be outstanding immediately after the
Effective Time (calculated assuming the issuance of 14,217,713 shares of Express
Capital Common Stock to the GreyStone shareholders in the Merger (the "Merger
Shares") and based upon 480,000 shares of Express Capital Common Stock
outstanding as of , 1998 (after giving effect to the Reverse Stock
Split defined below)). The Merger Shares would have an aggregate value of
approximately $ based upon the closing bid price of Express Capital
Common Stock as quoted on the Over-the-Counter Bulletin Board(R) of the Nasdaq
Stock Market, Inc. ("OTC-BB") on , 1998. While fluctuations in the
market price of Express Capital Common Stock will not affect the Exchange Ratio,
such fluctuations will affect the aggregate value of the Merger Shares to be
issued to the GreyStone shareholders in the Merger.

Prior to consummation of the Merger, Express Capital will (A) file an
amended and restated certificate of incorporation (the "Express Capital Restated
Certificate") to, among other things, (i) establish its authorized capital stock
as 30,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock,
(ii) change its name to "GreyStone Digital Technology, Inc.," (iii) effect a
1-for-41.66667 reverse split of its outstanding Common Stock (the "Reverse Stock
Split"), and (iv) adopt a classified board of directors, (B) amend and restate
its bylaws (the "Express Capital Restated Bylaws") and (C) elect, effective upon
the effectiveness of the merger, a new Board of Directors to consist of Richard
A. Smith, Thomas D. Aldern and Jon M. Reynolds. In addition, Express Capital
will become subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). A copy of the Express Capital Restated
Certificate and a copy of the Express Capital Restated Bylaws are set forth in
their entirety as Annex C and Annex D, respectively to this Proxy
Statement/Prospectus.

Exchange Act. As stockholders of a Delaware corporation following the Merger,
the rights of GreyStone shareholders will differ from their current rights as
holders of capital stock of a California corporation.

If the requisite approval of the shareholders of GreyStone is received and
all other conditions to the consummation of the Merger are satisfied or waived,
the Merger is anticipated to close by , 1998.

The foregoing Merger Proposal is more fully described in the Proxy
Statement/Prospectus accompanying this Notice.

The Board of Directors has fixed the close of business on ,
1998 as the record date for the determination of shareholders of GreyStone
entitled to notice of and to vote on the Merger Proposal. Only holders of record
of GreyStone Common Stock on the record date are entitled to notice of, and will
be entitled to vote at, the Special Meeting or any adjournment or postponement
thereof.

You can ensure that your shares are voted at the Special Meeting by signing
and dating the enclosed proxy and returning it in the envelope provided. Sending
in a signed proxy will not affect your right to attend the meeting and vote in
person. You may revoke your proxy at any time before it is voted by giving
written notice to the Secretary of GreyStone at GreyStone's headquarters, at
4950 Murphy Canyon Road, San Diego, CA 92123.

BY ORDER OF THE BOARD OF DIRECTORS

Carolyn Harris,
Secretary

San Diego, California
, 1998
<PAGE> 6

GREYSTONE TECHNOLOGY, INCORPORATED
PROXY STATEMENT FOR THE SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON , 1998
------------------------

EXPRESS CAPITAL CONCEPTS, INC.

PROSPECTUS
------------------------

The Board of Directors of GreyStone Technology, Incorporated has
unanimously approved a merger between GreyStone and Express Capital Concepts,
Inc. Express Capital's stock is quoted on the Over-the-Counter Bulletin Board(R)
of the Nasdaq Stock Market Inc., under the symbol "EXCC." Because Express
Capital is a company whose securities are quoted on the OTC-BB, the GreyStone
board believes that the merger will increase the visibility of GreyStone's
business, which could be helpful in further developing and commercializing
GreyStone's products. In addition, the GreyStone board believes that the merger
will facilitate GreyStone's ability to raise capital in the public markets and
could potentially improve GreyStone's shareholders' ability to sell their shares
in the over-the-counter market.

Your Board of Directors has determined that the merger is fair to you and
in your best interests. The Board therefore recommends that you vote to approve
the merger of GreyStone and Express Capital.

If the merger is completed, you will receive one share of Express Capital
common stock for each share of GreyStone common stock that you own.

Express Capital was formed as a Delaware corporation in 1988 primarily to
be used as a vehicle to effect a Merger with a privately-held company. The high
bid price of Express Capital Common Stock on the OTC-BB on , 1998
was $ per share. After the merger, Express Capital will continue to have its
stock quoted on the OTC-BB, but will seek to change its symbol to "GSTN."

The total number of shares of common stock that Express Capital will issue
to all of the GreyStone shareholders in the merger is 14,217,713. We estimate
that this number will represent approximately 97% of the outstanding Express
Capital common stock after the merger.

You will be asked, at a Special Meeting of GreyStone shareholders, to
approve the merger and to approve the merger agreement that contains the terms
of the merger transaction.

The date, time and place of the Special Meeting:

, 1998
9:00 a.m., California Time,
GreyStone Technology, Incorporated
4950 Murphy Canyon Road
San Diego, California 92123

Whether or not you plan to attend the Special Meeting, please take the time
to vote on the merger by completing and mailing the enclosed proxy card to us.
If you sign, date and mail your proxy card without indicating how you wish to
vote, your proxy will be counted as a vote in favor of the merger. Failing to
return your proxy card will have the same effect as a vote against the merger.

Under California law, if you vote against the merger and you comply with
the requirements contained in Chapter 13 of the California General Corporation
Law, you may be entitled to dissenters' rights, which means that you may require
GreyStone to purchase your GreyStone shares for cash at their fair market value
instead of accepting Express Capital common stock in exchange for your Greystone
stock.

THE PROPOSED MERGER IS A VERY COMPLEX TRANSACTION WITH A NUMBER OF RISKS
AND UNCERTAINTIES ASSOCIATED WITH IT. THIS DOCUMENT PROVIDES YOU WITH DETAILED
INFORMATION ABOUT THE PROPOSED MERGER. WE STRONGLY URGE YOU TO READ AND CONSIDER
CAREFULLY THIS DOCUMENT IN ITS ENTIRETY, ESPECIALLY THE MATTERS REFERRED TO
UNDER "RISK FACTORS," BEGINNING ON PAGE 14.

Neither the Securities and Exchange Commission nor any state securities
regulators have approved or disapproved the Express Capital common stock to be
issued in the merger or if this Proxy Statement/Prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.

The date of this Proxy Statement/Prospectus is , 1998, and it
is first being mailed to GreyStone shareholders on or about , 1998.

DEALER PROSPECTUS DELIVERY OBLIGATION

Until , all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE> 7

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY..................................................... 1
The Companies.......................................... 1
Greystone's Reasons for the Merger..................... 1
The Special Meeting.................................... 1
The Merger Agreement................................... 3

MARKET PRICE DATA........................................... 5

SELECTED HISTORICAL FINANCIAL INFORMATION................... 6

GREYSTONE SELECTED HISTORICAL FINANCIAL INFORMATION......... 7

EXPRESS CAPITAL SELECTED HISTORICAL FINANCIAL INFORMATION... 8

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS OF
GREYSTONE AND EXPRESS CAPITAL............................. 9

UNAUDITED PRO FORMA COMBINED BALANCE SHEET.................. 10

COMPARATIVE PER SHARE DATA.................................. 13

RISK FACTORS................................................ 14

GREYSTONE SPECIAL MEETING................................... 22
Date, Time and Place of Special Meeting................ 22
Purpose of the Special Meeting......................... 22
Record Date; Shares Entitled to Vote................... 22
Quorum; Required Vote.................................. 22
Voting of Proxies...................................... 22
Revocability of Proxies................................ 22
Solicitation of Proxies; Expenses...................... 23
Board Recommendation................................... 23

EXPRESS CAPITAL APPROVALS................................... 23
Approval of the Merger................................. 23

THE MERGER AND RELATED TRANSACTIONS......................... 24
General................................................ 24
Conversion of Shares................................... 24
Background Of The Merger............................... 25
Recommendations Of The Boards Of Directors And Reasons
For The Merger........................................ 26
Cautionary Statement and Risk Factor Concerning
Forward-Looking Statements............................ 27
The Merger Agreement................................... 28
Related Agreements and Interests of Certain Persons in
the Merger............................................ 29
Other Matters Related to the Merger.................... 30
</TABLE>

i
<PAGE> 8

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GREYSTONE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 36
Results of Operations.................................. 36

GREYSTONE BUSINESS.......................................... 42
Company Overview....................................... 42
Company's Business Strategy............................ 45
Commercial Markets and Digital Entertainment
Business.............................................. 46
Digital Entertainment Markets.......................... 47
Government Market and Products......................... 51
Marketing and Sales.................................... 55
Strategic Technology................................... 55
Production and Product Support......................... 56
Competition............................................ 56
Patents and Proprietary Rights......................... 57
Employees.............................................. 57
Facilities............................................. 57
Legal Proceedings...................................... 58

GREYSTONE MANAGEMENT........................................ 59
Board Committees and Meetings.......................... 60
Directors' Compensation................................ 60
Executive Officer Compensation......................... 61
Stock Option Grants And Exercises...................... 62
Aggregated Option Exercises in Last Fiscal Year........ 62
Employment Agreements.................................. 62

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 64

GREYSTONE PRINCIPAL SHAREHOLDERS............................ 66

EXPRESS CAPITAL MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............. 67

EXPRESS CAPITAL BUSINESS.................................... 67
General................................................ 67
Employees.............................................. 67
Properties............................................. 67
Legal Proceedings...................................... 67
Director And Executive Officer Of Express Capital;
Executive Compensation................................ 67

EXPRESS CAPITAL PRINCIPAL SHAREHOLDERS...................... 68

PROPOSED MANAGEMENT OF EXPRESS CAPITAL AND THE SURVIVING
CORPORATION AFTER THE MERGER.............................. 69
</TABLE>

ii
<PAGE> 9

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF GREYSTONE CAPITAL STOCK...................... 70
Common Stock........................................... 70
1991 Stock Option Plan................................. 70
1994 Stock Option and Stock Bonus Plan................. 70
Non-Plan Options....................................... 71
Warrants............................................... 72
Registration Rights.................................... 72

DESCRIPTION OF EXPRESS CAPITAL STOCK........................ 73
Common Stock........................................... 73
Preferred Stock........................................ 73
Delaware Law and Certain Charter and Bylaw
Provisions............................................ 73
Warrants............................................... 74

COMPARISON OF RIGHTS OF EXPRESS CAPITAL STOCKHOLDERS AND
GREYSTONE SHAREHOLDERS.................................... 75

EXPERTS..................................................... 82
LEGAL MATTERS............................................... 82
WHERE YOU CAN FIND MORE INFORMATION......................... 82
INDEX TO FINANCIAL STATEMENTS............................... F-1

ANNEX A
First Amendment to Agreement and Plan of Merger and
Reorganization........................................ A-1
Agreement and Plan of Merger and Reorganization........ A-15

ANNEX B
Certificate of Merger of GreyStone Technology,
Incorporated into Express Capital
Acquisition Corp...................................... B-1

ANNEX C
Amended and Restated Certificate of Incorporation of
Express Capital Concepts, Inc......................... C-1

ANNEX D
Amended and Restated Bylaws of GreyStone Digital
Technology, Inc....................................... D-1

ANNEX E
California General Corporation Law -- Chapter 13,
Dissenters' Rights.................................... E-1
</TABLE>

iii
<PAGE> 10

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: Why is GreyStone proposing the merger? How will I benefit?

A: Express Capital is a publicly-traded corporation that has been in existence
since 1988. In considering the merger, GreyStone's Board noted that the
combination of GreyStone with Express Capital could facilitate GreyStone's
ability to raise money in the public markets. Additionally, because Express
Capital is a company whose securities are publicly traded, the merger may
increase the visibility of GreyStone's business, which could improve
GreyStone's ability to develop and commercialize its products. GreyStone's
combination with Express Capital could potentially give you the ability to
sell your shares of GreyStone Stock in the public market, providing you with
liquidity of your investment in GreyStone. To review the background and
reasons for the merger in greater detail, see page 25.

Q: When is the Special Meeting?

A: The Special Meeting will take place on , 1998. At the meeting,
you will be asked to approve the merger and the merger agreement that was
signed by GreyStone and Express Capital on August 11, 1997 and amended on
October 1, 1998.

Q: What do I need to do now?

A: Please mail your signed proxy card in the enclosed envelope as soon as
possible, so that your shares may be represented at the Special Meeting. In
addition, you may attend the Special Meeting in person, rather than signing
and mailing your proxy card.

Q: What do I do if I want to change my vote?

A: Just send in a later-dated, signed proxy card before the Special Meeting or
attend the meeting in person and vote.

Q: Should I send in my GreyStone stock certificates now?

A: No. If the merger is completed, we will send you written instructions for
exchanging your share certificates.

Q: Please explain what I will receive in the merger.

A: If the merger is completed, you will receive one share of Express Capital
common stock for each share of GreyStone common stock that you own.

Q: What are the federal income tax consequences of the merger?

A: The merger has been structured as a tax-free reorganization. The tax basis
in your GreyStone common stock will carryover and become the tax basis in your
new shares of Express Capital common stock.

Q: Does Express Capital pay dividends?

A: Like GreyStone, Express Capital has never paid any dividends.

Q: When do you expect the merger to be completed?

A: We are working toward completing the merger as quickly as possible. We hope
to complete the merger by , 1998.

Q: Whom should I call with questions?

A: If you have any questions about the merger, please call Richard Smith, Chief
Executive Officer, at GreyStone, at (619) 874-7000.

iv
<PAGE> 11

SUMMARY

This summary highlights selected information from this Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document and the documents to which we have referred you. See "Where You
Can Find More Information" on page 82. We have included page references in
parentheses to direct you to a more complete description of the topics presented
in this summary.

In the merger, GreyStone (the Company) will merge with and into Express
Capital Acquisition Corp., a subsidiary of Express Capital. Express Capital
Acquisition Corp. will be the surviving corporation in the merger and will
continue as a subsidiary of Express Capital.

The merger agreement is attached as Annex A to this document. We encourage
you to read the merger agreement, as it is the legal document that governs the
merger.

THE COMPANIES

Express Capital
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
(303) 794-9450

Express Capital was incorporated in Delaware in 1988. Express Capital was
organized for the primary purpose of acquiring one or more privately-held
companies through either a merger, asset acquisition or other business
combination. Express Capital does not now have nor has it ever had any
significant operations.

GreyStone Technology, Incorporated
4950 Murphy Canyon Road
San Diego, California 92123
(619) 874-7000

GreyStone was incorporated in California in 1988. GreyStone designs,
develops and markets real-time, interactive 3-D software and related products
and services. GreyStone mainly targets the entertainment and defense markets.

GREYSTONE'S REASONS FOR THE MERGER (SEE PAGE 26)

For the past few years, the GreyStone board has been considering ways to
increase GreyStone's visibility and improve the trading market for GreyStone
stock. The GreyStone Board believes that by merging with Express Capital, which
is a publicly-traded corporation, GreyStone will gain visability. The GreyStone
board believes that the improved visibility of GreyStone's business may make it
easier for GreyStone to further develop and commercialize its products. The
GreyStone board also believes that the combination of GreyStone with Express
Capital may facilitate GreyStone's ability to raise money in the private and
public markets. As a shareholder of a publicly-traded corporation, it is
possible that it will be easier for you to sell your shares of GreyStone
stock -- giving you increased liquidity of your investment in GreyStone.

To review the reasons for the merger in greater detail, see page 26.

THE SPECIAL MEETING (SEE PAGE 22)

Date, Time and Place.

The Special Meeting will be held at 9:00 a.m., California Time, on
, 1998. At the Special Meeting, GreyStone shareholders will be asked
to approve the merger and the related merger agreement. The Special Meeting will
be held at GreyStone's offices located at 4950 Murphy Canyon Road, San Diego,
California 92123.

1
<PAGE> 12

Recommendation to GreyStone Shareholders.

The GreyStone Board of Directors believes that the merger is in your best
interests and unanimously recommends that you vote "for" approval of the merger.

Record Date; Shares Entitled to Vote.

You are entitled to vote at the Special Meeting if you owned shares of
GreyStone common stock as of the close of business on , 1998, the
Record Date.

On the Record Date, there were 14,217,713 shares of GreyStone common stock
entitled to vote at the Special Meeting. GreyStone shareholders will have one
vote at the Special Meeting for each share of GreyStone common stock they own on
the Record Date.

Stockholder Vote Required to Approve the Merger.

The favorable vote of the holders of a majority of the outstanding shares
of GreyStone common stock is required to approve the merger and the related
merger agreement. A vote of Express Capital stockholders is not required.

Share Ownership of Management and Certain Shareholders.

On the Record Date, GreyStone directors, executive officers and their
affiliates owned and were entitled to vote a majority of GreyStone common stock
outstanding on the Record Date. The directors of GreyStone have indicated that
they intend to vote the GreyStone common stock owned by them "for" approval of
the merger and the related merger agreement. Their vote alone will be sufficient
to approve the merger.

WHAT GREYSTONE SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 24)

If the merger is approved, GreyStone shareholders (except for dissenting
shareholders) will have the right to receive one share of Express Capital common
stock for each share of GreyStone common stock they own. GreyStone shareholders
should not send in their stock certificates for exchange until instructed to do
so.

WHAT CURRENT EXPRESS CAPITAL STOCKHOLDERS WILL HOLD AFTER THE MERGER (SEE PAGE
24)

Express Capital stockholders will continue to own their existing shares
after the merger which shares will be reverse split on a 1-for-41.66667 basis
prior to the consummation of the merger.

OWNERSHIP OF EXPRESS CAPITAL AFTER THE MERGER (SEE PAGE 24)

Express Capital will issue approximately 14,217,713 shares of Express
Capital common stock to GreyStone shareholders in the merger. Based on that
number, after the merger, GreyStone shareholders will own approximately 97% of
the outstanding Express Capital common stock. This information is based on the
number of shares of GreyStone and Express Capital common stock outstanding on
.

EFFECT ON OUTSTANDING OPTIONS AND WARRANTS (SEE PAGE 24)

If the merger takes place, all GreyStone options and warrants will be
converted into the right to purchase the same number of shares of Express
Capital common stock as such options and warrants could purchase of GreyStone
common stock. All of the other terms and conditions of the GreyStone options and
warrants will remain the same.

2
<PAGE> 13

THE MERGER AGREEMENT (SEE PAGE 28)

The merger agreement (Annex A) is attached at the back of this Proxy
Statement/Prospectus. We encourage you to read the agreement as it is the legal
document that governs the merger.

Conditions to the Merger (See page 28).

The merger will be completed if certain conditions, including the
following, are met:

- the approval of GreyStone shareholders;

- the accuracy of the parties' statements contained in the merger
agreement;

- the receipt of necessary third-party consents to the merger;

- the absence of pending or threatened litigation that could adversely
affect the parties;

- the receipt of legal opinions from Express Capital's counsel;

- the receipt of lock-up agreements from certain stockholders of Express
Capital;

- holders of no more than one percent (1%) of the outstanding shares of
GreyStone common stock exercising or being entitled to exercise
dissenters' rights;

- the effectiveness of the Registration Statement filed with the Securities
and Exchange Commission registering the stock issued by Express Capital
to the GreyStone shareholders in connection with the merger;

- the receipt of continuity-of-interest certificates from the holders of 1%
or more of GreyStone's outstanding Common Stock.

Termination of Merger Agreement (See page 29).

Under certain circumstances, the merger agreement may be terminated, before
or after the GreyStone shareholders have approved the merger. See "The Merger
and Related Transactions -- Termination or Amendment" on page 29.

Indemnification by Mr. Mathis.

In the merger agreement, Mathis has agreed that he will reimburse the
companies (Express Capital and GreyStone's successor corporation) and the
GreyStone shareholders if they suffer any losses or damages as a result of any
inaccuracies made by Mathis in the merger agreement. In addition, Mathis has
agreed that he will reimburse the companies for any losses or damages they
suffer as a result of any omissions or misstatements in certain sections of the
Registration Statement that relate to Express Capital. See "The Merger and
Related Transactions -- Indemnification" on page 29, "The Merger and Related
Transactions -- Indemnification Agreement" on page 30, and "The Merger and
Related Transactions -- Additional Indemnity" on page 30.

Indemnification by the Company.

In connection with the Merger, the Company has agreed to indemnify Mathis
and his representatives against any damages that arise out of any issuances of
GreyStone common stock prior to the Merger. GreyStone has agreed that it will
reimburse Mathis for any damages he suffers in connection with any portion of
the Registration Statement other than the sections related entirely to Express
Capital.

EXPENSES AND FEES (SEE PAGE 29)

GreyStone will bear the costs and expenses incurred by it with respect to
the Merger and the other transactions contemplated thereby (including $2,500 of
the costs of preparing the pro forma financial statements included herein), and
Express Capital will bear all of the costs and expenses of its accountants,
$2,500 of the costs of preparing the pro forma financial statements included
herein, all of the other costs and expenses incurred by it prior to September 3,
1998, and $35,000 of the other costs and expenses incurred by it

3
<PAGE> 14

after September 3, 1998. GreyStone will bear all of the costs and expenses in
excess of $35,000 incurred by Express Capital subsequent to September 3, 1998
with respect to the Merger Agreement and the transactions contemplated thereby.

RESTRICTIONS ON THE RESALE OF MERGER SHARES RECEIVED BY AFFILIATES (SEE PAGE 34)

The Express Capital shares issued in connection with the merger will be
registered under the Securities Act. Once shares are registered, they generally
can be re-sold in the public market without restrictions. However under some
circumstances, the Securities Act imposes restrictions on the resale of shares
by people who are closely-related to a company and who meet the definition of an
"affiliate" under the Securities Act. GreyStone's "affiliates" will be subject
to certain restrictions on the resale of the shares they receive in the merger.
See "The Merger and Related Transactions -- Restrictions on Resale of Express
Capital Common Stock by GreyStone Shareholders on page 34.

INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE 30)

You should be aware that some members of GreyStone's management and the
GreyStone board of directors have certain interests in the merger that are in
addition to the interests of GreyStone shareholders generally. See "The Merger
and Related Transactions-Interests of Certain Persons in the Merger."

In addition, GreyStone has agreed that immediately after the merger takes
place, it will make a good faith effort to see that warrants to purchase that
number of shares of Express Capital common stock equal to 6% of the total
outstanding shares after the merger are issued to Olympic Capital Group, Allen
Gelbard and Michael Pocaterro to compensate them for providing financial and
advisory services to GreyStone, including services in connection with the
merger. Such warrants will have an exercise price of $4.95 per share. The
expense related to the issuance of the warrants is estimated to be $2,664,379.
See "Unaudited Pro Forma Combined Financial Statements of GreyStone and Express
Capital."

RESTRICTION ON SALES OF SHARES BY EXPRESS CAPITAL STOCKHOLDERS (SEE PAGE 29)

In connection with the merger agreement, some stockholders of Express
Capital have agreed to certain restrictions on their ability to sell or transfer
shares of Express Capital common stock held by them. See "The Merger and Related
Transactions -- Restrictions on Resale of Express Capital Common Stock held by
Express Capital Stockholders; Lock-up Agreements" on page 29.

DISSENTERS' RIGHTS (SEE PAGE 33)

If the merger is approved by the required vote of the GreyStone
shareholders and is not abandoned or terminated, GreyStone shareholders are
entitled to exercise dissenters' rights under Chapter 13 of the California
General Corporation Law. A copy of Chapter 13 of the California General
Corporation Law is attached to this Proxy Statement/Prospectus as Annex E. If
more than 1% of the GreyStone shares exercise dissenters' rights, GreyStone may
elect not to consummate the merger. See "GreyStone Special Meeting --
Dissenters' Rights" on page 33.

RISK FACTORS (SEE PAGE 14)

See the section titled "Risk Factors" on page 14 for a discussion of
certain risk factors pertaining to the merger and the business of GreyStone and
Express Capital.

FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 30)

Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You should consult your tax
advisors for a full understanding of the tax consequences of the merger to you.
GreyStone and Express Capital have structured the merger so that neither
GreyStone nor its shareholders should recognize gain or loss for federal income
tax purposes as a result of the merger. See "The Merger and Related
Transactions-Material Federal Income Tax Consequences" on page 30.

4
<PAGE> 15

MARKET PRICE DATA

Express Capital Common Stock is currently quoted and traded on the OTC-BB
under the symbol "EXCC." The following table sets forth the quarterly high and
low bid quotations on the OTC-BB for the Common Stock of Express Capital for the
periods indicated below. These quotations represent prices between dealers and
do not include retail mark-up, mark-down or commissions or necessarily represent
actual transactions.

<TABLE>
<CAPTION>
FISCAL YEAR ENDING DECEMBER 31, 1998 HIGH LOW
------------------------------------ -------- --------
<S> <C> <C>
First Quarter............................................... $ 0.4375 $ 0.13
Second Quarter.............................................. $0.40625 $0.21875
Third Quarter............................................... $ 0.344 $ 0.25
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1997 HIGH LOW
----------------------------------- -------- --------
<S> <C> <C>
First Quarter............................................... * *
Second Quarter.............................................. * *
Third Quarter............................................... $ 1.00 $ 0.25
Fourth Quarter.............................................. $ 0.625 $0.15625
</TABLE>

- ---------------

* No market price data is available for the periods indicated as no market
makers posted any bids for Express Capital Common Stock until July 15, 1997.

There is no public trading market for GreyStone Common Stock.

It is expected that, following the Merger, the Express Capital Common Stock
will continue to be quoted and traded on the OTC-BB. Express Capital will,
however, seek to have its Common Stock quoted and traded on the OTC-BB under the
symbol "GSTN."

Because the market price of Express Capital is subject to fluctuation, the
market value of the shares of Express Capital Common Stock that holders of
GreyStone Common Stock will receive in the Merger may increase or decrease prior
to the Merger. Because the Exchange Ratio is fixed, however, the number of
shares of Express Capital Common Stock issuable in the Merger will not be
affected by any changes in the market price of Express Capital Common Stock.

On August 8, 1997 (the last trading day prior to the public announcement of
the execution of the Merger Agreement), the high bid price for Express Capital
Common Stock on the OTC-BB was $ . On , 1998 (the last day
before the printing of this Proxy Statement/Prospectus), such high bid price was
$ . HOLDERS OF GREYSTONE COMMON STOCK ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR EXPRESS CAPITAL COMMON STOCK PRIOR TO VOTING ON THE MERGER
PROPOSAL. THE REVERSE STOCK SPLIT AND ITS EFFECT ON THE MARKET PRICE OF EXPRESS
CAPITAL COMMON STOCK SHOULD BE CAREFULLY CONSIDERED PRIOR TO VOTING ON THE
MERGER. NO ASSURANCE CAN BE GIVEN AS TO THE FUTURE PRICES OR MARKET FOR EXPRESS
CAPITAL COMMON STOCK.

Neither Express Capital nor GreyStone has ever paid any cash dividends with
respect to its shares of Common Stock and neither anticipates that dividends
will be declared in the foreseeable future. GreyStone expects that all available
cash will be utilized to further the growth of its business.

5
<PAGE> 16

SELECTED HISTORICAL FINANCIAL INFORMATION

The following selected historical financial information of GreyStone and
Express Capital has been derived from their respective historical financial
statements, and should be read in conjunction with such financial statements and
the notes thereto, which are included in this Proxy Statement/Prospectus.

GreyStone Selected Historical Financial Information. The selected
historical financial information set forth below with respect to GreyStone's
statements of operations for the three months ended June 30, 1998 and 1997, and
with respect to its balance sheet at June 30, 1998, is derived from the
unaudited financial statements of GreyStone which are included elsewhere in this
Proxy Statement/Prospectus. In the opinion of GreyStone's management, the
unaudited financial statements include all adjustments, consisting of normal
recurring accruals, that GreyStone considers necessary for a fair presentation
of the results of operations and financial position for each of the periods
presented. Operating results for GreyStone for the three months ended June 30,
1998 are not necessarily indicative of the results that may be expected for the
year ending March 31, 1999. The selected historical financial information set
forth below with respect to GreyStone's statements of operations for the years
ended March 31, 1998, 1997 and 1996, and with respect to GreyStone's balance
sheet at March 31, 1998 and 1997, are derived from the financial statements of
GreyStone, which have been audited by J.H. Cohn LLP, independent public
accountants, included elsewhere in this Proxy Statement/Prospectus. The balance
sheet data for March 31, 1996 has been derived from the financial statements of
GreyStone, which have been audited by J.H. Cohn LLP, the full text of which is
not included in this Proxy Statement/Prospectus. The selected historical
financial information set forth below with respect to GreyStone's statements of
operations for the years ended March 31, 1995 and 1994 and with respect to
GreyStone's balance sheets at March 31, 1995 and 1994 are derived from the
financial statements provided by GreyStone which are treated herein as
unaudited, the full text of which are not included in this Proxy
Statement/Prospectus.

Express Capital Selected Historical Financial Information. The selected
historical financial information set forth below with respect to Express
Capital's statements of operations for the years ended December 31, 1995, 1996
and 1997, and with respect to Express Capital's balance sheets at December 31,
1996 and 1997 has been derived from the consolidated financial statements
audited by Angell & Deering independent accountants, included elsewhere in this
Proxy Statement/Prospectus. The selected historical financial information set
forth below of Express Capital as of December 31, 1993, 1994 and 1995 and for
the years ended December 31, 1993 and 1994 has been derived from the financial
statements audited by Angell & Deering, independent accountants, not included
elsewhere in this Proxy Statement/Prospectus. The selected historical financial
information set forth below with respect to Express Capital's consolidated
statements of operations for the six months ended June 30, 1997, 1998, and with
respect to its consolidated balance sheet at June 30, 1998 is derived from the
unaudited consolidated financial statements of Express Capital which are
included elsewhere in this Proxy Statement/Prospectus. In the opinion of Express
Capital's management, the unaudited financial statements include all
adjustments, consisting of normal recurring accruals, that Express Capital
considers necessary for a fair presentation of the results of operations and
financial position for each of the periods presented. Operating results for
Express Capital for the six months ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998.

The financial statement information set forth should be read in conjunction
with, and is qualified in its entirety by reference to, the financial statements
and notes related thereto included elsewhere in this Proxy Statement/Prospectus
and in the sections entitled: "EXPRESS CAPITAL MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and "GREYSTONE
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

6
<PAGE> 17

GREYSTONE SELECTED HISTORICAL FINANCIAL INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, YEARS ENDED MARCH 31,
------------------------- -------------------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................. $ 509,715 $ 312,751 $ 2,112,566 $ 2,336,371 $ 2,065,260 $ 498,285 $ 1,507,843
----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Cost of revenues....... 406,853 382,927 1,449,713 2,189,373 1,404,976 565,088 1,175,555
Marketing and sales.... 140,965 156,521 743,866 720,213 663,373 3,232,430 911,105
Research and
development.......... 223,271 444,478 1,742,018 1,978,505 3,146,960 3,089,469 1,330,907
General and
administrative....... 527,902 328,706 1,230,889 1,519,670 3,040,119 2,029,957 1,488,517
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses... 1,298,991 1,312,632 5,166,486 6,407,761 8,255,428 8,916,944 4,906,084
----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss from operations..... (789,276) (999,881) (3,053,920) (4,071,390) (6,190,168) (8,418,659) (3,398,241)
Interest expense......... 12,770 118,746 201,941 615,240 507,518 84,998 35,963
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net loss................. $ (802,046) (1,118,627) $(3,255,861) $(4,686,630) $(6,697,686) $(8,503,657) $(3,434,204)
=========== =========== =========== =========== =========== =========== ===========
Basic net loss per
share.................. $ (.06) $ (.09) $ (0.24) $ (0.41) $ (0.63) $ (0.81) $ (0.37)
Basic weighted average
number of shares
outstanding............ 14,074,874 12,424,402 13,435,377 11,408,158 10,617,417 10,481,305 9,395,911
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF MARCH 31,
JUNE 30, ------------------------------------------------------------------
1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ -0- $ 5,083 $ 14,224 $ 6,276 $ 155,694 $ 2,290,150
Working capital (deficiency)............... (2,504,987) (1,826,674) (7,151,324) (7,151,834) (1,359,013) 2,322,670
Total assets............................... 714,653 915,156 1,336,505 1,791,115 2,147,117 4,554,930
Long-term debt, net of current portion..... -0- -0- -0- 1,207,965 2,375,242 4,163
Total stockholders' equity (deficiency).... (2,031,975) (1,314,457) (6,199,575) (7,109,133) (2,238,765) 3,716,957
</TABLE>

7
<PAGE> 18

EXPRESS CAPITAL SELECTED HISTORICAL FINANCIAL INFORMATION

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues.................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expenses.......... 12,676 147,056 170,001 4,881 6,164 3,588 2,452
----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss from operations........ (12,676) (147,056) (170,001) (4,881) (6,164) (3,588) (2,452)
Other income (expense)...... (3,302) 137,362 134,890 27,753 (5,653) (5,211) (4,764)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)........... $ (15,978) $ (9,694) $ (35,111) $ 22,872 $ (11,217) $ (8,799) $ (7,216)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) per common
share..................... -- -- -- -- -- -- --
Shares used in net income
per share computation..... 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Dividends per share......... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
</TABLE>

<TABLE>
<CAPTION>
AS OF
JUNE 30, AS OF DECEMBER 31,
----------- ----------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 296 $ 325 $ 612 $ 332 $ 418 $ 206
Working capital (deficiency)..................... (103,144) (87,288) (85,006) (73,916) (62,099) (53,300)
Total assets..................................... 1,307 1,458 34,574 15,091 418 206
Long-term debt, net of current portion........... 0 0 0 0 0 0
Total stockholders' equity (deficiency).......... (102,133) (86,155) (51,044) (73,916) (62,099) (53,300)
</TABLE>

8
<PAGE> 19

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
OF GREYSTONE AND EXPRESS CAPITAL

The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position
that would have occurred if the Merger had been consummated, nor is it
necessarily indicative of future operating results or financial position. The
unaudited pro forma combined financial statements have been derived from the
historical financial statements of GreyStone and Express Capital included herein
and give effect to the Merger as a reverse acquisition and purchase of Express
Capital by GreyStone for accounting purposes. The unaudited combined balance
sheet gives effect to the Merger as if it had occurred on June 30, 1998 using
the historical unaudited balance sheets of GreyStone and Express Capital as of
that date. The unaudited pro forma combined statements of operations give effect
to the Merger as if it had occurred on April 1, 1997, and combine (i) the
unaudited historical results of operations of GreyStone for the three months
ended June 30, 1998 and Express Capital (which does not conduct any commercial
operations) for the six months ended June 30, 1998, and (ii) the audited
historical results of operations of GreyStone for the year ended March 31, 1998
and of Express Capital for the year ended December 31, 1997. The pro forma
adjustments are based on preliminary estimates, available information and
certain assumptions that management deems appropriate. The pro forma financial
information does not purport to represent what the financial position or results
of operations of the combined companies would actually have been if such
transactions in fact had occurred on these dates or to project the financial
position or results of operations of the combined companies for any future
period. The unaudited pro forma combined financial statements should be read in
conjunction with the historical financial statements of GreyStone and Express
Capital and the notes thereto included elsewhere herein.

9
<PAGE> 20

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

JUNE 30, 1998

<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------
GREYSTONE EXPRESS CAPITAL ADJUSTMENTS COMBINED
------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 296 $ 296
Accounts receivable, net of allowance for
doubtful accounts.......................... $ 241,641 241,641
------------ --------- ------------ ------------
Total current assets................... 241,641 296 241,937
Equipment and improvements, net of accumulated
depreciation................................. 315,895 315,895
Other assets................................... 157,117 1,011 158,128
------------ --------- ------------ ------------
Total assets........................... $ 714,653 $ 1,307 $ $ 715,960
============ ========= ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........ $ 1,545,778 $ 43,252 $ 170,900(3) $ 1,759,930
Accrued syndication costs....................
Short-term notes payable..................... 969,000 969,000
Convertible notes payable.................... 30,000 -- -- 30,000
Notes payable to principal stockholders...... 226,850 60,188 287,038
------------ --------- ------------ ------------
Total liabilities...................... 2,771,628 103,440 170,900(3) 3,045,968
------------ --------- ------------ ------------
Stockholders' deficiency:
Preferred stock, Express Capital
pre-merger................................. --
Common stock, pre-merger..................... 26,292,585 2,000 (26,294,585)(1)
Common stock, post-merger.................... -- -- 14,559(1) 14,559
Additional paid-in capital................... -- 27,618 26,280,026(1) 26,004,993
(131,751)(2)
(170,900)(3)
Receivable from sale of common stock......... (327,500) -- -- (327,500)
Accumulated deficit.......................... (28,022,060) (131,751) 131,751(2) (28,022,060)
------------ --------- ------------ ------------
Total stockholders' deficiency......... (2,056,975) (102,133) (170,900) (2,330,008)
------------ --------- ------------ ------------
Total liabilities and stockholders'
deficiency........................... $ 714,653 $ 1,307 $ -- $ 715,960
============ ========= ============ ============
</TABLE>

- ---------------
(1) To adjust the historical carrying values for common stock and additional
paid-in capital for the assumed consummation of the Merger and the change in
the par value of the common stock of Express Capital (the surviving legal
entity) from $.0001 per share to $.001 per share on June 30, 1998 whereby
Express Capital would have had 14,559,449 shares outstanding as a result of
(i) the issuance of 14,079,449 shares of common stock to the former
stockholders of GreyStone based on the equivalent number of GreyStone shares
outstanding on June 30, 1998 and (ii) the reduction of the 20,000,000 shares
of common stock of Express Capital outstanding on June 30, 1998 to
approximately 480,000 shares to give effect to the 1-for-41.66667 reverse
split. Since Express Capital had no preferred shares outstanding prior to
the Merger and will have no preferred shares outstanding immediately after
the Merger, the change in the par value of the preferred stock from $.0001
per share to $.001 per share on June 30, 1998 has no effect on the pro forma
financial statements. Since Express Capital has not conducted any commercial
operations from its inception and the former stockholders of GreyStone will
own approximately 97% of the outstanding voting stock of the combined
companies immediately after consummation of the Merger, the Merger will be
accounted for as a "reverse acquisition" whereby GreyStone will be deemed to
be the acquiring company for accounting purposes and the assets and
liabilities of GreyStone and Express Capital will continue to be recorded at
their historical carrying values as of the date of the Merger pursuant to
the purchase method of accounting.

(2) To eliminate the historical accumulated deficit of Express Capital, which
will be deemed to be the acquired company pursuant to the purchase method of
accounting.

(3) To adjust for the accrual of $170,900 of expenses associated with the
Merger, e.g., legal, accounting and transfer agent fees.

10
<PAGE> 21

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
GREYSTONE EXPRESS CAPITAL
THREE MONTHS SIX MONTHS PROFORMA
ENDED ENDED -------------------------------
6/30/98 6/30/98 ADJUSTMENTS TOTAL
------------ --------------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues............................ $ 509,715 $ 509,715
----------- ----------- ------------ -----------
Expenses:
Cost of revenues.................. 406,853 406,853
Marketing and sales............... 140,965 140,965
Research and development.......... 223,271 223,271
General and administrative........ 527,902 $ 12,676 $ 540,578
----------- ----------- ------------ -----------
Total expenses............ 1,298,991 12,676 1,311,667
----------- ----------- ------------ -----------
Loss from operations................ (789,276) (12,676) (801,952)
Interest expense on loans from
Greystone's principal
stockholders...................... (12,770) (12,770)
Interest expense on notes from
Express Capital's principal
stockholders...................... (3,302) (3,302)
----------- ----------- ------------ -----------
Net loss............................ $ (802,046) $ (15,978) $ $ (818,024)
=========== =========== ============ ===========
Basic net loss per share............ $ (.06) $ -- $ -- $ (.06)
=========== =========== ============ ===========
Basic weighted average number of
shares outstanding................ 14,074,874 20,000,000 (19,520,000)(1) 14,554,874
=========== =========== ============ ===========
</TABLE>

YEAR ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
GREYSTONE EXPRESS CAPITAL PRO FORMA
YEAR ENDED YEAR ENDED -------------------------------------
3/31/98 12/31/97 ADJUSTMENTS TOTAL
------------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues..................... $ 2,112,566 $ 2,112,566
----------- ----------- ------------ -----------
Expenses:
Cost of revenues........... 1,449,713 1,449,713
Marketing and sales........ 743,866 743,866
Research and development... 1,742,018 1,742,018
General and
administrative.......... 1,230,889 $ 170,001 $ 1,400,890
----------- ----------- ------------ -----------
Total expenses..... 5,166,486 170,001 5,336,487
----------- ----------- ------------ -----------
Loss from operations......... (3,053,920) (170,001) (3,223,921)
Interest expense on loans
from Greystone's principal
stockholders............... (201,941) (201,941)
Interest expense on notes
from Express Capital's
principal stockholders..... (4,729) (4,729)
Gain on disposal of
marketable securities...... 139,619 139,619
----------- ----------- ------------ -----------
Net loss..................... $(3,255,861) $ (35,111) $ $(3,290,972)
=========== =========== ============ ===========
Basic net loss per share..... $ (0.24) $ -- $ -- $ (0.24)
=========== =========== ============ ===========
Basic weighted average number
of shares outstanding...... 13,435,377 20,000,000 (19,520,000)(1) 13,915,377
=========== =========== ============ ===========
</TABLE>

11
<PAGE> 22

- ---------------

(1) To adjust the weighted average number of common shares outstanding for the
assumed consummation of the Merger and the reduction of the 20,000,000
weighted average shares of Express Capital common stock outstanding in each
period to approximately 480,000 shares to give effect to the 1-for-41.66667
reverse split. Since Express Capital has not conducted any commercial
operations from its inception and the former stockholders of GreyStone will
own approximately 97% of the outstanding voting stock of the combined
companies immediately after consummation of the Merger, the Merger will be
accounted for as a "reverse acquisition" whereby GreyStone will be deemed to
be the acquiring company for accounting purposes and the assets and
liabilities of GreyStone and Express Capital will continue to be recorded at
their historical carrying values as of the date of the Merger pursuant to
the purchase method of accounting.

12
<PAGE> 23

COMPARATIVE PER SHARE DATA

The following table sets forth certain historical per share data of Express
Capital and GreyStone and combined per share data on an unaudited pro forma
basis after giving effect to the Merger as a purchase of Express Capital by
GreyStone assuming the Merger had been effected during the periods presented.
This data should be read in conjunction with the selected financial data, the
unaudited pro forma combined financial information and the separate historical
financial statements of Express Capital and GreyStone, and notes thereto,
included elsewhere in this Proxy Statement/Prospectus. The pro forma combined
financial data is not necessarily indicative of the operating results that would
have been achieved had the Merger been consummated as of the beginning of the
periods indicated nor is such data necessarily indicative of future financial
condition or results of operations. For purposes of the comparative per share
data, Express Capital's financial data for the twelve months ended December 31,
1997 and the six months ended June 30, 1998 has been combined with GreyStone's
financial data for the twelve months ended March 31, 1998 and the three months
ended June 30, 1998, respectively.

<TABLE>
<CAPTION>
GREYSTONE EXPRESS CAPITAL
------------------------------------ -------------------------------------
THREE SIX YEAR ENDED
MONTHS ENDED YEAR ENDED MONTHS ENDED DECEMBER 31,
JUNE 30, 1998 MARCH 31, 1998 JUNE 30, 1998 1997
------------------ -------------- ---------------- -----------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Basic net loss per
share................... $(.06) $(.24) $-- $--
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA COMBINED LOSS
PRO FORMA COMBINED LOSS PER SHARE YEAR ENDED
PER SHARE THREE (SIX) MARCH 31, 1998
MONTHS ENDED JUNE 30, 1998 (DECEMBER 31, 1997)
-------------------------- -------------------------
<S> <C> <C>
Basic net loss per share..................... $(.06) $(.24)
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------
GREYSTONE EXPRESS CAPITAL
--------- ---------------
<S> <C> <C>
BOOK VALUE DATA:
Book value per common share................................. $(.05) $--
Pro forma combined book value per common share.............. $(.05) $--
</TABLE>

13
<PAGE> 24

The following Risk Factors, together with the other information set forth
in this Proxy Statement/ Prospectus, should be considered carefully by the
shareholders of GreyStone in evaluating whether to approve the transactions
contemplated by the Merger. These factors should be considered in conjunction
with the other information included in this Proxy Statement/Prospectus.

This Proxy Statement/Prospectus contains forward-looking statements that
involve risks and uncertainties. GreyStone's actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences, include, but are not limited to, those discussed in the
following section and in "GreyStone Management's Discussion and Analysis of
Financial Condition and Results of Operations", "GreyStone Business."

RISK FACTORS

There are a number of risks associated with the merger and the on-going
business of the combined company after the merger. In addition to other
information included in this Proxy Statement/Prospectus (including the matters
addressed in "The Merger and Related Transactions -- Forward Looking Statements"
on page 27), you should carefully consider the following risks in determining
whether to vote to approve the merger.

RISK OF NONCOMPLETION OF THE MERGER

The merger agreement contains a number of conditions that must be satisfied
in order for the merger to take place. These conditions include:

- the shareholders of GreyStone must approve the merger;

- the holders of no more than 1% of the outstanding shares of common stock
of GreyStone shall have exercising dissenters' rights;

- the Securities and Exchange Commission must declare the registration
statement under which the shares to be issued in the merger will be
registered effective;

- Express Capital common stock must be quoted on the OTC-BB; and

- GreyStone and its counsel must have satisfactorily completed their due
diligence review of Express Capital

The merger will not take place if the GreyStone shareholders do not approve
it. In addition, GreyStone is not to complete the merger if the other conditions
are not satisfied. Please understand that there is no guarantee that any of the
foregoing conditions will be satisfied, or that the merger will occur in the
time frame contemplated, if at all.

GOING CONCERN DIFFICULTIES; IMMEDIATE CAPITAL REQUIREMENTS

As of June 30, 1998, GreyStone had a working capital deficiency of
$2,504,987, total stockholders' deficiency of $2,031,975, and an accumulated
deficit of $28,022,060. In addition, GreyStone has had net losses of $802,046
for the three months ended June 30, 1998 and $3,255,861, $4,686,630 and
$6,697,686 for the fiscal years ended March 31, 1998, 1997 and 1996,
respectively. These losses have been primarily due to the following:

(1) substantial expenditures on research and development programs; and

(2) selling, and general and administrative costs incurred by
GreyStone in connection with the development and introduction of its
commercial product line.

Even if the merger takes place, there is no guarantee that GreyStone's
financial position will improve. GreyStone expects that it will also incur
losses through at least June 30, 1999 as it continues to develop and market its
products for sale in the entertainment markets. Thereafter, GreyStone will incur
additional losses if its products fail to achieve market acceptance in a timely
fashion or at all. There can be no assurance that
14
<PAGE> 25

GreyStone will successfully commercialize its products and reach profitability.
Furthermore, GreyStone needs to raise more money immediately. There is no
guarantee that GreyStone will be able to raise more money or that it will be
able to do so on favorable terms. If GreyStone is not able to raise more money,
it could be forced to stop its operations, liquidate its assets, repay its
liabilities and dissolve the corporation. If this happened, GreyStone
shareholders could completely lose the money they have invested in GreyStone.
These financial difficulties raise substantial doubt about GreyStone's ability
to continue operating as a going concern. For this reason, GreyStone's
independent public accountants, J.H. Cohn LLP, have included a statement in
their audit report for the fiscal year ended March 31, 1998, emphasizing that
there is a risk that GreyStone may not be able to continue as a going concern.
Because Express Capital will have no cash or other significant assets when the
merger is closed, the merger will itself not improve the financial position of
GreyStone, and will, in fact, increase GreyStone's stockholders' deficiency. In
addition, there may be other liabilities associated with Express Capital that
have not been discovered in GreyStone's due diligence review. See GreyStone's
Financial Statements and the Notes thereto beginning on page F-3 and the "Report
of GreyStone's Independent Public Accountants" on page F-2.

As explained above, GreyStone faces the risk of having insufficient
resources to meet its obligations. As of June 30, 1998, GreyStone had no cash or
cash-equivalents to pay its obligations. GreyStone has not been able to meet all
of its obligations as they become due. GreyStone must raise significant
additional capital in order to continue operations. The amount and timing of
GreyStone's future capital requirements will depend on a number of factors
including, among others, GreyStone's ability to successfully commercialize its
products related to the entertainment market, and the amounts and timing of
expenditures related to research and development and manufacturing activities.
Although GreyStone will attempt to raise additional capital through a public
offering of its equity securities or through one or more private placements of
equity or debt securities, there can be no assurance that additional capital
will be available on terms favorable to GreyStone, if at all. Any delay in
raising additional capital could result in material delays in the completion of
products under development or the introduction of new products or product
upgrades. Such delays could detrimentally affect GreyStone's business, financial
condition and results of operations. See "GreyStone's Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

LIMITED PUBLIC MARKET

Express Capital common stock is quoted on the OTC-BB. The total average
daily trading volume of Express Capital common stock during the 30 day period
preceding the date of this Proxy Statement/ Prospectus was shares
with an average daily total fair market value of $ (based on the daily
high bid price). Express Capital stock had an average high bid price of
$ during the same period. Prior to July 15, 1997 (26 days prior to the
announcement of the merger), no market makers quoted bid prices for Express
Capital common stock and there was no public market for such shares. There can
be no assurance that the daily trading volume or bid price for Express Capital
common stock will increase as a result of the merger.

DILUTION

Shareholders of GreyStone will incur immediate dilution as a result of the
merger. Dilution refers to a decrease in the percentage ownership interest of a
company that a share of stock represents. In connection with the merger, the
shareholders of GreyStone will receive one share of Express Capital common stock
in exchange for each share of GreyStone common stock. In addition, immediately
after the merger, Express Capital will issue to Olympic Capital Group , Michael
Pocaterro and Alan Gelbard, consultants to GreyStone, warrants to purchase
approximately 6% of the then-outstanding Express Capital common stock. As a
result of this exchange and the issuance of the warrants, GreyStone
shareholders' percentage ownership interest in Express Capital will be less than
their ownership interest in GreyStone prior to the merger.

15
<PAGE> 26

FLUCTUATION OF QUARTERLY OPERATING RESULTS

Certain factors may cause GreyStone to experience variations in its
quarterly revenues, operating results and cash flows. These factors include:

- the uncertainty in timing of the receipt of payments on government
contracts;

- the reduction in size, delay in starting-time, interruption, or
termination of one or more significant projects or contracts during a
quarter including, in particular, government;

- the failure to accurately estimate the resources required to obtain new
contracts or complete new or ongoing projects;

- the delays in the research, development and introduction of new products;
and

- general economic conditions which may affect the ability of GreyStone to
sell its products to the government, government contractors and in the
entertainment markets.

Because a majority of GreyStone's operating expenses, including salaries,
depreciation and rent, are generally set before a fiscal quarter begins,
GreyStone's business, financial condition, results of operations and cash flows
could be detrimentally affected if revenues and collections during a particular
quarter were not sufficient to offset GreyStone's operating expenses. Because
the timing of the receipt of payments on government contracts is associated with
government project schedules, if a project does not start on time or proceeds
too slowly, GreyStone's quarterly results and cash flows could be harmed.
GreyStone believes that quarterly revenues and operating results are likely to
vary significantly in the future and that period-to-period comparisons of its
revenues and operating results are not necessarily meaningful and should not be
relied upon as indications of future performance. See "GreyStone Management's
Discussion and Analysis of Financial Condition and Results of Operations."

LIMITED HISTORY OF SELLING ENTERTAINMENT PRODUCTS

GreyStone began its business in 1989. Since then, GreyStone has primarily
focused its development activities on projects for sales under government
programs. In 1993, GreyStone made a strategic decision to invest in research and
development of products that utilize similar technology for sale to the
commercial entertainment markets. Although GreyStone is in the process of
expanding its customer base to include out-of-home entertainment venue operators
and other commercial enterprises, GreyStone has limited experience marketing to
these customers, and its efforts may be unsuccessful. If GreyStone fails to
penetrate the commercial entertainment markets at the levels it expects,
GreyStone's revenues and cash flows may fall below company expectations and
could result in further net losses and working capital deficiencies. GreyStone
had total revenues of approximately $796,000 from sales of its products in the
entertainment market. There can be no assurance that GreyStone will recognize
any future revenues from sales of its products in the entertainment markets
during the year ended March 31, 1999.

CUSTOMER CONCENTRATION; DECLINING GOVERNMENT EXPENDITURES

To date, the majority of GreyStone's revenues have come from sales of 3-D
software and other simulation technology and from services to U.S. Government
agencies and contractors. Because substantially all of GreyStone's revenues come
from its Government Business Unit, any cancellations or delays in the starting-
time of government projects or activities could have a more significant impact
on GreyStone's results of operations than they would on companies with a higher
volume of sales in the entertainment market. Similarly, if third-parties who
have contracted to provide GreyStone project support lose their government
contracts, GreyStone could be affected more than larger companies would be.

It is possible that the U.S. Government may spend less money on
military-related technology in the future. While the total amount of
expenditures should remain in the billions of dollars and GreyStone believes
that an increasing proportion of these expenditures will be budgeted to software
and related technologies, there can be no assurance that the purchases by the
U.S. Government or its contractors will remain at or above historical levels.
Any inability by GreyStone to offset declines in government business with sales
to the
16
<PAGE> 27

commercial market or other governments would affect GreyStone materially and
adversely. See "GreyStone Business -- Government Market and Products" and
"GreyStone Management's Discussion and Analysis of Financial Condition and
Results of Operation."

EMERGING MARKET FOR 3-D SOFTWARE

The market for 3-D software applications is new and is changing rapidly.
GreyStone believes that growth of the market for 3-D software has been
restricted by the following:

- the high costs of the hardware components necessary for 3-D software

- an insufficient understanding of the software design and development
process for engaging 3-D software

- competition from other forms of out-of-home entertainment

Because GreyStone's future growth depends on, among other things, the
growth in demand for 3-D software, if the 3-D software market fails to develop
in a timely manner, or at all, GreyStone's results of operations may suffer. In
addition, there can be no assurance that, to the extent the 3-D software market
develops, GreyStone's products will be accepted or preferred by customers and
3-D software operators.

RAPID TECHNOLOGICAL CHANGE

The market for 3-D software is changing quickly. This is due to the fact
that the 3-D software technology and customers' preferences for it are changing
rapidly. As a result, GreyStone's success will depend on its ability to develop
and introduce products which keep pace with the technological advances in a
number of different disciplines, and to respond to rapidly changing customer
requirements. In addition, GreyStone must frequently develop new 3-D software to
successfully attract and maintain consumer interest. There is no guarantee that
GreyStone will be successful in developing or marketing products that
incorporate technological advances, or that adequately address customer
preferences on a timely basis, if at all. Furthermore, even if GreyStone is able
to successfully develop and market products that incorporate technological
advances, there is no guarantee that such products will gain customer
acceptance.

It is possible that GreyStone may occasionally experience delays in product
introductions. If GreyStone does experience delays in product introductions,
such delays could have a negative effect on GreyStone's business and results of
operations. Also, it is possible that some of GreyStone's products could contain
undetected or unresolved errors in the software code base when they are first
introduced or when new versions of the products are first released. Even if
GreyStone tests its products extensively, it is possible that GreyStone will not
find software errors in its new products or product upgrades. The existence of
such errors could result in a delay or an inability of GreyStone's products to
gain market acceptance. Furthermore, if errors exist, GreyStone could be
required to spend significant amounts of money to correct the errors.

DEPENDENCE ON THIRD PARTY SUPPLIERS, PRODUCTION AND SALES

GreyStone relies on just a few suppliers for some of the most important
parts used in GreyStone's products. Although GreyStone has not entered into any
exclusive relationship for the parts, an inadequate supply of required parts,
price increases, late deliveries and poor quality poses risk to GreyStone.
GreyStone has a non-exclusive license agreement with one company to market,
produce and distribute entertainment systems with the Company's current game,
XS-G, and to pay GreyStone a fee after the sale of each XS-G system. If a third
party fails to market, produce and distribute the entertainment systems, or
properly pay GreyStone upon the sale of the product, there could be an adverse
effect on GreyStone's business and results of operations.

