JACKSON HEWITT INC, SC 14D1, 1997-11-25

JACKSON HEWITT INC
SC 14D1, 1997-11-25
PATENT OWNERS & LESSORS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
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JACKSON HEWITT INC.
(Name of Subject Company)
HJ ACQUISITION CORP.
HFS INCORPORATED
(Bidders)
------------------------
COMMON STOCK, $.02 PAR VALUE
(Title of Class of Securities)
468201-10-8
(CUSIP Number of Class of Securities)

JAMES E. BUCKMAN, ESQ.
HFS INCORPORATED
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(973) 428-9700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on behalf of Bidders)
COPY TO:
ERIC J. FRIEDMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
------------------------
NOVEMBER 19, 1997
(Date of Event Which Requires Filing Statement on Schedule 13D)

CALCULATION OF FILING FEE

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TRANSACTION VALUATION* $483,865,288 AMOUNT OF FILING FEE $96,773.06
</TABLE>

* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 7,115,666 shares of common stock, $.02 par
value (the "Shares"), of Jackson Hewitt Inc. (the "Company"), at a price per
Share of $68.00 in cash (the "Offer Price"). Such number of Shares
represents all the Shares outstanding as of November 19, 1997, plus 440,684
Shares issuable upon the exercise of outstanding employee stock options, and
up to 10,000 Shares which may be issued upon exercise of outstanding
warrants.

/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None
Form or Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
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Page 1 of 10 Pages
Exhibit Index is located on Page 9
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CUSIP NO. 468201-10-8 14D-1 AND 13D

Names of Reporting Persons
1. S.S. or I.R.S. Identification Nos. of Above Persons
HJ Acquisition Corp.

(a) / /
2. Check the Appropriate Box if a Member of a Group (b) / /

3. SEC Use Only

Source of Funds
4. AF

Check Box if Disclosure of Legal Proceedings is Required Pursuant to / /
5. Items 2(e) or 2(f)

Citizenship or Place of Organization
6. Virginia

Aggregate Amount Beneficially Owned By Each Reporting Person*
7. 2,143,924

8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /

Percent of Class Represented By Amount in Row (7)*
9. Approximately 25.8% of the Shares outstanding on a fully diluted basis as
of November 19, 1997

Type of Reporting Person
10. CO
</TABLE>

* See footnote on following page.

2
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CUSIP NO. 468201-10-8 14D-1 AND 13D

Names of Reporting Person
1. S.S. or I.R.S. Identification No. of Above Persons
HFS Incorporated

(a) / /
2. Check the Appropriate Box if a Member of a Group (b) / /

3. SEC Use Only

Source of Funds
4. WC, BK
Check Box if Disclosure of Legal Proceedings is Required Pursuant to / /
5. Items 2(e) or 2(f)

Citizenship or Place of Organization
6. Delaware

Aggregate Amount Beneficially Owned By Each Reporting Person*
7. 2,143,924

8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /

Percent of Class Represented By Amount in Row (7)*
9. Approximately 25.8% of the Shares outstanding on a fully diluted basis as
of November 19, 1997

Type of Reporting Person
10. CO
</TABLE>

* On November 19, 1997, in connection with the Merger Agreement, HFS
Incorporated ("Parent") and HJ Acquisition Corp., a wholly owned subsidiary
of Parent (the "Purchaser"), entered into a Stock Option Agreement (the
"Stock Option Agreement") pursuant to which, among other things, the Company
granted the Purchaser an irrevocable option to purchase up to 1,326,331
Shares at a price of $68.00 per Share payable in cash, upon the occurrence
of certain conditions specified therein. The Stock Option Agreement is
described more fully in Section 12--Purpose of the Offer, Merger, Merger
Agreement and Other Transaction Agreements" of the Offer to Purchase dated
November 25, 1997 (the "Offer to Purchase").

In addition, on November 19, 1997, Parent and the Purchaser entered into
Shareholders Agreements (collectively, the "Shareholders Agreements"), with
each of the Company's directors and executive officers and with a
shareholder of the Company (collectively, the "Selling Shareholders") who
beneficially own an aggregate of 817,593 Shares, of which 316,074 Shares are
issuable upon exercise of stock options. Pursuant to the Shareholders
Agreements, among other things, the Selling Shareholders have agreed to
tender their Shares in the Offer (including any Shares that are issued upon
exercise of their stock options prior to the expiration of the Offer). The
Shareholders Agreements are described more fully in Section 12--"Purpose of
the Offer, Merger, Merger Agreement and Other Transaction Agreements" of the
Offer to Purchase.

3
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TENDER OFFER

This Tender Offer Statement on Schedule 14D-1 relates to the offer by the
Purchaser to purchase all outstanding shares of common stock, par value $.02 per
share (the "Shares"), of Jackson Hewitt Inc., a Virginia corporation, at $68.00
per Share, net to the seller in cash, on the terms and subject to the conditions
set forth in the Offer to Purchase, dated November 25, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively (which, as amended
or supplemented from time to time, together constitute the "Offer"). This Tender
Offer Statement on Schedule 14D-1 also constitutes a Statement on Schedule 13D
with respect to the acquisition by Parent and the Purchaser of beneficial
ownership of the Shares subject to the Stock Option Agreement and the
Shareholders Agreements. The item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1.

ITEM 1. SECURITY AND SUBJECT COMPANY.

(a) The name of the subject company is Jackson Hewitt Inc., a Virginia
corporation (the "Company"). The address of the Company's principal executive
offices is 4575 Bonney Road, Virginia Beach, VA 23462.

(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.

(c) The information set forth in Section 6--"Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d), (g) This Statement is filed by the Purchaser and Parent. The
information set forth in the Introduction, in Section 9--"Certain Information
Concerning the Purchaser and Parent" and in Schedule I of the Offer to Purchase
is incorporated herein by reference.

(e)-(f) During the last five years, neither of the Purchaser Entities (as
defined in the Offer to Purchase) nor, to their knowledge, any of the persons
listed in Schedule I (Directors and Executive Officers) to the Offer to
Purchase, (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.

(a)-(b) The information set forth in the Introduction, in Section
9--"Certain Information Concerning the Purchaser and Parent," in Section
11--"Background of the Offer; Contacts with the Company" and in Section
12--"Purpose of the Offer, Merger, Merger Agreement and the Other Transaction
Agreements" of the Offer to Purchase is incorporated herein by reference.

ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(b) The information set forth in Section 10--"Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.

4
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ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE
BIDDERS.

(a)-(g) The information set forth in the Introduction, in Section 7--"Effect
of the Offer on the Market for the Shares; Nasdaq Quotation and Exchange Act
Registration" and in Section 12--"Purpose of the Offer, Merger, Merger Agreement
and the Other Transaction Agreements" of the Offer to Purchase is incorporated
herein by reference.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a)-(b) The information set forth in the Introduction and in Section
12--"Purpose of the Offer, Merger, Merger Agreement and the Other Transaction
Agreements" is incorporated herein by reference.

ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.

The information set forth in the Introduction, in Section 9--"Certain
Information Concerning the Purchaser and Parent," in Section 11--"Background of
the Offer; Contacts with the Company," and in Section 12--"Purpose of the Offer,
Merger, Merger Agreement and the Other Transaction Agreements" of the Offer to
Purchase is incorporated herein by reference.

ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth in the Introduction, in Section 16--"Fees and
Expenses" and in Section 17--"Miscellaneous" of the Offer to Purchase is
incorporated herein by reference.

ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.

The information set forth in Section 9--"Certain Information Concerning the
Purchaser and Parent," of the Offer to Purchase, including the financial
statements and related notes thereto incorporated by reference in Section 9, is
incorporated herein by reference.

The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a shareholder of the Company whether to sell, tender or hold
shares being sought in the Offer.

ITEM 10. ADDITIONAL INFORMATION.

(a) The information set forth under Introduction, in Section 9--"Certain
Information Concerning the Purchaser and Parent," in Section 11--"Background of
the Offer; Contacts with the Company," and in Section 12--"Purpose of the Offer,
Merger, Merger Agreement and the Other Transaction Agreements" of the Offer to
Purchase is incorporated herein by reference.

(b)-(c) The information set forth in Section 12--"Purpose of the Offer,
Merger, Merger Agreement and the Other Transaction Agreements" and in Section
15--"Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.

(d) The information set forth in Section 7--"Effect of the Offer on the
Market for the Shares; Nasdaq Quotation and Exchange Act Registration" of the
Offer to Purchase is incorporated herein by reference.

(e) Not applicable.

(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.

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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.

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(a)(1) Offer to Purchase, dated November 25, 1997.

(a)(2) Letter of Transmittal.

(a)(3) Notice of Guaranteed Delivery.

(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.

(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.

(a)(7) Form of Summary Advertisement, dated November 25, 1997.

(a)(8) Text of Press Release, dated November 19, 1997.

(a)(9) Text of Press Release, dated November 25, 1997.

(b)(1) 364-Day Competitive Advance and Revolving Credit Agreement dated as of October 2,
1996 among Parent and the Lenders referred to therein and The Chase Manhattan Bank,
as Administrative Agent (the "364-Day Revolving Credit Agreement") (Incorporated by
reference to Parent's Current Report on Form 8-K dated October 15, 1996, Exhibit
10.1).

(b)(2) Five Year Competitive Advance and Revolving Credit Agreement dated as of October 2,
1996 among Parent and the Lenders referred to therein and The Chase Manhattan Bank,
as Administrative Agent (the "Five Year Revolving Credit Agreement") (Incorporated
by reference to Parent's Current Report on Form 8-K dated October 15, 1996, Exhibit
10.2).

(b)(2)(i) First Amendment, dated as of January 28, 1997, to the Five Year Revolving Credit
Agreement and the 364-Day Revolving Credit Agreement.

(b)(2)(ii) Second Amendment, dated as of September 18, 1997, to the Five Year Revolving Credit
Agreement and the 364-Day Revolving Credit Agreement (Incorporated by reference to
Parent's Current Report on Form 10-Q dated November 14, 1997, Exhibit 10.1).

(b)(3) Amended and Restated $500 Million Credit Agreement, dated as of November 19, 1997,
by and between Parent and The Chase Manhattan Bank (Incorporated by reference to
Parent's Current Report on Form 8-K dated November 25, 1997, Exhibit 10.2).

(c)(1) Agreement and Plan of Merger, dated as of November 19, 1997, by and among Parent,
the Purchaser and the Company.

(c)(2) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Keith E. Alessi.

(c)(3) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Harry W. Buckley.

(c)(4) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Christopher Drake.

(c)(5) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Harry S. Gruner.

(c)(6) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and JMI Equity Fund, L.P.

(c)(7) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and William P. Veillette.

(c)(8) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Ann Santomas.
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(c)(9) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Leslie Ann Wood.

(c)(10) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Michael E. Julian, Jr.

(c)(11) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and Martin B. Mazer.

(c)(12) Confidentiality and Nondisclosure Agreement, dated September 22, 1997, by and
between Parent and the Company.

(c)(13) Stock Option Agreement, dated as of November 19, 1997, by and among Parent, the
Purchaser and the Company.

(c)(14) Employment Agreement, dated as of November 19, 1997, between Jackson Hewitt Inc.
and Keith E. Alessi.

(c)(15) Employment Agreement, dated as of November 24, 1997, between Jackson Hewitt Inc.
and Harry W. Buckley.

(d) None.

(e) Not applicable.

(f) None.
</TABLE>

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SIGNATURES

After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.

Dated: November 25, 1997

HJ ACQUISITION CORP.

BY: /S/ JAMES E. BUCKMAN
-----------------------------------------
Name: James E. Buckman
Title: Senior Executive Vice President &
General Counsel

HFS INCORPORATED

BY: /S/ JAMES E. BUCKMAN
-----------------------------------------
Name: James E. Buckman
Title: Senior Executive Vice President &
General Counsel

8
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EXHIBIT INDEX

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EXHIBIT
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(a)(1) Offer to Purchase, dated November 25, 1997.

(a)(2) Letter of Transmittal.

(a)(3) Notice of Guaranteed Delivery.

(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.

(a)(7) Form of Summary Advertisement, dated November 25, 1997.

(a)(8) Text of Press Release, dated November 19, 1997.

(a)(9) Text of Press Release, dated November 25, 1997.

(b)(1) 364-Day Competitive Advance and Revolving Credit Agreement dated as of October 2, 1996 among Parent and
the Lenders referred to therein and The Chase Manhattan Bank, as Administrative Agent (the "364-Day
Revolving Credit Agreement") (Incorporated by reference to Parent's Current Report on Form 8-K dated
October 15, 1996, Exhibit 10.1).

(b)(2) Five Year Competitive Advance and Revolving Credit Agreement dated as of October 2, 1996 among Parent
and the Lenders referred to therein and The Chase Manhattan Bank, as Administrative Agent (the "Five
Year Revolving Credit Agreement") (Incorporated by reference to Parent's Current Report on Form 8-K
dated October 15, 1996, Exhibit 10.2).

(b)(2)(i) First Amendment, dated as of January 28, 1997, to the Five Year Revolving Credit Agreement and the
364-Day Revolving Credit Agreement.

(b)(2)(ii) Second Amendment, dated as of September 18, 1997, to the Five Year Revolving Credit Agreement and the
364-Day Revolving Credit Agreement (Incorporated by reference to Parent's Current Report on Form 10-Q
dated November 14, 1997, Exhibit 10.1).

(b)(3) Amended and Restated $500 Million Credit Agreement, dated as of November 19, 1997, as amended, by and
between Parent and The Chase Manhattan Bank (Incorporated by reference to Parent's Current Report on
Form 8-K dated November 25, 1997, Exhibit 10.2).

(c)(1) Agreement and Plan of Merger, dated as of November 19, 1997, by and among Parent, the Purchaser and the
Company.

(c)(2) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Keith E.
Alessi.

(c)(3) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Harry W.
Buckley.

(c)(4) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and
Christopher Drake.

(c)(5) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Harry S.
Gruner.

(c)(6) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and JMI
Equity Fund, L.P.

(c)(7) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and William
P. Veillette.
</TABLE>

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EXHIBIT
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(c)(8) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Ann
Santomas.

(c)(9) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Leslie
Ann Wood.

(c)(10) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Michael
E. Julian, Jr.

(c)(11) Shareholders Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and Martin B.
Mazer.

(c)(12) Confidentiality and Nondisclosure Agreement, dated as of September 22, 1997, by and between Parent and
the Company.

(c)(13) Stock Option Agreement, dated as of November 19, 1997, by and among Parent, the Purchaser and the
Company.

(c)(14) Employment Agreement, dated as of November 19, 1997, between Jackson Hewitt Inc. and Keith E. Alessi.

(c)(15) Employment Agreement, dated as of November 24, 1997, between Jackson Hewitt Inc. and Harry W. Buckley.

(d) None.

(e) Not applicable.

(f) None.
</TABLE>

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OFFER TO PURCHASE FOR CASH

ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JACKSON HEWITT INC.

$68.00 NET PER SHARE

HJ ACQUISITION CORP.

A WHOLLY OWNED SUBSIDIARY OF

HFS INCORPORATED

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MONDAY, JANUARY 5, 1998, UNLESS THE OFFER IS EXTENDED.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES (AS DEFINED HEREIN) WHICH CONSTITUTES MORE THAN TWO-THIRDS OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS, WITHOUT GIVING EFFECT TO ANY SHARES
ISSUABLE PURSUANT TO THE STOCK OPTION AGREEMENT (AS DEFINED HEREIN). THE OFFER
IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 14.
------------------------

THE BOARD OF DIRECTORS OF JACKSON HEWITT INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER (AS DEFINED HEREIN), HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.

IMPORTANT

Any shareholder desiring to tender all or any portion of his shares of
Common Stock, par value $.02 per share, of the Company (the "Shares"), should
either (a) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered Shares, and any
other required documents, to the Depositary or tender such Shares pursuant to
the procedures for book-entry transfer set forth in Section 3 or (b) request
such shareholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such shareholder. A shareholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if such shareholder desires to tender such
Shares.

Any shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on a
timely basis may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be directed to the
Information Agent. A shareholder may also contact brokers, dealers, commercial
banks and trust companies for assistance concerning this Offer.

The Dealer Managers for the Offer are:

MERRILL LYNCH & CO. SMITH BARNEY INC.

NOVEMBER 25, 1997
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TABLE OF CONTENTS

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PAGE
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Introduction.............................................................................................. 3
1. Terms of the Offer..................................................................................... 5
2. Acceptance for Payment and Payment for Shares.......................................................... 6
3. Procedures for Tendering Shares........................................................................ 7
4. Withdrawal Rights...................................................................................... 10
5. Certain Federal Income Tax Consequences................................................................ 10
6. Price Range of Shares; Dividends....................................................................... 11
7. Effect of the Offer on the Market for the Shares; Nasdaq Quotation and Exchange Act Registration....... 11
8. Certain Information Concerning the Company............................................................. 12
9. Certain Information Concerning the Purchaser and Parent................................................ 14
10. Source and Amount of Funds............................................................................ 15
11. Background of the Offer; Contacts with the Company.................................................... 16
12. Purpose of the Offer, Merger, Merger Agreement and the Other Transaction Agreements................... 17
13. Dividends and Distributions........................................................................... 28
14. Conditions to the Offer............................................................................... 28
15. Certain Legal Matters................................................................................. 30
16. Fees and Expenses..................................................................................... 32
17. Miscellaneous......................................................................................... 32
Schedule I--Information Concerning Directors and Executive Officers of Parent and the Purchaser........... S-1
</TABLE>

2
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To the Holders of Common Stock of
JACKSON HEWITT INC.:

INTRODUCTION

HJ Acquisition Corporation, a Virginia corporation (the "Purchaser") and a
wholly owned subsidiary of HFS Incorporated, a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of common stock, par value $.02
per share (the "Shares"), of Jackson Hewitt Inc., a Virginia corporation (the
"Company"), at $68.00 per Share (the "Offer Price"), net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").

Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all fees and expenses of Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc., who are acting
as the Dealer Managers (the "Dealer Managers"), ChaseMellon Shareholder
Services, L.L.C., which is acting as the Depositary (the "Depositary"), and
MacKenzie Partners, Inc., which is acting as the Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.

The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes more than two-thirds of the Shares outstanding on a
fully diluted basis, without giving effect to any Shares issuable pursuant to
the Stock Option Agreement (as defined herein) (the "Minimum Condition"). See
Section 14.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 19, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of the other conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"). At the effective time of the
Merger (the "Effective Time"), each outstanding Share (other than Shares held in
the treasury of the Company and Shares owned by Parent, the Purchaser or any
other wholly owned subsidiary of Parent) will be converted into the right to
receive the per Share price paid in the Offer, without interest (referred to
herein as the "Merger Consideration"). See Section 12.

THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS
THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.

Janney Montgomery Scott Inc., the Company's financial advisor ("Janney"),
has delivered to the Board of Directors of the Company (the "Company Board") its
written opinion to the effect that, as of the date of such opinion, the Offer
Price is fair to the shareholders of the Company from a financial point of view.
Such opinion is set forth in full as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to shareholders of the Company herewith.

The Merger Agreement provides that promptly upon the purchase by Parent or
any of its subsidiaries of Shares pursuant to the Offer that represent more than
two-thirds of the outstanding Shares on a fully diluted basis, Parent shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Company Board as will give Parent representation on the
Company Board equal to the product of the total number of directors on the
Company Board multiplied by the percentage that the number of Shares so accepted
for payment bears to the total number of Shares then outstanding. In the Merger
Agreement, the Company has agreed to use its best efforts promptly to cause
Parent's designees to be elected as directors of the Company, including securing
the resignations of incumbent directors.

3
<PAGE>
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by law, the approval and adoption of
the Merger Agreement by the requisite vote of the shareholders of the Company.
See Section 12. Under the Company's Articles of Incorporation and Virginia law,
except as otherwise described below, the affirmative vote of the holders of more
than two-thirds of the outstanding Shares is required to approve and adopt the
Merger Agreement and the Merger. Consequently, if the Purchaser acquires
(pursuant to the Offer or otherwise) more than two-thirds of the then
outstanding Shares, the Purchaser will have sufficient voting power to approve
and adopt the Merger Agreement and the Merger without the vote of any other
shareholder.

Under Virginia law, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser will be
able to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without a vote of the Company's shareholders. In
such event, Parent, the Purchaser and the Company have agreed to take, at the
request of Parent, all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of the Company's shareholders. If, however, the Purchaser does not
acquire at least 90% of the then outstanding Shares pursuant to the Offer or
otherwise, and a vote of the Company's shareholders is required under Virginia
law, a significantly longer period of time will be required to effect the
Merger. See Section 12.

The Merger Agreement provides that, following the satisfaction or waiver of
the conditions to the Offer, the Purchaser will accept for payment, in
accordance with the terms of the Offer, all Shares validly tendered pursuant to
the Offer as soon as it is permitted to do so pursuant to applicable law, but
not prior to 5:00 p.m., New York City time, on Monday, January 5, 1998. The
Merger Agreement provides that the Purchaser may under certain circumstances,
from time to time, extend the expiration date of the Offer beyond the time it
would otherwise be required to accept validly tendered Shares for payment. The
Offer will not remain open following the Expiration Date.

In connection with the execution of the Merger Agreement, Parent, the
Purchaser and the Company have entered into a Stock Option Agreement, dated as
of November 19, 1997 (the "Stock Option Agreement"), pursuant to which the
Company has granted to the Purchaser an option to purchase from the Company up
to 1,326,331 authorized but unissued Shares (approximately 19.9% of the
Company's currently outstanding Shares) for a price per Share of $68.00 (the
"Stock Option"). Under certain circumstances set forth in the Stock Option
Agreement, the Purchaser has the right to require the Company to repurchase the
Stock Option. See Section 12.

In addition, in connection with the execution of the Merger Agreement,
Parent and the Purchaser entered into separate Shareholders Agreements, dated as
of November 19, 1997 (collectively, the "Shareholders Agreements"), with each of
the Company's directors and executive officers and with a shareholder of the
Company, (collectively, the "Selling Shareholders"). The Selling Shareholders
beneficially own an aggregate of 501,519 Shares directly and hold stock options
to purchase an aggregate of 316,074 Shares (which Shares represent approximately
7% and 4%, respectively, of the Company's outstanding Shares on a fully diluted
basis). Pursuant to the Shareholders Agreements, the Selling Shareholders have
agreed to validly tender pursuant to the Offer and not withdraw all Shares which
are beneficially owned by the Selling Shareholders prior to the Expiration Date
(as hereinafter defined). The Shareholders Agreements are more fully described
in Section 12.

According to the Company, as of November 19, 1997 there were 6,664,982
Shares outstanding, 440,684 Shares reserved for issuance upon the exercise of
Company options (the "Company Options") under the Company's 1994 Long Term
Incentive Plan and the Non-Employee Director Stock Option Plan (together, the
"Option Plans") and 10,000 Shares issuable upon the exercise of warrants granted
pursuant to the Warrant Purchase Agreement, dated as of June 7, 1996 between the
Company and NationsBank, N.A. (the "Warrants"). For purposes of the Offer,
"fully diluted basis" assumes that the Company Options and the Warrants are
exercised for Shares and that no Shares are issued upon exercise of the Stock
Option. Based upon the foregoing information, the Minimum Condition would be
satisfied if 4,743,778 Shares

4
<PAGE>
were validly tendered. Assuming the valid tender into the Offer of the 501,519
Shares beneficially owned directly by the Selling Shareholders, the Purchaser
will need to purchase an additional 4,242,259 Shares to satisfy the Minimum
Condition.

Parent and CUC International ("CUC") have entered into an Agreement and Plan
of Merger, dated as of May 27, 1997, pursuant to which, among other things,
Parent will be merged with and into CUC, with CUC continuing as the surviving
corporation in the merger (the "Parent Merger") and changing its name to Cendant
Corporation ("Cendant"). Following the Parent Merger, Cendant, as successor to
Parent, will succeed to Parent's rights and obligations under the Merger
Agreement and the Offer and the Purchaser will become a wholly owned subsidiary
of Cendant. All references to Parent in this Offer to Purchase shall be deemed
to include Cendant following the Parent Merger.

THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.

1. TERMS OF THE OFFER

The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. See Section 14, which sets forth in full the conditions to
the Offer. If the Minimum Condition is not satisfied or any or all of the other
events set forth in Section 14 shall have occurred or shall be determined by the
Purchaser to have occurred prior to the Expiration Date, the Purchaser reserves
the right (but shall not be obligated) to (i) decline to purchase any of the
Shares tendered in the Offer and terminate the Offer and return all tendered
Shares to the tendering shareholders, (ii) waive any or all conditions to the
Offer, to the extent permitted by applicable law and the provisions of the
Merger Agreement, and, subject to complying with applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"),
purchase all Shares validly tendered, (iii) extend the Offer and, subject to the
right of shareholders to withdraw Shares until the Expiration Date, retain the
Shares which have been tendered during the period or periods for which the Offer
is extended or (iv) subject to the terms of the Merger Agreement, amend the
Offer. The Merger Agreement provides that the Purchaser will not, without the
written consent of the Company, decrease the Offer Price, decrease the numbers
of Shares sought in the Offer, or amend any other condition of the Offer in any
manner adverse to the holders of Shares, except that if on the initial scheduled
expiration date all conditions to the Offer shall not have been satisfied or
waived, the Offer may be extended from time to time for one or more periods not
to exceed an aggregate of 40 business days. The Merger Agreement provides that
if, immediately prior to the Expiration Date, the Shares tendered and not
withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares,
the Purchaser may extend the Offer for one or more periods not to exceed an
aggregate of 30 business days.

The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, subject to the terms of the Merger Agreement and
regardless of whether or not any of the events set forth in Section 14 shall
have occurred or shall have been determined by the Purchaser to have occurred,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) to amend the
Offer in any respect by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the

5
<PAGE>
Offer pursuant to Section 14. Any extension, amendment or termination will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Without
limiting the obligation of the Purchaser under such rules or the manner in which
the Purchaser may choose to make any public announcement, the Purchaser
currently intends to make announcements by issuing a release to the Dow Jones
News Service.

If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.

If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition, subject to the Merger Agreement), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange
Act. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or information concerning the Offer,
other than a change in price or a change in percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is required
to allow for adequate dissemination to shareholders and investor response. If,
prior to the Expiration Date, the Purchaser should decide to increase the price
per Share being offered in the Offer, such increase will be applicable to all
shareholders whose Shares are accepted for payment pursuant to the Offer. The
Merger Agreement provides that, without the Company's written consent, the
Purchaser will not decrease the price or the number of Shares sought in the
Offer. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.

The Company has provided to the Purchaser its list of shareholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.

2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES

Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly after the later to occur of (i)
the Expiration Date and (ii) the satisfaction or waiver of the conditions set
forth in Section 14. Subject to the applicable rules of the Commission and the
terms of the Merger Agreement, the Purchaser expressly reserves the right to
delay acceptance for payment of, or payment for, Shares pending termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). See Sections 14 and 15. The Purchaser
understands that, in accordance with the applicable rules of the Commission, any
delay in accepting Shares regardless of cause may not exceed an "unreasonable
length of time." Accordingly, if it appears at the time that the Offer is
scheduled to expire that the applicable waiting

6
<PAGE>
period under the HSR Act is not likely to terminate within a reasonable length
of time thereafter, the Purchaser will either (i) extend the Offer or (ii)
terminate the Offer.

In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares ("Stock Certificates") or timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by the
Letter of Transmittal.

The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.

For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance of
such Shares for payment. Payment for Shares accepted pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payments from the
Purchaser and transmitting payments to such tendering shareholders. Under no
circumstances will interest on the purchase price for Shares be paid by the
Purchaser, regardless of any delay in making such payment.

Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.

If any tendered Shares are not accepted pursuant to the Offer for any
reason, or if Stock Certificates are submitted evidencing more Shares than are
tendered, Stock Certificates evidencing Shares not purchased or tendered will be
returned, without expense to the tendering shareholder (or in the case of Shares
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3, such Shares
will be credited to an account maintained at such Book-Entry Transfer Facility),
as promptly as practicable after the expiration, termination or withdrawal of
the Offer.

The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to Parent or to one or more of its affiliates, the
right to purchase all or a portion of the Shares tendered pursuant to the Offer,
but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.

3. PROCEDURES FOR TENDERING SHARES

VALID TENDER. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (in the
case of any book-entry transfer), and any other required documents, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase prior to the Expiration Date. In addition, either (i) the
Stock Certificates evidencing Shares must be received by the Depositary along
with the Letter of Transmittal or Shares must be tendered pursuant to the
procedures for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date or
(ii) the tendering shareholder must comply with the guaranteed delivery
procedures described below.

7
<PAGE>
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date or the
tendering shareholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.

SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a participant in the Security Transfer Agents Medallion Program
(each, an "Eligible Institution"), unless the Shares tendered thereby are
tendered (i) by a registered holder of Shares who has not completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal, or (ii) for the account of
an Eligible Institution. See Instruction 1 of the Letter of Transmittal.

If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Stock Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Stock
Certificate, with the signature(s) on such Stock Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.

THE METHOD OF DELIVERY OF STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.

GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, or the procedures for book-entry transfer cannot
be completed on a timely basis, such Shares may nevertheless be tendered if all
the following conditions are satisfied:

(i) the tender is made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser herewith, is received by the
Depositary prior to the Expiration Date as provided below; and

(iii) the Stock Certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and any other documents required by the Letter of Transmittal, are
received by the Depositary within three Nasdaq National Market System trading
days after the date of execution of the Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.

8
<PAGE>
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by the
Depositary of (i) Stock Certificates evidencing such Shares or a Book-Entry
Confirmation of the delivery of such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.

BACK-UP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME
TAX WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES
PURCHASED PURSUANT TO THE OFFER, EACH TENDERING SHAREHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A SHAREHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH SHAREHOLDER.
SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.

DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right, in its sole discretion, subject to the Merger Agreement, to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to Shares of any particular shareholder, and the Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding. None of the
Purchaser, Parent, the Dealer Managers, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.

OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
as the shareholder's attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of the shareholder's rights with respect to the Shares tendered by the
shareholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of the Merger Agreement). All such proxies shall be considered
coupled with an interest in the tendered Shares. This appointment will be
effective when, and only to the extent that, the Purchaser accepts Shares for
payment. Upon acceptance for payment, all prior proxies given by the shareholder
with respect to the Shares or other securities will, without further action, be
revoked, and no subsequent proxies may be given nor any subsequent written
consent executed by such shareholder (and if given or executed, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the Shares and other securities, be empowered to exercise
all voting and other rights of such shareholder as they in their sole discretion
may deem proper at any annual, special or adjourned meeting of the Company's
shareholders, by written consent or otherwise. The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights of a record and beneficial
holder, including rights in respect of acting by written consent, with respect
to such Shares.

A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer.

9
<PAGE>
4. WITHDRAWAL RIGHTS

Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided that Shares tendered pursuant to
the Offer may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after January 23, 1998, or at such later time as
may apply if the Offer is extended.

For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Stock Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Stock Certificates, the serial numbers of the particular Stock
Certificates and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution, except in the case of Shares tendered for the account of
an Eligible Institution, must also be furnished to the Depositary as described
above. If Shares have been tendered pursuant to the procedures for book-entry
transfer as set forth in Section 3, any notice of withdrawal must also specify
the name and number of the account at the appropriate Book-Entry Transfer
Facility to be credited with the withdrawn Shares.

All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Dealer Managers, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.

ANY SHARES PROPERLY WITHDRAWN WILL BE DEEMED TO NOT HAVE BEEN VALIDLY
TENDERED FOR PURPOSES OF THE OFFER. However, withdrawn Shares may be re-tendered
by following one of the procedures described in Section 3 at any time prior to
the Expiration Date.

5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. The tax
consequences of such receipt pursuant to the Offer (or the Merger) may vary
depending upon, among other things, the particular circumstances of the
shareholder. In general, a shareholder who receives cash for Shares pursuant to
the Offer (or the Merger) will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such shareholder's adjusted tax basis in such Shares.
Provided that the Shares constitute capital assets in the hands of the
shareholder, such gain or loss will be capital gain or loss. Pursuant to
recently enacted legislation, in the case of shareholders who are individuals,
any such capital gain will be subject to a maximum federal income tax rate of
(i) 20% if the shareholder's holding period for the Shares was more than 18
months at the time of such sale and (ii) 28% if the shareholder's holding period
for the Shares was more than 12 months but not more than 18 months at such time.

10
<PAGE>
6. PRICE RANGE OF SHARES; DIVIDENDS

The Shares trade on the Nasdaq National Market System under the symbol
"JTAX." The following table sets forth, for the fiscal quarters indicated, the
high and low sales price per Share on the Nasdaq National Market System. All
prices set forth below are as reported in published financial sources:

<TABLE>
<CAPTION>
MARKET PRICE
--------------------
<S> <C> <C>
HIGH LOW
--------- ---------
Fiscal 1996:
First Quarter................................................................................ $ 5.25 $ 2.75
Second Quarter............................................................................... 4.00 2.75
Third Quarter................................................................................ 3.75 2.25
Fourth Quarter............................................................................... 3.75 2.75

Fiscal 1997:
First Quarter................................................................................ $ 6.50 $ 3.25
Second Quarter............................................................................... 5.50 3.50
Third Quarter................................................................................ 7.75 3.75
Fourth Quarter............................................................................... 11.25 6.50

Fiscal 1998:
First Quarter................................................................................ $ 24.00 $ 9.50
Second Quarter............................................................................... 52.75 22.25
Third Quarter
(through November 24, 1997)................................................................ 67.25 50.50
</TABLE>

On November 18, 1997 the last full trading day prior to the announcement of
the terms of the Merger Agreement, the reported closing sales price per Share on
the Nasdaq National Market System was $51.50. On November 24, 1997, the last
full trading day prior to the commencement of the Offer, the reported closing
sales price per Share on the Nasdaq National Market System was $66.94.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.

Since the Company became a public company on January 24, 1994 it has not
paid any dividends on its common stock.

7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION AND
EXCHANGE ACT REGISTRATION

The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.

Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the standards
for continued inclusion in the Nasdaq National Market System, which require that
an issuer have at least 200,000 publicly held shares with a market value of $1
million held by at least 400 shareholders or 300 shareholders holding round
lots. If these standards were not met, quotations might continue to be published
in the over-the-counter "additional list" or in one of the "local lists," but if
the number of holders of Shares falls below 300, or if the number of publicly
held Shares falls below 100,000, or there are not at least two market makers for
the Shares, the National Association of Securities Dealers ("NASD") rules
provide that the securities would no longer be "authorized" for Nasdaq reporting
and Nasdaq would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company, or by any beneficial owner
of more than 10 percent of the Shares, ordinarily will not be considered as
being publicly held for this purpose. In the event the Shares were no longer
eligible for Nasdaq quotation, quotations might still be available from other
sources. The extent of the public market for the Shares and availability of such
quotations would, however, depend upon the number of holders of Shares remaining
at such time, the interest in maintaining

11
<PAGE>
a market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act, as described below, and other factors.

The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, following the Offer it
is possible that the Shares would no longer constitute "margin securities" for
the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers.

