AMENDMENT TO
AGREEMENT AND PLAN OF
REORGANIZATION AND MERGER
This Amendment to Agreement and Plan of Reorganization and Merger
("Amendment") is made and entered into as of September 19, 1997 by and between
Jreck Subs Group, Inc., a Colorado corporation ("Jreck"), Admiral's Fleet, Inc.,
a Washington corporation ("Admiral"), and Quality Franchise Systems, Inc., a
Delaware corporation ("Target") and amends that certain Agreement and Plan of
Reorganization and Merger dated as of August 28, 1997 among Jreck, Admiral, and
Target (the "Merger Agreement").
THE PARTIES AGREE AS FOLLOWS:
12.15 Definitions. For purposes of this Amendment, all capitalized
terms not otherwise expressly defined herein shall have the same meaning as
defined in the Merger Agreement, which definitions are incorporated herein by
reference.
12.16 Target Preferred Shares. Section 2.3.2 of the Merger
Agreement is hereby
amended by modifying Section 2.3.2 as follows:
12.16.1 Target Preferred Shares. As of the date hereof Target
has issued and outstanding 545 shares of Series A Preferred Stock on the terms
set forth in that certain Certificate of Designation of Quality Franchise
Systems, Inc. filed with the State of Delaware Office of Secretary of State on
May 24, 1996 (the "Target Preferred"). Target covenants to use its best efforts
to see that all holders of Target Preferred convert such shares into shares of
Target Common prior to the Closing. In the event not all holders of Target
Preferred convert to Target Common prior to the Closing, each share of Target
Preferred outstanding at Closing shall be converted into one (1) share of Jreck
preferred stock (to be created by Jreck prior to Closing) which preferred shares
shall carry, in substance, the same terms and conditions as the Target Preferred
(the "Jreck Preferred"), except, (i) The Jreck Preferred will be junior to
Jreck's existing Series A and Series B preferred stock; (ii) the Jreck Preferred
shall be convertible into Jreck Common at a rate of 133.22 shares of Jreck
Common for each share of Jreck Preferred with a face amount of $1,000.00; and
(iii) each share of Jreck Preferred shall carry an accrued dividend payable to
the holder thereof of $170.
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12.17 Post-Closing Covenants. Section 8.7 of the Merger Agreement
is hereby amended
and modified by adding a new Section 8.7.4 as follows:
8.7.4 Additional Share Contingency. Following the Effective
Time, and with respect to the period October 1, 1997 through January
31, 1998 (the "Contingency Period"), if during the Contingency Period
the average daily closing price of the publicly traded shares of Jreck
common stock (as reported by the NASDAQ Bulletin Board) is not $3.50 or
more for at least one (1) consecutive 21-day period, then Jreck shall
deliver to the Shareholder Representative for delivery to the Target
Shareholders an additional 150,000 shares (in the aggregate) of Jreck
Common (the "Additional Contingent Shares") which Jreck shall deliver
to the Shareholder Representative within 30 days of the expiration of
the Contingency Period. Any and all Additional Contingent Shares shall
carry and be subject to all restrictions specified in the Merger
Agreement for shares of Jreck Common.
(a) Example. For illustrative purposes only, and by way of
example of how Section 8.7.4 is to be applied, if during any
consecutive 21-day period during the Contingency Period the average
daily closing price for publicly traded Jreck Common stock is $3.50 a
share for 21 consecutive days, no Additional Contingent Shares shall be
issued to the Target Shareholders. Conversely, if during the
Contingency Period there is no one (1) consecutive 21-day period during
which the average daily closing price for the publicly traded Jreck
Common stock is at least $3.50 a share for each day of such 21 day
period, then all 150,000 Additional Contingent Shares shall be issued
to the Target Shareholders and delivered to the Shareholder
Representative within 30 days of the expiration of the Contingency
Period.
12.18 Effect. This is the entire agreement of the parties with respect
to amendments to the Merger Agreement. The Merger Agreement, as amended hereby,
may only be further modified by a written document signed by all parties. Except
as expressly set forth herein, all terms and conditions of the Merger Agreement
shall continue in full force and effect.
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12.19 Counterparts/Facsimile. This Amendment may be executed in
counterparts and
with facsimile signature.
Dated as of the first date written above.
JRECK SUBS GROUP, INC., a Colorado
Corporation
By
Its
ADMIRAL'S FLEET, INC., a Washington
Corporation
By
Its
QUALITY FRANCHISE SYSTEMS, INC.,
a Delaware Corporation
By
Its
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