17
<PAGE> 28

COMPETITION

Competition in the Entertainment Market

The markets in which GreyStone competes are rapidly changing and highly
competitive. Competitors are currently developing or are expected to develop
entertainment products that are or may be directly competitive with many of
GreyStone's products. GreyStone's competitors range from small companies with
limited resources to large companies with greater financial, technical and
marketing resources than GreyStone. GreyStone believes that it competes against
the following companies in the interactive entertainment markets: Disney, Atari,
Electronic Arts, Inc., LucasArts Entertainment Company, Sony, Sega, Nintendo,
Atari, WMS Industries, Inc. ("Williams") and its subsidiary Midway Games, Inc.,
and Namco, Inc. GreyStone expects that the number of its competitors will
increase. GreyStone also believes that large entertainment and computer
companies are increasing their focus on the interactive 3-D software
entertainment market, which will further stimulate competition.

GreyStone plans to develop products for the in-home entertainment market,
which is a highly competitive market. Companies that have been in the market
longer and that have greater financial resources than GreyStone may be able to
make larger investments in research and development and engage in more extensive
marketing campaigns. Such companies may also be able to carry larger
inventories, adopt more aggressive pricing policies and make better offers to
customers.

GreyStone believes that the following companies are some, but not all, of
its competitors in the in-home entertainment markets: Acclaim Entertainment
Inc., Broderbund Software, Inc., Eidos Interactive, Inc., Electronic Arts,
Interplay Productions, Midway, Namco Limited, Nintendo, Sega, Sony, and
Williams.

Competition in the Government Market

In the government market, GreyStone competes against established
corporations that have substantially greater resources than GreyStone. In the
past, GreyStone has worked closely with several companies as a sub-contractor,
but there can be no assurances that GreyStone will be successful in maintaining
or enhancing these relationships in the future. GreyStone considers its
competitors for government products and services to include Science Applications
International Corporation, Cubic Corporation, Logicon, TRW and others. There can
be no assurance that GreyStone will be able to compete with these and other
companies for future government contracts. Even if GreyStone is awarded
contracts, there can be no assurance that the contracts will be on terms
favorable to GreyStone.

Factors Affecting Competition

GreyStone believes that competition will intensify in the future. GreyStone
also believes that its ability to compete successfully depends on a number of
factors, including the following:

- GreyStone's market presence

- the reliability and quality of its software products and the hardware on
which GreyStone's software products operate

- the pricing and timing of services and products by GreyStone and its
competitors

- GreyStone's ability to react to changes in the market

- industry and economic trends

While GreyStone believes that its products will compare favorably to those
offered by competitors, there can be no assurance that GreyStone's products will
gain market acceptance or that they will compete favorably in the marketplace.
Moreover, there can be no assurance that competitors will not develop products
or technologies that will be more successful than GreyStone's or render
GreyStone's products non-competitive for other reasons. In addition, GreyStone
believes that there is a trend toward consolidation taking place in its
industry. GreyStone believes that this trend may lead to the creation of larger,
better-financed competitors. If

18
<PAGE> 29

GreyStone is not able to compete effectively with other 3-D software vendors,
GreyStone's business and results of operations will be harmed.

DEPENDENCE ON PROPRIETARY TECHNOLOGY

GreyStone's success depends on its proprietary technology -- that
technology that GreyStone possesses the exclusive legal right to use and the
legal right to prevent others from using. GreyStone relies on a combination of
patent, trade secret, contract, copyright and trademark law to protect its
proprietary rights in its products and technology. As of March 31, 1998,
GreyStone had one patent issued, one registered copyright and two registered
trademarks. GreyStone generally enters into confidentiality and/or license
agreements with its employees, customers and potential customers and limits
access and distribution of its products, documentation and other proprietary
information. There can be no assurance that the steps taken by GreyStone in this
regard will be sufficient to prevent the theft or independent third party
development of its technology. While GreyStone believes that its technology does
not infringe upon the intellectual property rights of other parties, there can
be no assurance that third parties will not assert infringement claims against
GreyStone. If any such claims are asserted and upheld, the resulting financial
liability to GreyStone could have a material adverse effect on GreyStone's
business and results of operations.

PRODUCT LIABILITY

Testing, production, marketing and use of GreyStone's products entail the
risk of product liability. While GreyStone maintains product liability insurance
in amounts that it believes adequate to afford it protection from liability
claims that may be made against it, there can be no assurance that GreyStone
will be able to maintain such insurance at reasonable costs or in sufficient
amounts to protect GreyStone from losses due to product liability. An inability
to maintain insurance at an acceptable cost or to otherwise protect GreyStone
against potential product liability could prevent or inhibit the
commercialization of GreyStone's products. In addition a product liability claim
or recall could have a material adverse effect on GreyStone's business and
results of operations.

DEPENDENCE ON KEY PERSONNEL

GreyStone's future success depends to a significant extent on the continued
service of its senior management and other key employees. The loss of service of
any of these individuals or groups could have a material adverse effect on
GreyStone's business and results of operations. Five of GreyStone's key
employees are bound by management contracts. GreyStone also believes that its
future success will depend, in large part, on its ability to attract and retain
highly skilled employees in a variety of disciplines. Competition for such
employees within the computer industry is intense, and there can be no assurance
that GreyStone will be successful in attracting and retaining such personnel.
See "GreyStone Business -- Employees" and "GreyStone Management."

CONTROL BY EXISTING SHAREHOLDERS

As of September 30, 1998, directors and executive officers of GreyStone, as
a group, beneficially owned approximately 50% of the outstanding Common Stock of
GreyStone (including exercisable options and warrants to purchase GreyStone
Common Stock). Included in this group are Richard A. Smith, GreyStone's founder,
who owns, directly and with his spouse, approximately 36% of all outstanding
options, and warrants. After the merger, directors and executive officers will
beneficially own approximately 47.5% of Express Capital's outstanding common
stock (on a fully diluted basis). As a result, the current directors and
executive officers of GreyStone, if acting together, would be able to control
effectively most matters requiring the approval of the stockholders of Express
Capital. The voting power of these stockholders under certain circumstances
could have the effect of delaying or preventing a change in control of Express
Capital or the combined company. See "GreyStone Management -- GreyStone
Principal Shareholders."

19
<PAGE> 30

POSSIBLE VOLATILITY OF STOCK PRICE

The market price of Express Capital's common stock may be subject to
significant fluctuations due to the following factors:

- variations in the quarterly operating results of the combined companies

- announcements of new products by competitors

- general trends in the commercial software entertainment market

- fluctuations in the stock market that are unrelated to operating
performance of particular companies

Consequently, the market price of Express Capital common stock may vary
from the price on the date of this Proxy Statement/Prospectus, or on the dates
on which the GreyStone shareholders vote on the merger, as a result of the
following factors:

- changes in the business, operations, financial results and prospects of
GreyStone

- market assessments of the likelihood that the merger will take place and
the timing of the merger

- general market and economic conditions

- other factors

There can be no assurance as to the market price of Express Capital common
stock at the time of or after the merger.

YEAR 2000 ISSUE

Many computer systems and software products are coded to use only the last
two digits to refer to a year. Therefore, these computer programs do not
properly recognize a year that begins with "20" instead of the familiar "19." In
just over one year, the date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. If not corrected,
many computer applications could fail or create erroneous results. Accordingly,
computer systems and software used by many companies will need to be upgraded to
comply with such "Year 2000" requirements.

GreyStone uses a significant number of computer software programs and
operating systems in connection with its products, services and internal
operations. Such software and systems are being reviewed and updated with a view
towards Year 2000 compliance. Nevertheless, Year 2000 problems could affect
GreyStone's research and development, financial, administrative and
communication operations.

GreyStone's State of Readiness

Since the Year 2000 problem emerged, GreyStone has taken steps to prepare
both its information technology ("IT") and non-IT systems for the Year 2000.
GreyStone has focused its efforts on updating its Government and Commercial
software products to become Year 2000 compliant. Its software products (RAGE(TM)
and XS-G(TM)) have been updated and tested for Year 2000 compliance and are
thought to be compliant. GreyStone applied the U.S. Air Force's Year 2000
compliance checklist to the RAGE software product in March 1998. The three
uncertain or non-compliant features which were identified as a result of the
process have since been fixed or established to GreyStone's satisfaction to be
compliant. Even though GreyStone's XS-G 3-D interactive entertainment software
game does not have any date dependencies, the software has been tested and
performs without problem when computer dates are accelerated through the year
2000 change.

20
<PAGE> 31

internal computer systems and software being used to support Company operations.
The results indicate that voice mail and internal computer hardware upgrades
will be required for those components whose manufacturers cannot or will not
certify the items to be Year 2000 compliant.

The Costs to Address GreyStone's Year 2000 Issues

To date, GreyStone has incurred no costs outside of labor overhead costs to
evaluate its compliance status in addressing Year 2000 issues.

Because voice mail and internal computer hardware upgrades may be required
for those components whose manufacturers cannot or will not certify the items to
be Year 2000 compliant, GreyStone currently estimates that certain systems may
need to be replaced at an estimated cost of up to $50,000 during the next 12
months. The funds required for the systems' replacement will be supplied through
an allocation from GreyStone's general and administration budget.

External and internal costs specifically associated with modifying internal
software for Year 2000 compliance will be expensed as incurred. To date, costs
have not been material and are not expected to be in the future. Such costs do
not include normal system upgrades and replacements, as the systems being
replaced will be close to their scheduled replacement dates.

The Risks of GreyStone's Year 2000 Issues

Based on GreyStone's current plans and efforts to date, GreyStone believes
that changes mandated by the Year 2000 issue will not have any material adverse
effect on GreyStone's business, financial condition and results of operations.
There is no guarantee, however, that all problems will be foreseen and
corrected, or that no material disruption of GreyStone's business will occur.

GreyStone's Contingency Plans

At this point, in light of the advanced readiness level resulting from the
internal evaluation, GreyStone does not have a formal contingency plan in place
in the event that GreyStone is not ready for the Year 2000. GreyStone does not
have a formal contingency plan because it believes that the costs associated
with such a plan are not warranted due to GreyStone's readiness for the Year
2000 and the fact that the changes mandated by the Year 2000 issue will not have
a material adverse effect on GreyStone's business, financial condition or
results of operations.

21
<PAGE> 32

GREYSTONE SPECIAL MEETING

DATE, TIME AND PLACE OF SPECIAL MEETING

The Special Meeting will be held at 9:00 a.m., California Time, on
, 1998 at GreyStone's principal executive offices located at 4950
Murphy Canyon Road, San Diego, California 92123.

PURPOSE OF THE SPECIAL MEETING

At the Special Meeting, GreyStone shareholders will consider and vote upon
the Merger Proposal.

RECORD DATE; SHARES ENTITLED TO VOTE

The GreyStone Board has fixed the close of business on , 1998
as the Record Date for the Special Meeting. Only holders of record of GreyStone
Common Stock as of the Record Date are entitled to notice of and to vote at the
Special Meeting. As of the close of business on the Record Date, there were
shares of GreyStone Common Stock issued and outstanding and held by
holders of record. Holders of GreyStone Common Stock are entitled to
one vote for each share of GreyStone Common Stock held of record at the close of
business on the Record Date.

QUORUM; REQUIRED VOTE

The presence, in person or represented by properly executed proxy, of the
holders of a majority of the outstanding shares of GreyStone Common Stock
entitled to vote at the Special Meeting is necessary to constitute a quorum for
the conduct of business at the Special Meeting. Abstentions will be counted as
shares present for purposes of determining the presence of a quorum but will not
be counted as votes cast for purposes of determining whether the Merger Proposal
has received sufficient votes for adoption and approval. Consequently,
abstentions will have the same effect as a vote AGAINST the adoption and
approval of the Merger Proposal.

Approval of the Merger Proposal will require the affirmative vote of the
holders of a majority of the shares of GreyStone Common Stock outstanding as of
the Record Date and entitled to vote on the Merger Proposal. As of the Record
Date, GreyStone's directors and executive officers and their respective
affiliates beneficially held a majority of the shares of GreyStone Common Stock
outstanding on the Record Date. Such persons have indicated that they intend to
vote all of their shares of GreyStone Common Stock FOR APPROVAL OF THE MERGER
PROPOSAL. Such vote will alone be sufficient to approve and adopt the Merger
Proposal.

VOTING OF PROXIES

The GreyStone proxy accompanying this Proxy Statement/Prospectus is being
solicited on behalf of the GreyStone Board for use in voting at the Special
Meeting. Shares of GreyStone Common Stock represented by properly executed
proxies, if such proxies are received in time and are not revoked prior to the
vote, will be voted in accordance with the instructions indicated on the
proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR
ADOPTION OF THE MERGER PROPOSAL.

REVOCABILITY OF PROXIES

A GreyStone shareholder who has given a proxy may revoke it at any time
prior to its exercise at the Special Meeting by (i) giving written notice by any
means (including telefacsimile), bearing a date later than the date of the
proxy, stating that the proxy has been revoked, (ii) properly submitting to
GreyStone prior to the vote at the Special Meeting, a duly executed proxy
bearing a later date, or (iii) attending the Special Meeting and voting in
person (although attendance at the Special Meeting will not, by itself, revoke a
proxy). All written notices of revocation and other communications with respect
to revocation of proxies should be

22
<PAGE> 33

delivered to GreyStone's executive offices at 4950 Murphy Canyon Road, San
Diego, CA 92123, Attn: Corporate Secretary.

SOLICITATION OF PROXIES; EXPENSES

GreyStone will bear the entire cost of soliciting proxies for the Special
Meeting, including the cost of printing, assembly and mailing of this Proxy
Statement/Prospectus, the proxy and any additional information furnished to its
shareholders. In addition to the solicitation of proxies by mail, GreyStone may
supplement such solicitation by telephone or personal contact by directors,
officers or other employees of GreyStone. No additional compensation will be
paid to such persons in connection with such solicitation.

BOARD RECOMMENDATION

THE GREYSTONE BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF
GREYSTONE AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE MERGER PROPOSAL.

EXPRESS CAPITAL APPROVALS

APPROVAL OF THE MERGER

On ,1998, Mathis, as the sole member of the Boards of Directors
of both Express Capital and Express Capital Sub, approved the Merger Proposal.
Express Capital, as the sole stockholder of Express Capital Sub, approved the
Merger Proposal on ,1998. The stockholders of Express Capital are
not entitled to vote on the Merger Proposal.

23
<PAGE> 34

THE MERGER AND RELATED TRANSACTIONS

The following information describes certain information pertaining to the Merger
Proposal. This description does not purport to be complete and is subject to,
and qualified in its entirety by, reference to the Annexes hereto, including the
Merger Agreement, a copy of which is set forth in Annex A to this Proxy
Statement/ Prospectus and incorporated herein by reference. GreyStone
shareholders are urged to read the Annexes in their entirety.

GENERAL

The Merger will be consummated promptly after the approval by the GreyStone
shareholders of the Merger Proposal and upon the satisfaction or waiver of all
of the conditions to the consummation of the Merger (the "Closing Date"). The
Merger will become effective on the date and time a properly executed
Certificate of Merger is filed with the offices of the Secretaries of State of
the States of Delaware and California (the "Effective Time"). As of the
Effective Time, GreyStone will be merged with and into Express Capital Sub, with
the result that GreyStone will cease to exist and Express Capital Sub will be
the surviving corporation in the Merger and remain a whollyowned subsidiary of
Express Capital (the "Surviving Corporation").

Prior to consummation of the Merger, Express Capital will (A) file an
amended and restated certificate of incorporation (the "Express Capital Restated
Certificate") to, among other things, (i) establish its authorized capital stock
as 30,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock,
(ii) change its name to "GreyStone Digital Technology, Inc.," (iii) effect a
1-for-41.66667 reverse split of its outstanding Common Stock and (iv) adopt a
classified board of directors, (B) amend and restate its bylaws (the "Express
Capital Restated Bylaws") and (C) elect, effective upon the effectiveness of the
Merger, a new Board of Directors to consist of Richard A. Smith, Thomas D.
Aldern and Jon M. Reynolds. In addition, in connection with the Merger, Express
Capital will become subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). A copy of the Express
Capital Restated Certificate and a copy of the Express Capital Restated Bylaws
are set forth in their entirety as Annex C and Annex D to this Proxy
Statement/Prospectus.

CONVERSION OF SHARES

At the Effective Time, and subject to the rights of dissenting GreyStone
shareholders, if any, and without any action on the part of Express Capital,
Express Capital Sub or GreyStone, each share of GreyStone Common Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one (1) share of Express Capital Common Stock. The total number
of shares of Express Capital Common Stock to be issued to the GreyStone
shareholders under the Merger Agreement is hereinafter referred to as the
"Merger Shares." As of the Record Date, there were issued and outstanding
14,217,713 shares of GreyStone Common Stock held by 655 holders of record.
Provided there are no dissenting GreyStone shareholders, an aggregate of
14,217,713 shares of Express Capital Common Stock will be issued in the Merger
to the former holders of GreyStone Common Stock, representing approximately 97%
of the total shares of Express Capital Common Stock to be outstanding
immediately after the consummation of the Merger (calculated assuming the
issuance of 14,217,713 Merger Shares and based upon 480,000 shares of Express
Capital Common Stock assumed to be outstanding after giving effect to the
Reverse Split. Because the former holders of GreyStone Common Stock (other than
dissenting GreyStone shareholders, if any) will become holders of Express
Capital Common Stock as a result of the Merger, their rights as stockholders
will be governed by Delaware law and the Express Capital Restated Certificate
and Express Capital Restated Bylaws. See "Comparison of Rights of GreyStone
Shareholders and Express Capital Stockholders."

None of the shares of Express Capital Common Stock outstanding prior to the
consummation of the Merger will be converted or otherwise modified in the Merger
and all of such shares will continue to be outstanding capital stock of Express
Capital after the Effective Time.

Effect on Outstanding GreyStone Options and GreyStone Warrants. At the
Effective Time, Express Capital will assume all GreyStone Options and GreyStone
Warrants outstanding immediately prior to the
24
<PAGE> 35

Effective Time except for the Chathams Rowe Warrants. In accordance with their
terms, each such GreyStone Option and GreyStone Warrant except for the Chathams
Rowe Warrants will become the right to acquire, on the same terms and conditions
as were applicable to such GreyStone Option or GreyStone Warrant outstanding as
of the Effective Time, that number of shares of Express Capital Common Stock to
which the holder of such GreyStone Option or GreyStone Warrant would have been
entitled to receive pursuant to the Merger had such GreyStone Option or
GreyStone Warrant been exercised in full prior to the Effective Time. In
addition, Express Capital shall issue warrants to purchase 986,750 shares of
Express Capital Common Stock (the "Express Capital Warrants") to Chathams Rowe
Venture Partners ("Chathams Rowe") in exchange for certain warrants to purchase
986,750 shares of GreyStone Common Stock held by Chathams Rowe. Such Express
Capital Warrants will contain the same terms and conditions as the warrants to
purchase GreyStone Common Stock for which they are being exchanged. Following
the Merger, an aggregate of shares of Express Capital Common Stock will
be issuable upon the exercise of GreyStone Options, GreyStone Warrants and the
Chathams Rowe Warrants outstanding as of the Record Date.

Fractional Shares. As of the Record Date, there were no fractional shares
of GreyStone Common Stock outstanding. Because each outstanding share of
GreyStone Common Stock will be entitled to receive one (1) share of Express
Capital Common Stock pursuant to the terms of the Merger Agreement, there will
be no fractional shares issued in the Merger.

BACKGROUND OF THE MERGER

Express Capital. As discussed under "Express Capital Business" elsewhere
herein, Express Capital was formed primarily to serve as a vehicle to effect a
business combination with a private company.

Prior to July 1997, Earnest Mathis, Jr., Express Capital's sole director
and executive officer, reviewed approximately 20 prospective companies with
which to conduct a business combination (each a "Target Business").

In evaluating a prospective Target Business, Express Capital looked
primarily for private companies of two different types:

(1) companies with a history of revenues and earnings that Express Capital
believed had the potential to grow and to be well-received in the
securities markets; and

(2) companies with technology that Express Capital believed had the
potential for commercial success and an enthusiastic reception in the
securities markets, and where the individuals involved seemed to have the
skills necessary to develop the company's technology and to raise the
capital that the company would need to grow.

In February 1995 Express Capital entered into a letter of intent to acquire
a Target Business, but that acquisition terminated in March 1996.

Contacts between the Parties

On May 12, 1997, GreyStone engaged Olympic Capital Group, Inc. ("Olympic
Capital") to serve as an investment advisor for GreyStone.

In early June 1997, Mr. John Lowy of Olympic Capital introduced Mr. Richard
A. Smith, GreyStone's Chairman and Chief Executive Officer, to Mr. Earnest
Mathis, Jr. , Express Capital's Chairman and Chief Executive Officer. On June
19, 1997, Mr. Mathis met with, among others, Mr. Smith to discuss generally the
business and affairs of GreyStone and a possible business combination involving
Cancun Acquisition, Inc. ("CAI"), a company affiliated with Mr. Mathis. During
the meeting, Mr. Smith expressed GreyStone's desire to effect a business
combination with a publicly-traded company in order to enhance GreyStone's
ability to raise additional capital in the public markets.

On or about June 19, 1997, Mr. Mathis suggested to Mr. Smith that a
business combination between GreyStone and Express Capital would be more
consistent with GreyStone's objectives since CAI was not
25
<PAGE> 36

publicly traded. On or about July 3, 1997, Mr. Mathis contacted Mr. Smith
inquiring as to whether GreyStone would be interested in discussing a possible
business combination with Express Capital. Mr. Smith responded favorably to Mr.
Mathis' inquiry, and in response thereto, there were numerous telephone
conversations between Messrs. Mathis and Smith relating to various aspects of
the potential Merger, including in-depth discussions concerning the type and
amount of consideration to be received in the Merger.

Following these discussions, representatives of Express Capital and
GreyStone negotiated a letter of intent outlining the basic structure, terms and
conditions of the Merger. The letter of intent was discussed and approved by the
GreyStone Board at a meeting held on July 10, 1997. The letter of intent was
executed on behalf of Express Capital and GreyStone on or about July 10, 1997.

After execution of the letter of intent, each of Express Capital and
GreyStone commenced extensive due diligence investigations of the other and
counsel to the companies began drafting the Merger Agreement.

As part of the due diligence review, on July 22, 1997, Gary McAdam, a
co-founder of Express Capital, met with Mr. Smith at GreyStone's offices to
discuss generally the business and affairs of GreyStone and Express Capital. On
August 25, 1997, Thomas King, GreyStone's Chief Financial Officer met with Mr.
Mathis at Express Capital's offices to discuss generally the business and
affairs of Express Capital and to conduct other due diligence of Express
Capital.

During July and the first week of August 1997, Messrs. Mathis and Smith,
along with Express Capital's and GreyStone's respective counsel, held numerous
telephone conference calls to negotiate the final terms of the proposed Merger
and an Agreement and Plan of Merger and Reorganization (the "Agreement of
Merger"). After having reached resolution on all open issues, GreyStone convened
a special meeting of its Board of Directors at which the Agreement of Merger,
the Merger and the other transactions contemplated thereby were discussed and
reviewed. Thereafter, the Board of Directors of GreyStone unanimously adopted
and approved the Agreement of Merger, the Merger and the transactions
contemplated thereby.

On August 11, 1997, Earnest Mathis, as the sole director of Express Capital
and Express Capital Sub, approved the Agreement of Merger, the Merger and the
transactions contemplated thereby. On August 11, 1997, the Agreement of Merger
was executed and delivered by each of the parties thereto.

Between August 1997 and September 1998, GreyStone attempted to raise
additional capital to cover the expenses associated with the proposed Merger and
GreyStone's desire to have the Common Stock of Express Capital listed on the
Nasdaq SmallCap Market. In September 1998, after failing to raise any
significant amounts of additional capital, GreyStone nevertheless determined to
proceed with the Merger.

In October of 1998, the parties negotiated an amendment to the Agreement of
Merger to, among other things restructure the merger so that the surviving
corporation in the Merger would be Express Capital Sub as opposed to GreyStone
to maintain the tax-free nature of the transaction. See "-- The
Merger -- Material Federal Income Tax Consequences." The Board of Directors of
Greystone approved such amendment on October 12, 1998 and the Board of Express
Capital approved the amendment as of October 1, 1998.

Neither of the respective Boards of Directors of Express Capital or
GreyStone requested or received, or will receive, an opinion of an independent
investment banker as to whether the Merger is fair, from a financial point of
view, to Express Capital and its stockholders, on the one hand, or GreyStone and
its shareholders, on the other hand.

RECOMMENDATIONS OF THE BOARDS OF DIRECTORS AND REASONS FOR THE MERGER

Express Capital's Reasons for the Merger. In considering the Merger, the
Express Capital Board took note of, among other things, the criteria for
evaluating a prospective Target Business set forth under "Background of the
Merger" above. After evaluating GreyStone in light of Express Capital's Target
Business criteria, the Express Capital Board determined that the Merger Proposal
was fair to, and in the best interests of, Express Capital and the Express
Capital stockholders.

GreyStone's Reasons for the Merger. The GreyStone Board believes that the
Merger will enhance the combined company's ability to raise capital in the
private and public markets. In addition, GreyStone's Board
26
<PAGE> 37

of Directors noted that Express Capital's status as a company whose securities
are quoted on the OTC-BB would increase the visibility of the surviving
corporation's business, which could be helpful in further developing and
commercializing GreyStone's (and consequently, the surviving corporation's)
products. Consequently, the Board of Directors of GreyStone determined that the
Merger Proposal was fair to, and in the best interests of, GreyStone and the
GreyStone shareholders. THE GREYSTONE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER PROPOSAL.

CAUTIONARY STATEMENT AND RISK FACTOR CONCERNING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this document that are subject
to risks and uncertainties. Forward-looking statements include the information
concerning future results of operations, the ability of GreyStone to continue
its operations after the merger is completed, the ability of GreyStone's
shareholders to sell their shares in the over-the-counter market, the ability of
GreyStone to raise additional capital after the merger is completed, set forth
under "Questions and Answers About The Merger", "Summary", "-- Background of the
Merger", "-- Recommendations of the Boards of Directors and Reasons for the
Merger", and those preceded by, followed by or that otherwise include the words
"believes," "expects," "anticipates," "intends," "estimates" or similar
expressions. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.

27
<PAGE> 38

THE MERGER AGREEMENT

The following summary of the terms of the Merger Agreement is qualified in
its entirety by reference to the Merger Agreement, included as Annex A to this
Proxy Statement/Prospectus.

Representations

Under the Merger Agreement, GreyStone has made a number of representations,
including among others representations regarding its (i) due organization and
good standing, (ii) authority to conduct its business in the manner in which it
is currently being conducted, (iii) capitalization, and (iv) authority to enter
into and perform the Merger Agreement and the other transactions contemplated
thereby. Under the Merger Agreement, Express Capital, Express Capital Sub and
Mr. Mathis, as a major stockholder of Express Capital, have also made a number
of representations, including representations regarding (i) due organization and
good standing of Express Capital and Express Capital Sub, (ii) authority to
conduct Express Capital's and Express Capital Sub's respective businesses in the
manner in which they are currently being conducted, (iii) capitalization, (iv)
the due and valid issuance of the Merger Shares, (v) accuracy of certain
information provided to GreyStone, (vi) valid existence and enforceability of
certain contracts of Express Capital and Express Capital Sub, (vii) accuracy and
completeness of certain financial statements of Express Capital, (viii)
disclosure of all assets and liabilities of Express Capital, (ix) operations,
(x) compliance with laws, (xi) tax matters, (xii) related party transactions,
(xiii) litigation, and (xiv) authority to enter into and perform the Merger
Agreement and the other transactions contemplated thereby.

Covenants

Under the Merger Agreement, Express Capital has covenanted to (i) provide
GreyStone and its representatives with access to Express Capital's books and
records (including financial information), (ii) notify GreyStone of any event,
condition, fact or circumstance that occurs between the date of the Merger
Agreement and the Effective Time that causes or constitutes any inaccuracy in or
breach of any representation or covenant made by Express Capital, Express
Capital Sub and Mr. Mathis in the Merger Agreement, (iii) use best efforts to
ensure that at the Effective Time, Express Capital's Common Stock will be listed
for trading on the OTC-BB, and (iv) to effect a reverse stock split, as
described more fully in Section 4.3 of the Merger Agreement. Each of GreyStone,
Express Capital, Express Capital Sub and Mr. Mathis also have covenanted in the
Merger Agreement to (i) make all filings and give all notices required to be
made, and use commercially reasonable efforts to obtain all consents required to
be obtained, in connection with the Merger and the transactions contemplated
thereby, (ii) consult with each other prior to issuing any press release or
otherwise making any public statements with respect to the Merger, (iii)
cooperate with one another in providing any information necessary to be included
in any disclosure document provided to the GreyStone shareholders or filed with
any regulatory authority. In addition, the Company has covenanted to call and
hold a special meeting of its shareholders for the purpose of voting on the
Merger and the transactions contemplated thereby.

Conditions to Closing

In addition to the requirement that the Merger Agreement, the Merger and
the transactions contemplated thereby be approved by the GreyStone shareholders,
the obligations of the parties to consummate the Merger are conditioned upon,
among other things, the: (i) accuracy of the representations made by the other
party in the Merger Agreement and the other agreements or instruments delivered
by the parties as of the Closing Date (ii) performance by the other party of its
covenants, (iii) absence of any governmental restraints or orders preventing the
consummation of the Merger, and (v) absence of any governmental or other
litigation seeking to prevent the Merger or litigation the outcome of which
could have a material adverse effect on the parties.

GreyStone's obligation to consummate the Merger are further conditioned
upon, among other things, (i) the absence of any material adverse effect on
Express Capital or Express Capital Sub, (ii) the receipt from Mr. Mathis and
each current and former officer of Express Capital certain releases, (iii) there
not being

28
<PAGE> 39

holders of more than 1% of the outstanding shares of GreyStone Common Stock
entitled to vote on the Merger exercising or being entitled to exercise
dissenters' rights in accordance with California law, (iv) receipt of lock-up
agreements from certain stockholders of Express Capital, (v) receipt of certain
legal opinions from counsel to Express Capital, (vi) the effective listing of
Express Capital's Common Stock on the OTC-BB, (vii) the satisfactory completion
of due diligence of Express Capital and Express Capital Sub by GreyStone and its
counsel, and (viii) the effectiveness of a registration statement filed with the
Commission covering the issuance of the Merger Shares.

Termination. At any time prior to the Effective Date, the Merger Agreement
may be terminated, and the Merger abandoned under certain circumstances,
including (i) by mutual consent of Express Capital and GreyStone, (ii) by either
party if any of the other party's representations and warranties contained in
the Merger Agreement shall be or shall have become inaccurate, or if any of the
other party's covenants contained in the Merger Agreement shall have been
breached; (iii) by either party if a court of competent jurisdiction or other
governmental body shall have issued a final and nonappealable order, decree or
ruling, or shall have taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; (iv) by GreyStone if
the Special Meeting shall have been held and the Merger Agreement shall not have
been adopted and approved at such meeting by the required vote; or (v) by
GreyStone if GreyStone reasonably determines that the timely satisfaction of any
condition to its obligations to consummate the Merger has become impossible or
unlikely.

Indemnification. Pursuant to the terms of the Merger Agreement, Mr. Mathis
has agreed to personally hold harmless and indemnify Express Capital, GreyStone
shareholders, the Surviving Corporation and each of their respective
representatives (collectively, the "Indemnitees"), from and against any damages
which are directly or indirectly suffered or incurred by any of the Indemnitees
or to which any of the Indemnitees become subject and which arise, directly or
indirectly, from any inaccuracy in or breach of any representation made by
Express Capital, Express Capital Sub or Mr. Mathis in the Merger Agreement or in
any document provided to GreyStone in connection with the transactions
contemplated by the Merger Agreement.

Expenses And Fees. Under the terms of the Merger Agreement, GreyStone will
bear the costs and expenses incurred by it with respect to the Merger and the
other transactions contemplated thereby (including $2,500 of the costs of
preparing the pro forma financial statements included herein), and Express
Capital will bear all of the costs and expenses of its accountants, $2,500 of
the costs of preparing the pro forma financial statements included herein, all
of the other costs and expenses incurred by it prior to September 3, 1998, and
$35,000 of the other costs and expenses incurred by it after September 3, 1998.
GreyStone will bear all of the costs and expenses in excess of $35,000 incurred
by Express Capital subsequent to September 3, 1998 with respect to the Merger
Agreement and the transactions contemplated thereby.

Amendment; Waiver. The Merger Agreement may be amended only by a written
instrument duly executed on behalf of Express Capital, Express Capital Sub,
GreyStone and Mathis.

RELATED AGREEMENTS AND INTERESTS OF CERTAIN PERSONS IN THE MERGER

Lock-Up Agreements

In connection with the Merger, Messrs. Mathis and McAdam, stockholders of
Express Capital, have entered into lock-up agreements (the "Lock-Up Agreements")
with Express Capital whereby Messrs. Mathis and McAdam have agreed to certain
restrictions on their ability to sell or otherwise transfer shares of Express
Capital Common Stock following the consummation of the Merger. Messrs. Mathis
and McAdam are each permitted to sell or otherwise transfer, during each
three-month period occurring subsequent to the Closing, only that number of
shares of Express Capital Common Stock held by such persons that is equal to no
more than one percent (1%) of the total shares of Common Stock of Express
Capital outstanding as of the Closing Date. All restrictions on the sale or
transfer of Express Capital Common Stock by Messrs. Mathis or McAdam imposed
under the Lock-Up Agreements will expire on the date that is 180 days after the
Closing Date. Notwithstanding the foregoing, the restrictions on transfer will
not apply to bona fide gifts or transfers to family members of Messrs. Mathis or
McAdam, provided the recipient of such shares agrees to be bound by the terms of
the Stockholder Lock-Ups. Immediately after the consummation of the Merger,
Messrs. Mathis

29
<PAGE> 40

and McAdam will, in the aggregate, hold approximately 3% of the outstanding
Common Stock of Express Capital.

Indemnification Agreement

In connection with the Merger, GreyStone has agreed to indemnify, defend
and hold harmless, Mr. Mathis and his representatives from damages arising out
of (i) the issuance by GreyStone of any securities of GreyStone prior to the
Effective Date, (ii) any claims for rescission, breach of a representation or
warranty, fraud, and breach of contract in connection with the issuance of any
securities of GreyStone prior to the Effective Date, and (iii) any liability
imposed under federal or state securities laws in connection with the issuance
of any securities of GreyStone prior to the Effective Date.

Interests of Certain Persons in the Merger

Pursuant to the terms of the Merger Agreement, upon the consummation of the
Merger, the current directors and executive officers of GreyStone will become
the directors and executive officers of the surviving corporation. In addition,
immediately prior to the Effective Date, Messrs. Smith, Aldern and Reynolds, the
current directors of GreyStone, shall, effective upon the consummation of the
Merger, serve as the three directors of Express Capital. Also, Mr. Thomas King,
GreyStone's current Chief Financial Officer, will be appointed as the Chief
Financial Officer of Express Capital.

OTHER MATTERS RELATED TO THE MERGER

Amendment to Express Capital's Certificate of Incorporation and Bylaws

In connection with the Merger, Express Capital shall, prior to the
Effective Date, file the Express Capital Restated Certificate to (i) change its
name from "Express Capital Concepts, Inc." to "GreyStone Digital Technology,
Inc.," (ii) establish its authorized capital stock as 30,000,000 shares of
Common Stock, $.001 par value per share, and 3,000,000 shares of Preferred
Stock, $.001 par value per share, (iii) effect a 1-for-41.66667 reverse split of
its outstanding shares of Common Stock and (iv) establish a classified board of
directors. In addition, Express Capital will cause to be elected to the Express
Capital Board Messrs. Richard Smith, Thomas Aldern and Jon Reynolds, to be
effective immediately after the Effective Date. A copy of the Express Capital
Restated Certificate is set forth in its entirety as Appendix C. In addition,
immediately prior to the Effective Date, Express Capital will amend and restate
its bylaws as set forth in Appendix D.

General Release

Greystones' obligations to consummate the Merger are conditioned on Mr.
Mathis and Mr. Gary McAdam having agreed to release each of GreyStone, Express
Capital, Express Capital Sub, and such entities past, present and future
directors, officer, employees and agents from any past, present and future
claims, disputes or damages arising out of any matter existing on or prior to
the date of the release.

Additional Indemnity

In connection with the Merger, Earnest Mathis has agreed to indemnify
Express Capital, Greystone and their administrators, successors and assigns
against any damages arising out of certain sections of the registration
statement (the "Registration Statement"), of which this Proxy
Statement/Prospectus is a part. Similarly, Greystone has agreed to indemnify Mr.
Mathis and his heirs, administrators, successors and assigns against any damages
arising out of certain other sections of the Registration Statement or any
failure to deliver this Proxy Statement/Prospectus to any person.

Material Federal Income Tax Consequences

The following discussion summarizes the material federal income tax
consequences of the Merger that are generally applicable to holders of GreyStone
Common Stock. This discussion is based on currently existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
Treasury

30
<PAGE> 41

Regulations thereunder and current administrative rulings and court decisions,
all of which are subject to change. Any such change, which may or may not be
retroactive, could alter the tax consequences to the GreyStone shareholders, as
described herein.

GreyStone shareholders should be aware that this discussion does not deal
with all federal income tax considerations that may be relevant to particular
shareholders in light of their particular circumstances, such as shareholders
who are dealers in securities, banks or insurance companies, are subject to the
alternative minimum tax provisions of the Code, are foreign persons, are
tax-exempt entities, are taxpayers holding stock as part of a conversion,
straddle, hedge or other risk reduction transaction, or who acquired their
shares in connection with stock option or stock purchase plans or in other
compensatory transactions. In addition, the following discussion does not
address the tax consequences of the Merger under foreign, state or local tax
laws or the tax consequences of transactions effectuated prior to, concurrently
with or after the Merger (whether or not such transactions are in connection
with the Merger). ACCORDINGLY, ALL SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES OF THE MERGER TO THEM, INCLUDING
THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER
IN THEIR PARTICULAR CIRCUMSTANCES.

Neither Express Capital nor GreyStone has requested, or will request, a
ruling from the Internal Revenue Service ("IRS") with regard to any of the
federal income tax consequences of the Merger. It is the opinion of Mitchell
Silberberg & Knupp LLP, counsel to Express Capital ("Mitchell Silberberg") and
Cooley Godward LLP, counsel to GreyStone ("Cooley Godward"), that the Merger
will constitute a reorganization ("Reorganization") pursuant to Section 368(a)
of the Code (the "Tax Opinions"). The Tax Opinions are based on certain
assumptions, as well as representations received from GreyStone, Express
Capital, Express Capital Sub and certain shareholders of GreyStone and will be
subject to the limitations discussed below. Of particular importance are the
assumptions and representations relating to the "continuity of interest"
requirement discussed below. Moreover, the Tax Opinions will not be binding on
the IRS nor preclude the IRS from adopting a contrary position. The tax
description set forth below has been prepared and reviewed by Mitchell
Silberberg and Cooley Godward, and in their opinion, to the extent such
descriptions relates to statements of law, it is correct in all material
respects.

Subject to the limitations and qualifications referred to herein, and as a
result of the Merger's qualifying as a Reorganization, the following federal
income tax consequences should, under currently applicable law, result:

No gain or loss will be recognized for federal income tax purposes by the
holders of GreyStone Common Stock upon the receipt of Express Capital
Common Stock solely in exchange for such GreyStone Common Stock in the
Merger (except to the extent that cash is received pursuant to the exercise
of dissenters' rights).

The aggregate tax basis of the Express Capital Common Stock so received by
GreyStone shareholders in the Merger will be the same as the aggregate tax
basis of the GreyStone Common Stock surrendered in exchange therefor.

The holding period of the Express Capital Common Stock so received by each
GreyStone shareholder in the Merger will include the period for which the
GreyStone Common Stock surrendered in exchange therefor was considered to
be held, provided that the GreyStone Common Stock so surrendered is held as
a capital asset at the Effective Time of the Merger.

A holder of GreyStone Common Stock who exercises dissenters' rights with
respect to a share of GreyStone Common Stock and receives a cash payment
for such share generally should recognize capital gain or loss (if such
share was held as a capital asset at the Effective Time) measured by the
difference between the shareholder's basis in such share and the amount of
cash received, provided that such payment is not "essentially equivalent to
a dividend" within the meaning of Section 302 of the Code nor has the
effect of a distribution of a dividend within the meaning of Section
356(a)(2) of the Code after giving effect to the constructive ownership
rules of the Code (collectively, a "Dividend Equivalent

31
<PAGE> 42

Transaction"). A sale of shares pursuant to an exercise of dissenters'
rights generally will not be a Dividend Equivalent Transaction if, as a
result of such exercise, the shareholder exercising dissenters' rights owns
no shares of capital stock of the Surviving Corporation (either actually or
constructively within the meaning of Section 318 of the Code) immediately
after the Merger.

Neither Express Capital nor GreyStone will recognize gain solely as a
result of the Merger.

Characterizing the Merger as a Reorganization is dependent on certain
requirements. One key requirement is that there is a "continuity of interest"
with respect to the Merger Shares. Because the Merger Agreement was entered into
before the effective date of recent Treasury Regulations that relax the
continuity of interest requirement, the Merger must satisfy the more restrictive
requirements described below. In order for the continuity of interest
requirement to be met, shareholders of GreyStone must not, pursuant to a plan or
intent existing at or prior to the Effective Time of the Merger, dispose of so
much of (i) their GreyStone Common Stock in anticipation of the Merger, plus
(ii) the Express Capital Common Stock received in the Merger (collectively, the
"Planned Dispositions") such that the GreyStone shareholders, as a group, would
no longer have a "significant equity interest" in the GreyStone business being
conducted by the Surviving Corporation after the Merger. GreyStone shareholders
will generally be regarded as having a significant equity interest as long as
the Express Capital Common Stock received in the Merger (after taking into
account Planned Dispositions), in the aggregate, represents a "substantial
portion" of the entire consideration received by the GreyStone shareholders in
the Merger. This requirement is frequently referred to as the "continuity of
interest" requirement. If the continuity of interest requirement is not
satisfied, the Merger would not be treated as a Reorganization. The law is
unclear as to what constitutes a "significant equity interest" or a "substantial
portion." The IRS ruling guidelines require fifty percent (50%) continuity
(although such guidelines do not purport to represent the applicable substantive
law). Accordingly, certain GreyStone shareholders will be asked to execute and
deliver to GreyStone a continuity of interest certificate prior to the
consummation of the Merger. The continuity of interest certificates obtained
from such shareholders contemplate that the fifty percent (50%) standard will be
applied. No assurance, however, can be made that the "continuity of interest"
requirement will be satisfied, and if such requirement is not satisfied, the
Merger will not be treated as a Reorganization.

A successful IRS challenge to the Reorganization status of the Merger would
result in significant tax consequences. For example, (i) Greystone would
recognize a corporate level gain or loss on the deemed sale of all of its assets
equal to the difference between (A) the sum of the fair market value, as of the
Effective Time, of the Express Capital Common Stock issued in the Merger and the
amount of the liabilities of Greystone assumed by Express Capital in the Merger
and (B) Greystone's basis in such assets; and (ii) GreyStone shareholders would
recognize gain or loss with respect to each share of GreyStone Common Stock
surrendered equal to the difference between the shareholder's basis in such
share and the fair market value, as of the Effective Time, of the Express
Capital Common Stock received in exchange therefor. In such event, a
shareholder's aggregate basis in the Express Capital Common Stock so received
would equal its fair market value and the shareholder's holding period for such
stock would begin the day after the Merger is consummated.

Even if the Merger qualifies as a Reorganization, a recipient of Express
Capital Common Stock would recognize income to the extent that, for example, any
such shares were determined to have been received in exchange for services, to
satisfy obligations or in consideration for anything other than the GreyStone
Common Stock surrendered. Generally, such income is taxable as ordinary income
upon receipt. In addition, to the extent that GreyStone shareholders were
treated as receiving (directly or indirectly) consideration other than Express
Capital Common Stock in exchange for such shareholder's Common Stock, gain or
loss would have to be recognized.

THIS DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES OF THE MERGER TO HOLDERS
OF GREYSTONE WARRANTS AND OPTIONS, WHO, AS A RESULT OF THE MERGER, WILL RECEIVE
EXPRESS CAPITAL WARRANTS AND OPTIONS. HOLDERS OF SUCH SECURITIES SHOULD CONSULT
THEIR TAX ADVISORS WITH RESPECT TO SUCH TAX CONSEQUENCES.

32
<PAGE> 43

Dissenters' Rights

THE FOLLOWING SUMMARY OF DISSENTERS' RIGHTS UNDER CALIFORNIA LAW IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO CHAPTER 13 OF THE CGCL, THE COMPLETE
TEXT OF WHICH IS ATTACHED HERETO AS ANNEX E.

FAILURE TO STRICTLY FOLLOW THE PROCEDURES SET FORTH IN CHAPTER 13 OF THE
CGCL MAY RESULT IN THE LOSS, TERMINATION OR WAIVER OF DISSENTERS' RIGHTS. A
GREYSTONE SHAREHOLDER WHO FAILS TO SIGN AND RETURN A PROXY CARD DISAPPROVING AND
WITHHOLDING AUTHORIZATION FOR THE MERGER OR TO ATTEND THE GREYSTONE SPECIAL
MEETING AND VOTE HIS OR HER SHARES AGAINST THE MERGER WILL NOT HAVE A RIGHT TO
EXERCISE DISSENTERS' RIGHTS. A GREYSTONE SHAREHOLDER WHO DESIRES TO EXERCISE HIS
OR HER DISSENTERS' RIGHTS MUST ALSO SUBMIT A WRITTEN DEMAND FOR PAYMENT TO
GREYSTONE BEFORE THE DATE OF THE GREYSTONE SPECIAL MEETING.

Under Chapter 13 of the CGCL, each GreyStone shareholder as of the Record
Date who votes against the Merger and who submits a written demand for payment
to GreyStone prior to the date of the GreyStone Special Meeting is entitled to
receive payment of the fair value of all or any portion of such holder's shares
of GreyStone Common Stock owned by such holder if the Merger is consummated. The
fair value of such shares is determined as of August 10, 1997, the last day
before the first announcement of the terms of the Merger. Any GreyStone
shareholder who elects to perfect such holder's dissenters' rights and demands
payment of the fair value of such holder's shares must strictly comply with
Chapter 13 of the CGCL. The following summary does not purport to be complete
and is qualified in its entirety by reference to Chapter 13 of the CGCL, the
text of which is attached hereto as Annex E and is incorporated herein by
reference. Any holder of shares of GreyStone Common Stock considering demanding
dissenters' rights is advised to consult legal counsel. Dissenters' rights will
not be available unless and until the Merger (or a similar business combination)
is consummated.

TO PERFECT THE RIGHT TO DISSENT AND RECEIVE THE FAIR VALUE OF SUCH HOLDER'S
SHARES, A GREYSTONE SHAREHOLDER MUST VOTE AGAINST THE MERGER.

Prior to the date set for approval of the Merger, each GreyStone
shareholder who elects to exercise his or her dissenters' rights must make a
written demand upon GreyStone for the purchase of his or her GreyStone shares.
The GreyStone shareholder's demand must state the number and class of shares
held of record by the GreyStone shareholder which the GreyStone shareholder
demands that GreyStone purchase, as well as a statement by the GreyStone
shareholder as to what such holder claims the fair market value of such shares
was as of the day prior to the announcement of the Merger. The statement of fair
market value constitutes an offer by the GreyStone shareholder to sell the
shares at such price. Voting against the Merger shall not constitute such
written demand.

Within 10 days after the date of approval of the Merger, GreyStone will
mail to each GreyStone shareholder who did not vote in favor of the Merger
notice (the "GreyStone Notice") of the approval of the Merger by the GreyStone
shareholders, accompanied by a copy of Sections 1300 through 1304 of the CGCL.
The GreyStone Notice shall also state the price determined by GreyStone to be
the fair market value of shares of GreyStone Common Stock with respect to which
dissenters' rights are properly exercised under the CGCL ("GreyStone Dissenting
Shares") and a brief description of the procedure to be followed by a
shareholder who elects to dissent.

Within the 30-day period following the mailing of the GreyStone Notice, the
dissenting shareholder must submit to GreyStone for endorsement certificates for
any shares which the GreyStone shareholder demands that GreyStone purchase. If
GreyStone and the GreyStone shareholder agree upon the price of the GreyStone
Dissenting Shares, the dissenting GreyStone shareholder is entitled to the
agreed price with interest at the legal rate on judgments from the date of such
agreement. Payment must be made within 30 days of the later of the date of the
agreement between the GreyStone shareholder and GreyStone or the date the
contractual conditions to the Merger are satisfied or waived.

33
<PAGE> 44

If GreyStone and the GreyStone shareholder cannot agree as to the fair
market value or as to the fact that such shares are GreyStone Dissenting Shares,
such GreyStone shareholder may file within six months of the date of mailing of
the GreyStone Notice a complaint with the California Superior Court for the
County of San Diego demanding judicial determination of such matters. GreyStone
will then be required to make any payments in accordance with such judicial
determination. If the complaint is not filed within the specified six-month
period, the GreyStone shareholder's rights as a dissenter are lost.

GreyStone Dissenting Shares lose their status as such if (i) GreyStone
abandons the Merger; (ii) the shares are transferred prior to submission for
endorsement or are surrendered for conversion into shares of another class in
accordance with the Articles of Incorporation; (iii) the GreyStone shareholder
and GreyStone do not agree as to the fair market value of such shares and a
complaint is not filed within six months of the date that the GreyStone Notice
was mailed; or (iv) the dissenting GreyStone shareholder withdraws, with the
consent of GreyStone, his or her demand for purchase of such shares.

IT IS A CONDITION TO GREYSTONE'S OBLIGATIONS TO CONSUMMATE THE MERGER THAT THE
HOLDERS OF NO MORE THAN 1% OF THE OUTSTANDING SHARES OF GREYSTONE COMMON STOCK
ARE ENTITLED TO DISSENTERS' RIGHTS. If demands for payment are made with respect
to more than one percent (1%) of the outstanding shares of GreyStone Common
Stock, and, as a consequence more than one percent (1%) of the shareholders of
GreyStone become entitled to exercise dissenters' rights, then GreyStone will
not be obligated to consummate the Merger.

Restrictions on Resales Of Express Capital Common Stock by GreyStone
Shareholders

The Merger Shares to be issued to the GreyStone shareholders in the Merger
will have been registered under the Securities Act pursuant to the Registration
Statement, thereby allowing such shares to be freely traded without restriction,
except that any Merger Shares received by GreyStone shareholders who are deemed
to be "affiliates" (as such term is defined under the Securities Act) of
GreyStone prior to the Merger or Express Capital after the Merger may be sold by
them only in transactions permitted by the resale provisions of Rule 145 under
the Securities Act with respect to affiliates of GreyStone or Rule 144 under the
Securities Act with respect to affiliates of Express Capital. Generally, under
Rule 145, for one year following the Effective Time, an affiliate (together with
certain related persons) would be entitled to sell shares of Express Capital
Common Stock acquired in connection with the Merger only through unsolicited
"brokers' transactions" or in transactions directly with a "market maker," as
such terms are defined in Rule 145. Additionally, the number of shares to be
sold by an affiliate (together with certain related persons and persons acting
in concert) within any three-month period for purposes of Rule 145 may not
exceed the greater of 1% of the outstanding shares of Express Capital Common
Stock or the average weekly trading volume of such stock during the four
calendar weeks preceding such sale. Rule 145 would only remain available,
however, to affiliates if Express Capital remained current with its
informational filings under the Exchange Act. One year after the Effective Time,
an affiliate would be able to sell such Express Capital Common Stock without
such manner of sale or volume limitations provided that Express Capital was
current with its Exchange Act informational filings and such affiliate was not
then an affiliate of Express Capital. Two years after the Effective Time, an
affiliate would be able to sell such shares of Express Capital Common Stock
without any restrictions so long as such affiliate had not been an affiliate of
Express Capital for at least three months prior thereto.

Accounting Treatment

For accounting purposes, the Merger will be treated as a purchase of
Express Capital by GreyStone since the holders of GreyStone Common Stock will
hold and have voting power with respect to approximately 97% of the total issued
and outstanding voting capital stock of Express Capital immediately following
the Merger.

Regulatory Approvals

Neither Express Capital nor GreyStone is aware of any governmental
regulatory approvals required to be obtained with respect to the consummation of
the Merger, except for the filing of the Certificate of Merger

34
<PAGE> 45

with the offices of the Secretaries of State of the States of Delaware and
California, the filing with the Commission of the Registration Statement on Form
S-4 registering the Merger Shares and this Proxy Statement/Prospectus which
constitutes a part thereof, and compliance with all applicable state securities
laws regarding the offering and issuance of the Merger Shares.

Exchange Procedures

Unless otherwise designated by a GreyStone shareholder on the transmittal
letter, certificates representing shares of Express Capital Common Stock issued
to GreyStone shareholders in connection with the Merger will be issued and
delivered to the tendering GreyStone shareholder at the address on record with
GreyStone. In the event of a transfer of ownership of shares of GreyStone Common
Stock represented by certificates that are not registered in the transfer
records of GreyStone, the Merger consideration may be issued to a transferee if
such certificates are delivered to the Exchange Agent, accompanied by all
documents required to evidence such transfer and by evidence satisfactory to the
Exchange Agent that any applicable stock transfer taxes have been paid. If any
certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such certificate to be
lost, mislaid or destroyed, (ii) such bond, security or indemnity as the
surviving corporation and the Exchange Agent may reasonably require and (iii)
any other documents necessary to evidence and effect the bona fide exchange
thereof, the Exchange Agent shall issue to such holder the Merger consideration
into which the shares represented by such lost, stolen, mislaid or destroyed
certificate shall have been converted. Any other provision of the Merger
Agreement notwithstanding, neither Express Capital, GreyStone, the surviving
corporation nor the Exchange Agent shall be liable to a holder of GreyStone
Common Stock for any amounts paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property law. Adoption of
the Merger Agreement by the GreyStone shareholders shall constitute ratification
of the appointment of the Exchange Agent.

After the Effective Time, holders of certificates will have no rights with
respect to the shares of GreyStone Common Stock represented thereby other than
the right to surrender such certificates and receive in exchange therefor the
shares of Express Capital Common Stock to which such holders are entitled, as
described above.

35
<PAGE> 46

GREYSTONE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Except for the historical information contained herein, the following
contains forward-looking statements that involve risks and uncertainties.
GreyStone will be the accounting acquiror upon consummation of the Merger.
GreyStone's (and consequently, the surviving corporation's) actual results in
future periods could differ materially from those discussed here. Factors that
could cause or contribute to such differences, include, but are not limited to,
those discussed in "GreyStone Business" and "Risk Factors," as well as those
discussed elsewhere in this Proxy Statement/Prospectus and any document
incorporated herein by reference. Also see GreyStone's Financial Statements
included herein.

GreyStone (the "Company") designs, develops and markets real-time,
interactive, and networked three dimensional, software ("software"). The Company
develops and delivers its 3-D software principally for entertainment and defense
(i.e., training and simulation) applications. It is now seeking to market
entertainment products through its Commercial Business Unit. The Company applies
its skills and experience in using real-time distributed and networked
interactivity, 3-D graphics, artificial intelligence and physics-based
behavioral modeling to create software which enables participants to interact
realistically in a simulated environment. The same skills can be applied to
create interactive products for education/edutainment, medicine and
transportation.

The Company's operations are divided into two business units utilizing
similar technology -- the Government Business Unit and the Commercial Business
Unit. Since the Company commenced business in 1989 and continuing through the
fiscal year ending March 31, 1993, the Company earned all of its revenues from
work performed on government contracts. During the fiscal year ending March 31,
1994, the Company's Commercial Business Unit began to apply its technical
expertise and knowledge to the development of products and services suited to
commercial application and uses in order for the Company to achieve greater size
and growth. As of March 31, 1998, the Company's Commercial Business Unit has
generated revenues in the amount of approximately $796,000. The Company has
suffered losses every year since 1993. As of June 30, 1998, the Company had an
accumulated deficit of $28,022,060. The Company's losses have resulted
principally from costs incurred in developing the Company's products and from
general and administrative expenses associated with the Company's operations.
The Company expects to incur additional losses over the next few years as it
develops its Commercial Business Unit.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTH PERIOD ENDED JUNE 30, 1998 TO THE THREE MONTH
PERIOD ENDED JUNE 30, 1997

Revenues for the three months ended June 30, 1998 were $509,715 as compared
to $312,751 reported for the same three month period in 1997 an increase of
$196,964, or 63%. All revenues were generated by the Government Business Unit.
The increase is primarily the result of our continued work on larger, longer
term contracts with the Defense Advanced Research Products Agency and the Space
and Naval Warfare Systems Center.