The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange or Nasdaq and there are fewer than 300 record holders of the Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
shareholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
shareholders' meetings pursuant to Section 14(a) and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions no
longer applicable to the Company. Furthermore, if the Purchaser acquires a
substantial number of Shares or the registration of the Shares under the
Exchange Act were to be terminated, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 under the Securities Act of 1933 may be impaired
or eliminated. If registration of the Shares under the Exchange Act were
terminated prior to the consummation of the Merger, the Shares would no longer
be "margin securities" or be eligible for Nasdaq reporting. It is the present
intention of the Purchaser to seek to cause the Company to make an application
for termination of registration of the Shares as soon as possible following the
Offer if the requirements for termination of registration are met.

8. CERTAIN INFORMATION CONCERNING THE COMPANY

The information concerning the Company contained in this Offer to Purchase,
including financial information (other than forecasts of the Company's results
of operations provided below), has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither Parent nor the Purchaser assumes any responsibility for the
accuracy or completeness of the information concerning the Company contained in
such documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Parent or the Purchaser.

The Company is a Virginia corporation with its principal executive offices
located at 4575 Bonney Road, Virginia Beach, Virginia 23462. The telephone
number of the Company at such offices is (757) 473-3300. The Company is engaged
in the business of computerized preparation of tax returns.

Set forth below is a summary of certain consolidated financial information
with respect to the Company, excerpted or derived from the information contained
in the Company's Annual Report on Form 10-K/A for the fiscal year ended April
30, 1997, as well as the Company's Quarterly Report on Form 10-Q for the three
months ended July 31, 1997. More comprehensive financial information is included
in such reports and other documents filed by the Company with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and other documents and all of the financial information (including any
related notes) contained therein. Such reports and other documents may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth below.

12
<PAGE>
JACKSON HEWITT INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31, YEAR ENDED APRIL 30,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1995
--------- --------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 2,162 $ 980 $ 31,432 $ 25,016 $ 18,215
Income (loss) from operations............................. (1,309) (2,076) 11,768 5,278 (1,078)
Income (loss) before extraordinary item................... (423) (1,322) 6,232 2,402 840
Net (loss) income......................................... (423) (2,570) 4,984 2,402 840
Net (loss) income per share
Primary................................................. (0.46) (0.59) 0.95 0.40 0.11
Fully Diluted........................................... (0.46) (0.59) 0.91 0.40 0.11
Weighted average Shares outstanding....................... 4,833 4,408 4,520 4,354 4,252
</TABLE>
<TABLE>
<CAPTION>
AT JULY 31, 1996 YEAR ENDED APRIL 30,
--------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1995
--------- ---------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash & Cash equivalent.................................. $ 5,409 $ 229 $ 6,324 $ 3,558 $ 1,416
Working capital (deficit)............................... 5,524 (1,092) 5,983 4,719 2,682
Total assets............................................ 24,424 24,646 28,160 25,956 24,892
Long-term debt.......................................... 283 3,008 1,262 2,843 4,882
Redeemable Convertible
Preferred Stock....................................... -- 3,381 3,236 3,278 2,876
Shareholders' equity.................................... 17,871 7,644 14,740 9,829 7,534
</TABLE>

RECENT OPERATING RESULTS. On November 11, 1997, the Company announced that
its revenues for the quarter ended October 31, 1997 were $3.391 million. This
compares with revenues of $1.216 million for the quarter ended October 31, 1996.
Net income for the second quarter was $0.129 million, or $.02 per Share. The
Company had a net loss of $1.008 million, or $(.24) per Share, for the quarter
ended October 31, 1996.

The Company is subject to the information filing requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, options granted to them, the principal holders of
the Company's securities and any material interest of such persons in
transactions with the Company is required to be described in proxy statements
distributed to the Company's shareholders and filed with the Commission. These
reports, proxy statements and other information should be available for
inspection and copying at the Commission's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection and copying
at the regional offices of the Commission located at Seven World Trade Center,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains an internet web site at http://www.sec.gov that
contains reports, proxy statements and other information. Copies should also be
available at the offices of the NASD, 1735 K Street, N.W. Washington, D.C.
20006.

During the course of the discussions between Parent and the Company that led
to the execution of the Merger Agreement, the Company provided Parent with
certain information about the Company and its

13
<PAGE>
financial performance which is not publicly available. The information provided
included the Company's fiscal 1998 adjusted budget as an independent company
(i.e., without regard to the impact to the Company of a transaction with Parent)
based upon results through September 1997 (the Company's fiscal year ends on
April 30), which included the following information: total revenues, $47.689
million; income from operations, $21.462 million; and net income (before
extraordinary item), $15.671 million. The foregoing budget information was
prepared by the Company solely for internal use and not for publication or with
a view to complying with the published guidelines of the Commission regarding
projections or with the guidelines established by the American Institute of
Certified Public Accountants and are included in this Offer to Purchase only
because they were furnished to Parent. The budget is "forward-looking" and
inherently subject to significant uncertainties and contingencies, many of which
are beyond the control of the Company, including industry performance, general
business and economic conditions, changing competition, adverse changes in the
applicable laws, regulations or rules governing tax or accounting matters and
other matters. One cannot predict whether the assumptions made in preparing the
budget will be accurate, and actual results may be materially higher or lower
than those contained in the budget. The inclusion of this information should not
be regarded as an indication that Parent, the Purchaser, the Company or anyone
who received this information considered it a reliable predictor of future
events, and this information should be relied on as such. None of Parent, the
Purchaser or the Company assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the budget and the Company has made
no representation to Parent or the Purchaser regarding the budget described
above.

9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT

The Purchaser is a newly incorporated Virginia corporation and a wholly
owned subsidiary of Parent. To date the Purchaser has not conducted any business
other than in connection with the Offer and the Merger. The principal executive
offices of the Purchaser are located at 6 Sylvan Way, Parsippany, New Jersey
07054.

The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.

Parent is a Delaware corporation with its principal office located at 6
Sylvan Way, Parsippany, New Jersey 07054. Parent's principal line of business is
providing services to consumers through intermediaries in the travel and real
estate industries as a franchisor of hotels, residential real estate brokerage
offices and car rental operations.

Until immediately prior to the time the Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that the Purchaser will have any significant
assets or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer and
the Merger. Because the Purchaser is a newly formed corporation and has minimal
assets and capitalization, no meaningful financial information regarding the
Purchaser is available.

Financial information with respect to Parent and its subsidiaries is
included in Parent's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, which is incorporated herein by reference, and other
documents filed by Parent with the Commission. Such reports and other documents
should be available for inspection and copies thereof should be obtainable in
the manner set forth below under "Available Information."

AVAILABLE INFORMATION. Parent is subject to the informational filing
requirements of the Exchange Act and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning Parent's
directors and officers, their remuneration, options granted to them, the
principal holders of Parent's securities and any material interest of such
persons in transactions with Parent is required to be described in proxy
statements distributed to Parent's shareholders and filed with the Commission.
Such reports, proxy statements and other information may be inspected and copies
may be obtained from the offices of the Commission in the same manner as set
forth with respect to information concerning the Company in Section 8. Such
material

14
<PAGE>
should also be available at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10009.

Except as set forth in this Offer to Purchase, neither the Purchaser or
Parent (collectively, the "Purchaser Entities"), nor, to the best knowledge of
either of the Purchaser Entities, any of the persons listed on Schedule I, has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the transfer
or the voting of any securities of the Company, joint ventures, loan or option
arrangement, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies. Except as set forth in this Offer to Purchase,
neither of the Purchaser Entities, nor, to the best knowledge of either of the
Purchaser Entities, any of the persons listed on Schedule I, has had any
business relationships or transactions with the Company or any of its executive
officers, directors or affiliates that would require reporting under the rules
of the Commission. Except as set forth in this Offer to Purchase, there have
been no contacts, negotiations or transactions between the Purchaser Entities,
or their respective subsidiaries or, to the best knowledge of either of the
Purchaser Entities, any of the persons listed on Schedule I, and the Company or
its affiliates, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets. Except as set forth in this Offer to
Purchase, neither of the Purchaser Entities nor, to the best knowledge of either
of the Purchaser Entities, any of the persons listed on Schedule I, beneficially
owns any Shares or has effected any transactions in the Shares in the past 60
days.

10. SOURCE AND AMOUNT OF FUNDS

The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay related fees and expenses is
approximately $486 million. The Purchaser plans to obtain all funds needed for
the Offer and the Merger through a capital contribution from Parent. Parent
plans to obtain such funds from cash accounts or under available lines of
credit.

Parent's revolving credit facilities consist of (i) a $750 million Five Year
Competitive Advance and Revolving Credit Agreement dated as of October 2, 1996,
as amended, among Parent, the lenders referred to therein (the "Lenders") and
The Chase Manhattan Bank ("Chase"), as Administrative Agent (the "Five Year
Revolving Credit Facility"), (ii) a $750 million 364-Day Competitive Advance and
Revolving Credit Agreement, dated as of October 2, 1996, as amended, among
Parent, the Lenders and Chase, as Administrative Agent (the "364-Day Revolving
Credit Facility"), and (iii) a $500 million Amended and Restated Credit
Agreement dated as of November 19, 1997, by and between Parent and Chase (the
"Standby Credit Facility," and together with the 364-Day Revolving Credit
Facility and the Five Year Revolving Credit Facility, the "Revolving Credit
Facilities"). Upon consummation of the Parent Merger, the commitment under the
364-Day Revolving Credit Facility will increase from $750 million to $1.25
billion. At November 24, 1997, Parent had approximately $900 million of
available borrowings under its Revolving Credit Facilities.

The 364-Day Revolving Credit Facility will mature on September 30, 1998,
provided that Parent is entitled to annually request a 364 day extension of such
maturity date. The Five Year Revolving Credit Facility will mature on October 1,
2001 and the Standby Credit Facility will mature upon the earliest to occur of
(i) January 31, 1998 or (ii) the consummation of the Parent Merger. Parent
intends to, and currently believes that it will be able to, extend the maturity
date of the Standby Credit Facility.

The 364-Day Revolving Credit Facility and the Five Year Revolving Credit
Facility provide for revolving loans which bear interest, at the option of
Parent, at rates based on competitive bids of Lenders participating in such
facilities, at a prime rate or at LIBOR plus a margin approximating 22.5 basis
points. The Standby Credit Facility provides for loans bearing interest at a
floating base rate based on Chase's base rate for domestic commercial loans, or
at a rate per annum other than the base rate if Parent and Chase agree in
writing.

15
<PAGE>
The Revolving Credit Facilities contain certain financial covenants as well
as certain restrictions on, among other things, (i) indebtedness of
subsidiaries, (ii) liens, (iii) mergers, consolidations, liquidations,
dissolutions and sales of substantially all assets, (iv) sale and leasebacks,
(v) changes in fiscal year and accounting treatment and (vi) changes in the
character of business. The financial covenants require Parent to maintain
specified (i) maximum leverage ratios and (ii) minimum interest coverage ratios.

In connection with the Revolving Credit Facilities, Parent has agreed to pay
the Lenders and Chase certain fees and to reimburse Chase and the Lenders for
certain expenses and to provide certain indemnities, as is customary for
commitments of the type described herein.

It is anticipated that any indebtedness incurred by Parent under the
Revolving Credit Facilities will be repaid from funds generated internally by
Parent and its subsidiaries, through additional borrowings, or through a
combination of such sources. No final decisions have been made concerning the
method Parent will employ to repay such indebtedness. Such decisions when made
will be based on Parent's review from time to time of the advisability of
particular actions, as well as on prevailing interest rates and financial and
other economic conditions.

THE FOREGOING DESCRIPTION OF THE REVOLVING CREDIT FACILITIES IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH REVOLVING CREDIT FACILITIES,
COPIES OF WHICH HAVE BEEN FILED WITH THE COMMISSION AND ARE INCORPORATED BY
REFERENCE AS EXHIBITS TO PARENT'S AND THE PURCHASER'S TENDER OFFER STATEMENT ON
SCHEDULE 14D-1 (THE "SCHEDULE 14D-1").

11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY

Parent regularly explores and conducts discussions with regard to
acquisitions and other strategic corporate transactions. In early September
1997, the Company was identified to Parent as a potential strategic transaction
candidate and Parent decided to approach the Company regarding a possible
strategic transaction.

On September 2, 1997, a representative of Parent contacted Keith E. Alessi,
the Company's President, Chief Executive Officer and Chairman, to arrange a
meeting to discuss a potential strategic transaction between the companies. On
September 9, 1997, Henry R. Silverman, Parent's Chairman and Chief Executive
Officer, and Samuel L. Katz, Senior Vice President - Acquisitions of Parent, met
with Mr. Alessi in New York and discussed the benefits of a closer relationship
between the two companies.

On September 22, 1997, Parent and the Company entered into a confidentiality
agreement preceding Parent's review of certain information concerning the
Company.

On October 1, 1997, representatives of Parent met with Mr. Alessi at the
Company's executive offices to discuss the Company's business.

On October 9, 1997, representatives of Parent met with Mr. Alessi and two
members of the Company Board to further discuss the Company's business and,
among other things, the terms of, and conditions to, any possible transaction
between Parent and the Company.

From time to time during the course of the next month, representatives of
Parent and representatives of the Company discussed valuation parameters of the
Company and continued to discuss generally the terms and conditions of a
possible transaction.

Between November 10 and November 12, 1997, representatives of Parent,
together with Parent's legal counsel and outside auditors, conducted a due
diligence review at the offices of the Company's legal counsel and at the
offices of the Company's outside auditors and toured the Company's facilities in
the Virginia Beach area. During the same period, Parent's legal counsel and the
Company's outside legal counsel discussed structural issues regarding the
proposed acquisition, including Parent's requirement that there be agreements
along the lines of the Shareholders Agreements and the Stock Option Agreement,
and that there be certain other provisions in the event of a termination of the
Merger Agreement by the Company in connection with a competing transaction.

16
<PAGE>
On November 12, 1997, Parent delivered a draft merger agreement to the
Company's legal counsel, and on November 14, 1997, Parent delivered drafts of
the shareholders agreements and the stock option agreement to the Company's
legal counsel.

On November 16, 1997, the parties began negotiating the terms of a
definitive merger agreement, definitive shareholders agreements and a definitive
stock option agreement.

Negotiations between Parent and the Company continued through November 19,
1997, culminating in Parent and the Company agreeing upon a form of Merger
Agreement, Shareholders Agreement and Stock Option Agreement which were
presented to and approved by the Company Board at a meeting held on November 19,
1997 and by Parent's Board of Directors at a telephonic meeting also held
November 19, 1997. Following these approvals, the Merger Agreement, Shareholders
Agreements and Stock Option Agreement were executed and delivered and the
transaction was publicly announced on November 19, 1997.

12. THE OFFER, MERGER, MERGER AGREEMENT, AND THE OTHER TRANSACTION AGREEMENTS

The purpose of the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement and the Shareholders Agreements is to enable Parent to acquire control
of, and the entire equity interest in, the Company. Upon consummation of the
Merger, the Company will become a subsidiary of Parent. The Offer, the Stock
Option Agreement and the Shareholders Agreements are intended to increase the
likelihood that the Merger will be effected.

MERGER AGREEMENT

The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 of this Offer to Purchase.

THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of the conditions of the Offer, the Purchaser will purchase all Shares validly
tendered pursuant to the Offer. The Merger Agreement provides that, without the
written consent of the Company, the Purchaser will not decrease the Offer Price,
decrease the number of Shares sought in the Offer, accelerate the initial
scheduled expiration date of the Offer, or amend any other condition of the
Offer in a manner adverse to the holders of Shares (other than with respect to
insignificant changes or amendments and subject to certain conditions in the
Merger Agreement), except that if on the initial scheduled expiration date of
the Offer, which is January 5, 1998, all conditions to the Offer shall not have
been satisfied or waived, the Purchaser may extend the expiration date for one
or more periods not to exceed an aggregate of 40 business days. The Merger
Agreement provides that if, immediately prior to the initial expiration date of
the Offer, as it may be extended, the Shares tendered and not withdrawn pursuant
to the Offer equal less than 90% of the Shares outstanding, the Purchaser may
extend the Offer for one or more periods not to exceed an aggregate of 30
business days.

THE MERGER. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, and in accordance
with Virginia law, at the Effective Time, the Purchaser will be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
the Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation").

The respective obligations of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions, any and all of which may be
waived in whole or in part, to the extent permitted by applicable law: (i) the
Merger Agreement shall have been approved and adopted by the requisite vote of
the holders of Shares, if required by applicable law, in order to consummate the
Merger; (ii) no law, statute, rule, order, decree or regulation shall have been
enacted or

17
<PAGE>
promulgated by any Governmental Entity (as defined in the Merger Agreement) of
competent jurisdiction which declares the Merger Agreement invalid or
unenforceable in any material respect or which prohibits the consummation of the
Merger, and all governmental consents, orders and approvals required for the
consummation of the Merger and the transactions contemplated by the Merger
Agreement shall have been obtained and shall be in effect at the Effective Time;
(iii) Parent, the Purchaser or their affiliates shall have purchased Shares
pursuant to the Offer; and (iv) the applicable waiting period under the HSR Act
shall have expired or been terminated.

At the Effective Time of the Merger (i) each issued and outstanding Share
(other than Shares that are owned by the Company as treasury stock and Shares
owned by Parent), the Purchaser or any other wholly owned subsidiary of Parent,
will be converted into the right to receive the Merger Consideration and (ii)
each issued and outstanding share of the Purchaser will be converted into one
share of common stock of the Surviving Corporation.

THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly after the purchase by Parent of at least two thirds of the outstanding
Shares (on a fully diluted basis), Parent will be entitled to designate such
number of directors, rounded up to the next whole number, on the Company Board
as is equal to the product of the total number of directors on the Company Board
multiplied by the percentage that the number of Shares so accepted for payment
bears to the total number of Shares then outstanding. The Company will, upon
request of the Purchaser, use its best efforts promptly to secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees to be elected to the Company Board. The Company's obligation
to appoint the Purchaser's designees to the Board of Directors is subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder.

SHAREHOLDERS MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call, give
notice of, convene and hold a special meeting of its shareholders (the "Special
Meeting") as soon as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement. The Merger Agreement
provides that the Company will, if required by applicable law in order to
consummate the Merger, prepare and file with the Commission a preliminary proxy
or information statement (the "Proxy Statement") relating to the Merger and the
Merger Agreement and use its best efforts (i) to obtain and furnish the
information required to be included by the Commission in the Proxy Statement
and, after consultation with Parent, to respond promptly to any comments made by
the Commission with respect to the preliminary Proxy Statement and cause a
definitive Proxy Statement to be mailed to its shareholders and (ii) to obtain
the necessary approvals of the Merger and the Merger Agreement by its
shareholders. If the Purchaser acquires more than two-thirds of the outstanding
Shares, the Purchaser will have sufficient voting power to approve the Merger,
even if no other shareholder votes in favor of the Merger. The Company has
agreed, subject to the provisions described below under "No Solicitation," to
include in the Proxy Statement the recommendation of the Company Board that
shareholders of the Company vote in favor of the approval of the Merger and the
adoption of the Merger Agreement. Parent has agreed that it will vote, or cause
to be voted, all of the Shares then owned by it, the Purchaser or any of its
other subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of the Merger Agreement.

The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding
Shares, pursuant to the Offer or otherwise, Parent, the Purchaser and the
Company will, at the request of Parent and subject to the terms of the Merger
Agreement, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with Virginia law.

COMPANY OPTIONS. Pursuant to the Merger Agreement, except with respect to
any Roll-Over Option (as defined below), the Company will cause all Company
Options outstanding immediately prior to the Effective Time under the Option
Plans to become fully exercisable and vested. Each such Company Option

18
<PAGE>
will be cancelled, and, in consideration thereof and in full satisfaction of all
rights of the holder of such Company Options, at the Effective Time Parent will
pay, or cause the Purchaser to pay, to the holder thereof an amount in cash
equal to the product of (A) the excess of the Merger Consideration over the
exercise price per Share of such Company Option, multiplied by (B) the number of
Shares subject to such Company Option (net of applicable withholding taxes).

With respect to each Company Option as to which the holder, no later than
five days prior to the Effective Time, shall have delivered to Parent his or her
written election to have such Company Options treated as described in this
paragraph (a "Roll-Over Option"), Parent and the Company will cause each
outstanding Roll-Over Option to be assumed by Parent and converted into a fully
vested option (or a new substitute option shall be granted) (a "Parent Option"),
exercisable throughout the period specified in the original option award
agreement, to purchase shares of common stock, par value $.01 per share, of
Parent ("Parent Common Stock") issued under Parent's 1993 Amended and Restated
Stock Option Plan (or such surviving plan as may result from the Parent Merger),
or any other similar stock option plan of Parent adopted specifically for
employees of the Company (the "Parent Option Plan"). Pursuant to the Merger
Agreement (i) the number of shares of Parent Common Stock subject to such Parent
Option will be determined by multiplying the number of Shares subject to the
Roll-Over Option to be cancelled by the Option Exchange Ratio (as defined
below), rounding any fractional share down to the nearest whole share, and (ii)
the exercise price per share of such Parent Option will be determined by
dividing the exercise price per share under the Roll-Over Option in effect
immediately prior to the Effective Time by the Option Exchange Ratio, and
rounding the exercise price thus determined up to the nearest whole cent,
subject to appropriate adjustments for stock splits and other similar events.
Except as provided above, the converted or substituted Parent Options will be
subject to the same terms and conditions (including, without limitation,
expiration date, vesting and exercise provisions) as were applicable to the
Roll-Over Options immediately prior to the Effective Time. For purposes of the
Merger Agreement, the "Option Exchange Ratio" is (x) the Offer Price divided by
(y) the average of the closing prices of Parent Common Stock on the New York
Stock Exchange during the five trading days preceding the fifth trading day
prior to the closing date of the Merger.

In addition, except as may be otherwise agreed to by Parent or the Purchaser
and the Company, the Option Plans will terminate as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries will be deleted as of the Effective Time.

INTERIM OPERATIONS. Pursuant to the Merger Agreement, the Company has
agreed that, except as expressly contemplated by the Merger Agreement or
consented to in writing by Parent, such consent not to be unreasonably withheld
or delayed, during the period from the date of the Merger Agreement to the
Effective Time, and prior to the time the directors of the Purchaser constitute
two-thirds of the Company Board: (a) the business of the Company and its
subsidiaries will be conducted only in the usual, regular and ordinary course in
substantially the same manner as conducted prior to the date of the Merger
Agreement, and each of the Company and its subsidiaries will use its best
efforts to preserve its business organization intact, keep available the
services of its current officers and employees and maintain its existing
relations with franchisees, customers, suppliers, creditors, business partners
and others having business dealings with it, to the end that its goodwill and
ongoing business will be unimpaired at the Effective Time of the Merger in any
material respect; (b) the Company will not, directly or indirectly, (i) sell,
transfer or pledge or agree to sell, transfer or pledge any of the shares,
preferred stock or capital stock of any of its subsidiaries beneficially owned
by it, (ii) amend its Articles of Incorporation or Bylaws or similar
organizational documents; or (iii) split, combine or reclassify the outstanding
Shares or shares of preferred stock or any outstanding capital stock of any of
the subsidiaries of the Company; (c) neither the Company nor any of its
subsidiaries will: (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (ii) except pursuant to the Stock Option Agreement, issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the

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Company or its subsidiaries, other than Shares reserved for issuance on the date
of the Merger Agreement pursuant to the exercise of Company Options outstanding
on the date of the Merger Agreement; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any material assets other than in the
ordinary and usual course of business and consistent with past practice, or
incur or modify any material indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or (iv)
redeem, purchase or otherwise acquire directly or indirectly any of its capital
stock; (d) neither the Company nor any of its subsidiaries will: (i) grant any
increase in the compensation payable or to become payable by the Company or any
of its subsidiaries to any of its executive officers or key employees or (ii)(A)
adopt any new, or (B) amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing, bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan agreement or arrangement; or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its subsidiaries; (e) neither the Company nor
any of its subsidiaries will modify, amend or terminate any of its material
contracts or waive, release or assign any material rights or claims, except in
the ordinary course of business and consistent with past practice; (f) neither
the Company nor any of its subsidiaries will permit any material insurance
policy naming it as a beneficiary or a loss payable payee to be cancelled or
terminated without notice to Parent, except in the ordinary course of business
and consistent with past practice; (g) neither the Company nor any of its
subsidiaries will: (i) incur or assume any long-term debt, or except in the
ordinary course of business, incur or assume any short-term indebtedness in
amounts not consistent with past practice; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice; (iii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than to wholly owned subsidiaries of the Company); or (iv) enter into any
material commitment or transaction (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets or real
estate); (h) neither the Company nor any of its subsidiaries will change any of
the accounting methods used by it unless required by generally accepted
accounting principles; (i) neither the Company nor any of its subsidiaries will
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
subsidiaries; (j) neither the Company nor any of its subsidiaries will adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its subsidiaries (other than the Merger); (k) neither the Company nor any of its
subsidiaries will take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Merger not being
satisfied, or that would make any representation or warranty of the Company
contained in the Merger Agreement inaccurate in any respect at, or as of any
time prior to, the Effective Time, or that would impair the ability of the
Company to consummate the Merger in accordance with the terms hereof or delay
such consummation; and (l) neither the Company nor any of its subsidiaries will
enter into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.

NO SOLICITATION. In the Merger Agreement, the Company has agreed that
neither the Company nor any of its subsidiaries or affiliates will (and the
Company will cause its officers, directors, employees, representatives and
agents, including, but not limited to, investment bankers, attorneys and
accountants, not to), directly or indirectly, encourage, solicit, participate in
or initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any merger, tender offer,
exchange offer, sale of assets, sale of shares of capital stock or debt
securities or similar transactions involving the Company or

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any Subsidiary (an "Acquisition Proposal"). The Company also agreed to
immediately cease any existing activities, discussions or negotiations with any
parties conducted prior to the date of the Merger Agreement with respect to any
of the foregoing. The Merger Agreement provides that the Company may furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal if (x)
such entity or group has on an unsolicited basis submitted a bona fide written
proposal to the Company Board relating to any such transaction which the Company
Board determines in good faith, represents a superior transaction to the Offer
and the Merger and which is not subject to the receipt of any necessary
financing and (y) in the opinion of the Company Board, only after receipt of (i)
a written opinion from the Company's investment banking firm that the
Acquisition Proposal is superior, from a financial point of view, to the Offer
and the Merger, and (ii) advice from independent legal counsel to the Company to
the effect that the failure to provide such information or access or to engage
in such discussions or negotiations would be likely to cause the Company Board
to violate its fiduciary duties to the Company's shareholders under applicable
law (an Acquisition Proposal which satisfies clauses (x) and (y) being referred
to in the Merger Agreement as a "Superior Proposal"). The Merger Agreement also
provides that the Company will promptly communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry (and will disclose any written
materials received by the Company in connection with such proposal, discussion
negotiation, or inquiry) and the identity of the party making such proposal or
inquiry which it may receive in respect of any such transaction.

Except as provided below, pursuant to the terms of the Merger Agreement,
neither the Company Board nor any committee thereof is permitted to (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
the Purchaser, the approval or recommendation by such Company Board or any such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares in the Offer, the Company Board may (subject to the terms of this and the
following sentence) withdraw or modify its approval or recommendation of the
Offer, the Merger Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal,
PROVIDED, that the Company will promptly advise Parent orally and in writing of
any Superior Proposal or any inquiry which could lead to a Superior Proposal,
will specify the material terms and conditions of such Superior Proposal and
identify the person making such Superior Proposal; PROVIDED, FURTHER, that the
Company will not enter into an agreement with respect to a Superior Proposal
unless the Company shall have furnished Parent with written notice not later
than 12:00 noon two days in advance of any date that it intends to enter into
such agreement. In addition, if the Company enters into an agreement with
respect to any Acquisition Proposal, it will concurrently with entering into
such agreement pay, or cause to be paid, to Parent the Termination Fee described
below under "Termination Fee."

INDEMNIFICATION AND INSURANCE. Pursuant to the Merger Agreement, for five
years after the Effective Time, the Surviving Corporation (or any successor to
the Surviving Corporation) will indemnify, defend and hold harmless the present
and former officers and directors of the Company and its subsidiaries (each an
"Indemnified Party") against all losses, claims, damages, liabilities, fees and
expenses (including reasonable fees and disbursements of counsel and judgments,
fines, losses, claims, liabilities and amounts paid in settlement (provided that
any such settlement is effected with the written consent of the Parent or the
Surviving Corporation)) arising out of actions or omissions occurring at or
prior to the Effective Time to the full extent permitted under Virginia law
(provided that such actions or omissions were in compliance with the standards
set forth under Virginia law, the Company's Articles of Incorporation or the
Company's Bylaws), subject to the terms of the Company's Articles of
Incorporation and the Company's Bylaws, all as in effect at the date of the
Merger Agreement; PROVIDED that, in the event any claim or claims are asserted
or made within such five year period, all rights to indemnification in respect
of any such claim or claims shall continue until disposition of any and all such
claims; PROVIDED, FURTHER, that nothing in the Merger

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Agreement will impair any rights or obligations of any present or former
directors or officers of the Company.

The Merger Agreement also provides that Parent or the Surviving Corporation
will maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") for a period of not less than five years after the
Effective Date; PROVIDED, that the Parent may substitute therefor policies of
substantially similar coverage and amounts containing terms no less favorable to
such former directors or officers; PROVIDED, FURTHER, that in no event will the
Company be required to pay aggregate premiums for insurance under the Merger
Agreement in excess of 200% of the aggregate premiums paid by the Company in
1997 on an annualized basis for such purpose.

REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, authorization
and validity of the Merger Agreement, consents and approvals, public filings and
financial statements, conduct of business, undisclosed liabilities, litigation,
employee benefit plans, tax matters, title and condition of properties,
intellectual property, compliance with laws, contracts, relationships with
franchisees, potential conflicts of interest, information in the Proxy
Statement, opinion of financial advisor and brokers and finders.

TERMINATION; FEES. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof: (a) by the mutual written consent of the Board of
Directors of Parent or the Purchaser and the Company Board, (b) by either of the
Company Board or the Board of Directors of Parent or the Purchaser: (i) if the
Offer shall have expired without any Shares being purchased therein; provided,
that such right to terminate the Merger Agreement will not be available to any
party whose failure to fulfill any obligation under the Merger Agreement has
been the cause of, or resulted in, the failure of Parent or the Purchaser, as
the case may be, to purchase the Shares pursuant to the Offer on or prior to
such date; or (ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or other action
the parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and non-appealable; (c) by the
Company Board: (i) if Parent, the Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that the
Company may not terminate the Merger Agreement pursuant to this clause (i) if
the Company is in material breach of its obligations under this Agreement; (ii)
in connection with entering into a definitive agreement with respect to an
Acquisition Proposal, provided it has complied with all provisions thereof,
including the notice provisions described above under "No Solicitation", and
that it makes simultaneous payment of the Termination Fee (as defined below); or
(iii) if Parent or the Purchaser shall have breached in any material respect any
of their respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach cannot be or has not been cured
within 30 days after the giving of written notice to Parent or the Purchaser, as
applicable, except, in any case, for such breaches which are not, in Parent's
opinion, reasonably likely to affect adversely Parent's or the Purchaser's
ability to complete the Offer or the Merger, (d) by the Board of Directors of
Parent or the Purchaser: (i) if, due to an occurrence that if occurring after
the commencement of the Offer would result in a failure to satisfy any of the
conditions described in Section 14 hereof, Parent, the Purchaser, or any of
their affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer; (ii) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached any representation, warranty, covenant or other
agreement contained in this Agreement which (A) would give rise to the failure
of a condition set forth in paragraph (f) or (g) of Section 14 hereof and (B)
cannot be or has not been cured within 30 days after the giving of written
notice to the Company; or (iii) if either Parent or the Purchaser is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraph (e) of Section 14 hereof.

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In accordance with the Merger Agreement, if (x) the Board of Directors of
the Company terminates the Merger Agreement pursuant to clause (c)(ii) of the
immediately preceding paragraph, (y) the Board of Directors of Parent or the
Purchaser terminates the Merger Agreement pursuant to clause (d)(iii) of the
immediately preceding paragraph, or (z) prior to the termination of the Merger
Agreement (other than by the Company Board pursuant to clauses (c)(i) or
(c)(iii) of the immediately preceding paragraph), an Acquisition Proposal shall
have been made and within 12 months of such termination, the same or another
Acquisition Proposal from the same or another party shall be accepted and the
related transaction consummated pursuant to a definitive agreement or otherwise,
the Company will pay to Parent (concurrently with such termination, in the case
of clauses (x) or (y) above, and not later than two business days after the
Company takes any such action with respect to an Acquisition Proposal, in the
case of clause (z) above) an amount equal to $13,650,000 plus an amount equal to
the fees and expenses incurred by Parent and the Purchaser in connection with
the Offer, the Merger, the Merger Agreement and the consummation of the
transactions contemplated thereby (the portion of such fees and expenses payable
hereunder not to exceed $750,000) (the "Termination Fee").

STOCK OPTION AGREEMENT

The following is a summary of the material terms of the Stock Option
Agreement. This summary is qualified in its entirety by reference to the Stock
Option Agreement which is incorporated herein by reference and a copy of which
has been filed with the Commission as an exhibit to Schedule 14D-1. The Stock
Option Agreement may be examined and a copy may be obtained at the place and in
the manner set forth in Section 8.

STOCK OPTION. Pursuant to the Stock Option Agreement, the Company has
granted the Purchaser the Stock Option to purchase for $68.00 per Share (the
"Exercise Price") up to an aggregate of 1,326,331 Shares; provided, however,
that in no event will the number of Option Shares exceed 19.9% of the Company's
issued and outstanding Shares (without giving effect to any Shares subject to or
issued pursuant to the Stock Option). The number of Option Shares that may be
received upon the exercise of the Stock Option and the Exercise Price are
subject to adjustment as set forth in the Stock Option Agreement.

The Stock Option Agreement also provides that, in the event that any
additional Shares are either (i) issued or otherwise become outstanding after
the date of the Stock Option Agreement (other than pursuant to the Stock Option
Agreement) or (ii) redeemed, repurchased, retired or otherwise cease to be
outstanding after the date of the Stock Option Agreement, the number of Option
Shares shall be increased or decreased, as appropriate, so that, after such
issuance, such number equals 19.9% of the number of Shares then issued and
outstanding without giving effect to any Shares subject to issuance pursuant to
the Option. The Option may be exercised by the Purchaser at any time or from
time to time following the occurrence of a Triggering Event (as hereinafter
defined), in whole or in part, until the expiration of six months following the
termination of the Merger Agreement in accordance with its terms. The Company's
obligation to issue Option Shares upon exercise of the Stock Option is subject
to the conditions that (i) all waiting periods under the HSR Act required for
the purchase of the Option Shares upon such exercise shall have expired or been
waived and (ii) there shall not be in effect any preliminary injunction or other
order issued by any Governmental Entity prohibiting the exercise of the Stock
Option pursuant to the Stock Option Agreement.

