AMENDMENT NO. 2 TO PLAN AND AGREEMENT OF MERGER

     AMENDMENT  NO. 2, made and  entered  into as of  September  30,  l996 (this
"Amendment"),  to the PLAN AND AGREEMENT OF MEREST,  dated as of April 29, 1996,
as amended by Amendment No. 1 made and entered into as of June 28, 1996,  (as so
amended, the "Merger Agreement"),  by and between J. MlCHAELS,  INC., a New York
corporation  (the  "company"),  and MURIEL SIEBERT CAPITAL MARKETS GROUP INC., a
Delaware corporation wholly-owned by Muriel Siebert ("MSCMG").

                               W I T N E SS E TH:

     WHEREAS, the Company and MSCMG have entered into the Merger Agreement; and

     WHEREAS, the Company and MSCMG desire to amend the Merger Agreement.

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Termination. Section 10.1(d) of the Merger Agreement shall be amended by
(a) deleting the reference to  "September.30,  1996" appearing in the third line
thereof and  substituting in its place "January 6, 1997" and (b) inserting after
the word "herein" appearing in the fourth line thereof the following clause:

         ",  provided,  however,  that if the Company has not yet  implemented a
         one-for-seven  reverse  stock split of its common  stock (the  "Reverse
         Stock Split") on or prior to November 15, 1996,  then, at the option of
         the Company,  the  Effective  Time of the Merger may be deferred  until
         either the third or sixth day of January, 1997"

     2. Reverse Stock Split. The Company shall,  immediately following execution
of this  Amendment,  take  all  actions  necessary  to  allow  it to  amend  its
certificate  of  incorporation  to cause its Common  Stock,  par value $1.00 per
share,  to be reverse  split on a  one-for-seven  basis,  including  making such
filings with the Securities and Exchange Commission, The NASDAQ Stock Market and
the State of New York as may be required and mailing an information atatement to
its stockholders. In connection with such Reverse Stock Split, fractional shares
shall be rounded  upwards to the next largest  whole share.  Such Reverse  Stock
Split shall become effectixe immediately after the Effective Time of the Merger.
MSCMG  shall  indemnify  the  Company and its  officers,  directors,  employees,
affiliates,  successors or assigns (the  "Indemnified  Parties")  for, and shall
hold the Indemnified Parties harmless from and against,  and shall reimburse the
Indemnified Parties for, any and all damages, losses, liabilities,  penalties or
expenses of any kind or of any nature  whatatever  incurred  by the  Indemnified
Parties in connection with the Reverse Stock Split.



<PAGE>



     3.  Expenses.  Section  12.1 of the  Merger  Agreement  shall be amended by
inserting the following paragraph after the first paragraph thereof:

     "Further,  MSCMG shall pay all additional third party expenses  (including,
but not limited to,  reasonable  attorneys' fees,  accountants'  fees and filing
fees and excluding  expenses relating to the liquidation of the Company's assets
(including,  but not limited to,  salaries  and all other costs  relatlng to the
Company's employees)) of the Company incurred in connection with (i) the Reverse
stock Split and (ii) the  continued  affairs of the Company  until the Effective
Time of the Merger which would not have been  incurred had the Closing  occurred
on September 20, 1996."

     4. Legal Fees.  Promptly  following the execution of this Amendment,  MSCMG
shall  reimburse  the Company in the amount of $5,000 for legal fees  previous1y
paid by it in  connection  with  the  transactions  contemplated  by the  Merger
Agreement. Further, MSCMG shall similarly pay all outstanding invoices for legal
fees for  services  rendered  by  Moses & Singer  LLP,  special  counsel  to the
Company, to the Company pursuant to the Merger Agreement.

     5. Approval of this Amendment.  All authorizations,  approvals and consents
(including consents of the Boards of Directors)  necessary for the execution and
delivery by the Company and MSCMG of this Amendment have been given or made.

     6.  Governing  Law.  This  Amendment  shall be  construed  and  enforced in
accordance  with and governed by the laws of the State of New York applicable to
contracts executed in and to be performed solely within such state.

     7. Status of the Merger  Agreement.  All other terms and  conditions of the
Merger Agreement shall remain in full force and effect, as amended hereby.

     8.  Miscellaneous.  (a)  Headings.  All headings in this  Amendment are for
convenience  of  reference  only and are not  intended  to limit or  affect  the
meaning of any provision hereof.

     (b)   Counterparts.   This  Amendment  may  be  executed  in  one  or  more
counterparts  with the same effect as if the signatures to all such counterparts
were upon the same instrument,  and all such  counterparts  shall constitute but
one instrument.

     (c) Capitalized Terms. All capitalized terms used in this Amendment, unless
otherwise defined herein,  shall have the same meaning as such terms have in the
Merger Agreement.



<PAGE>


     IN WITNESS  WHEREOF,  the parties have caused this Amendment to be executed
by a duly  authorized  officer  and to become  effective  as of the day and year
first above written.

                                                 J. MICHAELS, INC.

                                                 By: /S/  JAMES H. MICHAELS
                                                 -----------------------------
                                                 Name: James H. Michaels
                                                 Title:   President


                                                 MURIEL SIEBERT CAPITAL
                                                 MARKETS GROUP INC.


                                                 By: /S/  MURIEL F. SIEBERT
                                                 ----------------------------
                                                 Name: Muriel F. SIEBERT
                                                 Title:   President