Costs of revenues, as percentage of total revenues, was approximately 80%
for the three months ended June 30, 1998, compared to 122% for the same period
in 1996. The decrease is primarily the result of both the larger contract base
and dedicating certain engineers to work exclusively on the direct-charge
projects for the customers named above.

Marketing and sales expense of $140,965 for the three months ended June 30,
1998 changed immaterially from the same period in the prior year. The marketing
and sales expense includes expenses associated with the Company's Government
Business Unit bid and proposal effort, as well as expenses incurred in the
pre-sale effort in the XS-G(TM) Commercial Business Unit entertainment product.

Research and development ("R&D") expense decreased to $223,271 for the
three months ended June 30, 1998, compared to $444,478 for the same period in
1997. The approximate 50% decrease reflects the

36
<PAGE> 47

progress of the development of XS-G game, emphasis shifting from heavy software
and hardware development to field testing and software fine-tuning.

General and administrative expenses were $527,902 for the three months
ended June 30, 1998, compared to $328,706 for the same period in 1997, an
increase of $199,196 reflecting the temporary delay in Government field exercise
support requirements. Personnel and overhead costs for this activity are
required for subsequent exercises but are classified as administrative expense
for this three month period.

Interest expense was $12,770 for the three months ended June 30, 1998,
compared to $118,746 for the same three month period in 1997. The decrease in
interest expense reflects the conversion of certain indebtedness of the Company
to equity of the Company during the period from July 1, 1997 to June 30, 1998.

COMPARISON OF THE TWELVE MONTH PERIOD ENDED MARCH 31, 1998 TO THE TWELVE MONTH
PERIOD ENDED MARCH 31, 1997

Revenues for the twelve months ended March 31, 1998 were $2,112,566 as
compared to $2,336,371 for the same twelve month period in 1997. During the
twelve month period ended March 31, 1998, revenues generated by the Government
Business Unit increased by $154,195, while revenues generated by the Commercial
Business Unit declined by $378,000. The increase in the Government Business Unit
is primarily due to the addition of the Navy's Joint Countermine Operational
Simulation (JCOS) Program to the Company's revenue base. The market for
entertainment systems which run on high-end image generator computer systems
(such as MagBall) shifted in anticipation of the increased capabilities of the
personal computer and Intel's proposal for the personal computer to be the base
platform for the arcade market. As such, the Company has been developing a lower
cost commercial product to take advantage of these improvements in hardware and
firmware and has incorporated them in its latest product, XS-G.

Cost of revenues decreased to $1,449,713 for the twelve months ended March
31, 1998, compared to $2,189,373 for the previous twelve months period. All
costs of revenues for the year ended March 31, 1998 are attributable only to the
Government Business Unit. As a percentage of revenues, this equates to 69% in
1998, compared to 94% for the same period in 1997. For the year ended March 31,
1998 overhead costs attributable to the Commercial Business Unit are included as
part of general and administrative expenses, since the Commercial Business Unit
did not sell any products during the year.

Marketing and sales expenses were $743,866 for the twelve months ended
March 31, 1998, compared to $720,213 for the same twelve month period in 1997.
The expenses reflect the continued effort by the Government Business Unit in
seeking additional awards as well as costs incurred by the Commercial Business
Unit of attending trade shows to demonstrate the new XS-G game title.

R&D expenses declined by 12% to $1,742,018 for the twelve months ended
March 31, 1998 as compared to $1,978,505 for the same twelve month period in
1997. The decline of R&D expenses was in both the Government Business Unit and
Commercial Business Unit. In the Government Business Unit, the decline was the
result of the Government Business Unit focusing its efforts on several bid and
proposal efforts and increasing contract work. R&D expenses in the Commercial
Business Unit were higher in the previous year as a result of expenses incurred
in developing the Andromeda platform and MagBall game versus the expenses
incurred on developing the XS-G game in the current reporting period.

General and administrative expenses declined 19% to $1,230,889 for the
twelve months ended March 31, 1998 compared to $1,519,670 for the same twelve
month period in 1997, a decline of $288,781. General and administrative expense
reductions were achieved primarily through a decline in the average number of
employees from 53 to 45 during the twelve month period ended March 31, 1998,
lower facility rent and lower depreciation and consulting fees.

Interest expense was $201,941 for the twelve months ended March 31, 1998
compared to $615,240 for the same twelve month period in 1997, a decline of
$413,299 or 67% and reflects the conversion of Company debt to equity.

37
<PAGE> 48

COMPARISON OF THE TWELVE MONTH PERIOD ENDED MARCH 31, 1997 TO THE TWELVE MONTH
PERIOD ENDED MARCH 31, 1996

Revenues for the twelve months ended March 31, 1997 were $2,336,371 as
compared to $2,065,260 for the same twelve month period in 1996. The increase in
revenue between the two periods was primarily the result of the sale of the
first three MagBall systems by the Commercial Business Unit to DisneyWorld in
Orlando, Florida, the Monte Carlo Resort and Casino in Las Vegas, Nevada and the
XS Center (Skyline Entertainment) in Times Square, in New York, New York.

Costs of revenues increased approximately 56% to $2,189,373 for the twelve
months ended March 31, 1997, compared to $1,404,976 for the previous twelve
month period and these costs relate to both the Government and Commercial SBU.
In the period ended March 31, 1997, Commercial Business Unit overhead costs are
included as part of the cost of revenues, since products were produced and sold
by the Commercial Business Unit during the year. In the twelve month period
ended March 31, 1997, Commercial Business Unit overhead costs were included as
part of general and administrative expenses, as no products were sold by the
Commercial Business Unit during such period.

Marketing and sales expenses were $720,213 for the twelve months ended
March 31, 1997, compared to $663,373 for the same twelve month period in 1996.
The increase in expenses reflect the increased activity on several initiatives
by the Government Business Unit.

R&D expenses declined by approximately 37% to $1,978,505 for the twelve
months ended March 31, 1997, as compared to $3,146,960 for the same twelve month
period in 1996. The decline is attributable to the completion of a major
rehosting effort by the Commercial Business Unit.

General and administrative costs declined approximately 50% to $1,519,670
for the twelve months ended March 31, 1997 compared to $3,040,119 for the same
twelve month period in 1996. The decline was primarily the result of a
reallocation of overhead costs out of the general and administrative category
and into the Cost of revenues, to coincide with the sale of the first three
MagBall systems during the period ended March 31, 1997. Additionally, General
and Administrative expense reductions have been achieved through a decline in
the number of employees and cost reductions have been made in non-labor areas
such as rent and professional services.

Interest expense was $615,240 for the twelve months ended March 31, 1997
compared to $507,518 for the same twelve month period in 1996, an increase of
$107,722 or 21% and is attributable to increased debt incurred by the Company
during the twelve month period ended March 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred losses in each fiscal year and interim period
since 1993, and as of June 30, 1998, the Company had an accumulated deficit of
$28,022,060. Also as of June 30, 1998, the Company had no cash or cash
equivalents. The only current asset of the Company at June 30, 1998 was accounts
receivable of $241,641. At June 30, 1998, the Company had a working capital
deficiency of $2,504,987. The Company has yet to generate any significant
revenue and cannot anticipate when it will be able to generate any significant
revenue in the future, if at all. There can be no assurance that the Company
will ever become profitable. As a result, J.H. Cohn LLP, the Company's
independent public accountants, have included a statement in their audit report
for the fiscal year ended March 31, 1998 emphasizing that there is substantial
doubt about the Company's ability to continue as a going concern. See "Report of
Independent Public Accountants" included in this Proxy Statement/Prospectus.

Since the Company was founded, management has focused on the goal of
developing and making available software products, utilizing the same basic
technology, for both the government and commercial markets. Although GreyStone
has consistently generated revenues from its government business since 1993, it
has generated substantial net losses and negative cash flows from its operating
activities. Accordingly, it has constantly needed to obtain debt and/or equity
financing on a private basis to enable it to develop a potentially successful
commercial product. The Company raised approximately $60,000 in the three months
ended June 30, 1998 and $3,153,000, $4,232,000 and $1,827,000 in the fiscal
years ended March 31, 1998, 1997 and
38
<PAGE> 49

1996, respectively, from sales of common stock. The proceeds were used primarily
to fund cash flows used in operating activities of approximately $363,000 in the
three months ended June 30, 1998 and $3,221,000, $4,157,000 and $4,810,000 in
the fiscal years ended March 31, 1998, 1997 and 1996, respectively.

The development of the Company's commercial entertainment
product -- XS-G(TM) -- is substantially complete. The product has been
field-tested and it is ready for market introduction. Management expects that
the first revenues from continuing sales of XS-G(TM) will begin in the third
quarter of the fiscal year ending March 31, 1999. As a result of the completion
of the development of this product, the Company was able to reduce expenditures
for R&D by 50% for the three months ended June 30, 1998.

Management also believes that the government contract business provides the
Company with the potential for significant growth in its revenues during at
least the twelve month period subsequent to June 30, 1998. The Company's
existing government product -- RAGE(TM) -- continues to generate new contract
business. The Company recently submitted a proposal in response to a U.S.
Government non-competitive contract to GreyStone in support of the Virtual
Airborne Reconnaissance Low Program. This effort, which uses the Company's
RAGE(TM) product as the core, will provide high fidelity mission payload
simulation to the actual aircraft hardware/software systems. On September 30,
1998, the Company was awarded an approximate $1,300,000 contract and has
commenced work on the program.

With the completion of its first PC-based entertainment product, the
Company has software products available for sale by both the government and
entertainment units. The Company's management believes that this is a
significant milestone and, importantly, that the prediction by many analysts
that both of these markets will grow significantly over the next several years
is accurate. With the development of XS-G(TM), the Company's management has
shifted its strategy away from R&D and product development to revenue generation
through the sale of its primary software products to the government and digital
entertainment markets. Therefore, management believes that R&D expenses, which
totaled approximately $223,000 and $444,000 in the three months ended June 30,
1998 and 1997 and $1,742,000, $1,979,000 and $3,147,000 in the fiscal years
ended March 31, 1998, 1997 and 1996, respectively, will stabilize during at
least the twelve month period subsequent to June 30, 1998. Management also
believes that those expenditures, which were a significant component of the
Company's net losses and cash flows used in operating activities during those
periods, were an important investment that could generate future profits and
cash flows for the Company.

Management projects that, after taking into account the aforementioned
reduction in R&D expenditures, the Company will need approximately $3,500,000 to
fund its operations during the twelve month period subsequent to June 30, 1998.
Management believes, but cannot assure, that the Company will be able to obtain
such resources through a combination of increased sales from its government and
entertainment products reductions of expenditures and debt or equity financing.

Management believes that sales will increase as a result of new contracts
for its government products, the introduction of its new entertainment product,
the overall growth in the related market for such products and the greater
recognition that the Company will achieve if the Merger is consummated and the
shares of the merged company are publicly traded. However, as explained above,
management also believes that the Company will still incur losses and negative
cash flows from operating activities through at least June 30, 1999.
Accordingly, the Company will need immediate debt and/or equity financing
through private placements and/or public offerings in order to meet its
obligations and continue as a going concern. Based on discussions it has had
with investment bankers and other potential investors, management believes the
potential for the growth in the Company's sales and the possibility that the
Company's shares will become publicly traded will enhance the Company's ability
to consummate a private or public offering of the Company's debt or equity
securities. Accordingly, management believes, but cannot assure, that the
Company will be able to obtain the additional debt and/or equity financing to
enable it to continue to operate through at least June 30, 1999.

NEW ACCOUNTING STANDARDS

During June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("State-
39
<PAGE> 50

ment 131"), which is effective for financial statements with fiscal years
beginning after December 15, 1997. The new standard requires that public
business enterprises report certain information about operating segments in
complete sets of financial statements of the enterprise and, after
implementation for the first fiscal year, in condensed financial statements of
interim periods issued to stockholders. It also requires that public business
enterprises report certain information about their products and services, the
geographic areas in which they operate and their major customers. Management is
in the process of evaluating whether Statement 131 will require the Company to
make any additional disclosures.

YEAR 2000 COMPLIANCE

GreyStone's State of Readiness

Since the Year 2000 problem emerged, GreyStone has taken steps to prepare
both its IT and non-IT systems for the Year 2000. GreyStone has focused its
efforts on updating its Government and Commercial software products to become
Year 2000 compliant. Its software products (RAGE(TM) and XS-G(TM)) have been
updated and tested for Year 2000 compliance and are thought to be compliant.
GreyStone applied the U.S. Air Force's Year 2000 compliance checklist to the
RAGE software product in March 1998. The three uncertain or non-compliant
features which were identified as a result of the process have since been fixed
or established to GreyStone's satisfaction to be compliant. Even though
GreyStone's XS-G 3-D interactive entertainment software game does not have any
date dependencies, the software has been tested and performs without problem
when computer dates are accelerated through the year 2000 change.

GreyStone has also focused its efforts on preparing its internal operations
for the Year 2000. GreyStone has assessed the degree to which it may be affected
by third-parties' Year 2000 issues and has taken steps to minimize the impact
that third-parties' Year 2000 problems will have on GreyStone. GreyStone has
implemented compliant versions of payroll and general accounting software and
has received certifications of compliance from the third party vendors of the
software. GreyStone has completed its evaluation of the internal computer
systems and software being used to support Company operations. The results
indicate that voice mail and internal computer hardware upgrades will be
required for those components whose manufacturers cannot or will not certify the
items to be Year 2000 compliant.

The Costs to Address GreyStone's Year 2000 Issues

To date, GreyStone has incurred no costs outside of labor overhead costs to
evaluate its compliance status in addressing Year 2000 issues.

40
<PAGE> 51

the future. Such costs do not include normal system upgrades and replacements,
as the systems being replaced will be close to their scheduled replacement
dates.

The Risks of GreyStone's Year 2000 Issues

GreyStone's Contingency Plans

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

The matters discussed in this Proxy Statement/Prospectus include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements other than the statements of historical facts
included in the Proxy Statement/Prospectus, including, without limitation,
statements regarding the Company's stock and financing alternatives, stock and
financial position, business strategy, plans and objectives of management of the
Company for future operations, and industry conditions, are considered
forward-looking statements. Although the Company believes that the expectations
reflected in any such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Any forward-
looking statements herein, are subject to certain risks and uncertainties in the
Company's business, including but not limited to, intense competition in its
markets, the absence of assurance of strategic and financing alternatives, and
its reliance on certain key customers, all of which may be beyond the control of
the Company. Any one or more of these factors could cause actual results to
differ materially from those expressed in any forward-looking statement. All
subsequent written and oral forward-looking statements attributable to the
Company or any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements disclosed in this paragraph and otherwise
in this Proxy Statement/Prospectus.

41
<PAGE> 52

GREYSTONE BUSINESS

AVAILABLE INFORMATION

GreyStone is not and, until the effectiveness of the Registration Statement
(as defined below), Express Capital was not, subject to the reporting
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, and, therefore, do not file reports, proxy statements or other
information with the Commission. Under the rules and regulations of the
Commission, the solicitation of proxies from the shareholders of GreyStone to
approve the Merger constitutes an offering of Express Capital Common Stock to be
issued in connection with the Merger. Accordingly, Express Capital has filed
with the Commission a Registration Statement on Form S-4 under the Securities
Act, with respect to such offering (as amended from time to time, the
"Registration Statement"). This Proxy Statement/Prospectus constitutes the
prospectus of Express Capital that is filed as part of the Registration
Statement in accordance with the rules and regulations of the Commission. Copies
of the Registration Statement, including the exhibits to the Registration
Statement and other material that is not included herein, may be inspected,
without charge, at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and may be
available at the following Regional Offices of the Commission: Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
7 World Trade Center, New York, New York 10048. Copies of such materials may be
obtained at prescribed rates from the Public Reference Section of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549. Information on
the operation of the Public Reference Room may be obtained by calling the
Commission at 1-800-SEC-0330. In addition, the Commission maintains a site on
the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.

COMPANY OVERVIEW

GreyStone creates real-time, interactive, and networked 3-D software and
simulations which it markets principally to customers in the defense and
entertainment markets. GreyStone also provides its customers with supporting
engineering services. GreyStone applies its proprietary core technologies,
skills, and experience to create software that enables participants to interact
in real-time within a simulated digital environment.

GreyStone commenced business in San Diego in 1989 in order to provide the
United States military and certain contractors with software and engineering
services for applications in highly advanced military hardware (fighting
aircraft, missiles, ships, and vehicles) and training simulators. GreyStone's
defense customers include the U.S. Navy, Army and Air Force, Lockheed Martin,
Logicon, Hughes Aircraft, and the Defense Advanced Research Projects Agency
(DARPA), and others. These customers use GreyStone's products and services in
aerial, mechanized, and naval combat, electronic warfare, mission planning and
support, training, battlefield command, control, communications, computers, and
intelligence ("C4I"), and unmanned aerial vehicles ("UAV").

In 1994, GreyStone initiated a long-term program to develop multi-player
real-time, interactive, and networked 3-D entertainment content ("Titles") for
the next generation of high-end 3-D multimedia home-based personal computers
("PCs") and for new PC-based open arcade architecture amusement machines
("OA3Ms"). During the summer of 1998, GreyStone test marketed its first PC
entertainment Title, XS-G(TM), to sell to the PC-based entertainment market.
GreyStone intends to license XS-G and to create new Titles for play upon a
growing installed base of OA3Ms and PCs.

Primary Markets for Products

GreyStone develops and markets products in two markets. The second market
is the defense market, where GreyStone develops products for use in combat and
training simulations and provides support services to help contain the costs and
increase the effectiveness of defense and defense preparation. The first market
is the home-based PC and open arcade entertainment market.

42
<PAGE> 53

Defense Market: The U.S. Government uses increasing amounts of defense
simulation technology for training, command, and control in order to contain or
reduce its budgeted expenditures for defense while maintaining force readiness.
The Government projects multi-billion dollar annual expenditures for software-
based modeling and simulation and for battlefield ("C4I") while demanding more
commercial off-the-shelf ("COTS") products that are adaptable to specific
requirements.

Defense Products: GreyStone's defense products are applied to some of the
world's most advanced military hardware and training simulators for aerial
combat, combat simulation, electronic warfare, mission planning and support,
battlefield C4I, and unmanned aerial vehicles (UAVs). Military personnel use
GreyStone's Real-time Advanced Graphics Environment COTS product, RAGE(TM), to
realistically reproduce combat scenarios in a modern and dynamic theatre of
operations ("Battlespace"). The U.S. Government uses RAGE in command centers at
locations throughout the world to visualize and distribute, in real-time,
information regarding battlefield situations and conditions. GreyStone's
AML-90(TM) COTS product is advanced flight simulation software used to train
military pilots for fighter aircraft combat. In addition GreyStone provides, on
a contract basis, sophisticated engineering and software development services to
the military and its contractors.

Entertainment Market: GreyStone has developed entertainment software that
displays and uses the capability of Intel's most advanced microprocessors and PC
architecture. GreyStone intends to sell new content to a growing number of
out-of-home entertainment locations using powerful new PC based OA3Ms that
improve industry economics. GreyStone also intends to sell its content to
customers who want to use advanced PCs with multimedia capabilities for
home-based entertainment. GreyStone recently test-marketed in several different
locations its first game, called XS-G, for play on new PC-based OA3Ms. GreyStone
is pleased with XS-G's performance at the locations where distributors have
placed and tested the game. GreyStone intends to distribute XS-G as rapidly as
possible. Rapid distribution of XS-G will require additional funding to build
and distribute the new OA3Ms. In addition GreyStone intends to sell its new
digital entertainment content to customers based at home who want to use the
full capability of the most advanced PCs.

Entertainment Strategy

GreyStone intends to provide superior digital entertainment products for a
rapidly growing population of devices having advanced PC capabilities. GreyStone
expects that PC population to become an established and substantial global
market for GreyStone's software. GreyStone has developed software for use in
location-based entertainment centers and for use in the home. The entertainment
centers targeted for GreyStone's content range from large destination-based
entertainment centers, such as theme and amusement parks, to smaller sites, such
as family, urban and location-based entertainment centers, sports bars, and
casinos. The multi-billion dollar digital entertainment market includes both
out-of-home and in-home software customers.

GreyStone intends to adapt its out-of-home entertainment Titles to play
upon new digital home entertainment devices. These devices include affordable
powerful 3-D PCs able to support sophisticated real-time, networked 3-D
software. The growing presence of these powerful new PC-based devices has
created the opportunity for GreyStone to exploit its advanced knowledge and
experience in creating real-time, interactive and networked 3-D software gained
from its history of developing defense applications.

Entertainment Products

GreyStone's digital entertainment content features new kinds of interactive
sports, high-energy, fast-paced, competitive "adrenaline" experiences, and
exploration-adventure type games. GreyStone is developing software products to
satisfy a demand for exciting new forms of attractions that promote social
interaction, while appealing to both genders and a broad range of age groups.
GreyStone believes that developing its entertainment software products for play
in entertainment centers as well as for the in-home entertainment market will
generate broad consumer awareness and enthusiasm for GreyStone's games and will
stimulate demand for GreyStone's software in both entertainment markets.

43
<PAGE> 54

GreyStone is a founding member of Intel's Open Arcade Architecture Forum
("OAAF"), which Intel formed to create a PC reference platform for game arcades,
location-based entertainment, and high-end visual entertainment for the home. In
1998 the price of PCs capable of supporting GreyStone's sophisticated software
declined to a level that enabled GreyStone to provide high-quality entertainment
content at prices competitive with established PC-based entertainment products.
GreyStone test marketed its first PC-based game, XS-G, during the summer of 1998
with Dynamo Ltd., Sega Gameworks, and Betson Enterprises, the industry's largest
amusement machine distributor. The OA3Ms with XS-G were test marketed at
different types of locations in California, Texas, Nevada, and New Jersey.

Entertainment Product Development

GreyStone began to develop entertainment software products in 1993 as a
response to requests from companies who learned of GreyStone's simulations for
defense and asked GreyStone to build high-quality, real-time 3-D demonstrations
and promotions for commercial purposes. These simulations could only run, at
that time, on very costly and powerful graphics oriented workstations.

As promotions and creations for commercial clients GreyStone developed and
demonstrated the following entertainment products:

For Chameleon Technologies' two-person theme park machine;

- "CHAMELEON 500" 1993 car racing experience debut at the 1993 Indianapolis
500 race

- "THUNDERBOLT" 1993 flying experience debut at Boston Museum of Technology

- "LABYRINTH RANGERS" 1993 fantasy experience debut at Disney Pleasure
Island for AT&T promotion

For Hiram Walker's Cutty Sark Scots Whisky;

- "VIRTUAL VOYAGE" 1994 sailing experience (received 1995 Interactive Media
and Marketing Award).

With Silicon Graphics;

- "THE PTERANODON" 1993 fantasy flying ride experience debut at 1993
SIGGRAPH Convention (nominated for 1994 Computer World/Smithsonian award
for Media, Arts and Entertainment).

For GreyStone's own market and technical research and development;

- STARBRIGHT Pediatric Network used in UCLA Medical Center's Pediatric Pain
Management program.
Exhibited at opening of "Jurassic park the Ride" attraction in 1996.

- "MAGBALL(R)" 1995 3-D multi-player sports game that combines ice hockey
and futuristic bumper cars. The CyberEdge Journal nominated MagBall as
"Virtual Reality Product of the Year". GreyStone sold MagBall Systems to
Disney World in Orlando, Florida, to Monte Carlo Resort and Casino in Las
Vegas, Nevada, and to the XS New York entertainment center located at
Times Square in New York City. GreyStone used powerful and costly
graphics oriented computers to support the MagBall system until Intel
architecture-based platforms became available capable of supporting high
quality graphics.

For Intel Corp.;

- "CANYON RUNNER" 1997 armed aircraft multi-player chase experience;
Pentium II supported demonstration at 1997 Computer Game Developers
Conference ("CGDC"). At the CGDC Intel announced hardware specifications
for coin-operated video games based on the Pentium II, and used
GreyStone's Canyon Runner to demonstrate the capabilities of the Pentium
II processor.

Following the CGDC, Intel asked GreyStone to demonstrate its software in
Intel's booth at the Electronic Entertainment Expo ("E3") in June 1997. At E3
GreyStone revealed an early segment of XS-G,

44
<PAGE> 55

an interactive game that evolved from Canyon Runner. GreyStone's proprietary
simulation architecture, GreySim(TM), drives XS-G. GreySim permits GreyStone to
develop software across a wide range of platforms for both Commercial and
Government business use. The GreySim foundation permits broad re-use of code and
shortens development time, and thus, time to market. The use of GreySim also
ensures that software developed on top of the GreySim foundation will operate
seamlessly with a variety of computers and peripheral devices, and readily take
advantage of the increases in performance of newer equipment.

The latest Intel architecture-based platforms makes it possible for
real-time 3-D entertainment content developers, like GreyStone, to create
affordable arcade titles that leverage the power and graphics capability of the
Pentium II while benefiting from the common hardware and software infrastructure
that reaches all the way to the in-home market. The Company believes that this
recent improvement in hardware performance enables a rapid transfer of high-end
arcade software onto the latest home computers and with the use of GreySim, will
reduce the time and cost of new content development for GreyStone.

Immediately following E3, Intel initiated the OAAF to encourage the
development of hardware and software based on an open architecture PC reference
platform, for game arcades, location-based entertainment, and high-end visual
entertainment for the home. Among the stated objectives of the OAAF are the
promotion of market development in the areas of arcade, location-based
entertainment, and high-end home entertainment, thus enlarging the customer
bases in each of these areas; and the growth of market opportunities for
software and hardware vendors, system integrators, and publishers through the
exchange of ideas and matchmaking.

COMPANY'S BUSINESS STRATEGY

The Company's strategy is to grow revenues through the sale of its software
products in both of its major markets (government and digital entertainment)
using its proprietary technology (GreySim). The Company intends to further
leverage its software products and services to build revenues through the
development and expansion of its government contracts and through the
development and expansion of its digital entertainment products.

As a key part of its strategy, the Company believes that networked
interactive 3-D digital reality remains the fastest moving key technology trend
in both of these major markets. GreyStone believes that the companies that are
going to be successful in these multi-billion dollar markets are those that are
able to employ new technologies quickly to create distinctive software products.
This belief is at the heart of the Company's business strategy for serving the
digital entertainment and defense markets with its initial products

The Company's mission is to become a leading provider of real-time,
interactive and networked 3-D digital software products. Key elements of the
Company's strategy include:

Emphasize Real-time Interactivity, Real-time Simulation and Behavioral
Modeling in 3-D Digital Software Environments. GreyStone seeks to differentiate
its products through a unique combination of interactivity, vivid 3-D graphics
and real-time, lifelike simulation technologies. The immersive impact of the
experience involves stimulating the user's sensory pathways at a high level of
fidelity. A key element of the Company's software expertise resides in its
ability to combine these aspects of 3-D digital media into software that
provides immersion and interactivity for the user while operating in real time.

Develop and Apply Core Technology Across Markets. GreyStone's expertise
lies in its ability to design reusable, modular 3-D digital software with broad
applicability across markets and to deploy this technology in a consistent
fashion. Through its research and development activities, the Company has
developed a technology base that is readily adaptable to a variety of
applications, enabling GreyStone to build products ranging from expert systems
for combat simulation to entertainment products. The Company believes that this
design philosophy, which is implemented through multi-disciplinary development
teams, will enable rapid product development and migration to other
complementary markets.

Shorten Time to Market for 3-D Digital Reality Experiences. GreyStone
believes that offering a portfolio of 3-D digital software experiences is
essential to success in the marketplace. Implementing the object-oriented nature
of its fundamental software products and practices, the Company believes it will
be able
45
<PAGE> 56

to significantly reduce the time necessary to develop new software products.
Further, each new development effort contributes to a growing core of software
tools and techniques to be utilized on future projects.

Support Third-Party Development. In keeping with its efforts to set a new
standard in 3-D digital software, to focus on software development and to
implement industry-standard computing platforms, GreyStone is committed to
supporting third-party development of software-based 3-D digital experiences. In
addition, the Company is exploring domestic and international original equipment
manufacturing ("OEM") and distribution arrangements that would enable it to
outsource some of its production activities.

Enhance Product Quality Through Interdisciplinary Balance. GreyStone
improves upon its software development concepts by applying knowledge developed
in the diverse areas of game theory, decision theory, graphic design, sound
processing and ergonomics. The Company's Strategic Technology Unit evaluates
market information and emerging technologies that may affect the commercial and
defense markets and products. The Company believes that a multi-disciplinary
analysis and development approach will enable it to create 3-D digital software
environments that establish a new standard in immersive, interactive
experiences.

Leverage the PC Pipeline with Its Substantial, Growing User
Base. GreyStone's strategy heavily leverages the PC product pipeline, which the
Company believes will offer cross-market commonality and global market
potential. Over the last three years, the PC hardware and software community,
led by Intel and Microsoft, has embarked on a strategic effort to enable
real-time interactive 3-D graphics on the standard desktop computer and to make
that level of software experience ubiquitous across its user base. This
technology was leveraged first by PC game titles, but is quickly moving into
Internet browsers, business applications, and ultimately, into the graphical
interface of the operating system itself. From the beginning of this process,
GreyStone has positioned itself to take advantage of this new technology and to
develop showcase software that clearly demonstrates the value of such technology
to the end user. As this virtuous cycle expands, the global user base for 3-D
graphics software will continue to grow, providing GreyStone with a common,
standard hardware platform for the Company's products.

Manage Technology Change; Influence the Technology Base. GreyStone operates
within a dynamic technology landscape. To manage the effects of this rapidly
evolving base, the Company constantly analyses technological progress in
multiple areas to maintain an awareness and familiarity with the
state-of-the-art. Maintaining this technology vigil allows the company to
anticipate major revolutions for strategic advantage or to rapidly adapt to
unexpected changes. The Company's Strategic Technology Unit is responsible for
providing this timely analysis of technology trends and for ensuring that
corporate strategy is aligned with such trends. Further, the company maintains a
valued set of strategic technology partnerships with those companies deemed to
be most influential in its areas of business. Where possible, GreyStone
leverages its unique technology awareness to actually push the state-of-the-art
to create market discriminators.

COMMERCIAL MARKETS AND DIGITAL ENTERTAINMENT BUSINESS

Digital Entertainment

Digital entertainment is unique. It is created, stored, and can be
distributed electronically in a multimedia format complete with high-quality
sound, rich 3-D graphics and animation, and can be further enhanced by
multi-sensory human-computer interfaces and artificial intelligence. Such
high-fidelity, realistic experiences have found early success in the arcade
markets and are increasingly distributed on in-home CD-ROM and game console
cartridges. Leading-edge digital entertainment products can also be released
online to capitalize on the tremendous current interest in the Internet and the
World Wide Web, and in special narrow-band networks. In addition, digital
entertainment products have recently been released as broadcast television and
cable programming, home videos, and even full-length feature movies.

Digital entertainment combines the best elements of traditional,
mass-market, filmed entertainment, where creative artistry and engaging
plot-lines can be leveraged by use of special technology advances that enable
millions of consumers to interact with the content in a richer way. The market
for digital entertainment has evolved and grown dramatically with the increasing
proliferation and sophistication of personal computers (PCs) and game playing
consoles, and with the widespread use of the Internet. Sales trends of PCs to
home

46
<PAGE> 57

users have increased in recent years as a result of declining prices and
increased functionality of PCs. The number of multimedia PCs used in-homes
worldwide is expected to grow significantly, and many analysts have prepared
predictions about PC growth trends in 1999 and beyond. For example, near-term
estimates of continued PC growth in 1999 span from 15% to 25%, and exceed 85
million units.

The Company believes that the demand for digital entertainment will
continue to grow given the increasingly powerful multimedia capability of PCs,
and the growing popularity of the Internet. Despite the many technological
advances that have been made in producing, processing and delivering digital
entertainment, the Company believes that consumers will expect digital
entertainment products to have increasingly sophisticated features. These
features include more realistic graphics and special effects, user control of
more complicated or subtle character movements and real-time interactivity with
other humans.

GreyStone believes that its proprietary technology, skill in applying
critical enabling technologies, and years of experience with complex real-time
military virtual environments will allow it to continue its leadership in
producing interactive 3-D digital entertainment that will appeal to the growing
expectations of consumers. Utilizing its proprietary technology, GreySim, the
Company has successfully developed a long list of interactive experiences and
virtual environments that it believes represent significant technical
enhancements over existing simulation-based experiences. In addition, the
Company has developed strong strategic alliances and technology partnerships
that it believes will allow it to continue to expand its digital entertainment
products into the home PC-based software market.

DIGITAL ENTERTAINMENT MARKETS

Traditional, mass-market entertainment has been predominantly produced and
delivered through motion pictures, radio, and television, and more through
videocassette tapes. The market for interactive digital entertainment is more
broadly defined and consists of three principal components: (i) the arcade
market, or coin-op business, which includes out-of-home entertainment centers
ranging from large destination-based theme and amusement parks, to smaller
family focused centers, and location-based sports bars, casinos, and specialty
theme centers; (ii) the console game market, or consumer in-home video games,
which includes almost exclusively the 32 and 64-bit, and the emerging 128-bit
machines, and with sales channels dominated by companies, such as Sega,
Nintendo, and Sony; and (iii) the PC game market, or packaged PC/multimedia
software, which is heavily influenced by the increasing proliferation and
sophistication of personal computers, their declining prices and increased
functionality.

In the 1970's, video games such as Pong and Atari home video games
introduced customers to interactive entertainment. Nintendo and Sega game
platforms quickly followed riding a crest of interest by consumers to influence
the entertainment experience, albeit in a two dimensional environment. During
the same period, a number of advancements in personal computer technology began
to appear, resulting in a rapid evolution of its capabilities. In-home console
devices were introduced in the mid-1980's that enabled the patron of the coin-
operated arcades to play video games in the home. In the late 1980's, new and
more powerful TV set-top devices were introduced by firms such as Sega and
Nintendo and, more recently, video games are available using CD-ROM as well as
cartridges.

In the mid 1980's, home set-top devices were introduced which enabled the
patron of coin-operated video arcades to play video games at home. In the late
1980's, new and more powerful TV set-top devices were introduced by firms such
as Sega and Nintendo and, more recently, video games are available using CD-ROM
as well as cartridges for play at home.

By the beginning of 1990, rapidly declining prices of microprocessors and
CD-ROM drives, and the introduction of new PC components, such as 3-D graphics
accelerators, began to hasten the evolution of the PC platform, make multimedia
PCs more affordable, and increase their acceptance for use in homes. These
computers, generally configured with enhanced memory, high-speed processors,
high-resolution color monitors, sound boards, stereo speakers and high-capacity
CD-ROM drives, are able to deliver an engaging entertainment experience that
combines text, realistic sound, advanced graphics and animation. With the large
and growing base of multimedia PCs combined with 3-D capability, a significant
market opportunity has been created for companies that can provide compelling
3-D digital media content.
47
<PAGE> 58

The Company's first products for the commercial entertainment market are
3-D digital media experiences designed for use at the rapidly expanding
population of entertainment centers. These centers range from large
destination-based entertainment centers, such as theme and amusement parks, to
smaller family, urban and location-based entertainment centers sports bars, and
casinos.

The past decade has shown dramatic growth in theme and amusement parks.
However, it is anticipated that further rapid development of large
destination-type amusement and theme parks will be limited due to market
saturation, space, environmental and legal restrictions. As a result, a trend
has begun towards establishing new, more accessible, metropolitan entertainment
centers in the United States, Europe and Asia. These new types of out-of-home
entertainment venues are generally referred to as "destination-based
entertainment centers", "family entertainment centers", "urban entertainment
centers" or "location-based entertainment centers". The new centers emphasize
family entertainment and combine immersive, interactive entertainment with
restaurants and shopping in urban and suburban locations.

Significantly, numerous entertainment companies are developing
location-based entertainment centers that are smaller than the large destination
entertainment centers. The new centers are more accessible to customers to
encourage more frequent and repeat attendance. In order to attain higher growth
rates for their business, companies such as Sega, United Artists, Sony, Disney,
Namco, DreamWorks SKG, Blockbuster Entertainment, Time Warner, Paramount Parks,
Bass Leisure, Dave and Busters, Nickels & Dimes, and others have all announced
intentions to open multiple entertainment centers throughout North America, Asia
and Europe.

In addition to its thrust in the entertainment centers, GreyStone plans to
adapt its digital entertainment software for play on the next generation of
in-home entertainment systems, and in particular PCs with real-time 3-D digital
media capabilities. The in-home entertainment market is highly competitive;
however, the number of companies able to develop real-time 3-D digital reality,
which is the core of GreyStone's technical strength, has been limited. The
Company has adapted its digital entertainment software for use on the next
generation of 3-D multimedia personal computers, and intends to develop
"scaleable" content for the in-home entertainment market to permit play of its
software on a broad range of platforms.

The number of software developers who are able to create real-time,
interactive 3-D digital entertainment software is smaller than the number of
traditional 2-D developers, principally due to the high cost for development of
3-D digital products in the past. Therefore, there is a shortage of software
titles that use the full potential of the hardware platforms that are capable of
providing real-time 3-D graphics. This has also created an opportunity for
software developers, such as GreyStone, who have many years of experience
developing real-time, 3-D simulations for customers with high-fidelity
applications.

Many game developers who have pursued the development of 3-D graphics have
resorted to writing much of their computer code at a "native" level, in an
attempt to achieve real-time speed of presentation. As a result, these
applications often will work only with a limited range of hardware, and must be
re-written to operate on alternate machines, or with alternate peripheral
devices. For those who choose this path, when the next generation of machines or
devices arrive on market, the core component of software must be developed
starting from scratch, increasing the development time and the development
costs.

Entertainment Product Strategy

GreyStone has invested considerable resources in the development of a
capability to accomplish on the PC what has customarily been achievable only on
much more expensive computer workstations. The Company considers it a top
priority that its software products be capable of operating on a wide range of
computer platforms and peripheral devices, and not be burdened with any
additional requirements for distinct, or tailored versions of its software for
any hardware variant. Moreover, the Company has put considerable effort into
organizing its core software architecture so that multiple copies of its games
and other products, running on different computers, can link with one another in
a way that makes the users (players) seem to be in a single virtual environment.

48
<PAGE> 59

As a result of this strategy, the Company desires to field digital
entertainment products for the out-of-home market at prices competitive with the
best games available for that market, without sacrificing anything in quality of
game play. Since these low-cost platforms are PC-based, GreyStone desires to be
able to develop games which will run on both out-of-home LBE and arcade consoles
as well as on home PCs used for in-home game play. This means that with minimal
modification, a game title may be used to satisfy the demands of both markets.
Further, GreyStone desires to develop the game titles to be able to run on a
wide range of PC configurations, and to be readily adaptable to new and emerging
technologies in the PC market. These benefits manifest themselves in a more
competitive product posture and increased market share, a shorter time to market
for newly developed titles, and a reduction in the allocation of development
costs through amortization over a larger market base.

The Company believes that the synergy between the out-of-home and in-home
markets can be exploited to cross-promote products, to increase revenues through
ancillary merchandise sales, and to reduce costs. The Company believes that by
targeting its entertainment products to the expanding customer base it has the
potential of tremendous operating leverage, and intends to distribute its
entertainment products' development costs across the Arcade market base, and the
Console and PC markets base. The Company believes that its strategy is a very
attractive leverage of the PC pipeline, can be strongly aligned with the Intel
product strategy for entertainment, and therefore, has the possibility to
dominate the product distribution channel for the target digital entertainment
market. Some of the key elements of the Company's commercial entertainment
strategy include:

Widen Game Experiences; Build Brand Awareness. The Company believes that
many existing 3-D digital product offerings fail to capture and retain wide
market acceptance because they lack realism and fail to engender social
interaction and passive entertainment among non-participants. Similarly, ride
films and 3-D digital media adaptations of arcade games do not deliver high
degrees of interactivity. Each of GreyStone's 3-D digital software experiences
is designed to foster repeat play, competition, and a diversity of experiences
(from sports to high-adrenaline experiences) and offer entertainment to
spectators. Following additional adaptations, the Company, through its software
expertise and its object-oriented software architecture, plans to rapidly
introduce a variety of new experiences that it believes will attract repeat
customers and establish GreyStone as the company of choice for digital
entertainment among consumers and operators alike.

Target Broad Markets; Emphasize Strategic Relationships. GreyStone expects
to expand its product offerings to both the out-of-home and in-home markets
through consistent application and adaptation of its core technologies and
creative concepts for each market. The Company intends to promote its products
and technology through strategic alliances with vendors, customers and
merchandisers. As 3-D digital software experiences are deployed, the Company
intends to cross-promote its products along with those of sponsors in the 3-D
digital experience and through merchandising. The Company will pursue strategic
alliances with companies that enjoy mass-market appeal, broad distribution
capabilities or other strengths, which will complement the Company's abilities.

Enhance Social Aspects of Digital Entertainment. GreyStone's digital
entertainment experiences are designed to foster social interaction. Unlike many
existing 3-D digital media or traditional arcade games, GreyStone products are
designed to be played among groups of participants and are ideal for
multi-player and challenge play. GreyStone believes that this aspect of its
technology, combined with system features that enable spectator immersion, will
increase the attractiveness and utilization of its 3-D digital software
experiences, and will foster social interaction. Similarly, GreyStone's 3-D
digital entertainment experiences are designed to take advantage of a themed
environment, further emphasizing immersion, realism and social interaction.

Digital Entertainment Products

Utilizing its core technology base, the Company began to develop
commercially available 3-D digital entertainment experiences and research
platforms to take advantage of the rapidly growing market for 3-D digital
entertainment products. The Company's commercial content combines real-time
interactivity, real-time simulation and provides the participant with a
fully-immersive 3-D digital entertainment experience. The

49
<PAGE> 60

platforms integrate one or more "seats" to provide players with multiple sensory
inputs, including visual displays, sound output devices and, in some cases,
mechanical apparatus to generate motion. MagBall and XS-G are two Titles that
have been completed and are ready for wide commercial out-of-home distribution.

Entertainment Platforms

GreyStone decided to undertake the design and production of entertainment
platforms that could take full advantage of its unique digital reality
experiences and stimulate demand for GreyStone's Titles. The Company believes
that few, if any, commercially available platforms exist that enable the
complete integration of all of the requisite technologies required to represent
a fully-immersive and networked interactive experience and are capable of
exhibiting multiple digital entertainment Titles. The Company may develop and
market one or more of these platforms in a OA3M configuration in the future.

Special Promotional Projects

The Company is frequently asked to engage in special projects with and for
other companies. The Company has accepted a few requests in order to market and
promote its capabilities while funding and extending its research and
development work.

For example, the Pteranodon was exhibited simultaneously at the 1993 COMDEX
Computer Show in Las Vegas and the International Association of Amusement Parks
and Attractions ("IAAPA") show in Los Angeles. The demonstration allowed
participants at COMDEX in Las Vegas to compete in real-time with participants in
Los Angeles at IAAPA by linking the computers over a telephone line,
demonstrating real-time distributed interactive simulation technology, which
enables complex real-time simulation from diverse locations using standard
communications, infrastructure and protocols. The Company believes that this
demonstration was the first interstate shared commercial interactive real time
3-D digital reality experience.

The Company continues to receive additional requests to perform special
projects, and will consider working on special projects if they accelerate the
Company's entry into its markets, provide funded opportunities for research and
development of its core technology and skills, fund an extension of the
Company's software capabilities, or are otherwise deemed to be in the best
interest of the Company.

The Advanced PC Technology Strategy

GreyStone's technology strategy allowed the company to effectively
anticipate the push for real-time 3-D graphics on the PC platform, resulting in
an invitation from Intel to demonstrate the Canyon Runner game concept on the
Pentium II processor at the Computer Game Developers Conference ("CGDC") in
April 1997. This provided GreyStone's entree to the Open Arcade Architecture
Forum ("OAAF") organized by Intel and added credibility to the Company's
existing strategy to introduce 3-D software titles to the arcade market on PC
platforms and eventually migrate those titles to the in-home market. By
carefully monitoring the evolution of 3-D graphics on the PC platform, GreyStone
was able to move forward confidently in the development of the Company's own 3-D
simulation software foundation (GreySim), while maintaining commonality with the
evolving base of Application Development Interfaces (APIs) from Microsoft.
Ultimately, this has allowed the Company to (i) develop a diverse suite of
real-time 3-D applications using a common software development architecture that
fosters reuse and sound software development practices; (ii) capitalize on a
growing base of software, hardware, and API support in the broadest segment of
the computer market; and (iii) maintain total compatibility with a broad
spectrum of improving 3-D graphics hardware. All these factors combine to
provide the company with reduced development costs and a wider market for its
products.

Extended Product Strategy

GreyStone believes that its core set of technological capabilities and
skills can be further extended and applied to successfully create interactive
digital software products for other markets, such as the internet,
education/edutainment, health/medical, transportation, telecommunications, and
for enterprise-spanning applications in design, engineering, and manufacturing.
50
<PAGE> 61

The Company has some experience in these areas, especially with respect to
(i) the simulation of customer's designs, engineering, and product prototyping
for the Intelligent Vehicle Highway System, (ii) the development of product
concepts for the health/medical markets, and (iii) the production of advanced
avionics in modern tactical jet aircraft. The Company has years of experience in
using engineering simulation for the rapid-prototyping and refinement of
advanced avionics technologies, including "expert systems" that can be embedded
in the advanced avionics of modern tactical jet aircraft.

The Company believes that there is significant growth potential in
engineering simulation. The Company intends to leverage its core set of
technologies to develop real-time software that can be used to refine and
improve a product's design and assembly planning, to cut development time and
costs, improve a product's understanding, and reduce the time to market by
identifying a product's defects early in the design cycle.

Additionally, the Company believes that it can extend its core set of
technologies successfully and develop new software products to become a leading
producer of enterprise-wide product data visualization and integration software
solutions for major manufacturing corporations. GreyStone believes that its
existing core proprietary visualization software, when coupled with the
Company's many years of experience in prototyping real-time digital software,
can result in a unique product data visualization capability that can support
the effective management, viewing and communicating of digital product data. The
Company believes that this approach can be a critical factor in helping
customers retain their competitive advantage in today's manufacturing
environment.

It is the Company's belief that through its continued technology research
and the development of enterprise-spanning digital software, that it can help
its customers differentiate themselves with more competitive product line-ups
and drive down product development time and costs.

GOVERNMENT MARKET AND PRODUCTS

Overview of Government Markets

GreyStone was founded to provide simulation and training products for the
defense industry. It has earned an excellent reputation for creating and
exploiting virtual environments for the warfighter. These virtual environments
employ real-time simulation, intelligent agent and advanced visualization
technologies that create a battlespace in which a commander and soldier alike
can assess, command and shape the dynamics of the battle as well as experiment
with various contingencies to test skill and judgment. Increasingly, virtual
environments are used to provide knowledge of the battlespace and new ways to
exploit the battlespace not available previously without deploying live troops
and millions of dollars of equipment. The U.S. government projects continued
growth in the multi-billion dollar annual budget for C4I.

In April 1995, the Department of Defense (DoD) reported to Congress that it
is in a transition period from a time when simulation is considered a supplement
to live training to a time when simulation will comprise a larger portion of
readiness training in the future. The DoD added that as new forms of simulation
prove effective, the U.S. government's expenditures in virtual and constructive
simulation could more than double over the next few years.

The Company believes that it is well positioned to grow its products and
services with the U.S. government and is benefiting from the basic shift in the
military procurement strategy to commercial-off-the-shelf technology and
systems. The Company has positioned its core software products and services,
which are focused on C4I and Modeling and Simulation, and which it believes to
be high growth segments of the overall military budget. Its primary software
products, especially RAGE, supports operational systems, which provides a force
multiplier and has high operational priority with the military. Further, the
Company believes that RAGE sales also provide a lead for valuable engineering
services opportunities.

Government Market Strategy

In order to capitalize on what the Company perceives as a large and growing
opportunity in DoD, the Company's strategy is to: (i) focus on software products
and services in the government-defined growth areas

51
<PAGE> 62

of simulation, advanced visualization and artificial intelligence; (ii) use a
product-based approach for initial entry into traditionally "closed" industry
areas and take advantage of the government's mandated commercial-off-the-shelf
solutions instead of funded research and development solutions; (iii) stay
involved in the government's new or high technology initiatives that have the
potential for GreyStone-wide applications; and (iv) build revenues and obtain
funded research and development through engineering services for key government
agencies and prime government contractors. To achieve this strategy, the Company
has focused on the following strategic initiatives:

Offer Technology-driven Solutions. The Company's achievements in developing
immersive, interactive, and intelligent systems that operate in real-time
provide a robust and flexible set of capabilities and services that provide
customized solutions for a variety of projects within the defense industry. The
Company focuses its government business on designing and building simulations
and 3-D digital reality environments that can answer the needs of research and
development laboratories that require virtual environments to prototype systems
before design and specification, to support command centers that require the
decision aiding and "what-if" aspects of the virtual world, and enable the
troops in the field to train in the operation of these systems. The Company has
developed capabilities to facilitate distributed interactive participation,
texture mapping, advanced data acquisition, signal processing, and visualization
of non-visible phenomenon, which enhances the utility of the Company's products
and services.

Add Value Through Strategic Relationships. The Company has had, and
maintains subcontracts and close working relationships with leading government
contractors, including Lockheed Martin, Cubic, SAIC, Hughes Aircraft, Draper
Laboratory, BTG, Inc. and others. Additionally, the Company has entered into
joint technology, development, sales and marketing agreements with companies
including, Technology Service Corporation and Virtual Prototypes Inc., to
leverage mutually beneficial approaches and integrated solutions to the modeling
and simulation market place. The Company feels that such agreements complement
its products and further leverage its opportunities for engineering services.
Through these relationships, the Company believes it can participate in larger
multiple contracts for a variety of agencies and programs to which it might not
normally have access.

Gain Access to New Technologies. GreyStone believes that by targeting
government research laboratories and organizations, it will gain access to new,
emerging technologies as funded by the government. Much of GreyStone's current
capabilities and technology base was achieved through this initiative. Further,
this small but important segment of the government market is willing to fund
high-risk technology initiatives, allowing GreyStone to participate with little
cost. This access supports GreyStone's strategy of applying its technology
across the Company's business areas and products. This is particularly true in
promoting the Company's role in optimizing commercial image generator
technology. As the government customer seeks lower cost platforms and
workstations on which to host virtual environments, they are funding continued
development of the software products on these new, more affordable hardware
systems.

Develop Products for New Markets. GreyStone believes that many governments
and agencies worldwide desire advanced visualization and simulation technologies
such as those produced by the Company. In the past, the proprietary nature of
many hardware and software components made the procurement of such systems
uneconomical or impossible due to severe limitations on technology transfer.
Using commercially available image generators and exportable software and
firmware, the Company is developing this market to offer cost-effective 3-D
digital reality solutions targeted to smaller markets and customers.

Government Products and Services

From its beginning in 1989, the Company's government business has been
built on key technologies used to create virtual environments and the experience
of qualified individuals -- defense industry engineers as well as experienced
warfighters -- who understand the requirements and utility of virtual
environments for training and combat operations. GreyStone has modeling and
simulation professionals, advanced systems integrators, mission-planning
specialists, intelligent agent experts, software developers with defense
industry experience, and experienced former military personnel who continue to
provide the government customer with an alternative to deploying troops and
systems to the field.

52
<PAGE> 63

There is a legacy of software development and engineering services for
high-performance military systems that are immersive, interactive, and
intelligent and which function in real-time. This legacy has allowed the Company
to posture its military software products for application across several mission
areas: planning, advanced simulations, aerial combat, battlefield command and
control, and, most recently, in the growing arena of intelligence, surveillance
and reconnaissance systems. These products are created through the application
of advanced software techniques to create smart, artificial intelligence-based
systems that achieve varied levels of individual and autonomous behavioral
characteristics. A key element of the Company's government market strategy is
based upon the implementation of advanced behavioral modeling and graphics
technology.

GreyStone's government software products are sold subject to license
agreements which grant to the user a non-exclusive runtime executable license to
use the software on a single workstation for an unlimited period of time. The
software remains the sole and exclusive property of GreyStone, and other than
the license granted by the agreement, no proprietary right or copyright to the
software or the accompanying documentation is granted under the license.

Commercial Off the Shelf Defense Products (COTS)

A principal product of the Company's government business base is a
real-time, object-oriented software product, called Real-time Advanced Graphics
Environment (RAGE). RAGE enables 3-D representations of dynamic virtual
environments. RAGE displays environments for system simulations, constructive
and virtual mission simulations, support systems and mission visualizations by
generating a 3-D environment and immersive graphical entities from
dynamically-acquired data from flight recorders, sensors or satellite imagery
which are updated thousands of times per second.

The RAGE-generated environment has been viewed as a cost-effective solution
to unmanned aerial vehicle (UAV) platform and payload simulation, leveraging
existing government products (platform flight models, ground control stations,
object models, terrain databases, etc.) and the RAGE product. The virtual UAV is
designed as a modular, flexible, "dial-a-collector" system capable of simulating
a variety of current and projected unmanned platforms and associated sensors.
RAGE has been used to provide the virtual world for U.S. Army UAV operators
during large, multi-force training exercises.

Since RAGE is the primary software running the real-time enhanced virtual
world simulation during the exercise, each site requires a RAGE license sale.
With each exercise, GreyStone is paid for other engineering services it
performs, such as modifications to RAGE, custom databases, and the creation of
unique interfaces required of each application, in addition to providing both
field and home-office services during the exercise. In its first 21 months of
availability, eighteen RAGE(TM) licenses were sold to the U.S. military. The
system has been invaluable for UAV concept of employment and operational utility
demonstrations in over thirty large-scale live Joint and Army exercises and
force modernization Advance Warfighting Experiments.

Another product borne out of the air combat training experience of the
Company is the Adaptive Maneuvering Logic (AML(C)). AML is an advanced synthetic
adversary control model that provides real-time, interactive air combat
engagements with a six degree-of-freedom air combat simulation for
one-versus-one and two-versus-two scenarios. These intelligent control systems
are sophisticated computer programs that pit one or two computer-controlled
aircraft against human pilots using advanced aerodynamic performance,
interactive, intelligent real-time behaviors air combat and pilot expertise.
GreyStone's AML jet fighter weapons tactics simulation software was licensed to
Hughes training for use in the F/A-18 domed simulators for an unlimited period
of time.

53
<PAGE> 64

Defense Engineering Services and Projects

GreyStone has provided and does provide engineering services to the
military services and their contractors including services to:

Lockheed Martin to support:

- DARPA's Pilot's Associate Program

- On board software to support the F-22 Advanced Tactical Fighter

- The Joint Strike Fighter program

DARPA for the:

- Warbreaker Mission Planning Program

- Virtual Reality Device assessment and selection for carrier force
operations

- Battlefield Awareness Data Dissemination program

Logicon for the:

- Design of mission planning and support module for the F-117A Stealth
Fighter

U.S. Air Force Armstrong Laboratory for:

- Advanced cockpit technology (visualization, intelligent systems, cockpit
controls, displays, simulators, weapon systems)

Department of Defense for the:

- Virtual Unmanned Aerial Vehicle Program

- Multiple Unified Simulation Environment project

U.S. Army for the:

- Live Multiforce Training Exercises (more than thirty exercises)

- Live Joint and Army force modernization Advance Warfighting Experiments

Defense Backlog and High Probability Awards

Current government contract activities include the following projects.

The U.S. Government has published an announcement that it intends to award
a non-competitive contract to GreyStone, where it will acquire engineering
technical services to support the interface, integration, test, demonstration
and support of Joint Technology Center/System Integration Laboratory customer
hardware and software systems/subsystems/components within the Multiple Unified
Simulation Environment and its virtual world subsystem as built with RAGE. The
proposed initial period of performance is 15 months. The Company expects the
contract award in the fourth calendar quarter of 1998.

The Company recently submitted a proposal in response to another U.S.
Government non-competitive contract to GreyStone in support of the Virtual
Airborne Reconnaissance-Low (VARL) Program. This effort is follow-on to our
successful Phase I prototype program and will provide our U.S. Army customer a
VARL demonstration system at their Fort Belvior headquarters and operational
mission trainers for units deployed to South Korea and other operational sites.
Our synthetic natural environment simulation, using the RAGE product as its
core, will provide high fidelity mission payload simulation to the actual
aircraft hardware/software systems. The Company expects to commence work on this
multi-million dollar program in the fourth calendar quarter of 1998.