Pursuant to the Stock Option Agreement, the term "Triggering Event" means
the occurrence of any of the following events (a) a person, entity or group (as
such terms are defined in the Exchange Act and the rules and regulations
thereunder), other than Parent and its subsidiaries or affiliates (each such
person, entity or group being a "Third Party"), shall publicly propose (x) any
merger, tender offer, exchange offer, sale of assets, sale of shares of capital
stock or debt securities or similar transactions involving the Company or any
subsidiary, (y) that any change be made in the composition of a majority of the
Company Board and such Third Party shall file proxy materials or other documents
with the Commission in respect of such proposal or (z) the purchase of 20
percent or more of the total voting power of the Company,

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including by tender or exchange offer, (b) the Purchaser shall have accepted
Shares for payment pursuant to the Offer constituting a majority of the Shares
outstanding on a fully diluted basis (excluding Shares issuable pursuant to this
Agreement), (c) the Company shall have breached the covenants contained in the
Merger Agreement which are described above under "The Merger Agreement--No
Solicitation", (d) one or more of the events set forth in paragraph (e) of
Section 14 hereof shall have occurred, or (e) an event as a result of which
Parent is, or, as a result of an Acquisition Proposal having been made, may be,
entitled to receive the Termination Fee pursuant to the Merger Agreement. The
Company will notify the Purchaser promptly in writing of the occurrence of any
Triggering Event of which it has knowledge, it being understood that the giving
of such notice by the Company shall not be a condition to the right of the
Purchaser to exercise the Option.

Pursuant to the Stock Option Agreement, if, at any time during the period
commencing on the occurrence of an event as a result of which Parent is, or, as
a result of an Acquisition Proposal having been made, may be, entitled to
receive the Termination Fee pursuant to the Merger Agreement and ending on the
termination of the Option in accordance with its terms (a) the Purchaser sends
to the Company an exercise notice indicating the Purchaser's election to
exercise its right pursuant to the Stock Option Agreement, then the Company will
pay to the Purchaser, in exchange for the cancellation of the Stock Option with
respect to such number of Option Shares as the Purchaser specifies in the
exercise notice, an amount in cash equal to such number of Option Shares
multiplied by the difference between (a) the Market/Offer Price (as defined
below) and (ii) the Exercise Price, or (b) the owner of Option Shares from time
to time (the "Owner") sends to the Company an exercise notice indicating the
Owner's election to exercise its right pursuant to the Stock Option Agreement,
then the Company shall pay to the Owner, in exchange for the Option Shares as
specified in the notice, an amount in cash equal to such number of Option Shares
multiplied by the Market/Offer Price.

Pursuant to the Stock Option Agreement, the term "Market/Offer Price" means
the highest of (i) the price per Share at which a tender offer or exchange offer
therefor has been made, (ii) the price per Share to be paid by any third party
pursuant to an agreement with the Company, (iii) the highest closing price for
the Shares within the six-month period immediately preceding the date the
Purchaser gives notice of the required repurchase of the Stock Option or the
Owner gives notice of the required repurchase of Option Shares, as the case may
be, or (iv) in the event of a sale of all or a substantial portion of the
Company's assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of the Company as determined by a
nationally recognized investment banking firm mutually selected by the Purchaser
or the Owner, as the case may be, on the one hand, and the Company, on the other
hand, divided by the number of Shares outstanding at the time of such sale. In
determining the Market/Offer Price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm mutually
selected by the Purchaser or the Owner, as the case may be, on the one hand, and
the Company, on the other hand. Notwithstanding the termination of the Stock
Option, the Purchaser or the Owner, as the case may be, will be entitled to
exercise its rights under the Stock Option Agreement if it has exercised such
rights in accordance with the terms hereof prior to the termination of the Stock
Option.

SHAREHOLDERS AGREEMENTS

The following is a summary of the material terms of the Shareholders
Agreements. This summary is qualified in its entirety by reference to the
Shareholder Agreements which are incorporated herein by reference and a copy of
each of which has been filed with the Commission as an exhibit to the Schedule
14D-1. The Shareholders Agreements may be examined and a copy of each of them
may be obtained at the place and in the manner set forth in Section 8.

TENDER OF SHARES. In connection with the execution of the Merger Agreement,
Parent and the Purchaser entered into a separate Shareholders Agreement with
each of the Selling Shareholders. Upon the terms and subject to the conditions
of each of such agreements, each of the Selling Shareholders has agreed to
validly tender (and not withdraw) pursuant to and in accordance with the terms
of the Offer, not

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later than the fifteenth business day after commencement of the Offer, the
number of Shares owned beneficially by such Selling Shareholder. The Selling
Shareholders beneficially own an aggregate of 501,519 Shares directly and hold
stock options to purchase an aggregate of 316,074 Shares (which Shares represent
approximately 7% and 4%, respectively, of the Company's outstanding Shares on a
fully diluted basis).

PROVISIONS CONCERNING THE SHARES. The Selling Shareholders have agreed that
during the period commencing on the date of each of the Shareholders Agreements
and continuing until the first to occur of the Effective Time or the termination
of the Merger Agreement in accordance with its terms, at any meeting of the
Company's shareholders or in connection with any written consent of the
Company's shareholders, the Selling Shareholders will vote (or cause to be
voted) the Shares held of record or beneficially owned by each of such Selling
Shareholders: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement, the Stock Option
Agreement and each of the Shareholders Agreements and any actions required in
furtherance thereof; and (ii) against any Acquisition Proposal and against any
action or agreement that would impede, frustrate, prevent or nullify each of the
Shareholders Agreements or result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which would result in any of the conditions to the
Offer or to the Merger not being fulfilled. In addition, each of the Selling
Shareholders has appointed representatives of Parent as proxies to vote such
Selling Shareholder's Shares or grant a consent or approval in respect of such
Shares in favor of the various transactions contemplated by the Merger Agreement
and against any Acquisition Proposal. Each of the Selling Shareholders also
agreed not to transfer such Selling Shareholder's Shares and not to, directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal.

OTHER COVENANTS, REPRESENTATIONS, WARRANTIES. In connection with each of
the Shareholders Agreements, each of the Selling Shareholders made certain
customary representations and warranties, including with respect to (i)
ownership of the Shares, (ii) the Selling Shareholder's authority to enter into
and perform its or his obligations under the Shareholders Agreement, (iii) the
absence of conflicts and requisite governmental consents and approvals, and (iv)
the absence of encumbrances on and in respect of the Selling Shareholder's
Shares. Parent and the Purchaser have made certain representations and
warranties with respect to Parent and the Purchaser's authority to enter into
the Shareholders Agreements and the absence of conflicts and requisite
governmental consents and approvals.

CONFIDENTIALITY AGREEMENT

Pursuant to the Confidentiality Agreement entered into on September 22, 1997
by Parent and the Company (the "Confidentiality Agreement"), the Company and
Parent agreed to provide, among other things, for the confidential treatment of
their discussions regarding the Offer and the Merger and the exchange of certain
confidential information concerning the Company. The Confidentiality Agreement
is incorporated herein by reference and a copy of it has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Confidentiality Agreement
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 of this Offer to Purchase.

EMPLOYMENT AGREEMENTS

In connection with the Merger, the Company entered into an employment
agreement, dated as of November 19, 1997, with Keith E. Alessi (the "Employment
Agreement") under which Mr. Alessi will continue to serve as the Company's
President and Chief Executive Officer following the consummation of the Merger.
The term of the Employment Agreement commences at the Effective Time of the
Merger and expires on the first anniversary thereof. Pursuant to the Employment
Agreement, Mr. Alessi will be paid an annual salary of $300,000 per year, and
will be eligible to receive a bonus of up to $300,000 per year if

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certain performance objectives of the Company and of Cendant are met. The
Employment Agreement includes a covenant not to compete or to solicit customers
of the Company for a period of two years following termination of Mr. Alessi's
employment for any reason, and imposes certain non-disclosure obligations on Mr.
Alessi with respect to the Company's confidential and proprietary information.
The Company may terminate the Employment Agreement at any time without cause by
notice to Mr. Alessi, provided that, upon termination without cause, the Company
will be obligated to pay to Mr. Alessi the equivalent of one year's annual
salary plus a stipulated bonus.

In addition, to attract Mr. Alessi as the Company's President and Chief
Executive Officer, Mr. Alessi will receive a non-qualified option to acquire
124,838 shares of common stock of Parent (or, if the Parent Merger occurs prior
to the Effective Time, 300,000 shares of common stock of Cendant), in either
case with a per share exercise price equal to the fair market value of the
respective shares under option.

In connection with the Merger, the Company entered into an employment
agreement, dated as of November 24, 1997, with Harry W. Buckley (the "Buckley
Agreement") under which Mr. Buckley will continue to serve as a consultant to
the Company's Chairman, President and Chief Executive Officer up to two days per
week. The term of the Buckley Agreement commences at the Effective Time of the
Merger and expires on the first anniversary thereof. Pursuant to the Buckley
Agreement, Mr. Buckley will be paid an annual salary of $90,000 per year. The
Buckley Agreement includes a covenant not to solicit customers of the Company
for a period of two years following termination of Mr. Buckley's employment for
any reason, and imposes certain non-disclosure obligations on Mr. Buckley with
respect to the Company's confidential and proprietary information. The Company
may terminate the Buckley Agreement at any time without cause by notice to Mr.
Buckley, provided that, upon termination without cause, the Company will be
obligated to pay to Mr. Buckley the amount of his annual salary for the
remainder of the term.

In addition, to attract Mr. Buckley as a consultant to the Company, Mr.
Buckley will receive a non-qualified option to acquire 31,209 shares of common
stock of Parent (or, if the Parent Merger occurs prior to the Effective Time,
75,000 shares of common stock of Cendant), in either case with a per share
exercise price equal to the fair market value of the respective shares under
option.

OTHER MATTERS

MERGER VOTE. Under Virginia law, the affirmative vote of holders of more
than two-thirds of the outstanding Shares entitled to vote, including any Shares
owned by the Purchaser, would be required to adopt the Merger. If the Purchaser
acquires, through the Offer or otherwise, voting power with respect to more than
two-thirds of the outstanding Shares, which would be the case if the Minimum
Condition were satisfied, it would have sufficient voting power to effect the
Merger without the vote of any other shareholder of the Company. Virginia law
also provides that if a parent company owns at least 90% of each class of stock
of a subsidiary, the parent company can effect a merger with the subsidiary
without the authorization of the other shareholders of the subsidiary.
Accordingly, if, as a result of the Offer, the Stock Option Agreement, the
Shareholders Agreements or otherwise, the Purchaser acquires at least 90% of the
outstanding Shares, the Purchaser could, and intends to, effect the Merger
without approval of any other shareholder of the Company.

VIRGINIA AFFILIATED TRANSACTIONS STATUTE. The Company is also subject to
Article 14 (the "Affiliated Transactions Statute") of the Virginia Stock
Corporation Act (the "VSCA"). The Affiliated Transactions Statute generally
prohibits a publicly held Virginia corporation from engaging in an "affiliated
transaction" with an "interested shareholder" for a period of three years after
the date of the transaction in which the person became an interested
shareholder, unless (i) a majority of disinterested directors approved in
advance the transaction in which the interested shareholder became an interested
shareholder or (ii) the affiliated transaction is approved by the affirmative
vote of a majority of the disinterested directors and the holders of two-thirds
of the voting shares other than the shares beneficially owned by the interested
shareholder. A corporation may engage in an affiliated transaction with an
interested shareholder

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beginning three years after the date of the transaction in which the person
became an interested shareholder, if the transaction is approved by a majority
of the disinterested directors or by two-thirds of the disinterested
shareholders or if it complies with certain statutory fair price provisions.

Subject to certain exceptions, under the VSCA an "interested shareholder" is
a person who, together with affiliates and associates, beneficially owns 10% or
more of the corporation's outstanding voting securities. "Affiliated
transaction" includes: (i) any merger or share exchange with an interested
shareholder; (ii) the transfer to any interested shareholder of corporate assets
with a fair market value greater than 5% of the corporation's consolidated net
worth; (iii) the issuance to any interested shareholder of voting shares with a
fair market value greater than 5% of the fair market value of all outstanding
voting shares of the corporation; (iv) any reclassification of securities or
corporate reorganization that will have the effect of increasing by 5% or more
the percentage of the corporation's outstanding voting shares held by any
interested shareholder and (v) any plan or proposal for dissolution of the
corporation proposed by or on behalf of any interested shareholder.

Because the Company Board has approved the Merger Agreement, the Stock
Option Agreement and the Shareholders Agreements and the transactions
contemplated thereby, the provisions of the Affiliated Transactions Statute are
not applicable to the Offer, the Merger, the Stock Option and the other
transactions contemplated by the Merger Agreement, the Stock Option Agreement
and the Shareholders Agreements.

CONTROL SHARE ACQUISITION STATUTE. The Company is also subject to Article
14.1 of the VSCA (the "Control Share Acquisition Statute"). The Control Share
Acquisition Statute provides that shares of a publicly held Virginia corporation
that are acquired in a "control share acquisition" generally will have no voting
rights unless such rights are conferred on those shares by the vote of a
majority of all the outstanding shares other than interested shares. A control
share acquisition is defined, with certain exceptions, as the acquisition of the
beneficial ownership of voting shares which would cause the acquirer to have
voting power within the following ranges or to move upward from one range into
another: (i) 20% to 33 1/3%; (ii) 33 1/3% to 50%; or (iii) more than 50%, of
such votes.

The Control Share Acquisition Statute does not apply to an acquisition of
shares of a publicly held Virginia corporation (i) pursuant to a merger or share
exchange effected in compliance with the VSCA if the issuing public company is a
party to the merger or share exchange agreement, or (ii) directly from the
issuing public corporation.

Because the Control Share Acquisition Statute specifically exempts a merger
effected in compliance with the VSCA if the publicly held Virginia corporation
is a party to the merger agreement, the provisions of the Control Share
Acquisition Statute are not applicable to the Offer or the Merger. In addition,
because the Control Share Acquisition Statute specifically exempts an
acquisition of shares of an issuing public corporation directly from the issuing
public corporation, the provisions of the Control Share Acquisition Statute are
not applicable to the Stock Option.

EXCHANGE ACT. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which the
Purchaser seeks to acquire the remaining Shares not held by it. The Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger will be effected within one year following
consummation of the Offer. Rule 13e-3 requires, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the proposed transaction and the consideration offered to
minority shareholders in such transaction, be filed with the Commission and
disclosed to shareholders prior to consummation of the transaction.

GENERAL. The Purchaser or an affiliate of the Purchaser may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately

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negotiated transactions, a tender offer or exchange offer or otherwise, upon
such terms and at such prices as it shall determine, which may be more or less
than the price to be paid pursuant to the Offer. The Purchaser and its
affiliates also reserve the right to dispose of any or all Shares acquired by
them.

Upon the completion of the Offer, Parent intends to conduct a detailed
review of the Company and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider what, if any, changes would be desirable in light of the circumstances
which then exist. Such changes could include changes in the Company's business,
corporate structure, charter, by-laws, capitalization, Board of Directors,
management or dividend policy, although Parent has no current plans with respect
to any of such matters.

Except as noted in this Offer to Purchase, neither Parent nor the Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations, or sale or transfer of assets, involving the Company or any of
its subsidiaries, or any material changes in the Company's corporate structure,
business or composition of its management or personnel.

13. DIVIDENDS AND DISTRIBUTIONS

As described above, the Merger Agreement provides that, prior to the
Effective Time, the Company will not, (i) declare, set aside or pay any dividend
or other distribution payable in cash, stock or property with respect to its
capital stock, (ii) except pursuant to the Stock Option Agreement, issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
subsidiaries, other than Shares reserved for issuance on the date of the Merger
Agreement pursuant to the exercise of Company Options outstanding on the date of
the Merger Agreement, as permitted by the Merger Agreement, or (iii) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock.

14. CONDITIONS TO THE OFFER

Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and may delay the acceptance for payment of or, subject to
the restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) any
applicable waiting period under the HSR Act has not expired or terminated, (ii)
the Minimum Condition has not been satisfied, or (ii) at any time on or after
the date of the Merger Agreement and before the Expiration Date, any of the
following events shall occur or shall be determined by the Purchaser to have
occurred:

(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective subsidiaries or affiliates) of all or a material portion
of their or the Company's businesses or assets, or to compel Parent or the
Purchaser or their respective subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the purchaser of any Shares under the
Offer or pursuant to the Stock Option Agreement or the Shareholders Agreements,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, the Stock Option Agreement or the Shareholders Agreements, or seeking
to obtain from the Company, Parent or

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the Purchaser any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of the Purchaser, or rendering the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, (iv) seeking to impose material limitations on the ability of the
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's shareholders, or (v) which
otherwise is reasonably likely to have a material adverse affect on the
consolidated financial condition, businesses or results of operations of the
Company and its subsidiaries, taken as a whole;

(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through (v)
of paragraph (a) above;

(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or in the
Nasdaq National Market System, for a period in excess of two days (excluding
suspensions or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (iv) any limitation (whether or not mandatory) by
any United States or foreign governmental authority on the extension of credit
by banks or other financial institutions, (v) any decline in either the Dow
Jones Industrial Average or the Standard & Poor's Index of 500 Industrial
Companies by an amount in excess of 20% measured from the close of business on
the date of the Merger Agreement for a period of at least five consecutive
trading days; PROVIDED, HOWEVER, in the event that there shall have occurred a
decline in either the Dow Jones Industrial Average or the Standard & Poor's
Index of 500 Industrial Companies by an amount in excess of 20% measured from
the close of business on the date of the Merger Agreement and which remains in
effect on the scheduled expiration date of the Offer but which decline shall not
have existed for a period of at least five consecutive trading days, the
Purchaser shall extend the Offer for up to five business days in order to enable
the Purchaser to determine whether such decline continues for a period of at
least five consecutive trading days; PROVIDED, FURTHER, that the Purchaser shall
be required to notify the Company of its determination to terminate the Offer as
a result of the occurrence of a decline contemplated in this paragraph (c)(v)
within three days following the occurrence thereof, unless the scheduled
expiration date of the Offer (as it may be extended pursuant to the Merger
Agreement or the immediately preceding proviso) is to occur within such three
day period, in which event the Purchaser shall be required to notify the Company
of such determination by 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date, or (vi) a change in general
financial bank or capital market conditions which materially or adversely
affects the ability of financial institutions in the United States to extend
credit or syndicate loans;

(d) there shall have occurred any material adverse change (or any
development that, insofar as reasonably can be foreseen, is reasonably likely to
result in any material adverse change) in the consolidated financial condition,
businesses, results of operations or prospects of the Company and its
subsidiaries, taken as a whole;

(e) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Acquisition Proposal or the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with this Agreement;

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(f) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality shall not be true and
correct and any such representations and warranties that are not so qualified
shall not be true and correct in any material respect, in each case as of the
date of the Merger Agreement and as of the scheduled expiration of the Offer;

(g) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;

(h) the Merger Agreement shall have been terminated in accordance with its
terms;

(i) all of the Warrants shall have been exercised in full and the Shares
issuable upon the exercise thereof shall have been issued; or

(j) the Company shall have received written resignations, conditioned upon
and to be effective only upon the purchase of and payment for by Parent or any
of its subsidiaries of Shares which represent at least a majority of the
outstanding Shares (on a fully diluted basis), of that number of directors of
the Company as Parent is entitled to designate pursuant to the Merger Agreement,
such that Parent may exercise such rights; which in the reasonable judgment of
Parent or the Purchaser, in any such case, and regardless of the circumstances
(including any action or inaction by Parent or the Purchaser) giving rise to
such condition makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payment for Shares.

The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be waived by Parent or the Purchaser, in whole or in part, at any
time and from time to time in the sole discretion of Parent or the Purchaser.
The failure by Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.

15. CERTAIN LEGAL MATTERS

Except as described in this Section 15, based on a review of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, the Purchaser is not aware of any
regulatory license or permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the acquisition of Shares by the Purchaser pursuant to the Offer or, except
as set forth below, of any approval or other action by any governmental,
administrative or regulatory agency or authority, domestic or foreign, that
would be required prior to the acquisition of Shares by the Purchaser pursuant
to the Offer. Should any such approval or other action be required, the
Purchaser currently contemplates that it will be sought. While the Purchaser
does not currently intend to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that adverse consequences
might not result to the Company's business or that certain parts of the
Company's business might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to the legal matters
discussed in this Section 15. See Section 14.

STATE TAKEOVER STATUTES. A number of states have adopted "takeover"
statutes that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states.

The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether

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any of these statutes will, by their terms, apply to the Offer, and has not
complied with any such statutes. To the extent that certain provisions of these
statutes purport to apply to the Offer, the Purchaser believes that there are
reasonable bases for contesting such statutes. The Company Board has approved
the acquisition of Shares pursuant to the Offer, the Merger and the Stock Option
Agreement for purposes of the Affiliated Transactions Statute and the Contol
Share Acquisition Statute. See Section 12. If any person should seek to apply
any state takeover statute, the Purchaser would take such action as then appears
desirable, which action may include challenging the validity or applicability of
any such statute in appropriate court proceedings. If it is asserted that one or
more takeover statutes apply to the Offer, and it is not determined by an
appropriate court that such statute or statutes do not apply or are invalid as
applied to the Offer, the Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities, and
the Purchaser might be unable to purchase or pay for Shares tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer. In such case,
the Purchaser may not be obligated to accept for payment or pay for Shares
tendered. See Section 14.

UNITED STATES ANTITRUST. The Offer, the Merger and the acquisition of
Shares pursuant to the Stock Option Agreement are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission ("FTC") and certain waiting period requirements have been satisfied.
As soon as practicable after the date hereof, Parent will file a Notification
and Report Form with respect to the Offer, the Merger and the purchase of Shares
pursuant to the Stock Option Agreement. Due to the pendency of the Parent
Merger, CUC is making a concurrent filing under the HSR Act in order to comply
with the requirements thereof in the event the Parent Merger is consummated
prior to the purchase of Shares in the Offer or pursuant to the Stock Option.

Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent, unless the
Antitrust Division and the FTC terminate the waiting period prior thereto. If,
within such 15-day period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 14.

The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.

The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer, the Merger and the Stock Option Agreement. At any time
before or after the Purchaser's acquisition of Shares, the Antitrust Division or
the FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe that
the acquisition of Shares by the Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by the Purchaser on antitrust grounds

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will not be made or, if such a challenge is made, of the result. See Section 14
for certain conditions to the Offer, including conditions with respect to
litigation and certain governmental actions.

16. FEES AND EXPENSES

The Purchaser has retained Merrill Lynch and Smith Barney, Inc. to act as
Dealer Managers and to provide certain financial advisory services, MacKenzie
Partners, Inc. to act as the Information Agent and The Chase Manhattan Bank to
act as the Depositary in connection with the Offer. The Dealer Managers and the
Information Agent may contact holders of Shares by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers, commercial
banks, trust companies and other nominees to forward the Offer material to
beneficial owners. The Dealer Managers, the Information Agent and the Depositary
each will receive reasonable and customary compensation for their services, will
be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws. Parent has
agreed to pay $250,000 to each of Matthew Edelman, who identified the Company to
Parent as a possible strategic transaction candidate and who is the son of a
member of Parent's Board of Directors, and Michael Karsch, an Associate with
Chiefton Capital Management, Inc. ("Chiefton") who discussed the Company with
Matthew Edelman, in consideration for their assistance in connection with the
transaction. Chiefton is the record owner of an aggregate of 143,550 Shares, all
of which are beneficially owned by Chiefton's principals, employees or clients,
including 10,675 Shares beneficially owned by Mr. Karsch.

None of the Dealer Managers, the Information Agent or the Depositary has
been retained to make solicitations or recommendations in connection with the
Offer. Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Managers and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for reasonable expenses incurred by them in forwarding material to
their customers.

17. MISCELLANEOUS

The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in compliance
with applicable law, the Purchaser will make a good faith effort to comply with
any such law. If, after such good faith effort, the Purchaser cannot comply with
any such law, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares residing in such jurisdiction. In those
jurisdictions whose securities or blue sky laws require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Managers or one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.

No person has been authorized to give any information or make any
representation on behalf of the Purchaser or Parent not contained in this Offer
to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been authorized.

The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 8
(except that they will not be available at the regional offices of the
Commission).

HJ ACQUISITION CORP.
November 25, 1997

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SCHEDULE I

DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER

1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of Parent. Except as noted, each such person is a
citizen of the United States of America. The business address of each such
person is c/o HFS Incorporated, 6 Sylvan Way, Parsippany, New Jersey 07054.

DIRECTORS

The following individuals serve as directors of the Company as of November
25, 1997:

Henry R. Silverman, Chairman

James E. Buckman

Leonard Coleman

Christel DeHaan

Martin L. Edelman

Stephen P. Holmes

Robert D. Kunisch

Michael P. Monaco

The Rt. Hon. Brian Mulroney

Robert E. Nederlander

Robert W. Pittman

E. John Rosenwald, Jr.

Leonard Schutzman

Robert F. Smith

John D. Snodgrass

HENRY R. SILVERMAN, age 57, Director, Chairman of the Board, Chairman of the
Executive Committee and Chief Executive Officer of Parent since May 1990. From
November 1994 until February 1996, Mr. Silverman also served as Chairman of the
Board and Chief Executive Officer of Chartwell Leisure Inc. ("Chartwell"),
formerly known as National Gaming Corp. and National Lodging Corp., an
independent publicly traded company and former wholly owned subsidiary of
Parent.

JAMES E. BUCKMAN, age 53, has been Senior Executive Vice President, General
Counsel and Assistant Secretary of Parent since May 1997 and Executive Vice
President, General Counsel and Assistant Secretary of Parent since February 1992
and a Director of Parent since June 1994. Mr. Buckman also serves as a director
and officer of several subsidiaries of Parent. From November 1994 to February
1996, Mr. Buckman served as the Executive Vice President, General Counsel and
Secretary of Chartwell and until August 1996 he served as a Director of
Chartwell.

LEONARD COLEMAN, age 48, has been a Director of Parent since April 1997. Mr.
Coleman has served as President of The National League of Professional Baseball
Clubs since 1994, having previously served since 1992 as Executive Director,
Market Development of Major League Baseball. Mr. Coleman is a director of
Beneficial Corporation, Owens Corning, the Omnicom Group, New Jersey Resources
and Avis Rent A Car, Inc.

CHRISTEL DEHAAN, age 54, was elected a Director of Parent effective in November
1996. Ms. DeHaan founded Resort Condominiums International, Inc. ("RCI") in
1974, until November 1996 served as its Chairman and Chief Executive Officer and
currently serves as the Chairman of the Board of Directors of RCI. Ms. DeHaan
also currently serves as President and Chief Executive Officer of CD
Enterprises, Inc.

MARTIN L. EDELMAN, age 56, has been a Director of Parent since November 1993.
Mr. Edelman also serves as President and a Director of Chartwell. He has been a
partner with Battle Fowler, a New York City law firm, from 1972 through 1993 and
as of January 1, 1994 is Of Counsel to that firm. Battle Fowler has represented
Parent in a number of transactions during the past fiscal year. Mr. Edelman is
also a partner of Chartwell Hotels Associates, Chartwell Leisure Associates
L.P., Chartwell Leisure Associates L.P. II, and of certain of their respective
affiliates. Mr. Edelman also serves as a Director of Capital Trust and Avis Rent
A Car, Inc.

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STEPHEN P. HOLMES, age 40, has been a Vice Chairman of Parent since September
1996 and has served as a Director of Parent since June 1994. From July 1990
through September 1996 Mr. Holmes served as Executive Vice President, Treasurer
and Chief Financial Officer of Parent. Mr. Holmes also serves as a director and
officer of several subsidiaries of Parent. Mr. Holmes also serves as a Director
and, from November 1994 to February 1996 was the Executive Vice President and
Chief Financial Officer, of Chartwell. Mr. Holmes also serves as a director of
Avis Europe Ltd. and Avis Rent A Car, Inc.

ROBERT D. KUNISCH, age 55, has been a Director of Parent since April 1997. Mr.
Kunisch has served as Vice Chairman of Parent since April 1997, having
previously been Chairman of the Board (since 1989), Chief Executive Officer
(since 1988) and President (since 1984) of PHH Corporation. He is a member of
the board of directors of CSX Corporation, Mercantile Bankshares Corporation and
GenCorp, Inc.

MICHAEL P. MONACO, age 49, was appointed Vice Chairman and Chief Financial
Officer of Parent in October 1996 and was elected to the Board of Directors
effective January 27, 1997. Mr. Monaco also serves as a director and officer of
several subsidiaries of Parent. Mr. Monaco served as Executive Vice President
and Chief Financial Officer of the American Express Company from September 1990
to June 1996. Mr. Monaco also serves as a director of Avis Rent-A-Car, Inc.

THE RT. HON. BRIAN MULRONEY, P.C., L.L.D., age 58, has been a Director of Parent
since April 1997. Mr. Mulroney served as Prime Minister of Canada from 1984 to
1993 and is currently senior partner in the Montreal-based law firm, Oglivy
Renault. He is a member of several corporate boards of directors, including
Archer Daniels Midland Company Inc., Barrick Gold Corporation and Petrofina,
S.A. Mr. Mulroney is a Canadian citizen.

ROBERT E. NEDERLANDER, age 64, has been a Director of Parent since July 1995.
Mr. Nederlander has been President and Director since November 1981 of the
Nederlander Organization, Inc., owner and operator of one of the world's largest
chains of legitimate theaters. Mr. Nederlander has been Chairman of the Board of
Riddell Sports Inc. ("Ridell") since April 1988 and was the Chief Executive
Officer of such corporation from 1988 through April 1, 1993. From February until
June 1992, Mr. Nederlander was also Ridell's interim President and Chief
Operating Officer. He served as the Managing General Partner of the New York
Yankees from August 1990 until December 1991, and has been a limited partner
since 1973. Mr. Nederlander has been President since October 1985 of the
Nederlander Television and Film Productions, Inc.; Chairman of the Board since
January 1988 of Mego Financial Corp. ("Mego"); Mr. Nederlander also served as
Vice Chairman of the Board since February 1988 to early 1993 of Vacation Spa
Resorts, Inc., an affiliate of Mego; and Chairman of the Board of Allis-Chalmers
Corp. from May 1989 to 1993 and as Vice Chairman from 1993 through October 1996.
In October 1996, Mr. Nederlander became a director of News Communications, Inc.,
a publisher of community oriented free circulation newspapers.

ROBERT W. PITTMAN, page 43, has been a Director of Parent since July 1994. Since
October 1996 Mr. Pittman has been President and Chief Executive Officer of AOL
Networks, a unit of America Online, Inc. From September 1995 through October
1996, Mr. Pittman served as the Chief Executive Officer and Managing Partner of
the Parent's wholly owned subsidiary, Century 21 Real Estate Corporation. From
1990 until September 1995, Mr. Pittman served as President and Chief Executive
Officer of Time Warner Enterprises, a business development unit of Time Warner
Inc. and, from 1991 to September 1995, additionally, as Chairman and Chief
Executive Officer of Six Flags Entertainment Corporation, the parent of Six
Flags Theme Parks Inc. Mr. Pittman serves as a director of America Online, Inc.

MR. ROSENWALD, age 67, was elected a director of Parent effective in September
1996. Mr. Rosenwald has been, since 1988, Vice Chairman of The Bear Stearns
Companies, Inc. Mr. Rosenwald also serves as a Director of The Bear Stearns
Companies, Inc., Hasbro, Inc. and Frequency Electronics, Inc.

LEONARD SCHUTZMAN, age 50, has been a Director of Parent since August 1993. Mr.
Schutzman is currently Chairman of the Board and Chief Executive Officer of
Triad Capital Corporation of New York, a small business investment company, and
is a professor at the William E. Simon Graduate School of Business at the

S-2
<PAGE>
University of Rochester in Rochester, New York. Mr. Schutzman was Senior Vice
President of PepsiCo Inc. from February 1987 to April 1995. Mr. Schutzman also
serves as a Director of RCSB Finance, Inc., the bank holding company for
Rochester Community Savings Bank.

ROBERT F. SMITH, age 64, has been a Director of Parent since February 1993. From
November 1994 until August 1996, Mr. Smith also served as a Director of
Chartwell. Mr. Smith is the retired Chairman and Chief Executive Officer of
American Express Bank, Ltd. ("AEBL"). He joined AEBL's parent company, the
American Express Company in 1981 as Corporate Treasurer before moving to AEBL
and serving as Vice Chairman and Co-Chief Operating Officer and then President
prior to becoming CEO. Mr. Smith is currently a Partner in Car Component
Technologies, Inc., an automobile parts remanufacturer, located in Bedford, New
Hampshire.

JOHN D. SNODGRASS, age 40, has been a Director, President and Chief Operating
Officer of Parent since February 1992 and was appointed Vice Chairman in
September 1996. Mr. Snodgrass also serves as a Director, Chairman of the Board
and Chief Executive Officer of several subsidiaries of Parent. From November
1994 through January 1996, Mr. Snodgrass served as Vice Chairman of the Board of
Chartwell.

EXECUTIVE OFFICERS

The following table sets forth certain information regarding the executive
officers of Parent:

<TABLE>
<CAPTION>
NAME OFFICE OR POSITIONS HELD
- ---------------------------- ------------------------------------------------------------------------------------
<S> <C>
Henry R. Silverman.......... Chairman of the Board and Chief Executive Officer
John D. Snodgrass........... Vice Chairman, President, Chief Operating Officer
Stephen P. Holmes........... Vice Chairman
Michael P. Monaco........... Vice Chairman and Chief Financial Officer
James E. Buckman............ Executive Vice President, General Counsel and Assistant Secretary
John W. Chidsey............. Executive Vice President, Business Development
David P. McNicholas......... Executive Vice President and Chief Information Officer
John M. Osborne............. Executive Vice President of Franchise Sales
Douglas L. Patterson........ Executive Vice President, Call Center Operations
John J. Russell, Jr......... President, Hospitality Division
Richard A. Smith............ President, Real Estate Division
</TABLE>

For biographical information concerning Messrs. Silverman, Snodgrass,
Holmes, Monaco and Buckman see "Directors" above.

JOHN W. CHIDSEY, age 35, has been an Executive Vice President, Business
Development of Parent since May 1997. From January 1996 through May 1997, Mr.
Chidsey served as Senior Vice President, Preferred Alliance Programs for Parent.
From 1994 through 1995, Mr. Chidsey served as Chief Financial Officer,
Pepsi-Cola International, Eastern Europe and from 1992 through 1994, he served
as Chief Financial Officer of PepsiCo World Trading Co.

DAVID P. MCNICHOLAS, age 56, was appointed Executive Vice President and
Chief Information Officer of Parent in November 1996. Mr. McNicholas also has
been, since May 1994, President and, since May 1987, a Director of WizCom
International, Ltd., a subsidiary of Parent. Prior to November 1996, Mr.
McNicholas served as Corporate Vice President of Information Systems of Avis,
Inc. Mr. McNicholas currently serves as a Director of Avis Europe Ltd.