54
<PAGE> 65

GreyStone is currently providing Modeling and Simulation engineering
services to the U.S. Navy's Space and Naval Warfare Systems Center in San Diego.
Our core support to the Navy's Synthetic Forces Model provides other Government
customers cost effective solutions for Joint Counter-Mine Warfare, Battle Force
training, Command and Control, and Joint Medical Tele-medicine applications. In
response to our customer's Broad Agency Announcement, the Company has submitted
a multi-million dollar proposal for six years of support. The Company expects to
enter final contract negotiations for this project during the fourth calendar
quarter of 1998.

In August 1997, GreyStone and partner BTG, Inc., began work on an Advanced
Technology Concept Demonstration project for DARPA that will provide a test-bed
for evaluating battlefield visualization concepts and technologies for inclusion
in the Battlefield Awareness Data Dissemination (BADD) program. BADD will
develop, install and evaluate an operational system that allows commanders to
design their own information system; delivers to warfighters an accurate,
timely, and consistent picture of the joint/coalition battlefield; and provides
access to key transmission mechanisms and worldwide data repositories.

MARKETING AND SALES

Government and Entertainment Markets

GreyStone's marketing and sales activity in the commercial market to date
has consisted primarily of participation in trade shows, distribution of
marketing communications, market research and public relations activities
designed to showcase GreyStone's technology and capabilities. GreyStone intends
to promote its name, trademarks and products to create a recognizable brand of
quality in each of its markets and to coordinate advertising and promotional
opportunities to benefit itself and its licensees. GreyStone's marketing
activities are also designed to demonstrate the capabilities of GreyStone's
products, showing potential customers 3-D software environments that surpass
those offered by competitors in functionality, realism and interactivity.
GreyStone has a non-exclusive license agreement with Dynamo Interactive, a
division of Dynamo, Ltd., to market, produce and distribute entertainment
systems with the Company's current game, XS-G, and to pay GreyStone a fee after
the sale of the product.

In the government market, marketing activities are conducted primarily
through interaction with key military acquisition offices and laboratories, as
well as with prime and subcontractors to the U.S. and other governments,
availing them of GreyStone's expertise in simulation and 3-D digital reality
software environments. GreyStone also participates in a number of trade shows
focused on the government markets.

STRATEGIC TECHNOLOGY

GreyStone's Strategic Technology Unit is responsible for technology
management and strategy within the company. This charter includes the
maintenance of technology awareness, utilization, acquisition, and transfer. It
also involves management of the company's Technology Council, and the evaluation
and establishment of strategic technology partnerships.

GreyStone's research and development efforts are coordinated by the
Strategic Technology Unit, whose responsibility it is to develop and demonstrate
advanced technologies for use in the company's commercial and government
products. These R&D projects include the exploration of basic technology
alternatives, maturation of critical technology components, and the execution of
cooperative technology ventures. The Strategic Technology Unit directly impacts
product improvement and reduction of costs through the incorporation of advanced
technology proven through R&D.

GreyStone's Strategic Technology Unit is responsible for communication and
coordination among GreyStone's software and hardware engineering personnel. The
software engineering group includes engineers with significant design and
development experience in object-oriented software, systems and dynamics
modeling, real-time operating systems, network technology and protocols
(including distributed simulation), intelligent systems design, advanced
multi-sensory user interfaces, graphical design and databases, data acquisition
and signal processing, and embedded systems. Hardware engineering includes
engineers with significant experience in image generator design and
applications, computer architecture, network technolo-

55
<PAGE> 66

gies, display technologies, audio and video synchronization, computer buses,
complex computer systems, user interface design and integration and design
manufacturing. The software and hardware engineering personnel work together to
develop and refine the tools necessary for the development of GreyStone's
products.

In addition to Company-sponsored research and development, GreyStone
performs contract research and development for various government agencies and
contractors. As part of its product development strategy, GreyStone seeks to
identify commercial applications for new technologies developed under its
defense contracts and retains title as permitted to developments made pursuant
to government contracts. By coordinating its various technology research and
development efforts, the company maximizes the growth and internal availability
of its strategic intellectual property and experience.

As of June 30, 1998, GreyStone employed twenty-five (25) persons engaged in
research and development related activities.

PRODUCTION AND PRODUCT SUPPORT

GreyStone's production strategy is based upon outsourcing of basic
component manufacturing and assembly and internal development of software.
Components procured from or built by third parties may be shipped to GreyStone's
headquarters, to be assembled and tested prior to shipment. GreyStone's
headquarters include 5,000 square feet allocated to production of GreyStone's
products. GreyStone has contracted or will contract with multiple suppliers of
components for its 3-D software platforms wherever possible.

GreyStone has a non-exclusive license agreement with one company to market,
produce and distribute entertainment systems with the Company current game,
XS-G, and to pay GreyStone a fee after the sale of such product. GreyStone has
also had discussions with other manufacturers of entertainment systems to
license its software programs for inclusion with their product.

At June 30, 1998, GreyStone employed three (3) people dedicated to
production and manufacturing.

COMPETITION

The Company experiences substantial competition in its government and
entertainment markets and believes its principal competition advantages to be
its reputation and experience in its selected market areas, creativity in
applying existing and company proprietary technology to new applications and
meet customer requirements, technical assistance to its customers, price and
adherence to delivery schedules.

The Company believes that it has a competitive advantage with its
government software product, RAGE(TM), which has been identified by the
government in several sole source award announcements as a requirement for award
performance. The Company believes that this competitive advantage will continue,
for an unknown period of time, however, there is no guarantee that the
government will continue to identify the Company's software as a continuing
requirement for such awards.

The Company competes against established corporations in the government
market that have substantially greater financial and other resources than the
Company. In the past, the Company has worked closely with several companies as a
sub-contractor, but there can be no assurances that it will be successful in
maintaining or enhancing these relationships in the future. The Company
considers the competitors for its government products and services to include
Science Applications International Corporation, Cubic Corporation, Logicon, TRW
and others. There can be no assurance that the Company will be able to compete
with these and other companies for future government contracts or that such
contracts, upon successful award, will be on terms favorable to the Company.

The markets for interactive 3-D software products are still emerging, and
the Company anticipates that the number of competitors will increase. Companies
having greater financial resources may be able to make greater investments in
research and development, engage in more extensive marketing campaigns, carry
large inventories, adopt more aggressive pricing policies and make more
attractive offers to customers. The Company also believes that large
entertainment and computer companies are increasing their focus on the
interactive 3-D software entertainment market, which will stimulate further
competition.

56
<PAGE> 67

The Company's competitors range from small companies with limited resources
to large companies with greater financial, technical and marketing resources.
The Company considers the competitors in the interactive entertainment markets
to include Broderbund Software, Inc., Electronic Arts, Inc., Interplay,
LucasArts Entertainment Company, Sony, Sega, Nintendo, Namco, and Williams.
Competitors are developing or are expected to develop for the Company's
entertainment products that are, or may be, directly competitive with many of
its products, now and as its products transition to the in-home entertainment
market.

The Company's future success in both of its markets will depend upon, among
other things, its ability to withstand competition from larger companies, to
obtain and retain competent personnel to successfully accomplish its obligations
under its various contracts and agreements and to productively extend its
technological expertise to new applications. All of these factors are subject to
uncertainty. See "Risk Factors -- Competition."

PATENTS AND PROPRIETARY RIGHTS

The policy of GreyStone is to apply for patents, or other appropriate
proprietary or statutory protection, when it develops valuable new or improved
technology. As of June 30, 1998, GreyStone has one patent as well as certain
trademarks and copyrights. The status of patents involves complex legal and
factual questions and the breadth of claims allowed is uncertain. Accordingly,
there can be no assurance that patent applications filed by GreyStone will
result in patents being issued or that its patents, or any patents that may be
issued to it in the future, will afford effective protection against competitors
with similar technology; nor can there be any assurance that patents issued to
GreyStone will not be infringed upon or designed around by others or that others
will not obtain patents that GreyStone would need to license or design around.
If the courts uphold existing or future patents containing broad claims, the
holders of such patents might be in a position to require companies to obtain
licenses. There can be no assurance those licenses that might be required for
GreyStone's products would be available on reasonable terms, if at all.

In addition to patent and copyright law, GreyStone relies on trade secrets
and proprietary know-how, which it seeks to protect in part by confidential
agreements with its strategic partners, employees, consultants, vendors and
licensees. GreyStone's agreements prohibit unauthorized disclosure or reverse
engineering of GreyStone's systems. However, GreyStone expects that third
parties may attempt to reverse engineer its technology and there can be no
assurance that GreyStone's confidentiality agreements will not be breached or
that GreyStone would have adequate remedies for any breach. In addition, the law
concerning reverse engineering by a person or entity that has not signed a
license agreement is currently uncertain. As a result, GreyStone may not have an
adequate remedy if a competitor disassembles or reverse engineers products based
on GreyStone's proprietary technology even if trade secret or copyright law
protects GreyStone's technology.

GreyStone relies in part on copyright laws to prevent unauthorized
duplication or distribution of its software, written materials and audiovisual
works. Existing copyright and mask work right laws afford only limited
protection, particularly in certain jurisdictions outside the United States
where GreyStone may seek to license its technology See "Risk
Factors -- Dependence on Proprietary Technology."

EMPLOYEES

GreyStone had forty-three (43) full-time employees as of June 30, 1998.
Twenty-five (25) of these employees are in research and product development
related activities, one (1) in sales and marketing, three (3) in manufacturing
and fourteen (14) in GreyStone's business sectors, finance and administration.
The employees and GreyStone are not parties to any collective bargaining
agreements, and GreyStone believes its relations with employees to be good.

FACILITIES

GreyStone leases approximately 29,367 square feet of office and research
and development space at 4950 Murphy Canyon Road, San Diego, California 92123.
GreyStone has executed a seven-year lease agreement for this property that
expires on December 14, 2003. GreyStone also has a small supporting office

57
<PAGE> 68

in Washington, D.C., and six (6) employees working in government furnished
facilities. GreyStone believes its existing facilities are capable of supporting
GreyStone's operations for the foreseeable future.

LEGAL PROCEEDINGS

On October 2, 1996, GreyStone entered into a stock purchase agreement with
Seawind USA providing for the purchase of $50,000,000 of Common Stock of
GreyStone at a purchase price of $5.46 per share. As of November 3, 1997,
Seawind USA had failed to purchase any shares of GreyStone Common Stock. On
November 3, 1997, GreyStone filed a claim (the "Claim") against Seawind USA and
certain affiliates thereof and other parties associated with the proposed stock
purchase in the Superior Court of California, County of San Diego. The Claim
asserts various causes of action including, among others, breach of contract,
intentional concealment and fraud. GreyStone is seeking damages of approximately
$21.8 million. As of the date of this Proxy Statement/Prospectus, certain
parties have been dismissed from the Claim.

58
<PAGE> 69

GREYSTONE MANAGEMENT

The directors and executive officers of GreyStone and their ages as of June
30, 1998 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard A. Smith 51 Chairman of the Board, President and Chief Executive
Officer
Jon M. Reynolds 58 Director
Thomas D. Aldern 44 Vice President, Government Systems and Director
Carl A. Beaudet 56 Vice President, Government Business Development
Bernard J. Crowe 59 Vice President, Commercial Systems and Products
Thomas L. King 66 Vice President, Finance and Chief Financial Officer
Carolyn Harris 41 Vice President, General Counsel and Secretary
</TABLE>

Richard A. Smith. Mr. Smith was a founder of GreyStone and has served as
its Chairman and Chief Executive Officer since its inception in 1988. Before
founding GreyStone, Mr. Smith was employed by Titan Systems, Inc. ("Titan"), a
high technology systems engineering company in San Diego, California from 1985
to 1989. At Titan, he was responsible for planning and direction of advanced
programs for the Combat Systems Group and was Deputy Operations Manager for
Advanced Avionics. From 1970 to 1985, Mr. Smith served in the Navy as a fighter
pilot in Vietnam, as an instructor and adversary pilot, and as a pilot with
Continental Airlines. In 1995, he retired as a Commander in the U.S. Naval
Reserve. Mr. Smith earned a B.S. degree from South East Missouri State
University and a M.S. degree from the University of Southern California.

Jon M. Reynolds. Mr. Reynolds has been a member of the Board of Directors
of GreyStone since February 1994 and served as GreyStone's President from April
1995 until January 1997. Since April 1998, Mr. Reynolds has been the Senior Vice
President of Hoak, Breedlove & Wesneski & Co., Inc., an investment banking firm
in Dallas, Texas. Mr. Reynolds is also the President of The Pointe-Force
Company, a private Dallas-based merchant banking concern. From 1985 until 1992
Mr. Reynolds was a director of Sun Coast Plastics, Inc., a company specializing
in plastic molded closures and food service products, and from 1988 to 1992 Mr.
Reynolds served as that Company's Chairman and Chief Executive Officer. From
1984 through 1988 Mr. Reynolds also served as president of Mayfair Capital, a
merchant banking company. In February 1983, Mr. Reynolds joined Rauscher Pierce
Refsnes in Dallas. From 1971 through 1982, Mr. Reynolds worked in New York as an
investment banker engaged in project and corporate finance at Salomon Brothers
and at CS First Boston. Mr. Reynolds is a certified public accountant and holds
an A.B. from Harvard College in economics. He received his MBA from Rutgers
University.

Thomas D. Aldern. Mr. Aldern has been GreyStone's Vice President,
Government Systems and a member of the Board of Directors since joining
GreyStone in 1989. From 1985 to 1989, Mr. Aldern supported projects for the
Naval Ocean Systems Center and ARPA and was active in classified defense
programs at Titan. From 1978 to 1985, Mr. Aldern was in the U.S. Navy as a F-14A
Radar Intercept Officer and involved in projects concerning battlespace
extension, aircraft tactics, and advanced sensor modeling. Mr. Aldern earned a
B.S. in Systems Engineering from the U.S. Naval Academy and has completed
numerous U.S. Navy Warfare courses such as Strike Leader Attack Training School,
Navy Fighter Weapons School (TOPGUN) and U.S. Navy Electronic Warfare School.

Carl A. Beaudet. Mr. Beaudet joined GreyStone in 1989 as its Vice
President, Government Business Development. He has been active in various areas
of GreyStone's business development, administration and operations. Before
joining GreyStone, Mr. Beaudet was a field office manager at Advanced
Technology, Inc. ("ATI"), an engineering services company, as well as a
technical director for electronic warfare for that company's project activities
at the Pacific Missile Test Center from January 1988 to December 1989. Before
ATI, Mr. Beaudet spent 5 years at the Military Electronics and Avionics Division
of TRW, Inc., a defense electronics and computer systems manufacturer, in San
Diego, California where he managed the Operations Analysis department in support
of a number of different programs and projects. Mr. Beaudet was a career Naval
Flight Officer with 20 years' experience. Mr. Beaudet received a B.S. in
Aeronautics and Astronautics from Purdue University and an M.S. in Aeronautical
Engineering from the Naval Postgraduate School.

59
<PAGE> 70

Bernard J. Crowe. Mr. Crowe has been GreyStone's Vice President, Commercial
Systems since 1992. Prior to joining GreyStone, Mr. Crowe was Vice President at
Ball Corporation, Systems Engineering Division located in San Diego, California
from 1990 to 1992 where he managed that company's development of products for
military and commercial customers. From 1975 to 1990, Mr. Crowe was at TRACOR
Flight Systems, Inc., an aerospace company where he was Director of the
Simulation Product Department. In this capacity, he led over 20 engineers in
developing real-time simulation products. Mr. Crowe received a B.S. from London
University.

Thomas L. King. Mr. King joined GreyStone in 1994 as its Vice President,
Finance and Chief Financial Officer. From 1985 until 1993, Mr. King was employed
in various capacities, including Chief Financial Officer, at Sun Coast
Industries, Inc., a company specializing in plastic closures and food service
products. From 1954 to 1985, he was employed by the General Electric Company
serving the last five years as Manager/Financial Planning and Analysis with
General Electric de Mexico in Mexico City. Mr. King graduated Cum Laude with a
B.A. in Economics from Notre Dame and earned his MBA at the University of
Massachusetts.

Carolyn A. Harris. Ms. Harris is Vice President, General Counsel and
Corporate Secretary. She joined GreyStone in 1995 as Contracts Director and
served as Assistant General Counsel and Assistant Secretary until 1998 when she
assumed her current duties. From 1979 to 1994 she worked for Rockwell
International Corporation's Rocketdyne Division in Los Angeles, California in
the areas of financial management, advanced programs and contracts. Ms. Harris
received her B.S. in Finance and Accounting from the University of Arizona, and
her J.D. from Southwestern University School of Law.

BOARD COMMITTEES AND MEETINGS

During the fiscal year ended March 31, 1998, the GreyStone Board held 8
meetings.

DIRECTORS' COMPENSATION

GreyStone's directors do not currently receive any cash compensation for
service on the Board of Directors or any committee thereof, but directors may be
reimbursed for certain expenses in connection with attendance at Board and
committee meetings. The current directors also serve as officers and/or
consultants to GreyStone and do receive compensation for such services.

60
<PAGE> 71

EXECUTIVE OFFICER COMPENSATION

The following table shows for the fiscal years ended March 31, 1996, 1997
and 1998, certain information regarding compensation awarded or paid to, or
earned by, GreyStone's (i) Chief Executive Officer, (ii) and the four highest
compensated executive officers of GreyStone who earned more than $100,000 in the
fiscal year ended March 31, 1998 and who were executive officers of the Company
as of March 31, 1998 (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- ------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION
--------------------------- ------ -------- ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Smith............. 1998 $227,500 $9,750(1) 450,000(2) $2,600(3)
Chairman, President and 1997 $217,709 500,000(4) $4,540(3)
Chief Executive Officer 1996 $178,125 -- $6,075(3)
Carl A. Beaudet.............. 1998 $105,000 --
Vice President, Government 1997 $111,563 50,000(5)
Business Development 1996 $ 98,438 --
Bernard J. Crowe............. 1998 $125,020 0
Vice President, Commercial 1997 $132,812 20,000
Systems and Products 1996 $117,187 25,000
Thomas L. King............... 1998 $113,750 0
Vice President, Finance and 1997 $111,563 50,000
Chief Financial Officer 1996 $ 98,438 200,000
Joe Russell(4)............... 1998 $189,750(6) 0
Former General Counsel 1997 $188,663(6) 0
1996 $120,813(6) 800,000
</TABLE>

- ---------------
(1) Represents car allowance paid to Mr. Smith.

(2) During fiscal year 1998, options to purchase 200,000 shares of GreyStone
Common Stock at an exercise price of $4.95 per share which were originally
issued in fiscal year 1997 were cancelled and options to purchase 450,000
shares of GreyStone Common Stock were issued to Mr. Smith.

(3) For fiscal year 1998, amount represents reimbursement of income tax services
expense for fiscal year 1998. For fiscal years 1997 and 1996, amounts
represent reimbursement of medical expenses and certain company car expenses
incurred by Mr. Smith.

(4) During fiscal year 1997, options to purchase 500,000 shares of GreyStone
Common Stock at an exercise price of $7.70 per share which were originally
issued to Mr. Smith in fiscal year 1995 were cancelled and options to
purchase 500,000 shares of GreyStone Common Stock at an exercise price of
$4.95 per share were issued to Mr. Smith.

(5) During fiscal year 1997, options to purchase 50,000 shares of GreyStone
Common Stock at an exercise price of $7.00 per share which were originally
issued to Mr. Beaudet in fiscal year 1995 were cancelled and options to
purchase 50,000 shares of GreyStone Common Stock at an exercise price of
$3.80 per share were issued to Mr. Beaudet.

(6) Mr. Russell terminated employment with GreyStone effective July 10, 1998.
Includes for fiscal years 1998, 1997 and 1996 deferred compensation of
$39,000, $39,000 and $16,250, respectively. As of September 30, 1998,
deferred compensation in an aggregate amount of $7,500 has been paid to Mr.
Russell.

61
<PAGE> 72

STOCK OPTION GRANTS AND EXERCISES

GreyStone grants options to its executive officers under its 1994 Stock
Option and Stock Award Plan and under its 1991 Stock Option Plan. Mr. Rich Smith
was the only executive officer of Greystone who received options in fiscal year
1998. The following table shows, for the fiscal year ended March 31, 1998,
certain information regarding options granted to Mr. Smith:

OPTIONS OUTSTANDING

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE --------------------------
NAME GRANTED(#) FISCAL YEAR(1) (S/SH) EXPIRATION DATE 5% 10%
---- ------------- -------------- ----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Smith.......... 450,000 31.9% $4.95 200,000 @ 6/28/07 $1,400,862 $3,550,061
250,000 @ 8/16/07
</TABLE>

- ---------------
(1) In fiscal year 1998, 200,000 of the 500,000 ISO options issued to Mr. Smith
in 1995 were cancelled and reissued as NSO options. In addition, during
fiscal year 1998, options to purchase 250,000 shares of GreyStone Common
Stock at an exercise price of $4.95 per share were issued to Mr. Smith under
the terms of his employment agreement. Based on options to purchase
1,410,000 shares granted to employees during fiscal year 1998.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR

During fiscal year 1998, no Named Executive Officers exercised any options.

EMPLOYMENT AGREEMENTS

Pursuant to an employment agreement between GreyStone and Mr. Richard A.
Smith entered into in August 16, 1997 (the "Smith Employment Agreement"), Mr.
Smith currently receives from GreyStone an annual base salary of not less than
$250,000 and bonuses and equity compensation as determined by the GreyStone
Board of Directors. The Smith Employment Agreement also provides that Mr. Smith
shall be entitled to a bonus of five percent (5%) of pre-tax earnings of
GreyStone, provided the pre-tax earnings exceed $500,000 after the bonus expense
is charged against earnings, with a cap that the annual bonus shall not exceed
five hundred percent (500%) of the annual base salary in the year of
determination. If Mr. Smith's employment is "Constructively Terminated" other
than for a "Change in Control" (as such terms are defined in the Smith
Employment Agreement"), then Mr. Smith is entitled to an amount equivalent to
his base salary for the thirty-six months immediately prior to the Constructive
Termination. If Mr. Smith's employment is Constructively Terminated pursuant to
a "Change in Control", other than for cause (as such terms are defined in the
Smith Employment Agreement), Mr. Smith will receive as severance (i) an amount
equal to 299% of his then current annual base salary plus 299% of the amount of
the greater of the bonus awarded to him in the prior calendar year or the
average of the annual bonuses received by him in respect of his employment
during the 2 year period preceding the year in which the change of control
occurred, and (ii) an amount in cash equal to the present value (calculated at a
discount rate of 10%) of the incremental retirement benefits that would have
been payable or available to Mr. Smith under any qualified plan, or under any
other supplemental retirement, life or medical plan or arrangement, regardless
of whether qualified, that is maintained by GreyStone and is based on the age
and service Mr. Smith would have attained or completed had he continued as an
employee of GreyStone for an additional two (2) years. All of such payments are
to be made in one lump sum within 30 days of termination, except with respect to
item (ii) above which is to be paid within 10 days after the date of
Constructive Termination. If Mr. Smith's employment is terminated with cause or
if Mr. Smith resigns other than for "sufficient reason," Mr. Smith's
compensation and benefits will cease immediately and Mr. Smith will not be
entitled to severance benefits.

Pursuant to an employment agreement dated May 15, 1992 between GreyStone
and Mr. Bernard Crowe, GreyStone's Vice President, Commercial Systems Division,
Mr. Crowe receives a current annual base salary of $125,000. In addition, under
the employment agreement, the GreyStone Board may, in its sole discretion,

62
<PAGE> 73

award such bonuses to Mr. Crowe as the GreyStone Board deems appropriate based
on Mr. Crowe's performance. Either party may terminate the agreement upon
fourteen days written notice. In the event GreyStone terminates the employment
agreement with or without cause, GreyStone shall only be obligated to pay to Mr.
Crowe his annual base salary prorated to the date of termination.

Pursuant to an employment agreement dated August 16, 1991 between GreyStone
and Mr. Carl Beaudet, GreyStone's Vice President, Government Business
Development, Mr. Beaudet receives a current annual base salary of $125,000. In
addition, under the employment agreement, the GreyStone Board may, in its sole
discretion, award such bonuses to Mr. Beaudet as the GreyStone Board deems
appropriate based on Mr. Beaudet's performance. Either party may terminate the
agreement upon fourteen days written notice. In the event GreyStone terminates
the employment agreement with or without cause, GreyStone shall only be
obligated to pay to Mr. Beaudet his annual base salary prorated to the date of
termination.

Pursuant to an employment agreement dated August 16, 1991 between GreyStone
and Mr. Thomas Aldern, GreyStone's Vice President, Government Systems, Mr.
Aldern receives a current annual base salary of $110,000. In addition, under the
employment agreement, the GreyStone Board may, in its sole discretion, award
such bonuses to Mr. Aldern as the GreyStone Board deems appropriate based on Mr.
Aldern's performance. Either party may terminate the agreement upon fourteen
days written notice. In the event GreyStone terminates the employment agreement
with or without cause, GreyStone shall only be obligated to pay to Mr. Aldern
his annual base salary prorated to the date of termination.

Pursuant to an employment agreement dated January 17, 1994 between
GreyStone and Mr. Thomas King, GreyStone's Chief Financial Officer, Mr. King
receives a current base salary of $140,000. In addition, under Mr. King's
employment agreement, he was awarded a signing bonus of $24,000 and $10,000 for
moving expenses. Also, Mr. King was granted options to purchase 50,000 shares of
GreyStone Common Stock at an exercise price of $7.00 per share. Either party may
terminate the agreement upon fourteen days written notice. In the event
GreyStone terminates the employment agreement with or without cause, GreyStone
shall only be obligated to pay to Mr. King his annual base salary prorated to
the date of termination.

63
<PAGE> 74

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In order to provide incentives for certain founders of GreyStone, GreyStone
sold shares to three employees of GreyStone in August 1991 pursuant to certain
8.2% promissory notes (the "Founders Notes"). The Founders Notes are secured by
such shares. In May l992, GreyStone reacquired certain of such shares from the
three individuals and reduced the principal balance of the notes. As a result of
such transactions, as of August 31, 1998, the outstanding principal balances of
the Notes were as follows: Carl A. Beaudet -- $195,000 which is secured by
800,000 shares of Common Stock; Thomas D. Aldern -- $35,000 which is secured by
160,000 shares of Common Stock; and David C. Vineyard -- $97,500 which is
secured by 400,000 shares of Common Stock of GreyStone. The Notes mature on the
earlier of (i) August 16, 2001, (ii) ninety (90) days after the termination of
the Stock Restriction Agreement, (iii) the dissolution, bankruptcy or insolvency
of GreyStone or (iv) GreyStone's initial public offering. All of the shares of
Common Stock owned by Messrs. Beaudet, Aldern and Vineyard (the "Founders") are
subject to a Stock Restriction Agreement dated August 16, 1991 among GreyStone,
the Founders, Richard A. Smith and Mr. Smith's wife. The Stock Restriction
Agreement contains certain prohibitions on transfer of any Common Stock owned by
such individuals, a right of first refusal in favor of GreyStone upon a proposed
sale of the Common Stock and a covenant not to compete by each individual upon a
sale of such individual's stock which is subject to the Stock Restriction
Agreement.

By promissory note dated July 15, 1993 GreyStone borrowed from Kenwood
Capital I Limited Partnership ("Kenwood") the sum of $100,000 and by promissory
note dated September 23, 1993, GreyStone borrowed the sum of $50,000 from
Kenwood. Kenwood is an affiliated entity of Jon M. Reynolds, a Director of
GreyStone. GreyStone has repaid the loans in full, in cash or by the exchange of
shares of Common Stock of GreyStone therefor.

On November 22, 1993, GreyStone issued warrants to The Pointe Force Company
("Pointe Force") to acquire the aggregate of 400,000 shares of Common Stock of
GreyStone at an exercise price of $10.00 per share (the "Pointe Force
Warrants"). The Pointe Force Warrants terminate on November 22, 2003. As of the
date of this Prospectus, none of the Pointe Force Warrants had been exercised.

In March 1996, GreyStone and Pointe Force entered into a Services Agreement
which provides for Pointe Force, through its agent Jon Reynolds, who was at the
time an officer and director of GreyStone, to provide continuing general
financial and management advisory services to GreyStone, including the services
of Mr. Reynolds as the President and Chief Operating Officer of GreyStone. Under
the Services Agreement, GreyStone acknowledged that it owed Pointe Force for
services rendered through March 31, 1996 under a previous agreement in the
aggregate sum of $92,954.14 and that for the period commencing April 1, 1996
GreyStone would accrue compensation to Pointe Force in the amount of $10,000 per
month until the earlier of (i) Mr. Reynolds ceasing to perform services as
GreyStone's President and Chief Operating Officer or (ii) thirty (30) days after
GreyStone's receipt of an infusion of debt or equity in an amount of not less
than $2 million (the "Capital Infusion"). The parties agreed that upon receiving
the Capital Infusion, (i) GreyStone would pay as soon as reasonably practical to
Pointe Force the sum of $92,954.14 plus the sum of $10,000 per month from April
1, 1996 until thirty days after the Capital Infusion, (ii) Pointe Force and
Reynolds would cease to be entitled to any further compensation; and (iii) the
parties would negotiate in good faith a compensation package for Mr. Reynolds in
accordance with the parties understanding and agreement on the future
involvement of Mr. Reynolds with GreyStone. It is anticipated by the parties
that Mr. Reynolds will, at a minimum, continue to serve as a director of
GreyStone. In addition, the Services Agreement provided that the Pointe Force
Warrants previously issued to Pointe Force would fully vest and that Pointe
Force would receive additional warrants to purchase 100,000 shares of Common
Stock at an exercise price of $10.00 per share. Finally, the Services Agreement
provides that Pointe Force will receive warrants to purchase an additional
150,000 shares of Common Stock of GreyStone, at an exercise price of $10.00 per
share, in the event the Capital Infusion is from certain parties with whom Mr.
Reynolds is the primary procuring person. Mr. Reynolds resigned as President and
Chief Operating Officer of GreyStone effective as of January 1, 1997, but has
agreed to continue to serve as a Director of GreyStone.

64
<PAGE> 75

Between December 1994 and December 1995, GreyStone borrowed an aggregate of
$2,709,769 from Richard A. Smith, GreyStone's Chief Executive Officer. Mr. Smith
had in turn borrowed the funds he loaned GreyStone from other creditors pursuant
to promissory notes which were convertible into shares of GreyStone's Common
Stock owned by Mr. Smith (the "Creditor Notes"). The loans from the various
creditors to Mr. Smith (the "Creditor Notes") bear interest at the rate of 9.0%
per annum and contain a provision which enables the creditors to convert the
loans into shares of Common Stock owned by Mr. Smith at the rate of $4.50 per
share; except loans from three creditors for the aggregate amount of $147,500
bear interest at the rate of 18.0% per annum and are convertible at the option
of the holder on maturity into shares of Common Stock owned by Mr. Smith at the
rate of $7.14 per share. GreyStone has entered into a promissory note to Mr.
Smith ("Smith Notes") upon the same terms as the Creditor Notes to Mr. Smith,
with the exception that GreyStone's promissory notes to Mr. Smith do not contain
the right to convert the principal amount into shares of Common Stock. During
calendar year 1996, holders of Creditor Notes in the aggregate principal amount
of $385,880 plus unpaid accrued interest either converted their respective notes
into shares of GreyStone's Common Stock owned by Mr. Smith or were paid in full.
In March 1997, GreyStone expressed its desire to satisfy its obligation to repay
the Smith Notes by assuming the obligation of Mr. Smith to repay the Creditor
Notes, and if the creditors desired to convert their respective Creditor Notes
into shares of GreyStone's Common Stock, then GreyStone would permit such
conversion from the authorized shares of GreyStone instead of Mr. Smith,
provided such creditors exercising the conversion agreed. As of March 31, 1998,
the aggregate of $2,564,769 in outstanding principal of the Creditor Notes plus
unpaid accrued interest was either paid in full or had agreed to the assumption
of the debt by GreyStone and the conversion of such debt ("Novation") into
shares of Common Stock of GreyStone at $4.50 per share, leaving a balance of
$184,048 in outstanding principal amount of the Creditor Notes, including
accrued unpaid interest.

As of March 31, 1998, the outstanding balance of the Smith Notes owed by
GreyStone to Mr. Smith, plus unpaid accrued interest thereon, was $262,937. Mr.
Smith has entered into written agreements with the holders of the Smith Notes to
make a capital contribution of this amount, less any taxes incurred by Mr.
Smith. As of March 31, 1998, Mr. Smith owes GreyStone the sum of $133,548,
including accrued and unpaid interest thereon, representing sums advanced to or
paid on behalf of Mr. Smith by GreyStone. GreyStone has entered into employment
agreements with five of its executive officers (including Mr. Smith). The
original terms of two of the employment agreements have expired and such
employment agreements continue on a month-to-month basis until terminated by
either party with written notice to the other. The original terms of two of the
other employment agreements expire December 31, 1998, and such employment
agreements will continue on a month-to-month basis until terminated by either
party with written notice to the other. The original term of Mr. Smith's
employment agreement expires August 16, 2000, and such employment agreement will
continue for two years in the absence of written notice to the contrary from the
other party.

65
<PAGE> 76

GREYSTONE PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of GreyStone's Common Stock as of September 30, 1998 by (i) each
GreyStone shareholder known by GreyStone to own beneficially more than 5% of the
Common Stock; (ii) each Named Executive Officer; and (iii) each director, and
(iv) all directors and Named Executive Officers as a group:

<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF COMMON STOCK
NAME SHARES(1) OWNED(1)
---- --------- ------------
<S> <C> <C>
Richard A. Smith(2)................................ 7,103,419 47.4%
Carl A. Beaudet(3)................................. 890,000 6.2%
Thomas A. Aldern(4)................................ 850,000 6.0%
Jon M. Reynolds(5)................................. 519,286 3.5%
Bernard J. Crowe(6)................................ 233,000 1.6%
Thomas L. King(7).................................. 220,000 1.5%
--------- ----
All directors and Named Executive Officers as a
Group(8)......................................... 9,815,705 61.1%
========= ====
</TABLE>

- ---------------
(1) This table is based upon information derived from GreyStone's stock records.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, GreyStone believes that each of
the shareholders named in this table has sole or shared voting and
investment power with respect to the shares indicated as beneficially owned.
Applicable percentages are based upon 14,217,713 shares of Common Stock
outstanding as of September 30, 1998.

(2) Includes 3,200,000 shares of Common Stock held by Katherine Smith, the wife
of Richard Smith. Also includes options to purchase 783,373 shares of Common
Stock exercisable within 60 days of September 30, 1998.

(3) Includes 40,000 shares of Common Stock held by Linda Beaudet, the wife of
Carl Beaudet. Also includes options to purchase 50,000 shares of Common
Stock exercisable within 60 days of September 30, 1998.

(4) Includes options to purchase 50,000 shares of Common Stock exercisable
within 60 days of September 30, 1998.

(5) Includes warrants to purchase 500,000 shares of Common Stock exercisable
within 60 days of September 30, 1998.

(6) Includes options to purchase 233,000 shares of Common Stock exercisable
within 60 days of September 30, 1998.

(7) Includes options to purchase 220,000 shares of Common Stock exercisable
within 60 days of September 30, 1998.

(8) Includes options and warrants to purchase 1,836,373 shares of Common Stock
exercisable within 60 days of September 30, 1998.

66
<PAGE> 77

EXPRESS CAPITAL MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

In reviewing the following discussion, reference is made to Express
Capital's financial statements included elsewhere herein.

Since January 1, 1996, Express Capital has not had any operating revenues
(other than investment income).

Express Capital does not have sufficient funds, assuming that a Business
Combination is not consummated, to operate. Express Capital has funded its
activities primarily by borrowing from its two largest shareholders. This debt
shall be forgiven in connection with the Merger.

EXPRESS CAPITAL BUSINESS

GENERAL

Express Capital was formed on May 18, 1988 to serve as a vehicle to effect
a Business Combination with a Target Business. In July 1988 Express Capital
consummated its initial public offering of 500,000 shares of Express Capital
Common Stock at a price of $.10 per share.

Express Capital has been seeking to acquire a Target Business for several
years. In February 1995, it entered into a letter of intent to acquire a Target
Business but that acquisition was terminated in March 1996. On August 11, 1997,
Express Capital agreed to the Merger with GreyStone. Express Capital anticipates
that at the date of the Merger, it will have no substantial assets.

EMPLOYEES

As of June 30, 1998, Express Capital had no employees.

PROPERTIES

Express Capital's principal office is located in Littleton, Colorado where
it occupies space in the offices controlled by Mr. Earnest Mathis, Jr.,
President of Express Capital. Express Capital utilizes this space pursuant to an
oral agreement. Express Capital intends to occupy this space until it effects a
Business Combination. Express Capital does not owe or pay any rent on the space
and the oral agreement will be terminated without any liability to Express
Capital or GreyStone upon the consummation of the Merger.

LEGAL PROCEEDINGS

At this time, there are no pending or threatened legal proceedings
involving Express Capital or any of its assets.

DIRECTOR AND EXECUTIVE OFFICER OF EXPRESS CAPITAL; EXECUTIVE COMPENSATION

The current sole director and officer of Express Capital is Mr. Earnest
Mathis, Jr., who shall resign as director and officer effective as of the
Effective Time of the Merger. Mr. Mathis has served as the sole director and
officer of Express Capital since its inception. Mr. Mathis received $69,809.50
as compensation from Express Capital during 1997. During 1998, he will receive
no compensation from Express Capital.

67
<PAGE> 78

EXPRESS CAPITAL PRINCIPAL SHAREHOLDERS

The following table sets forth information as of October 7, 1998, based on
information obtained from the persons named below, with respect to the
beneficial ownership (as defined under the applicable rules of the Commission)
of shares of Express Capital Common Stock by (i) each person known by Express
Capital to be the owner of more than 5% of the outstanding shares of Express
Capital Common Stock, and (ii) the sole director and executive officer:

<TABLE>
<CAPTION>
SHARES OF
SHARES OF EXPRESS PERCENT OF EXPRESS EXPRESS CAPITAL
CAPITAL COMMON CAPITAL STOCK COMMON STOCK
STOCK BENEFICIALLY OUTSTANDING PRIOR BENEFICIALLY OWNED
NAME OWNED(1)(2) TO THE MERGER AFTER THE MERGER(3)
---- ------------------ ------------------ -------------------
<S> <C> <C> <C>
Earnest Mathis, Jr.(4) ........... 9,250,000 46.25% 221,997
Gary J. McAdam(5)................. 9,310,000 46.55% 223,434
</TABLE>

- ---------------
(1) Earnest Mathis, Jr.'s address is in care of Express Capital. Gary J.
McAdam's address is 14 Red Tail Drive, Highlands Ranch, Colorado, 80126.

(2) Unless otherwise noted, Express Capital believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Express Capital Common Stock beneficially owned by them.

(3) Shares of Express Capital Common Stock Beneficially owned after the Merger
gives effect to a 1-for-41.66667 reverse split of Express Capital's Common
Stock to be effected in connection with the consummation of the Merger.

(4) Includes: (i) 4,575,000 Shares of Common Stock held by Mathis' Family
Partners, Ltd. and (ii) 4,675,000 Shares of Common Stock held by Inverness
Investments Profit Sharing Plan.

(5) Includes: (i) 2,147,500 shares of Common Stock held by GJM Trading Partners,
Ltd.; (ii) 2,387,500 Shares of Common Stock held by Growth Ventures, Inc.;
(iii) 2,387,500 Shares of Common Stock held by Growth Ventures, Inc. Pension
Plan and Trust; and (iv) 2,387,500 Shares of Common Stock held by Growth
Ventures, Inc. Profit Sharing Plan and Trust.

68
<PAGE> 79

PROPOSED MANAGEMENT OF EXPRESS CAPITAL AND THE SURVIVING CORPORATION
AFTER THE MERGER

Pursuant to the terms of the Merger Agreement, the current directors and
executive officers of GreyStone will become the directors and executive officers
of the surviving corporation. Effective upon the consummation of the Merger,
Messrs. Richard Smith, Thomas Aldern and Jon Reynolds, the current directors of
GreyStone, will be appointed as the directors of Express Capital. Mr. Smith will
be appointed as a Class I director and will serve an initial term of one year,
Mr. Aldern will be appointed as a Class II director and will serve an initial
term of two years and Mr. Reynolds will be appointed as a Class III director and
will serve an initial term of three years. Upon their first reelection after the
consummation of the Merger, each Class I, II and III director will serve for a
three-year term. Also, effective upon the consummation of the Merger, the
following persons will serve as executive officers of Express Capital in the
positions indicated: Mr. Richard Smith, Chairman, President and Chief Executive
Officer; Mr. Thomas Aldern, Vice President, Government Systems; Mr. Carl
Beaudet, Vice President, Government Business Development; Mr. Bernard Crowe,
Vice President, Commercial Systems and Products; Mr. Thomas King, Vice
President, Finance and Chief Financial Officer; and Ms. Carolyn Harris, Vice
President, General Counsel and Secretary.

69
<PAGE> 80

DESCRIPTION OF GREYSTONE CAPITAL STOCK

COMMON STOCK

The authorized capital stock of GreyStone consists of 50,000,000 shares of
Common Stock, no par value. No other class of capital stock has been authorized.
As of August 31, 1998 there were 14,119,699 shares of GreyStone's Common Stock
outstanding held of record by 654 shareholders. The holders of GreyStone's
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the shareholders. With respect to the election of
directors, a shareholder may cumulate his or her votes for any nominee if such
nominee's name has been placed in nomination prior to the commencement of the
voting and the shareholder gives notice at the meeting of his or her intent to
cumulate votes. If any shareholder gives notice, then all shareholders entitled
to vote may cumulate their votes by giving one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of his or her
shares or by distributing such votes on the same principle among any number of
candidates such shareholder sees fit. Shares of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. Holders of GreyStone's Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of GreyStone's Common Stock are validly
issued, fully paid and nonassessable. Two shareholders have rights of first
refusal to purchase their pro rata share of any new securities which GreyStone
proposes to sell, and such shareholders have waived and terminated this right as
to any past, current and future offerings of any new securities by GreyStone.

1991 STOCK OPTION PLAN

GreyStone's 1991 Stock Option Plan (the "1991 Plan") was adopted by the
Board of Directors in August 1991. A total of 500,000 shares of Common Stock
have been reserved for issuance under the 1991 Plan. The Board of Directors, or
a Committee to whom the Board has delegated authority, selects the employees,
officers and directors of, and consultants to, GreyStone to whom options are
granted (provided that incentive stock options may only be granted to employees
of GreyStone), interprets and adopts rules for the operation of the 1991 Plan
and specifies other terms of such options. Options granted under the 1991 Plan
generally become exercisable at a rate of twenty percent (20%) of the shares
subject to the option upon grant and twenty percent (20%) on each anniversary
date of the grant until the options are fully vested.

The maximum term of a stock option under the 1991 Plan is ten (10) years.
If an optionee ceases to be an employee of GreyStone, the optionee may exercise
only those option shares vested as of the date of termination and must effect
such exercise within thirty (30) days of termination of service for any reason
other than death or disability and six (6) months after termination due to death
or disability. The exercise price of incentive stock options granted under the
1991 Plan must be at least equal to 100% of the fair market value of the Common
Stock of GreyStone on the date of grant, provided, however that such exercise
price must be at least 110% of the fair market value of GreyStone's Common Stock
if the optionee owns stock possessing more than 10% of the voting power of
GreyStone's outstanding capital stock. The exercise price of non-qualified stock
options must be at least equal to 85% of the fair market value of GreyStone's
Common Stock on the date of grant. Payment of the exercise price may be made in
cash unless the Board of Directors exercises its discretion to accept other
types of consideration. The 1991 Plan may be amended at any time by the Board,
although certain amendments would require shareholder approval. The 1991 Plan
will terminate in August 2001 unless earlier terminated by the Board.

Of the 500,000 shares available for issuance under the 1991 Plan as of
August 31, 1998, options to purchase 200,000 shares of Common Stock have been
issued and are fully vested at an exercise price of $0.275 per share.

1994 STOCK OPTION AND STOCK BONUS PLAN

GreyStone's 1994 Stock Option and Stock Bonus Plan (the "1994 Plan") was
adopted by the Board of Directors in February 1994 and amended in May 1994. A
total of 2,000,000 shares of Common Stock have

70
<PAGE> 81

been reserved for issuance under the 1994 Plan. Of the 2,000,000 shares
available for issuance under the 1994 Plan, as of August 31, 1998, incentive
stock options to purchase 1,132,050 shares have been issued and are outstanding.
The exercise prices on the outstanding options issued pursuant to the 1994 Plan
vary.

The Board of Directors, or a Committee to whom the Board has delegated
authority, selects the employees, officers and directors of, and consultants to,
GreyStone to whom options are granted (provided that incentive stock options may
only be granted to employees of GreyStone), interprets and adopts rules for the
operation of the 1994 Plan and specifies other terms of such options. Options
granted under the 1994 Plan generally vest and become exercisable at a rate of
twenty percent (20%) of the shares subject to the option on December 31 at the
end of the first year and twenty percent (20%) on each successive December 31
until the options are fully vested.

The 1994 Plan also provides GreyStone with the right to repurchase any
shares purchased by an optionee upon exercise of options within 90 days after
the termination of the optionee's relationship with GreyStone. If GreyStone
exercises its option to repurchase the option shares, the repurchase price will
be equal to the higher of the original price or the then fair market value of
the shares to be repurchased and GreyStone must repurchase all of the optionee's
option shares. GreyStone also has a right of first refusal with respect to the
sale of any option shares by an optionee for a period of 30 days after receiving
notice of the proposed transfer by the optionee. These transfer restrictions do
not apply to the transfer of option shares to certain related parties of an
option, and terminate entirely upon an initial public offering by GreyStone
raising at least $5,000,000.

The maximum term of a stock option under the 1994 Plan is ten (10) years.
If an optionee ceases to be an employee of GreyStone, the optionee may exercise
only those option shares vested as of the date of termination and must effect
such exercise within thirty (30) days of termination of service for any reason
other than death or disability and twelve months after termination due to death
or disability. The exercise price of incentive stock options granted under the
1994 Plan must be at least equal to 100% of the fair market value of the Common
Stock of GreyStone on the date of grant, or 110% if the optionee owns stock
possessing more than 10% of the voting power of GreyStone's outstanding capital
stock. The exercise price of non-qualified stock options must be at least equal
to 85% of the fair market value of the Common Stock on the date of grant.
Payment of the exercise price may be made in cash unless the Board of Directors
exercises its discretion to accept other types of consideration.

The 1994 Plan also provides for awards of Common Stock to employees
approved by the Board of Directors. As of June 30, 1998, stock awards were
granted to seven employees of GreyStone for a total of 3,935 shares pursuant to
the 1994 Plan.

The 1994 Plan may be amended at any time by the Board, although certain
amendments would require shareholder approval. The 1994 Plan will terminate in
July 2004 unless earlier terminated by the Board.

NON-PLAN OPTIONS

In 1991, GreyStone granted to Mr. Richard Smith, GreyStone's Chairman and
Chief Executive Officer, a non-qualified stock option for 100,000 shares of
Common Stock at an exercise price of $0.55 per share which became subject to a
May 1992 2-for-1 stock split. In 1994, subject to the 1992 stock split,
GreyStone granted to Mr. Smith a non-qualified stock option to purchase up to
200,000 shares of Common Stock at an exercise price of $0.275 per share.

In 1992, under the 1991 Stock Option Plan of the GreyStone Trading Company,
GreyStone granted to Mr. Bernard Crowe, GreyStone's Vice President, Commercial
Systems, an incentive stock option to purchase 20,000 shares of Common Stock at
an exercise price of $1.00 per share. In July 1993, the option was increased to
200,000 shares at an exercise price of $1.00 per share in connection with his
employment during the year ended March 31, 1993. In July 1994, the 200,000 share
1991 incentive stock option was converted to a non-statutory option to purchase
200,000 shares of GreyStone common stock under the 1994 Stock Option and Stock
Bonus Plan of GreyStone Technology, Incorporated, at an exercise price of $1.00
per share.

In 1997, the Board of Directors cancelled 200,000 of the 500,000 options
that had been granted to Mr. Smith under the 1994 Plan and re-issued such
options outside of the 1994 Plan.
71
<PAGE> 82

In addition, on July 10, 1997, the GreyStone Board of Directors authorized
the grant of non-qualified options to two consultants to purchase an aggregate
of 700,000 shares of Common Stock at an exercise price of $4.95 per share, and
on August 16, 1997, the GreyStone Board of Directors authorized the grant of a
non-qualified option to Mr. Smith to purchase 250,000 shares of Common Stock at
an exercise price of $4.95 per share ("Smith August Grant"). The grants to the
two consultants and the Smith August Grant are to take effect upon approval of
an increase in the aggregate number of options issuable by GreyStone, which is
subject to (i) approval by a majority of GreyStone's shareholders and (ii) the
California Department of Corporation issuing a permit to increase the aggregate
number of options issuable by GreyStone. On July 21, 1997, the Company modified
the grant to Mr. Joe Russell, then Vice President, Corporate Development and
General Counsel of the Company, of incentive stock options to purchase 800,000
shares of the Company Stock to provide that in the event his employment with the
Company is terminated for any reason, then he shall have a period of thirty-six
(36) months from the date of termination to exercise his options.

WARRANTS

As of August 31, 1998, GreyStone had issued and outstanding warrants to
acquire an aggregate of 965,974 shares of Common Stock at an exercise price of
$4.95 per share, 5,000 shares of Common Stock at an exercise price of $7.00 per
share, 39,448 shares of Common Stock at an exercise price of $8.00 per share,
2,338,711 shares of Common Stock at an exercise price of $10.00 per share and
25,891 shares at an exercise price of $12.00 per share. As of August 31, 1998,
warrants to purchase 3,255,024 shares of Common Stock were immediately
exercisable. The holders of warrants to purchase an aggregate of 1,386,750
shares of Common Stock of GreyStone are entitled to certain registration rights
with respect to the underlying shares.

REGISTRATION RIGHTS

Pursuant to agreements between GreyStone and certain holders of GreyStone's
Common Stock, holders of shares of Common Stock issuable pursuant to the
exercise of certain of GreyStone's outstanding convertible notes and warrants
are entitled to certain rights with respect to the registration of such shares
under the Securities Act. If GreyStone proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of other securityholders, such holders are entitled to notice of such
registration and are entitled to include, at GreyStone's expense, such shares
therein, provided, among other conditions, that the underwriters of any offering
have the right to limit the number of such shares included in the registration.

72
<PAGE> 83

DESCRIPTION OF EXPRESS CAPITAL STOCK

The following description regarding Express Capital Stock assumes the
adoption of the Express Capital Restated Certificate prior to the consummation
of the Merger.

After giving effect to the adoption of the Express Capital Restated
Certificate, the authorized capital of Express Capital will consist of
30,000,000 shares of Common Stock, par value $.001 per share, and 3,000,000
shares of Preferred Stock, par value $.001 per share.

COMMON STOCK

After giving effect to the reverse stock split discussed herein,
approximately 480,000 shares of Express Capital Common Stock will be issued and
outstanding. Subject to such rights as may thereafter be established with
respect to Express Capital Preferred Stock, holders of Express Capital Common
Stock have one vote for each share held of record. All shares of Express Capital
Common Stock participate equally in such dividends as may be declared and, in
the event of dissolution, in the assets of Express Capital remaining after
payment of all debts and liabilities and after satisfaction of any rights which
may be established with respect to shares of Express Capital Preferred Stock.
Holders of Express Capital Common Stock have no pre-emptive or other rights to
subscribe for additional shares or conversion rights, and there are no
redemption or sinking fund provisions. The outstanding shares of Express Capital
Common Stock are, and the shares to be issued in the Merger will be, fully paid
and non-assessable.

Corporate Stock Transfer, Inc. is the transfer agent and registrar for the
Express Capital Common Stock.

PREFERRED STOCK

The Board of Directors of Express Capital may issue Express Capital
Preferred Stock from time to time in one or more series, without any vote or
action by the Express Capital stockholders. The Board of Directors can fix the
number of shares, voting powers, designation, dividend rights, conversion
rights, terms of redemption, liquidation rights and other preferences, powers
and special or relative rights of each such series and the qualifications,
limitations and restrictions thereon, and increase or decrease the number of
shares of each such series (but not below the number of shares of such series
then outstanding). The issuance of Express Capital Preferred Stock, while
providing flexibility in connection with possible financings, acquisitions and
other corporate transactions, could, among other things, adversely affect the
rights of the holders of Express Capital Common Stock and, in certain
circumstances, make it more difficult for a third party to acquire, or
discourage a third party from acquiring, control over Express Capital. On the
date of this Prospectus/Proxy Statement and on the date the Merger takes place,
no shares of Express Capital Preferred Stock will be issued and outstanding, and
Express Capital has no plans to issue any such shares.

DELAWARE LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

Express Capital is a Delaware corporation and is subject to the provisions
of the DGCL, the Express Capital Restated Certificate and the restated bylaws
set forth in Annex D. Certain important provisions thereof are discussed in
"Comparison of Rights of GreyStone Shareholders and Express Capital
Stockholders." Such provisions include, without limitation, the provisions of
Section 203 of the DGCL, and provisions dealing with indemnification and
limitation of the monetary liability of directors of Express Capital, Express
Capital's classified Board of Directors, and limitations on the power of
stockholders of Express Capital to call special meetings, act by written
consent, nominate directors of Express Capital and introduce other business at
stockholders meetings. Such provisions could, among other things, have the
effect of delaying, deferring or preventing a change in control of Express
Capital.

73
<PAGE> 84

WARRANTS

In connection with the Merger, Express Capital will exchange warrants to
purchase an aggregate of 986,750 shares of Express Capital Common Stock (the
"Express Capital Warrants") for certain outstanding warrants to purchase an
aggregate of 986,750 shares of GreyStone Common Stock. The Express Capital
Warrants bear exercise prices as follows: warrants to purchase 405,000 shares of
Common Stock at an exercise price of $4.95 per share; warrants to purchase
38,250 shares of Common Stock at $8.00 per share; and warrants to purchase
543,500 shares of Common Stock at $10.00 per share. The Express Capital Warrants
shall contain terms and conditions identical to those contained in the warrants
to purchase GreyStone Common Stock being exchanged therefore. See "Description
of GreyStone Capital Stock."

74
<PAGE> 85

COMPARISON OF RIGHTS OF GREYSTONE SHAREHOLDERS AND EXPRESS CAPITAL STOCKHOLDERS

The rights of Express Capital stockholders are governed by Express
Capital's Certificate of Incorporation (the "Express Capital Certificate"), its
Bylaws (the "Express Capital Bylaws") and the DGCL. The rights of GreyStone
shareholders are currently governed by GreyStone's Articles of Incorporation, as
amended (the "GreyStone Articles"), its Bylaws (the "GreyStone Bylaws") and the
CGCL. Prior to the Effective Time, Express Capital will file the Express Capital
Restated Certificate and will adopt the Express Capital Restated Bylaws, copies
of each of which are attached to this Proxy Statement/Prospectus as Annex C and
Annex D, respectively. Upon consummation of the Merger, and issuance of the
Merger Shares, the GreyStone shareholders will be governed by the Express
Capital Restated Certificate, the Express Capital Restated Bylaws, the DGCL and,
under certain circumstances and in accordance with Section 2115 of the CGCL,
various provisions of the CGCL.

The following is a summary of certain similarities and differences between
the rights of Express Capital stockholders and GreyStone shareholders under the
foregoing governing documents and applicable law, after giving effect to the
filing of the Express Capital Restated Certificate and Express Capital Bylaws.
This summary does not purport to be a complete statement of such similarities
and differences. The identification of specific similarities and differences is
not meant to indicate that other equally or more significant similarities and
differences do not exist. Such similarities and differences can be examined in
full by reference to the DGCL, the CGCL and the respective corporate documents
of Express Capital and GreyStone.

Capital Stock. Under the Express Capital Restated Certificate, the
authorized capital stock of Express Capital will consist of 30,000,000 shares of
Express Capital Common Stock, $.001 par value per share, and 3,000,000 shares of
Preferred Stock, $.001 par value per share, issuable in such series and with
such rights, powers and privileges as the Express Capital Board shall determine.
As of September 30, 1998, and assuming the Reverse Split had then been
effective, the total shares of Express Capital Common Stock issued and
outstanding was 480,000. Express Capital currently has no shares of Preferred
Stock outstanding. The authorized capital stock of GreyStone consists of
50,000,000 shares of Common Stock, no par value, of which 14,217,713 shares were
issued and outstanding on September 30, 1998. GreyStone has no shares of
Preferred Stock authorized.