JOHN M.OSBORNE, age 46, has been Executive Vice President of Franchise Sales
for Parent's Hospitality Division since July 1993. In August 1996, Mr. Osborne
also assumed responsibility for Parent's Franchise Sales for the Real Estate
Division. Mr. Osborne was General Manager for the Central Region of Wang
Laboratories Inc. from July 1991 to June 1993. Prior to such time he spent
approximately 12 years at Unisys Corporation in various senior management
positions.

S-3
<PAGE>
DOUGLAS L. PATTERSON, age 41, has been an Executive Vice President, Call
Center Operations of Parent since June 1997. From August 1992 through June 1997,
Mr. Patterson served as Senior Vice President, Reservations of Parent.

JOHN J. RUSSELL, JR., age 50, has been President of the Hospitality Division
of Parent since April 1996. Prior to such time, Mr. Russell served as Executive
Vice President of Franchise Sales for the Real Estate Division of Parent from
October 1995 through March 1996 and President of Days Inns of America, Inc. from
August 1992 to October 1995.

MR. SMITH, age 43, has been President of Parent's Real Estate Division since
October 1996. Prior to such time, Mr. Smith served as Executive Vice President
of Operations of Parent since February 1992.

2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of the Purchaser. Each such person is a citizen
of the United States of America and the business address of each such person is
c/o HFS Incorporated, 6 Sylvan Way, Parsippany, NJ 07059.

DIRECTORS

<TABLE>
<S> <C>
Michael P. Monaco
James E. Buckman
Stephen P. Holmes
</TABLE>

EXECUTIVE OFFICERS

<TABLE>
<S> <C>
Michael P. Monaco............................ President
James E. Buckman............................. Vice President and Secretary
Stephen P. Holmes............................ Vice President
</TABLE>

For biographical information concerning Messrs. Monaco, Buckman and Holmes
see Section 1 above.

S-4
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or such stockholder's broker, dealer, commercial bank or other
nominee to the Depositary at one of its addresses set forth below.

THE DEPOSITARY FOR THE OFFER IS:

CHASEMELLON SHAREHOLDER SERVICES, L.L.C.

<TABLE>
<S> <C> <C>
BY HAND: BY MAIL: BY OVERNIGHT CARRIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
120 Broadway-13th Floor Post Office Box 3305 85 Challenger Road
New York, NY 10271 South Hackensack, NJ 07606 Mail Drop Reorg. Dept.
Attn: Reorganization Attn: Reorganization Ridgefield Park, NJ 07660
Department Department

</TABLE>

FACSIMILE FOR ELIGIBLE INSTITUTIONS:

201-329-8936

TO CONFIRM FAX ONLY:

201-296-4860

Any questions or requests for assistance may be directed to the Dealer
Managers or the Information Agent at their respective telephone numbers and
locations listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. You may
also contact your broker, dealer, commercial bank or trust company or nominee
for assistance concerning the Offer.

THE INFORMATION AGENT FOR THE OFFER IS:

LOGO

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL-FREE (800) 322-2885

THE DEALER MANAGERS FOR THE OFFER ARE:

<TABLE>
<S> <C>
MERRILL LYNCH & CO. SMITH BARNEY INC.

World Financial Center 388 Greenwich Street
North Tower New York, New York 10013
New York, New York (212) 816-7970 (Call
10281-1305 Collect)
(212) 449-8971 (Call
Collect)
</TABLE>

November 25, 1997

<PAGE>
LETTER OF TRANSMITTAL

TO TENDER SHARES OF COMMON STOCK
OF
JACKSON HEWITT INC.
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 25, 1997
BY

HJ ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HFS INCORPORATED

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MONDAY, JANUARY 5, 1998, UNLESS THE OFFER IS EXTENDED

THE DEPOSITARY FOR THE OFFER IS:

ChaseMellon Shareholder Services, L.L.C.

<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3305 85 Challenger Road 120 Broadway - 13th Floor
South Hackensack, NJ 07606 Mail Drop Reorg. Dept. New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
BY FACSIMILE TRANSMISSION
(201) 329-8936
INFORMATION AND CONFIRM
BY TELEPHONE
(201) 296-4860
</TABLE>

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry
transfer procedure described in Section 3 of the Offer to Purchase (as defined
below). Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary.

Shareholders whose certificates evidencing Shares ("Stock Certificates") are
not immediately available or who cannot deliver their Stock Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section l of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.

/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE
THE FOLLOWING:

Name(s) of Tendering
Institution:
- --------------------------------------------------------------------------------

Check Box of Applicable Book-Entry Transfer Facility: (CHECK ONE)
/ / DTC / / PDTC

Account Number
- ------------------------- Transaction Code Number
- -------------------------
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:

Name(s) of Registered
Holder(s): _____________________________________________________________________

Window Ticket No. (if any): ____________________________________________________

Date of Execution of Notice of Guaranteed Delivery: ____________________________

Name of Institution which guaranteed delivery: _________________________________

If Delivered by Book-Entry Transfer, Check Box of Book-Entry Transfer Facility:
(check one) / / DTC / / PDTC

Account Number ____________________ Transaction Code Number____________________

<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
STOCK CERTIFICATE(S) AND SHARE(S)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) (ATTACH ADDITIONAL LIST, IF
APPEAR(S) ON STOCK CERTIFICATE(S) NECESSARY)
TOTAL
NUMBER
OF SHARES
EVIDENCED
STOCK BY NUMBER OF
CERTIFICATE(S) STOCK SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
TOTAL SHARES
</TABLE>

* Need not be completed by shareholders delivering Shares by book-entry
transfer.

** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Stock Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.

<TABLE>
<S> <C> <C> <C>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
</TABLE>
<PAGE>
Ladies and Gentlemen:

The undersigned hereby tenders to HJ Acquisition Corp., a Virginia
corporation (the "Purchaser") and a wholly owned subsidiary of HFS Incorporated,
a Delaware corporation, the above-described shares of common stock, par value
$.02 per share (the "Shares"), of Jackson Hewitt Inc., a Virginia corporation
(the "Company"), pursuant to the Purchaser's offer to purchase all outstanding
Shares, at $68.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated November 25,
1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"). The undersigned understands that the Purchaser
reserves the right to transfer or assign, in whole or from time to time in part,
to one or more of its affiliates, the right to purchase all or any portion of
the Shares tendered pursuant to the Offer.

Parent and CUC International ("CUC") have entered into an Agreement and Plan
of Merger, dated as of May 27, 1997, pursuant to which, among other things,
Parent will be merged with and into CUC, with CUC continuing as the surviving
corporation in the merger (the "Parent Merger") and changing its name to Cendant
Corporation ("Cendant"). Following the Parent Merger, Cendant, as successor to
Parent, will succeed to Parent's rights and obligations under the Merger
Agreement and the Offer and the Purchaser will become a wholly owned subsidiary
of Cendant. All references to Parent in the Offer to Purchase and in this Letter
of Transmittal shall be deemed to include Cendant following the Parent Merger.

Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after November 25, 1997,
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Stock Certificates evidencing such Shares and all Distributions,
or transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.

The undersigned hereby irrevocably appoints James E. Buckman and Michael P.
Monaco, and each of them, as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his substitute shall, in his sole discretion, deem proper and
otherwise act (by written consent or otherwise) with respect to all the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time of such vote or other action and all Shares and other securities issued
in Distributions in respect of such Shares, which the undersigned is entitled to
vote at any meeting of shareholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby, is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by the Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such Shares),
and no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon the Purchaser's acceptance of such
Shares for payment, the Purchaser must be able to exercise full voting and other
rights with respect to such Shares, including, without limitation, voting at any
meeting of the Company's shareholders then scheduled.

The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price the amount or value of such
Distribution as determined by the Purchaser in its sole discretion.
<PAGE>
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer.

Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Stock Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Stock Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Stock Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Stock Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that the Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if the Purchaser does not purchase any of the Shares tendered hereby.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)

To be completed ONLY if the check for the purchase price of Shares purchased
or Stock Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned, or if Shares tendered
hereby and delivered by book-entry transfer which are not purchased are to be
returned by credit to an account at one of the Book-Entry Transfer Facilities
other than that designated above.
Issue / / check / / Stock Certificate(s) to:
Name ___________________________________________________________________________
(Print)
Address ________________________________________________________________________
(Include Zip Code)

(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

/ / Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:

Check appropriate box: / / DTC / / PDTC
Account Number _________________________________________________________________

SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)

To be completed ONLY if the check for the purchase price of Shares purchased
or Stock Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."

Mail / / check / / Stock Certificate(s) to: Name ______________________________
(Print)

Address ________________________________________________________________________

- ---------------------------------------
(Include Zip Code)
<PAGE>
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
SIGNATURE(S) OF HOLDER(S)
Dated: ,199

(Must be signed by registered holder(s) exactly as name(s) appear(s) on Stock
Certificates or on a security position listing or by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5.)

Name(s):
- --------------------------------------------------------------------------------

(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------

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

Address:
- --------------------------------------------------------------------------------

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

(INCLUDE ZIP CODE)

Area Code and Telephone No.:
- ------------------------------------------------------------------------

Taxpayer Identification or Social Security No.:
- -----------------------------------------------------------

(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)

FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.

Authorized Signature:
- --------------------------------------------------------------------------------

Name:
- --------------------------------------------------------------------------------

(PLEASE PRINT)

Name of Firm:
- --------------------------------------------------------------------------------

Address:
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)

Area Code and Telephone No.:
- ------------------------------------------------------------------------

Dated:
- --------------------------------------------------------------------------,199--
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
(each an "Eligible Institution"). No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof, or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.

2. DELIVERY OF LETTER OF TRANSMITTAL AND STOCK CERTIFICATES. This Letter of
Transmittal is to be used if either Stock Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 3 of the Offer to Purchase. Stock Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message, as defined below) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the reverse hereof prior to the Expiration Date (as defined in Section
l of the Offer to Purchase). If Stock Certificates are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery. Shareholders whose Stock
Certificates are not immediately available, who cannot deliver their Stock
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Shares pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, must be
received by the Depositary prior to the Expiration Date; and (iii) the Stock
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three Nasdaq National Market System trading
days after the date of execution of such Notice of Guaranteed Delivery, all as
described in Section 3 of the Offer to Purchase. The term "Agent's Message"
means a message, transmitted by a Book-Entry Transfer Facility to, and received
by, the Depositary and forming a part of the Book-Entry Confirmation, which
states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of this Letter of Transmittal and that the Purchaser may enforce
such agreement against the participant.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, STOCK CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.

3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Stock Certificate numbers, the number of
Shares evidenced by such Stock Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.

4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Stock Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Stock Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Stock Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Stock Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.

5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Stock Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
<PAGE>
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.

If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.

If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Stock Certificates or separate stock
powers are required, unless payment is to be made to, or Stock Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case the Stock
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Stock Certificate(s).
Signatures on such Stock Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Stock Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Stock Certificate(s). Signatures on such
Stock Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.

If this Letter of Transmittal or any Stock Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.

6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Stock
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to the Purchaser of the payment of such taxes, or
exemption therefrom, is submitted. Except as provided in this Instruction 6, it
will not be necessary for transfer tax stamps to be affixed to the Stock
Certificates evidencing the Shares tendered hereby.

7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Stock Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Stock Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such shareholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.

8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Dealer Managers or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Dealer Managers
or the Information Agent or from brokers, dealers, commercial banks or trust
companies.

9. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such shareholder. If the tendering shareholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, sign and date the Substitute
Form W-9 and complete the Certificate of Awaiting Taxpayer Identification Number
below. If "Applied For" is written in Part I and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price to such shareholder until a TIN is provided to the
Depositary.
<PAGE>
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the tendering
shareholder should promptly notify the Depositary. The tendering shareholder
will then be instructed as to the steps that must be taken in order to replace
the certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
STOCK CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN THE OFFER TO PURCHASE).
<PAGE>
IMPORTANT TAX INFORMATION

Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.

Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.

If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.

PURPOSE OF SUBSTITUTE FORM W-9

To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.

WHAT NUMBER TO GIVE THE DEPOSITARY

The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, sign and date the Substitute Form W-9 and complete the
Certificate of Awaiting Taxpayer Identification Number below. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% of all payments of the purchase price to
such shareholder until a TIN is provided to the Depositary.
<PAGE>

<TABLE>
<CAPTION>
PAYER'S NAME: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
<S> <C> <C>
SUBSTITUTE PART I--Taxpayer Identification Number-- ------------------------
FORM W-9 For all accounts, enter taxpayer identification Social Security Number
DEPARTMENT OF THE TREASURY number in the box at right. (For most individuals, OR ---------------------
INTERNAL REVENUE SERVICE this is your social security number. If you do not Employer Identification Number
have a number, see Obtaining a Number in the (If awaiting TIN write
enclosed Guidelines.) Certify by signing and "Applied For")
dating below. Note: If the account is in more than
one name, see the chart in the enclosed Guidelines
to determine which number to give the payer
Payer's Request for Taxpayer PART II--For Payees Exempt From Backup Withholding, see the enclosed Guidelines and
Identification Number (TIN) complete as instructed therein.
CERTIFICATION--Under Penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or a Taxpayer Identification Number has
not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer Identification
Number to the appropriate Internal Revenue Service ("IRS") or Social Security Administration Office or (b) I intend
to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer
Identification Number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld
until I provide a number), and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have not been
notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified
by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)

SIGNATURE DATE
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS
NOT BEEN ISSUED TO ME, AND EITHER (1) I HAVE MAILED OR DELIVERED AN APPLICATION
TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE
SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (2) I INTEND TO MAIL
OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT
PROVIDE A TAXPAYER IDENTIFICATION NUMBER BY THE TIME OF PAYMENT, 31% OF ALL
REPORTABLE PAYMENTS MADE TO ME WILL BE WITHHELD, BUT THAT SUCH AMOUNTS WILL BE
REFUNDED TO ME IF I THEN PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN SIXTY
(60) DAYS.
SIGNATURE ________________________________ DATE _______________

Any questions or requests for assistance may be directed to the Dealer
Managers or the Information Agent at their respective telephone numbers and
locations listed below. Additional copies of the Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. You may
also contact your broker, dealer, commercial bank or trust company or nominee
for assistance concerning the Offer.

THE INFORMATION AGENT FOR THE OFFER IS:

[LOGO]

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL-FREE (800) 322-2885

THE DEALER MANAGERS FOR THE OFFER ARE:

<TABLE>
<S> <C>
MERRILL LYNCH & CO. SMITH BARNEY INC.

World Financial Center 388 Greenwich Street
North Tower New York, New York 10013
New York, New York 10281-1305 (212) 816-7970 (Call Collect)
(212) 449-8971 (Call Collect)
</TABLE>

November 25, 1997

<PAGE>
NOTICE OF GUARANTEED DELIVERY

FOR

TENDER OF SHARES OF COMMON STOCK

JACKSON HEWITT INC.

(NOT TO BE USED FOR SIGNATURE GUARANTEES)

This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Stock
Certificates") evidencing shares of common stock, par value $.02 per share (the
"Shares"), of Jackson Hewitt Inc., a Virginia corporation (the "Company"), are
not immediately available, (ii) if Stock Certificates and all other required
documents cannot be delivered to ChaseMellon Shareholder Services, L.L.C., as
Depositary (the "Depositary"), prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase (as defined below)) or (iii) if the procedure
for delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by
telegram or facsimile transmission to the Depositary. See Section 3 of the Offer
to Purchase.

THE DEPOSITARY FOR THE OFFER IS:

ChaseMellon Shareholder Services, L.L.C.

<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3305 85 Challenger Road 120 Broadway - 13th Floor
South Hackensack, NJ 07606 Mail Drop Reorg. Dept. New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reorganization
Department BY FACSIMILE TRANSMISSION Department
(201) 329-8936
INFORMATION AND CONFIRM
BY TELEPHONE
(201) 296-4860
</TABLE>

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:

The undersigned hereby tenders to HJ Acquisition Corp., a Virginia
corporation and a wholly owned subsidiary of HFS Incorporated, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated November 25, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedures described in Section 3 of the Offer to Purchase.

Number of Shares:
- ---------------------------------------

Certificate Nos. (if available)
- ------------------------------

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

Check ONE box if Shares will be tendered by book-entry transfer:

/ / The Depository Trust Company

Name(s) of Record Holder(s):

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

(Please Print)

Address(es):
- --------------------------------------------

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

(Zip Code)

/ / Philadelphia Depository Trust Company
Account Number:
- ---------------------------------------

Dated:
- -------------------------------------------------

Area Code and Tel. No:
- ----------------------------------

Signature(s):
- --------------------------------------------

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

GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a participant in the Security Transfer Agents Medallion
Program, hereby guarantees to deliver to the Depositary either the certificates
representing the Shares tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase) of a
transfer of such Shares, in any such case together with a properly completed and
duly executed Letter of Transmittal, or a manually signed facsimile thereof,
with any required signature guarantees, or an Agent's Message (as defined in
"Acceptance for Payment and Payment for Shares" of the Offer to Purchase), and
any other documents required by the Letter of Transmittal within three Nasdaq
National Market System trading days after the date of execution of this Notice
of Guaranteed Delivery.

The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Stock
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in financial loss to such Eligible Institution.

Name of Firm:
- ------------------------------------------

Address:
- -----------------------------------------------

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

(Zip Code)

Area Code and Tel. No.:
- ---------------------------------

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

(Authorized Signature)

Title:
- --------------------------------------------------

Date:
- --------------------------------------------------

NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.

STOCK CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JACKSON HEWITT INC.
AT
$68.00 NET PER SHARE
BY
HJ ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HFS INCORPORATED

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MONDAY, JANUARY 5, 1998, UNLESS THE OFFER IS EXTENDED.

To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:

We have been appointed by HJ Acquisition Corp., a Virginia corporation (the
"Purchaser") and a wholly owned subsidiary of HFS Incorporated, a Delaware
corporation ("Parent"), to act as Dealer Managers in connection with Purchaser's
offer to purchase all outstanding shares of common stock, par value $.02 per
share (the "Shares"), of Jackson Hewitt Inc., a Virginia corporation (the
"Company"), at a price of $68.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase, dated November 25, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer") enclosed herewith. Please furnish copies of the
enclosed materials to those of your clients for whose accounts you hold Shares
registered in your name or in the name of your nominee.

The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes more than two-thirds of the Shares outstanding on a
fully diluted basis. The Offer is also subject to other terms and conditions
contained in the Offer to Purchase.

Enclosed for your information and use are copies of the following documents:

1. Offer to Purchase;

2. Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares;

3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or cannot
be delivered to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") by
the expiration of the Offer or if the procedure for book-entry transfer cannot
be completed by the expiration of the Offer;

4. A letter to shareholders of the Company from Keith E. Alessi, Chairman of
the Board, President and Chief Executive Officer of the Company, together with a
Solicitation/ Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;

5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;

6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and

7. Return envelope addressed to the Depositary.
<PAGE>
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MONDAY, JANUARY 5, 1998, UNLESS THE OFFER IS EXTENDED.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 19, 1997 (the "Merger Agreement"), by and among the Company,
Parent and the Purchaser. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of the conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"). At the effective time of the
Merger, each outstanding Share (other than Shares held in the treasury of the
Company, owned by Parent, the Purchaser or any other wholly owned subsidiary of
Parent) will be cancelled and converted into the right to receive the per Share
price paid in the Offer, without interest.

In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares or a confirmation of a book-entry transfer of such Shares
into the Depositary's account at one of the Book-Entry Transfer Facilities (as
defined in the Offer to Purchase), a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, or an Agent's Message (as defined
in the Offer to Purchase), and any other required documents in accordance with
the instructions contained in the Letter of Transmittal.

If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.

The Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Managers and the Information Agent as
described in the Offer) in connection with the solicitation of tenders of Shares
pursuant to the Offer. However, Purchaser will reimburse you for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Purchaser will pay or cause to be paid any stock
transfer taxes payable with respect to the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Offer and requests for
additional copies of the enclosed material should be addressed to the Dealer
Managers or the Information Agent at their respective addresses and telephone
numbers set forth on the back cover page of the Offer to Purchase.

Very truly yours,

MERRILL LYNCH, PIERCE, FENNER & SMITH SMITH BARNEY INC.
INCORPORATED

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE DEALER
MANAGERS, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.

<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JACKSON HEWITT INC.
AT
$68.00 NET PER SHARE
BY
HJ ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HFS INCORPORATED

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON MONDAY, JANUARY 5, 1998, UNLESS THE OFFER IS EXTENDED.

To Our Clients:

Enclosed for your consideration is an Offer to Purchase, dated November 25,
1997 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") in
connection with the offer by HJ Acquisition Corp., a Virginia corporation (the
"Purchaser") and a wholly owned subsidiary of HFS Incorporated, a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock, par
value $.02 per share (the "Shares"), of Jackson Hewitt Inc., a Virginia
corporation (the "Company"), at a price of $68.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer.
Also enclosed is the Letter to Shareholders of the Company from the Chairman,
President and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.

WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.

We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.

Your attention is invited to the following:

1. The tender price is $68.00 per Share, net to the seller in cash.

2. The Offer is being made for all outstanding Shares.

3. The Board of Directors of the Company has unanimously approved the Offer
and the Merger (as defined in the Offer to Purchase) and has determined that the
terms of the Offer and the Merger are fair to and in the best interests of the
shareholders of the Company, and recommends that shareholders accept the Offer
and tender their Shares pursuant to the Offer.

4. The Offer and withdrawal rights will expire at 5:00 p.m. New York City
time, on Monday, January 5, 1998, unless the Offer is extended.

5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes more than two-thirds of the Shares outstanding on a
fully diluted basis.

6. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by the
Purchaser pursuant to the Offer.

If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered
<PAGE>
unless otherwise specified in your instructions. YOUR INSTRUCTIONS SHOULD BE
FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.

The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. The Offer is not being
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by the Dealer Managers, or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.

INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF
JACKSON HEWITT INC. BY HJ ACQUISITION CORP.

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated November 25, 1997, and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), in connection with the offer by HJ Acquisition Corp., a Virginia
corporation and a wholly owned subsidiary of HFS Incorporated, a Delaware
corporation, to purchase all outstanding shares of common stock, par value $.02
per share (the "Shares"), of Jackson Hewitt Inc., a Virginia corporation.

This will instruct you to instruct your nominee to tender the number of
Shares indicated below (or, if no number is indicated below, all Shares) that
are held for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.

<TABLE>
<S> <C>
SIGN HERE
Number of Shares -------------------------------------------
to be Tendered: -------------------------------------------
------------Shares* Signature(s)
Dated: , 199 -------------------------------------------
-------------------------------------------
Please type or print name(s)
-------------------------------------------
-------------------------------------------
Please type or print address
-------------------------------------------
Area Code and Telephone Number
-------------------------------------------
Taxpayer Identification or
Social Security Number
</TABLE>

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

* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.

<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payor.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4. a. The usual The
revocable savings grantor-trustee(1)
trust (grantor is
also trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
state law.
5. Sole proprietorship The owner(3)
6. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(4)
- -----------------------------------------------------

<CAPTION>
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -----------------------------------------------------
7. Corporate account The corporation
8. Religious, The organization
charitable, or
educational
organization account
9. Partnership account The partnership
10. Association, club, The organization
or other tax-exempt
organization
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>

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

(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.

(2) Circle the minor's name and furnish the minor's social security number.

(3) Show your individual name. You may also enter your business or "doing
business as" name. You may use either your social security number or your
employer identification number.

(4) List first and circle the name of the legal trust, estate, or pension trust.

NOTE: If no name is circled when there is more than one name listed, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2

Note: Section references are to the Internal Revenue Code unless otherwise
noted.

OBTAINING A NUMBER

If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.

PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING

The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisors Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation
(other than certain hospitals described in Regulations section 1.6041-3(c)) that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (1) through (5) are exempt from backup
withholding for barter exchange transactions and patronage dividends.

(1) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7), if the account satisfies the
requirements of section 401(f)(2).

(2) The United States or any of its agencies or instrumentalities.

(3) A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.

(4) A foreign government or any of its political subdivisions, agencies or
instrumentalities.

(5) An international organization or any of its agencies or instrumentalities.

(6) A corporation.

(7) A foreign central bank of issue.

(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.

(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.

(10) A real estate investment trust.

(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940

(12) A common trust fund operated by a bank under section 584(a).

(13) A financial institution.

(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries, Inc.,
Nominee List.

(15) A trust exempt from tax under section 664 or described in section 4947.

Payments of dividends and patronage dividends that generally are exempt from
backup withholding include the following:

- - Payments to nonresident aliens subject to withholding under section 1441.

- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.

- - Payments of patronage dividends not paid in money.

- - Payments made by certain foreign organizations.

- - Section 404(k) payments made by an ESOP.

Payments of interest that generally are exempt from backup withholding include
the following:

- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payor.

- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).

- - Payments described in section 6049(b)(5) to non-resident aliens.

- - Payments on tax-free covenant bonds under section 1451.

- - Payments made by certain foreign organizations.

- - Payments of mortgage interest to you.

Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYOR. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYOR A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).

Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations promulgated thereunder.

PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must generally withhold 31% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a taxpayer
identification number to a payor. Certain penalties may also apply.

PENALTIES

(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a requester, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.

(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.

(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.

<PAGE>

EXHIBIT 99.(a)(7)

This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
November 25, 1997 and the related Letter of Transmittal and is being made to
all holders of Shares. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Purchaser by
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Smith Barney Inc. or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.

NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JACKSON HEWITT INC.
AT
$68.00 NET PER SHARE
BY
HJ ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HFS INCORPORATED

HJ Acquisition Corp., a Virginia corporation (the "Purchaser") and a
wholly owned subsidiary of HFS Incorporated, a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of common stock,
par value $.02 per share (the "Shares"), of Jackson Hewitt Inc., a Virginia
corporation (the "Company"), at a price of $68.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated November 25, 1997 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer"). Following the Offer, the
Purchaser intends to effect the Merger described below.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M. NEW YORK
CITY TIME, ON MONDAY, JANUARY 5, 1998, UNLESS THE OFFER IS EXTENDED.

The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes more than two-thirds of the Shares outstanding on a
fully diluted basis, without giving effect to any Shares issuable pursuant to
the Stock Option Agreement (as defined below). The Offer is also subject to
other terms and conditions.

The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of November 19, 1997 (the "Merger Agreement"), by and among Parent,
the Purchaser and the Company. The Merger Agreement provides that, among
other things, after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of Virginia law, the Purchaser will
be merged with and into the Company (the "Merger"). Following consummation of
the Merger, the Company will continue as the surviving corporation and will
be a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each Share issued and outstanding immediately prior
to the Effective Time (other than Shares held in the treasury of the Company
or Shares owned by the Purchaser, Parent or any other wholly owned subsidiary
of Parent) will be cancelled and con verted into the right to receive $68.00
in cash, without interest.

In connection with the Merger Agreement, Parent, the Purchaser and the
Company entered into a Stock Option Agreement, dated as of November 19, 1997
(the "Stock Option Agreement"), pursuant to which, among other things, the
Company granted the Purchaser an irrevocable option (the "Stock Option") to
purchase up to 1,326,331 Shares (which represent approximately 19.9% of the
currently outstanding Shares or 15.7% of the outstanding Shares giving effect
to the exercise of the Stock Option), at a price of $68.00 per Share payable
in cash, upon the occurrence of certain conditions specified therein.

In addition, in connection with the Merger Agreement, Parent and the
Purchaser have entered into Shareholders Agreements, each dated as of
November 19, 1997 (collectively, the "Shareholders Agreements"), with each of
the Company's directors and executive officers and with a shareholder of the
Company (collectively, the "Selling Shareholders") who beneficially own an
aggregate of 501,519 Shares directly and hold stock options to purchase an
aggregate 316,074 Shares (which shares represent approximately 7% and 4%,
respectively, of the Company's outstanding Shares on a fully diluted basis).
Pursuant to the Shareholders Agreements, among other things, the Selling
Shareholders have agreed to tender their Shares in the Offer (including any
Shares which are issued upon exercise of their stock options prior to the
expiration of the Offer).

THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER

<PAGE>

ARE FAIR TO AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY AND
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.

For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the
Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering shareholders whose
Shares have been accepted for payment. Under no circumstances will interest
on the purchase price for Shares be paid, regard less of any delay in making
such payment. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the certificates evidencing such Shares or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in the Offer
to Purchase) pursuant to the procedures set forth in Section 3 of the Offer
to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guar
antees, or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry transfer, and (iii) any other documents required
under the Letter of Transmittal.

Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 5:00 p.m., New York City
time, on Monday, January 5, 1998 (or the latest time and date at which the
Offer, if extended by the Purchaser, shall expire) and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after January 23, 1998. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover page of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If share certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share certificates, the serial numbers shown on
such Share certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares have
been tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and validity
(including the time of receipt of any notice of withdrawal) will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding.

The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.

The Company has provided the Purchaser with the Company's shareholder
list and security position listings for the purpose of disseminating the
Offer to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's shareholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nomi nees, appear on the shareholder list or, if applicable,
who are listed as participants in a clearing agency's security posi tion
listing for subsequent transmittal to beneficial owners of Shares.

THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respec tive addresses and telephone
numbers as set forth below. Additional copies of the Offer to Purchase and
the related Letter of Transmittal and other tender offer materials may be
obtained from the Information Agent as set forth below. Such copies will be
furnished promptly at the Purchaser's expense. No fees or commissions will be
paid to brokers, dealers or other persons (other than the Dealer Managers and
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:

[MacKenzie Logo]

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL-FREE (800) 322-2885

The Dealer Managers for the Offer are:

MERRILL LYNCH & CO. SMITH BARNEY INC.
World Financial Center 388 Greenwich Street
North Tower New York, New York 10013
New York, New York 10281-1305 (212) 816-7970 (Call Collect)
(212) 449-8971 (Call Collect)

November 25, 1997

<PAGE>

Exhibit (a)(8)

FOR IMMEDIATE RELEASE Contact: HFS Incorporated
Elliot Bloom
973-496-8414
Jackson Hewitt Inc.
Keith E. Alessi
757-473-3300

HFS INCORPORATED AGREES TO ACQUIRE JACKSON HEWITT INC.
FOR $68 PER SHARE, TOTAL PURCHASE PRICE OF $480 MILLION

EXTENDS FRANCHISE SERVICE REACH INTO TAX PREPARATION SERVICES

PARSIPPANY, NJ, NOVEMBER 19, 1997 - HFS Incorporated (NYSE: HFS) announced
today it has executed a definitive agreement to acquire Jackson Hewitt Inc.
(NASDAQ: JTAX), for approximately $480 million in cash, or $68 per common share
of JTAX. HFS will shortly commence a tender offer for all outstanding shares of
JTAX which is expected to be completed on January 5, 1998. Following the tender
offer, HFS will purchase any JTAX shares not tendered in a merger in which each
JTAX common stock will receive $68 in cash. The JTAX Board of Directors and its
management have unanimously agreed to support the proposed transaction. This
transaction is subject to customary conditions, including regulatory approval.

In conjunction with this anticipated transaction, the JTAX Board of
Directors has rescinded the 2-1 stock split that was to have been effective
December 3, 1997.

Formed in 1982 and based in Virginia Beach, VA, JTAX is the second largest
tax preparation service system in the United States with locations in 41 states.
It expects to have approximately 1,900 offices, 92 percent franchised and the
remainder company owned, open and operating for the current tax preparation
season. For the fiscal year ended April 30, 1997, JTAX reported revenues of
$31.4 million and income from operations of $11.8 million compared to revenues
and income from operations for fiscal 1996 of $25.0 million and $5.3 million,
respectively. The JTAX system prepared approximately 875,000 tax returns in its
fiscal 1997 year, a 21 percent increase from the 722,000 returns prepared in
fiscal 1996.

<PAGE>

Jackson Hewitt's franchised and company owned offices offer consumers tax
preparation services as well as bank products such as refund anticipation loans.
The company's tax preparation product is based on its proprietary software,
"Hewtax", which enables JTAX franchises to provide consistent, high quality tax
preparation services at competitive prices. There are over 114 million tax
returns filed annually in the United States with approximately 50 percent
prepared by a paid service. The JTAX system currently has a 1 percent share of
total tax returns. H&R Block is the country's largest tax preparation service
with a 12 percent market share.

Keith Alessi, chairman, president and chief executive officer of JTAX,
said, "We have built a very profitable and simple business model based on
meeting the tax preparation needs of middle income taxpayers. HFS is the
world's largest franchisor; its core competency is acquiring franchise
operations and dramatically growing the franchise network and its profitability.
We believe HFS can accelerate our unit and earnings growth."

Keith Alessi will manage this newest HFS business unit, reporting to
Michael P. Monaco, HFS Vice Chairman and Chief Financial Officer. In addition,
it is expected that John D. Snodgrass, HFS Vice Chairman, will serve as chairman
of Jackson Hewitt and assist in the ongoing management and franchise growth of
JTAX.

Mr. Monaco stated, "JTAX is a well run company with excellent growth
prospects and is a terrific strategic fit with our company. We will leverage
our franchising and marketing skills to further accelerate unit growth, which
should translate into meaningful earnings growth for Jackson Hewitt. In
conjunction with our pending merger with CUC International (NYSE: CU), we
believe there are numerous opportunities to create further revenue streams
through cross marketing tax preparation services to our millions of annual
consumer contacts, as well as CUC services to the JTAX consumer base."

Monaco concluded, "This acquisition further extends our vision of offering
financial services to consumers, in order to capture a greater percentage of the
consumer spending dollar."

<PAGE>

Jackson Hewitt Inc. franchises a system of offices that specialize in
computerized preparation of federal and state individual income tax returns. At
the customer's request, the company will file the return electronically and also
process refund anticipation loans.

HFS Incorporated is a global provider of real estate and travel services.
The Company is the world's largest franchisor of residential real estate
brokerage offices, provides mortgage services to consumers and is the global
leader in corporate employee relocation. Within the travel sector of the
economy, HFS is the largest franchisor of hotels and rental car agencies, a
leading provider of vacation timeshare exchanges and is the second largest
vehicle management company worldwide. In May, the Company announced that it
would merge with CUC International (NYSE: CU). The merger is expected to close
in December.

<PAGE>

Exhibit (a)(9)

For Immediate Release

Contact: HFS Incorporated
Elliot Bloom
973-496-8414

HFS INCORPORATED SUBSIDIARY BEGINS CASH TENDER FOR ALL OUTSTANDING SHARES OF
JACKSON HEWITT INC. COMMON STOCK

PARSIPPANY, NJ--November 25, 1997--HFS Incorporated (NYSE: HFS) announced
today that HJ Acquisition Corp., its wholly owned subsidiary, has commenced
its cash tender offer for all outstanding shares of common stock of Jackson
Hewitt Inc. (NASDAQ: JTAX) at $68.00 per share.

The offer is being made pursuant to the previously announced merger
agreement between HFS Incorporated and Jackson Hewitt Inc. The offer is
conditioned upon, among other things, the tender of more than two-thirds of the
shares outstanding on a fully diluted basis. The offer and withdrawal right are
scheduled to expire at 5:00 P.M. on Monday, January 5, 1998. Merrill Lynch &
Co. and Smith Barney Inc. are acting as the Dealer Managers in connection with
the offer and MacKenzie Partners Inc. is acting as the Information Agent in
connection with the offer.

Jackson Hewitt Inc. franchises a system of offices that specialize in
computerized preparation of federal and state individual income tax returns.
At the customers's request, the company will file the return electronically
and also process refund anticipation loans.

HFS Incorporated is a global provider of real estate and travel services.
HFS is the world's largest franchisor of residential real estate
brokerage offices, provides mortgage services to consumers and is the global
leader in corporate employee relocation. Within the travel sector of the
economy, HFS is the largest franchisor of hotels and rental car agencies and a
leading provider of vacation timeshare exchanges. HFS is also the second largest
vehicle management company worldwide. Recently, the Company announced it will
merge with CUC International Inc. to form the world's leading consumer and
business services company. The transaction is expected to close in the fall
of 1997.

<PAGE>

EXHIBIT (b)(2)(i)

FIRST AMENDMENT, dated as of January 28, 1997, to the FIVE YEAR
COMPETITIVE ADVANCE AND REVOLVING CREDIT AGREEMENT and the 364-DAY COMPETITIVE
ADVANCE AND REVOLVING CREDIT AGREEMENT, each of which is dated as of October 2,
1996 (as each of the same may be amended, supplemented or otherwise modified
from time to time, the "Credit Agreements"), by and among, HFS INCORPORATED, a
Delaware corporation (the "Borrower"), the financial institutions parties
thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as agent for the Lenders (in such capacity, the "Administrative
Agent").

WITNESSETH:

WHEREAS, the Borrower has requested the Lenders to amend certain
provisions of the Credit Agreements upon the terms and conditions set forth
herein;

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the undersigned hereby agree as follows:

1. Defined Terms. Terms defined in the Credit Agreements and used
herein shall have the meanings given to them in the Credit Agreements.

2. Amendments to Credit Agreement. (a) Section 2.22 of each Credit
Agreement is hereby amended by deleting from the first sentence following the
table the phrase "one or more levels" and substituting therefor the phrase "more
than one level".

(b) Section 6.1 of each Credit Agreement is hereby amended by (i)
deleting the word "and" which appears at the end of paragraph (f), (ii) deleting
the period at the end of paragraph (g) and substituting therefor the phrase
";and" and (iii) adding the following new paragraph:

(h) in addition to the Indebtedness permitted by paragraphs
(a)-(g) above, Indebtedness of PHH Corporation and its Subsidiaries
so long as, after giving effect to the incurrence of such
Indebtedness and the use of the proceeds thereof, the ratio of
Indebtedness of PHH and its Subsidiaries to consolidated
shareholders' equity of PHH is less than 10 to 1.

(c) Section 6.2 of each Credit Agreement is hereby amended by (i)
deleting the word "and" which appears at the end of paragraph (b), (ii) deleting
the period at the end of paragraph (c) and substituting therefor the phrase
";and" and (iii) adding the following new paragraph (d):

(d) in addition of the Guaranties permitted by paragraphs
(a)-(c) above, performance undertakings executed in connection with
the Receivables Facility.

3. Effective Date. This First Amendment shall become effective on
the date (the "Effective Date") on which the Borrower, the Administrative Agent
and the

<PAGE>

Required Lenders under each Credit Agreement shall have duly executed and
delivered to the Administrative Agent this First Amendment.

4. Representations and Warranties. The Borrower hereby represents
and warrants to the Lenders that each of the representations and warranties made
by the Borrower in the Fundamental Documents is true and correct on and as of
the Effective Date, before and after giving effect to the effectiveness of this
First Amendment, as if made on and as of the Effective Date, except to the
extent such representations and warranties expressly relate to an earlier date.

5. Payment of Expenses. The Borrower agrees to reimburse the
Administrative Agent for all of its reasonable costs and expenses incurred in
connection with the preparation, execution and delivery of this First Amendment
and any other documents prepared in connection herewith and the transactions
contemplated hereby, including without limitation the reasonable fees and
disbursements of counsel to the Administrative Agent.

6. No Other Amendments; Confirmation. Except as expressly amended
hereby, the provisions of the Credit Agreement and each of the Fundamental
Documents are and shall remain in full force and effect.

7. Governing Law. This First Amendment and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.

8. Counterparts. This First Amendment may be executed by one or more
of the parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This First Amendment may be delivered by facsimile transmission of
the relevant signature pages hereof.

IN WITNESS WHEREOF, the undersigned have caused this First Amendment
to be executed and delivered by their duly authorized officers as of the date
first above written.

HFS INCORPORATED

By: /s/ Stephen P. Holmes
---------------------------------
Name: Stephen P. Holmes
Title: Executive Vice President
<PAGE>

THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender

By: /s/ William J. Gaggiano
-----------------------------------
Name: WILLIAM J. GAGGIANO
Title: MANAGING DIRECTOR

ABN-AMRO BANK N.V. NEW YORK
BRANCH

By: /s/ George M. Dugan
-----------------------------------
Name: George M. Dugan
Title: Vice President

By: /s/ Tuner T. Rogers
-----------------------------------
Name: Tuner T. Rogers
Title: Assistant Vice President

BANK OF AMERICA NT&SA

By: /s/ John W. Toorlyab
-----------------------------------
Name: John W. Toorlyab
Title: Vice President

THE BANK OF NEW YORK

By: /s/ Eliza S. Adams
-----------------------------------
Name: Eliza S. Adams
Title: Vice President

<PAGE>

THE BANK OF NOVA SCOTIA

By: /s/ Brian Allen
-----------------------------------
Name: Brian Allen
Title: Sr. Relationship Manager

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY

By: /s/ Paula Muller
-----------------------------------
Name: Paula Muller
Title: Vice President

BANQUE PARIBAS

By: /s/ Dunne Hekowski
-----------------------------------
Name: Dunne Hekowski
Title: Vice President

By: /s/ Mary T. Fennegan
-----------------------------------
Name: Mary T. Fennegan
Title: Group Vice President

BAYERISCHE LANDESBANK
GIROZENTRALE
CAYMAN ISLANDS BRANCH

By:
-----------------------------------
Name:
Title:

<PAGE>

BAYERISCHE VEREINSBANK, AG, NEW
YORK BRANCH

By: /s/ Marianne H. Eckineier
-----------------------------------
Name: Marianne H. Eckineier
Title: Vice President

CIBC, INC.

By: /s/ Timothy E. Doyle
-----------------------------------
Name:
Title: Authorized Signatore

COMERICA BANK

By: /s/ Chris Georvassilis
-----------------------------------
Name: Chris Georvassilis
Title: Vice President

CREDIT LYONNAIS NEW YORK BRANCH

By: /s/ Mary E. Collier
-----------------------------------
Name: Mary E. Collier
Title: Vice President

CREDIT SUISSE NEW YORK

By: /s/ Eileen O'Connell Fox
-----------------------------------
Name: Eileen O'Connell Fox
Title: Director

By: /s/ Elizabeth A. Whalem
-----------------------------------
Name: Elizabeth A. Whalem
Title: Associate

<PAGE>

DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK, CAYMAN
ISLAND BRANCH

By:
-----------------------------------
Name:
Title:

FIRST HAWAIIAN BANK

By: /s/ Scott R. Nanne
-----------------------------------
Name: Scott R. Nanne
Title: Assistant Vice President

THE FUJI BANK, LIMITED
NEW YORK BRANCH

By: /s/ Masanobu Kobayaski
-----------------------------------
Name: Masanobu Kobayaski
Title: Vice President and Manager

THE INDUSTRIAL BANK OF JAPAN,
LIMITED
NEW YORK BRANCH

By: /s/ John V. Veltri
-----------------------------------
Name: John V. Veltri
Title: Senior Vice President

MELLON BANK, N.A.

By: /s/ Caroline R. Walsh
-----------------------------------
Name: Caroline R. Walsh
Title: Assistant Vice President

<PAGE>

NATIONSBANK, N.A.

By: /s/ Eileen C. Higgins
-----------------------------------
Name: Eileen C. Higgins
Title: Vice President

THE NORTHERN TRUST COMPANY

By: /s/ Eric Strickland
-----------------------------------
Name: Eric Strickland
Title: The Northern Trust

PNC BANK, N.A.

By: /s/ Edward M. Tessalone
-----------------------------------
Name: Edward M. Tessalone
Title: Vice President

ROYAL BANK OF CANADA

By: /s/ Sheryl L. Greenberg
-----------------------------------
Name: Sheryl L. Greenberg
Title: Manager

THE SAKURA BANK, LIMITED

By: /s/ Yasumura Kikushi
-----------------------------------
Name: Yasumuru Kikushi
Title: Senior Vice President
<PAGE>

THE SANWA BANK, LIMITED

By: /s/ Yoshinori Yokoo
-----------------------------------
Name: Yoshinori Yokoo
Title: Vice President

THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH

By: /s/ John C. Kiestiner
-----------------------------------
Name: John C. Kiestiner
Title: Joint General Manager

SUMMIT BANK

By: /s/
-----------------------------------
Name:
Title:

THE TOKAI BANK LIMITED NEW YORK
BRANCH

By: /s/ Strot M. Scholin
-----------------------------------
Name: Strot M. Scholin
Title: Deputy General Manager

UNITED STATES NATIONAL BANK OF
OREGON

By: /s/ Douglas A. Rich
-----------------------------------
Name: Douglas A. Rich
Title: Vice President
<PAGE>

WESTDEUTSCHE LANDESBANK
GIROZENTRALE

By: /s/
-----------------------------------
Name:
Title:

THE YASUDA TRUST AND BANKING CO.,
LTD.
NEW YORK BRANCH

By: /s/ NORIO MIYSHITA
-----------------------------------
Name: Norio Miyshita
Title: Deputy General Manager

<PAGE>

Exhibit (c)(1)

__________________________________________________

AGREEMENT AND PLAN OF MERGER

by and among

HFS INCORPORATED,

HJ ACQUISITION CORP.

and

JACKSON HEWITT INC.

dated as of

November 19, 1997

__________________________________________________

<PAGE>

Index of Defined Terms
----------------------

Defined Term Section No.
- ------------ -----------

Agreement . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Acquisition Proposal. . . . . . . . . . . . . . . . . . . . 5.4
Appointment Date. . . . . . . . . . . . . . . . . . . . . . 5.1
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Articles of Incorporation . . . . . . . . . . . . . . . . . 1.4
Certificates. . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Chief Scientist . . . . . . . . . . . . . . . . . . . . . . 3.10(p)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . 1.6
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Agreements. . . . . . . . . . . . . . . . . . . . . 3.4
Company Options . . . . . . . . . . . . . . . . . . . . . . 2.5(b)
Company SEC Documents . . . . . . . . . . . . . . . . . . . 3.5
Confidentiality Agreement . . . . . . . . . . . . . . . . . 5.2
Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . 3.12(l)
Dissenting Shareholders . . . . . . . . . . . . . . . . . . 2.1(c)
D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . 5.10(b)
Effective Time. . . . . . . . . . . . . . . . . . . . . . . 1.5
Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . 3.2(b)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Financial Statements. . . . . . . . . . . . . . . . . . . . 3.5
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Governmental Entity . . . . . . . . . . . . . . . . . . . . 3.4
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
Indemnified Party . . . . . . . . . . . . . . . . . . . . . 5.9(a)
Intellectual Property . . . . . . . . . . . . . . . . . . . 3.12
Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(l)
Mask Works. . . . . . . . . . . . . . . . . . . . . . . . . 3.12(l)
Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Merger Consideration. . . . . . . . . . . . . . . . . . . . 2.1(c)
Minimum Condition . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer Documents . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Offer Price . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer to Purchase . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Option Exchange Ratio . . . . . . . . . . . . . . . . . . . 2.5(a)
Option Plan . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Parent Common Stock . . . . . . . . . . . . . . . . . . . . 2.5(a)
Parent Option . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Parent Option Plan. . . . . . . . . . . . . . . . . . . . . 2.5(a)

<PAGE>

Defined Term Section No.
- ------------ -----------

Patents . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(l)
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . 1.8(a)
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Purchaser Common Stock. . . . . . . . . . . . . . . . . . . 2.1
Schedule 14D-1. . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Schedule 14D-9. . . . . . . . . . . . . . . . . . . . . . . 1.2(b)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 3.5
Secretary of State. . . . . . . . . . . . . . . . . . . . . 1.5
Securities Act. . . . . . . . . . . . . . . . . . . . . . . 3.5
Service . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(g)
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Special Meeting . . . . . . . . . . . . . . . . . . . . . . 1.8(a)
Stockholder Agreement . . . . . . . . . . . . . . . . . . . 1.2(a)
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Surviving Corporation . . . . . . . . . . . . . . . . . . . 1.4
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10(r)
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . 3.10(r)
Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . 3.12(l)
Transactions. . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Unvested Company Option . . . . . . . . . . . . . . . . . . 2.5(a)
Vested Company Option . . . . . . . . . . . . . . . . . . . 2.5(b)
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)

<PAGE>

TABLE OF CONTENTS
-----------------

Page
----

ARTICLE I THE OFFER AND MERGER.......................................... 2
Section 1.1 The Offer..................................................... 2
Section 1.2 Company Actions............................................... 4
Section 1.3 Directors..................................................... 6
Section 1.4 The Merger.................................................... 7
Section 1.5 Effective Time................................................ 8
Section 1.6 Closing....................................................... 8
Section 1.7 Directors and Officers of the
Surviving Corporation......................................... 8
Section 1.8 Shareholders' Meeting......................................... 8
Section 1.9 Merger Without Meeting of Shareholders........................ 9

ARTICLE II CONVERSION OF SECURITIES...................................... 10
Section 2.1 Conversion of Capital Stock................................... 10
Section 2.2 Exchange of Certificates...................................... 11
Section 2.3 Transfer of Shares After the
Effective Time................................................ 12
Section 2.4 Company Plans................................................. 12
Section 2.5 Certain Adjustments........................................... 14

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY....................................................... 15
Section 3.1 Organization.................................................. 15
Section 3.2 Capitalization................................................ 16
Section 3.3 Authorization; Validity of Agreement;
Company Action................................................ 17
Section 3.4 Consents and Approvals; No Violations......................... 18
Section 3.5 SEC Reports and Financial Statements.......................... 19
Section 3.6 Absence of Certain Changes.................................... 20
Section 3.7 No Undisclosed Liabilities.................................... 20
Section 3.8 Litigation.................................................... 20
Section 3.9 Employee Benefit Plans; ERISA................................. 21
Section 3.10 Tax Matters................................................... 23
Section 3.11 Title and Condition of Properties............................. 26
Section 3.12 Intellectual Property......................................... 27
Section 3.13 Compliance with Laws.......................................... 29
Section 3.14 Contracts..................................................... 30
Section 3.15 Relationships with Franchisees................................ 31
Section 3.16 Potential Conflicts of Interest............................... 31
Section 3.17 Information in Proxy Statement................................ 32
Section 3.18 Opinion of Financial Advisor.................................. 32
Section 3.19 Brokers or Finders............................................ 32

ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER................................... 33
Section 4.1 Organization.................................................. 33
Section 4.2 Authorization; Validity of Agreement;
Necessary Action.............................................. 33
Section 4.3 Consents and Approvals; No Violations......................... 34
Section 4.4 Information in Proxy Statement................................ 35

<PAGE>

Page
----

Section 4.5 Sec Reports and Financial Statements...........................35

ARTICLE V COVENANTS..................................................... 36
Section 5.1 Interim Operations of the Company............................. 36
Section 5.2 Access; Confidentiality....................................... 39
Section 5.3 Consents and Approvals........................................ 39
Section 5.4 No Solicitation............................................... 40
Section 5.5 Additional Agreements......................................... 42
Section 5.6 Publicity..................................................... 42
Section 5.7 Notification of Certain Matters............................... 42
Section 5.8 Directors' and Officers' Insurance and
Indemnification............................................... 43

ARTICLE VI CONDITIONS.................................................... 44
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger.......................................... 44
Section 6.2 Conditions to Parent's and the Purchaser's
Obligations to Effect the Merger.............................. 44

ARTICLE VII TERMINATION................................................... 45
Section 7.1 Termination................................................... 45
Section 7.2 Effect of Termination......................................... 47

ARTICLE VIII MISCELLANEOUS................................................. 47
Section 8.1 Fees and Expenses............................................. 47
Section 8.2 Amendment and Modification.................................... 48
Section 8.3 Nonsurvival of Representations and
Warranties.................................................... 48
Section 8.4 Notices....................................................... 48
Section 8.5 Interpretation................................................ 49
Section 8.6 Counterparts.................................................. 50
Section 8.7 Entire Agreement; No Third Party
Beneficiaries................................................. 50
Section 8.8 Severability.................................................. 50
Section 8.9 Governing Law................................................. 50
Section 8.10 Assignment.................................................... 51
Section 8.11 Company's Knowledge........................................... 51

Certain Conditions of the Offer..........................................Annex A

<PAGE>

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of November 19, 1997, by and among HFS Incorporated, a
Delaware corporation ("Parent"), JH Acquisition Corp., a Virginia corporation
and a wholly owned subsidiary of Parent (the "Purchaser"), and Jackson Hewitt
Inc., a Virginia corporation (the "Company").

WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;

WHEREAS, concurrently with the execution of this Agreement, and as an
inducement to Parent and the Purchaser to enter into this Agreement, the Company
has entered into a Stock Option Agreement with Parent and the Purchaser (the
"Stock Option Agreement"), pursuant to which the Company has granted to the
Purchaser an option to purchase Shares (as hereinafter defined) upon the terms
and subject to the conditions set forth in the Stock Option Agreement;

WHEREAS, concurrently with the execution of this Agreement, and as an
inducement to Parent and the Purchaser to enter into this Agreement, certain
shareholders of the Company have entered into a Shareholder Agreement, dated as
of the date hereof (the "Shareholder Agreement"), among Parent, the Purchaser
and the shareholders named therein providing, among other things, that each such
shareholder will tender its Shares pursuant to the Offer (as hereinafter
defined), will vote in favor of the Merger, and will grant a proxy to Parent for
that purpose;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:

<PAGE>

ARTICLE I

THE OFFER AND MERGER

Section 1.1 THE OFFER.

(a) As promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares of Common Stock, par value $.02 per
share (the "Shares"), of the Company at a price of $68.00 per Share, net to the
seller in cash (such price, or such other price per Share as may be paid in the
Offer, being referred to herein as the "Offer Price"), subject to there being
validly tendered and not withdrawn prior to the expiration of the Offer, that
number of Shares which represents more than two-thirds of the Shares outstanding
on a fully diluted basis (without giving effect to any Shares issuable pursuant
to the Stock Option Agreement) (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto. The obligations of the Purchaser to
commence the Offer and to accept for payment and to pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn shall be
subject only to the Minimum Condition and the other conditions set forth in
Annex A hereto. The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this Agreement, the
Minimum Condition and the other conditions set forth in Annex A hereto. The
Purchaser shall not decrease the Offer Price or decrease the number of Shares
sought, or amend any other condition of the Offer in any manner adverse to the
holders of the Shares (other than with respect to insignificant changes or
amendments and subject to the last sentence of this Section 1.1(a)) without the
written consent of the Company (such consent to be authorized by the Board of
Directors of the Company or a duly authorized committee thereof); PROVIDED,
HOWEVER, that if on the initial scheduled expiration date of the Offer which
shall be January 5, 1998 and which may not be accelerated without the Company's
prior written approval, all conditions to the Offer shall not have been
satisfied or waived, the Purchaser may, from time to time, in its sole
discretion,

<PAGE>

extend the expiration date for one or more periods not to exceed an aggregate of
40 business days. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as it is legally permitted to do so under
applicable law as long as such date is on or after January 5, 1998; PROVIDED,
HOWEVER, that if, immediately prior to the initial expiration date of the Offer
(as it may be extended), the Shares tendered and not withdrawn pursuant to the
Offer equal less than 90% of the outstanding Shares, the Purchaser may extend
the Offer for one or more periods not to exceed an aggregate of thirty business
days, notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer.

(b) As soon as practicable on the date the Offer is commenced,
Parent and the Purchaser shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's shareholders, shall not 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 light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or the Purchaser with respect to information
furnished by the Company for inclusion in the Offer Documents. The information
supplied in writing by the Company for inclusion in the Offer Documents and by
Parent or the Purchaser for inclusion in the Schedule 14D-9 (as hereinafter
defined) will not 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 light of the circumstances under which they were
made, not misleading. Each of Parent and the Purchaser will take all steps
necessary to cause the

<PAGE>

Offer Documents to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and the Purchaser, on the one hand, and the
Company, on the other hand, will promptly correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false and misleading in any material respect and the Purchaser will take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the Schedule 14D-1 before it is
filed with the SEC. In addition, Parent and the Purchaser will provide the
Company and its counsel in writing with any comments, whether written or oral,
Parent, the Purchaser or their counsel may receive from time to time from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments.

Section 1.2 COMPANY ACTIONS.

(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors, at a meeting duly called and held, has
(i) unanimously determined that each of the Agreement, the Offer and the Merger
(as defined in Section 1.4) are fair to and in the best interests of the
shareholders of the Company, (ii) approved this Agreement, the Stock Option
Agreement, the Shareholders Agreement, and the transactions contemplated hereby
and thereby, including the Offer and the Merger (collectively, the
"Transactions"), and such approval constitutes approval of the Offer, the Stock
Option, this Agreement, the Stock Option Agreement, the Shareholders Agreement
and the Transactions, for purposes of Sections 13.1-727 and Sections 13.1-728.1
ET SEQ. of the Virginia Stock Corporation Act (the "VSCA") (iii) resolved to
recommend that the shareholders of the Company accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt this Agreement and the
Merger; PROVIDED, THAT such recommendation may be withdrawn, modified or amended
if, in the opinion of the Board of Directors, only after receipt of (x) a
written opinion from the Company's investment banking firm that the Acquisition
Proposal (as defined in Section 5.4(a))

<PAGE>

is superior, from a financial point of view, to the Offer and the Merger and (y)
advice from independent legal counsel to the Company to the effect that the
failure to withdraw, modify or amend such recommendation would be likely to
result in the Board of Directors violating its fiduciary duties to the Company's
shareholders under applicable law. The Company represents that the actions set
forth in this Section 1.2(a) and all other actions it has taken in connection
therewith are sufficient to render the relevant provisions of Sections
13.1-725.1, 13.1-726 and 13.1-728.3 of the VSCA inapplicable to the
Transactions.

(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions
of Section 5.4(b), contain the recommendation referred to in clause (iii) of
Section 1.2(a) hereof. The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not 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 light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information furnished by Parent or the Purchaser for inclusion
in the Schedule 14D-9. The Company further agrees to take all steps necessary
to cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of the Company, on the one hand, and Parent and
the Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before

<PAGE>

it is filed with the SEC. In addition, the Company agrees to provide Parent,
the Purchaser and their counsel with any comments, whether written or oral, that
the Company or its counsel may receive from time to time from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments or other communications.

(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to the Purchaser mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of all recordholders of the Shares as of a recent date, and
shall furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered to
the Company all copies of such information then in its possession or the
possession of its agents or representatives.

Section 1.3 DIRECTORS. Promptly upon the purchase of and payment
for any Shares by Parent or any of its subsidiaries which represents at least
two-thirds of the outstanding Shares (on a fully diluted basis), Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product of
the total number of directors on such Board (giving effect to the directors
designated by Parent pursuant to this sentence) multiplied by the percentage
that the number of Shares so accepted for payment bears to the total number of
Shares then outstanding. In furtherance thereof, the Company shall, upon
request of the Purchaser, use its best efforts promptly to secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees to be

<PAGE>

so elected to the Company's Board, and shall take all actions available to the
Company to cause Parent's designees to be so elected. At such time, the Company
shall also cause persons designated by Parent to constitute at least the same
percentage (rounded up to the next whole number) as is on the Company's Board of
Directors of (i) each committee of the Company's Board of Directors, (ii) each
board of directors (or similar body) of each Subsidiary (as defined in Section
3.1) of the Company and (iii) each committee (or similar body) of each such
board. The Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 1.3, including mailing to
shareholders the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors. Parent or the Purchaser will supply the Company any information with
respect to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1. The provisions of this Section
1.3 are in addition to and shall not limit any rights which the Purchaser,
Parent or any of their affiliates may have as a holder or beneficial owner of
Shares as a matter of law with respect to the election of directors or
otherwise.

Section 1.4 THE MERGER. Subject to the terms and conditions of
this Agreement and in accordance with the applicable provisions of the VSCA, at
the Effective Time (as defined in Section 1.5), the Company and the Purchaser
shall consummate a merger (the "Merger") pursuant to which (a) the Purchaser
shall be merged with and into the Company and the separate corporate existence
of the Purchaser shall thereupon cease, (b) the Company shall be the successor
or surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Virginia, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Section 1.4. Pursuant to
the Merger, (x) the Articles of Incorporation of the Purchaser (the "Articles of
Incorporation"), as in effect immediately prior to the Effective Time, shall be
the articles of incorporation of the Surviving Corporation until thereafter
amended as

<PAGE>

provided by law and such Articles of Incorporation, and (y) the Bylaws of the
Purchaser (the "Bylaws"), as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by law, by the Articles of Incorporation or by such Bylaws. The Merger
shall have the effects specified in the VSCA.

Section 1.5 EFFECTIVE TIME. On the date of the Closing (as defined
in Section 1.6) (or on such other date as Parent and the Company may agree)
Parent, the Purchaser and the Company will cause Articles of Merger with respect
to the Merger to be executed and filed with the Virginia State Corporation
Commission as provided in the VSCA. The Merger shall become effective upon the
issuance by the State Corporation Commission of a certificate of merger, such
time being hereinafter referred to as the "Effective Time".

Section 1.6 CLOSING. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VI hereof (the "Closing Date"), at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New
York, New York 10022, unless another date or place is agreed to in writing by
the parties hereto.

Section 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
The directors and officers of the Purchaser at the Effective Time shall, from
and after the Effective Time, be the directors and officers, respectively, of
the Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and the Bylaws.

Section 1.8 SHAREHOLDERS' MEETING.

(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law:

<PAGE>

(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as promptly as
practicable following the acceptance for payment and purchase of Shares by
the Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;

(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
best efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and,
after consultation with Parent, to respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment
or supplement thereto (the "Proxy Statement") to be mailed to its
shareholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its shareholders; and

(iii) subject to the provisions of Section 5.4(b), include in
the Proxy Statement the recommendation of the Board that shareholders of
the Company vote in favor of the approval of the Merger and the adoption of
this Agreement.

(b) Parent shall vote, or cause to be voted, all of the Shares
then owned by it, the Purchaser or any of its other subsidiaries and affiliates
in favor of the approval of the Merger and the adoption of this Agreement.

Section 1.9 MERGER WITHOUT MEETING OF SHAREHOLDERS.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser or
any other subsidiary of Parent shall acquire at least 90% of the outstanding
shares of each class of capital stock of the Company, pursuant to the Offer or
otherwise, the parties hereto shall, at the request of Parent and subject to
Article VI hereof, take all necessary and appropriate action to

<PAGE>

cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of shareholders of the Company, in accordance
with Section 13.1-719 of the VSCA.

ARTICLE II

CONVERSION OF SECURITIES

Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):

(a) PURCHASER COMMON STOCK. Each issued and outstanding share
of the Purchaser Common Stock shall be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.

(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent, the Purchaser or any other wholly owned Subsidiary of Parent shall be
cancelled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.

(c) EXCHANGE OF SHARES. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.1(b)) shall be
converted into the right to receive the Offer Price, payable to the holder
thereof, without interest (the "Merger Consideration"), upon surrender of the
certificate formerly representing such Share in the manner provided in Section
2.2. All such Shares, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2, without interest.

<PAGE>

Section 2.2 EXCHANGE OF CERTIFICATES.

(a) PAYING AGENT. Parent shall designate a bank or trust
company to act as agent for the holders of the Shares in connection with the
Merger (the "Paying Agent") to receive the funds to which holders of the Shares
shall become entitled pursuant to Section 2.1(c). Such funds shall be invested
by the Paying Agent as directed by Parent or the Surviving Corporation.

(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent, and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be cancelled. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive

<PAGE>

the Merger Consideration in cash as contemplated by this Section 2.2.

(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE SHARES.
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of the Shares
on the records of the Company. From and after the Effective Time, the holders
of Certificates evidencing ownership of the Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
II.

(d) TERMINATION OF FUND; NO LIABILITY. At any time following
six months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.

Section 2.3 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No
transfer of Shares shall be made on the stock transfer books of the Surviving
Corporation at or after the Effective Time.

Section 2.4 COMPANY PLANS.

(a) Except with respect to any Roll-Over Option (as defined in
Section 2.4(b), the Company shall take such actions as are appropriate to
provide that, immediately prior to the Effective Time, (i) all options ("Company
Options") outstanding under any of the

<PAGE>

Company's 1994 Long Term Incentive Plan and the Non-Employee Director Stock
Option Plan (together, the "Option Plans"), whether or not then exercisable or
vested, shall become fully exercisable and vested, (ii) each Company Option that
is then outstanding shall be cancelled and (iii) in consideration of such
cancellation and in full satisfaction of all rights of the holder under the
Company Options, Parent shall pay, or shall cause the Purchaser to pay, at the
Effective Time, to the holder of each Company Option an amount in cash in
respect thereof equal to the product of (A) the excess of the Merger
Consideration over the exercise price per Share of such Company Option,
multiplied by (B) the number of Shares subject to such Company Option (such
payment to be net of applicable withholding taxes).

(b) With respect to each Company Option (a "Roll-Over Option") as
to which the holder thereof, no later than five days prior to the Effective
Time, shall have delivered to Parent his or her written election to have such
Roll-Over Options treated as provided in this Section 2.4(b), Parent and the
Company shall, effective as of the Effective Time, cause each outstanding
Roll-Over Option to be assumed by Parent and converted into a fully vested
option (or a new substitute option shall be granted) (a "Parent Option"),
exercisable throughout the period specified in the original option award
agreement, to purchase shares of common stock, par value $.01 per share, of
Parent ("Parent Common Stock") issued under and pursuant to the terms and
conditions of Parent's 1993 Amended and Restated Stock Option Plan (or such
surviving plan as may result from the anticipated merger of Parent with and into
CUC International Inc. ("CUC") pursuant to the Agreement and Plan of Merger,
dated as of May 27, 1997, between CUC and Parent), or any other similar stock
option plan of Parent adopted specifically for employees of the Company in order
to issue Parent Options as provided in this Section 2.4(b) (the "Parent Option
Plan"). The parties agree that (i) the number of shares of Parent Common Stock
subject to such Parent Option will be determined by multiplying the number of
Shares subject to the Roll-Over Option to be cancelled by the Option Exchange
Ratio (as hereinafter defined), rounding any fractional share down to the
nearest whole share, and (ii) the exercise price per share of such Parent Option
will be determined by dividing the exercise price per share under the Roll-Over
Option in effect immediately prior to the

<PAGE>

Effective Time by the Option Exchange Ratio, and rounding the exercise price
thus determined up to the nearest whole cent, subject to appropriate adjustments
for stock splits and other similar events. Except as provided above, the
converted or substituted Parent Options shall be subject to the same terms and
conditions (including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Roll-Over Options immediately prior to the
Effective Time. The Company and Parent shall take all necessary action to
facilitate and effect the substitution described in this Section 2.4(b). For
purposes of this Agreement, the "Option Exchange Ratio" shall be (x) the Offer
Price divided by (y) the average of the closing prices of the Parent Common
Stock on the New York Stock Exchange during the five trading days preceding the
fifth trading day prior to the Closing Date.

(c) Except as may be otherwise agreed to by Parent or the
Purchaser and the Company, the Option Plans shall terminate as of the Effective
Time and the provisions in any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company or any of its Subsidiaries shall be deleted as of the Effective Time
and no holder of Company Options or any participant in the Option Plans or any
other plans, programs or arrangements shall have any right thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.

Section 2.5 CERTAIN ADJUSTMENTS. If after the date hereof and on
or prior to the Effective Time the Shares shall be changed into a different
number of shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares, or any dividend payable in stock or other
securities shall be declared thereon with a record date within such period, or
any similar event shall occur (any such action, an "Adjustment Event"), the
terms of this Agreement shall be adjusted accordingly, to provide to the holders
of such Shares the same economic effect as contemplated by this Agreement prior
to such reclassification, recapitalization, split-up, combination, exchange or
dividend or similar event.

<PAGE>

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and the Purchaser that
all of the statements contained in this Article III are true and correct as of
the date of this Agreement (or, if made as of a specified date, as of such
date), except as set forth in the applicable section of the schedule attached to
this Agreement (the "Company Disclosure Schedule") or as specifically set forth
in the Company SEC Documents (as defined in Section 3.5) that are listed on
Schedule B of the Company Disclosure Schedule.

Section 3.1 ORGANIZATION. Each of the Company and its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority, and governmental approvals would
not have a material adverse effect on the Company and its Subsidiaries, taken as
a whole. As used in this Agreement, the term "Subsidiary" shall mean all
corporations or other entities in which the Company or the Parent, as the case
may be, owns a majority of the issued and outstanding capital stock or similar
interests. As used in this Agreement, any reference to any event, change or
effect being material or having a material adverse effect on or with respect to
any entity (or group of entities taken as a whole) means such event, change or
effect as is materially adverse to (i) the consolidated financial condition,
businesses, results of operations or prospects of such entity (or, if used with
respect thereto, of such group of entities taken as a whole) or (ii) the ability
of such entity (or group) to consummate the transactions contemplated hereby.
The Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not

<PAGE>

individually or in the aggregate have a material adverse effect on the Company
and its Subsidiaries, taken as a whole. Except as set forth on Section 3.1 of
the Company Disclosure Schedule, the Company does not own, directly or
indirectly, (i) any equity interest in any corporation or other entity or (ii)
marketable securities.

Section 3.2 CAPITALIZATION. (a) The authorized capital stock of
the Company consists of 30 million Shares and 1 million shares of preferred
stock, without par value (the "Preferred Stock"). As of the date hereof, (i)
6,664,982 Shares are issued and outstanding, (ii) no Shares are issued and held
in the treasury of the Company, (iii) no shares of Preferred Stock are issued
and outstanding, and (iv) 440,984 Shares are reserved for issuance upon exercise
of Company Options under the Option Plans. All the outstanding shares of the
Company's capital stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Company Options will be, when issued in accordance with
the respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable. Except as set forth on Section 3.2 of the Company Disclosure
Schedule, there are no bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. Except for (x) the warrants to purchase 10,000 Shares (the
"Warrants") issued pursuant to the Warrant Purchase Agreement, dated as of June
7, 1996 between the Company and NationsBank, N.A., (y) the 440,984 Company
Options, and (z) the transactions contemplated by this Agreement, as of the date
hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right,

<PAGE>

agreement, arrangement or commitment and (iii) there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company, or
any Subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.