Amendment of Express Capital Restated Certificate and GreyStone
Articles. The DGCL and the CGCL both provide that approval of a majority of the
outstanding stock entitled to vote thereon is required to amend a certificate of
incorporation or articles of incorporation, as applicable. The Express Capital
Restated Certificate provides, however, that an amendment of certain provisions
must be approved by the affirmative vote of at least sixty-six and two-thirds
percent (66 2/3%) of all of the outstanding stock entitled to vote thereon. On
the other hand, consistent with the CGCL, any provision of the GreyStone
Articles may be amended by the affirmative vote of a majority of the shares
entitled to vote.

Amendment of Bylaws. Under the DGCL, bylaws may be amended by stockholders
entitled to vote; however, a corporation may confer the power to amend bylaws
upon the board of directors. The fact that such power has been so conferred upon
the directors does not divest the stockholders of their power to amend the
bylaws. The Express Capital Restated Certificate provides that the Express
Capital bylaws may be amended by the affirmative vote of at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding stock entitled to vote thereon
or by the Express Capital Board. Under the CGCL and the GreyStone Bylaws, the
GreyStone Bylaws generally may be amended or repealed either by the majority
vote of the GreyStone Board or by the holders of a majority in interest of the
outstanding shares of voting stock of GreyStone, except that a change in the
authorized number of directors may only be effected by a vote of the majority of
the outstanding stock entitled to vote thereon; however, an amendment reducing
the minimum number of directors to less than five cannot be adopted if votes
cast against its adoption are equal to or more than 16 2/3% of the outstanding
shares entitled to vote thereon.

Special Meetings of Stockholders and Shareholders. Under the DGCL, a
special meeting of stockholders may be called by the board of directors or by
any other person authorized to do so in the certificate of
75
<PAGE> 86

incorporation or the bylaws. The Express Capital Restated Bylaws permit a
special meeting to be called for any purpose or purposes by (i) the Chairman of
Express Capital Board, (ii) the Chief Executive Officer, (iii) a majority of the
Express Capital Board, or (iv) if Express Capital is then subject to Section
2115 of the CGCL, by the holder or holders of five percent (5%) or more of the
outstanding shares of Express Capital.

Under the CGCL and the GreyStone Bylaws, a special meeting of shareholders
may be called by (i) the GreyStone Board, (ii) the Chairman of the GreyStone
Board, (iii) GreyStone's President, or (iv) one or more shareholders holding at
least ten percent (10%) of the voting power of GreyStone.

Actions by Written Consent of Stockholders or Shareholders. Under the DGCL,
any action which may be taken at a meeting of stockholders may be taken without
a meeting and without prior notice if written consents setting forth the action
so taken are signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all stock entitled to vote thereon were present and voted.
Under the Express Capital Restated Certificate, an action may be taken by the
stockholders by written consent only prior to the time Express Capital's capital
stock is listed for trading on a national securities exchange or the Nasdaq
National Market. After such time, no action may be taken by the stockholders by
written consent.

Under the CGCL, shareholders may execute an action by written consent in
lieu of a shareholder meeting. The GreyStone Bylaws provide that an action may
be taken by the stockholders by written consent signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting. The GreyStone Bylaws
provide further that directors may not be elected by written consent except by
unanimous written consent of all shares entitled to vote for the election of
directors; provided, however, that any vacancy on the GreyStone Board, other
than a vacancy created by virtue of removal, may be filled by written consent of
a majority of the outstanding shares entitled to vote for the election of
directors.

Size of the Board of Directors. The DGCL provides that the board of
directors of a Delaware corporation shall consist of one or more members. The
number of directors may be fixed by, or in the manner provided in, the
corporation's bylaws unless the certificate of incorporation fixes the number of
directors. The Express Capital Restated Certificate requires that the number of
directors shall be fixed exclusively by one or more resolutions adopted by the
Board of Directors. Upon consummation of the Merger, the Express Capital Board
will consist of three directors.

The CGCL allows the number of persons constituting the board of directors
to be fixed by the bylaws or the articles of incorporation, or permits the
bylaws to provide that the number of directors may vary within a specified
range, the exact number to be determined by the board of directors. The CGCL
further provides that, in the case of a variable board, the maximum number of
directors may not exceed two times the minimum number minus one. The GreyStone
Bylaws currently provide that the authorized number of directors shall be not
less than four nor more than seven, with the present number authorized at four.

Classification of Board of Directors. The DGCL permits, but does not
require, a classified board of directors, divided into as many as three classes
with staggered terms under which one-half or one-third of the directors are
elected for terms of two or three years, respectively. The Express Capital
Restated Certificate and the Express Capital Restated Bylaws provide for a
classified board of directors whereby the directors will be separated into three
classes with members of each class serving for a three year term; provided,
however, that in the event Express Capital is subject to Section 2115 of the
CGCL, then the Express Capital Board will not be deemed to be a classified board
and all directors shall be elected at each annual meeting of the stockholders.

The CGCL generally requires that directors be elected annually but does
permit a "classified" board of directors if the corporation is "listed." A
listed corporation is defined under the CGCL as one which (i) is listed on the
NYSE or American Stock Exchange or (ii) with a class of securities designated as
a national market system security on and by the National Association of
Securities Dealers Automatic Quotation System (or any successor national market
system) if the corporation has at least 800 holders of its equity securities. If
eligible for the classes, the CGCL permits corporations to provide for a board
of directors divided

76
<PAGE> 87

into as many as three classes by adopting an amendment to their articles of
incorporation or bylaws, which amendment must be approved by the shareholders.
The size of the classes must be as even as possible, and any change in number of
classes must be approved by the shareholders. Neither the GreyStone Articles nor
the GreyStone Bylaws provide for a classified Board.

Cumulative Voting. Under the DGCL, cumulative voting in the election of
directors is not available unless specifically provided for in the certificate
of incorporation. The Express Capital Restated Certificate provides that there
shall be no cumulative voting unless Express Capital is then subject to Section
2115 of the CGCL.

Under the CGCL, cumulative voting in the election of directors is mandatory
upon notice given by a shareholder at a shareholders' meeting at which directors
are to be elected that such shareholder intends to cumulate his votes. If any
one shareholder gives such a notice, all shareholders may cumulate their votes.
The CGCL permits a corporation, by amending its articles of incorporation or
bylaws, to eliminate cumulative voting when such company is "listed" (as defined
above in the section entitled "Classification of Board of Directors"). The
GreyStone Bylaws permit any person entitled to vote at an election for directors
to cumulate the votes to which such person is entitled; provided, however, that
no shareholder shall be entitled to cumulate such shareholder's votes unless the
candidates for which such shareholder is voting have been placed in nomination
prior to the voting and a shareholder has given notice at the meeting, prior to
the vote, of an intention to cumulate votes.

Removal of Directors. Under the DGCL, a director of a corporation with a
classified board of directors may be removed only for cause, unless the
certificate of incorporation otherwise provides. A director of a corporation
that does not have a classified board of directors or cumulative voting may be
removed with the approval of a majority of the outstanding shares entitled to
vote with or without cause. The Express Capital Restated Certificate provides
that if Express Capital is then subject to Section 2115 of the CGCL, any
director may be removed from office, at any time, without cause, by the
affirmative vote of the holders of a majority of the shares entitled to vote.
However, if Express Capital is not then subject to Section 2115 of the CGCL, a
director may be removed by the stockholders of Express Capital only for cause.

Under the CGCL, a director may be removed with or without cause by the
affirmative vote of a majority of the outstanding shares, provided that the
shares voted against removal would not be sufficient to elect the director by
cumulative voting. In addition, when, by the provisions of the articles of
incorporation, the holders of shares of a class or series, voting as a class or
series, are entitled to elect one or more directors, any director so elected may
be removed only by the applicable vote of holders of shares of that class or
series. The GreyStone Bylaws are consistent with the CGCL with respect to the
removal of directors.

Filling Vacancies in the Board of Directors. Under the DGCL, vacancies may
be filled by a majority of the directors then in office (even though less than a
quorum) unless otherwise provided in the certificate of incorporation or bylaws.
The DGCL further provides that if, at the time of filling any vacancy, the
directors then in office constitute less than a majority of the board (as
constituted immediately prior of any such increase), the Delaware Court of
Chancery may, upon application of any holder or holders of at least ten percent
of the total number of the outstanding stock having the right to vote for
directors, summarily order a special election be held to fill any such vacancy
or to replace directors chosen by the board to fill such vacancies. The Express
Capital Restated Bylaws provide that any vacancies on the Express Capital Board
resulting from death, resignation, disqualification, removal or other causes and
any newly created directorships resulting from any increase in the number of
directors shall, unless the Board of Directors determines by resolution that any
such vacancies or newly created directorships shall be filled by the Express
Capital stockholders, be filled by the affirmative vote of the majority of the
directors then in office, even though less than a quorum of the board of
directors.

Under the CGCL, any vacancy on the board of directors other than one
created by removal of a director may be filled by the board. If the number of
directors in office is less than a quorum, a vacancy may be filled by the
unanimous written consent of the directors then in office, by the affirmative
vote of a majority of the directors then in office or by a sole remaining
director. A vacancy created by removal of a director may be filled by the board
only if so authorized by a corporation's articles of incorporation or by a bylaw
approved by a
77
<PAGE> 88

corporation's shareholders. Furthermore, if, after the filling of any vacancy by
the directors of a corporation, the directors then in office who have been
elected by the corporation's shareholders constitute less than a majority of the
directors then in office, then: (i) any holder of more than 5% of the
corporation's voting stock may call a special meeting of shareholders, or (ii)
the superior court of the appropriate county may order a special meeting of the
shareholders to elect the entire board of directors of the corporation. The
GreyStone Bylaws provide that the shareholders may elect a director at any time
to fill any vacancy not filled by the directors. Any such election by written
consent, other than to fill a vacancy created by removal, requires the consent
of a majority of the outstanding shares entitled to vote. Any such election by
written consent to fill a vacancy created by removal requires the consent of all
of the outstanding shares entitled to vote.

Appraisal Rights. Under both the CGCL and the DGCL, a shareholder of a
corporation participating in certain major corporate transactions may, under
varying circumstances, be entitled to appraisal (or dissenters') rights pursuant
to which such shareholder may receive cash in the amount of the fair market
value of his or her shares in lieu of the consideration he or she would
otherwise receive in the transaction. Under the DGCL, such rights are not
available (a) with respect to the sale, lease or exchange of all or
substantially all of the assets of a corporation, (b) with respect to a merger
or consolidation by a corporation, the shares of which are either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. or are held of record by more than 2,000 holders if such
stockholders receive only shares of the surviving corporation or shares of any
other corporation which are either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders, plus cash in lieu of fractional shares, or (c) to
stockholders of a corporation surviving a merger if no vote of the stockholders
of the surviving corporation is required to approve the merger because the
merger agreement does not amend the existing certificate of incorporation, each
share of the surviving corporation outstanding prior to the merger is an
identical outstanding or treasury share after the merger, and the number of
shares to be issued in the merger does not exceed 20% of the shares of the
surviving corporation outstanding immediately prior to the merger and if certain
other conditions are met.

In connection with the Merger, holders of GreyStone Common Stock may, by
complying with Chapter 13 of the CGCL, be entitled to dissenter's rights as set
forth therein, and the shares of GreyStone Common Stock held by such persons
will be deemed to be dissenting shares. A copy of Chapter 13 of the CGCL is
attached as Annex E to this Proxy Statement/Prospectus.

Limitation of Liability of Directors. The laws of both Delaware and
California permit corporations to adopt a provision in their certificate of
incorporation or articles of incorporation, respectively, eliminating, with
certain exceptions, the personal liability of a director to the corporation or
its shareholders for monetary damages for breach of the director's fiduciary
duty as a director. Under the DGCL, Express Capital may not eliminate or limit
director monetary liability for (a) breaches of the director's duty of loyalty
to the corporation or its stockholders; (b) acts or omissions not in good faith
or involving intentional misconduct or a knowing violation of law; (c) unlawful
dividends, stock repurchases or redemptions; or (d) transactions from which the
director received an improper personal benefit. Such limitation of liability
provision also may not limit a director's liability for violation of, or
otherwise relieve directors from the necessity of complying with federal or
state securities laws, or affect the availability of nonmonetary remedies such
as injunctive relief or rescission. The Express Capital Restated Certificate
eliminates the liability of the Express Capital Board to the fullest extent
permissible under the DGCL.

The CGCL does not permit the elimination of monetary liability where such
liability is based on: (a) intentional misconduct or knowing and culpable
violation of law; (b) acts or omissions that a director believes to be contrary
to the best interests of the corporation or its shareholders, or that involve
the absence of good faith on the part of the director; (c) receipt of any
improper personal benefit; (d) acts or omissions that show reckless disregard
for the director's duty to the corporation or its shareholders, where the
director in the ordinary course of performing a director's duties should have
been aware of a risk of serious injury to the corporation or its shareholders;
(e) acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the corporation and its
shareholders; (f) interested

78
<PAGE> 89

transactions between the corporation and a director, in which a director has a
material financial interest; or (g) liability for improper distributions, loans
or guarantees.

Stockholder and Shareholder Approval of Certain Business
Combinations. Section 203 of the DGCL prohibits a corporation from engaging in a
"business combination" with an "interested stockholder" for three years
following the date that such person becomes an interested stockholder. With
certain exceptions, an interested stockholder is a person or entity who or which
owns 15% or more of the corporation's outstanding voting stock (including any
rights to acquire stock pursuant to an option, warrant, agreement, arrangement
or understanding, or upon the exercise of conversion or exchange rights, and
stock with respect to which the person has voting rights only), or is an
affiliate or associate of the corporation and was the owner of 15% or more of
such voting stock at any time within the previous three years.

For purposes of Section 203, the term "business combination" is defined
broadly to include mergers of the corporation or a subsidiary with or caused by
the interested stockholder; sales or other dispositions of the interested
stockholder (except proportionately with the corporation's other stockholders)
of assets of the corporation or a subsidiary equal to ten percent or more of the
aggregate market value of the corporation's consolidated assets or its
outstanding stock; the issuance or transfer by the corporation or a subsidiary
of stock of the corporation or such subsidiary to the interested stockholder
(except for certain transfers in a conversion or exchange or a pro rata
distribution or certain other transactions, none of which increase the
interested stockholder's proportionate ownership of any class or series of the
corporation's or such subsidiary's stock); or receipt by the interested
stockholder (except proportionately as a stockholder), directly or indirectly,
of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation or a subsidiary.

The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the date at which such stockholder becomes an
interested stockholder the board of directors approves either the business
combination or the transaction which resulted in the person becoming an
interested shareholder; (ii) the interested stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction which made him
or her an interested stockholder (excluding from the number of shares
outstanding those shares owned by directors who are also officers of the target
corporation and shares held by employee stock plans which do not permit
employees to decide confidentially whether to accept a tender or exchange
offer); or (iii) on or after the date such person becomes an interested
stockholder, the board approves the business combination and it is also approved
at a stockholder meeting by 66 2/3% of the voting stock not owned by the
interested stockholder. Section 203 does not apply if the business combination
is proposed prior to the consummation or abandonment of and subsequent to the
earlier of the public announcement or a 20-day notice required under Section 203
of the proposed transaction which (i) constitutes certain (a) mergers or
consolidations, (b) sales or other transfers of assets having an aggregate
market value equal to 50% or more of the aggregate market value of all of the
assets of the corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation, or (c) proposed
tender or exchange offer for 50% or more of the corporation's outstanding voting
stock; (ii) is with or by a person who was either not an interested stockholder
during the last three years or who became an interested stockholder with the
approval of the corporation's board of directors; and (iii) is approved or not
opposed by a majority of the board members elected prior to any person becoming
an interested stockholder during the previous three years (or their chosen
successors).

Under California law, there is no equivalent provision to Section 203 of
the DGCL. Under Section 1203 of the CGCL, certain business combinations with
certain interested shareholders are subject to specified conditions, including a
requirement that a fairness opinion must be obtained and delivered to the
corporation's shareholders. The CGCL requires that holders of a California
corporation's common stock receive nonredeemable common stock in a merger of the
corporation with the holder (or an affiliate of the holder) of more than 50% but
less than 90% of its common stock, unless all of the holders of its common stock
consent to the transaction.

Stockholder Voting on Mergers and Similar Transactions. The laws of both
California and Delaware generally require that a majority of the stockholders of
both acquiring and target corporations approve

79
<PAGE> 90

statutory mergers. The DGCL does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of stock of the surviving
corporation outstanding before the merger is an identical outstanding or
treasury share after the merger, and (c) the number of shares to be issued by
the surviving corporation in the merger does not exceed 20% of the shares
outstanding immediately prior to the merger. The CGCL contains a similar
exception to its voting requirements for reorganization where shareholders or
the corporation itself, or both, immediately prior to the reorganization will
own immediately after the reorganization equity securities equal to more than
five-sixths of the voting power (assuming the conversion of convertible equity
securities) of the surviving or acquiring corporation or its parent entity.

The laws of both California and Delaware also generally require that a sale
of all or substantially all of the assets of a corporation be approved by a
majority of the voting shares of the corporation transferring such assets.

With certain exceptions, the CGCL also requires that mergers,
reorganizations, and similar transactions be approved by a majority vote of each
class of shares outstanding. In contrast, the DGCL generally does not require
class voting, except for amendments to the certificate of incorporation that
change the number of authorized shares or the par value of shares of a specific
class or that adversely affect such class of shares.

Loans to Directors, Officers and Employees. The DGCL permits Express
Capital to make loans to, guarantee the obligations of, or otherwise assists its
officers or other employees when such action, in the judgment of the directors,
may reasonably be expected to benefit Express Capital. Under the CGCL, any loan
to or guaranty for the benefit of a director or officer, including pursuant to
an employee benefit plan, of the corporation requires approval of holders of a
majority of the outstanding shares of the corporation. However, the CGCL
provides that if GreyStone has 100 or more shareholders of record and has
adopted a bylaw allowing the GreyStone Board to do so, the GreyStone Board alone
may approve loans to or guaranties on behalf of an officer (whether or not such
officer is a director) or adopt an employee benefit plan authorizing such loans
or guarantees, by a vote sufficient without counting the vote of any interested
director or directors, if the GreyStone Board determines that any such loan,
guaranty or plan may reasonably be expected to benefit the corporation.

Interested Director Transactions. Under the both the CGCL and the DGCL,
contracts or transactions between a corporation and one or more of its directors
or between a corporation and any other entity in which one or more of its
directors are directors or have a financial interest, are not void or voidable
because of such interest or because such director is present at a meeting of the
board which authorizes or approves the contract or transaction, provided that
certain conditions, such as obtaining the required approval and fulfilling the
requirements of good faith and full disclosure, are met. With certain
exceptions, the conditions are similar under the CGCL and the DGCL. Under the
CGCL and the DGCL, either (a) the shareholders or the board of directors must
approve any such contract or transaction in good faith after full disclosure of
the material facts (and, in the case of board approval other than for a common
directorship, the CGCL requires that the contract or transaction must also be
"just and reasonable" to the corporation), or (b) the contract or transaction
must have been "fair" (in Delaware) or, in the case of a common directorship (in
California), "just and reasonable" as to the corporation at the time it was
approved. The CGCL explicitly places the burden of proof of the just and
reasonable nature of the contract or transaction on the interested director.

Under the DGCL, if board approval is sought, the contract or transaction
must be approved by a majority of the disinterested directors (even though less
than a majority of a quorum). Under the CGCL, if shareholder approval is sought,
the interested director is not entitled to vote his or her shares at a
shareholder meeting with respect to any action regarding such contract or
transaction. If board approval is sought, the contract or transaction must be
approved by a majority vote of a quorum of the directors, without counting the
vote of any interested directors (except that interested directors may be
counted for purposes of establishing a quorum).

Stockholder Derivative Suit. Under the DGCL, a person may only bring a
derivative action on behalf of the corporation if the person was a stockholder
of the corporation at the time of the transaction in question or
80
<PAGE> 91

his or her stock thereafter devolved upon him or her by operation of law. The
CGCL provides that a shareholder bringing a derivative action on behalf of a
corporation need not have been a shareholder at the time of the transaction in
question, provided that certain criteria are met. The CGCL also provides that
the corporation or the defendant in a derivative suit may, under certain
circumstances, make a motion to the court for an order requiring the plaintiff
shareholder to furnish a security bond. Delaware does not have a similar bonding
requirement.

Dissolution. Under the DGCL, if the dissolution is initiated by the board
of directors it may be approved by the holders of a majority of the
corporation's shares. If the board of directors does not approve the proposal to
dissolve, it must be consented to in writing by all stockholders entitled to
vote thereon. Under the CGCL, shareholders holding fifty percent (50%) or more
of the total voting power may authorize a corporation's dissolution, with or
without the approval of the corporation's board of directors. The board may
cause the corporation to dissolve if (a) an order for relief under Chapter 7 of
the Federal bankruptcy law has been entered, (b) no shares have been issued or
(c) the corporation has disposed of all of its assets and has not conducted any
business for a period of five years preceding the adopting of a resolution to
dissolve.

81
<PAGE> 92

EXPERTS

The financial statements of GreyStone as of March 31, 1998 and 1997 and for
the years ended March 31, 1998, 1997 and 1996 have been included herein and in
the Registration Statement in reliance upon the report (which contains an
explanatory paragraph relating to GreyStone's ability to continue as a going
concern) of J.H. Cohn LLP, independent public accountants, given on the
authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Express Capital as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 have been included herein and in the Registration Statement in reliance
upon the report of Angell & Deering, independent accountants, appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.

Representatives of J.H. Cohn LLP will be present at the Special Meeting.
While such representatives have stated that they do not plan to make a statement
at such meeting, they will be available to respond to appropriate questions from
shareholders in attendance.

LEGAL MATTERS

The validity of the shares of Express Capital Common Stock being offered by
this Proxy Statement/ Prospectus and certain federal income tax matters related
to the Merger are being passed upon for Express Capital by Mitchell Silberberg &
Knupp LLP, Los Angeles, California. Certain federal income tax matters related
to the Merger are being passed upon for GreyStone by Cooley Godward LLP, San
Diego, California.

WHERE YOU CAN FIND MORE INFORMATION

Neither Express Capital nor GreyStone is subject to the reporting
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, and, therefore, does not file reports, proxy statements or other
information with the Commission.

Under the rules and regulations of the Commission, the solicitation of
proxies from the shareholders of GreyStone to approve the Merger constitutes an
offering of Express Capital Common Stock to be issued in connection with the
Merger. Accordingly, Express Capital has filed with the Commission a
Registration Statement on Form S-4 under the Securities Act, with respect to
such offering (as amended from time to time, the "Registration Statement"). This
Proxy Statement/Prospectus constitutes the prospectus of Express Capital that is
filed as part of the Registration Statement in accordance with the rules and
regulations of the Commission. Copies of the Registration Statement, including
the exhibits to the Registration Statement and other material that is not
included herein, may be inspected, without charge, at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549, and may be available at the following Regional Offices of
the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, New York, New York 10048.
Copies of such materials may be obtained at prescribed rates from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549. Information on the operation of the Public Reference Room
may be obtained by calling the Commission at 1-800-SEC-0330. In addition, the
Commission maintains a site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.

82
<PAGE> 93

GreyStone has supplied all information contained in this Proxy
Statement/Prospectus relating to GreyStone, and Express Capital has supplied all
information in this Proxy Statement/Prospectus relating to Express Capital.

You should rely only on the information contained in this Proxy
Statement/Prospectus to vote on approval of the Merger Agreement and the Merger
Proposal. We have not authorized anyone to provide you with information that is
different from what is contained in this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus is dated , 1998. You should not assume
that the information contained in this Proxy Statement/Prospectus is accurate as
of any date other than such date, and neither the mailing of this Proxy
Statement/Prospectus to shareholders nor the issuance of Express Capital Common
Stock in the Merger shall create any implication to the contrary.

83
<PAGE> 94

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GREYSTONE TECHNOLOGY, INCORPORATED
Report of Independent Public Accountants.................... F-2
Balance Sheets as of March 31, 1998 and 1997................ F-3
Statements of Operations for the Years Ended March 31, 1998,
1997 and 1996............................................. F-4
Statements of Stockholders' Deficiency for the Years Ended
March 31, 1998, 1997 and 1996............................. F-5
Statements of Cash Flows for the Years Ended March 31, 1998,
1997 and 1996............................................. F-6
Notes to Financial Statements............................... F-7
Unaudited Balance Sheet as of June 30, 1998................. F-16
Unaudited Statements of Operations for the Three Months
Ended June 30, 1998 and 1997.............................. F-17
Unaudited Statement of Stockholders' Deficiency for the
Three Months Ended June 30, 1998.......................... F-18
Unaudited Statements of Cash Flows for the Three Months
Ended June 30, 1998 and 1997.............................. F-19
Notes to Unaudited Financial Statements..................... F-20
EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY
Independent Auditors' Report................................ F-26
Consolidated Balance Sheets as of June 30, 1998 (unaudited)
and December 31, 1997 and 1996............................ F-27
Consolidated Statements of Operations for the six months
ended June 30, 1998 and 1997 (unaudited) and for the years
ended December 31, 1997, 1996 and 1995.................... F-28
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for the six months ended June 30, 1998
(unaudited) and for the years ended December 31, 1997,
1996 and 1995............................................. F-29
Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (unaudited) and for the years
ended December 31, 1997, 1996 and 1995.................... F-30
Notes to Consolidated Financial Statements.................. F-31
</TABLE>

F-1
<PAGE> 95

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of GreyStone Technology, Incorporated

We have audited the accompanying balance sheets of GREYSTONE TECHNOLOGY,
INCORPORATED as of March 31, 1998 and 1997, and the related statements of
operations, stockholders' deficiency and cash flows for the years ended March
31, 1998, 1997 and 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GreyStone Technology,
Incorporated as of March 31, 1998 and 1997, and its results of operations and
cash flows for the years ended March 31, 1998, 1997 and 1996, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
GreyStone Technology, Incorporated will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company had substantial
working capital and stockholders' deficiencies at March 31, 1998 and substantial
losses for the years ended March 31, 1998, 1997 and 1996. In addition, as
discussed in Notes 6 and 7, the Company was in default on certain of its
outstanding debt. These matters raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.

J.H. COHN LLP
San Diego, California
June 10, 1998

F-2
<PAGE> 96

GREYSTONE TECHNOLOGY, INCORPORATED

BALANCE SHEETS
MARCH 31, 1998 AND 1997

ASSETS

<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 5,083 $ 14,224
Restricted cash........................................... 200,000
Accounts receivable, net of allowance for doubtful
accounts of $85,000 and $21,379........................ 397,856 170,532
------------ ------------
Total current assets.............................. 402,939 384,756
Equipment and improvements, net of accumulated depreciation
and amortization of $1,894,944 and $1,429,477............. 391,553 814,556
Other assets................................................ 120,664 137,193
------------ ------------
Total assets...................................... $ 915,156 $ 1,336,505
============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
Accounts payable and accrued expenses..................... $ 1,301,676 $ 2,405,954
Line of credit borrowings................................. 200,000
Short-term notes payable.................................. 670,000
Convertible notes payable................................. 30,000 3,344,000
Notes payable to principal stockholder.................... 227,937 1,432,802
Capital lease obligations................................. 153,324
------------ ------------
Total liabilities................................. 2,229,613 7,536,080
------------ ------------

Commitments and contingencies

Stockholders' deficiency:
Common stock, no par value; 50,000,000 shares authorized;
14,068,883 and 12,241,404 shares issued and
outstanding............................................ 26,233,057 18,092,078
Receivable from sale of common stock...................... (327,500) (327,500)
Accumulated deficit....................................... (27,220,014) (23,964,153)
------------ ------------
Total stockholders' deficiency.................... (1,314,457) (6,199,575)
------------ ------------
Total liabilities and stockholders' deficiency.... $ 915,156 $ 1,336,505
============ ============
</TABLE>

See Notes to Financial Statements.
F-3
<PAGE> 97

GREYSTONE TECHNOLOGY, INCORPORATED

STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues............................................ $ 2,112,566 $ 2,336,371 $ 2,065,260
----------- ----------- -----------

Expenses:
Cost of revenues.................................. 1,449,713 2,189,373 1,404,976
Marketing and sales............................... 743,866 720,213 663,373
Research and development.......................... 1,742,018 1,978,505 3,146,960
General and administrative........................ 1,230,889 1,519,670 3,040,119
----------- ----------- -----------
Total expenses............................ 5,166,486 6,407,761 8,255,428
----------- ----------- -----------
Loss from operations................................ (3,053,920) (4,071,390) (6,190,168)
Interest expense, including $40,500, $222,425 and
$143,000 on loans from principal stockholder...... 201,941 615,240 507,518
----------- ----------- -----------
Net loss............................................ $(3,255,861) $(4,686,630) $(6,697,686)
=========== =========== ===========
Basic net loss per share............................ $ (.24) $ (.41) $ (.63)
=========== =========== ===========
Basic weighted average number of shares
outstanding....................................... 13,435,377 11,408,158 10,617,417
=========== =========== ===========
</TABLE>

See Notes to Financial Statements.
F-4
<PAGE> 98

GREYSTONE TECHNOLOGY, INCORPORATED

STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED MARCH 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
COMMON STOCK RECEIVABLE FROM
------------------------ SALE OF ACCUMULATED
SHARES AMOUNT COMMON STOCK DEFICIT TOTAL
---------- ----------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, April 1, 1995......... 10,486,031 $10,668,567 $(327,500) $(12,579,837) $(2,238,770)

Common stock sold for cash..... 429,278 1,827,323 1,827,323

Net loss....................... (6,697,686) (6,697,686)
---------- ----------- --------- ------------ -----------
Balance, April 1, 1996......... 10,915,309 12,495,890 (327,500) (19,277,523) (7,109,133)

Common stock sold for cash..... 1,022,938 4,231,980 4,231,980

Common stock issued upon
conversion of convertible
notes payable................ 31,034 139,654 139,654

Common stock issued to reduce
balance of notes payable to
principal stockholder........ 272,123 1,224,554 1,224,554

Net loss....................... (4,686,630) (4,686,630)
---------- ----------- --------- ------------ -----------
Balance, April 1, 1997......... 12,241,404 18,092,078 (327,500) (23,964,153) (6,199,575)

Common stock sold for cash..... 734,197 3,153,031 3,153,031

Common stock issued upon
conversion of convertible
notes payable................ 712,556 3,206,500 3,206,500

Common stock issued to reduce
balance of notes payable to
principal stockholder........ 198,088 891,396 891,396

Common stock issued to pay for
accrued interest............. 147,359 731,287 731,287

Common stock issued to pay for
services..................... 35,279 158,765 158,765

Net loss....................... (3,255,861) (3,255,861)
---------- ----------- --------- ------------ -----------
Balance, March 31, 1998........ 14,068,883 $26,233,057 $(327,500) $(27,220,014) $(1,314,457)
========== =========== ========= ============ ===========
</TABLE>

See Notes to Financial Statements.
F-5
<PAGE> 99

GREYSTONE TECHNOLOGY, INCORPORATED

STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss.............................................. $(3,255,861) $(4,686,630) $(6,697,686)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization...................... 529,911 443,474 521,154
Provision for bad debts............................ 64,000 30,000
Write-off of other assets.......................... 27,020
Write-off of deferred lease obligations upon lease
termination...................................... (140,906)
Other.............................................. 8,576
Changes in operating assets and liabilities:
Accounts receivable.............................. (291,324) 163,641 (196,888)
Other assets..................................... 16,529 (100,251) 143,879
Accounts payable and accrued expenses............ (292,947) 163,779 1,361,733
----------- ----------- -----------
Net cash used in operating activities......... (3,221,116) (4,156,893) (4,810,788)
----------- ----------- -----------
Investing activities:
Purchases of equipment and improvements, net.......... (115,484) (44,306) (318,581)
----------- ----------- -----------
Financing activities:
Repayment of line of credit borrowings................ (200,000)
Proceeds from issuance of short-term notes payable.... 670,000
Proceeds from issuance of convertible notes payable... 150,000 1,147,350
Repayments of convertible notes payable............... (107,500)
(Payments to) borrowings from principal stockholder... (313,469) (85,356) 2,181,963
Payments of capital lease obligations................. (74,603) (87,477) (176,685)
Sales of common stock................................. 3,153,031 4,231,980 1,827,323
----------- ----------- -----------
Net cash provided by financing activities..... 3,127,459 4,209,147 4,979,951
----------- ----------- -----------

Net increase (decrease) in cash and cash equivalents.... (209,141) 7,948 (149,418)
Cash and cash equivalents, beginning of year............ 214,224 206,276 355,694
----------- ----------- -----------

Cash and cash equivalents, end of year.................. $ 5,083 $ 214,224 $ 206,276
=========== =========== ===========
Supplemental disclosure of cash flow data:
Interest paid......................................... $ 85,805 $ 269,775 $ 272,568
=========== =========== ===========
Supplemental disclosure of noncash investing and
financing activities:
Common stock issued upon conversion of convertible
notes payable...................................... $ 3,206,500 $ 139,654
=========== ===========
Common stock issued as payment for:
Notes payable to principal stockholder............. $ 891,396 $ 1,224,554
=========== ===========
Accrued interest................................... $ 731,287
===========
Services........................................... $ 158,765
===========
</TABLE>

See Notes to Financial Statements.
F-6
<PAGE> 100

GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Description of operations:

GreyStone Technology, Incorporated (the "Company") was incorporated in
California on April 5, 1988. The Company is organized into two principal
operating groups within a single business segment. The Company designs, develops
and markets real-time, interactive, and networked three dimensional, digital
media content ("digital media"). The Company develops and delivers its 3-D
digital media content principally for entertainment and defense (i.e., training
and simulation) applications.

The Company's Government Systems Group began operations in 1989 and works
primarily as a subcontractor on contracts with prime defense contractors. The
Government Systems Group's engineers perform systems software engineering,
specializing in the application of advanced software techniques for developing
"smarter" systems that learn, reason and achieve some level of intelligence
(i.e., artificial intelligence). Substantially all of the Company's revenues
from its inception through March 31, 1998 have been derived from government
contracts.

The Company's Commercial Systems Group was established in 1993 to develop
products to be sold primarily for entertainment centers and home entertainment.
The Commercial Systems Group's engineers perform systems software engineering,
specializing in the custom development and application of entertainment software
for the coin-operated market. No significant revenues have been derived from the
Commercial Systems Group through March 31, 1998.

Cash and cash equivalents:

The Company considers all highly-liquid investments with maturities of
three months or less when acquired to be cash equivalents.

Equipment and improvements:

Equipment and improvements are stated at cost and are depreciated over
their estimated useful lives of five years using the straight-line method.

Impairment of long-lived assets:

The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of ("SFAS 121"). Under SFAS 121, impairment
losses on long-lived assets, such as property and equipment and intangible
assets, are recognized when events or changes in circumstances indicate that the
undiscounted cash flows estimated to be generated by such assets are less than
their carrying value and, accordingly, all or a portion of such carrying value
may not be recoverable. Impairment losses are then measured by comparing the
fair value of assets to their carrying amounts.

Revenue recognition:

The revenues derived by the Government Systems Group are earned under a
variety of cost reimbursement and fixed-price contracts with the U.S.
Government, subcontracts with prime contractors and commercial contracts.
Contract revenues on fixed price long-term contracts are recorded using the
percentage of completion method, primarily based on contract costs incurred to
date, compared with total estimated costs at completion. Provisions for
estimated losses on contracts are recorded as such losses become known. Contract
revenues on cost reimbursement type contracts are recognized as the related
costs are incurred. Revenues on time and material contracts are recognized as
earned.

The Commercial Systems Group recognizes revenues when products are shipped.

F-7
<PAGE> 101
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 -- BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Advertising:

The Company expenses the cost of advertising and promotions as incurred.
Advertising costs charged to operations were not material in 1998, 1997 and
1996.

Research and development:

Costs and expenses related to research and product development are expensed
as incurred.

Income taxes:

The Company accounts for income taxes pursuant to the asset and liability
method which requires deferred income tax assets and liabilities to be computed
annually for temporary differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted laws and rates applicable to the periods in which
the temporary differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be realized. The income tax provision or credit is the tax
payable or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.

Earnings (loss) per share:

Effective March 31, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"),
which replaces the presentation of "primary" and "fully-diluted" earnings (loss)
per common share required under previously promulgated accounting standards with
the presentation of "basic" and "diluted" earnings (loss) per common share.

Basic earnings (loss) per common share is calculated by dividing net income
or loss by the weighted average number of common shares outstanding during the
period. The calculation of diluted earnings (loss) per common share is similar
to that of basic earnings (loss) per common share, except that the denominator
is increased to include the number of additional common shares that would have
been outstanding if all potentially dilutive common shares, principally those
issuable upon the exercise of stock options and warrants, were issued during the
period.

Since the Company had losses applicable to common stock in 1998, 1997 and
1996, the assumed effects of the exercise of outstanding stock options and
warrants were anti-dilutive and, accordingly, dilutive per share amounts have
not been presented in the accompanying statements of operations. In addition,
the basic per share and weighted average share amounts presented in the
accompanying 1997 and 1996 statements of operations which were computed in
accordance with SFAS 128 do not differ from those computed under the previously
promulgated accounting standards.

Use of estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

Reclassifications:

Certain amounts in the accompanying 1997 and 1996 financial statements have
been reclassified to conform to the 1998 presentation.

F-8
<PAGE> 102
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 -- BASIS OF PRESENTATION:

As shown in the accompanying financial statements, the Company had a
working capital deficiency of $1,826,674 and a total stockholders' deficiency of
$1,314,457 at March 31, 1998; net losses of $3,255,861, $4,686,630, and
$6,697,686 in 1998, 1997 and 1996, respectively; and an accumulated deficit from
losses since its inception of $27,220,014 at March 31, 1998. As explained in
Notes 6 and 7, the Company was in default with respect to certain covenants in
its loan agreements as of March 31, 1998. These matters raise substantial doubt
about the ability of the Company to continue as a going concern.

Management believes that sales will increase as a result of new contracts
for its government products, the introduction of its new entertainment product,
the overall growth in the related market for such products and the greater
recognition that the Company will achieve if the Merger described in Note 14 is
consummated and the shares of the merged company are publicly traded. It also
believes that with the introduction of its new entertainment product, research
and development expenses will be reduced. However, management also believes that
the Company will still incur losses and negative cash flows from operating
activities through at least March 31, 1999. Accordingly, the Company will need
immediate debt and/or equity financing through private placements and/or public
offerings in order to meet its obligations and continue as a going concern.
Based on discussions it has had with investment bankers and other potential
investors, management believes the potential for the growth in the Company's
sales and the possibility that the Company's shares will become publicly traded
will enhance the Company's ability to consummate a private or public offering of
the Company's debt or equity securities. Accordingly, management believes, but
cannot assure, that the Company will be able to obtain, through private and/or
public offerings, the additional debt and/or equity financing to enable it to
continue to operate through at least March 31, 1999.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern which contemplates continuity of
operations, realization of assets and satisfaction of liabilities in the
ordinary course of business. If the Company is unable to raise additional
capital, it may be required to take actions which may not be favorable to the
Company in order to continue operations or liquidate its assets and liabilities
and cease operations. The accompanying financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

NOTE 3 -- CONCENTRATION OF CREDIT RISK AND SALES TO MAJOR CUSTOMERS:

The Company maintains all of its cash balances on deposit with one
financial institution. At times, these balances exceed the Federal Deposit
Insurance Corporation limitation for coverage of $100,000 thereby exposing the
Company to credit risk. The Company reduces its exposure to credit risk by
maintaining such deposits with high quality financial institutions.

Accounts receivable are financial instruments that also expose the Company
to a concentration of credit risk. The Company routinely assesses the financial
strength of its customers and maintains an allowance for doubtful accounts that
management believes will adequately provide for credit losses.

During 1998, sales to two customers represented 35% and 12% of total sales.
During 1997, sales to two customers represented 33% and 29% of total sales.
During 1996, sales to four customers represented 25%, 17%, 14% and 11% of total
sales.

F-9
<PAGE> 103
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 -- EQUIPMENT AND IMPROVEMENTS, NET:

Equipment and improvements, net at March 31, 1998 and 1997 consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Computer and other equipment........................ $2,257,457 $2,201,979
Furniture........................................... 29,040 37,040
Leasehold improvements.............................. -- 5,014
---------- ----------
2,286,497 2,244,033
Less accumulated depreciation and amortization.... 1,894,944 1,429,477
---------- ----------
Totals.................................... $ 391,553 $ 814,556
========== ==========
</TABLE>

Total equipment and improvements included approximately $241,000
attributable to capitalized leases as of March 31, 1997.

NOTE 5 -- COMMITMENTS AND CONTINGENCIES:

At March 31, 1998, the Company had a noncancelable lease for its office
space which expires in 2004 and is classified as an operating lease. Rent
expense under all operating leases (including equipment leases that expired in
1996) totaled $331,982, $334,926 and $821,588 in 1998, 1997 and 1996,
respectively.

At March 31, 1998, the future minimum lease payments under the operating
lease are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31, AMOUNT
----------- ----------
<S> <C>
1999........................................... $ 339,818
2000........................................... 339,818
2001........................................... 339,818
2002........................................... 339,818
2003........................................... 339,818
Thereafter..................................... 226,545
----------
Total.................................. $1,925,635
==========
</TABLE>

The Company also had noncancelable leases for certain equipment that
expired in 1998 and were classified as capital leases. At March 31, 1998, the
Company was in default with respect to capital lease obligations totaling
$78,721, which has been included in accounts payable in the accompanying 1998
balance sheet.

Pursuant to a three year employment agreement between GreyStone and Mr.
Richard A. Smith dated August 16, 1997, the Company must, among other things,
pay Mr. Smith an annual base salary of not less than $250,000. It must also pay
Mr. Smith a bonus of 5% of the Company's pre-tax earnings, provided such
earnings exceed $500,000 after the bonus expense is charged against earnings;
the bonus shall not exceed 500% of Mr. Smith's annual base salary in the year of
determination.

NOTE 6 -- SHORT-TERM NOTES PAYABLE:

At March 31, 1998, the Company had outstanding notes payable with a
principal balance of $670,000 that had initial maturities of six months or less,
of which notes payable with a principal balance of $400,000 had matured and were
in default. The notes were unsecured and bore interest at 9% or 10%.

F-10
<PAGE> 104
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7 -- CONVERTIBLE NOTES PAYABLE:

Convertible notes payable at March 31, 1998 and 1997 consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
------- ----------
<S> <C> <C>
9% unsecured notes initially scheduled to mature on January
15, 2000; convertible at $7.14 per share.................. $2,175,000
9% unsecured notes initially scheduled to mature from August
6, 1997 through September 28, 1997; convertible at $4.50
per share(A).............................................. $30,000 783,000
10% unsecured notes initially scheduled to mature from March
18, 1996 through July 3, 1996; convertible at $4.50 per
share..................................................... 286,000
10% secured note initially scheduled to mature June 5, 1996;
convertible at $4.50 per share............................ 100,000
------- ----------
Totals(B)......................................... 30,000 3,344,000
Less current portion........................................ 30,000 3,344,000
------- ----------
Convertible notes payable, net of current portion........... $ -- $ --
======= ==========
</TABLE>

- ---------------
(A) The balance outstanding at March 31, 1998 was in default.

(B) Effective as of March 31, 1998, the Company reduced the principal balance of
the convertible notes payable by $3,206,500 through the issuance of 712,556
shares of common stock, and the balance of accrued interest by $391,877
through the issuance of 87,084 shares of common stock, to the convertible
noteholders. The conversions of the principal balances and accrued interest
were at an effective rate of $4.50 per share.

NOTE 8 -- WARRANTS:

The Company has issued warrants in conjunction with the sale of convertible
notes payable and as part of the consideration paid to various consultants.
Management believes that the fair value of the warrants at the date of each
issuance was nominal and the Company has not made any charges to operations in
conjunction with such issuances. Each warrant entitles the holder to purchase
one share of common stock upon exercise. The warrants expire at various dates
from 2002 through 2008. The following is a summary of warrant activity during
1998, 1997 and 1996:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
WARRANTS PRICE
--------- ------------
<S> <C> <C>
Outstanding at April 1, 1995....................... 760,610 $ 7 to $12
Granted.......................................... 660,275 $10
Cancelled........................................ (11,700) $ 10 to $12
---------
Outstanding at March 31, 1996...................... 1,409,185 $ 7 to $12
Granted.......................................... 39,510 $10
---------
Outstanding at March 31, 1997...................... 1,448,695 $ 7 to $12
Granted.......................................... 1,221,494 $4.95 to $12
Cancelled........................................ (330,849) $4.95 to $12
---------
Outstanding at March 31, 1998...................... 2,339,340 $4.95 to $12
=========
Warrants exercisable at March 31, 1998............. 2,299,340 $4.95 to $12
=========
</TABLE>

NOTE 9 -- INCOME TAXES:

The Company had net operating loss carryforwards at March 31, 1998 of
approximately $26,200,000 available to reduce future Federal taxable income and
approximately $12,700,000 available to reduce state

F-11
<PAGE> 105
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9 -- INCOME TAXES: (CONTINUED)
taxable income, if any. The net operating loss carryforwards expire between 2006
and 2012 for Federal tax purposes and 1999 and 2003 for state tax purposes. The
Company has net deferred tax assets at March 31, 1998, 1997 and 1996 comprised
of the following:

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax assets arising primarily from
net operating losses available for
carryforward and accrued vacation
benefits.................................. $ 9,005,327 $ 8,995,029 $ 7,212,914
Deferred tax liability arising from
accelerated depreciation.................. (79,537) (103,844)
Valuation allowance for deferred tax
assets.................................... (9,005,327) (8,915,492) (7,109,070)
----------- ----------- -----------
Net deferred tax assets..................... $ -- $ -- $ --
=========== =========== ===========
</TABLE>

The Company has offset the net deferred tax assets by an equivalent
valuation allowance due to the uncertainties related to the extent and timing of
its future taxable income.

The expected Federal income benefit, computed based on the Company's
pre-tax losses in 1998, 1997 and 1996 and the statutory Federal income tax rate,
is reconciled to the actual tax provision reflected in the accompanying
financial statements as follows:

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Expected tax benefit at statutory rates..... $ 1,107,000 $ 1,593,500 $ 2,277,200
Decrease resulting from change in valuation
allowance................................. (1,107,000) (1,593,500) (2,277,200)
----------- ----------- -----------
Totals............................ $ -- $ -- $ --
=========== =========== ===========
</TABLE>

NOTE 10 -- SALES OF COMMON STOCK:

The Company sold 734,197 shares of common stock at $4.50 to $8.00 per share
during 1998, 1,022,938 shares at $4.50 per share during 1997 and 429,278 shares
of common stock at $4.50 per share during 1996 to private investors pursuant to
private placement memorandums and exemptions from registration under the
Securities Act of 1933 and received net proceeds of $3,153,031, $4,231,980 and
$1,827,323 in 1998, 1997 and 1996, respectively.

NOTE 11 -- STOCK OPTION PLANS:

The Company has two incentive stock option ("ISO") plans -- the "1991 Plan"
and the "1994 Plan." In addition, the Company issued nonqualified stock options
("NSOs") in 1994 and 1998. Information related to the plans and the other
options granted follows:

<TABLE>
<CAPTION>
OPTIONS
OUTSTANDING AT
OPTIONS MARCH 31,
YEAR TYPE AUTHORIZED 1998
---- ---- ---------- --------------
<S> <C> <C> <C>
1991........................................ ISO 500,000 200,000
1994........................................ NSO 200,000 200,000
1994........................................ ISO 2,000,000 1,913,550
1998........................................ NSO 1,250,000 1,250,000
---------
3,563,550
=========
</TABLE>

F-12
<PAGE> 106
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 11 -- STOCK OPTION PLANS: (CONTINUED)
Generally, the plans specify that the options to purchase shares may be
granted at prices which approximate their fair market value at the date of
grant. At March 31, 1998, options to purchase 300,000 shares were available for
future grant under the 1991 Plan. The 1991 Plan will terminate on August 16,
2001.

As of March 31, 1998, the Company had issued options to purchase 1,913,550
shares and options to purchase 86,450 shares were available for future grant
under the 1994 Plan. The 1994 Plan will terminate in July 2004 unless terminated
as of an earlier date by the Board of Directors.

Options issued under the plans and the other options granted vest over a
five year period and are exercisable over a ten year period from the date of
grant.

Since the Company has adopted the disclosure-only provisions of Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123") and the exercise prices of all of the options
granted were equal to the fair market value at the date of grant, no earned or
unearned compensation cost was recognized in the accompanying financial
statements for stock options granted in 1998, 1997 and 1996. Had compensation
cost been computed based on the fair value at the grant date for all awards in
1998, 1997 and 1996 consistent with the provisions of SFAS No. 123 and
recognized in the financial statements, the Company would have recognized
additional compensation costs of approximately $1,120,300, $732,700 and $402,800
in 1998, 1997 and 1996, respectively.

Additional information regarding options outstanding under the Company's
stock option plans at March 31, 1998, 1997 and 1996 and changes in outstanding
options in 1998, 1997 and 1996 follows:

<TABLE>
<CAPTION>
1998 1997 1996
------------------------ ------------------------ -------------
WEIGHTED WEIGHTED
SHARES OR AVERAGE SHARES OR AVERAGE SHARES OR
PRICE PER EXERCISE PRICE PER EXERCISE PRICE PER
SHARE PRICE SHARE PRICE SHARE
------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Outstanding at beginning of
year.......................... 2,461,853 $3.52 2,257,278 $4.47 1,524,363
Granted......................... 1,410,000 4.82 986,153 4.38 1,128,250
Cancelled....................... (308,303) 4.55 (781,578) 7.35 (395,335)
------------- ------------- -------------
Outstanding at end of year...... 3,563,550 3.95 2,461,853 3.52 2,257,278
============= ============= =============
Price range at end of year...... $.275 - $4.95 $.275 - $7.00 $.275 - $7.00
Exercisable at end of year...... 2,481,300 3.66 2,126,793 3.53 1,088,421
============= ============= =============
Available for grant at end of
year.......................... 386,450 238,147 442,722
============= ============= =============
Weighted average fair value of
options granted during the
year.......................... 3.80 3.80
</TABLE>

The following table summarizes information about stock options outstanding
at March 31, 1998, all of which are at fixed prices:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
NUMBER OF CONTRACTUAL LIFE NUMBER OF
EXERCISE OPTIONS OF OPTIONS OPTIONS
PRICE OUTSTANDING EXERCISABLE EXERCISABLE
-------- ----------- ------------------- -----------
<S> <C> <C> <C>
$ .275.............................. 200,000 3.4 years 200,000
1.000.............................. 200,000 6.3 years 200,000
3.800.............................. 1,613,550 7.6 years 1,281,300
4.950.............................. 1,550,000 5.7 years 800,000
--------- ---------
3,563,550 2,481,300
========= =========
</TABLE>

F-13
<PAGE> 107
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 12 -- RELATED PARTY TRANSACTIONS AND BALANCES:

The Company had outstanding notes payable to its Principal Stockholder of
$227,937 and $1,432,802 at March 31, 1998 and 1997, respectively, which were
unsecured, nonconvertible and bore interest at 9%. Accrued interest of
approximately $35,000 and $222,000 at March 31, 1998 and 1997, respectively, is
included in accounts payable and accrued expenses in the accompanying balance
sheets. The notes mature on December 31, 1998.

The Principal Stockholder borrowed the funds used to make the loans to the
Company from a group of investors by issuing notes (the "Smith Notes") with the
same interest rates and due dates as the notes issued by the Company to the
Principal Stockholder. In addition, the Principal Stockholder granted the
holders of the Smith Notes the right to convert the principal balance and
accrued interest into shares of common stock that he owns at a conversion rate
of $4.50 per share.

During 1998, the Company reduced the principal balance of, and the accrued
interest on, the notes payable to the Principal Stockholder by $891,396 and
$339,410, respectively, by issuing 258,363 shares of common stock to certain
holders of the Smith Notes. During 1997, the Company reduced the principal
balance of, and the accrued interest on, the notes payable to the Principal
Stockholder by $1,072,500 and $152,054, respectively, by issuing 272,123 shares
of common stock to certain holders of the Smith Notes. The holders of the Smith
Notes concurrently agreed to reduce the principal balance and the accrued
interest owed by the Principal Stockholder by equivalent amounts. The
conversions of the principal balances and accrued interest during 1998 and 1997
were at an effective rate of $4.50 per share.

The receivable from the sale of common stock of $327,500 that is reflected
as a reduction of stockholders' equity in the accompanying balance sheets at
March 31, 1998 and 1997 is evidenced by notes received as part of the
consideration for the sale of common stock in 1992. The notes are secured by the
shares of the Company's common stock, mature in August 2001 (except under
certain specified circumstances) and bear interest at 8.2% which is payable at
maturity.

In November 1993, the Company entered into an agreement with a financial
consultant (the "Consultant"), who is also a director of the Company, whereby
the Consultant agreed to provide advice regarding financial and strategic
planning and the negotiation of various business agreements and to review
certain business opportunities and general business decisions, as required by
the Company. In return, the Company agreed to pay the Consultant $10,000 per
month plus reasonable out-of-pocket costs until the Company successfully
completed a public offering or raised $15,000,000 in capital. The agreement was
terminated on December 31, 1996. Unpaid consulting fees of approximately
$124,000 were included in accounts payable and accrued expenses in the
accompanying March 31, 1998 balance sheet.

NOTE 13 -- EMPLOYEE BENEFIT PLAN:

The Company maintains a defined contribution "Section 401(k)" retirement
plan which covers all full-time employees of the Company who have met certain
age and citizenship requirements. Employees may elect to contribute a portion of
their wages directly to the plan, up to the maximum allowed by the Internal
Revenue Code. The Company matches, on a discretionary basis, up to 50% of each
participant's annual contributions to the plan; however, the Company's matching
contribution may not exceed 8% of the participant's annual compensation. The
Company did not make any contributions in connection with the plan in 1998, 1997
and 1996.

NOTE 14 -- PROPOSED BUSINESS COMBINATION:

On August 11, 1997, the Company entered into a definitive agreement whereby
the Company and Express Capital Concepts, Inc., a Delaware corporation ("Express
Capital"), would enter into a business combination pursuant to which the Company
would merge with a wholly-owned subsidiary of Express Capital
F-14
<PAGE> 108
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 14 -- PROPOSED BUSINESS COMBINATION: (CONTINUED)
(the "Merger"). Upon consummation of the Merger, the wholly-owned subsidiary of
Express Capital would continue as the surviving corporation. Pursuant to the
terms of the definitive agreement, the stockholders of the Company would receive
an equivalent number of shares of common stock of Express Capital in exchange
for their shares of common stock of the Company and all of the Company's
outstanding options and warrants would be assumed by Express Capital and
therefore would entitle the holders thereof to receive an equivalent number of
shares of Express Capital common stock upon the exercise of such options and
warrants.

The existing stockholders of the Company would own more than 90% of the
outstanding common stock of Express Capital subsequent to the Merger. Express
Capital was formed for the primary purpose of acquiring one or more
privately-held companies and has not conducted any commercial operations since
its inception. Based on audited financial statements provided by Express
Capital, it had no revenues during the year ended December 31, 1997 and a
working capital deficiency of approximately $86,000 as of December 31, 1997. The
common stock of Express Capital is traded on the OTC Electronic Bulletin Board.
Consummation of the Merger is subject to various terms and conditions. If
consummated, the business combination will be accounted for as a "Reverse
Acquisition" whereby the Company will be deemed to be the acquiring company for
accounting purposes and the assets and liabilities of the Company will continue
to be recorded at their historical carrying values as of the date of the Merger
pursuant to the purchase method of accounting.