(b) Except as set forth on Section 3.2(b) of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each of
the Subsidiaries are beneficially owned by the Company, directly or indirectly,
and all such shares have been validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its Subsidiaries
free and clear of all liens, charges, claims or encumbrances ("Encumbrances").

(c) Except for the Shareholders Agreement, there are no voting
trusts or other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock of the
Company or any of the Subsidiaries.

Section 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION.
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this Agreement and the
Stock Option Agreement, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by its Board of
Directors and, except for obtaining the approval of more than two-thirds of its
shareholders of the Merger Agreement in accordance with Section 13.1-718 of the
VSCA as contemplated by Section 1.8 hereof, no other corporate action on the
part of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement or the Stock Option Agreement and the consummation by
it of the transactions contemplated hereby and thereby. Each of this Agreement
and the Stock Option Agreement has been duly executed and delivered by the
Company and, assuming due and valid authorization, execution and delivery hereof
and thereof by Parent and the Purchaser, is a valid and binding obligation of
the Company enforceable against the Company in accordance

<PAGE>

with its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

(b) The Board of Directors of the Company has duly and validly
unanimously approved the Transactions, including the Stock Option, the Offer,
the acquisition of Shares pursuant to the Offer, the Shareholders Agreement and
the Merger, for the purposes of Article 14 and Article 14.1 of the VSCA such
that the provisions of Article 14 and Article 14.1 of the VSCA will not apply to
the transactions contemplated by this Agreement, such approval occurring prior
to the time the Purchaser became an "interested shareholder", as that term is
defined in Section 13.1-725 of the VSCA.

Section 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the
filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the VSCA, none of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the Articles of Incorporation, the Bylaws or similar
organizational documents of the Company or of any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental Entity"),
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or

<PAGE>

obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (the
"Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, other than, in the case of clause (iii),
for such violations, breaches or defaults that individually or in the aggregate
would not (x) have a material adverse effect on the Company and its
Subsidiaries, taken as a whole, or (y) reasonably be expected to impair the
ability of the Company to perform its obligations under this Agreement. The
affirmative vote of the holders of more than two-thirds of the outstanding
Shares is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.

Section 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since April 30, 1995 under the Exchange Act
or the Securities Act of 1933, as amended (the "Securities Act") (as such
documents have been amended since the time of their filing, collectively, the
"Company SEC Documents"). As of their respective dates or, if amended, as of
the date of the last such amendment, the Company SEC Documents, including,
without limitation, any financial statements or schedules included therein (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC. The financial statements of the Company included in the Company
SEC Documents (the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with

<PAGE>

respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") (except in the case of unaudited
statements, as permitted by Form 10-Q under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated Subsidiaries as of the
times and for the periods referred to therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments).

Section 3.6 ABSENCE OF CERTAIN CHANGES.
Except as disclosed in Section 3.6 of the Company Disclosure Schedule, and
except for liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, since April 30, 1997, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course and (i) there have not occurred any events or changes (including
the incurrence of any liabilities of any nature, whether or not accrued,
contingent or otherwise) having or reasonably likely to have, individually or in
the aggregate, a material adverse effect on the Company and its Subsidiaries,
taken as a whole, and (ii) the Company has not taken any action which would have
been prohibited under Section 5.1 hereof.

Section 3.7 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in
the Financial Statements and (b) for liabilities and obligations (x) incurred in
the ordinary course of business and consistent with past practice (y) pursuant
to the terms of this Agreement or (z) as set forth in Section 3.7 of the Company
Disclosure Schedule, since April 30, 1997 neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that have, or would be reasonably
likely to have, a material adverse effect on the Company and its Subsidiaries,
taken as a whole, or would be required by GAAP to be reflected on a consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto).

Section 3.8 LITIGATION. (a) Except as set forth in Section 3.8 of
the Company Disclosure Schedule,

<PAGE>

as of the date hereof, there are no suits, claims, actions, proceedings,
including, without limitation, arbitration proceedings or alternative dispute
resolution proceedings, or investigations pending or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries before any
Governmental Entity. Except as disclosed in Section 3.8 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject
to any outstanding order, writ, injunction or decree.

(b) Except as set forth in Section 3.8 of the Company Disclosure
Schedule, there are no suits, claims, actions, proceedings, including, without
limitation, arbitration proceedings or alternative dispute resolution
proceedings, or investigations pending, or to the Company's knowledge,
threatened against the Company or any of its Subsidiaries, or, to the knowledge
of the Company, any person acting as an agent or franchisee of the Company,
before any Governmental Entity, relating to any claims of unlawful
discrimination by any customers, potential customers, franchisees, potential
franchisees, employees or potential employees or others.

Section 3.9 EMPLOYEE BENEFIT PLANS; ERISA.

(a) Section 3.9(a) of the Company Disclosure Schedule sets forth
a true and complete list (or, in the case of an unwritten plan, a description)
of all material employee benefit plans, arrangements, contracts or agreements
(including employment agreements, severance agreements and managers' insurance
plans) of any type, statutory or otherwise, (including but not limited to plans
described in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained by the Company, any of its Subsidiaries
or any trade or business, whether or not incorporated (an "ERISA Affiliate"),
which together with the Company would be deemed a "single employer" within the
meaning of Section 414(b), 414(c) or 414(m) of the Internal Revenue Code of
1986, as amended (the "Code"), or the regulations, issued under Section 414(o)
of the Code ("Benefit Plans").

(b) With respect to each Benefit Plan: (i) if intended to
qualify under Section 401(a) of the Code, such plan so qualifies, and its trust
is exempt from taxation under Section 501(a) of the Code, no condi-

<PAGE>

tion exists that would reasonably be expected to affect such qualification, and
except as set forth on Section 3.9(b) of the Company Disclosure Schedule, there
have been no amendments to any such Benefit Plan which are not the subject of a
favorable determination letter; (ii) such plan has been administered in all
material respects in accordance with its terms and U.S. federal, state or local,
statutes, orders or governmental rules or regulations, including but not limited
to ERISA and the Code, no notice has been issued by any Governmental Entity
questioning or challenging such compliance, and no condition exists that would
be expected to affect such compliance; (iii) no breaches of fiduciary duty have
occurred which might reasonably be expected to give rise to material liability
on the part of the Company; (iv) no disputes are pending, or, to the Company's
knowledge, threatened that might reasonably be expected to give rise to material
liability on the part of the Company; (v) no prohibited transaction (within the
meaning of Section 406 of ERISA) has occurred that would give rise to material
liability on the part of the Company, any ERISA Affiliate or any of their
employees, shareholders or directors; and (vi) all contributions and premiums
due as of the date hereof in respect of any Benefit Plan (taking into account
any extensions for such contributions and premiums) have been made in full or
accrued on the Company's balance sheet forming part of the Financial Statements.

(c) Except as set forth in Section 3.9(c) of the Company
Disclosure Schedule, neither the Company nor any ERISA Affiliate (i) has
incurred an accumulated funding deficiency, as defined in the Code and ERISA, or
(ii) has incurred any material liability under Title IV of ERISA with respect to
any employee benefit plan that is subject to Title IV of ERISA.

(d) With respect to each Benefit Plan that is a "welfare plan"
(as defined in section 3(1) of ERISA), except as disclosed in Section 3.9(d) of
the Company Disclosure Schedule, no such plan provides medical or death benefits
with respect to current or former employees of the Company or any of its
Subsidiaries beyond their termination of employment, other than as required by
law.

(e) Except as set forth in Section 3.9(e) of the Company
Disclosure Schedule, neither the execution

<PAGE>

of this Agreement nor the consummation of the transactions contemplated hereby
will (i) entitle any individual to severance pay or accelerate the time of
payment or vesting, or increase the amount, of compensation or benefits due to
any individual.

(f) There is no Benefit Plan that is a "multiemployer plan," as
such term is defined in Section 3(37) of ERISA.

(g) With respect to each Benefit Plan, the Company has
previously delivered to Parent or its representatives accurate and complete
copies of all plan documents, summary plan descriptions, summary of material
modifications, trust agreements and other related agreements, including all
amendments to the foregoing; the most recent annual report; the annual and
periodic accounting of plan assets in respect of the two most recent plan years;
the most recent determination letter received from the United States Internal
Revenue Service (the "Service"); and the actuarial valuation, to the extent any
of the foregoing may be applicable to a particular Benefit Plan, in respect of
the two most recent plan years.

Section 3.10 TAX MATTERS.

(a)Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries have filed all Tax
Returns (as hereinafter defined) that are required to be filed and have paid or
caused to be paid all Taxes (as hereinafter defined) shown on such Tax Returns
or otherwise due or claimed to be due by any taxing authority. All such Tax
Returns are correct and complete in all material respects and accurately reflect
all liability for Taxes for the periods covered thereby. All Taxes owed and due
by the Company and each of its Subsidiaries for results of operations through
April 30, 1997 (whether or not shown on any Tax Return) have been paid or have
been adequately reflected on the Company's balance sheet as of April 30, 1997
included in the Financial Statements (the "Balance Sheet"). Since April 30,
1997 the Company has not incurred liability for any Taxes other than in the
ordinary course of business. Neither the Company nor any of its Subsidiaries
has received notice of any claim made by an authority in a jurisdiction where
neither the Company nor

<PAGE>

any of its Subsidiaries file Tax Returns, that the Company is or may be subject
to taxation by that jurisdiction.

(b) Neither the Company nor any of its Subsidiaries has violated
any applicable law of any jurisdiction relating to the payment and withholding
of Taxes, including, without limitation, (x) withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code and (y) withholding of Taxes in respect of
amounts paid or owing to any employee, creditor, independent contractor, or
other third party. The Company and each of its Subsidiaries have, in the manner
prescribed by law, withheld and paid when due all Taxes required to have been
withheld and paid under all applicable laws.

(c) There are no Encumbrances upon the Shares or any of the
assets or properties of the Company or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax when due.

(d) Except as set forth in Section 3.10(d) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has waived
any statute of limitations in any jurisdiction in respect of Taxes or Tax
Returns or agreed to any extension of time with respect to a Tax assessment or
deficiency.

(e) Except as set forth in Section 3.10(e) of the Company
Disclosure Schedule, no federal, state, local or foreign audits, examinations or
other administrative proceedings have been commenced or are pending with regard
to any Taxes or Tax Returns of the Company or of any of its Subsidiaries. No
notification has been received by the Company or by any of its Subsidiaries that
such an audit, examination or other proceeding is pending or threatened with
respect to any Taxes due from or with respect to or attributable to the Company
or any of its Subsidiaries or any Tax Return filed by or with respect to the
Company or any of its Subsidiaries.

(f) During their most recent five taxable years respectively,
neither the Company nor any of its Subsidiaries has made a change in accounting
methods (nor has any taxing authority proposed in writing any such adjustment or
change of accounting method), received a ruling from any taxing authority or
signed an agreement

<PAGE>

with any taxing authority which could have a material adverse effect on the
Company or any of its Subsidiaries, or has entered into any closing or similar
agreement with any taxing authority.

(g) Neither the Company nor any of its Subsidiaries is a party
to, is bound by or has any obligation under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement.

(h) No power of attorney with respect to any matter relating to
Taxes or Tax Returns has been granted by or with respect to the Company or any
of its Subsidiaries.

(i) Neither the Company nor any of its Subsidiaries is a party
to any agreement, plan, contract or arrangement that could result, separately or
in the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code or the payment of any amount that is not
deductible by reason of Section 162(m) of the Code.

(j) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.

(k) None of the Subsidiaries of the Company is a controlled
foreign corporation within the meaning of Section 957 of the Code or a passive
foreign investment company within the meaning of Section 1296 of the Code.

(l) The Company has delivered to Parent complete and accurate
copies of each of: (A) all audit, examination and similar reports and all letter
rulings and technical advice memoranda relating to United States federal, state,
local, and foreign Taxes due from or with respect to the Company and its
Subsidiaries; (B) all United States federal, state and local, and foreign Tax
Returns, Tax examination reports and similar documents filed by the Company and
its Subsidiaries; and (C) all

<PAGE>

closing agreements entered into by the Company and its Subsidiaries with any
taxing authority and all statements of Tax deficiencies assessed against or
agreed to by the Company and its Subsidiaries. The Company will deliver to the
Purchaser all materials with respect to the foregoing for all matters arising
after the date hereof.

(m) As used in this Agreement, the following terms shall have
the following meanings:

(i) "Tax" or "Taxes" shall mean all taxes, charges, fees,
duties, levies, penalties or other assessments imposed by any federal,
state, local or foreign governmental authority, including, but not limited
to, income, gross receipts, excise, property, sales, gain, use, license,
custom duty, unemployment, capital stock, transfer, franchise, payroll,
withholding, social security, minimum estimated, and other taxes, and shall
include interest, penalties or additions attributable thereto; and

(ii) "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.

Section 3.11 TITLE AND CONDITION OF PROPERTIES. Except as set forth
on Section 3.11 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries own any real property. The Company and its Subsidiaries own
good and marketable title, free and clear of all Encumbrances, to all of the
personal property and assets shown on the Balance Sheet or acquired after April
30, 1997 except for (A) assets which have been disposed of to nonaffiliated
third parties since April 30, 1997 in the ordinary course of business, (B)
Encumbrances reflected in the Balance Sheet, (C) Encumbrances or imperfections
of title which are not, individually or in the aggregate, material in character,
amount or extent and which do not materially detract from the value or
materially interfere with the present or presently contemplated use of the
assets subject thereto or affected thereby, and (D) Encumbrances for current
Taxes not yet due and payable. All of the equipment (including computer
hardware) and other tangible personal

<PAGE>

property and assets owned or used by the Company and its Subsidiaries are in
good condition and repair, except for ordinary wear and tear not caused by
neglect, and are useable in the ordinary course of business. The personal
property and assets reflected on the Balance Sheet or acquired after April 30,
1997, the rights under the Company Agreements and the Intellectual Property (as
defined in Section 3.12) owned or used by the Company under valid license,
collectively include all assets necessary to provide, produce, franchise, sell
and license the services and products currently provided, produced, franchised,
sold and licensed by the Company and its Subsidiaries and to conduct the
business of the Company and its Subsidiaries as presently conducted or as
currently contemplated to be conducted.

Section 3.12 INTELLECTUAL PROPERTY.

(a) As used in this Agreement, "Intellectual Property" means all of
the following, in which the Company holds or owns any rights which are necessary
to conduct the business of the Company and its Subsidiaries as presently
conducted or as currently proposed to be conducted: (i) trademarks, trade
dress, service marks, logos, trade names, corporate names and all registrations
and applications to register the same; (ii) patents and pending patent
applications, and any and all divisions, continuations, continuations-in-part,
reissues, reexaminations, and extensions thereof; (iii) copyrights, rights of
publicity, rights in any semi-conductor chip product works or "mask works" and
all registrations and applications to register the same; (iv) all computer
software programs, including without limitation, all source code and object
code; databases and compilations, including all data and compilations of data;
all descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing; and all documentation, including user
manuals and training materials relating to the foregoing (collectively,
"Computer Software"); (v) all technology, know-how, trade secrets and
proprietary processes and formulae; and (vi) all licenses and agreements to
which the Company or any of the Subsidiaries is a party which relate to any of
the foregoing, including but not limited to Computer Software licenses other
than shrink-wrap licenses for off-the-shelf applications ("Licenses").

<PAGE>

(b) Except as otherwise set forth on Section 3.12(b) of the Company
Disclosure Schedule, the Company or its Subsidiaries owns or has the right to
use, sell or license all Intellectual Property, free and clear of all
Encumbrances. Section 3.12(b) of the Company Disclosure Schedule contains a
true and complete list of all of the following Intellectual Property: (i)
copyright registrations and applications and material unregistered copyrights;
(ii) trademark and service mark registrations and applications and material
unregistered trademarks, service marks and trade names; (iii) patents and patent
applications; (iv) Computer Software; and (v) material Licenses.

(c) Except as set forth in Section 3.12(c) of the Company Disclosure
Schedule, all Computer Software (i) was developed (x) by employees of the
Company or its Subsidiaries within the scope of their employment or (y) as
"works-made-for-hire" as that term is defined under Section 101 of the United
States copyright laws, pursuant to a written agreement; (ii) was assigned to the
Company or its Subsidiaries pursuant to a written agreement; (iii) is used in
accordance with rights granted to the Company or its Subsidiaries pursuant to a
written License; or (iv) is in the public domain. Except as set forth in
Section 3.12(c) of the Company Disclosure Schedule, no former or present
employees, officers or directors of the Company hold any right, title or
interest directly or indirectly, in whole or in part, in or to any Computer
Software or any other Intellectual Property.

(d) No breach or default (or event which with notice or lapse of time
or both would result in an event of default) by the Company or any of its
Subsidiaries exists or has occurred under any of the Licenses, and the
consummation of the transactions contemplated by this Agreement will not violate
or conflict with or constitute such a default, result in a forfeiture under, or
constitute a basis for termination of any such License.

(e) Except as set forth in Section 3.12(e) of the Company Disclosure
Schedule, to the Company's knowledge the conduct of the Company's and its
Subsidiaries' business and the use of the Intellectual Property do not infringe,
violate or misuse any intellectual property rights or any other proprietary
right of any person or give rise to any obligations to any person as a result of

<PAGE>

co-authorship, or co-inventorship. Neither the Company nor any of the
Subsidiaries have received any notice of any claims or threats that the
Company's and its Subsidiaries' use of any of the Intellectual Property
infringes, violates or misuses, or is otherwise in conflict with any
Intellectual Property or proprietary rights of any third party or that any of
the Intellectual Property is invalid or unenforceable, nor to the Company's
knowledge, is there a basis for such a claim. Except as set forth in Section
3.12(e) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has sent to any other person any notice or claim of any present or
threatened infringement, violation or misuse by any other person of any of the
Intellectual Property and, to the Company's knowledge, there are no such
infringements, violations or misuses.

(f) The Company and its Subsidiaries have used reasonable efforts to
maintain the confidentiality of its trade secrets and other confidential
Intellectual Property.

Section 3.13 COMPLIANCE WITH LAWS. (a) The Company and its
Subsidiaries are in compliance with, and have not violated any applicable law,
rule or regulation of any United States federal, state, local or foreign
government or agency thereof which materially affects the business, properties
or assets of the Company and its Subsidiaries, including without limitation all
laws, rules or regulations relating to Taxes and the preparation and electronic
filing of Tax Returns, and no notice, charge, claim, action or assertion has
been received by the Company or any of its Subsidiaries or has been filed,
commenced or, to the Company's knowledge, threatened against the Company or any
of its Subsidiaries alleging any such violation. All licenses, permits and
approvals required under such laws, rules and regulations are in full force and
effect, except where the failure to have such licenses, permits and approvals
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.

(b)The terms and conditions of (i) the accelerated check
requests, refund anticipation loans and other financial products offered from
time to time by the Company, its Subsidiaries and franchisees (collectively, the
"Bank Products"), and (ii) all franchise arrangements

<PAGE>

entered into, including the form of Franchise Agreement attached from time to
time to the Company's Franchise Offering Circular, currently comply, and have at
all times in the past complied, with all applicable laws, rules or regulations
of any United States federal, state, local or foreign government or agency
thereof, including without limitation all laws, rules or regulations relating to
Taxes.

(c) Except as set forth in Section 3.13 of the Company
Disclosure Schedule, the procedures utilized by, and the practices of, the
Company and each of its Subsidiaries for the preparation and electronic filing
of Tax Returns currently comply, and have at all times in the past complied,
with all applicable laws, rules or regulations of any United States federal,
state, local or foreign government or agency thereof, including without
limitation all laws, rules or regulations relating to Taxes and the preparation
and electronic filing of Tax Returns.

(d) Except as set forth in Section 3.13 of the Company
Disclosure Schedule, the Company and its Subsidiaries and, to the knowledge of
the Company, each person acting as an agent or franchisee of the Company, is in
compliance with all laws, rules and regulations having the purpose or effect of
prohibiting unlawful discrimination against customers, potential customers,
franchisees, potential franchisees, present and former employees, applicants for
employment or others and, to the knowledge of the Company, the Company has
received no complaints from any person that the Company or any agent or
franchisee has engaged in any unlawful discrimination.

Section 3.14 CONTRACTS. (a) Each material Company Agreement is
legally valid and binding and in full force and effect. The Company has
previously made available for inspection by Parent or the Purchaser or their
representatives all material Company Agreements.

(b) Each contract, agreement or arrangement between the Company and
any bank or financial institution with respect to Bank Products (the "Bank
Product Agreements") is legally valid and binding and in full force and effect.
The Company is not in default, nor to the Company's knowledge is any third party
in default, under any Bank Product Agreement. The Company has previously

<PAGE>

made available for inspection by Parent or the Purchaser or their
representatives complete and accurate copies of all Bank Product Agreements.

Section 3.15 RELATIONSHIPS WITH FRANCHISEES. Except as set forth in
Section 3.15 of the Company Disclosure Schedule, since April 30, 1997, no
franchisee of the Company or any of its Subsidiaries has cancelled or otherwise
modified its relationship with the Company or its subsidiaries and (i) to the
Company's knowledge, no such person has threatened or has any intention to do
so, and (ii) to the Company's knowledge, the consummation of the transactions
contemplated hereby will not adversely affect any of such relationships.
Section 3.15 of the Company Disclosure Schedule sets forth a complete list of
all franchisees of the Company as of the date hereof. No more than 25% of such
franchise agreements with the Company differ from the form of Franchise
Agreement attached to the Company's Franchise Offering Circular dated July 1,
1997 (the "Form"), and none of such differences from the Form are material.

Section 3.16 POTENTIAL CONFLICTS OF INTEREST. Except as set forth
in Section 3.16 of the Company Disclosure Schedule or in the Company SEC
Reports, no officer of the Company or any of its Subsidiaries owns, directly or
indirectly, any interest in (excepting not more than 1% stock holdings for
investment purposes in securities of publicly held and traded companies) or is
an officer, director, employee or consultant of any person which is a
competitor, lessor, lessee, franchisee, customer or supplier of the Company or
any of its Subsidiaries; and no officer or director of the Company or any of its
Subsidiaries (i) owns, directly or indirectly, in whole or in part, any
Intellectual Property which the Company or any of its Subsidiaries is using or
the use of which is necessary for the business of the Company or any of its
Subsidiaries; (ii) has any claim, charge, action or cause of action against the
Company or any of its Subsidiaries, except for claims for accrued vacation pay,
accrued benefits under the Benefit Plans and similar matters and agreements
existing on the date hereof; (iii) has made, on behalf of the Company or any of
its Subsidiaries, any payment or commitment to pay any commission, fee or other
amount to, or to purchase or obtain or otherwise contract to purchase or obtain
any goods or services from, any other person of which any officer or

<PAGE>

director of the Company, or, to the Company's knowledge, a relative of any of
the foregoing, is a partner or stockholder (except stock holdings solely for
investment purposes in securities of publicly held and traded companies); (iv)
owes any money to the Company or any of its Subsidiaries; (v) is owed any money
by the Company or any of its Subsidiaries; or (vi) is a party to any
transaction, agreement, arrangement or understanding with the Company or any of
its Subsidiaries other than items arising out of the ordinary course of
employment with the Company.

Section 3.17 INFORMATION IN PROXY STATEMENT. The Proxy Statement, if
any (or any amendment thereof or supplement thereto), will, at the date mailed
to Company shareholders and at the time of the meeting of Company shareholders
to be held in connection with the Merger, not 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 light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or the Purchaser for inclusion in the
Proxy Statement. The Proxy Statement will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.

Section 3.18 OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Janney Montgomery Scott Inc. dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, a copy of which opinion has been delivered to Parent
and the Purchaser, it being understood and agreed by Parent and the Purchaser
that such opinion is for the benefit of the Board of Directors of the Company
and may not be relied upon by the Parent or Purchaser or their affiliates or
stockholders.

Section 3.19 BROKERS OR FINDERS. The Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commis-

<PAGE>

sion or similar fee in connection with any of the transactions contemplated by
this Agreement except for Janney Montgomery Scott Inc., whose engagement letter
has previously been provided to Parent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER

Parent and the Purchaser represent and warrant to the Company that the
statements contained in this Article IV are true and correct as of the date of
this Agreement and, subject to modification as appropriate to effect the
anticipated merger of Parent with and into CUC pursuant to the Agreement and
Plan of Merger, dated as of May 27, 1997, between CUC and Parent, will be true
and correct as of the Closing Date as though made on the Closing Date.

Section 4.1 ORGANIZATION. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate or other
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a material
adverse effect on Parent and its Subsidiaries, taken as a whole. Parent and
each of its Subsidiaries is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on Parent and its Subsidiaries, taken
as a whole.

Section 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the

<PAGE>

transactions contemplated hereby. The execution, delivery and performance by
Parent and the Purchaser of this Agreement, and the consummation of the Merger
and of the transactions contemplated hereby have been duly authorized by the
Board of Directors of Parent and the Purchaser and by Parent as the sole
stockholder of the Purchaser and no other corporate action on the part of Parent
and the Purchaser is necessary to authorize the execution and delivery by Parent
and the Purchaser of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and the Purchaser, as the case may be, and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and the Purchaser, as the case may be,
enforceable against each of them in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.

Section 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set
forth in Section 4.3 of the schedule attached to this Agreement setting forth
exceptions to Parent's representations and warranties set forth herein and
except for filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Exchange Act, the HSR
Act, state securities or blue sky laws, and the VSCA and the DGCL, none of the
execution, delivery or performance of this Agreement by Parent or the Purchaser,
the consummation by Parent or the Purchaser of the transactions contemplated
hereby or compliance by Parent or the Purchaser with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent or the Purchaser,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond,

<PAGE>

mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent, or any of its Subsidiaries or the Purchaser is a
party or by which any of them or any of their respective properties or assets
may be bound, or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Parent, any of its Subsidiaries or any of their
properties or assets.

Section 4.4 INFORMATION IN PROXY STATEMENT. None of the
information supplied by Parent or the Purchaser specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
shareholders and at the time of the meeting of shareholders to be held in
connection with the Merger, 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 light of the circumstances under which
they are made, not misleading.

Section 4.5 SEC REPORTS AND FINANCIAL STATEMENTS. Parent has filed
with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since April 30, 1995 under the Exchange Act or the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "Parent SEC Documents"). As of their respective dates
or, if amended, as of the date of the last such amendment, the Parent SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
The financial statements of Parent included in the Parent SEC Documents (the
"Parent Financial Statements") have been prepared from, and are in accordance
with, the books and records of Parent and its consolidated subsidiaries, comply
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with

<PAGE>

United States generally accepted accounting principles ("GAAP") (except in the
case of unaudited statements, as permitted by Form 10-Q under the Exchange Act)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position and the consolidated results of operations and cash flows (and changes
in financial position, if any) of Parent and its consolidated subsidiaries as of
the times and for the periods referred to therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

ARTICLE V

COVENANTS

Section 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule,
or (iii) as consented to in writing by Parent, such consent not to be
unreasonably withheld or delayed, during the period from the date of this
Agreement to the Effective Time, and prior to the time the directors of the
Purchaser have been elected to, and shall constitute two-thirds of, the Board of
Directors of the Company pursuant to Section 1.3 (the "Appointment Date"):

(a) the business of the Company and its Subsidiaries shall be
conducted only in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted, and each of the Company and its
Subsidiaries shall use its best efforts to preserve its business organization
intact, keep available the services of its current officers and employees and
maintain its existing relations with franchisees, customers, suppliers,
creditors, business partners and others having business dealings with it, to the
end that its goodwill and ongoing business shall be unimpaired at the Effective
Time of the Merger in any material respect;

(b) the Company will not, directly or indirectly, (i) sell,
transfer or pledge or agree to sell, transfer or pledge any of the shares,
preferred stock or capital stock of any of its Subsidiaries beneficially owned
by it, (ii) amend its Articles of Incorpora-

<PAGE>

tion or Bylaws or similar organizational documents; or (iii) split, combine or
reclassify the outstanding Shares or Preferred Stock or any outstanding capital
stock of any of the Subsidiaries of the Company;

(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) except pursuant to the
Stock Option Agreement, issue, sell, pledge, dispose of or encumber any shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital stock
of any class of the Company or its Subsidiaries, other than Shares reserved for
issuance on the date hereof pursuant to the exercise of Company Options
outstanding on the date hereof; (iii) transfer, lease, license, sell, mortgage,
pledge, dispose of, or encumber any material assets other than in the ordinary
and usual course of business and consistent with past practice, or incur or
modify any material indebtedness or other liability, other than in the ordinary
and usual course of business and consistent with past practice; or (iv) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock;

(d) neither the Company nor any of its Subsidiaries shall: (i)
grant any increase in the compensation payable or to become payable by the
Company or any of its Subsidiaries to any of its executive officers or key
employees or (ii)(A) adopt any new, or (B) amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to become payable
under any existing, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan agreement or arrangement; or (iii)
enter into any employment or severance agreement with or, except in accordance
with the existing written policies of the Company, grant any severance or
termination pay to any officer, director or employee of the Company or any of
its Subsidiaries;

(e) neither the Company nor any of its Subsidiaries shall
modify, amend or terminate any of its material contracts or waive, release or
assign any mate-

<PAGE>

rial rights or claims, except in the ordinary course of business and consistent
with past practice;

(f) neither the Company nor any of its Subsidiaries shall permit
any material insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except in the ordinary
course of business and consistent with past practice;

(g) neither the Company nor any of its Subsidiaries shall: (i)
incur or assume any long-term debt, or except in the ordinary course of
business, incur or assume any short-term indebtedness in amounts not consistent
with past practice; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other person, except in the ordinary course of business and consistent
with past practice; (iii) make any loans, advances or capital contributions to,
or investments in, any other person (other than to wholly owned Subsidiaries of
the Company); or (iv) enter into any material commitment or transaction
(including, but not limited to, any borrowing, capital expenditure or purchase,
sale or lease of assets or real estate);

(h) neither the Company nor any of its Subsidiaries shall change
any of the accounting methods used by it unless required by GAAP;

(i) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice, of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and its consolidated Subsidiaries;

(j) neither the Company nor any of its Subsidiaries will adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);

<PAGE>

(k) neither the Company nor any of its Subsidiaries will take,
or agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Merger set forth in Article VI not being
satisfied, or that would make any representation or warranty of the Company
contained herein inaccurate in any respect at, or as of any time prior to, the
Effective Time, or that would impair the ability of the Company to consummate
the Merger in accordance with the terms hereof or delay such consummation; and

(l) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.

Section 5.2 ACCESS; CONFIDENTIALITY. Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, full access to all its properties, books, contracts,
commitments and records and the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to the Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Unless otherwise required by law and until the
Appointment Date, Parent will hold any such information which is nonpublic in
confidence in accordance with the provisions of a letter agreement dated
September 22, 1997, between the Company and the Parent (the "Confidentiality
Agreement").

Section 5.3 CONSENTS AND APPROVALS. (a) Each of the Company, Parent
and the Purchaser will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on it with respect to this
Agreement and the transactions contemplated hereby (which actions shall include,
without limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of

<PAGE>

their Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and the Purchaser will, and
will cause its Subsidiaries to, take all reasonable actions necessary to obtain
(and will cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, the
Purchaser, the Company or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.

(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.

Section 5.4 NO SOLICITATION. (a) Neither the Company nor any of
its Subsidiaries or affiliates shall (and the Company shall cause its officers,
directors, employees, representatives and agents, including, but not limited to,
investment bankers, attorneys and accountants, not to), directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than Parent, any of its affiliates or representatives)
concerning any merger, tender offer, exchange offer, sale of assets, sale of
shares of capital stock or debt securities or similar transactions involving the
Company or any Subsidiary (an "Acquisition Proposal"). The Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, the Company may furnish information concerning
its business, properties or assets to any corporation, partnership, person or
other entity or group pursuant to appropriate confidentiality agreements, and
may negotiate and participate in discussions and negotiations with such entity
or group concerning an Acquisition Proposal if (x) such entity or

<PAGE>

group has on an unsolicited basis submitted a bona fide written proposal to the
Board of Directors of the Company relating to any such transaction which the
Board determines in good faith, represents a superior transaction to the Offer
and the Merger and which is not subject to the receipt of any necessary
financing and (y) in the opinion of the Board of Directors of the Company, only
after receipt of (i) a written opinion from the Company's investment banking
firm that the Acquisition Proposal is superior, from a financial point of view,
to the Offer and the Merger, and (ii) advice from independent legal counsel to
the Company to the effect that the failure to provide such information or access
or to engage in such discussions or negotiations would be likely to cause the
Board of Directors to violate its fiduciary duties to the Company's shareholders
under applicable law (an Acquisition Proposal which satisfies clauses (x) and
(y) being referred to herein as a "Superior Proposal"). The Company will
promptly communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry (and will disclose any written materials received by the
Company in connection with such proposal, discussion negotiation, or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.

(b) Except as set forth herein, neither the Board of Directors
of the Company nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or the Purchaser,
the approval or recommendation by such Board of Directors or any such committee
of the Offer, this Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the time of acceptance for payment of Shares in the Offer,
the Board of Directors of the Company may (subject to the terms of this and the
following sentence) withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger, approve or recommend a Superior Proposal,
or enter into an agreement with respect to a Superior Proposal, PROVIDED, that
the Company shall promptly advise Parent orally and in writing of any Superior
Proposal or any inquiry which could lead to a Superior Proposal, shall specify
the material terms and conditions of such Superior Proposal and identify the

<PAGE>

person making such Superior Proposal; PROVIDED, FURTHER, that the Company shall
not enter into an agreement with respect to a Superior Proposal unless the
Company shall have furnished Parent with written notice not later than 12:00
noon 2 days in advance of any date that it intends to enter into such agreement.
In addition, if the Company enters into an agreement with respect to any
Acquisition Proposal, it shall concurrently with entering into such agreement
pay, or cause to be paid, to Parent the Termination Fee (as defined in Section
8.1(b)).

Section 5.5 ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of the Company and
Parent shall use all reasonable efforts to take, or cause to be taken, all such
necessary actions.

Section 5.6 PUBLICITY. The initial press release with respect to
the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without the prior consultation of the other party, except as may be required by
law or by any listing agreement with a national securities exchange or trading
market.

Section 5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the

<PAGE>

Company or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 5.8
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.

Section 5.8 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) For five years after the Effective Time, the Surviving Corporation (or any
successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries (each an "Indemnified Party") against all losses, claims, damages,
liabilities, fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the written
consent of the Parent or the Surviving Corporation)) arising out of actions or
omissions occurring at or prior to the Effective Time to the full extent
permitted under Virginia law (provided that such actions or omissions were in
compliance with the standards set forth under Virginia law, the Articles of
Incorporation or the Bylaws), subject to the terms of the Articles of
Incorporation and the Bylaws, all as in effect at the date hereof; PROVIDED
THAT, in the event any claim or claims are asserted or made within such five
year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims; PROVIDED,
FURTHER, that nothing herein shall impair any rights or obligations of any
present or former directors or officers of the Company.

(b) Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of not less than five years after the Effective Date;
PROVIDED, that the Parent may substitute therefor policies of substantially
similar coverage and amounts containing terms no less favorable to such former
directors or officers; PROVIDED, FURTHER, that in no event shall the Company be
required to pay aggregate premiums for insurance under this Section in excess of
200% of the aggregate premiums paid by the Company in 1997 on an annualized
basis for such purpose.

<PAGE>

ARTICLE VI

CONDITIONS

Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:

(a) STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, if
required by applicable law, in order to consummate the Merger;

(b) STATUTES; CONSENTS. No law, statute, rule, order, decree or
regulation shall have been enacted or promulgated by any Governmental Entity of
competent jurisdiction which declares this Agreement invalid or unenforceable in
any material respect or which prohibits consummation of the Merger and all
governmental consents, orders and approvals required for the consummation of the
Merger and the other transactions contemplated hereby shall have been obtained
and shall be in effect at the Effective Time;

(c) PURCHASE OF SHARES IN OFFER. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer; and

(d) HSR APPROVAL. The applicable waiting period under the HSR
Act shall have expired or been terminated.

Section 6.2 CONDITIONS TO PARENT'S AND THE PURCHASER'S OBLIGATIONS
TO EFFECT THE MERGER. The obligations of Parent and the Purchaser to consummate
the Merger shall be subject to the satisfaction on or prior to the Closing Date
of each of the following conditions, any and all of which may be waived in whole
or in part by the Parent and the Purchaser, to the extent permitted by
applicable law.

<PAGE>

(a) COMPLIANCE WITH OBLIGATIONS. All actions contemplated by Section
2.4 hereof shall have been taken;

(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in Article III hereof shall be true in all
material respects; and

(c) COVENANTS. The Company shall have complied in all material
respects with its obligations under the terms of this Agreement.

ARTICLE VII

TERMINATION

Section 7.1 TERMINATION. This Agreement may be terminated and the
transaction contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:

(a) By the mutual written consent of the Board of Directors of
Parent or the Purchaser and the Board of Directors of the Company.

(b) By either of the Board of Directors of the Company or the
Board of Directors of Parent or the Purchaser:

(i) if the Offer shall have expired without any Shares being
purchased therein; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as the
case may be, to purchase the Shares pursuant to the Offer on or prior to
such date; or

(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their best efforts to lift),
which permanently restrains, enjoins or otherwise prohibits the acceptance
for payment

<PAGE>

of, or payment for, Shares pursuant to the Offer or the Merger and such
order, decree, ruling or other action shall have become final and
non-appealable.

(i) if Parent, the Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(i) if the Company is in material breach of its
obligations under this Agreement;

(ii) in connection with entering into a definitive agreement in
accordance with Section 5.4(b), provided it has complied with all
provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the Termination Fee; or

(iii) if Parent or the Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to Parent or the Purchaser, as applicable, except, in any case, for
such breaches which are not, in Parent's opinion, reasonably likely to
affect adversely Parent's or the Purchaser's ability to complete the Offer
or the Merger.

(d) By the Board of Directors of Parent or the Purchaser:

(i) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, the Purchaser, or any of
their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public announcement of
the Offer;

<PAGE>

(ii) if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached any representation, warranty, covenant or
other agreement contained in this Agreement which (A) would give rise to
the failure of a condition set forth in paragraph (f) or (g) of Annex A
hereto and (B) cannot be or has not been cured within 30 days after the
giving of written notice to the Company; or

(iii) if either Parent or the Purchaser is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(e) of Annex A hereto.

Section 7.2 EFFECT OF TERMINATION. In the event of the termination
of this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void, and there shall be no liability on the part of the Parent
or the Company except (A) for fraud or for breach of this Agreement and (B) as
set forth in Section 8.1.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 FEES AND EXPENSES. (a) Except as contemplated by this
Agreement, including Section 8.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.

(b) If (x) the Board of Directors of the Company shall terminate
this Agreement pursuant to Section 7.1(c)(ii), (y) the Board of Directors of
Parent or the Purchaser shall terminate this Agreement pursuant to Section
7.1(d)(iii) hereof, or (z) prior to the termination of this Agreement (other
than by the Board of Directors of the Company pursuant to Section 7.1(c)(i) or
7.1(c)(iii)), an Acquisition Proposal shall have been made and within 12 months
of such termination, the same or another Acquisition Proposal from the same or
another

<PAGE>

party shall be accepted and the related transaction consummated pursuant to a
definitive agreement or otherwise, the Company shall pay to Parent (concurrently
with such termination, in the case of clauses (x) or (y) above, and not later
than two business days after the Company takes any such action with respect to
an Acquisition Proposal, in the case of clause (z) above) an amount equal to
$13,650,000 plus an amount equal to the fees and expenses incurred by Parent and
the Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the transactions contemplated hereby (the portion of such fees
and expenses payable hereunder not to exceed $750,000) (the "Termination Fee").

Section 8.2 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto (by action taken
by their respective Boards of Directors), at any time prior to the Closing Date
with respect to any of the terms contained herein; PROVIDED, HOWEVER, that after
the approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce the amount or change the form
of the Merger Consideration.

Section 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.

Section 8.4 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

(a) if to Parent or the Purchaser, to:

<PAGE>

HFS Incorporated
6 Sylvan Way
Parsippany, New Jersey 07054
Attention: James E. Buckman, Esq.
Telephone No.:
Telecopy No.: (973) 496-5335

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

and

(b) if to the Company, to:

Jackson Hewitt Inc.
4575 Bonnie Road
Virginia Beach, VA 23462
Attention: Keith E. Alessi
Telephone No.: (757) 473-3300
Telecopy No.: (757) 473-8409

with a copy to:

Kaufman & Canoles
One Commercial Place
Norfolk, Virginia 23514
Attention: John M. Paris, Jr., Esq.
Telephone No.: (757) 624-3000
Telecopy No.: (757) 624-3169

Section 8.5 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". As used in this Agreement, (a) the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange
Act, and (b) the term "Company's knowledge" means the knowledge that the
directors and officers of the Company and its Subsidiaries and the employees of
the

<PAGE>

Company and its Subsidiaries having responsibility for the particular subject
matter at issue would possess after reasonable investigation and inquiry.

Section 8.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.

Section 8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Section 5.8 is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.

Section 8.8 SEVERABILITY. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.

Section 8.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof; PROVIDED, however, that
the laws of the respective jurisdictions of

<PAGE>

incorporation of each of the parties shall govern the relative rights,
obligations, powers, duties and other internal affairs of such party and its
board of directors.

Section 8.10 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent provided, however, that nothing herein shall limit the right of Parent to
effect the consummation of its merger with and into CUC pursuant to the
Agreement and Plan of Merger, dated as of May 27, 1997, between CUC and Parent.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.

Section 8.11 COMPANY'S KNOWLEDGE. For purposes of Article III of
this Agreement, the term "knowledge of the Company" shall mean the actual
knowledge of the directors and executive officers of the Company identified on
Schedule B of the Company Disclosure Schedule, without independent
investigation.

<PAGE>

IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

JACKSON HEWITT INC.

By: /s/ Keith E. Alessi
--------------------------------
Name: Keith E. Alessi
Title: Chairman, President and Chief
Executive Officer

<PAGE>

ANNEX A
-------

CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time in its sole discretion (subject
to the provisions of the Merger Agreement), the Purchaser shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if (i) any applicable waiting period under the HSR Act has not expired or
terminated, (ii) the Minimum Condition has not been satisfied, or (iii) at any
time on or after the date of the Merger Agreement and before the time of payment
for any such Shares, any of the following events shall occur or shall be
determined by the Purchaser to have occurred:

(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (i) seeking to prohibit or impose any
material limitations on Parent's or the Purchaser's ownership or operation (or
that of any of their respective Subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
the Purchaser or their respective Subsidiaries and affiliates to dispose of or
hold separate any material portion of the business or assets of the Company or
Parent and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the purchaser of any Shares under the
Offer or pursuant to the Stock Option Agreement or the Shareholders Agreement,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, the Stock Option Agreement or the Shareholders Agreement, or seeking
to obtain from the Company, Parent or the Purchaser any damages that are
material in relation to the Company and its Subsidiaries taken as a whole, (iii)
seeking to impose material limitations on the ability of the Purchaser, or
rendering the Purchaser unable, to accept for payment, pay for

<PAGE>

or purchase some or all of the Shares pursuant to the Offer and the Merger, (iv)
seeking to impose material limitations on the ability of the Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's shareholders, or (v) which otherwise is
reasonably likely to have a material adverse affect on the consolidated
financial condition, businesses or results of operations of the Company and its
Subsidiaries, taken as a whole;

(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;

(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or in the NASDAQ National Market System, for a period in excess of two
days (excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States (whether or not mandatory), (iii) a commencement of a
war, armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any limitation (whether or not
mandatory) by any United States or foreign governmental authority on the
extension of credit by banks or other financial institutions, (v) any decline in
either the Dow Jones Industrial Average or the Standard & Poor's Index of 500
Industrial Companies by an amount in excess of 20% measured from the close of
business on the date of this Agreement for a period of at least five consecutive
trading days; PROVIDED, HOWEVER, in the event that there shall have occurred a
decline in either the Dow Jones Industrial Average or the Standard & Poor's
Index of 500 Industrial Companies by an amount in excess of 20% measured from
the close of business on the date of this Agreement and which remains in effect
on the scheduled expiration date of the Offer but which decline shall not have
existed for a period of at least five consecutive trad-

<PAGE>

ing days, the Purchaser shall extend the Offer for up to five business days in
order to enable the Purchaser to determine whether such decline continues for a
period of at least five consecutive trading days; PROVIDED, FURTHER, that the
Purchaser shall be required to notify the Company of its determination to
terminate the Offer as a result of the occurrence of a decline contemplated in
this paragraph (c)(v) within three days following the occurrence thereof, unless
the scheduled expiration date of the Offer (as it may be extended pursuant to
the Merger Agreement or the immediately preceding proviso) is to occur within
such three day period, in which event the Purchaser shall be required to notify
the Company of such determination by 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date, or (vi) a change in
general financial bank or capital market conditions which materially or
adversely affects the ability of financial institutions in the United States to
extend credit or syndicate loans;

(d) there shall have occurred any material adverse change (or
any development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any material adverse change) in the consolidated financial
condition, businesses, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole;

(e)(i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Acquisition Proposal or (ii) the
Company shall have entered into any agreement with respect to any Superior
Proposal in accordance with Section 5.4(b) of this Agreement;

(f) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be true
and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each case as
of the date of this Agreement and as of the scheduled expiration of the Offer;

(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
material agreement or cove-

<PAGE>

nant of the Company to be performed or complied with by it under this Agreement;

(h) this Agreement shall have been terminated in accordance with
its terms;

(i) all of the Warrants shall have been exercised in full and
the Shares issuable upon the exercise thereof shall have been issued; or

which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by Parent
or the Purchaser) giving rise to such condition makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for Shares.

<PAGE>

Exhibit (c)(2)

SHAREHOLDERS AGREEMENT

AGREEMENT, dated as of November 19, 1997, among HFS Incorporated, a
Delaware corporation ("Parent"), HJ Acquisition Corp., a Virginia corporation
and a wholly owned subsidiary of Parent (the "Purchaser"), and the shareholder
identified on the signature page hereof (the "Shareholder").

W I T N E S S E T H:

WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Jackson Hewitt Inc., a Virginia corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which the Purchaser will be merged with and into the Company (the
"Merger");

WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at a price of $68.00 per
share all outstanding shares of Common Stock (as defined in Section 1 hereof) of
the Company, including all of the Shares (as defined in Section 2 hereof)
beneficially owned by the Shareholder; and

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

(a) In order to induce Parent and the Purchaser to enter into the
Merger Agreement, the Shareholder hereby agrees to validly tender (or cause the
record owner of such shares to validly tender), and not to withdraw, pursuant to
and in accordance with the terms of the Offer, not later than the fifteenth
business day after commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares of
Common Stock set forth opposite the Shareholder's name on Schedule I hereto (the
"Existing Shares"), all of which are Beneficially Owned by the Shareholder, and
any shares of Common Stock acquired by the Shareholder in any capacity after the
date hereof and prior to the termination of this Agreement by means of purchase,
dividend, distribution or in any other way (such shares of Common Stock,
together with the Existing Shares, the "Shares"). The Shareholder hereby
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

(b) The Shareholder hereby permits Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
shareholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) its identity and ownership of
the Shares and the nature of its commitments, arrangements and understandings
under this Agreement.

3. ADDITIONAL AGREEMENTS.

(a) VOTING AGREEMENT. The Shareholder shall, at any meeting of the
holders of Common Stock, however called, or in connection with any written
consent of the holders of Common Stock, vote (or cause to be voted) the Shares
(if any) then held of record or Beneficially Owned by the Shareholder, (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof and hereof; and (ii) against any Acquisition Proposal and
against any action or agreement that would impede, frustrate, prevent or nullify
this Agreement, or result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which would result in any of the conditions set
forth in Annex A to the Merger Agreement or set forth in Article VI of the
Merger Agreement not being fulfilled.

(b) NO INCONSISTENT ARRANGEMENTS. The Shareholder hereby covenants
and agrees that, except as contemplated by this Agreement and the Merger
Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of the Shares or any interest therein, (ii) enter into
any contract, option or other agreement or understanding with respect to any
transfer of any or all of the Shares or any interest therein, (iii) grant any
proxy, power-of-attorney or other authorization in or with respect to the
Shares, (iv) deposit the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the

<PAGE>

Shares or (v) take any other action that would in any way restrict, limit or
interfere with the performance of its obligations hereunder or the transactions
contemplated hereby or by the Merger Agreement.

(i) The Shareholder hereby irrevocably grants to, and appoints,
Parent and James E. Buckman and Michael P. Monaco, or either of them, in their
respective capacities as officers of Parent, and any individual who shall
hereafter succeed to any such office held by such individuals with Parent, and
each of them individually, the Shareholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
Shareholder, to vote the Shares, or grant a consent or approval in respect of
the Shares in favor of the Transactions and against any Acquisition Proposal.

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

(iii) The Shareholder understands and acknowledges that Parent and
the Purchaser are entering into the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement. The Shareholder hereby
affirms that the irrevocable proxy set forth in this Section 3(c) is given in
connection with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of the Shareholder under
this Agreement. The Shareholder hereby further affirms that the irrevocable
proxy is coupled with an interest and may under no circumstances be revoked.
The Shareholder hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 13.1-663(D) of the Virginia Stock Corporation Act.

(d) NO SOLICITATION. The Shareholder hereby agrees, in its capacity
as a shareholder of the Company, that neither the Shareholder nor any of its
subsidiaries or affiliates shall (and the Shareholder shall cause its

<PAGE>

officers, directors, partners, employees, representatives and agents, including,
but not limited to, investment bankers, attorneys and accountants, not to),
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any Acquisition Proposal.
The Shareholder will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The Shareholder will immediately communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry (and will disclose
any written materials received by the Shareholder in connection with such
proposal, discussion, negotiation or inquiry) and the identity of the party
making such proposal or inquiry which it may receive in respect of any such
transaction. Any action taken by the Company or any member of the Board of
Directors of the Company in accordance with Section 5.4(b) of the Merger
Agreement shall be deemed not to violate this Section 3(d).

(e) BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult with the other and
provide any necessary information and material with respect to all filings made
by such party with any Governmental Entity in connection with this Agreement and
the Merger Agreement and the transactions contemplated hereby and thereby.

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

(a) OWNERSHIP OF SHARES. The Shareholder is the record and
Beneficial Owner of the Existing Shares, as set forth on Schedule I. On the
date hereof, the Existing Shares constitute all of the Shares owned of record or
Beneficially Owned by the Shareholder. The Shareholder has sole voting power
and sole power to issue

<PAGE>

instructions with respect to the matters set forth in Sections 2, 3 and 4
hereof, sole power of disposition and sole power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of the Existing
Shares with no limitations, qualifications or restrictions on such rights,
subject to applicable securities laws and the terms of this Agreement.

(b) POWER; BINDING AGREEMENT. The Shareholder has the power
(corporate, partnership or other) and authority to enter into and perform all of
its obligations under this Agreement. The execution, delivery and performance
of this Agreement by the Shareholder will not violate any other agreement to
which the Shareholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or voting
trust. This Agreement has been duly and validly executed and delivered by the
Shareholder and constitutes a valid and binding agreement of the Shareholder,
enforceable against the Shareholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Shareholder is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by the Shareholder
of the transactions contemplated hereby.

(c) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by the Shareholder and the consummation by the Shareholder of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by the Shareholder, the consummation by the Shareholder of the
transactions contemplated hereby or compliance by the Shareholder with any of
the provisions hereof shall (A) conflict with or result in any breach of any
organizational documents applicable to the Shareholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any

<PAGE>

kind to which the Shareholder is a party or by which the Shareholder or any of
its properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Shareholder or any of its properties or assets.

(d) NO ENCUMBRANCES. Except as permitted by this Agreement, the
Existing Shares and the certificates representing the Existing Shares are now,
and at all times during the term hereof will be, held by the Shareholder, or by
a nominee or custodian for the benefit of the Shareholder, free and clear of all
Encumbrances, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such Encumbrances or
proxies arising hereunder.

(e) NO FINDER'S FEES. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Shareholder.

(f) RELIANCE BY PARENT. The Shareholder understands and acknowledges
that Parent and the Purchaser are entering into the Merger Agreement in reliance
upon the Shareholder's execution and delivery of this Agreement.

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

(a) POWER; BINDING AGREEMENT. Parent and the Purchaser each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and the Purchaser will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and the Purchaser and constitutes a
valid and binding agreement of each of Parent and the Purchaser, enforceable
against each of Parent and the Purchaser in accordance with its terms.

<PAGE>

(b) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and the Purchaser and the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby or compliance by each of Parent and the
Purchaser with any of the provisions hereof shall (A) conflict with or result in
any breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
either of Parent or the Purchaser is a party or by which either of Parent or the
Purchaser or any of their properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.

6. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.

7. STOP TRANSFER. The Shareholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Shares" shall refer to and include the Shares as well as all such stock

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.

(b) BINDING AGREEMENT. This Agreement and the obligations hereunder
shall attach to the Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of the Shares shall pass, whether by
operation of law or otherwise, including, without limitation, the Shareholder's
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.

(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties hereto,
provided that Parent or the Purchaser may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent or the
Purchaser of its obligations hereunder if such assignee does not perform such
obligations provided, further, that nothing herein shall limit the right of
Parent to effect the consummation of its merger with and into CUC International
("CUC") pursuant to the Agreement and Plan of Merger, dated as of May 27, 1997,
between CUC and Parent.

(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.

<PAGE>

(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

(f) SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed,

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.

(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.

(i) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof; PROVIDED, however, that the laws of the
respective jurisdictions of incorporation of each of the parties shall govern
the relative rights, obligations, powers, duties and other internal affairs of
such party and its board of directors.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Keith E. Alessi
-----------------------------------
Keith E. Alessi

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

4575 Bonney Road
Virginia Beach, Va 23462 105,301 207,049(1)

(1) None of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(3)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Harry W. Buckley
-----------------------------------
Harry W. Buckley

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

13700 NW Timber Ridge
Parkville, MO 64152 2,000 12,000(1)

400 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(4)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Christopher Drake
-----------------------------------
Christopher Drake

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

4575 Bonney Road
Virginia Beach, Va 23462 5,300 13,900(1)

None of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(5)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Harry S. Gruner
-----------------------------------
Harry S. Gruner

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

1119 St. Paul Steet
Baltimore, MD 21202 -0- 10,000(1)

2,000 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(6)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Harry S. Gruner
-----------------------------------
Harry S. Gruner, General Partner

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

1119 St Paul Street
Baltimore, MD 21202 243,735 -0-

<PAGE>

Exhibit (c)(7)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ William P. Veillette
-----------------------------------
William P. Veillette

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

86 Elliot Road
East Chatham, NY 12060 134,162 14,000(1)

5,200 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(8)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Ann Santomas
-----------------------------------
Ann Santomas

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

4575 Bonney Road
Virginia Beach, Va 23462 -0- 2,625(1)

600 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(9)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Leslie Ann Wood
-----------------------------------
Leslie Ann Wood

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

4575 Bonney Road
Virginia Beach, Va 23462 -0- 23,500(1)

2,100 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(10)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Michael E. Julian, Jr.
-----------------------------------
Michael E. Julian, Jr.

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

P.O. Box 3498
Jackson, MS 39204 10,000 12,000(1)

2,400 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(11)

SHAREHOLDERS AGREEMENT

W I T N E S S E T H:

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

<PAGE>

(b) "Common Stock" shall mean at any time the Common Stock, $.02 par
value, of the Company.

(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

<PAGE>

the Shareholder, is subject to the terms and conditions of the Offer.

3. ADDITIONAL AGREEMENTS.

<PAGE>

(ii) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.

<PAGE>

4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Shareholder as
follows:

<PAGE>

dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.

8. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Shares shall terminate upon the termination of the
Merger Agreement in accordance with its terms.

9. MISCELLANEOUS.

<PAGE>

If to the Shareholder, to the address set forth on Schedule I hereto.

If to Parent
or the
Purchaser: HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: James E. Buckman, Esq.
Telephone No.: (973) 428-9700
Telecopy No.: (973) 496-5335

Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

<PAGE>

construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.

<PAGE>

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.

<PAGE>

IN WITNESS WHEREOF, Parent and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

<PAGE>

IN WITNESS WHEREOF, the Shareholder has caused this Agreement to be
duly executed as of the day and year first above written.

SHAREHOLDER

/s/ Martin B. Mazer
-----------------------------------
Martin B. Mazer

<PAGE>

Schedule I

Number of Shares Beneficially Owned
Direct Stock
Address of Shareholder Ownership Options
- ---------------------- --------- -------

4575 Bonney Road
Virginia Beach, Va 23462 1,021 21,000(1)

1,600 of these shares are exercisable within 60 days.

<PAGE>

Exhibit (c)(12)

September 22, 1997

HFS Incorporated
6 Sylvan Way
Parsippany, New Jersey 07054

Attention: Sam Katz
Senior Vice President - Acquisitions

Re: Confidentiality Agreement
-------------------------

Gentleman:

In connection with your consideration of a possible transaction with
Jackson Hewitt, Inc., a Virginia corporation, and/or one or more of its direct
or indirect subsidiaries or affiliates (collectively, with such subsidiaries of
affiliates, the "Company"), the Company is prepared to make available to you
certain information concerning certain business, operations and assets of the
Company. As a condition to such information being furnished to you and your
directors, officers, employees, agents or advisors (including, without
limitation, solicitors, attorneys, accountants, consultants, bankers and
financial advisors) (collectively, "Representatives"), you agree to treat any
information concerning the Company or any subsidiary or affiliate of the Company
(whether prepared by the Company, its advisors or otherwise and irrespective of
the form of communication) which is furnished to you or to your Representatives
by or on behalf of the Company (herein collectively referred to as the
"Evaluation Material") in accordance with the provisions of this letter
agreement and to take or abstain from taking other actions hereinafter set
forth.

The term "Evaluation Material" shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
you or your Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished

<PAGE>

HFS Incorporated
September 22, 1997
Page 2

to you or your Representatives pursuant hereto regardless of whether such
information is specifically identified as "confidential". The term "Evaluation
Material" does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by you or your
Representatives, (ii) was within your possession prior to its being furnished to
you by or on behalf of the Company pursuant hereto, provided that the source of
such information was not known by you to be bound by a confidentiality agreement
with or other contractual, legal or fiduciary obligation of confidentiality to
the Company with respect to such information or (iii) becomes available to you
on a nonconfidential basis from a source other than the Company or any of its
Representatives, provided that such source is not known by you to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company with respect to such information.

You hereby agree that you and your Representatives shall use the Evaluation
Material solely for the purpose of evaluating a possible transaction between the
Company and you, that the Evaluation Material will be kept confidential and that
you and your Representatives will not disclose any of the Evaluation Material in
any manner whatsoever; provided, however, that (i) you may make any disclosure
of such information to which the Company gives its prior written consent and
(ii) any of such information may be disclosed to your Representatives who need
to know such information for the purpose of evaluating a possible transaction
with the Company and who agree to keep such information confidential and who are
provided with a copy of this letter agreement and agree to be bound by the terms
hereof to the same extent as if they were parties hereto.

In addition, we both agree that, without the prior written consent of the
other party, neither nor its Representatives will disclose to any person the
fact the Evaluation Material has been made available to you, that discussions or
negotiations are taking place concerning a possible transaction involving the
Company or any of the terms, conditions or other facts with respect thereto
(including the status thereof), unless such party is advised by its counsel such
disclosure is required by law and then only with as much prior written notice to
the party as is practical under circumstances. The term "person" as used in
this letter agreement shall be broadly interpreted to include the media and any
corporation, partnership, group, individual, governmental agency, stock exchange
or other entity.

In the event that you or any of your Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may, at its sole expense, seek a protective order or other
appropriate remedy and/or waive compliance with the revisions of this letter
agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver by the

<PAGE>

HFS Incorporated
September 22, 1997
Page 3

Company, you or any of your Representatives are nonetheless, in the opinion of
your counsel, legally compelled to disclose Evaluation Material to any tribunal
or else stand liable for contempt or suffer other censure or penalty to you or
any of your Representatives are otherwise required by law to disclose Evaluation
Material, then you or your Representative may, without liability hereunder,
disclose to such tribunal only that portion of the Evaluation Material which
such counsel advises you is legally required to be disclosed, provided that you
exercise reasonable good faith efforts (which shall not include any expenditure
of funds) to preserve the confidentiality of Evaluation Material, including,
without limitation, by cooperating with the Company at the Company's expense to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Evaluation Material by such
tribunal.

Without the prior written consent of the Company, none of your directors,
officers or employees who are aware of the Evaluation Material and/or the
possibility of the transaction contemplated hereby will, for the two-year period
from the date hereof solicit or cause to be solicited the employment of any
employee of the Company, provided that the foregoing shall not prohibit general
solicitation made by means of advertising or similar media not directed
specifically to any employee of the Company.

In addition, you hereby acknowledge that you are aware (and that your
Representatives who are apprised of this matter have been or will be advised)
that the United States securities laws restrict persons with material non-public
information about a company obtained directly or indirectly from that company
from purchasing or selling securities of such company, or from communicating
such information to any other person under circumstances in which it is
reasonably foreseeable that such persons are likely to purchase or sell such
securities.

You hereby further agree that until the expiration of two years from the
date of this Agreement, you shall not without the prior approval of the Board of
Directors of the Company (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities or property of the
Company or any of its subsidiaries, whether such agreement or proposal is with
the Company or any of its subsidiaries or with a third party; provided that you
may acquire up to five (5%) of the outstanding stock of the Company without
violating the foregoing, (ii) propose to enter into, directly or indirectly, any
merger or business combination involving the Company or any of its subsidiaries,
(v) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of the Company or any
of its subsidiaries, (vi) disclose any intention, plan or arrangement
inconsistent with the foregoing or (vii) assist any other persons in connection
with any of the foregoing.

<PAGE>

HFS Incorporated
September 22, 1997
Page 4

If you decide that you do not wish to proceed with a transaction with the
Company, you will promptly inform the Company of that decision. In that case,
or at any time upon the request of the Company for any reason, you will promptly
deliver to the Company all documents (and all copies thereof) furnished to you
or your Representatives by or on behalf of the Company pursuant hereto. In the
event of such a decision or request, all other Evaluation Material prepared by
you or your Representatives shall be destroyed, and no copy thereof shall be
retained except as may be required by law. Notwithstanding the return or
destruction of the Evaluation Material, you and your Representatives will
continue to be bound by your obligations of confidentiality and other
obligations hereunder.

Please confirm your agreement with the forgoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between you and the Company.

Very truly yours,

JACKSON HEWITT, INC.

By: /s/ Keith E. Alessi
------------------------------------
Name: Keith E. Alessi
Title: Chairman, President & CEO

ACCEPTED AND AGREED as of
The date first written above:

HFS INCORPORATED

By: /s/ Sam Katz
------------------------------------
Name: Sam Katz
Title: Senior Vice President - Acquisition

<PAGE>

Exhibit (c)(13)

STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT, dated as of November 19, 1997, among HFS
Incorporated, a Delaware corporation ("Parent"), HJ Acquisition Corp., a
Virginia corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
and Jackson Hewitt Inc., a Virginia corporation (the "Company"). Capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement (as defined below).

WHEREAS, Parent, the Purchaser and the Company propose to enter into
an Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"), which would provide, among other things,
that the Purchaser, upon the terms and subject to the conditions thereof, would
make a cash tender offer (the "Offer") for all outstanding shares of common
stock, par value $.02 per share, of the Company (the "Shares") and thereafter
the Purchaser would merge with and into the Company (the "Merger"); and

WHEREAS, as an inducement and a condition to their willingness to
enter into the Merger Agreement, Parent and the Purchaser have required that the
Company agree, and the Company has agreed, as set forth herein, to grant to the
Purchaser an option to purchase authorized but unissued Shares.

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, the parties hereto agree as follows:

1. GRANT OF OPTION.

(a) The Company hereby grants to the Purchaser an irrevocable option,
exercisable as provided herein (the "Option"), to purchase for $68.00 per share
(the "Exercise Price") up to an aggregate of 1,326,331 Shares (the "Option
Shares"); PROVIDED, HOWEVER, that in no event shall the number of Option Shares
exceed 19.9% of the Company's issued and outstanding Shares (without giving
effect to any Shares subject to or issued pursuant

<PAGE>

to the Option). The number of Option Shares that may be received upon the
exercise of the Option and the Exercise Price are subject to adjustment as
herein set forth.

(b) In the event that any additional Shares are either (i) issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement) or (ii) redeemed, repurchased, retired or otherwise
cease to be outstanding after the date of this Agreement, the number of Option
Shares shall be increased or decreased, as appropriate, so that, after such
issuance, such number equals 19.9% of the number of Shares then issued and
outstanding without giving effect to any Shares subject to issuance pursuant to
the Option.

2. EXERCISE OF OPTION. The Option may be exercised by the Purchaser
at any time or from time to time following the occurrence of a Triggering Event
(as hereinafter defined), in whole or in part, until the expiration of six
months following the termination of the Merger Agreement in accordance with its
terms. If the Purchaser wishes to exercise the Option, the Purchaser shall give
written notice to the Company of its intention to exercise the Option,
specifying the number of Option Shares it will purchase and a place, time and
date not earlier than one day and not later than 20 days from the date such
notice is given for the closing of such purchase (a "Closing"). Each Closing
shall be held on the date specified in such notice unless, on such date, there
shall be any preliminary or permanent injunction or other order by any court of
competent jurisdiction or any other legal restraint or prohibition preventing
the consummation of such purchase, in which event such Closing shall be held as
soon as practicable following the lifting, termination or suspension of such
injunction, order, restraint or prohibition preventing the consummation of such
purchase, but in any event within two days thereof. The Company's obligation to
issue Option Shares upon exercise of the Option is subject to the conditions
that (i) all waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), required for the purchase of the Option
Shares upon such exercise shall have expired or been waived and (ii) there shall
not be in effect any preliminary injunction or other order issued by any
Governmental Entity prohibiting the exercise of the Option pursuant to this
Agreement. Parent and the Company shall each promptly

<PAGE>

make such filings and provide such information as may be required under the HSR
Act with respect to the purchase of the Option Shares. Notwithstanding the
termination of the Option, the Purchaser will be entitled to exercise its rights
under this Section 2 if it has exercised such rights in accordance with the
terms hereof prior to the termination of the Option.

The term "Triggering Event" shall mean the occurrence of any of the
following events (a) a person, entity or group (as such terms are defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder), other than Parent and its subsidiaries or
affiliates (each such person, entity or group being a "Third Party"), shall
publicly propose (x) any merger, tender offer, exchange offer, sale of assets,
sale of shares of capital stock or debt securities or similar transactions
involving the Company or any Subsidiary, (y) that any change be made in the
composition of a majority of the Board of Directors of the Company and such
Third Party shall file proxy materials or other documents with the Securities
and Exchange Commission in respect of such proposal or (z) the purchase of 20
percent or more of the total voting power of the Company, including by tender or
exchange offer, (b) the Purchaser shall have accepted Shares for payment
pursuant to the Offer constituting a majority of the Shares outstanding on a
fully diluted basis (excluding Shares issuable pursuant to this Agreement), (c)
the Company shall have breached the covenants contained in Section 5.4 of the
Merger Agreement, (d) one or more of the events set forth in paragraphs (e) of
Annex A to the Merger Agreement shall have occurred, or (e) an event as a result
of which Parent is, or, as a result of an Acquisition Proposal having been made,
may be, entitled to receive the Termination Fee pursuant to Section 8.1 of the
Merger Agreement. The Company shall notify the Purchaser promptly in writing of
the occurrence of any Triggering Event of which it has knowledge, it being
understood that the giving of such notice by the Company shall not be a
condition to the right of the Purchaser to exercise the Option.

3. PAYMENT AND DELIVERY OF CERTIFICATES. At any Closing hereunder (a)
the Purchaser shall make payment to the Company of the aggregate purchase price
for the Option Shares so purchased in immediately available

<PAGE>

funds by certified or official bank check or by wire transfer to a bank account
designated by the Company to the Purchaser prior to such Closing and (b) the
Company shall deliver to or cause to be delivered to the Purchaser a certificate
or certificates, duly executed by the Company and registered in the name of the
Purchaser, representing the number of Option Shares so purchased.

4. REPURCHASE OBLIGATION. If, at any time during the period
commencing on the occurrence of an event as a result of which Parent is, or, as
a result of an Acquisition Proposal having been made, may be, entitled to
receive the Termination Fee pursuant to Section 8.1 of the Merger Agreement and
ending on the termination of the Option in accordance with Section 2, (a) the
Purchaser sends to the Company an exercise notice indicating the Purchaser's
election to exercise its right pursuant to this Section 4, then the Company
shall pay to the Purchaser on the Closing, in exchange for the cancellation of
the Option with respect to such number of Option Shares as the Purchaser
specifies in the exercise notice, an amount in cash equal to such number of
Option Shares multiplied by the difference between (a) the Market/Offer Price
(as defined below) and (ii) the Exercise Price, or (b) the owner of Option
Shares from time to time (the "Owner") sends to the Company an exercise notice
indicating the Owner's election to exercise its right pursuant to this Section
4, then the Company shall pay to the Owner on the Closing, in exchange for the
Option Shares as specified in the notice, an amount in cash equal to such number
of Option Shares multiplied by the Market/Offer Price.