F-15
<PAGE> 109

GREYSTONE TECHNOLOGY, INCORPORATED

BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)

ASSETS

<TABLE>
<S> <C>
Current assets -- accounts receivable, net of allowance for
doubtful accounts of $85,000.............................. $ 241,641
Equipment and improvements, net of accumulated depreciation
and amortization of $1,970,602............................ 315,895
Other assets................................................ 157,117
------------
Total assets...................................... $ 714,653
============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses..................... $ 1,520,778
Short-term notes payable.................................. 969,000
Convertible notes payable................................. 30,000
Notes payable to principal stockholder.................... 226,850
------------
Total liabilities................................. 2,746,628
------------
Commitments and contingencies
Stockholders' deficiency:
Common stock, no par value; 50,000,000 shares authorized;
14,079,449 shares issued and outstanding............... 26,317,585
Receivable from sale of common stock...................... (327,500)
Accumulated deficit....................................... (28,022,060)
------------
Total stockholders' deficiency.................... (2,031,975)
------------
Total liabilities and stockholders' deficiency.... $ 714,653
============
</TABLE>

See Notes to Unaudited Financial Statements.
F-16
<PAGE> 110

GREYSTONE TECHNOLOGY, INCORPORATED

STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Revenues.................................................... $ 509,715 $ 312,751
----------- -----------

Expenses:
Cost of revenues.......................................... 406,853 382,927
Marketing and sales....................................... 140,965 156,521
Research and development.................................. 223,271 444,478
General and administrative................................ 527,902 328,706
----------- -----------
Total expenses......................................... 1,298,991 1,312,632
----------- -----------

Loss from operations........................................ (789,276) (999,881)

Interest expense, includes $6,061 and $45,230 on loans from
principal stockholder..................................... 12,770 118,746
----------- -----------

Net loss.................................................... $ (802,046) $(1,118,627)
=========== ===========

Basic net loss per share.................................... $ (.06) $ (.09)
=========== ===========

Basic weighted average number of shares outstanding......... 14,074,874 12,424,402
=========== ===========
</TABLE>

See Notes to Unaudited Financial Statements.
F-17
<PAGE> 111

GREYSTONE TECHNOLOGY, INCORPORATED

STATEMENT OF STOCKHOLDERS' DEFICIENCY
THREE MONTHS ENDED JUNE 30, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
COMMON STOCK RECEIVABLE
------------------------- FROM SALE OF ACCUMULATED
SHARES AMOUNT COMMON STOCK DEFICIT TOTAL
---------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, April 1,
1998................. 14,068,883 $26,233,057 $(327,500) $(27,220,014) $(1,314,457)
Common stock sold for
cash................. 3,125 25,000 25,000
Common stock issued to
pay for services..... 3,125 25,000 25,000
Common stock issued
upon exercise of
warrants............. 4,316 34,528 34,528
Net loss............... (802,046) (802,046)
---------- ----------- --------- ------------ -----------
Balance, June 30,
1998................. 14,079,449 $26,317,585 $(327,500) $(28,022,060) $(2,031,975)
========== =========== ========= ============ ===========
</TABLE>

See Notes to Unaudited Financial Statements.
F-18
<PAGE> 112

GREYSTONE TECHNOLOGY, INCORPORATED

STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
1998 1997
--------- -----------
<S> <C> <C>
Operating activities:
Net loss.................................................. $(802,046) $(1,118,627)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 74,993 106,839
Loss on disposal of fixed assets....................... 666 3,985
Changes in operating assets and liabilities:
Accounts receivable.................................. 156,215 (82,230)
Other assets......................................... (36,453) (7,076)
Accounts payable and accrued expenses................ 244,102 981
--------- -----------
Net cash used in operating activities............. (362,523) (1,096,128)
--------- -----------
Investing activities:
Purchases of equipment and improvements................... (19,763)
-----------
Financing activities:
Repayment on line of credit borrowings.................... 0 (200,000)
Proceeds from short-term notes payable.................... 299,000
(Payments to) proceeds from notes payable to principal
stockholder............................................ (1,088) 10,815
Sales of common stock..................................... 59,528 1,197,986
--------- -----------
Net cash provided by financing activities......... 357,440 1,008,801
--------- -----------
Net decrease in cash and cash equivalents................... (5,083) (107,090)
Cash and cash equivalents, beginning of period.............. 5,083 214,224
--------- -----------
Cash and cash equivalents, end of period.................... $ -- $ 107,134
========= ===========
Supplemental disclosure of cash flow data:
Interest paid............................................. $ 5,000 $ 1,556
========= ===========
Supplemental disclosure of noncash investing and financing
activities:
Common stock issued upon conversion of convertible notes
payable................................................ -- $ 1,593,346
========= ===========
Common stock issued as payment for services............... $ 25,000 $ --
========= ===========
</TABLE>

See Notes to Unaudited Financial Statements.
F-19
<PAGE> 113

GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 -- UNAUDITED INTERIM FINANCIAL STATEMENTS:

In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position of Greystone Technology,
Incorporated (the "Company") as of June 30, 1998, and its results of operations,
changes in stockholders' deficiency and cash flows for the three months ended
June 30, 1998 and 1997. These unaudited financial statements should be read in
conjunction with the audited Greystone financial statements and other
information included herein.

The results of operations for the three months ended June 30, 1998 are not
necessarily indicative of the results of operations for the year ending March
31, 1999.

NOTE 2 -- BASIS OF PRESENTATION:

As shown in the accompanying audited and unaudited financial statements,
the Company had a working capital deficiency of $2,504,987 and a total
stockholders' deficiency of $2,031,975 at June 30, 1998; net losses of $802,046
for the three months ended June 30, 1998 and $3,255,861, $4,686,630 and
$6,697,686 in the fiscal years ended March 31, 1998, 1997 and 1996,
respectively; and an accumulated deficit from losses since its inception of
$28,022,060 at June 30, 1998. As explained in Notes 4 and 5, the Company was in
default with respect to certain covenants in its loan agreements as of June 30,
1998. These matters raise substantial doubt about the ability of the Company to
continue as a going concern.

Historically, the Company has funded its operations primarily through sales
of common stock to and borrowings from its principal stockholder and sales of
common stock and convertible notes payable to private investors pursuant to
private placement memorandums and exemptions from registration under the
Securities Act of 1933. Management believes that sales will increase as a result
of new contracts for its government products, the introduction of its new
entertainment product, the overall growth in the related market for such
products and the greater recognition that the Company will achieve if the Merger
described in Note 14 of the notes to the audited financial statements is
consummated and the shares of the merged company are publicly traded. It also
believes that with the introduction of its new entertainment product, research
and development expenses will be reduced. However, management also believes that
the Company will still incur losses and negative cash flows from operating
activities through at least June 30, 1999. Accordingly, the Company will need
immediate debt and/or equity financing through private placements and/or public
offerings in order to meet its obligations and continue as a going concern.
Based on discussions it has had with investment bankers and other potential
investors, management believes the potential for the growth in the Company's
sales and the possibility that the Company's shares will become publicly traded
will enhance the Company's ability to consummate a private or public offering of
the Company's debt or equity securities. Accordingly, management believes, but
cannot assure, that the Company will be able to obtain, through private and/or
public offerings, the additional debt and/or equity financing to enable it to
continue to operate through at least June 30, 1999.

NOTE 3 -- EARNINGS (LOSS) PER SHARE:

Effective March 31, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"),
which requires presentation of "basic" and "diluted"

F-20
<PAGE> 114
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 -- EARNINGS (LOSS) PER SHARE: (CONTINUED)
earnings (loss) per common share, as further explained in Note 1 of the notes to
the audited financial statements of the Company.

Since the Company had losses applicable to common stock in the three months
ended June 30, 1998 and 1997, the assumed effects of the exercise of outstanding
stock options and warrants were anti-dilutive and, accordingly, dilutive per
share amounts have not been presented in the accompanying statements of
operations.

NOTE 4 -- SHORT-TERM NOTES PAYABLE:

At June 30, 1998, the Company had outstanding notes payable with a
principal balance of $969,000 that had initial maturities of six months or less,
of which notes payable with a principal balance of $400,000 had matured and were
in default. The Notes were unsecured and bore interest at 9% or 10%.

NOTE 5 -- CONVERTIBLE NOTES PAYABLE:

At June 30, 1998, convertible notes payable consisted of 9% unsecured
notes, with a principal balance of $30,000, that were convertible at $4.50 per
share and in default (see Note 7 of the notes to the audited financial
statements of the Company).

NOTE 6 -- WARRANTS:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
WARRANTS PRICE
---------- -------------
<S> <C> <C>
Outstanding at March 31, 1998...................... 2,339,340 $4.95 to $12
Granted............................................ 1,017,448 $4.95 to $13
Exercised.......................................... (4,316) $8
Cancelled.......................................... (1,198) $10
Outstanding at June 30, 1998....................... 3,351,274 $4.95 to $12
Warrants exercisable at June 30, 1998.............. 3,031,274 $4.95 to $12
</TABLE>

NOTE 7 -- INCOME TAXES:

The Company had net operating loss carryforwards at June 30, 1998 of
approximately $27,000,000 available to reduce future Federal taxable income and
approximately $13,000,000 available to reduce state taxable income, if any. The
net operating loss carryforwards expire between 2006 and 2012 for Federal tax
purposes and 1999 and 2003 for state tax purposes. The related deferred tax
assets were fully reserved through valuation allowances at June 30, 1998 and
1997 and, accordingly, there was no provision or credit for income taxes.

The expected Federal income tax benefit, computed based on the Company's
pre-tax losses and the statutory Federal income tax rate, was approximately
$273,000 and $380,000 for the three months ended June 30, 1998 and 1997,
respectively. The potential benefits were eliminated through equivalent
increases in the Company's valuation allowance primarily for deferred tax assets
arising from net operating loss carryforwards (see Note 9 of the notes to the
audited financial statements of the Company).

F-21
<PAGE> 115
GREYSTONE TECHNOLOGY, INCORPORATED

NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8 -- STOCK OPTION PLANS:

As further explained in Note 11 of the Notes to the audited financial
statements, the Company has two incentive stock option ("ISO") plans -- the
"1991 Plan" and the "1994 Plan." In addition, the Company issued nonqualified
stock options ("NSOs") in 1994 and 1998. Information related to the plans and
other options granted follows:

<TABLE>
<CAPTION>
OPTIONS
OPTIONS OUTSTANDING
YEAR TYPE AUTHORIZED JUNE 30, 1998
- ---- ---- ---------- -------------
<S> <C> <C> <C>
1991............................................ ISO 500,000 200,000
1994............................................ NSO 200,000 200,000
1994............................................ ISO 2,000,000 1,937,550
1998............................................ NSO 1,250,000 850,000
---------
3,187,550
=========
</TABLE>

Additional information regarding options outstanding under the Company's stock
option plans at June 30, 1998 and changes in outstanding options during the
three month period then ended follows:

<TABLE>
<CAPTION>
WEIGHTED
SHARES AVERAGE
OR PRICE EXERCISE
PER SHARE PRICE
------------ --------
<S> <C> <C>
Outstanding at April 1, 1998......................... 3,563,550 $3.95
Granted.............................................. 48,500 $6.80
Cancelled............................................ (424,500) $4.88
------------
Outstanding at June 30, 1998......................... 3,187,550 $3.86
============
Price range at June 30, 1998......................... $ .275-$6.80
Exercisable at June 30, 1998......................... 2,377,850 $3.62
============
Available for grant at June 30, 1998................. 762,450
============
Weighted average fair value of options granted during
the period......................................... $6.80
</TABLE>

The following table summarizes information about stock options outstanding
at June 30, 1998, all of which are at fixed prices:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
REMAINING
NUMBER CONTRACTUAL NUMBER
EXERCISE OF OPTIONS LIFE OF OPTIONS OF OPTIONS
PRICE OUTSTANDING OUTSTANDING EXERCISABLE
- -------- ----------- ---------------- -----------
<S> <C> <C> <C>
$ .275 200,000 3.1 years 200,000
1.000 200,000 6.0 years 200,000
3.800 1,589,050 7.7 years 1,268,150
4.950 1,150,000 6.0 years 700,000
6.800 48,500 9.9 years 9,700
--------- ---------
3,187,550 2,377,850
========= =========
</TABLE>

NOTE 9 -- RELATED PARTY TRANSACTIONS AND BALANCES:

The Company had outstanding notes payable to its Principal Stockholder of
$226,850 at June 30, 1998 which were unsecured, nonconvertible and bore interest
at 9%. Accrued interest of approximately $30,177 is included in accounts payable
and accrued expenses in the accompanying June 30, 1998 balance sheet. The notes
mature on December 31, 1998. See Note 12 of the notes to the audited financial
statements of the Company.

F-22
<PAGE> 116

EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements
Independent Auditors' Report................................ F-26
Consolidated Balance Sheets as of June 30, 1998 (unaudited)
and December 31, 1997 and 1996............................ F-27
Consolidated Statements of Operations for the six months
ended June 30, 1998 and 1997 (unaudited) and for the years
ended December 31, 1997, 1996 and 1995.................... F-28
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for the six months ended June 30, 1998
(unaudited) and for the years ended December 31, 1997,
1996 and 1995............................................. F-29
Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (unaudited) and for the years
ended December 31, 1997, 1996 and 1995.................... F-30
Notes to Consolidated Financial Statements.................. F-31
</TABLE>

F-23
<PAGE> 117

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Express Capital Concepts, Inc.

We have audited the accompanying consolidated balance sheets of Express
Capital Concepts, Inc. and Subsidiary as of December 31, 1997 and 1996, and the
related consolidated statements of operations, changes in stockholders' equity
(deficit) and cash flows for the years ended December 31, 1997, 1996 and 1995.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Express
Capital Concepts, Inc. and Subsidiary as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years ended December 31,
1997, 1996 and 1995 in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As shown in the
consolidated financial statements, the Company incurred a net loss of $35,111
during the year ended December 31, 1997, and, as of that date had a working
capital deficiency of $87,288 and stockholders' deficit of $86,155. As discussed
in Note 1 to the financial statements, the Company's significant operating
losses and working capital deficiency raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also discussed in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

ANGELL & DEERING
Certified Public Accountants

Denver, Colorado
March 10, 1998

F-24
<PAGE> 118

EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------
1998 1997 1996
----------- --------- --------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents.............................. $ 296 $ 325 $ 612
--------- --------- --------
Total Current Assets........................... 296 325 612
--------- --------- --------

Other Assets:
Investment in corporation, at cost..................... -- -- 33,962
Organization costs, net of accumulated amortization of
$219 and $97, respectively.......................... 1,011 1,133 --
--------- --------- --------
Total Other Assets............................. 1,011 1,133 33,962
--------- --------- --------
Total Assets................................... $ 1,307 $ 1,458 $ 34,574
========= ========= ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
Accounts payable -- trade.............................. $ 5,176 $ 2,951 $ 1,223
Notes payable -- stockholders.......................... 60,188 49,888 54,350
Accrued interest -- stockholders....................... 38,076 34,774 30,045
--------- --------- --------
Total Current Liabilities...................... 103,440 87,613 85,618
--------- --------- --------

Stockholders' Equity (Deficit):
Preferred stock: $.0001 par value, 10,000,000 shares
authorized, none issued or outstanding.............. -- -- --
Common stock: $.0001 par value, 500,000,000 shares
authorized, 20,000,000 shares issued and
outstanding......................................... 2,000 2,000 2,000
Additional paid in capital............................. 27,618 27,618 27,618
Accumulated deficit.................................... (131,751) (115,773) (80,662)
--------- --------- --------
Total Stockholders' Equity (Deficit)........... (102,133) (86,155) (51,044)
--------- --------- --------
Total Liabilities and Stockholders' Equity
(Deficit).................................... $ 1,307 $ 1,458 $ 34,574
========= ========= ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-25
<PAGE> 119

EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue..................... $ -- $ -- $ -- $ -- $ --
Operating Expenses.......... 12,676 147,056 170,001 4,881 6,164
----------- ----------- ----------- ----------- -----------
Loss from Operations........ (12,676) (147,056) (170,001) (4,881) (6,164)
----------- ----------- ----------- ----------- -----------

Other Income (Expense):
Gain on disposal of
marketable
securities............. -- 139,619 139,619 -- --
Other income.............. -- -- 33,962 --
Interest expense --
stockholders........... (3,302) (2,257) (4,729) (6,209) (5,653)
----------- ----------- ----------- ----------- -----------
Total Other Income
(Expense).............. (3,302) 137,362 134,890 27,753 (5,653)
----------- ----------- ----------- ----------- -----------
Net Income (Loss)......... $ (15,978) $ (9,694) $ (35,111) $ 22,872 $ (11,817)
=========== =========== =========== =========== ===========

Net Income (Loss) Per Share
of Common Stock:
Basic..................... $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
Diluted................... $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
Weighted Average Number of
Common Shares Outstanding
Basic..................... 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Diluted................... 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-26
<PAGE> 120

EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ADDITIONAL
SHARES AMOUNT PAID IN CAPITAL ACCUMULATED DEFICIT
---------- ------ --------------- -------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994.......... 20,000,000 $2,000 $27,618 $ (91,717)
Net loss for the year................. -- -- -- (11,817)
---------- ------ ------- ---------
Balance at December 31, 1995.......... 20,000,000 2,000 27,618 (103,534)
Net income for the year............... -- -- -- 22,872
---------- ------ ------- ---------
Balance at December 31, 1996.......... 20,000,000 2,000 27,618 (80,662)
Net loss for the year................. -- -- -- (35,111)
---------- ------ ------- ---------
Balance at December 31, 1997.......... 20,000,000 2,000 27,618 (115,773)
Net loss for the period (unaudited)... -- -- -- (15,978)
---------- ------ ------- ---------
Balance at June 30, 1998
(unaudited)......................... 20,000,000 $2,000 $27,618 $(131,751)
========== ====== ======= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-27
<PAGE> 121

EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------
1998 1997 1997 1996 1995
---------- ----------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating
Activities:
Net income (loss)............... $(15,978) $ (9,694) $ (35,111) $ 22,872 $(11,817)
Adjustments to reconcile net
income (loss) to net cash
(used) by operating
activities:
Amortization.................... 122 -- 97 -- --
Gain on disposal of marketable
securities................... -- (139,619) (139,619) -- --
Marketable securities
transferred as compensation
to an officer and a
stockholder.................. -- 139,619 139,619 -- --
Stock received as
compensation................. -- -- -- (33,962) --
Changes in assets and
liabilities:
(Increase) decrease in accounts
receivable................... -- -- -- 14,736 (14,736)
(Increase) decrease in prepaid
expenses..................... -- -- -- 23 (23)
Increase (decrease) in accounts
payable...................... 2,225 (1,123) 1,728 (13,848) 14,987
Increase in accrued interest.... 3,302 2,257 4,729 6,209 5,653
-------- --------- --------- -------- --------
Net Cash (Used) By Operating
Activities................. (10,329) (8,560) (28,557) (3,970) (5,936)
-------- --------- --------- -------- --------
Cash Flows from Investing
Activities:
Organization costs.............. -- -- (1,230) -- --
-------- --------- --------- -------- --------
Net Cash (Used) By Investing
Activities................... -- -- (1,230) -- --
-------- --------- --------- -------- --------
Cash Flows from Financing
Activities:
Proceeds from stockholder
loans........................ 10,300 8,800 29,500 4,250 5,850
-------- --------- --------- -------- --------
Net Cash Provided by Financing
Activities................... 10,300 8,800 29,500 4,250 5,850
-------- --------- --------- -------- --------
Net Increase (Decrease) in Cash
and Cash Equivalents......... (29) 240 (287) 280 (86)
Cash and Cash Equivalents at
Beginning of Period.......... 325 612 612 332 418
-------- --------- --------- -------- --------
Cash and Cash Equivalents at End
of Period.................... $ 296 $ 852 $ 325 $ 612 $ 332
======== ========= ========= ======== ========
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the period for:
Interest..................... $ -- $ -- $ -- $ -- $ --
Income Taxes................. -- -- -- -- --
Supplemental Disclosure of Noncash
Investing and Financing
Activities:
Distribution of marketable
securities for repayment of
notes payable to
stockholders............... $ -- $ 33,962 $ 33,962 $ -- $ --
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-28
<PAGE> 122

EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Express Capital Concepts, Inc. (the "Company") was organized on May 18,
1988 as a Delaware corporation. The Company intends to evaluate, structure and
complete a merger with, or acquisition of, prospects consisting of private
companies, partnerships or sole proprietorships. The Company may seek to acquire
a controlling interest in such entities in contemplation of later completing an
acquisition.

Unaudited Interim Financial Statements

The financial statements as of June 30, 1998 and for the six months ended
June 30, 1998 and 1997 are unaudited, however, in the opinion of management of
the Company, all adjustments (consisting solely of normal recurring adjustments)
necessary to a fair presentation of the financial statements for the interim
periods have been made.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern. The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flow to meet its obligations on a timely
basis and to obtain additional financing as may be required.

The Company's continued existence is dependent upon its ability to secure
loans from its President and/or a principal stockholder. Future operating
expenses will be funded by these loans. The Company's ability to continue to
meet its obligations is dependent upon obtaining the above loans.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. All significant intercompany accounts and
transactions have been eliminated.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all
highly liquid investments with a maturity of three months of less at the date of
purchase to be cash equivalents.

Investment in Corporation

The Company's investment in Hollis-Eden, Inc., a private company, was
accounted for utilizing the cost method of accounting (Note 2).

Organization Costs

Organization costs are being amortized using the straight-line method over
an estimated useful life of 5 years.

Long-Lived Assets

In accordance with Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Company reviews for

F-29
<PAGE> 123
EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Long-Lived Assets (continued)
the impairment of certain identifiable intangibles, whenever events or changes
in circumstances indicate that the carrying value of an asset may not be
recoverable. An impairment loss would be recognized when the estimated future
cash flows is less than the carrying amount of the asset. No impairment losses
have been identified by the Company.

Stock-Based Compensation

During the year ended December 31, 1996, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation". The Company will continue to measure compensation expense for its
stock-based employee compensation plan using the intrinsic value method
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees".

Income Taxes

Deferred income taxes are provided for temporary differences between the
financial reporting and tax bases of assets and liabilities using enacted tax
laws and rates for the years when the differences are expected to reverse.

Net Income (Loss) Per Share of Common Stock

As of December 31, 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share", which specifies the
method of computation, presentation and disclosure for earnings per share. SFAS
No. 128 requires the presentation of two earnings per share amounts, basic and
diluted.

Basic earnings per share is calculated using the average number of common
shares outstanding. Diluted earnings per share is computed on the basis of the
average number of common shares outstanding plus the dilutive effect of
outstanding stock options using the "treasury stock" method.

Estimates

The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

2. INVESTMENT

In February 1995, the Company entered into a letter of intent with
Hollis-Eden, Inc. ("Hollis-Eden"). Under the terms of the agreement the Company
was to acquire 100% of Hollis-Eden's outstanding voting common stock. The
acquisition was not consummated and the companies entered into an agreement and
release in March 1996.

Under the terms of the agreement and release both companies were released
from the terms of the letter of intent. Additionally, Hollis-Eden agreed to
reimburse Express for expenses Express incurred in connection with the
acquisition totalling $14,736. Also, Hollis-Eden issued 15,094 shares of its
common stock to Express in 1996. The stock was valued at $2.25 per share based
on sales of Hollis Eden's common stock at the time of issuance.

F-30
<PAGE> 124
EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. INVESTMENT (CONTINUED)
On March 21, 1997, the Board of Directors approved the transfer of the
Company's Hollis-Eden investment to the Company's President and a stockholder to
repay notes payable to the two individuals. The Hollis-Eden common shares were
transferred equally to each individual reducing the notes payable to each party
by $16,981.

On March 26, 1997, Hollis-Eden consummated a stock exchange with Initial
Acquisition Corp. ("IAC"), a publicly traded Company. Under the terms of the
agreement the Hollis-Eden stockholders received IAC stock on a share for share
basis. Ultimately the above individuals received IAC common stock as repayment
for their notes. At the time of merger IAC's common stock was trading at $11.50
per share.

The difference between the debt repayment of $33,962 and the market value
of the investment of $173,581 resulted in compensation of $139,619 to the above
individuals.

3. NOTES PAYABLE -- STOCKHOLDERS

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
12% unsecured demand notes payable to entities controlled by
Mr. Gary McAdam, a stockholder of the Company............. $24,219 $37,200
12% unsecured demand notes payable to the Company's
President and to entities he controls..................... 25,669 17,150
------- -------
Total............................................. $49,888 $54,350
======= =======
</TABLE>

4. PREFERRED STOCK

The authorized preferred stock of the Company consists of 10,000,000
shares, $.0001 par value. The preferred stock may be issued in series from time
to time with such designation, rights, preferences and limitations as the Board
of Directors of the Company may determine by resolution. The rights, preferences
and limitations of separate series of preferred stock may differ with respect to
such matters as may be determined by the Board of Directors, including without
limitation, the rate of dividends, method and nature of payment of dividends,
terms of redemption, amounts payable on liquidation, sinking fund provisions (if
any), conversion rights (if any), and voting rights. Unless the nature of a
particular transaction and applicable statutes require approval, the Board of
Directors has the authority to issue these shares without shareholder approval.

5. INCENTIVE STOCK OPTION PLAN

In May 1988, the Company's Board of Directors authorized an Incentive Stock
Option Plan and have reserved 10,000,000 shares of the Company's $.0001 par
value common stock for issuance to key employees. The Board of Directors is
authorized to determine the exercise price, time period, number of shares
subject to the option, and the identity of those persons receiving the options.
As of December 31, 1997, no options have been granted pursuant to the plan.

6. INCOME TAXES

The Company has made no provision for income taxes because of financial
statement and tax losses. As of December 31, 1997 the Company had net operating
loss carryforwards of approximately $60,000. The net operating losses can be
carried forward fifteen years to offset future taxable income. The net operating
loss carryforwards expire in the years 2008 through 2012.

F-31
<PAGE> 125
EXPRESS CAPITAL CONCEPTS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES (CONTINUED)
At December 31, 1997, 1996 and 1995, the Company had a deferred tax asset
of approximately $12,250, $5,100 and $9,600, respectively, resulting from net
operating loss carryforwards, which has been offset in its entirety by a
valuation allowance. The net change in the valuation allowance for deferred tax
assets was an increase of $7,150 and a (decrease) of ($4,150) for the years
ended December 31, 1997 and 1996, respectively, related to benefits from net
operating loss carryforwards.

7. RELATED PARTY TRANSACTIONS

Notes payable -- stockholders (Note 3).

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Disclosures about Fair Value of Financial Instruments for the Company's
financial instruments are presented in the table below. These calculations are
subjective in nature and involve uncertainties and significant matters of
judgment and do not include income tax considerations. Therefore, the results
cannot be determined with precision and cannot be substantiated by comparison to
independent market values and may not be realized in actual sale or settlement
of the instruments. There may be inherent weaknesses in any calculation
technique, and changes in the underlying assumptions used could significantly
affect the results. The following table presents a summary of the Company's
financial instruments as of December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial Assets:
Cash and cash equivalents............... $ 325 $ 325 $ 612 $ 612
Financial Liabilities:
Notes payable........................... 49,888 49,888 54,350 54,350
</TABLE>

The carrying amounts for cash and cash equivalents, accounts payable and
accrued expenses approximate fair value because of the short maturities of these
instruments. The fair value of the notes payable approximates fair value because
of the market rate of interest on the notes.

9. PROPOSED ACQUISITION

The Company has entered into an Agreement and Plan of Merger and
Reorganization (the "Agreement") with Greystone Technology, Inc. ("Greystone").
Under the terms of the Agreement the Company will issue shares of its $.0001 per
value common stock in exchange for all of the issued and outstanding stock of
Greystone on a share for share basis. Immediately after the exchange it is
anticipated that the ownership of the Company will be approximately 97% by
existing Greystone stockholders, warrant and option holders, collectively, and
approximately 3% by existing Express stockholders. Prior to the closing the
Company plans to effect a reverse stock split reducing its issued and
outstanding common shares to approximately 480,000. In addition, the Company
plans to amend and restate its Certificate of Incorporation reducing its
authorized common stock and preferred stock to 30,000,000 shares and 3,000,000
shares, respectively. The par value of the Company's common stock and preferred
stock will be increased from $.0001 per share to $.001 per share. Closing is
anticipated in 1998 after all conditions of the Agreement have been satisfied.

F-32
<PAGE> 126

ANNEX A

FIRST AMENDMENT TO AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION

THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(the "Amendment") is entered into as of October 1, 1998 by and among EXPRESS
CAPITAL CONCEPTS, INC., a Delaware corporation ("Parent"), EXPRESS CAPITAL
ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of Parent
("Merger Sub"), GREYSTONE TECHNOLOGY, INCORPORATED, a California corporation
(the "Company"), and EARNEST MATHIS, JR. ("Mathis"). Capitalized terms used but
not defined herein shall have the meanings set forth in that certain Agreement
and Plan of Merger and Reorganization dated as of August 11, 1997 by and among
Parent, Merger Sub, the Company and Mathis (the "Reorganization Agreement").

RECITALS

Whereas, Parent, Merger Sub, the Company and Mathis are parties to the
Reorganization Agreement;

Whereas, in accordance with Section 10.10 of the Reorganization Agreement,
the parties desire to amend the Reorganization Agreement prior to the Effective
Date of the Merger as set forth herein; and

Whereas, contemporaneously with this Amendment the Company and Mathis are
also entering into an Indemnification Agreement providing for the Company to
indemnify Mathis against certain liabilities in connection with the transactions
contemplated by the Reorganization Agreement.

AGREEMENT

Now, Therefore, in consideration of the foregoing premises and the mutual
promises and covenants set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parent, Merger
Sub, the Company and Mathis agree as follows:

1. Recital A of the Reorganization Agreement is amended and restated
in its entirety to read as follows:

A. Parent, Merger Sub and the Company intend to effect a merger of
the Company with and into Merger Sub (the "Merger") in accordance with
this Agreement, the Delaware General Corporation Law (the "DGCL") and
the California General Corporation Law (the "CGCL"). Upon consummation
of the Merger, the Company will cease to exist, and Merger Sub will
continue to be a wholly-owned subsidiary of Parent.

2. Recital B of the Reorganization Agreement is amended and restated
in its entirety to read as follows:

B. In connection with the Merger and prior to the Effective Date,
(i) an amended and restated certificate of incorporation of Parent will
be adopted in substantially the form of Exhibit B attached hereto (the
"Restated Certificate"), to, among other things, (A) establish the
authorized capital stock of Parent as 30,000,000 shares of Common Stock,
$.001 par value per, and 3,000,000 shares of "blank check" Preferred
Stock, $.001 par value per share, (B) change its name to "GreyStone
Digital Technology, Inc.," (C) effect a reverse split of its outstanding
Common Stock in a ratio of 1-for-41.66667 (the "Reverse Split") and, (D)
adopt a classified board of directors, (ii) amended and restated bylaws
of Parent will be adopted substantially in the form of Exhibit C
attached hereto (the "Restated Bylaws"), (iii) effective as of the
Effective Date the authorized number of directors of Parent will be
fixed as three and the directors will be changed to consist of Richard
A. Smith, Thomas D. Aldern and Jon M. Reynolds.

A-1
<PAGE> 127

3. Section 1.1 of the Reorganization Agreement is amended in its
entirety to read as follows:

1.1 Merger of the Company into Merger Sub. Upon the terms and
subject to the conditions set forth in the Agreement, on the Effective
Date (as defined in Section 1.3), the Company shall be merged with and
into Merger Sub, and the separate existence of the Company shall cease.
Merger Sub will continue as the surviving corporation in the Merger (the
"Surviving Corporation").

4. The last two sentences of Section 1.3 of the Reorganization
Agreement are amended and restated to read as follows:

Contemporaneously with the Closing, a properly executed certificate
of merger conforming to the requirements of the DGCL (the "Agreement of
Merger") shall be filed with the Secretary of State of the State of
Delaware and a duplicate original thereof shall be filed with the
Secretary of State of the State of California. The Merger shall take
effect at the time the Agreement of Merger is filed with and accepted by
both such Secretaries of State (the "Effective Date").

5. Section 1.4 of the Reorganization Agreement is amended and restated
in its entirety to read as follows:

(a) the Certificate of Incorporation of the Surviving Corporation
shall be the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Date;

(b) the Bylaws of the Surviving Corporation shall be the Bylaws of
Merger Sub as in effect immediately prior to the Effective Date; and

(c) the directors and officers of the Surviving Corporation
immediately after the Effective Date shall be the individuals identified
on Exhibit D.

6. To the extent necessary to avoid misrepresentation and breach of
warranty, each of the representations and warranties in Section 3 of the
Reorganization Agreement is amended to disclose that Merger Sub was not in
good standing in Delaware during a portion of 1998 because it failed to
file its annual report which was due in March 1998, and that taxes, a
penalty and interest in an aggregate amount of approximately $100 was paid
as a result of such

7. Section 1.5(a)(ii) of the Reorganization Agreement is amended and
restated in its entirety to read as follows:

(ii) each share of Common Stock, $.001 par value per share, of
Merger Sub outstanding immediately prior to the Effective Date shall
remain outstanding, and shall not be affected by the Merger.

8. Section 1.5(c) of the Reorganization Agreement shall be amended and
restated in its entirety to read as follows:

(c) On the Effective Date, all rights with respect to Company
Common Stock under Company Options and Company Warrants that are then
outstanding shall, pursuant to the terms of such Company Options and
Company Warrant be converted into and become rights with respect to
Parent Common Stock, and Parent shall assume each Company Option and
Company Warrant in accordance with the terms (as in effect as of the
date hereof) of the stock option plan, warrant or other agreement, as
the case may be, under which it was issued by which it is evidenced.
From and after the Effective Date, pursuant to the terms of each Company
Option and Company Warrant, (i) each Company Option and Company Warrant
assumed by Parent may be exercised solely for shares of Parent Common
Stock, (ii) the number of shares of Parent Common Stock subject to each
Company Option and Company Warrant shall be equal to the number of
shares of Company Common Stock subject to such Company Option or Company
Warrant immediately prior to the Effective Date, and (iii) any
restriction on the exercise of any Company Option or Company Warrant
shall continue in full force and effect and the term, exercisability,
vesting schedule and other provisions of such Company Option and Company
Warrant shall otherwise remain unchanged; provided, however, that each
such Company Option and Company Warrant shall, in accordance with
A-2
<PAGE> 128

its terms, be subject to further adjustment as appropriate to reflect
any stock split, stock dividend, subdivision, reclassification,
reorganization, stock split, reverse stock split or similar transaction
subsequent to the Effective Date. The Company shall take all actions
that may be necessary (under the stock option plan, warrant or other
agreements pursuant to which Company Options or Company Warrants, as
applicable, are outstanding) to effectuate the provisions of this
Section 1.5(c) and to ensure that, from and after the Effective Date,
holders of Company Options and Company Warrants have no rights with
respect thereto other than those specifically provided herein.

9. Section 1.5(d) shall be added to the Reorganization Agreement and
shall read as follows:

Parent shall offer to the holders of all Chathams Rowe Warrants
that are outstanding on the Effective Date, the opportunity to exchange
such Chathams Rowe Warrants for warrants to purchase the same number of
shares of Parent Common Stock as such Chathams Rowe Warrants previously
entitled the holders thereof to purchase of Company Common Stock, at an
exercise price and for an exercise period, and upon the same terms and
conditions as was set forth in such Chathams Rowe Warrants. Upon
surrender of the warrant, certificates or agreements representing the
Chathams Rowe Warrants by the holders thereof and the delivery by Parent
of certificates or agreements representing warrants to purchase Parent
Common Stock, the certificates or agreements representing the Chathams
Rowe Warrants shall be canceled. The warrants to purchase Parent Common
Stock to be issued in exchange for the Chathams Rowe Warrants and the
shares of Parent Common Stock underlying such warrants shall be
registered for issuance by Parent on the Registration Statement on Form
S-4 to be filed by Parent covering the registration of the Merger
Shares.

10. Section 1.7(b) of the Reorganization Agreement shall be amended
and restated in its entirety as follows:

(b) Fractional Shares. No fractional shares of Parent Common Stock
shall be issued in connection with the Merger, and no certificate for
any such fractional shares shall be issued.

11. The second sentence of Section 3.2 of the Reorganization Agreement
is amended to read as follows:

Subsequent to the Reverse Split, the authorized capital stock of
Parent will consist of 30,000,000 shares of Common Stock, $.001 par
value per share, not more than 480,000 of which will be issued and
outstanding, and 3,000,000 shares of Preferred Stock, $.001 par value
per share, none of which will be outstanding.

12. The fifth sentence of Section 3.2 of the Reorganization Agreement
is amended and restated in its entirety to read as follows:

As of October 7, 1998, the Major Parent Stockholder beneficially
owned an aggregate of 9,250,000 shares of Parent Common Stock,
representing 46.25% of the outstanding capital stock of Parent, and Mr.
Gary McAdam beneficially owned an aggregate of 9,310,000 shares of
Parent Common Stock, representing 46.55% of the outstanding capital
stock of Parent (all prior to giving effect to the Reverse Split).

13. Section 3.5 is amended to change the reference in the first
sentence from Exhibit D to Exhibit E.

14. Section 3.8 of the Reorganization Agreement is amended in its
entirety to read as follows:

3.8 No Operations. Except for Parent's forming seven subsidiaries
and spinning them off to its stockholders, the last of which spin offs
took place in 1991, neither Parent nor Merger Sub has, or in the past
has had, any operations of any kind. Except for Earnest Mathis, Jr.,
neither Parent nor Merger Sub has, nor in the past has had any
employees.

A-3
<PAGE> 129

15. Section 3.12 of the Reorganization Agreement is amended and
restated in its entirety to read as follows:

3.12 Related Party Transactions. Except for the Reorganization
Agreement, as amended, and other agreements and instruments entered into
in connection therewith, (i) no Parent Related Party has any direct or
indirect interest (other than as a stockholder of Parent) in any asset
used in or otherwise relating to the business of Parent or Merger Sub,
or has any direct or indirect financial interest (other than as a
stockholder of Parent) in any Parent Contract, transaction or business
dealing involving Parent or Merger Sub, and (ii) Parent Related Party
has any claim or right (other than as a stockholder of Parent) against
Parent or Merger Sub that will not be released or contributed to the
capital of Parent on or prior to the Closing.

16. The second sentence of Section 3.14 of the Reorganization
Agreement is amended and restated in its entirety to read as follows:

Except as necessary to comply with the provisions of Section 4.3,
no vote of the stockholders of Parent is necessary to approve this
Agreement, the Merger or the transactions contemplated hereby.

17. Section 3.15(e) of the Reorganization Agreement is amended in its
entirety to read as follows:

(e) Except as may be necessary for compliance with applicable
securities laws, as may be necessary in connection with the transactions
provided for in Section 4.3, or as contemplated by Section 1.3 of this
Agreement, neither Parent nor Merger Sub is, or will be, required to
make any filing with or give any notice to, or obtain any Consent from,
any Person in connection with the execution and delivery of this
Agreement or the consummation of the Merger.

18. Section 4.3 of the Reorganization Agreement shall be amended and
restated in its entirety as follows:

4.3 Amendment to Parent Certificate of Incorporation and
Bylaws. During the Pre-Closing Period, (i) the Board of Directors of
Parent and the holders of at least a majority of the outstanding shares
of common stock of Parent shall have acted by written consent to approve
and adopt the Restated Certificate and the Restated Bylaws, and (ii)
Parent shall file the Restated Certificate with the office of the
Delaware Secretary of State. In addition, during the Pre-Closing Period,
Major Parent Stockholder shall have resigned as a director of Parent,
and the holders of at least a majority of the outstanding shares of
common stock of Parent shall have acted by written consent to amend the
bylaws of Parent to increase Parent's authorized number of directors
from 1 to 3, and to elect Messrs. Richard A. Smith, Jon M. Reynolds and
Thomas D. Aldern as the three directors of Parent, all to be effective
immediately after the Effective Date.

19. Section 6.1 of the Reorganization Agreement is amended in its
entirety to read as follows:

6.1 Accuracy of Representations. The representations and
warranties made by Parent, Merger Sub and the Major Parent Stockholder
in this Agreement and in each of the other agreements and instruments
delivered to the Company in connection with the transactions
contemplated by this Agreement (as such representations and warranties
have been amended by that certain First Amendment to Agreement and Plan
of Reorganization dated as of October 1, 1998 by and between Parent,
Merger Sub, the Company and Mathis) shall have been accurate in all
respects as of the date of such First Amendment and shall be accurate in
all respects as of the Closing Date.

20. Section 6.7 of the Reorganization Agreement is amended and
restated in its entirety to read as follows:

6.7 Receipt of Documents from Shareholders. The Company shall have
received a completed and signed Continuity of Interest Certificate from
each holder of 1% or more of the outstanding shares of Company Common
Stock, each in a form reasonably acceptable to the Company.

A-4
<PAGE> 130

21. Section 6.16 of the Reorganization Agreement is amended and
restated in its entirety to read as follows:

6.16 Amendment of Parent's Certificate of Incorporation and
Bylaws. The Restated Certificate shall have been filed with office of
the Delaware Secretary of State and such Restated Certificate shall be
in full force and effect, and (ii) the Restated Bylaws shall have been
adopted and such Restated Bylaws shall be in full force and effect.

22. Sections 6.20 and 6.21 shall be added to the Reorganization
Agreement and shall read as follows:

6.20 Election of New Directors. The authorized number of directors
of Parent shall have been increased to 3, Major Parent Stockholder shall
have resigned as a director of Parent, and Messrs. Richard A. Smith, Jon
M. Reynolds and Thomas D. Aldern shall have been elected as the three
directors of Parent, all effective upon the Effective Date, and Parent
shall have furnished to the Company certified copies of the Minutes,
evidencing the same.

6.21 Payment of Parent's Liabilities. As of the Effective Date,
all of the liabilities of Parent shall have been paid or otherwise
discharged.

23. Section 7.3 of the Reorganization Agreement is amended and
restated in its entirety to read as follows:

7.3 Compliance Certificate. The Company shall have delivered to
Parent a certificate signed by the President of the Company evidencing
compliance by the Company with the conditions set forth in Sections 7.1
and 7.2.

24. Section 8.1(d) of the Reorganization Agreement is amended and
restated in its entirety to read as follows:

(d) by either party if the Merger shall not have been consummated
by June 30, 1999.

25. The last sentence of Section 10.3 of the Reorganization Agreement
is amended to read as follows:

The Company shall also be liable and shall pay for all costs of
Parent, Merger Sub and Major Parent Stockholder (including, without
limitation, legal fees) incurred in connection with and prior to the
consummation of the Merger, except that Major Parent Stockholder shall
be liable and shall pay for (i) all such costs incurred prior to
September 3, 1998, (ii) all accounting fees of Angell & Deering, the
accountants for Parent and Merger Sub, incurred in connection with and
prior to the consummation of the Merger, (iii) $2,500 of fees of J.H.
Cohn LLP, the accountants for GreyStone, (iv) $25,000 of legal fees of
Parent and Merger Sub paid to Mitchell, Silberberg & Knupp LLP in
connection with the Merger, and (v) an additional $10,000 of such costs
incurred after September 3, 1998 in connection with the Merger. Major
Parent Stockholder has already paid certain of these costs and fees
prior to the execution of this Amendment.

26. Exhibit B of the Reorganization Agreement is amended and restated
into the form of Exhibit B to this Amendment.

27. Exhibit C of the Reorganization Agreement is amended and restated
in to the form of Exhibit C to this Amendment.

28. Exhibit D of the Reorganization Agreement is amended into the form
of Exhibit D to this Amendment.

29. Exhibit E of the Reorganization Agreement is amended into the form
of Exhibit E to this Amendment.

30. Exhibit H of the Reorganization Agreement is amended into the form
of Exhibit H to this Amendment.

A-5
<PAGE> 131

31. The address of the Company set forth in Section 10.4 of the
Agreement is hereby amended by replacing "Attention: Joe Russell" with
"Attention: Carolyn Harris."

32. The following definitions appearing in Exhibit A to the
Reorganization Agreement shall be amended and restated as follows:

Company Option. "Company Option" shall mean any option to purchase
capital stock of the Company held by any director, officer or employee
of, or consultant to, the Company.

Indemnitees. "Indemnitees" shall mean the following Persons: (a)
Parent, (b) the Company Shareholders, (c) the Surviving Corporation, (d)
the respective Representatives of the Persons referred to in clauses
"(a)", "(b)", and "(c)" above, and "(e)" the respective successors and
assigns of the Persons referred to in clauses "(a)", "(b)", "(c)", and
"(d)" above.

33. The following definitions shall be added to Exhibit A of the
Reorganization Agreement:

Chathams Rowe Warrants. "Chathams Rowe Warrants" shall mean all
warrants to purchase Common Stock of the Company held by Chathams Rowe
Venture Partners.

Company Warrants. "Company Warrants" shall mean all warrants, other
than the Chathams Rowe Warrants, to purchase Common Stock of the Company
which warrants are outstanding immediately prior to the Effective Date.

34. This Amendment shall be deemed an amendment to the Agreement and
shall become effective when executed by Parent, Merger Sub, the Company and
Mathis. The Agreement, as amended by this Amendment, is ratified and
confirmed by the parties as of the date hereof, and shall continue in full
force and effect.

35. This Amendment shall be governed by and construed under the laws
of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.

36. In the event any provision of this Amendment, or the application
of any such provision to any entity, person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent,
the remainder of this Amendment, and the application of such provision to
entities, person or circumstances other than those as to which it is
determined to be invalid, unlawful, void or unenforceable, shall not be
impaired or otherwise affected and shall continue to be valid and
enforceable to the fullest extent permitted by law.

37. This Amendment may be amended or modified only by the written
mutual consent of the parties hereto.

38. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.

[The remainder of this page intentionally left blank]

A-6
<PAGE> 132

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Agreement and Plan of Merger and Reorganization as of the date first set
forth above.

EXPRESS CAPITAL CONCEPTS, INC.,
a Delaware corporation

By:

---------------------------------------

Name:
Title:

EXPRESS CAPITAL ACQUISITION CORP.,
a Delaware corporation

By:

---------------------------------------
Name:
Title:

GREYSTONE TECHNOLOGY, INCORPORATED,
a California corporation

By:

---------------------------------------
Name:
Title

------------------------------------------
EARNEST MATHIS, JR.

A-7
<PAGE> 133

EXHIBITS

<TABLE>
<S> <C> <C>
Exhibit B -- Restated Certificate of Parent
Exhibit C -- Restated Bylaws of Parent
Exhibit D -- List of Directors and Officers of Surviving Corporation
Exhibit E -- Parent Contracts
Exhibit H -- Legal Opinion
</TABLE>

A-8
<PAGE> 134

EXHIBIT B

RESTATED CERTIFICATE OF PARENT

[Refer to Annex C of this Proxy Statement/Prospectus]

A-9
<PAGE> 135

EXHIBIT C

RESTATED BYLAWS OF PARENT

[Refer to Annex D of this Proxy Statement/Prospectus]

A-10
<PAGE> 136

EXHIBIT D

LIST OF DIRECTORS AND OFFICERS OF SURVIVING CORPORATION

<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Richard A. Smith................. Chairman of the Board, President and Chief Executive Officer
Jon M. Reynolds.................. Director
Thomas D. Aldern................. Director and Vice President, Government Systems
Carl A. Beaudet.................. Vice President, Government Business Development
Bernard J. Crowe................. Vice President, Commercial Systems and Products
Thomas L. King................... Vice President, Finance and Chief Financial Officer
Carolyn A. Harris................ Vice President, General Counsel and Secretary
</TABLE>

A-11
<PAGE> 137

EXHIBIT E

PARENT CONTRACTS

(1) Stock transfer Agreement between Corporate Stock Transfer and Express
Capital Concepts, Inc.

A-12
<PAGE> 138

EXHIBIT H

LEGAL OPINION

1. Each of Express Capital Concepts, Inc. ("Parent") and Express Capital
Acquisition Corp. ("Merger Sub") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.

2. Parent has the requisite corporate power to own, operate and lease its
property and assets and to conduct its business as it is currently being
conducted. To the best of counsel's knowledge, Parent is qualified as a foreign
corporation to do business and is in good standing in each jurisdiction in the
United States in which the ownership of its property or the conduct of its
business requires such qualification and where any statutory fines or penalties
or any corporate disability imposed for the failure to so qualify would
materially and adversely affect Parent, its assets, financial condition or
operations.

3. All corporate action on the part of Parent and Merger Sub and their
respective Boards of Directors and, with respect to Merger Sub, its sole
stockholder, necessary for the authorization, execution and delivery of the
Merger Agreement by Parent and Merger Sub and the performance of Parent's and
Merger Sub's obligations under the Merger Agreement has been taken. The Merger
Agreement has been duly and validly authorized, executed and delivered by Parent
and Merger Sub, and constitutes a valid and binding agreement of Parent and
Merger Sub enforceable against Parent and Merger Sub in accordance with its
terms, except as enforcement of the Merger Agreement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and except that the
enforceability of the Merger Agreement is subject to the effect of general
principles of equity, including, without limitation, concepts or materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.

4. The authorized capital stock of Parent consists of (i) 30,000,000 shares
of Common Stock, $.001 par value, of which shares have been
issued and are outstanding as of the date hereof and (ii) 3,000,000 shares of
Preferred Stock, $.001 par value, none of which have been issued as of the date
hereof. The shares of Common Stock of Parent to be issued to the shareholders of
the Company pursuant to the Merger Agreement have been duly authorized and, upon
issuance and delivery against payment therefore in accordance with the terms of
the Merger Agreement, will be validly issued, fully paid and nonassessable. To
the best of counsel's knowledge, there are no options, warrants, conversion
privileges, preemptive rights, or other rights (or agreements for any such
rights) presently outstanding to acquire any authorized but unissued capital
stock of Parent, other than rights assumed in connection with the transactions
contemplated by the Merger Agreement. There are no voting agreements, co-sale
rights, rights of first refusal or other similar rights applicable to any of
Parent's outstanding capital stock under Parent's Certificate of Incorporation,
Bylaws or any material agreement known to counsel to which Parent is a party or
by which Parent or any of its assets may be bound.

5. The execution, delivery and performance by Parent of the Merger
Agreement and the consummation by Merger Sub of the Merger as contemplated
therein do not violate any provision of Parent's Certificate of Incorporation or
Bylaws, and will not constitute a material default or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or other evidence of
indebtedness of Parent or any material agreement or other material contract,
instrument or obligation to which Parent is a party or by which Parent or any of
its assets may be bound and which has been identified to us on an officer's
certificate from Parent as being material to Parent, and will not violate or
contravene (i) any governmental statute, rule or regulation which is known by
counsel to be applicable to Parent or (ii) any order, writ, judgment,
injunction, decree, determination or award which has been entered against Parent
and which is known by counsel to be applicable to Parent, the violation or
contravention of which would have a material adverse effect on the assets,
financial condition or the operations of Parent.

6. To the best of counsel's knowledge, there is no action, proceeding or
investigation pending or overtly threatened against Parent before any court or
administrative agency that questions the validity of the Merger

A-13
<PAGE> 139

Agreement or might result, either individually or in the aggregate, in any
material adverse change in the assets, financial conditions or operations of
Parent.

7. The Certificate of Merger has been duly authorized by Parent's and
Merger Sub's Board of Directors and by Merger Sub's sole stockholder and,
assuming appropriate approval by the Board of Directors and shareholders of the
Company and compliance by the Company with all requirements of applicable law
and the Merger Agreement necessary to effect the Merger, upon its filing with
and acceptance by the Secretary of State of the State of California and the
Secretary of State of the State of Delaware, the Merger will be effective.

A-14
<PAGE> 140

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION

among:

EXPRESS CAPITAL CONCEPTS, INC.,
a Delaware corporation;

EXPRESS CAPITAL ACQUISITION CORP.,
a Delaware corporation;

GREYSTONE TECHNOLOGY, INCORPORATED,
a California corporation; and

EARNEST MATHIS, JR.

------------------------

Dated as of August 11, 1997

------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-15
<PAGE> 141

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. DESCRIPTION OF TRANSACTION............................... A-19
1.1 Merger of Merger Sub into the Company....................... A-19
1.2 Effect of the Merger........................................ A-19
1.3 Closing; Effective Date..................................... A-19
Articles of Incorporation and Bylaws; Directors and
1.4 Officers.................................................... A-20
1.5 Conversion of Shares........................................ A-20
1.6 Closing of the Company's Transfer Books..................... A-21
1.7 Exchange of Certificates.................................... A-21
1.8 Dissenting Shares........................................... A-22
1.9 Tax Consequences............................................ A-22
1.10 Further Action.............................................. A-22

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............ A-22
2.1 Due Organization............................................ A-22
2.2 Articles of Incorporation and Bylaws........................ A-22
2.3 Capitalization.............................................. A-23
2.4 Financial Statements........................................ A-23
2.5 Authority; Binding Nature of Agreement...................... A-23

SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT, MERGER SUB AND
MAJOR PARENT STOCKHOLDER................................. A-23
3.1 Due Organization, No Subsidiaries; Etc. .................... A-23
3.2 Capitalization, Etc. ....................................... A-23
3.3 Disclosure Document......................................... A-24
3.4 Charter Documents........................................... A-24
3.5 Contracts................................................... A-24
3.6 Parent Financial Statements................................. A-24
3.7 No Undisclosed Assets or Liabilities........................ A-25
3.8 No Operations............................................... A-25
3.9 Compliance with Legal Requirements.......................... A-25
3.10 Governmental Authorizations................................. A-25
3.11 Tax Matters................................................. A-25
3.12 Related Party Transactions.................................. A-25
3.13 Legal Proceedings; Orders................................... A-25
3.14 Authority; Binding Nature of Agreement...................... A-25
3.15 Non-Contravention; Consents and Notices..................... A-26
3.16 Full Disclosure............................................. A-26
</TABLE>

A-16
<PAGE> 142

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4. CERTAIN COVENANTS OF PARENT.............................. A-26
4.1 Access and Investigation.................................... A-26
4.2 Notification................................................ A-27
4.3 Reverse Split; Amendment of Certificate of Incorporation.... A-27

SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES...................... A-27
5.1 Filings and Consents........................................ A-27
5.2 Public Announcements........................................ A-27
5.3 Preparation and Filing of Disclosure Document............... A-27
5.4 Company Shareholders' Meeting............................... A-28

SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY....... A-28
6.1 Accuracy of Representations................................. A-28
6.2 Performance of Covenants.................................... A-28
6.3 No Material Adverse Effect.................................. A-28
6.4 Compliance Certificate...................................... A-28
6.5 Shareholder Approval........................................ A-28
6.6 Execution and Delivery of Release........................... A-28
6.7 Receipt of Documents from Shareholders...................... A-28
6.8 Purchaser Representative Agreement.......................... A-29
6.9 Dissenter's Rights.......................................... A-29
6.10 Lock-up Agreements.......................................... A-29
6.11 Consents.................................................... A-29
6.12 Legal Opinion............................................... A-29
6.13 No Restraints............................................... A-29
6.14 No Governmental Litigation.................................. A-29
6.15 No Other Litigation......................................... A-29
6.16 Amendment of Parent's Certificate of Incorporation.......... A-29
6.17 OTC Electronic Bulletin Board Listing....................... A-29
6.18 Completion of Due Diligence................................. A-29
6.19 Effectiveness of Registration Statement..................... A-29

SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT............ A-30
7.1 Accuracy of Representations................................. A-30
7.2 Performance of Covenants.................................... A-30
7.3 Compliance Certificate...................................... A-30
7.4 Shareholder Approval........................................ A-30
7.5 Consents.................................................... A-30
7.6 No Restraints............................................... A-30
7.7 No Governmental Litigation.................................. A-30
7.8 No Other Litigation......................................... A-30
</TABLE>

A-17
<PAGE> 143

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 8. TERMINATION.............................................. A-30
8.1 Termination................................................. A-30
8.2 Effect of Termination....................................... A-31

SECTION 9. INDEMNIFICATION.......................................... A-31
9.1 Survival of Representations................................. A-31
9.2 Indemnification by Major Parent Stockholder................. A-31
9.3 No Contribution............................................. A-31
9.4 Interest.................................................... A-31
9.5 Defense of Third Party Claims............................... A-32

SECTION 10. MISCELLANEOUS PROVISIONS................................ A-32
10.1 Further Assurances.......................................... A-32
10.2 Attorneys' Fees............................................. A-32
10.3 Transaction Costs........................................... A-32
10.4 Notices..................................................... A-32
10.5 Time of the Essence......................................... A-33
10.6 Governing Law; Venue........................................ A-33
10.7 Successors and Assigns...................................... A-34
10.8 Remedies Cumulative; Specific Performance................... A-34
10.9 Waiver...................................................... A-34
10.10 Amendments.................................................. A-34
10.11 Severability................................................ A-34
10.12 Entire Agreement............................................ A-34
10.13 Construction................................................ A-34
10.14 Counterparts................................................ A-34
</TABLE>

EXHIBITS

<TABLE>
<S> <C> <C>
Exhibit A -- Certain Definitions
Exhibit B -- Form of Amended and Restated Articles of Incorporation of
Surviving Corporation
Exhibit C -- Directors and Officers of Surviving Corporation
Exhibit D -- Parent Contracts
Exhibit E -- Amended and Restated Certificate of Incorporation of Parent
Exhibit F -- Release
Exhibit G -- Lock-up Agreements
Exhibit H -- Opinion of Counsel to Parent
</TABLE>

A-18
<PAGE> 144

AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION

THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement") is
made and entered into as of August 11, 1997, by and among EXPRESS CAPITAL
CONCEPTS, INC., a Delaware corporation ("Parent"), EXPRESS CAPITAL ACQUISITION
CORP., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), GREYSTONE TECHNOLOGY, INCORPORATED, a California corporation (the
"Company"), and EARNEST MATHIS, JR. a stockholder of Parent (a "Major Parent
Stockholder"). Certain capitalized terms used in this Agreement are defined in
Exhibit A.