The term "Market/Offer Price" shall mean the highest of (i) the price
per Share at which a tender offer or exchange offer therefor has been made, (ii)
the price per Share to be paid by any third party pursuant to an agreement with
the Company, (iii) the highest closing price for the Shares within the six-month
period immediately preceding the date the Purchaser gives notice of the required
repurchase of the Option or the Owner gives notice of the required repurchase of
Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of the Company's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Company as determined by a nationally recognized invest-

<PAGE>

ment banking firm mutually selected by the Purchaser or the Owner, as the case
may be, on the one hand, and the Company, on the other hand, divided by the
number of Shares outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm mutually selected
by the Purchaser or the Owner, as the case may be, on the one hand, and the
Company, on the other hand. Notwithstanding the termination of the Option, the
Purchaser or the Owner, as the case may be, will be entitled to exercise its
rights under this Section 4 if it has exercised such rights in accordance with
the terms hereof prior to the termination of the Option.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and the Purchaser as follows:

(a) DUE AUTHORIZATION, ETC. (a) The Company has the corporate
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by the
Company will not violate any other agreement to which it is a party. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms. The Board of Directors of the Company
(at a meeting duly called and held) has duly and validly approved the
transactions contemplated hereby and by the Merger Agreement, including the
Offer and the Merger and the acquisitions of Option Shares contemplated hereby
and thereby for purposes of Section 13.1-727 and Sections 13.1-728.1 ET SEQ. of
the Virginia Stock Corporation Act (the "VSCA"), such approval occurring prior
to the time the Purchaser became an "interested shareholder", as that term is
defined in Section 13.1-725 of the VSCA.

(b) OPTION SHARES. The Company has taken all necessary corporate
action to authorize and reserve for issuance upon exercise of the Option the
Option Shares and will take all necessary corporate action to authorize and
reserve for issuance all additional Shares or other securities which may be
issued as a result of Section 7 hereof upon exercise of the Option. The Shares

<PAGE>

(or such other securities) to be issued upon due exercise, in whole or in part,
of the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights,
without liability attaching to the ownership thereof, and will be delivered free
and clear of all claims, liens, encumbrances and security interests of any kind
whatsoever.

(c) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof shall (A) conflict with or result in any breach of any organizational
documents applicable to the Company, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Company is a party or by which the Company
or any of its properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, statute, rule or regulation applicable to it or
any of its properties or assets.

6. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Company as
follows:

(a) DUE AUTHORIZATION, ETC. Parent and Purchaser each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and the Purchaser will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and the Purchas-

<PAGE>

er and constitutes a valid and binding agreement of each of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in accordance
with its terms.

(b) NO DISTRIBUTION. The Purchaser is acquiring the Option, and
will acquire the Option Shares issuable upon exercise of the Option, for its own
account and not with a view to or for sale in connection with any distribution
thereof, and the Purchaser will not sell or otherwise dispose of the Option, or
any Option Shares, except in each case in compliance with the Securities Act and
the rules and regulations thereunder.

7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any
change in the Shares by reason of any stock dividend, extraordinary dividend or
distribution, split-up, recapitalization, combination, exchange of shares or the
like, the number of Option Shares subject to the Option and the Exercise Price
shall be appropriately adjusted.

8. REGISTRATION UNDER THE SECURITIES ACT. If the Option is exercised
and the Purchaser so requests, the Company shall effect as promptly as
practicable after receiving such request, but only after the termination of the
Merger Agreement in accordance with its terms, the registration under the
Securities Act and any applicable state securities laws of such Shares owned by
Parent, the Purchaser or any of Parent's other subsidiaries as such notice shall
designate and to keep such registration effective for a period of not less than
six months (or such shorter period as may be necessary to effect the
distribution of such Shares); PROVIDED, HOWEVER, that the Company shall not be
obligated to effect more than two such registrations. The Company shall pay all
fees and expenses in connection with such registrations, including the
reasonable fees and expenses of counsel and accountants of Parent and the
Purchaser, but excluding underwriting discounts and commissions to brokers or
dealers. In connection with any registration pursuant to this Section 8, the
Company shall provide the Purchaser, Parent, their officers, directors and
agents, and any underwriters retained by them in connection with the sale of
such Shares, with customary representations, warranties, covenants, indemnities
and contribution.

<PAGE>

9. LISTING. If the Shares or any other securities to be acquired
upon exercise of the Option are then listed on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") (or any other national
securities quotation system or national securities exchange), the Company, upon
the request of the Purchaser, will promptly file an application to list the
Shares or other securities to be acquired upon exercise of the Option on NASDAQ
(and any other national securities quotation system or national securities
exchange) and will use reasonable efforts to obtain approval of such listing as
promptly as practicable.

10. FURTHER ASSURANCES. From time to time, at the other parties'
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.

11. MISCELLANEOUS.

(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.

(b) ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties hereto, provided that Parent or the Purchaser may assign, in their sole
discretion, their rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve Parent
or the Purchaser of its obligations hereunder if such assignee does not perform
such obligations, provided, further, that nothing herein shall limit the right
of Parent to effect the consummation of its merger with and into CUC
International ("CUC") pursuant to the Agreement and Plan of Merger, dated as of
May 27, 1997, between CUC and Parent.

<PAGE>

waived or otherwise modified or terminated, except upon the execution and
delivery of a written agreement executed by the parties hereto.

(d) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received upon receipt) in accordance with the terms of
Section 8.4 of the Merger Agreement.

(e) SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.

(f) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.

(g) REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

(h) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect

<PAGE>

hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.

(i) NO THIRD PARTY BENEFICIARIES. Except for the Owner as
provided in Section 4, this Agreement is not intended to be for the benefit of,
and shall not be enforceable by, any person or entity who or which is not a
party hereto.

(j) CONSENTS. Each of the parties hereto will use its best
efforts to obtain consents of all third parties and Governmental Entities
necessary to the consummation of the transactions contemplated by this
Agreement.

(k) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof; PROVIDED, however, that
the laws of the respective jurisdictions of incorporation of each of the parties
shall govern the relative rights, obligations, powers, duties and other internal
affairs of such party and its board of directors.

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.

(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.

(n) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.

(o) REVOCATION OF APPROVALS. The Company will not revoke the
approvals contemplated by Section 5(a) hereof.

<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the Parent, the Purchaser and the Company on the date first above
written.

HFS INCORPORATED

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

HJ ACQUISITION CORP.

By: /s/ Michael P. Monaco
--------------------------------
Name: Michael P. Monaco
Title: Vice Chairman and Chief Financial Officer

JACKSON HEWITT INC.

By: /s/ Keith E. Alessi
--------------------------------
Name: Keith E. Alessi
Title: Chairman, President and Chief
Executive Officer

<PAGE>

Exhibit (c)(14)

EMPLOYMENT AGREEMENT

AGREEMENT, dated this 19th day of November, 1997, by and between
Jackson Hewitt Inc. (the "Company") and Keith E. Alessi ("Executive").

WITNESSETH:

WHEREAS, the Company is engaged in the business of providing income
tax return preparation and related services (the "Business");

WHEREAS, Executive has been employed by the Company in the
capacities of President and Chief Executive Officer;

WHEREAS, the Company and Executive entered into an Employment
Agreement dated May 29, 1997 (the "Prior Agreement");

WHEREAS, the Company is entering into an Agreement and Plan of
Merger dated November 19, 1997, by and among HFS Incorporated ("HFS"), HJ
Acquisition Corp. ("Acquisition"), and the Company (the "Merger Agreement")
pursuant to which, among other things, Acquisition will be merged into the
Company (the "Merger"); and

WHEREAS, HFS has entered into an Agreement and Plan of Merger dated
May 27, 1997 between CUC International Inc. ("CUC") and HFS (the "CUC Merger
Agreement"), pursuant to which HFS shall be merged into CUC (the "CUC
Merger"). The surviving corporation of the CUC Merger shall be referred to
hereinafter as "Cendant." In the event that the CUC Merger is not
consummated prior to the Effective Time of the Merger, references herein to
Cendant shall be read as HFS.

WHEREAS, pursuant to and simultaneous with the Merger, the Company
and Executive wish to supersede the Prior Agreement with this Agreement;

<PAGE>

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive agree as
follows:

1. Employment: The Company hereby agrees to employ Executive, and
Executive hereby agrees to serve, subject to the provisions of this
Agreement, as an employee of the Company. Executive agrees to devote all of
his business time, attention and energies to the performance of the duties
assigned to him hereunder, and to perform such duties faithfully, diligently
and to the best of his abilities and subject to such laws, rules, regulations
and policies from time to time applicable to the Company's employees. Except
as otherwise provided herein, Executive is permitted to pursue outside
interests, including, but not limited to, membership in trade associations,
industry boards, and on the boards of directors of other companies, provided
that such outside interests do not interfere with the performance of his
duties and obligations hereunder, and provided that Executive receives the
express written consent of the Board of Directors of the Company. Executive
agrees to refrain from engaging in any activity that does, will or could
reasonably be deemed to conflict with the best interests of the Company.
Without limiting the generality of the foregoing, Executive shall perform the
duties associated with the positions of President and Chief Executive
Officer, and such other duties and responsibilities as are from time to time
assigned to Executive by the Board of Directors of the Company consistent
with such positions.

2. Term: This Agreement shall commence on the Effective Time of the
Merger, and shall expire on the first anniversary thereof, unless sooner
terminated in accordance with Section 9 hereof (the "Term"). In the event
the Merger is not consummated, this Agreement shall be of no further force
and effect.

3. Compensation:

(a) Salary: Executive's salary shall be at the annual rate of
Three Hundred Thousand Dollars ($300,000) (the "Annual Salary"), payable in
accordance with the Company's regular payroll practices. All applicable
withholding taxes shall be deducted from such payments.

<PAGE>

(b) Incentive Bonus: Executive shall be eligible to receive a
bonus of up to fifty percent (50%) of the Annual Salary (the "Annual Bonus"),
provided that Cendant achieves it EBITDA (as defined below) target for 1998,
which target shall be determined solely by Cendant. EBITDA shall mean
Cendant's earnings before interest, taxes, depreciation and amortization,
adjusted for any extraordinary gains or losses, as reflected in the Cendant
audited Consolidated Statements of Income. The Annual Bonus shall be
increased incrementally in the following amounts if the Company exceeds its
corresponding unit EBITDA target, which target shall be determined solely by
Cendant:

Company Target Additional Annual Bonus

10% above EBITDA 25% of Annual Salary

25% above EBITDA 50% of Annual Salary.

The Annual Bonus shall be paid to Executive no later than February 28, 1999,
or as soon as practicable thereafter if the amount of the Annual Bonus cannot
be determined by such date. Notwithstanding the foregoing, Executive shall
not be eligible to receive an Annual Bonus if his employment is terminated
prior to the expiration of the Term pursuant to Sections 9(a)(i), (ii) or
(iii).

(c) Bonus for 1997: The Company understands that, pursuant to
the Prior Agreement, Executive was to be paid an annual bonus on June 18,
1998 with respect to the Company's 1998 fiscal year. Therefore, as soon as
practicable following the Effective Time of the Merger (as defined in the
Merger Agreement), the Company shall pay Executive an amount equal to the
annual bonus Executive would have received under the Prior Agreement,
prorated from June 19, 1997 to the Effective Time of the Merger.

(d) Use of Automobile: During the Term of this Agreement, the
Company shall make available to Executive for Executive's exclusive use, an
automobile that is equivalent to a Buick Riviera or Park Avenue, and shall
pay the costs of operating, maintaining and insuring such automobile.

<PAGE>

4. Stock Options: As soon as practicable following the Effective
Time of the Merger, Cendant shall grant to Executive, pursuant to an
agreement substantially in the form of Exhibit A hereto, a nonqualified
option to acquire 300,000 shares of Cendant common stock (or, if the
Effective Time of the Merger occurs prior to the Effective Time of the CUC
Merger (as defined in the CUC Merger Agreement), HFS shall grant to Executive
a nonqualified option to acquire 124,838 shares of HFS common stock) with a
per share exercise price equal to the fair market value of a share of Cendant
(or, if applicable, HFS) common stock on the date on which the Effective Time
of the Merger occurs.

5. Benefits: Executive shall be eligible to participate in such
benefit plans as are, or from time-to-time hereafter may be, provided by the
Company. All benefits shall be provided to Executive in accordance with the
terms and conditions of such benefit plans and programs as are maintained by
the Company, as such plans are amended from time to time.

6. Vacation: Executive shall be entitled to paid vacation of two
(2) weeks annually.

7. Reimbursement of Expenses: The Company will reimburse Executive
for reasonable and necessary business expenses of Executive for travel, meals
and similar items incurred in connection with the performance of Executive's
duties, and which are consistent with such guidelines as the Board of
Directors of the Company may from time to time establish. All payments for
reimbursement of such expenses shall be made to the Executive only upon the
presentation to the Company of appropriate vouchers or receipts.

8. Confidentiality, Non-Competition, etc.:

(a) Executive acknowledges that: (i) the Business is intensely
competitive and that Executive's employment by the Company will require that
Executive have access to and knowledge of confidential information of the
Company, including, but not limited to, the identity of the Company's
customers, the identity of the representatives of customers with whom the
Company has dealt, the kinds of services provided by the Company to customers
and offered to be performed for potential

4
<PAGE>

customers, the manner in which such services are performed or offered to be
performed, the service needs of actual or prospective customers, pricing
information, information concerning the creation, acquisition or disposition
of products and services, computer software applications and other programs,
personnel information and other trade secrets (the "Confidential
Information"); (ii) the direct and indirect disclosure of any such
Confidential Information to existing or potential competitors of the Company
would place the Company at a competitive disadvantage and would do damage,
monetary or otherwise, to the Company's business; and (iii) the engaging by
Executive in any of the activities prohibited by this Section 8 may
constitute improper appropriation and/or use of such Confidential
Information. Executive expressly acknowledges the trade secret status of the
Confidential Information and that the Confidential Information constitutes a
protectible business interest of the Company. Accordingly, the Company and
Executive agree as follows:

(b) For purposes of this Section 8, the Company shall be
construed to include the Company and its parents and subsidiaries engaged in
the Business, including any divisions managed by Executive.

(c) During Executive's employment with the Company, and at all
times after the termination of Executive's employment by expiration of the
Term or otherwise, Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner, employee, principal
or agent of any business, or in any other capacity, make known, disclose,
furnish, make available or utilize any of the Confidential Information, other
than in the proper performance of the duties contemplated herein, or as
expressly permitted herein, or as required by a court of competent
jurisdiction or other administrative or legislative body; provided that,
prior to disclosing any of the Confidential Information as required by a
court or other administrative or legislative body, Executive shall promptly
notify the Company so that the Company may seek a protective order or other
appropriate remedy. Executive agrees to return all Confidential Information,
including all photocopies, extracts and summaries thereof, and any such
information stored electronically on tapes, computer disks or in any other
manner to the Company at any time

5
<PAGE>

upon request by the Company and upon the termination of his employment for
any reason.

(d) During Executive's employment with the Company, Executive
shall not engage in "Competition" with the Company. For purposes of this
Agreement, Competition by Executive shall mean Executive's engaging in, or
otherwise directly or indirectly being employed by or acting as a consultant
or lender to, or being a director, officer, employee, principal, agent,
stockholder, member, owner or partner of, or permitting his name to be used
in connection with the activities of any other business or organization
anywhere in the United States which competes, directly or indirectly, with
the Business of the Company.

(e) For a period of two (2) years following the termination of
Executive's employment, whether upon expiration of the Term or otherwise,
Executive shall not engage in Competition, as defined above, with the Company
in any locality or region of the United States in which the Company had
operations at the time of, or within six (6) months prior to, Executive's
termination, or in which, during the six (6) month period prior to
Executive's termination, the Company had made substantial plans with the
intention of establishing operations in such locality or region; provided
that, it shall not be a violation of this sub-paragraph for Executive to
become the registered or beneficial owner of up to five percent (5%) of any
class of the capital stock of a competing corporation registered under the
Securities Exchange Act of 1934, as amended, provided that Executive does not
actively participate in the business of such corporation until such time as
this covenant expires.

(f) For a period of two (2) years after he ceases to be
employed hereunder by the Company, whether upon expiration of the Term or
otherwise, Executive agrees that he will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or entity, do any of the
following:

(i) solicit from any customer doing business with the
Company as of Executive's termination, business of the same
or of a similar nature to the business of the Company with
such customer;

6
<PAGE>

(ii) solicit from any known potential customer of the
Company business of the same or of a similar nature to that
which has been the subject of a known written or oral bid,
offer or proposal by the Company, or of substantial
preparation with a view to making such a bid, proposal or offer,
within six (6) months prior to Executive's termination;

(iii) solicit the employment or services of, or hire, any
person who was known to be employed by the Company upon
termination of Executive's employment, or within six (6) months
prior thereto; or

(iv) otherwise knowingly interfere with the business or
accounts of the Company.

(g) Executive acknowledges that the services to be rendered by
him to the Company are of a special and unique character, which gives this
Agreement a peculiar value to the Company, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and
that a material breach or threatened breach by him of any of the provisions
contained in this Section 8 will cause the Company irreparable injury.
Executive therefore agrees that the Company shall be entitled, in addition to
any other right or remedy, to a temporary, preliminary and permanent
injunction, without the necessity of proving the inadequacy of monetary
damages or the posting of any bond or security, enjoining or restraining
Executive from any such violation or threatened violations.

(h) Executive further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of the Company.

7
<PAGE>

9. Termination:

(a) The employment of Executive hereunder shall terminate on
the first to occur of the following:

(i) the date of Executive's death, adjudicated
incompetency or adjudicated bankruptcy;

(ii) the date on which Executive shall have experienced a
Disability (as defined below), and the Board of Directors of the
Company gives Executive notice of termination on account of
Disability;

(iii) the date on which Executive shall have engaged in
conduct which constitutes Cause (as defined below), and the Board
of Directors of the Company gives Executive notice of termination
for Cause;

(iv) expiration of the Term; or

(v) the date on which the Board of Directors of the
Company shall give Executive notice of termination for any
reason other than the reasons set forth in (i) through (iv)
above.

(b) For purposes of this Agreement, "Disability" shall mean an
illness, injury or other incapacitating condition as a result of which
Executive is unable to perform the services required to be performed under
this Agreement for (i) ninety (90) consecutive days during the Term, or (ii)
a period or periods aggregating more than one hundred and twenty (120) days
in any six (6) consecutive months. In any such event, the Board of Directors
of the Company, in its sole discretion, may terminate this Agreement by
giving notice to Executive of termination for Disability. Executive agrees
to submit to such medical examinations as may be necessary to determine
whether a Disability exists, pursuant to such reasonable requests made by the
Board of Directors of the Company from time to time.

(c) For purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following, as reasonably determined by the Board of
Directors of the Company:

8
<PAGE>

(i) Executive's willful and continued failure to
substantially perform his duties with the Company;

(ii) Executive's conviction of, or guilty plea or
confession to, a felony or crime of moral turpitude;

(iii) the willful or negligent engaging by Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise; or

(iv) Executive's breach of any material term of this
Agreement.

10. Compensation in Event of Termination; Survival: Upon
termination of Executive's employment for any reason, this Agreement shall
terminate and the Company shall have no further obligation to Executive
except as set forth in this Section 10; provided that, the provisions set
forth in Sections 8 and 12 hereof shall remain in full force and effect after
the termination of Executive's employment.

(a) In the event Executive's employment is terminated pursuant
to Sections 9(a)(i), (ii), or (iii) prior to the expiration of the Term,
Executive or his estate, conservator or designated beneficiary, as the case
may be, shall be entitled to payment of any earned but unpaid Annual Salary
and payment for unused vacation days, through the date of termination.
Following any such termination, neither Executive nor his estate, conservator
or designated beneficiary shall be entitled to receive any salary or other
payment provided for hereunder with respect to any period after such
termination, except as Executive may otherwise be entitled pursuant to any
employee benefit plan.

(b) In the event Executive's employment is terminated pursuant
to Section 9(a)(iv) upon expiration of the Term, Executive shall be entitled
to receive, as his sole and exclusive remedy, (i) any earned but unpaid
Annual Salary, and payment for unused vacation days through the date of
termination, (ii) and the Annual Bonus, if any, pursuant to Section 3(b)
hereof.

9
<PAGE>

(c) In the event Executive's employment is terminated pursuant
to Section 9(a)(v) prior to the expiration of the Term, Executive shall be
entitled to receive, as his sole and exclusive remedy, (i) severance pay in
an amount equal to one (1) year's Annual Salary, paid in installments at such
times as Executive would normally receive payroll checks as though employed
through the severance payment period, and (ii) an amount, if any, equal to
the Annual Bonus Executive would have received hereunder pursuant to Section
3(b) hereof, prorated from the Effective Time of the Merger to the date of
such termination of employment.

11. Successors and Assigns; Binding Agreement: This Agreement shall
be binding upon, and inure to the benefit of, the Company and its successors
and assigns and upon any person acquiring, whether by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company's
assets and business.

12. Return of Company Property: Executive agrees that following the
termination of his employment for any reason, he shall return all property of
the Company, its subsidiaries, affiliates and any divisions thereof he may
have managed which is then in or thereafter comes into his possession,
including, but not limited to, documents, contracts, agreements, plans,
photographs, books, notes, electronically stored data and all copies of the
foregoing as well as any automobile or other materials or equipment supplied
by the Company to Executive.

13. Entire Agreement: This Agreement sets forth the entire
agreement between the parties with respect to its subject matter and merges
and supersedes all prior discussions, agreements and understandings of every
kind and nature between them, including, but not limited to, the Prior
Agreement, and neither party shall be bound by any term or condition with
respect to the subject matter of this Agreement other than as expressly set
forth or provided for herein. This Agreement may not be changed or modified
except by an agreement in writing, signed by the parties hereto.

14. Each Party the Drafter: This Agreement and the provisions
contained in it shall not be construed or interpreted for or against any
party to this Agreement

10
<PAGE>

because that party drafted or caused that party's legal representative to draft
any of its provisions.

15. Waiver: The failure of either party to this Agreement to
enforce any of its terms, provisions or covenants shall not be construed as a
waiver of the same or of the right of such party to enforce the same. Waiver
by either party hereto of any breach or default by the other party of any
term or provision of this Agreement shall not operate as a waiver of any
other breach or default.

16. Severability: In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of
the Agreement shall not in any way be affected or impaired thereby.
Moreover, if any one or more of the provisions contained in this Agreement
shall be held to be excessively broad as to duration, activity or subject,
such provisions shall be construed by limiting and reducing them so as to be
enforceable to the maximum extent allowed by applicable law.

17. Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia, without
regard to its conflict of law rules.

18. Descriptive Headings: The paragraph headings and recitals
contained herein are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.

19. Counterparts: This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.

11
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.

The Company EXECUTIVE

By: /s/ Michael E. Julian, Jr. /s/ Keith E. Alessi
---------------------------- --------------------------
Director

<PAGE>

EXHIBIT 99.(c)(15)

EMPLOYMENT AGREEMENT

AGREEMENT, dated this 24th day of November, 1997, by and between
Jackson Hewitt Inc. (the "Company") and Harry W. Buckley ("Employee").

WITNESSETH:

WHEREAS, the Company is engaged in the business of providing income
tax return preparation and related services (the "Business");

WHEREAS, the Company has entered into an Agreement and Plan of Merger
dated November 19, 1997, by and among HFS Incorporated ("HFS"), HJ Acquisition
Corp. ("Acquisition"), and the Company (the "Merger Agreement") pursuant to
which, among other things, Acquisition will be merged into the Company (the
"Merger"); and

WHEREAS, HFS has entered into an Agreement and Plan of Merger dated
May 27, 1997 between CUC International Inc. ("CUC") and HFS (the "CUC Merger
Agreement"), pursuant to which HFS shall be merged into CUC (the "CUC Merger").
The surviving corporation of the CUC Merger shall be referred to hereinafter as
"Cendant." In the event that the CUC Merger is not consummated prior to the
Effective Time of the Merger, references herein to Cendant shall be read as HFS.

WHEREAS, pursuant to and simultaneous with the Merger, the Company and
Employee wish to enter into a contractual arrangement whereby the Company will
utilize Employee's services upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Employee agree as
follows:

1. EMPLOYMENT: The Company hereby agrees to employ Employee, and
Employee hereby agrees to serve,

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subject to the provisions of this Agreement, as an employee of the Company. The
services to be rendered by Employee pursuant to this Agreement shall consist of
such consulting services as the President and Chief Executive Officer may from
time to time reasonably request during the Term, as defined below, with respect
to the operation of the Company's Business. The Company understands and agrees
that the duties which may be assigned to Employee pursuant to this Agreement
shall not require Employee to devote more than two (2) days of service per week.

2. TERM: This Agreement shall commence on the Effective Time of the
Merger (as defined in the Merger Agreement) and shall expire on the first
anniversary thereof, unless sooner terminated in accordance with Section 9
hereof (the "Term"). In the event the Merger is not consummated, this Agreement
shall be of no further force and effect.

3. SALARY: Employee's salary shall be at the annual rate of Ninety
Thousand Dollars ($90,000) (the "Annual Salary"), payable in accordance with the
Company's regular payroll practices. All applicable withholding taxes shall be
deducted from such payments.

4. STOCK OPTIONS: As soon as practicable following the Effective Time
of the Merger, Cendant shall grant to Employee, pursuant to an agreement
substantially in the form of Exhibit A hereto, a nonqualified option to acquire
75,000 shares of Cendant common stock (or, if the Effective Time of the Merger
occurs prior to the Effective Time of the CUC Merger (as defined in the CUC
Merger Agreement), HFS shall grant to Employee a nonqualified option to acquire
31,209 shares of HFS common stock) with a per share exercise price equal to the
fair market value of a share of Cendant (or, if applicable, HFS) common stock on
the date on which the Effective Time of the Merger occurs.

5. BENEFITS: Employee shall be eligible to participate in such
benefit plans as are, or from time-to-time hereafter may be, provided by the
Company. All benefits shall be provided to Employee in accordance with the
terms and conditions of such benefit plans and programs as are maintained by the
Company, as such plans are amended from time to time.

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6. REIMBURSEMENT OF EXPENSES: The Company will reimburse Employee for
reasonable and necessary business expenses of Employee for travel, meals and
similar items incurred in connection with the performance of Employee's duties,
and which are consistent with such guidelines as the Board of Directors of the
Company may from time to time establish. All payments for reimbursement of such
expenses shall be made to the Employee only upon the presentation to the Company
of appropriate vouchers or receipts.

7. CONFIDENTIALITY, NON-COMPETITION, ETC.:

(a) Employee acknowledges that: (i) the Business is intensely
competitive and that Employee's employment by the Company will require that
Employee have access to and knowledge of confidential information of the
Company, including, but not limited to, the identity of the Company's customers,
the identity of the representatives of customers with whom the Company has
dealt, the kinds of services provided by the Company to customers and offered to
be performed for potential customers, the manner in which such services are
performed or offered to be performed, the service needs of actual or prospective
customers, pricing information, information concerning the creation, acquisition
or disposition of products and services, computer software applications and
other programs, personnel information and other trade secrets (the "Confidential
Information"); (ii) the direct and indirect disclosure of any such Confidential
Information to existing or potential competitors of the Company would place the
Company at a competitive disadvantage and would do damage, monetary or
otherwise, to the Company's business; and (iii) the engaging by Employee in any
of the activities prohibited by this Section 7 may constitute improper
appropriation and/or use of such Confidential Information. Employee expressly
acknowledges the trade secret status of the Confidential Information and that
the Confidential Information constitutes a protectible business interest of the
Company. Accordingly, the Company and Employee agree as follows:

(b) For purposes of this Section 7, the Company shall be
construed to include the Company and its parents and subsidiaries engaged in the
Business, including any divisions managed by Employee.

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<PAGE>

(c) During Employee's employment by the Company, and at all times
after the termination of Employee's employment by expiration of the Term or
otherwise, Employee shall not, directly or indirectly, whether individually, as
a director, stockholder, owner, partner, employee, principal or agent of any
business, or in any other capacity, make known, disclose, furnish, make
available or utilize any of the Confidential Information, other than in the
proper performance of the duties contemplated herein, or as expressly permitted
herein, or as required by a court of competent jurisdiction or other
administrative or legislative body; PROVIDED THAT, prior to disclosing any of
the Confidential Information as required by a court or other administrative or
legislative body, Employee shall promptly notify the Company so that the Company
may seek a protective order or other appropriate remedy. Employee agrees to
return all Confidential Information, including all photocopies, extracts and
summaries thereof, and any such information stored electronically on tapes,
computer disks or in any other manner to the Company at any time upon request by
the Company and upon the termination of his employment for any reason.

(d) During Employee's employment with the Company, Employee shall
not engage in "Competition" with the Company. For purposes of this Agreement,
Competition by Employee shall mean Employee's engaging in, or otherwise directly
or indirectly being employed by or acting as a consultant or lender to, or being
a director, officer, employee, principal, agent, stockholder, member, owner or
partner of, or permitting his name to be used in connection with the activities
of any other business or organization anywhere in the United States which
competes, directly or indirectly, with the Business of the Company; PROVIDED
THAT, Employee's ownership of shares in H&R Block, Inc. as of the date of this
Agreement shall not be deemed "Competition" to the extent such shares are not
otherwise sold.

(e) For a period of two (2) years after he ceases to be employed
hereunder by the Company, whether upon expiration of the Term or otherwise,
Employee agrees that he will not, directly or indirectly, for his benefit or for
the benefit of any other person, firm or entity, do any of the following:

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(i) solicit from any customer doing business with the
Company as of Employee's termination, business of the same or of a similar
nature to the business of the Company with such customer;

(ii) solicit from any known potential customer of the
Company business of the same or of a similar nature to that which has been
the subject of a known written or oral bid, offer or proposal by the
Company, or of substantial preparation with a view to making such a bid,
proposal or offer, within six (6) months prior to Employee's termination;

(iii) solicit the employment or services of, or hire, any
person who was known to be employed by the Company upon termination of
Employee's employment, or within six (6) months prior thereto; or

(iv) otherwise knowingly interfere with the business or
accounts of the Company.

(f) Employee acknowledges that the services to be rendered by him
to the Company are of a special and unique character, which gives this Agreement
a peculiar value to the Company, the loss of which may not be reasonably or
adequately compensated for by damages in an action at law, and that a material
breach or threatened breach by him of any of the provisions contained in this
Section 7 will cause the Company irreparable injury. Employee therefore agrees
that the Company shall be entitled, in addition to any other right or remedy, to
a temporary, preliminary and permanent injunction, without the necessity of
proving the inadequacy of monetary damages or the posting of any bond or
security, enjoining or restraining Employee from any such violation or
threatened violations.

(g) Employee further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of the Company.

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8. NO BREACH OF DUTY: Employee represents and warrants that he is not
subject to any agreement or other restriction that prohibits or would prohibit
him from entering into this Agreement or performing the duties contemplated
hereby. Employee further represents and warrants that he has not and will not
make use of at any time during the Term, any trade secrets, copyrighted
material, or other confidential or proprietary information from any prior
employer.

9. TERMINATION:

(a) The employment of Employee hereunder shall terminate on the
first to occur of the following:

(i) the date of Employee's death, adjudicated incompetency
or adjudicated bankruptcy;

(ii) the date on which Employee shall have experienced a
Disability (as defined below), and the Company gives Employee notice of
termination on account of Disability;

(iii) the date on which Employee shall have engaged in
conduct which constitutes Cause (as defined below), and the Company gives
Employee notice of termination for Cause;

(iv) expiration of the Term; or

(v) the date on which the Company shall give Employee notice
of termination for any reason other than the reasons set forth in (i)
through (iv) above.

(b) For purposes of this Agreement, "Disability" shall mean an
illness, injury or other incapacitating condition as a result of which Employee
is unable to perform the services required to be performed under this Agreement
for (i) ninety (90) consecutive days during the Term, or (ii) a period or
periods aggregating more than one hundred and twenty (120) days in any six (6)
consecutive months. In any such event, the Company, in its sole discretion, may
terminate this Agreement by giving notice to Employee of termination for
Disability. Employee agrees to submit to such medical examinations as may be
necessary to determine whether a Disability ex

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<PAGE>

ists, pursuant to such reasonable requests made by the Company from time to
time.

(c) For purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following, as reasonably determined by the Company:

(i) Employee's willful and continued failure to
substantially perform his duties with the Company;

(ii) Employee's conviction of, or guilty plea or confession
to, felony or crime of moral turpitude;

(iii) the willful or negligent engaging by Employee in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise; or

(iv) Employee's breach of any material term of this
Agreement.

10. COMPENSATION IN EVENT OF TERMINATION; SURVIVAL: Upon termination
of Employee's employment for any reason, this Agreement shall terminate and the
Company shall have no further obligation to Employee except as set forth in this
Section 10; PROVIDED THAT, the provisions set forth in Sections 7, 8 and 12
hereof shall remain in full force and effect after the termination of Employee's
employment.

(a) In the event Employee's employment is terminated pursuant to
Sections 9(a)(i), (ii), (iii) or (iv), Employee or his estate, conservator or
designated beneficiary, as the case may be, shall be entitled to payment of any
earned but unpaid portion of the Annual Salary through the date of termination.
Following any such termination, neither Employee nor his estate, conservator or
designated beneficiary shall be entitled to receive any other payment provided
for hereunder with respect to any period after such termination.

(b) In the event Employee's employment is terminated pursuant to
Section 9(a)(v) prior to the expiration of the Term, Employee shall be entitled
to receive, as his sole and exclusive remedy, payment of an

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<PAGE>

amount equal to the Annual Salary for the remainder of the Term.

11. SUCCESSORS AND ASSIGNS; BINDING AGREEMENT: This Agreement shall
be binding upon, and inure to the benefit of, the Company and its successors and
assigns and upon any person acquiring, whether by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company's
assets and business.

12. RETURN OF COMPANY PROPERTY: Employee agrees that following the
termination of his employment for any reason, he shall return all property of
the Company, its subsidiaries, affiliates and any divisions thereof he may have
managed which is then in or thereafter comes into his possession, including, but
not limited to, documents, contracts, agreements, plans, photographs, books,
notes, electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by the Company to Employee.

13. ENTIRE AGREEMENT: This Agreement sets forth the entire agreement
between the parties with respect to its subject matter and merges and supersedes
all prior discussions, agreements and understandings of every kind and nature
between them, and neither party shall be bound by any term or condition with
respect to the subject matter of this Agreement other than as expressly set
forth or provided for herein. This Agreement may not be changed or modified
except by an agreement in writing, signed by the parties hereto.

14. EACH PARTY THE DRAFTER: This Agreement and the provisions
contained in it shall not be construed or interpreted for or against any party
to this Agreement because that party drafted or caused that party's legal
representative to draft any of its provisions.

15. WAIVER: The failure of either party to this Agreement to enforce
any of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by either
party hereto of any breach or default by the other party of any term or
provision of this Agreement shall not operate as a waiver of any other breach or
default.

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16. SEVERABILITY: In the event that any one or more of the provisions
of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of the Agreement shall
not in any way be affected or impaired thereby. Moreover, if any one or more of
the provisions contained in this Agreement shall be held to be excessively broad
as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent allowed
by applicable law.

17. GOVERNING LAW: This Agreement shall be governed by and construed
in accordance with the laws of the State of Virginia, without regard to its
conflict of law rules.

18. DESCRIPTIVE HEADINGS: The paragraph headings and recitals
contained herein are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.

19. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.

The Company Employee

By: /s/ Keith E. Alessi /s/ Harry W. Buckley
------------------------ ----------------------
Keith E. Alessi
Chairman, President
and Chief Executive
Officer