RECITALS

A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company (the "Merger") in accordance with this Agreement, the
Delaware General Corporation Law (the "DGCL") and the California General
Corporation Law (the "CGCL"). Upon consummation of the Merger, Merger Sub will
cease to exist, and the Company will become a wholly owned subsidiary of Parent.

B. In connection with the Merger and prior to the Effective Date, Parent
will effect a reverse split of its outstanding Common Stock in a ratio of
1-for-41.66667 and shall establish the authorized capital stock of Parent as
30,000,000 shares of Common Stock, $.001 par value per share, and 3,000,000
shares of "blank check" Preferred Stock, $.001 par value per share (the "Reverse
Split"). Unless otherwise provided herein, all references to Parent Common Stock
contained herein give effect to the Reverse Split.

C. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").

D. This Agreement has been adopted and approved by the respective Boards of
Directors of Parent, Merger Sub and the Company, and by Parent, as the sole
stockholder of Merger Sub.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as
follows:

SECTION 1. Description of Transaction

1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, on the Effective Date (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").

1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the CGCL and the DGCL.

1.3 Closing; Effective Date. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, 4365 Executive Drive, Suite 1100, San Diego, California
92121 at 10:00 a.m. (PST) on the second business day after all of the conditions
specified in Sections 6 and 7 have been satisfied or waived, or at such other
place, time and date as the parties may designate. The date on which the Closing
actually takes place shall be referred to herein as the "Closing Date."
Contemporaneously with the Closing, a properly executed agreement of merger
conforming to the requirements of the CGCL and the DGCL (the "Agreement of
Merger") shall be filed with the Secretary of State of the State of California
and a copy of such Agreement of Merger shall be filed with the Secretary of
State of the State of Delaware. The Merger shall take effect at the time the
Agreement of Merger is filed with and accepted by the Secretary of State of the
State of California (the "Effective Date").

A-19
<PAGE> 145

1.4 Articles of Incorporation and Bylaws; Directors and Officers. Unless
otherwise agreed to in writing by the Company and Parent prior to the Effective
Date:

(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Date to conform to Exhibit B;

(b) the Bylaws of the Surviving Corporation shall be the Bylaws of the
Company as in effect immediately prior to the Effective Date; and

(c) the directors and officers of the Surviving Corporation
immediately after the Effective Date shall be the individuals identified on
Exhibit C.

1.5 Conversion of Shares.

(a) Subject to Sections 1.5(b), 1.7(b) and 1.8, on the Effective Date, by
virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or the Company Shareholders:

(i) each share of Company Common Stock outstanding immediately prior
to the Effective Date shall be converted into the right to receive one (1)
share of Parent Common Stock (such number of shares of Parent Common Stock
being calculated after giving effect to the Reverse Split). The ratio of
shares of Parent Common Stock to be received for each share of Company
Common Stock is sometimes referred to herein as the "Exchange Ratio." The
shares of Parent Common Stock to be issued to the Company Shareholders
pursuant to the terms of this Agreement shall be referred to herein as the
"Merger Shares;" and

(ii) each share of Common Stock, $.001 par value per share, of Merger
Sub outstanding immediately prior to the Effective Date shall be converted
into one share of Common Stock of the Surviving Corporation.

(b) If, between the date of this Agreement and the Effective Date, the
shares of Company Common Stock or Parent Common Stock deemed outstanding are
changed into a different number or class of shares by reason of any stock
dividend, subdivision, reclassification, reorganization, stock split, reverse
stock split (other than the Reverse Split contemplated by this Agreement) or
similar transaction, the total number of Merger Shares shall be appropriately
adjusted, provided that any such adjustment shall in all events result in the
Company Shareholders immediately prior to the Effective Date receiving no less
than the pro rata percentage of Merger Shares that would have been received by
such shareholders prior to any such adjustment.

(c) On the Effective Date, all rights with respect to Company Common Stock
under Company Options that are then outstanding shall be converted into and
become rights with respect to Parent Common Stock, and Parent shall assume each
Company Option in accordance with the terms (as in effect as of the date hereof)
of the stock option plan or other agreement, as the case may be, under which it
was issued by which it is evidenced. From and after the Effective Date, (i) each
Company Option assumed by Parent may be exercised solely for shares of Parent
Common Stock, (ii) the number of shares of Parent Common Stock subject to each
Company Option shall be equal to the number of shares of Company Common Stock
subject to such Company Option immediately prior to the Effective Date
multiplied by the Exchange Ratio, rounding down to the nearest whole share (with
cash, less the applicable exercise price, being payable for any fraction of a
share), (iii) the per share exercise price under each such Company Option shall
be adjusted by dividing the per share exercise price under each such Company
Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any
restriction on the exercise of any Company Option shall continue in full force
and effect and the term, exercisability, vesting schedule and other provisions
of such Company Option shall otherwise remain unchanged; provided, however, that
each such Company Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
subdivision, reclassification, reorganization, stock split, reverse stock split
or similar transaction subsequent to the Effective Date. The Company shall take
all actions that may be necessary (under the benefits plan or other agreements
pursuant to which Company Options are outstanding) to effectuate the provisions
of this Section 1.5(c) and to ensure that, from and after the Effective Date,
holders of Company Options have no rights with respect thereto other than those
specifically provided herein.

A-20
<PAGE> 146

1.6 Closing of the Company's Transfer Books. On the Effective Date, (a)
all certificates representing shares of Company Common Stock outstanding
immediately prior to the Effective Date shall automatically be canceled and
retired and shall cease to exist, and all holders of certificates representing
shares of Company Common Stock that were outstanding immediately prior to the
Effective Date shall cease to have any rights as shareholders of the Company,
and (b) the stock transfer books of the Company shall be closed with respect to
all shares of such Company Common Stock outstanding immediately prior to the
Effective Date.

No further transfer of any such shares of Company Common Stock shall be made on
such stock transfer books after the Effective Date. If, after the Effective
Date, a valid certificate previously representing any of such shares of Company
Common Stock (a "Company Stock Certificate") is presented to the Surviving
Corporation or Parent, such Company Stock Certificate shall be canceled and
shall be exchanged as provided in Section 1.7.

1.7 Exchange of Certificates.

(a) Exchange Procedures. On or as soon as practicable after the Effective
Date, Parent will send or cause to be sent to the holders of Company Stock
Certificates (i) a letter of transmittal in customary form and containing such
provisions as Parent may reasonably specify, and (ii) instructions for use in
effecting the surrender of Company Stock Certificates in exchange for
certificates representing Parent Common Stock. Subject to Section 1.7(b), upon
surrender of a Company Stock Certificate for exchange, together with a duly
executed letter of transmittal and such other documents as may be reasonably
required by Parent, (1) the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor a certificate representing the number
of shares of Parent Common Stock that such holder has the right to receive
pursuant to Section 1.5(a)(i), and (2) the Company Stock Certificate so
surrendered shall be canceled. Until surrendered as contemplated by this Section
1.7(a), each Company Stock Certificate shall be deemed, from and after the
Effective Date, to represent only the right to receive shares of Parent Common
Stock (and cash in lieu of any fractional share of Parent Common Stock as
contemplated by Section 1.7(b)). If any Company Stock Certificate shall have
been lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock,
require the owner of such lost, stolen or destroyed Company Stock Certificate to
provide an appropriate affidavit of loss and indemnity agreement against any
claim that may be made against Parent or the Surviving Corporation with respect
to such Company Stock Certificate.

(b) Fractional Shares. No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, any holder
of Company Common Stock who would otherwise be entitled to receive a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock issuable to such holder) shall, upon surrender of such
holder's Company Stock Certificate(s), be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by the average of the last bid and ask price of a share of Parent
Common Stock as reported on the OTC Electronic Bulletin Board on the day of
Closing (and if such day is not a trading day, then the last trading day
immediately preceding the Closing Date).

(c) Legends. In the event the Merger Shares are issued pursuant to a
registration statement filed under the Securities Act, no certificate
representing such shares will bear a restrictive legend with respect to the
Securities Act. In the event the Merger Shares are issued in reliance on the
exemption provided by Rule 506 of Regulation D of the Securities Act, then such
shares shall be characterized as "restricted securities" for purposes of Rule
144 under the Securities Act, and each certificate representing any of such
shares shall bear a legend identical or similar in effect to the following
legend (together with any other legend or legends required by applicable state
securities laws or otherwise):

(i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR IN COMPLIANCE WITH AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS;" and .
A-21
<PAGE> 147

(ii) Any other legend required to be placed thereon by applicable blue
sky laws of any state.

(d) No Liability. None of Parent, Major Parent Stockholder or the Surviving
Corporation shall be liable to any holder or former holder of Company Common
Stock for any shares of Parent Common Stock (or dividends or distributions with
respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property, escheat or similar law.

1.8 Dissenting Shares.

(a) Notwithstanding anything to the contrary contained in this Agreement,
any shares of capital stock of the Company that, as of the Effective Date, are
or may become "dissenting shares" within the meaning of Section 1300(b) of the
CGCL shall not be converted into or represent the right to receive Parent Common
Stock in accordance with Section 1.5 (or cash in lieu of fractional shares in
accordance with Section 1.7(b)), and the holder or holders of such shares shall
be entitled only to such rights as may be granted to such holder or holders
under Chapter 13 of the CGCL; provided, however, that if the status of any such
shares as "dissenting shares" shall not be perfected, or if any such shares
shall lose their status as "dissenting shares," then, as of the later of the
Effective Date or the time of the failure to perfect such status, such shares
shall automatically be converted into and shall represent only the right to
receive (upon the surrender of the certificate or certificates representing such
shares) Parent Common Stock in accordance with Section 1.5 (and cash in lieu of
fractional shares in accordance with Section 1.7(b)).

(b) The Company shall give Parent (i) prompt notice of any written demand
received by the Company prior to the Effective Date to require the Company to
purchase shares of capital stock of the Company pursuant to Chapter 13 of the
CGCL and of any other demand, notice or instrument delivered to the Company
prior to the Effective Date pursuant to the CGCL, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such demand,
notice or instrument. The Company will comply with the relevant provisions of
Chapter 13 of the CGCL.

1.9 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368(a) of
the Code.

1.10 Further Action. If, at any time after the Effective Date, any further
action is determined by Parent to be necessary to carry out the purposes of this
Agreement or to vest the Surviving Corporation or Parent with full right, title
and possession of and to all rights and property of Merger Sub and the Company,
the officers and directors of the Surviving Corporation and Parent shall be
fully authorized (in the name of Merger Sub, in the name of the Company and
otherwise) to take such action.

SECTION 2. Representations and Warranties of the Company

The Company represents and warrants that:

2.1 Due Organization. The Company is a corporation validly existing and in
good standing under the laws of the State of California and has the corporate
power and authority to: (i) conduct its business in the manner in which its
business is currently being conducted; and (ii) perform its obligations under
all material contracts by which it is bound. The Company is qualified to do
business as a foreign corporation, and is in good standing in all jurisdictions
in which it operates to the extent required by such jurisdiction and where the
failure to be so qualified would have a Material Adverse Effect on the Company
or on the ability of the Company to consummate the transactions contemplated
hereby. The Company does not have any direct or indirect subsidiaries.

2.2 Articles of Incorporation and Bylaws. The Company has delivered to
Parent copies of the Company's articles of incorporation and bylaws as currently
in effect, including all amendments thereto. The Company has made available to
Parent and its agents for review the records of the Company and the minutes of
the meetings and other proceedings of the Company's Board of Directors and
shareholders. The Merger and the transactions contemplated thereby were approved
by the Company's Board of Directors on August 7, 1997. Except for the minutes of
the meeting of the Board of Directors of the Company held on July 10, 1997,
there have been no formal meetings or other proceedings of the stockholders or
Board of Directors or any

A-22
<PAGE> 148

committee of the Board of Directors of the Company that are not fully reflected
in such minutes or other records. There has not been any violation of any of the
provisions of the Articles of Incorporation or bylaws of the Company and the
Company has not taken any action inconsistent with any resolutions adopted by
the stockholders, Board of Directors or any committees of the Board of Directors
of the Company. The books of account, stock records, minute books and other
records of the Company are accurate, up-to-date and complete in all material
respects and have been maintained in accordance with prudent business practices.

2.3 Capitalization. The authorized capital stock of the Company consists
of 50,000,000 shares of Company Common Stock, no par value, of which 12,241,404
shares were issued and outstanding as of March 31, 1997. All of the outstanding
shares of Company Common Stock have been duly authorized, validly issued and are
fully paid and nonassessable. As of March 31, 1997, there were outstanding
options to purchase 2,461,853 shares of Company Common Stock.

2.4 Financial Statements. The Company will deliver to Parent prior to the
Closing Date, the audited balance sheets of the Company as of March 31, 1997 and
1996, and the related audited statements of income, statements of shareholders'
equity and statements of cash flows of the Company for the years then ended,
together with the notes thereto, and the unaudited summary balance sheet of the
Company as of June 30, 1997 and the related unaudited summary statement of
income, summary statement of shareholders' equity and summary statement of
cashflow for the three-month period ended June 30, 1997.

2.5 Authority; Binding Nature of Agreement. The Company has the corporate
power and authority to enter into and to perform its obligations under this
Agreement and the execution, delivery and performance by the Company of this
Agreement and the other agreements and transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and its
Board of Directors. This Agreement constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by (i) laws of general application
relating to bankruptcy, insolvency, moratorium, reorganization or other similar
laws, both state and federal, affecting the enforcement of creditors' rights or
remedies in general, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.

SECTION 3.Representations and Warranties of Parent, Merger Sub and Major Parent
Stockholder

Parent, Merger Sub and the Major Parent Stockholder, jointly and severally,
represent and warrant that:

3.1 Due Organization, No Subsidiaries; Etc.

(a) Each of Parent and Merger Sub are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation, and each of them have the corporate power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; and (ii) to perform its obligations under all Material Parent
Contracts by which it is bound. Each of Parent and Merger Sub is duly qualified
to do business and is in good standing in each jurisdiction in which the failure
to be so qualified would have a Material Adverse Effect on Parent or Merger Sub
or on the ability of Parent or Merger Sub to consummate the transactions
contemplated hereby. Parent does not currently have any direct or indirect
subsidiaries other than Merger Sub, and has not had any direct or indirect
subsidiaries since 1991.

3.2 Capitalization, Etc. Prior to the Reverse Split, the authorized
capital stock of Parent consists of: (i) 500,000,000 shares of Common Stock,
$.0001 par value per share, 20,000,000 shares of which have been issued and are
outstanding; and (ii) 10,000,000 shares of Preferred Stock, $.0001 par value per
share, none of which are, or in the past have been, issued or outstanding.
Subsequent to the Reverse Split, the authorized capital stock of Parent will
consist of 30,000,000 shares of Common Stock, $.001 par value per share, 480,000
of which will be issued and outstanding and 3,000,000 shares of Preferred Stock,
$.001 par value per share, none of which will be outstanding. All of the
outstanding shares of capital stock of Parent and Merger Sub have been duly
authorized and validly issued, and are fully paid and nonassessable, and none of
such shares is subject to any repurchase option or restriction on transfer other
than restrictions imposed by federal or state securities laws. All outstanding
shares of capital stock of Parent and Merger Sub have been issued in

A-23
<PAGE> 149

compliance with all applicable federal and state securities laws and other
applicable Legal Requirements, and all requirements set forth in applicable
Parent Contracts. The Major Parent Stockholders own beneficially and of record,
in the aggregate, 19,500,000 shares of Parent Common Stock representing 97.5% of
the outstanding capital stock of Parent (prior to giving effect to the Reverse
Split). No holder of any shares of Parent Common Stock has any right to require
Parent to repurchase such shares of Common Stock from such holder. All of the
outstanding shares of capital stock of Merger Sub are owned beneficially and of
record by Parent, free and clear of any Encumbrances. There are no outstanding
subscriptions, options, calls, warrants or other rights (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of Parent or Merger Sub. The Merger Shares, when issued by Parent to
the Company's Shareholders in accordance with the terms of this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable. There are no
voting agreements or preemptive or similar rights with respect to any of
Parent's capital stock. Neither Parent nor Merger Sub has declared, accrued, set
aside or paid or promised to declare, accrue, set aside or pay any dividend or
any other distribution in respect of any shares of capital stock nor has
repurchased, redeemed or otherwise reacquired any shares of capital stock or
other securities.

3.3 Disclosure Document. None of the information relating to Parent,
Merger Sub or Parent's officers and directors to be included in the registration
statement (or, in the event the Merger Shares are to be issued in reliance on an
exemption to the Securities Act, such other disclosure document as the Company
deems appropriate) to be prepared jointly by Parent and the Company and to be
sent to each Company Shareholder (the "Disclosure Document") will, at the time
the Disclosure Document is mailed to the Company Shareholders or at the time of
the Company Shareholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.

3.4 Charter Documents. Parent has delivered to the Company complete and
true copies of each of Parent's and Merger Sub's Certificates of Incorporation
and bylaws as currently in effect, and the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent
or otherwise without a meeting) of the stockholders, Board of Directors and all
committees of the Board of Directors of Parent and Merger Sub. There have been
no formal meetings or other proceedings of the stockholders or Boards of
Directors or any committee of the Boards of Directors of either Parent or Merger
Sub that are not fully reflected in such minutes or other records. There has not
been any violation of any of the provisions of the Certificates of Incorporation
or bylaws of either Parent or Merger Sub and neither Parent nor Merger Sub have
taken any action that is inconsistent with any resolution adopted by the
stockholders, Boards of Directors or any committees of the Boards of Directors
of Parent or Merger Sub. The books of account, stock records, minute books and
other records of Parent and Merger Sub are accurate, up-to-date and complete in
all material respects and have been maintained in accordance with prudent
business practices.

3.5 Contracts. Exhibit D attached hereto identifies all contracts,
commitments, agreements (whether written or oral) and other instruments to which
Parent or Merger Sub or their respective assets are bound, is a party or which
create any obligation enforceable against Parent or Merger Sub (collectively,
the "Parent Contracts"). Parent has delivered to the Company accurate and
complete copies of all Parent Contracts, including all amendments thereto. Each
Parent Contract is valid and in full force and effect, and is enforceable by
Parent or Merger Sub, as the case may be, in accordance with its terms. Neither
Parent nor Merger Sub have violated or breached, or committed any default under,
any Parent Contract in any respect whatsoever. No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, (A) result in a violation or breach of
any of the provisions of any Parent Contract, (B) give any Person the right to
declare a default or exercise any remedy under any Parent Contract, (C) give any
Person the right to accelerate the maturity or performance of any Parent
Contract, or (D) give any Person the right to cancel, terminate or modify any
Parent Contract. Neither Parent nor Merger Sub has received any notice or other
communication regarding any actual or possible violation or breach of, or
default under, any Parent Contract, or any actual or possible termination of any
Parent Contract. Neither Parent nor Merger Sub have waived any of its material
rights under any Parent Contract.

3.6 Parent Financial Statements. Parent has delivered to the Company the
audited balance sheets as of December 31, 1996 and 1995, and the related audited
income statements, statements of stockholders' equity
A-24
<PAGE> 150

and statements of cash flows of Parent for the years then ended, with the notes
thereto and the report and opinion of Angell & Deering relating thereto, and the
unaudited balance sheet of Parent as of June 30, 1997, and the related unaudited
income statement for the 6-month period ended June 30, 1997 (the audited and
unaudited financial statements shall be referred to herein as the "Parent
Financial Statements"). The Parent Financial Statements are accurate and
complete in all respects and present fairly the financial position of Parent as
of the respective dates thereof and the results of operations and cash flows of
Parent for the periods covered thereby. The Parent Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered.

3.7 No Undisclosed Assets or Liabilities. As of the Closing, except as set
forth in the Parent Financial Statements, Parent will have no assets or accrued,
contingent or other liabilities of any kind or nature, whether matured or
unmatured.

3.8 No Operations. Neither Parent nor Merger Sub has, or in the past has
had, any operations of any kind. Except for Earnest Mathis, Jr., neither Parent
nor Merger Sub has, nor in the past has had, any employees.

3.9 Compliance with Legal Requirements. Parent and Merger Sub are, and
have at all times been, in compliance with all applicable Legal Requirements.
Neither Parent nor Merger Sub has received any notice or other communication
from any Governmental Body regarding any actual or possible violation of, or
failure to comply with, any Legal Requirement.

3.10 Governmental Authorizations. Each of Parent and Merger Sub has all
Governmental Authorizations necessary to enable it to conduct its business in
the manner in which its business is currently being conducted. Parent and Merger
Sub are, and at all times have been, in compliance with the terms and
requirements of such Governmental Authorizations. Neither Parent nor Merger Sub
has received any notice or other communication from any Governmental Body
regarding (a) any actual or possible violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (b) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization.

3.11 Tax Matters. All Tax Returns required to be filed by or on behalf of
Parent or Merger Sub with any Governmental Body on or before the Closing Date
have been or will be filed when due, and have been, or will be when filed,
accurately prepared in all respects. Parent and Merger Sub have within the time
(including any extensions of applicable due dates) and in the manner prescribed
by law, paid all Taxes that are due and payable. No claim or Legal Proceeding is
pending or has been threatened against or with respect to Parent or Merger Sub
in respect of any Tax. Neither Parent nor Merger Sub has any unsatisfied
liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses). There are no liens for Taxes upon any
of the assets of Parent or Merger Sub.

3.12 Related Party Transactions. No Parent Related Party has any direct or
indirect interest in any asset used in or otherwise relating to the business of
Parent or Merger Sub, or has any direct or indirect financial interest in any
Parent Contract, transaction or business dealing involving Parent or Merger Sub.
No Parent Related Party has any claim or right against Parent or Merger Sub.

3.13 Legal Proceedings; Orders. There is no pending Legal Proceeding and
no Person has threatened to commence any Legal Proceeding against Parent or
Merger Sub or that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Merger or any of the
other transactions contemplated by this Agreement. No event has occurred, and no
claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding. No Parent Related Party is subject to
any order, writ, injunction, judgment or decree that prohibits Parent Related
Party from engaging in or continuing any conduct, activity or practice relating
to Parent's or Merger Sub's business. There is no action, suit, proceeding or
investigation by Parent or Merger Sub currently pending or which Parent or
Merger Sub intends to initiate.

3.14 Authority; Binding Nature of Agreement. Parent and Merger Sub have
the full corporate power and authority to perform their respective obligations
under this Agreement; the execution, delivery and
A-25
<PAGE> 151

performance by Parent and Merger Sub of this Agreement have been duly authorized
by all necessary action on the part of Parent and Merger Sub and their
respective Boards of Directors, and the execution, delivery and performance of
this Agreement by Merger Sub have been duly authorized by all necessary action
on the part of Parent, as the sole stockholder of Merger Sub. No vote of the
stockholders of Parent is necessary to approve this Agreement, the Merger or the
transactions contemplated hereby. This Agreement constitutes the legal, valid
and binding obligation of Parent and Merger Sub, enforceable against them in
accordance with its terms, except as enforcement thereof may be limited by (i)
laws of general application relating to bankruptcy, insolvency moratorium,
reorganization or other similar laws, both state and federal, affecting the
enforcement of creditors' rights or remedies in general, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.

3.15 Non-Contravention; Consents and Notices. Neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor (2) the consummation of the Merger or any of
the other transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):

(a) contravene, conflict with or result in a violation of any of the
provisions of Parent's or Merger Sub's certificate of incorporation or
bylaws;

(b) with respect to Parent or Merger Sub, contravene, conflict with or
result in a violation of, or give any Governmental Body or other Person the
right to challenge any of the transactions contemplated by this Agreement
or to exercise any remedy or obtain any relief under, any Legal Requirement
or any order, writ, injunction, judgment or decree to which Parent or
Merger Sub is subject;

(c) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Parent Contract, or give
any Person the right to (i) declare a default or exercise any remedy under
any Parent Contract, (ii) accelerate the maturity or performance of any
Parent Contract, or (iii) cancel, terminate or modify any Parent Contract;
or

(d) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by Parent or
Merger Sub.

(e) Neither Parent nor Merger Sub is, or will be, required to make any
filing with or give any notice to, or obtain any Consent from, any Person
in connection with the execution and delivery of this Agreement or the
consummation of the Merger.

3.16 Full Disclosure.

(a) Neither this Agreement nor any other agreement, document or instrument
delivered to the Company in connection with the transactions contemplated by
this Agreement and the Merger (i) contains any representation, warranty or
information that is false or misleading with respect to any material fact, or
(ii) omits to state any material fact necessary in order to make the
representations, warranties and information contained and to be contained herein
and therein not false or misleading.

(b) The information supplied by Parent for inclusion in the Disclosure
Document will not, as of the date of the Disclosure Document or as of the date
of the Company Shareholders' Meeting, contain any statement that is inaccurate
or misleading with respect to any material fact, or (ii) omit to state any
material fact necessary in order to make such information not false or
misleading.

SECTION 4. Certain Covenants of Parent

4.1 Access and Investigation. During the Pre-Closing Period, Parent shall,
and shall cause its Representatives to: (a) provide the Company and the
Company's Representatives with reasonable access to Parent's books, records, tax
returns, work papers and other documents and information relating to Parent and
Merger Sub; and (b) provide the Company and the Company's Representatives with
such copies of the existing books, records, Tax Returns, work papers and other
documents and information relating to Parent and Merger Sub, and with such
additional financial and other data and information regarding Parent and Merger
Sub, as the Company or its Representatives may reasonably request.
A-26
<PAGE> 152

4.2 Notification.

(a) During the Pre-Closing Period, Parent shall promptly notify the
Company in writing of:

(i) the discovery by Parent of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by Parent, Merger Sub or Major Parent
Stockholder in this Agreement or in any document provided to the Company by
Parent, Merger Sub or Major Parent Stockholder;

(ii) any event, condition, fact or circumstance that occurs, arises or
exists after the date of this Agreement and that would cause or constitute
an inaccuracy in or breach of any representation or warranty made by
Parent, Merger Sub or any Major Parent Stockholder in this Agreement, if
(A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement;

(iii) any breach of any covenant or obligation of Parent, Merger Sub
or Major Parent Stockholder; and

(iv) any event, condition, fact or circumstance that would make the
timely satisfaction of any of the conditions set forth in Section 6
impossible or unlikely.

(b) Prior to the Effective Date, Parent shall use its best efforts to
ensure that, as of the Closing Date, Parent's Capital Stock will be listed for
trading on the OTC Electronic Bulletin Board and that, to the extent the Merger
Shares must be registered or listed with any regulatory body that regulates the
OTC Electronic Bulletin Board, such registration or listing has been completed.

4.3 Reverse Split; Amendment of Certificate of Incorporation. During the
Pre-Closing Period, Parent will (a) effect a reverse split of its outstanding
Common Stock in a ratio of 1-for-41.66667 and shall establish the authorized
capital stock of Parent as 30,000,000 shares of Common Stock, $.001 par value
per share, and 3,000,000 shares of "blank check" Preferred Stock, $.001 par
value per share, and (b) amend and restate its Certificate of Incorporation in
the form of Exhibit E.

SECTION 5. Additional Covenants of the Parties

5.1 Filings and Consents. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, (b) shall use his or its commercially reasonable efforts to obtain
each Consent (if any) required to be obtained (pursuant to any applicable Legal
Requirement) by such party in connection with the Merger or any of the other
transactions contemplated by this Agreement and (c) with respect to Parent,
shall obtain all Consents required to be obtained under Parent Contracts in
connection with the Merger. Each party shall promptly deliver to the other party
a copy of each such filing made, each such notice given and each such Consent
obtained by such party during the Pre-Closing Period.

5.2 Public Announcements. The parties shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the Merger and the transactions contemplated thereby. Without limiting the
generality of the foregoing, neither party shall (and neither party shall permit
any of its Representatives to) issue any press release or make any public
statement regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without the other party's prior
consent.

5.3 Preparation and Filing of Disclosure Document. In the event that the
Company deems it necessary or advisable that the issuance of the Merger Shares
be registered under the Securities Act, as promptly as practicable after the
date of this Agreement, Parent, the Major Parent Stockholder and the Company
shall prepare and cause to be filed with the SEC the appropriate Disclosure
Document contemplated by Section 3.3 and any other documents required to be
filed with the SEC in connection with the Merger. In this regard, each of
Parent, the Major Parent Stockholder and the Company shall provide each other
with any information
A-27
<PAGE> 153

regarding the other (including the other's management) that the Company deems
necessary and advisable to be included in the Disclosure Document. Each of
Parent, the Major Parent Stockholder and the Company shall use their best
efforts to cause the Disclosure Document to comply with the rules and
regulations promulgated by the SEC, to respond promptly to any comments of the
SEC or its staff and to have the Disclosure Document declared effective under
the Securities Act as promptly as practicable after such filing. Each of Parent
and the Company shall (i) notify the other promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Disclosure Document or for additional
information and (ii) shall supply the other with copies of all correspondence
with the SEC or its staff with respect to the Disclosure Document. Neither
Parent nor the Company shall file any amendment or supplement to the Disclosure
Document to which the other shall have reasonably objected. Whenever any event
occurs that should be set forth in an amendment or supplement to the Disclosure
Document, Parent or the Company, as the case may be, shall promptly inform the
other of such occurrence and shall cooperate in filing with the SEC or its
staff, and, if appropriate, mailing to stockholders of the Company, such
amendment or supplement.

5.4 Company Shareholders' Meeting. The Company shall, in accordance with
its articles of incorporation and bylaws and the applicable requirements of the
CGCL, call and hold a special meeting of its shareholders for the purposes of
permitting them to consider and to vote upon and approve this Agreement and the
Merger (the "Company Shareholders' Meeting"). In connection with the Company
Shareholders' Meeting, the Company shall cause a copy of the Disclosure Document
to be delivered to each Company Shareholder entitled to vote at the Company
Shareholders' Meeting.

SECTION 6. Conditions Precedent to Obligations of the Company

The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions:

6.2 Performance of Covenants. Each covenant or obligation that Parent,
Merger Sub and/or the Major Parent Stockholder is required to comply with or to
perform at or prior to the Closing shall have been complied with and performed
in all respects.

6.3 No Material Adverse Effect. Since the date of this Agreement, there
shall have been no Material Adverse Effect on Parent or Merger Sub and there
shall not have occurred any change or development, or any combination of changes
or developments, that would reasonably be expected to have a Material Adverse
Effect on Parent or Merger Sub.

6.4 Compliance Certificate. The Major Parent Stockholder shall have
delivered to the Company a certificate evidencing compliance by Parent and/or
Merger Sub with the conditions set forth in Sections 6.1, 6.2 and 6.3.

6.5 Shareholder Approval. The terms of the Merger and this Agreement shall
have been adopted and approved by the Requisite Vote of the Company's
Shareholders.

6.6 Execution and Delivery of Release. On or prior to the Closing, the
Major Parent Stockholder and each current and former officer and director of
Parent shall execute and deliver to the Company a release in the form of Exhibit
F.

6.7 Receipt of Documents from Shareholders. The Company shall have
received from each Company Shareholder, a completed and signed (i) Investment
Representation Letter, and (ii) Continuity of Interest Certificate, each in a
form reasonably acceptable to the Company.

A-28
<PAGE> 154

6.8 Purchaser Representative Agreement. The Company shall have received
from each Company Shareholder that will receive any Merger Shares and who is not
an "accredited investor" within the meaning of Rule 506 of Regulation D of the
Securities Act (each a "NonAccredited Investor") a completed and signed
Purchaser Representative Agreement in a form reasonably satisfactory to the
Company. Each NonAccredited Investor may be a party to one and the same
Purchaser Representative Agreement. Notwithstanding the foregoing, satisfaction
of the conditions set forth in this Section 6.8 shall not be a condition
precedent to the Company's obligations hereunder if the Merger Shares are to be
issued pursuant to a registration statement filed under the Securities Act.

6.9 Dissenter's Rights. The holders of no more than one percent (1%) of
the outstanding shares of Company Common Stock entitled to vote on the Merger
shall have exercised or be entitled to exercise dissenter's rights in accordance
with Chapter 13 of the CGCL.

6.10 Lock-Up Agreements. On or prior to the Closing, the Major Parent
Stockholder and Gary J. McAdam shall have each executed and delivered to the
Company a lock-up agreement in the form of Exhibit G.

6.11 Consents. All Consents required to be obtained and all filings
required to have been made in connection with the Merger pursuant to Section 5.1
and the other transactions contemplated by this Agreement shall have been
obtained or made and shall be in full force and effect.

6.12 Legal Opinion. The Company shall have received a legal opinion of
counsel to Parent, dated as of the Closing Date, in the form of Exhibit H;

6.13 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.

6.14 No Governmental Litigation. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Authority is or is threatened to
become a party: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the transactions contemplated thereby; (b)
relating to the Merger and seeking to obtain from Parent, Merger Sub or the
Company any damages that may be material to Parent, Merger Sub or the Company;
(c) seeking to prohibit or limit in any way Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Corporation; or (d) which would affect adversely the
right of Parent or the Surviving Corporation to own the assets or operate the
business of the Company.

6.15 No Other Litigation. There shall not be pending any Legal Proceeding
in which there is a reasonable possibility of an outcome that would have a
Material Adverse Effect on Parent, Merger Sub or the Company: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
transactions contemplated thereby; (b) relating to the Merger and seeking to
obtain from Parent, Merger Sub or the Company any damages that may be material
to Parent, Merger Sub or the Company; (c) seeking to prohibit or limit in any
way Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would affect adversely the right of Parent or the
Surviving Corporation to own the assets or operate the business of the Company.

6.16 Amendment of Parent's Certificate of Incorporation. Parent shall have
amended and restated its Certificate of Incorporation in the form of Exhibit E.

6.17 OTC Electronic Bulletin Board Listing. The Parent Common Stock shall
be listed or quoted for trading on the OTC Electronic Bulletin Board and there
shall be no suspension of trading then in effect.

6.18 Completion of Due Diligence. The Company and Company's counsel shall
have completed its due diligence review of the Parent and Merger Sub to the
satisfaction of the Company and Company's counsel.

6.19 Effectiveness of Registration Statement. In the event the Merger
Shares are to be issued pursuant to a registration statement filed with the SEC,
such registration statement shall have become effective in

A-29
<PAGE> 155

accordance with the requirements of the Securities Act and no stop order shall
have been issued by the SEC with respect to the registration statement.
Notwithstanding the foregoing, satisfaction of the condition set forth in this
Section 6.19 shall not be a condition precedent to the Company's obligations
hereunder if the Merger Shares are to be issued pursuant to Rule 506 of the
Securities Act.

SECTION 7. Conditions Precedent to Obligations of Parent

7.1 Accuracy of Representations. The representations and warranties made
by the Company in this Agreement and in each of the other agreements and
instruments delivered to Parent in connection with the transactions contemplated
by this Agreement shall have been accurate in all material respects as of the
date of this Agreement and shall be accurate in all material respects as of the
Closing Date.

7.2 Performance of Covenants. Each covenant or obligation that the Company
is required to comply with or to perform at or prior to the Closing shall have
been complied with and performed in all respects.

7.3 Compliance Certificate. The Company shall have delivered to Parent a
certificate signed by the President of the Company evidencing compliance by the
Company with the conditions set forth in Sections 6.1 and 6.2.

7.4 Shareholder Approval. The terms of the Merger and this Agreement shall
have been adopted and approved by the Requisite Vote of the Company's
Shareholders.

7.5 Consents. All Consents required to be obtained and all filings
required to have been made in connection with the Merger pursuant to Section 5.1
and the other transactions contemplated by this Agreement shall have been
obtained or made and shall be in full force and effect.

7.6 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.

7.7 No Governmental Litigation. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Authority is or is threatened to
become a party: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the transactions contemplated thereby; (b)
relating to the Merger and seeking to obtain from Parent, Merger Sub or the
Company any damages that may be material to Parent, Merger Sub or the Company;
(c) seeking to prohibit or limit in any way Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Corporation; or (d) which would affect adversely the
right of Parent or the Surviving Corporation to own the assets or operate the
business of the Company.

7.8 No Other Litigation. There shall not be pending any Legal Proceeding
in which there is a reasonable possibility of an outcome that would have a
Material Adverse Effect on Parent, Merger Sub or the Company: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
transactions contemplated thereby; (b) relating to the Merger and seeking to
obtain from Parent, Merger Sub or the Company any damages that may be material
to Parent, Merger Sub or the Company; (c) seeking to prohibit or limit in any
way Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would affect adversely the right of Parent or the
Surviving Corporation to own the assets or operate the business of the Company.

SECTION 8. Termination

8.1 Termination. This Agreement may be terminated prior to the Effective
Date:

(a) by mutual written consent of Parent and the Company;

(b) by either party if any of the other party's representations and
warranties contained in this Agreement shall be or shall have become
inaccurate, or if any of the other party's covenants contained in this
Agreement shall have been breached;

A-30
<PAGE> 156

(c) either party if a court of competent jurisdiction or other
Governmental Body shall have issued a final and nonappealable order, decree
or ruling, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;

(d) by the Company if the Merger shall not have been consummated by
October 31, 1997;

(e) by the Company if the Company Shareholders' Meeting shall have
been held and this Agreement and the Merger shall not have been adopted and
approved at such meeting by the Requisite Vote; and

(f) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 6 has become
impossible or unlikely.

8.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; provided, however, that Section 9 shall survive the termination
of this Agreement and shall remain in full force and effect.

SECTION 9. Indemnification

9.1 Survival of Representations

(a) The representations and warranties made by the Parent, Merger Sub and
the Major Parent Stockholder (including the representations and warranties set
forth in Section 3 and the representations and warranties of Parent, Merger Sub
and the Major Parent Stockholder set forth in any other agreement or instrument
provided to the Company in connection with the transactions contemplated by this
Agreement) shall survive the Closing. All representations and warranties made by
the Company shall terminate and expire as of the Effective Date, and any
liability of the Company with respect to such representations and warranties
shall thereupon cease.

(b) The representations, warranties, covenants and obligations of the
Parent, Merger Sub and the Major Parent Stockholder, and the rights and remedies
that may be exercised by the Indemnitees, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or knowledge of, the Company or any of the Indemnitees or any of their
representatives.

9.2 Indemnification by Major Parent Stockholder. From and after the
Effective Date, the Major Parent Stockholder, shall hold harmless and indemnify
each of the Indemnitees from and against, and shall compensate and reimburse
each of the Indemnitees for, any Damages which are directly or indirectly
suffered or incurred by any of the Indemnitees or to which any of the
Indemnitees may otherwise become subject (regardless of whether or not such
Damages relate to any third-party claim) and which arise from or as a result of,
or are directly or indirectly connected with: (i) any inaccuracy in or breach of
any representation or warranty made by Parent, Merger Sub or the Major Parent
Stockholder in Section 3 or in any document provided to the Company in
connection with the transactions contemplated by this Agreement, (ii) any breach
of any covenant or obligation of Parent, Merger Sub or the Major Parent
Stockholder (including the covenants set forth in Sections 4 and 5); or (iii)
any Legal Proceeding relating to any inaccuracy or breach of the type referred
to in clause "(i)" or "(ii)" above (including any Legal Proceeding commenced by
an Indemnitee for the purpose of enforcing any of its rights under this Section
9).

9.3 No Contribution. Major Parent Stockholder waives, and acknowledges and
agrees that he shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or other
right or remedy against Parent or the Surviving Corporation in connection with
any indemnification obligation or any other liability to which he may become
subject under or in connection with this Agreement.

9.4 Interest. If Major Parent Stockholder is required to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 9
with respect to any Damages, he shall also be liable to such Indemnitee for
interest on the amount of such Damages (for the period commencing as of the date
on which the Major Parent Stockholder first receives notice of a claim for
recovery by such Indemnitee and

A-31
<PAGE> 157

ending on the date on which the liability of the Major Parent Stockholder to
such Indemnitee is fully satisfied) at a floating rate equal to the rate of
interest publicly announced by Bank of America, N.T. & S.A. from time to time as
its prime, base or reference rate.

9.5 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which the Major Parent Stockholder may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 9,
Parent shall have the right, at its election, to proceed with the defense of
such claim or Legal Proceeding on its own. If Parent so proceeds with the
defense of any such claim or Legal Proceeding:

(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be borne and paid exclusively by the Major Parent
Stockholder;

(b) Major Parent Stockholder shall make available to Parent any
documents and materials in his possession or control that may be necessary
to the defense of such claim or Legal Proceeding; and

(c) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding with the consent of the Major Parent Stockholder;
provided, however, that such consent shall not be unreasonably withheld.

Parent shall give the Major Parent Stockholder prompt notice of the
commencement of any such Legal Proceeding against Parent or the Surviving
Corporation; provided, however, that any failure on the part of Parent to so
notify the Major Parent Stockholder shall not limit any of the obligations of
the Major Parent Stockholder under this Section 9.

SECTION 10. Miscellaneous Provisions

10.1 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.

10.2 Attorneys' Fees. If any action at law or suit in equity to enforce
this Agreement or the rights of any of the parties hereunder is brought against
any party hereto, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).

10.3 Transaction Costs. The Company shall be liable and shall pay for all
costs of the Company (including legal and accounting fees) incurred in
connection with and prior to the consummation of the Merger. Major Parent
Stockholder shall be liable and shall pay for all costs of Parent and Merger Sub
(including legal and accounting fees) incurred in connection with and prior to
the consummation of the Merger.

10.4 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):

if to Parent or Merger Sub:

Express Capital Concepts, Inc.
4 West Dry Creek Circle, Suite 140
Littleton, CO 80120
Attention: Earnest Mathis, Jr.
Facsimile: (303) 794-9457

A-32
<PAGE> 158

with a copy to (which shall not constitute notice):

Law Offices of Gary Agron
5445 DTC Parkway, Suite 520
Englewood, CO 80111
Attention: Gary Agron, Esq.
Facsimile: (303) 770-7257

if to Major Parent Stockholder:

Inverness Investments
26 West Dry Creek Circle, Suite 600
Littleton, CO 80120
Attention: Earnest Mathis, Jr.

if to the Company:

GreyStone Technology, Incorporated
4950 Murphy Canyon Road, Suite 140
San Diego, CA 92121
Attention: Joe Russell
Facsimile: (619) 874-7007

with a copy to (which shall not constitute notice):

Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Attention: Eric J. Loumeau, Esq.
Facsimile: (619) 453-3555

All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by
nationally-recognized, overnight courier, on the business day following dispatch
and (d) in the case of mailing, on the fifth business day following such
mailing.

10.5 Time of the Essence. Time is of the essence of this Agreement.

10.6 Governing Law; Venue.

(a) This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of California (without giving
effect to principles of conflicts of laws).

(b) Any legal action or other legal proceeding relating to this Agreement
or the enforcement of any provision of this Agreement may be brought or
otherwise commenced in any state or federal court located in San Diego,
California. Each party to this Agreement:

(i) expressly and irrevocably consents and submits to the jurisdiction
of each state and federal court located in San Diego, California (and each
appellate court located in the State of California) in connection with any
such legal proceeding;

(ii) agrees that each state and federal court located in California
shall be deemed to be a convenient forum; and

(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal
court located in California, any claim that such party is not subject
personally to the jurisdiction of such court, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such
proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.

A-33
<PAGE> 159

(c) Nothing contained in Section 10.6(b) shall be deemed to limit or
otherwise affect the right of any Person entitled to indemnification hereunder
to commence any legal proceeding or otherwise proceed against the indemnifying
party in any other forum or jurisdiction.

10.7 Successors and Assigns. This Agreement shall be binding upon and
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their permitted successors and assigns; provided, however, that this
Agreement may not be assigned by any party without the written consent of the
other parties, and any attempted assignment without such consent shall be void
and of no effect. None of the provisions of this Agreement are intended to
provide any rights or remedies to any Person other than the parties hereto and
their respective successors and assigns (if any).

10.8 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.

10.9 Waiver.

(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.

(b) No Person shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.

10.10 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.

10.11 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.

10.12 Entire Agreement. This Agreement, including the exhibits attached
hereto, set forth the entire understanding of the parties hereto relating to the
subject matter hereof and, supersede all prior and contemporaneous agreements
and understandings among or between any of the parties relating to the subject
matter hereof.

10.13 Construction. The parties hereto agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement.

10.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one and the same instrument. The execution of
this Agreement may be evidenced by facsimile signatures.

A-34
<PAGE> 160

The parties hereto have caused this Agreement to be executed and delivered
as of August 11, 1997.

EXPRESS CAPITAL CONCEPTS, INC.
a Delaware corporation

By:
--------------------------------------
Name:
Title:

EXPRESS CAPITAL ACQUISITION CORP.,
a Delaware corporation

By:
--------------------------------------
Name:
Title:

GREYSTONE TECHNOLOGY, INCORPORATED,
a California corporation

By:
--------------------------------------
Name:
Title:

--------------------------------------
EARNEST MATHIS, JR.

A-35
<PAGE> 161

EXHIBIT A

CERTAIN DEFINITIONS

For purposes of the Agreement (including this Exhibit A):

Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.

Agreement of Merger. "Agreement of Merger" shall have the meaning set forth
in Section 1.3.

CGCL. "CGCL" shall mean the California General Corporation Law.

Closing. "Closing" shall have the meaning set forth in Section 1.3.

Closing Date. "Closing Date" shall have the meaning set forth in Section
1.3.

Code. "Code" shall mean the Internal Revenue Code of 1968, as amended.

Company. "Company" shall mean GreyStone Technology, Incorporated, a
California corporation.

Company Common Stock. "Company Common Stock" shall mean all classes of
Company capital stock.

Company Option. "Company Option" shall mean any option to purchase capital
stock of the Company held by any director, officer or employee of, or consultant
to, the Company, warrants, convertible notes and any other instruments
convertible into shares of Common Stock of the Company.

Company Shareholders. "Company Shareholders" shall mean those holders of
Company Common Stock entitled to receive Merger Shares pursuant to Section 1.5.

Company Shareholders' Meeting. "Company Shareholders' Meeting" shall have
the meaning set forth in Section 5.4.

Company Stock Certificate. "Company Stock Certificate" shall have the
meaning set forth in Section 1.6.

Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).

Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.

Damages. "Damages" shall include any loss, damage, injury, liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation) or
expense of any nature. Damages shall not include lost profits, lost savings, or
other indirect, special, incidental or consequential damages whether such
damages are based on tort, contract, or any other legal theory, and even if the
Indemnitee has been advised of the possibility of such damages.

DGCL. "DGCL" shall mean the Delaware General Corporation Law.

Effective Date. "Effective Date" shall have the meaning set forth in
Section 1.3.

Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).

Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company, limited liability company,
joint stock company, firm or other enterprise, association, organization or
entity.

A-36
<PAGE> 162

Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

Exchange Ratio. "Exchange Ratio" shall have the meaning set forth in
Section 1.5(b)(i).

Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.

Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).

Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent,
(b) the Company Shareholders, (c) the Surviving Corporation, (d) the respective
Representations of the Persons referred to in clauses "(a)", "(b)" and "(c)"
above, and (e) the respective successors and assigns of the Persons referred to
in clauses "(a)", "(b)", "(c)" and "(d)" above.

Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.

Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.

Major Parent Stockholder. "Major Parent Stockholder" shall mean Earnest
Mathis, Jr.

Material Adverse Effect. A violation of a representation or warranty or any
other matter will be deemed to have a "Material Adverse Effect" on the Company
or Parent, as the case may be, if such violation or other matter (considered
together with all other matters that would constitute exceptions to such
representations and warranties set forth in the Agreement but for the presence
of "Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on the business, condition, assets, liabilities, operations,
financial performance or prospects of the Company or Parent or Merger Sub, as
the case may be.

Merger Shares. "Merger Shares" shall have the meaning set forth in Section
1.5(a)(i).

Merger Sub. "Merger Sub" shall mean Express Capital Acquisition Corp., a
Delaware corporation.

NASD. "NASD" shall mean the National Association of Securities Dealers,
Inc.

Parent. "Parent" shall mean Express Capital Concepts, Inc., a Delaware
corporation.

Parent Contract. "Parent Contract" shall have the meaning set forth in
Section 3.5.

Parent Common Stock. "Parent Common Stock" shall mean Parent's Common
Stock, $.0001 par value per share.

Parent Related Party. "Parent Related Party" shall mean (i) each individual
who is, or who has at any time been, an officer or director of Parent or Merger
Sub or beneficial holder of more than 10% of the capital stock of Parent; (ii)
each individual who is a member of the immediate family of any of the
individuals referred to in clause "(i)" above; and (iii) any trust or other
Entity (other than Parent or Merger Sub) in which any one of the individuals
referred to in clauses "(i)" and "(ii)" above holds (or in which more than one
of such individuals collectively hold), beneficially or otherwise, a material
voting, proprietary or equity interest.)

A-37
<PAGE> 163

Person. "Person" shall mean any individual, Entity or Governmental Body.

Pre-Closing Period. "Pre-Closing Period" shall be the period between the
date of this Agreement and the Closing Date.

Disclosure Document. "Disclosure Document" shall have the meaning set forth
in Section 3.3.

Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.

Requisite Vote. "Requisite Vote" shall mean the vote necessary to approve
the Merger pursuant to the CGCL.

Reverse Split. "Reverse Split" shall have the meaning set forth in Recital
B.

Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.

Surviving Corporation. "Surviving Corporation" shall have the meaning set
forth in Section 1.1.

Taxes. "Taxes" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.

Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.

A-38
<PAGE> 164

EXHIBIT B

FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION OF SURVIVING CORPORATION

A-39
<PAGE> 165

EXHIBIT C

DIRECTORS AND OFFICERS OF SURVIVING CORPORATION

<TABLE>
<S> <C>
Richard A. Smith Chairman of the Board, President and Chief Executive Officer
Jon M. Reynolds Director
Thomas D. Aldern Director and Vice President, Government Systems
Thomas L. King Vice President, Finance and Chief Financial Officer
Joe E. Russell Vice President, Corporate Development, General Counsel and
Secretary
</TABLE>

A-40
<PAGE> 166

EXHIBIT D

PARENT CONTRACTS

A-41
<PAGE> 167

EXHIBIT E

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF PARENT

A-42
<PAGE> 168

EXHIBIT F

RELEASE

A-43
<PAGE> 169

GENERAL RELEASE

This GENERAL RELEASE (the "Release") is being executed and delivered as of
August 11, 1997 by ("Releasor"), to and in favor of Express Capital
Concepts, Inc., a Delaware corporation ("Parent") and GreyStone Technology,
Inc., a California corporation (the "Company").

RECITALS

WHEREAS, reference is made to that certain Agreement and Plan of Merger and
Reorganization dated August 11, 1997 (the "Merger Agreement") by and among
Parent, Express Capital Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub"), the Company, Releasor and Gary
J. McAdam, whereby Merger Sub will be merged with and into the Company (the
"Merger") and upon consummation of the Merger the Company will become a
wholly-owned subsidiary of Parent;

WHEREAS, Releasor is a stockholder of Parent and serves as Parent's [insert
officer position] and as a member of the Board of Directors of Parent; and

WHEREAS, under Section 6.6 of the Merger Agreement, the Company has
required as a condition to the consummation of the Merger and the other
transactions contemplated by the Merger Agreement, that the Releasor execute and
deliver this Release.

AGREEMENT

Releasor acknowledges that execution and delivery of this Release is a
condition to the Company's obligation to consummate the Merger and the
transactions contemplated by the Merger Agreement and that, in order to induce
the Company and Parent to consummate the transactions contemplated by the Merger
Agreement, Releasor hereby for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
covenants and agrees as follows:

1. RELEASE. Releasor, for himself and for each of such Releasor's
Associated Parties (as defined in Section 2), hereby generally, irrevocably,
unconditionally and completely releases, acquits and forever discharges each of
the Releasees (as defined in Section 2) from, and hereby irrevocably,
unconditionally and completely waives and relinquishes, each of the Released
Claims (as defined in Section 2). Notwithstanding the foregoing, this Release
shall not be deemed to supersede or release the Company from its obligations
under that certain Indemnification Agreement dated August 11, 1997 between
Releasor and the Company.

2. DEFINITIONS.

(a) "Associated Party" when used herein with respect to Releasor, shall
mean and include: (i) Releasor's executors, administrators, heirs and estate;
(ii) Releasor's past, present and future assigns, agents and representatives;
(iii) each entity that Releasor has the power to bind (by such Releasor's acts
or signature) or over which such Releasor directly or indirectly exercises
control; and (iv) each entity of which such Releasor owns, directly or
indirectly, at least 50% of the outstanding equity, beneficial, proprietary,
ownership or voting interests.

(b) "Releasees" shall mean and include: (i) Parent, (ii) each of the direct
and indirect subsidiaries of Parent, (iii) the Company, (iv) the Surviving
Corporation (as defined in the Merger Agreement), and (v) the successors, and
past, present and future assigns, directors, officers, employees, agents,
attorneys and representatives of the respective entities identified or otherwise
referred to in clauses (i) through (iv) of this sentence, other than Releasors.

(c) "Claims" shall mean and include all past, present and future disputes,
claims, damages, controversies, demands, rights, obligations, liabilities,
actions and causes of action of every kind and nature, in equity or otherwise,
whether known, unknown, suspected, unsuspected, disclosed or undisclosed.

(d) "Released Claims" shall mean and include each and every Claim that
Releasor or any Associated Party of Releasor may have had in the past, may now
have or may have in the future against any of the

A-44
<PAGE> 170

Releasees, and that has arisen or arises directly or indirectly out of, or
relates directly or indirectly to, any circumstance, agreement, activity,
action, omission, event or matter occurring or existing on or prior to the date
of this Release (excluding only such Releasor's rights, if any, under the Merger
Agreement).

3. REPRESENTATIONS AND WARRANTIES. Releasor represents and warrants that:

(a) Releasor has not assigned, transferred, conveyed or otherwise
disposed of any Claim against any of the Releasees, or any direct or
indirect interest in any such Claim, in whole or in part;

(b) to the best of Releasor's knowledge, no other person or entity has
any interest in any of the Released Claims;

(d) no Associated Party of Releasor will in the future have any Claim
against any Releasee that arises directly or indirectly from or relates
directly or indirectly to any circumstance, agreement, activity, action,
omission, event or matter occurring or existing on or before the date of
this Release;

(e) this Release has been duly and validly executed and delivered by
Releasor;

(f) this Release is a valid and binding obligation of Releasor and
Releasor's Associated Parties, and is enforceable against such Releasor and
each of such Releasor's Associated Parties in accordance with its terms;

(g) there is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental
body, governmental agency or arbitrator pending, or to the best knowledge
of Releasor, threatened against such Releasor or any of such Releasor's
Associated Parties that challenges or would challenge the execution and
delivery of this Release or the taking of any of the actions required to be
taken by such Releasor under this Release;

(h) neither the execution and delivery of this Release nor the
performance hereof will (i) result in any violation or breach of any
agreement or other instrument to which Releasor or any of such Releasor's
Associated Parties is bound, or (ii) result in a violation or any law,
rule, regulation, treaty, ruling, directive, order, arbitration award,
judgment or decree to which Releasor or any of Releasor's Associated
Parties is subject; and

(i) no authorization, instruction, consent or approval of any person
or entity is required to be obtained by Releasor or any of Releasor's
Associated Parties in connection with the execution and delivery of this
Release or the performance hereof.

(j) this release contains the entire agreement between the parties
with respect to the matters addressed herein and Releasor is not relying on
any representation or warranty of any party other than those contained
herein in the execution and delivery of this Release.

4. CIVIL CODE SECTION 1542. Releasor represents, warrants and agrees that
he has been fully advised by his attorney of the contents of Section 1542 of the
Civil Code of the State if California. Releasor expressly waives and
relinquishes all rights and benefits under that section and any similar law or
common law principle of similar effect of any state or territory of the United
States with respect to the claims released hereby. Section 1542 reads as
follows:

"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially effected his
settlement with the debtor."

5. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any Releasee, Releasor shall indemnify, defend
and hold harmless each Releasee against and from any loss, damage, injury, harm,
detriment, lost opportunity, liability, exposure, claim, demand, settlement,
judgment, award, fine, penalty, tax, fee, charge or expense (including
attorneys' fees) that is directly or indirectly suffered or incurred at any time
by such Releasee, or to which such Releasee otherwise becomes subject at any
time, and that arises directly or indirectly out of or by virtue of, or relates
directly or indirectly to, (a) any failure on the part of Releasor to observe,
perform or abide by, or any other breach of, any restriction, covenant,
obligation, representation, warranty or other provision contained herein, (b)
the assertion or

A-45
<PAGE> 171

purported assertion of any of the Released Claims by Releasor or any of
Releasor's Associated Parties, or (c) any conduct or action of Releasor or
Parent occurring or taken prior to the date of this Release.

6. MISCELLANEOUS.

(a) This Release sets forth the entire understanding of the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings among or between Releasor and any Releasees relating to the
subject matter hereof.

(b) If any provision of this Release or any part of any such provision is
held under any circumstances to be invalid or unenforceable in any jurisdiction,
then (i) such provision or part thereof shall, with respect to such
circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (ii) the invalidity or unenforceability of such provision or part
thereof under such circumstances and in such jurisdictions shall not affect the
validity or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (iii) such invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Release. If any provision of this
Release or any part of such provision is held to be unenforceable against
Releasor, then the unenforceability of such provision or any part thereof
against Releasor shall not affect the enforceability thereof against any other
Releasor. Each provision of this Release is separable from every other provision
of this Release, and each part of each provision of this Release is separable
from every other part of such provision.

(c) This Release shall be construed in accordance with, and governed in all
respects by, the laws of the State of California (without giving effect to
principles of conflicts of laws).

(d) Any legal action or other legal proceeding relating to this Release or
the enforcement of any provision of this Release may be brought or otherwise
commenced by any Releasee in any state or federal court located in the State of
California. Releasor expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the State of California
in connection with any such legal proceeding. Releasor agrees that each state
and federal court located in the State of California shall be deemed to be a
convenient forum. Releasor agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or federal
court located in the State of California, any claim that such Releasor is not
subject personally to the jurisdiction of such court, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Release or the subject matter of this Release may not be
enforced in or by such court. Nothing contained in this Release shall be deemed
to limit or otherwise affect the right of any Releasee (1) to commence any legal
proceeding or to otherwise proceed against Releasor or any other person or
entity in any other forum or jurisdiction, or (2) to raise this Release as a
defense in any legal proceeding in any other forum or jurisdiction.

(e) Releasor shall execute and/or cause to be delivered to each Releasee
such instruments and other documents, and shall take such other actions, as such
Releasee may reasonably request for the purpose of carrying out or evidencing
any of the actions contemplated by this Release.

(f) This Release shall be interpreted and construed mutually in accordance
with the plain meaning of the language contained herein and shall not be
preemptively construed against the drafters.

(g) If any legal action or other legal proceeding relating to this Release
or the enforcement of any provision hereof is brought by Releasor or any
Releasee, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements to the extent actually incurred (in
addition to any other relief to which the prevailing party may be entitled).

IN WITNESS WHEREOF, the undersigned has executed and delivered this Release
as of August 11, 1997.

--------------------------------------

A-46
<PAGE> 172

EXHIBIT G

LOCK-UP AGREEMENTS

A-47
<PAGE> 173

LOCK-UP AGREEMENT

THIS LOCK-UP AGREEMENT dated as of August 11, 1997 (the "Agreement") is
entered into by and between Express Capital Concepts, Inc., a Delaware
corporation ("Parent"), , a stockholder of Parent (the
"Stockholder") and GreyStone Technology, Inc., a California corporation (the
"Company"). Capitalized terms used and not otherwise defined herein shall have
the meanings given to such terms in the Merger Agreement (as defined below).

RECITALS

WHEREAS, reference is made to that certain Agreement and Plan of Merger and
Reorganization dated August 11, 1997 (the "Merger Agreement") among Parent,
Express Capital Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Parent ("Merger Sub"), the Company and Stockholder;

WHEREAS, the Merger Agreement provides for, among other things, the merger
of Merger Sub with and into the Company (the "Merger") and the issuance of
shares of Common Stock of Parent to the shareholders of the Company;

WHEREAS, in connection with the Merger and the issuance of shares of Common
Stock of Parent to the shareholders of the Company, Parent and the Company
believe that it would be in the best interest of the respective stockholders and
shareholders of Parent and the Company to impose certain restrictions on the
Disposition (as defined below) of the shares of Common Stock of Parent held by
certain existing stockholders of Parent.

WHEREAS, as of the date hereof, Stockholder holds 9,550,000 shares of
Common Stock of Parent (all of such shares being referred to herein as the
"Parent Shares") and agrees that, subsequent to and contingent upon the
consummation of the Merger, the Parent Shares will be subject to certain
restrictions on Disposition (as defined below) as more fully set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:

1. RESTRICTIONS ON DISPOSITION. As an inducement to and in consideration of
the Parent's and the Company's agreement to enter into the Merger Agreement and
proceed with the Merger, and for other good and valuable consideration, receipt
of which is hereby acknowledged, Stockholder hereby agrees, except as permitted
in this Section 1 and in Section 2 below, not to, directly or indirectly, offer
to sell, contract to sell, transfer, assign, cause to be redeemed or otherwise
sell or dispose of any of the Parent Shares (collectively, a "Disposition").
Stockholder hereby agrees and consents to the entry of stop transfer
instructions with Parent's transfer agent against the transfer of the Parent
Shares except in compliance with this Agreement. Notwithstanding the foregoing,
Stockholder may pledge, hypothecate or otherwise grant a security interest in
all or a portion of the Parent Shares during the term of this Agreement;
provided, however, that any person or entity receiving such shares in pledge or
hypothecation or granted a security interest in such shares, shall be subject to
all of the restrictions on Disposition of such shares imposed by this Agreement
to the same extent as Stockholder.

2. PERMITTED DISPOSITIONS. During each three-month period occurring
subsequent to the Closing Date, Stockholder may effect one or more Dispositions
of that number of Parent Shares that, taken together with any other Dispositions
effected during such three-month period, does not exceed one percent (1%) of the
total number of shares of Common Stock of Parent outstanding as of the Closing
Date (after giving effect to the issuance by Parent of the Merger Shares). None
of the restrictions on Disposition contained herein shall apply to a bona fide
gift or gifts, or to transfers to family members of Stockholder, of the Parent
Shares, provided the donee, donees or transferees thereof agree to be bound by
the restrictions on Disposition contained in this Agreement.

A-48
<PAGE> 174

3. EXPIRATION OF LOCK-UP. On the day that is 180 days after the Closing
Date, all restrictions on Disposition imposed hereunder shall expire and shall
not apply to any of the Parent Shares.

4. MISCELLANEOUS.

(a) Expiration of Agreement. This Agreement shall expire and be of no
further force or effect on the day immediately following the first anniversary
of the Closing Date.

(b) Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of California, without
giving effect to principles of conflicts of laws.

(c) Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day first set forth above.

--------------------------------------

EXPRESS CAPITAL CONCEPTS, INC.

By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------

GREYSTONE TECHNOLOGY, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------

A-49
<PAGE> 175

EXHIBIT H

OPINION OF COUNSEL TO PARENT

A-51
<PAGE> 176

ANNEX B

CERTIFICATE OF MERGER
OF
GREYSTONE TECHNOLOGY, INCORPORATED INTO
EXPRESS CAPITAL ACQUISITION CORP.
(PURSUANT TO SECTION 252 OF THE
DELAWARE GENERAL CORPORATION LAW)

The undersigned corporation, organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, does hereby certify:

FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger are as follows:

<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
---- ----------------------
<S> <C>
GREYSTONE TECHNOLOGY, INCORPORATED California
EXPRESS CAPITAL ACQUISITION CORP Delaware
</TABLE>

SECOND: That an Agreement and Plan of Merger and Reorganization, dated as
of August 11, 1997 as amended on October 1, 1998, by and among EXPRESS CAPITAL
ACQUISITION CORP. and GREYSTONE TECHNOLOGY, INCORPORATED has been approved,
adopted, certified, executed, and acknowledged by each of the constituent
corporations in accordance with the requirements of Section 252(c) of the
General Corporation Law of the State of Delaware.

THIRD: That the name of the surviving corporation of the merger is Express
Capital Acquisition Corp.

FOURTH: That the surviving corporation of the merger is a Delaware
corporation.

FIFTH: That the Certificate of Incorporation of the surviving corporation
is the Certificate of Incorporation of Express Capital Acquisition Corp.

SIXTH: That the executed Agreement and Plan of Merger and Reorganization is
on file at the principal place of business of Express Capital Acquisition Corp.
located at 26 West Dry Creek Circle, Suite 600, Littleton, Colorado, 80120.

SEVENTH: That a copy of the Agreement and Plan of Merger and Reorganization
will be furnished by the surviving corporation, on request and without cost, to
any stockholder of any constituent corporation.

EIGHTH: That the authorized capital stock of GreyStone Technology,
Incorporated, a California corporation, is 50,000,000 shares of Common Stock, no
par value.

IN WITNESS WHEREOF, Express Capital Acquisition Corp. has caused this
Certificate of Merger to be signed by its President and Chief Executive Officer
on 1998.

EXPRESS CAPITAL ACQUISITION CORP.

By:
------------------------------------
Earnest Mathis, Jr.
President and Chief Executive
Officer

B-1
<PAGE> 177

ANNEX C

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EXPRESS CAPITAL CONCEPTS, INC.

Express Capital Concepts, Inc., a corporation incorporated in the State of
Delaware, hereby certifies as follows:

1. The original Certificate of Incorporation of this corporation was filed
in the office of the Secretary of State of the State of Delaware on May 18, 1988
under the name "Express Capital Concepts, Inc."

2. That the amendment and restatement of the Certificate of Incorporation
set forth in paragraph 3 hereof has been duly adopted in accordance with the
provisions of the Delaware General Corporation Law (the "DGCL") by the
affirmative vote of the holders of not less than a majority of the outstanding
capital stock of the corporation entitled to vote thereon by written consent of
the stockholders dated , 1998, following adoption by the Board of
Directors of a resolution setting forth and declaring the advisability of the
proposed amendment and restatement, all in accordance with Section 242 of the
DGCL.

3. That the Board of Directors of said corporation at a meeting duly
called, convened and held, duly adopted a resolution proposing and declaring
advisable the following restatement of the Certificate of Incorporation:

RESOLVED, that the Certificate of Incorporation of this corporation be
restated in its entirety as follows:

The name of this corporation is GreyStone Digital Technology, Inc.

II.

The address of the registered office of the corporation in the State of
Delaware is 229 South State Street, in the City of Dover, County of Kent, and
the name of the registered agent of the corporation in the State of Delaware at
such address is The Prentice-Hall Corporation System, Inc.

III.

The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the DGCL.

IV.

A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Thirty Three Million
(33,000,000) shares. Thirty Million (30,000,000) shares shall be Common Stock,
each having a par value of one-tenth of one cent ($.001). Three Million
(3,000,000) shares shall be Preferred Stock, each having a par value of
one-tenth of one cent ($.001).

Effective at the time of filing with the Secretary of State of the State of
Delaware of this Amended and Restated Certificate of Incorporation (the
"Effective Time"), each 41.66667 shares of the corporation's Common Stock, par
value $.0001 per share, then issued and outstanding shall, automatically and
without any action on the part of the respective holders thereof, be converted
into one (1) share of Common Stock, par value $.001 per share, of the
corporation. No fractional shares shall be issued and, in lieu thereof, any
holder of a fractional share of Common Stock after such conversion shall be
entitled to receive cash for such holder's

C-1
<PAGE> 178

fractional share based upon the high bid price of the corporation's Common Stock
as quoted on the Over-the-Counter Bulletin Board(R) of the Nasdaq Stock Market,
Inc. on the date of the Effective Time.

B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the DGCL, to fix or alter from time
to time the designation, powers, preferences and rights and the qualifications,
limitations or restrictions of any wholly unissued series of Preferred Stock,
and to establish from time to time the number of shares constituting any such
series or any of them; and to increase or decrease the number of shares of any
series subsequent to the issuance of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of shares
of any series shall be decreased in accordance with the foregoing sentence, the
shares constituting such decrease shall resume the status that they had prior to
the adoption of the resolution originally fixing the number of shares of such
series.

For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

1. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors.

2. BOARD OF DIRECTORS

a. Subject to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, and during such time
or times that the corporation is not subject to Section 2115(b) of the
California General Corporation Law (the "CGCL"), the directors shall be divided
into three classes designated as Class I, Class II and Class III, respectively.
Directors shall be assigned to each class in accordance with a resolution or
resolutions adopted by the Board of Directors. At the first annual meeting of
stockholders following the adoption of this Amended and Restated Certificate of
Incorporation (assuming the corporation is not subject to Section 2115(b) of the
CGCL), the term of office of the Class I directors shall expire and Class I
directors shall be elected for a full term of three years. At the second annual
meeting of stockholders following the adoption of this Amended and Restated
Certificate of Incorporation (assuming the corporation is not subject to Section
2115(b) of the CGCL), the term of office of the Class II directors shall expire
and Class II directors shall be elected for a full term of three years. At the
third annual meeting of stockholders following the adoption of this Amended and
Restated Certificate of Incorporation (assuming the corporation is not subject
to Section 2115(b) of the CGCL), the term of office of the Class III directors
shall expire and Class III directors shall be elected for a full term of three
years. At each succeeding annual meeting of stockholders (assuming the
corporation is not subject to sec. 2115(b) of the CGCL), directors shall be
elected for a full term of three years to succeed the directors of the class
whose terms expire at such annual meeting.

b. In the event that the corporation is subject to Section 2115(b) of the
CGCL at any time, or from time to time, Section A. 2. a. of this Article V shall
not apply and all directors shall be elected at each annual meeting of
stockholders to hold office until the next annual meeting.

c. No person entitled to vote at an election for directors may cumulate
votes to which such person is entitled, unless at the time of such election the
corporation is subject to Section 2115(b) of the CGCL. During such time or times
that the corporation is subject to Section 2115(b) of the CGCL, every
stockholder entitled to vote at an election for directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which such
stockholder's shares are otherwise entitled, or distribute the stockholder's
votes on the same principle among as many candidates as such stockholder thinks
fit. No stockholder, however, shall be entitled to so

C-2
<PAGE> 179

cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any stockholder
has given proper notice to cumulate votes, all stockholders may cumulate their
votes for any candidates who have been properly placed in nomination. Under
cumulative voting, the candidates receiving the highest number of votes, up to
the number of directors to be elected, are elected.

Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.

3. REMOVAL OF DIRECTORS

a. During such time or times that the corporation is subject to Section
2115(b) of the CGCL, the Board of Directors or any individual director may be
removed from office at any time without cause by the affirmative vote of the
holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of such director's most recent election were then being
elected.

b. At any time or times that the corporation is not subject to Section
2115(b) of the CGCL and subject to any limitations imposed by law, Section A. 3.
a. above shall no longer apply and removal shall be as provided in Section
141(k) of the DGCL.

B. BYLAW AMENDMENTS

Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may be
altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the
then-outstanding shares of the voting stock of the corporation entitled to vote.
The Board of Directors shall also have the power to adopt, amend, or repeal
Bylaws.

2. The directors of the corporation need not be elected by written ballot
unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the corporation except
at an annual or special meeting of stockholders called in accordance with the
Bylaws or by written consent of stockholders in accordance with the Bylaws;
provided, however, that after the corporation's capital stock is listed for
trading on a national securities exchange, or the Nasdaq National Market no
action shall be taken by the stockholders by written consent.

At any time or times that the corporation is subject to Section 2115(b) of
the CGCL, stockholders holding more than five percent (5%) of the outstanding
shares of the corporation shall have the right to call a special meeting of
stockholders as set forth in Article V, B., 3 herein.

4. Advance notice of stockholder nominations for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.

VI.

A. The liability of the directors for monetary damages shall be eliminated
to the fullest extent under applicable law.

B. This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the CGCL) for breach of duty to the corporation and
its shareholders through bylaw provisions or through agreements with the agents,
or through shareholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL or Section 145 of
the Delaware General Corporation Law,

C-3
<PAGE> 180

subject, at any time or times the corporation is subject to Section 2115(b) to
the limits on such excess indemnification set forth in Section 204 of the CGCL.

C. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.

VII.

A. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, except as provided in
paragraph B. of this Article VII, and all rights conferred upon the stockholders
herein are granted subject to this reservation.

B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI
and VII.

IN WITNESS WHEREOF, Express Capital Concepts, Inc. has caused its corporate
seal to be hereunto affixed and this Amended and Restated Certificate of
Incorporation to be signed by Earnest Mathis, Jr., its President and Chief
Executive Officer on this day of , 1998.

--------------------------------------
Earnest Mathis, Jr.
President, Chief Executive Officer
and Secretary

C-4
<PAGE> 181

ANNEX D

BYLAWS
OF
GREYSTONE DIGITAL TECHNOLOGY, INC.,
(FORMERLY, "EXPRESS CAPITAL CONCEPTS, INC.")
A DELAWARE CORPORATION
<PAGE> 182

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
OFFICES..................................................... D-1
SECTION 1. Registered Office............................ D-1
SECTION 2. Other Offices................................ D-1

ARTICLE II
CORPORATE SEAL.............................................. D-1
SECTION 3. Corporate Seal............................... D-1

ARTICLE III
STOCKHOLDERS' MEETINGS...................................... D-1
SECTION 4. Place Of Meetings............................ D-1
SECTION 5. Annual Meetings.............................. D-1
SECTION 6. Special Meetings............................. D-2
SECTION 7. Notice Of Meetings........................... D-3
SECTION 8. Quorum....................................... D-3
SECTION 9. Adjournment And Notice Of Adjourned
Meetings............................................... D-4
SECTION 10. Voting Rights................................ D-4
SECTION 11. Joint Owners Of Stock........................ D-4
SECTION 12. List Of Stockholders......................... D-4
SECTION 13. Action Without Meeting....................... D-4
SECTION 14. Organization................................. D-4

ARTICLE IV
DIRECTORS................................................... D-5
SECTION 15. Number And Term Of Office.................... D-5
SECTION 16. Powers....................................... D-5
SECTION 17. Classes of Directors......................... D-5
SECTION 18. Vacancies.................................... D-6
SECTION 19. Resignation.................................. D-6
SECTION 20. Removal...................................... D-6
SECTION 21. Meetings..................................... D-7
SECTION 22. Quorum And Voting............................ D-7
SECTION 23. Action Without Meeting....................... D-8
SECTION 24. Fees And Compensation........................ D-8
SECTION 25. Committees................................... D-8
SECTION 26. Organization................................. D-9

ARTICLE V
OFFICERS.................................................... D-9
SECTION 27. Officers Designated.......................... D-9
SECTION 28. Tenure And Duties Of Officers................ D-9
</TABLE>

i
<PAGE> 183

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 29. Delegation Of Authority...................... D-10
SECTION 30. Resignations................................. D-10
SECTION 31. Removal...................................... D-10

ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION.................................. D-10
SECTION 32. Execution Of Corporate Instruments........... D-10
SECTION 33. Voting Of Securities Owned By The
Corporation............................................ D-11

ARTICLE VII
SHARES OF STOCK............................................. D-11
SECTION 34. Form And Execution Of Certificates........... D-11
SECTION 35. Lost Certificates............................ D-11
SECTION 36. Transfers.................................... D-11
SECTION 37. Fixing Record Dates.......................... D-12
SECTION 38. Registered Stockholders...................... D-12

ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION......................... D-12
SECTION 39. Execution Of Other Securities................ D-12

ARTICLE IX
DIVIDENDS................................................... D-13
SECTION 40. Declaration Of Dividends..................... D-13
SECTION 41. Dividend Reserve............................. D-13

ARTICLE X
FISCAL YEAR................................................. D-13
SECTION 42. Fiscal Year.................................. D-13

ARTICLE XI
INDEMNIFICATION............................................. D-13
SECTION 43. Indemnification Of Directors, Employees And
Other Agents........................................... D-13

ARTICLE XII
NOTICES..................................................... D-16
SECTION 44. Notices...................................... D-16

ARTICLE XIII
AMENDMENTS.................................................. D-17
SECTION 45. Amendments................................... D-17

ARTICLE XIV
LOANS TO OFFICERS........................................... D-17
SECTION 46. Loans To Officers............................ D-17
</TABLE>

ii
<PAGE> 184

AMENDED AND RESTATED
BYLAWS
OF
GREYSTONE DIGITAL TECHNOLOGY, INC.
(FORMERLY "EXPRESS CAPITAL CONCEPTS, INC.")
A DELAWARE CORPORATION

ARTICLE I

OFFICES

SECTION 1. Registered Office. The registered office of the corporation in
the State of Delaware is 229 South State Street, in the City of Dover, County of
Kent, and the name of the registered agent of the corporation in the State of
Delaware at such address is the Prentice Hall Corporation System, Inc.

SECTION 2. Other Offices. The corporation shall also have and maintain an
office or principal place of business at such place as may be fixed by the Board
of Directors, and may also have offices at such other places, both within and
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.

ARTICLE II

CORPORATE SEAL

SECTION 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.

ARTICLE III

STOCKHOLDERS' MEETINGS

SECTION 4. Place Of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.

SECTION 5. Annual Meetings.

(a) The annual meeting of the stockholders of the corporation, for the
purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.

(b) At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (A) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (B) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (C) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual

D-1
<PAGE> 185

meeting or, in the event public announcement of the date of such annual meeting
is first made by the corporation fewer than seventy (70) days prior to the date
of such annual meeting, the close of business on the tenth (10th) day following
the day on which public announcement of the date of such meeting is first made
by the corporation. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
corporation which are beneficially owned by the stockholder, (iv) any material
interest of the stockholder in such business and (v) any other information that
is required to be provided by the stockholder pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), in his
capacity as a proponent to a stockholder proposal. Notwithstanding the
foregoing, in order to include information with respect to a stockholder
proposal in the proxy statement and form of proxy for a stockholder's meeting,
stockholders must provide notice as required by the regulations promulgated
under the 1934 Act. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any annual meeting except in accordance with the
procedures set forth in this paragraph (b). The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this paragraph (b), and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.

(c) Only persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 5. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section 5.
At the request of the Board of Directors, any person nominated by a stockholder
for election as a director shall furnish to the Secretary of the corporation
that information required to be set forth in the stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.

(d) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the 1934 Act.

SECTION 6. Special Meetings.

(a) Special meetings of the stockholders of the corporation may be called,
for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii)
the Chief Executive Officer, or (iii) the Board of Directors
D-2
<PAGE> 186

pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), and shall be held at such place, on such date, and at
such time as the Board of Directors, shall fix.

At any time or times that the corporation is subject to Section 2115(b) of
the California General Corporation Law ("CGCL"), stockholders holding five
percent (5%) or more of the outstanding shares shall have the right to call a
special meeting of stockholders as set forth in Section 18(c) herein.

(b) If a special meeting is properly called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
general nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than thirty-five (35) nor more than one hundred twenty
(120) days after the date of the receipt of the request. Upon determination of
the time and place of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within sixty
(60) days after the receipt of the request, the person or persons properly
requesting the meeting may set the time and place of the meeting and give the
notice. Nothing contained in this paragraph (b) shall be construed as limiting,
fixing, or affecting the time when a meeting of stockholders called by action of
the Board of Directors may be held.

SECTION 7. Notice Of Meetings. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.

SECTION 8. Quorum. At all meetings of stockholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. In the absence of a quorum, any meeting
of stockholders may be adjourned, from time to time, either by the chairman of
the meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by statute, the Certificate of Incorporation or these Bylaws,
in all matters other than the election of directors, the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders.
Except as otherwise provided by statute, the Certificate of Incorporation or
these Bylaws, directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Where a separate vote by a class or classes
or series is required, except where otherwise provided by the statute or by the
Certificate of Incorporation or these Bylaws, a majority of the outstanding
shares of such class or classes or series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with respect to that
vote on that matter and, except where otherwise provided by the statute or by
the Certificate of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of the votes cast
by the holders of shares of such class or classes or series shall be the act of
such class or classes or series.

D-3
<PAGE> 187

SECTION 9. Adjournment And Notice Of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

SECTION 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.

SECTION 11. Joint Owners Of Stock. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the Delaware General Corporation Law, Section 217(b). If
the instrument filed with the Secretary shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of subsection (c)
shall be a majority or even-split in interest.

SECTION 12. List Of Stockholders. The Secretary shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not specified, at the place where
the meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof and may be inspected by any
stockholder who is present.

SECTION 13. Action Without Meeting.

(a) No action shall be taken by the stockholders except at an annual or
special meeting of stockholders called in accordance with these Bylaws or by
written consent of stockholders in accordance with these Bylaws; provided,
however, that after the corporation's capital stock is listed for trading on a
national securities exchange or the Nasdaq National Market, no action shall be
taken by the stockholders by written consent.

SECTION 14. Organization.

(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary
directed to do so by the President, shall act as secretary of the meeting.

(b) The Board of Directors of the corporation shall be entitled to make
such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such
D-4
<PAGE> 188

rules and regulations of the Board of Directors, if any, the chairman of the
meeting shall have the right and authority to prescribe such rules, regulations
and procedures and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the meeting,
including, without limitation, establishing an agenda or order of business for
the meeting, rules and procedures for maintaining order at the meeting and the
safety of those present, limitations on participation in such meeting to
stockholders of record of the corporation and their duly authorized and
constituted proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.

ARTICLE IV

DIRECTORS

SECTION 15. Number And Term Of Office. The authorized number of directors
of the corporation shall be fixed in accordance with the Certificate of
Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.

SECTION 16. Powers. The powers of the corporation shall be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation.

SECTION 17. Classes of Directors.

(a) Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, and during such
time or times that the corporation is not subject to sec. 2115(b) of the CGCL,
the directors shall be divided into three classes designated as Class I, Class
II and Class III, respectively. Directors shall be assigned to each class in
accordance with a resolution or resolutions adopted by the Board of Directors.
At the first annual meeting of stockholders following the date of adoption of
these Amended and Restated Bylaws (assuming the corporation is not subject to
sec. 2115(b) of the CGCL), the term of office of the Class I directors shall
expire and Class I directors shall be elected for a full term of three years. At
the second annual meeting of stockholders following the date of adoption of
these Amended and Restated Bylaws (assuming the corporation is not subject to
sec. 2115(b) of the CGCL), the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders following the date of adoption of
these Amended and Restated Bylaws (assuming the corporation is not subject to
sec. 2115(b) of the CGCL), the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders (assuming the corporation is
not subject to sec. 2115(b) of the CGCL), directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.

(b) In the event that the corporation is subject to sec. 2115(b) of the
CGCL at any time, or from time to time, Section 17(a) of these Bylaws shall not
apply and all directors shall be elected at each annual meeting of stockholders
to hold office until the next annual meeting.

(c) No person entitled to vote at an election for directors may cumulate
votes to which such person is entitled, unless, at the time of such election,
the corporation is subject to sec. 2115(b) of the CGCL. During such time or
times that the corporation is subject to sec. 2115(b) of the CGCL, every
stockholder entitled to vote at an election for directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which such
stockholder's shares are otherwise entitled, or distribute the stockholder's
votes on the same principle among as many candidates as such stockholder thinks
fit. No stockholder, however, shall be entitled to so cumulate
D-5
<PAGE> 189

such stockholder's votes unless (i) the names of such candidate or candidates
have been placed in nomination prior to the voting and (ii) the stockholder has
given notice at the meeting, prior to the voting, of such stockholder's
intention to cumulate such stockholder's votes. If any stockholder has given
proper notice to cumulate votes, all stockholders may cumulate their votes for
any candidates who have been properly placed in nomination. Under cumulative
voting, the candidates receiving the highest number of votes, up to the number
of directors to be elected, are elected.

SECTION 18. Vacancies.

(a) Unless otherwise provided in the Certificate of Incorporation, any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes and any newly created directorships
resulting from any increase in the number of directors shall, unless the Board
of Directors determines by resolution that any such vacancies or newly created
directorships shall be filled by stockholders, be filled only by the affirmative
vote of a majority of the directors then in office, even though less than a
quorum of the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
director for which the vacancy was created or occurred and until such director's
successor shall have been elected and qualified. A vacancy in the Board of
Directors shall be deemed to exist under this Bylaw in the case of the death,
removal or resignation of any director.

(b) If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
Delaware General Corporation Law.

(c) At any time or times that the corporation is subject to Section 2115(b)
of the CGCL, if, after the filling of any vacancy, the directors then in office
who have been elected by stockholders shall constitute less than a majority of
the directors then in office, then

(1) Any holder or holders of an aggregate of five percent (5%) or more
of the total number of shares at the time outstanding having the right to
vote for those directors may call a special meeting of stockholders; or

(2) The Superior Court of the proper county shall, upon application of
such stockholder or stockholders, summarily order a special meeting of
stockholders, to be held to elect the entire board, all in accordance with
Section 305(c) of the CGCL. The term of office of any director shall
terminate upon that election of a successor.

SECTION 19. Resignation. Any director may resign at any time by delivering
his written resignation to the Secretary, such resignation to specify whether it
will be effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it shall
be deemed effective at the pleasure of the Board of Directors. When one or more
directors shall resign from the Board of Directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each Director so chosen shall hold office for the unexpired portion of the term
of the Director whose place shall be vacated and until his successor shall have
been duly elected and qualified.

SECTION 20. Removal.

(a) During such time or times that the corporation is subject to Section
2115(b) of the CGCL, the Board of Directors or any individual director may be
removed from office at any time without cause by the
D-6
<PAGE> 190

affirmative vote of the holders of at least a majority of the outstanding shares
entitled to vote on such removal; provided, however, that unless the entire
Board is removed, no individual director may be removed when the votes cast
against such director's removal, or not consenting in writing to such removal,
would be sufficient to elect that director if voted cumulatively at an election
which the same total number of votes were cast (or, if such action is taken by
written consent, all shares entitled to vote were voted) and the entire number
of directors authorized at the time of such director's most recent election were
then being elected.

(b) Following any date on which the corporation is no longer subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section 20(a) above shall no longer apply and removal shall be as provided in
Section 141(k) of the Delaware General Corporation Law.

SECTION 21. Meetings.

(a) Annual Meetings. The annual meeting of the Board of Directors shall be
held immediately before or after the annual meeting of stockholders and at the
place where such meeting is held. No notice of an annual meeting of the Board of
Directors shall be necessary and such meeting shall be held for the purpose of
electing officers and transacting such other business as may lawfully come
before it.

(b) Regular Meetings. Unless otherwise restricted by the Certificate of
Incorporation, regular meetings of the Board of Directors may be held at any
time or date and at any place within or without the State of Delaware which has
been designated by the Board of Directors and publicized among all directors. No
formal notice shall be required for regular meetings of the Board of Directors.

(c) Special Meetings. Unless otherwise restricted by the Certificate of
Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or any two of the directors

(d) Telephone Meetings. Any member of the Board of Directors, or of any
committee thereof, may participate in a meeting by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at such meeting.

(e) Notice of Meetings. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
including a voice messaging system or other system or technology designed to
record and communicate messages, facsimile, telegraph or telex, or by electronic
mail or other electronic means, during normal business hours, at least
twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.

(f) Waiver of Notice. The transaction of all business at any meeting of the
Board of Directors, or any committee thereof, however called or noticed, or
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.

SECTION 22. Quorum And Voting.

(a) Unless the Certificate of Incorporation requires a greater number and
except with respect to indemnification questions arising under Section 43
hereof, for which a quorum shall be one-third of the exact number of directors
fixed from time to time in accordance with the Certificate of Incorporation, a
quorum of the Board of Directors shall consist of a majority of the exact number
of directors fixed from time to time by the Board of Directors in accordance
with the Certificate of Incorporation; provided, however, at any meeting whether
a quorum be present or otherwise, a majority of the directors present may
adjourn from time to time until the time fixed for the next regular meeting of
the Board of Directors, without notice other than by announcement at the
meeting.
D-7
<PAGE> 191

(b) At each meeting of the Board of Directors at which a quorum is present,
all questions and business shall be determined by the affirmative vote of a
majority of the directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.

SECTION 23. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.

SECTION 24. Fees And Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.

SECTION 25. Committees.

(a) Executive Committee. The Board of Directors may appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to (i) approving or adopting, or recommending to
the stockholders, any action or matter expressly required by the Delaware
General Corporation Law to be submitted to stockholders for approval, or (ii)
adopting, amending or repealing any bylaw of the corporation.

(b) Other Committees. The Board of Directors may, from time to time,
appoint such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors and shall have such powers and perform such duties as may
be prescribed by the resolution or resolutions creating such committees, but in
no event shall any such committee have the powers denied to the Executive
Committee in these Bylaws.

(c) Term. Each member of a committee of the Board of Directors shall serve
a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to any requirements of any
outstanding series of preferred Stock and the provisions of subsections (a) or
(b) of this Bylaw, may at any time increase or decrease the number of members of
a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

(d) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the

D-8
<PAGE> 192

manner provided for the giving of written notice to members of the Board of
Directors of the time and place of special meetings of the Board of Directors.
Notice of any special meeting of any committee may be waived in writing at any
time before or after the meeting and will be waived by any director by
attendance thereat, except when the director attends such special meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. A majority of the authorized number of members of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall be
the act of such committee.

SECTION 26. Organization. At every meeting of the directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President (if a director), or if the President is absent, the most
senior Vice President (if a director), or, in the absence of any such person, a
chairman of the meeting chosen by a majority of the directors present, shall
preside over the meeting. The Secretary, or in his absence, any Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.

ARTICLE V

OFFICERS

SECTION 27. Officers Designated. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.

SECTION 28. Tenure And Duties Of Officers.

(a) General. All officers shall hold office at the pleasure of the Board of
Directors and until their successors shall have been duly elected and qualified,
unless sooner removed. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors. If the office of
any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.

(b) Duties of Chairman of the Board of Directors. The Chairman of the Board
of Directors, when present, shall preside at all meetings of the stockholders
and the Board of Directors. The Chairman of the Board of Directors shall perform
other duties commonly incident to his office and shall also perform such other
duties and have such other powers, as the Board of Directors shall designate
from time to time. If there is no President, then the Chairman of the Board of
Directors shall also serve as the Chief Executive Officer of the corporation and
shall have the powers and duties prescribed in paragraph (c) of this Section 28.

(c) Duties of President. The President shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors, unless the Chairman
of the Board of Directors has been appointed and is present. Unless some other
officer has been elected Chief Executive Officer of the corporation, the
President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers, as the Board of
Directors shall designate from time to time.

(d) Duties of Vice Presidents. The Vice Presidents may assume and perform
the duties of the President in the absence or disability of the President or
whenever the office of President is vacant. The Vice Presidents shall perform
other duties commonly incident to their office and shall also perform such other
duties and have such other powers as the Board of Directors or the President
shall designate from time to time.

D-9
<PAGE> 193

(e) Duties of Secretary. The Secretary shall attend all meetings of the
stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.

(f) Duties of Chief Financial Officer. The Chief Financial Officer shall
keep or cause to be kept the books of account of the corporation in a thorough
and proper manner and shall render statements of the financial affairs of the
corporation in such form and as often as required by the Board of Directors or
the President. The Chief Financial Officer, subject to the order of the Board of
Directors, shall have the custody of all funds and securities of the
corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.

SECTION 29. Delegation Of Authority. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officer or
agent, notwithstanding any provision hereof.

SECTION 30. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.

SECTION 31. Removal. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.

ARTICLE VI

EXECUTION OF CORPORATE INSTRUMENTS
AND VOTING OF SECURITIES OWNED BY THE CORPORATION

SECTION 32. Execution Of Corporate Instruments. The Board of Directors may,
in its discretion, determine the method and designate the signatory officer or
officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.

All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.

D-10
<PAGE> 194

Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.

SECTION 33. Voting Of Securities Owned By The Corporation. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.

ARTICLE VII

SHARES OF STOCK

SECTION 34. Form And Execution Of Certificates. Certificates for the shares
of stock of the corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. Every holder of stock in the
corporation shall be entitled to have a certificate signed by or in the name of
the corporation by the Chairman of the Board of Directors, or the President or
any Vice President and by the Treasurer or Assistant Treasurer or the Secretary
or Assistant Secretary, certifying the number of shares owned by him in the
corporation. Any or all of the signatures on the certificate may be facsimiles.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued with the same effect as if he were such officer, transfer agent,
or registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set forth
on the face or back a statement that the corporation will furnish without charge
to each stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.

SECTION 35. Lost Certificates. A new certificate or certificates shall be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to agree to indemnify the corporation in such manner as it shall
require or to give the corporation a surety bond in such form and amount as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.

SECTION 36. Transfers.

(a) Transfers of record of shares of stock of the corporation shall be made
only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.

(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the Delaware General Corporation Law.
D-11
<PAGE> 195

SECTION 37. Fixing Record Dates.

(a) In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix, in advance, a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall, subject to
applicable law, not be more than sixty (60) nor less than ten (10) days before
the date of such meeting. If no record date is fixed by the Board of Directors,
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

(b) In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted, and which record date shall be not more than sixty (60) days prior
to such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.

SECTION 38. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VIII

OTHER SECURITIES OF THE CORPORATION

SECTION 39. Execution Of Other Securities. All bonds, debentures and other
corporate securities of the corporation, other than stock certificates (covered
in Section 34), may be signed by the Chairman of the Board of Directors, the
President or any Vice President, or such other person as may be authorized by
the Board of Directors, and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Chief Financial Officer or Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or
other corporate security shall be authenticated by the manual signature, or
where permissible facsimile signature, of a trustee under an indenture pursuant
to which such bond, debenture or other corporate security shall be issued, the
signatures of the persons signing and attesting the corporate seal on such bond,
debenture or other corporate security may be the imprinted facsimile of the
signatures of such persons. Interest coupons appertaining to any such bond,
debenture or other corporate security, authenticated by a trustee as aforesaid,
shall be signed by the Treasurer or an Assistant Treasurer of the corporation or
such other person as may be authorized by the Board of Directors, or bear
imprinted thereon the facsimile signature of such person. In case any officer
who shall have signed or attested any bond, debenture or other corporate
security, or whose facsimile signature shall appear thereon or on any such
interest coupon, shall have ceased to be such officer before the bond, debenture
or other corporate security so signed or attested shall have been delivered,
such bond, debenture or other corporate security nevertheless may be adopted by
the corporation and issued and delivered as though the person who signed the
same or whose facsimile signature shall have been used thereon had not ceased to
be such officer of the corporation.

D-12
<PAGE> 196

ARTICLE IX

DIVIDENDS

SECTION 40. Declaration Of Dividends. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of Incorporation
and applicable law, if any, may be declared by the Board of Directors pursuant
to law at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation and applicable law.

SECTION 41. Dividend Reserve. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.

ARTICLE X

FISCAL YEAR

SECTION 42. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.

ARTICLE XI

INDEMNIFICATION

SECTION 43. Indemnification Of Directors, Employees And Other Agents.

(a) Directors. The corporation shall indemnify its directors to the fullest
extent not prohibited by the Delaware General Corporation Law or any other
applicable law; provided, however, that the corporation may modify the extent of
such indemnification by individual contracts with its directors; and, provided,
further, that the corporation shall not be required to indemnify any director in
connection with any proceeding (or part thereof) initiated by such person unless
(i) such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the corporation, (iii)
such indemnification is provided by the corporation, in its sole discretion,
pursuant to the powers vested in the corporation under the Delaware General
Corporation Law or any other applicable law or (iv) such indemnification is
required to be made under subsection (d).

(b) Employees and Other Agents. The corporation shall have power to
indemnify its employees and other agents as set forth in the Delaware General
Corporation Law or any other applicable law. The Board of Directors shall have
the power to delegate the determination of whether indemnification shall be
given to any such or other persons as the Board of Directors shall determine.

(c) Expenses. The corporation shall advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director of the
corporation, or is or was serving at the request of the corporation as a
director or executive officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director in connection with such proceeding upon receipt of an undertaking by or
on behalf of such person to repay said amounts if it should be determined
ultimately that such person is not entitled to be indemnified under this Bylaw
or otherwise.

Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to an
officer of the corporation (except by reason of the fact that such officer is or
was a director of the corporation in which event this paragraph shall not apply)
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and

D-13
<PAGE> 197

promptly made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (ii) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, that
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the best
interests of the corporation.

(d) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors under this
Bylaw shall be deemed to be contractual rights and be effective to the same
extent and as if provided for in a contract between the corporation and the
director. Any right to indemnification or advances granted by this Bylaw to a
director shall be enforceable by or on behalf of the person holding such right
in any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. The claimant in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. In connection with any claim for
indemnification, the corporation shall be entitled to raise as a defense to any
such action that the claimant has not met the standards of conduct that make it
permissible under the Delaware General Corporation Law or any other applicable
law for the corporation to indemnify the claimant for the amount claimed. In
connection with any claim by an officer of the corporation (except in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such executive officer is or was a
director of the corporation) for advances, the corporation shall be entitled to
raise a defense as to any such action clear and convincing evidence that such
person acted in bad faith or in a manner that such person did not believe to be
in or not opposed to the best interests of the corporation, or with respect to
any criminal action or proceeding that such person acted without reasonable
cause to believe that his conduct was lawful. Neither the failure of the
corporation (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law or any other applicable law, nor an actual determination
by the corporation (including its Board of Directors, independent legal counsel
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.

(e) Non-Exclusivity of Rights. The rights conferred on any person by this
Bylaw shall not be exclusive of any other right which such person may have or
hereafter acquire under any applicable statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law, or by any
other applicable law.

(f) Survival of Rights. The rights conferred on any person by this Bylaw
shall continue as to a person who has ceased to be a director, officer, employee
or other agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

(g) Insurance. To the fullest extent permitted by the Delaware General
Corporation Law or any other applicable law, the corporation, upon approval by
the Board of Directors, may purchase insurance on behalf of any person required
or permitted to be indemnified pursuant to this Bylaw.

(h) Amendments. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.

(i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each director to the full extent not prohibited by any
applicable portion of this Bylaw that shall not have been invalidated, or by any
other applicable law. If this Section 43 shall be invalid due to the application
of the indemnification provisions of
D-14
<PAGE> 198

another jurisdiction, then the corporation shall indemnify each director to the
full extent under any other applicable law.

(j) Certain Definitions. For the purposes of this Bylaw, the following
definitions shall apply:

(1) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony
in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.

(2) The term "expenses" shall be broadly construed and shall include,
without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of
any nature or kind incurred in connection with any proceeding.

(3) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Bylaw with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.

(4) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer,
employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.

(5) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the
best interests of the corporation" as referred to in this Bylaw.

D-15
<PAGE> 199

ARTICLE XII

NOTICES

SECTION 44. Notices.

(a) Notice To Stockholders. Whenever, under any provisions of these Bylaws,
notice is required to be given to any stockholder, it shall be given in writing,
timely and duly deposited in the United States mail, postage prepaid, and
addressed to his last known post office address as shown by the stock record of
the corporation or its transfer agent.

(b) Notice To Directors. Any notice required to be given to any director
may be given by the method stated in subsection (a), or by overnight delivery
service, facsimile, telex or telegram, except that such notice other than one
which is delivered personally shall be sent to such address as such director
shall have filed in writing with the Secretary, or, in the absence of such
filing, to the last known post office address of such director.

(c) Affidavit Of Mailing. An affidavit of mailing, executed by a duly
authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.

(d) Time Notices Deemed Given. All notices given by mail or by overnight
delivery service, as above provided, shall be deemed to have been given as at
the time of mailing, and all notices given by facsimile, telex or telegram shall
be deemed to have been given as of the sending time recorded at time of
transmission.

(e) Methods of Notice. It shall not be necessary that the same method of
giving notice be employed in respect of all directors, but one permissible
method may be employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.

(f) Failure To Receive Notice. The period or limitation of time within
which any stockholder may exercise any option or right, or enjoy any privilege
or benefit, or be required to act, or within which any director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him in the
manner above provided, shall not be affected or extended in any manner by the
failure of such stockholder or such director to receive such notice.

(g) Notice To Person With Whom Communication Is Unlawful. Whenever notice
is required to be given, under any provision of law or of the Certificate of
Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.

(h) Notice To Person With Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall
D-16
<PAGE> 200

be reinstated. In the event that the action taken by the corporation is such as
to require the filing of a certificate under any provision of the Delaware
General Corporation Law, the certificate need not state that notice was not
given to persons to whom notice was not required to be given pursuant to this
paragraph.

ARTICLE XIII

AMENDMENTS

SECTION 45. Amendments. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the
voting power of all of the then-outstanding shares of the voting stock of the
corporation entitled to vote. The Board of Directors shall also have the power
to adopt, amend, or repeal Bylaws.

ARTICLE XIV

LOANS TO OFFICERS

SECTION 46. Loans To Officers. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.

D-17
<PAGE> 201

ANNEX E

CALIFORNIA GENERAL CORPORATION LAW

CHAPTER 13. DISSENTERS' RIGHTS

1300. Right to Require Purchase -- "Dissenting Shares" and "Dissenting
Shareholder" Defined (a) If the approval of the outstanding shares (Section 152)
of a corporation is required for a reorganization under subdivisions (a) and (b)
or subdivision (e) or (f) of Section 1201, each shareholder of the corporation
entitled to vote on the transaction and each shareholder of a subsidiary
corporation in a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to purchase for cash at
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or depreciation
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split, or share dividend which becomes effective thereafter.

(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:

(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
Section 25100 or (B) listed on the list of OTC margin stocks issued by the
Board of Governors of the Federal Reserve System, and the notice of meeting
of shareholders to act upon the reorganization summarizes this section and
Sections 1301, 1302, 1303 and 1304; provided, however, that this provision
does not apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law or
regulation; and provided, further, that this provision does not apply to
any class of shares described in subparagraph (A) or (B) if demands for
payment are filed with respect to 5 percent or more of the outstanding
shares of that class.

(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) or paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case were
the approval required by Section 1201 is sought by written consent rather
than at a meeting.

(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.

(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.

(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.

1301. Demand for Purchase -- (a) If, in the case of a reorganization, any
shareholders of a corporation have a right under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivisions (b) thereof, to require
the corporation to purchase their shares for cash, such corporation shall mail
to each such shareholder a notice of the approval of the reorganization by its
outstanding shares (Section 152) within 10 days after the date of such approval,
accompanied by a copy of Sections 1300, 1302, 1303, 1304 and this section, a
statement of the price determined by the corporation to represent the fair
market value of the dissenting shares, and a brief description of the procedure
to be followed if the shareholder desires to exercise the shareholder's right
under such sections. The statement of price constitutes an offer by the
corporation to purchase at the price stated any dissenting shares as defined in
subdivision (b)of Section 1300, unless they lose their status as dissenting
shares under Section 1309.
E-1
<PAGE> 202

(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares describe in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.

(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.

1302. Endorsement of Shares -- Within 30 days after the date on which
notice of the approval by the outstanding shares or the notice pursuant to
subdivision (i) of Section 1110 was mailed to the shareholder, the shareholder
shall submit to the corporation at its principal office or at the office of any
transfer agent thereof, (a) if the shares are certificated securities, the
shareholder's certificates representing any shares which the shareholder demands
that the corporation purchase, to be stamped or endorsed with a statement that
the shares are dissenting shares or to be exchanged for certificates of
appropriate denomination so stamped or endorsed or (b) if the shares are
uncertificated securities, written notice of the number of shares which the
shareholder demands that the corporation purchase. Upon subsequent transfers of
the dissenting shares on the books of the corporation, the new certificates,
initial transaction statement, and other written statements issued therefor
shall bear a like statement, together with the name of the original dissenting
holder of the shares.

1303. Agreed Price -- Time for Payment -- (a) If the corporation and the
shareholder agree that the shares are dissenting shares and agree upon the price
of the shares, the dissenting shareholder is entitled to the agreed price with
interest thereon at the legal rate on judgments from the date of the agreement.
Any agreements fixing the fair market value of any dissenting shares as between
the corporation and the holders thereof shall be filed with the secretary of the
corporation.

(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.

1304. Dissenter's Action to Enforce Payment -- (a) If the corporation
denies that the shares are dissenting shares, or the corporation and the
shareholder fail to agree upon the fair market values of the shares, then the
shareholder demanding purchase of such shares as dissenting shares or any
interested corporation, within six months after the date on which notice of the
approval by the outstanding shares (Section 152) or notice pursuant to
subdivision (i) of Section 1110 was mailed to the shareholder, but not
thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.

(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.

(c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.

E-2
<PAGE> 203

1305. Appraiser's Report -- Payment -- Costs -- (a) If the court appoints
an appraiser or appraisers, they shall proceed forthwith to determine the fair
market value per share. Within the time fixed by the court, the appraisers, or a
majority of them, shall make and file a report in the office of the clerk of the
court. Thereupon, on the motion of any party, the report shall be submitted to
the court and considered on such evidence as the court considers relevant. If
the court finds the report reasonable, the court may confirm it.

(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such further
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.

(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.

(d) Any such judgment shall be payable forthwith with respect to
undercertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.

(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Section 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).

1306. Dissenting Shareholder's Status as Creditor -- To the extent that the
provisions of Chapter 5 prevent the payment to any holders of dissenting shares
of their fair market value, they shall become creditors of the corporation for
the amount thereof together with interest at the legal rate on judgments until
the date of payment, but subordinate to all other creditors in any liquidation
proceeding, such debt to be payable when permissible under the provisions of
Chapter 5.

1307. Dividends Paid as Credit Against Payment -- Cash dividends declared
and paid by the corporation upon the dissenting shares after the date of
approval of the reorganization by the outstanding shares (Section 152) and prior
to payment for the shares by the corporation shall be credited against the total
amount to be paid by the corporation therefor.

1308. Continuing Rights and Privileges of Dissenting Shareholders -- Except
as expressly limited in this chapter, holders of dissenting shares continue to
have all the rights and privileges incident to their shares, until the fair
market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation
consents thereto.

1309. Termination of Dissenting Shareholder Status -- Dissenting shares
lose their status as dissenting shares and the holders thereof cease to be
dissenting shareholders and cease to be entitled to require the corporation to
purchase their shares upon the happening of any of the following:

(a) The corporation abandons the reorganization. Upon abandonment of
the reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter
all necessary expenses incurred in such proceedings and reasonable
attorneys' fees.

(b) The shares are transferred prior to their submission for
endorsement in accordance with Section 1302 or are surrendered for
conversion into shares of another class in accordance with the articles.

(c) The dissenting shareholder and the corporation do not agree upon
the status of the shares as dissenting shares or upon the purchase price of
the shares, and neither files a complaint or intervenes in a pending action
as provided in Section 1304, within six months after the date on which
notice of the

E-3
<PAGE> 204

approval by the outstanding shares or notice pursuant to subdivisions (i)
of Section 1110 was mailed to the shareholder.

(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.

1310. Suspension of Proceedings for Payment Pending Litigation -- If
litigation is instituted to test the sufficiency of regularity of the votes of
the shareholder in authorizing a reorganization, any proceedings under Section
1304 and 1305 shall be suspended until final determination of such litigation.

1311. Exempt Shares -- This chapter, except Section 1312, does not apply to
classes of shares whose terms and provisions specifically set forth the amount
to be paid in respect to such shares in the event of a reorganization or merger.

1312. Attacking Validity of Reorganization or Merger -- (a) No shareholder
of a corporation who has a right under this chapter to demand payment of cash
for the shares held by the shareholder shall have any right at law or in equity
to attack the validity of the reorganization or short-form merger, or to have
the reorganization or short-form merger set aside or rescinded, except in an
action to test whether the number of shares required to authorize or approve the
reorganization have been legally voted in favor thereof; but any holder of
shares of a class whose terms and provisions specifically set forth the amount
to be paid in respect to them in the event of a reorganization or short-form
merger is entitled to payment in accordance with those terms and provisions or,
if the principal terms of the reorganization are approved pursuant to
subdivision (b) of Section 1202, is entitled to payment in accordance with the
terms and provisions of the approved reorganization.

(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days,
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.

(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.

E-4
<PAGE> 205

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its Directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act.

The Registrant's Certificate of Incorporation includes provisions to
eliminate the personal liability of its directors for monetary damages resulting
from breaches of their fiduciary duty to the extent permitted by Section
102(b)(7) of the General Corporation Law of Delaware (the "Delaware Law").
Pursuant to Section 145 of the Delaware Law, a corporation generally has the
power to indemnify its present and former directors, officers, employees and
agents against expenses incurred by them in connection with any suit to which
they are or are threatened to be made a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in or not opposed to, the best interests of the corporation and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as Directors and officers.
These provisions do not eliminate the Directors' duty of care, and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware Law. In addition,
each Director will continue to be subject to liability (i) for breach of the
Directors' duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the Director derived an
improper personal benefit. The provisions also does not affect a Directors'
responsibilities under any other law, such as the federal securities law or
state or federal environmental laws.

At present, there is no pending litigation or proceeding involving a
Director, officer or key employee of the Registrant as to which indemnification
is being sought nor is the Registrant aware of any threatened litigation that
may result in claims for indemnification by any officer or Director.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization by and among
Express Capital Concepts, Inc., Express Capital Acquisition
Corp., GreyStone Technology, Incorporated and Mr. Earnest
Mathis, Jr., dated as of August 11, 1997. See Annex A
attached hereto.
2.2 Amendment to Agreement and Plan of Merger and Reorganization
dated as of October 1, 1998 by and among Registrant, Express
Capital Acquisition Corp., GreyStone Technology,
Incorporated and Mr. Earnest Mathis, Jr. See Annex A
attached hereto.
3.1 Certificate of Incorporation of the Registrant.(1)
3.2 Bylaws of the Registrant.(1)
3.3 Amended and Restated Certificate of Incorporation of
Registrant, to be effective after consummation of the
proposed Merger. See Annex C attached hereto.
3.4 Amended and Restated Bylaws of the Registrant, to be
effective after consummation of the proposed Merger. See
Annex D attached hereto.
4.1 Form of Common Stock Certificate of the Registrant.(1)
*5.1 Legal Opinion of Mitchell Silberberg & Knupp LLP.
*8.1 Tax Opinion of Mitchell Silberberg & Knupp LLP.
*8.2 Tax Opinion of Cooley Godward LLP.
*11.1 Statement of computation of per share earnings.
</TABLE>

II-1
<PAGE> 206

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
23.1 Consent of Angell & Deering, LLP.
23.2 Consent of J.H. Cohn LLP.
*23.3 Consent of Mitchell Silberberg & Knupp LLP (to be included
in Exhibits 5.1 and 8.1).
*23.4 Consent of Cooley Godward LLP (to be included in Exhibit
8.2).
*99.1 GreyStone form of proxy card.
</TABLE>

- ---------------
(1) Incorporated by reference to Registrant's Registration Statement on Form S-1
(No. 33-60134).

* To be filed by amendment.

ITEM 22. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant hereby undertakes:

(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request;

(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective;

(3) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(4) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

II-2
<PAGE> 207

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Littleton, State of
Colorado, on October 21, 1998.

EXPRESS CAPITAL CONCEPTS, INC.

By: /s/ EARNEST MATHIS, JR.

------------------------------------
President and Treasurer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ EARNEST MATHIS, JR. President, Secretary, October 21, 1998
- ----------------------------------------------------- Treasurer and Director
</TABLE>

II-3
<PAGE> 208

EXHIBIT INDEX

- ---------------
(1) Incorporated by reference to Registrant's Registration Statement on Form S-1
(No. 33-60134).

* To be filed by amendment.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use, in this Registration Statement on Form S-4,
of our report dated March 10, 1998, relating to the consolidated financial
statements of Express Capital Concepts, Inc. and Subsidiary for the years ended
December 31, 1997, 1996 and 1995 and the reference to our firm under the caption
"Experts" in the Prospectus contained in said Registration Statement.

/s/ ANGELL & DEERING

Angell & Deering
Certified Public Accountants

Denver, Colorado
October 13, 1998

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the inclusion in the Prospectus of this Registration Statement of
our report on the financial statements of GreyStone Technology, Incorporated
("GreyStone") as of March 31, 1998 and 1997 and for the years ended March 31,
1998, 1997 and 1996, which report is dated June 10, 1998 and contains an
explanatory paragraph pertaining to GreyStone's ability to continue as a going
concern. We also consent to the reference to our firm under the caption
"Experts" in the Prospectus of this Registration Statement.

J.H. COHN LLP

San Diego, California
October 19, 1998