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EXHIBIT A
Business Plan
Over 100 Jiffy Lube Service centers will be In operation by the end of 1982. Expansion will be accomplished through:
1. Sales of new franchises.
2. Acquisition of existing service centers or small franchise chains that meet the company's specifications.
Franchising will be used as the primary means of expanding the Jiffy Lube network. Franchising will attract qualified managers to
each Individual center because of the ownership opportunity offered them. Franchising will also accelerate growth because it elimi-
nates many of the managerial and financial requirements that would be necessary to develop and maintain a large network of
company-operated centers.
Franchises will be positioned to create blocks of service centers In targeted cities. "Clustering" these centers In large blocks will
build name recognition and make advertising costeffective.
The overall Image of Jiffy Lube Is not yet at the point where all franchisees will be willing to pay up front the $250K-$300K re-
quired to purchase land and develop a new center. In many situations it may be necessary for Jiffy Lube to provide the real estate de-
velopment financing.
Reaching 100 units by the end of 1982 will require the sale of 40 to 60 new franchises (depending on the number of units ac-
quired from existing chains). The company may find it necessary to provide real estate financing for half, or 20 to 30, of these units.
Based on a cost of $300K per unit, Jiffy Lube will need to obtain real estate financing of $6 million to $9 million to achieve the pro-
jected level of new franchise sales.
EXHIBIT B
Jiffy Lube Service Center Network (includes statistics for both franchised
and company-owned centers)
Year Ending March 31
1983
1980
1981
1982
[projected)
Total gross sales for network (millions)
$1.5
$2.5
$7.1
$15.6
Total centers In operation:
Franchised
7
19
40
90
Company owned
-
10
30
EXHIBIT C
Jiffy Lube, Inc., Operating Results
Year Ended March 31 (in millions]
1980
1982
1983
1981
[projected)
Revenues
$.2
$2.0
$3.5
$5.5
Net loss
$(0.4)
$(0.7)
$[1.4)
$12.6)
See Exhibit G for projected 1983 financial statements.

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entire network of service centers is projected to generate
The most significant sale was a private placement of
over $15 million in sales for fiscal 1983. However, as
the franchisor, Jiffy Lube shares in only a portion of this
$530K in preferred stock, the majority of which was
total. Jiffy Lube's revenues are made up of the following:
sold to a small group of Midwest investors. In addition,
Jiffy Lube used its common stock in several acquisitions,
- Royalty fees from franchisees (approximately 5
the largest being the purchase of Speedy Lube, a fran-
percent of each franchisee's gross sales)-
chisor and operator of seven oil change centers.
Rental income on property leased or subleased to
In addition to the above, the need for real estate fi-
franchisees.
noncing outlined in Jiffy Lube's business plan resulted in
Initial fees from new franchises (approximately
the company's most significant financing transaction to
date, its 1981 agreement with Pennzoil.
$20,000 per new service center)-
Sales by company-owned centers (however, as
described in a later section, all company-owned
centers were disposed of in fiscal 1983).
Pennzoil Agreement
The majority of franchisees are individuals who op-
erate one or two franchises.
In December 1980, Hindman and Kelley attended a
trade meeting put on by Pennzoil for its regional sales
people and major distributors. Pennzoil was the oil sup-
plier for the majority of Jiffy Lube centers and believed
Early Financing
that the quick oil change business could become a new
major distribution channel for oil products. Pennzoil sow
Jiffy Lube was financed during its startup and first several
the quick change industry as an opportunity to gain mar-
years of growth largely through Jim Hindman's personal
ket share from Quaker State, the leading oil distributor
resources. During the first three years of operation Hind-
in the eastern United States. Pennzoil's national sales
man contributed over $1.5 million in the form of cash,
manager told Hindman that the oil company planned on
assumptions of debt, and forgiveness of personal loans
building 100 quick oil change centers in the East.
made to Jiffy Lube. Hindman also personally guaranteed
Hindman spent the night writing a proposal to con-
certain transactions Jiffy Lube entered into, including
vince Pennzoil to work with Jiffy Lube, rather than com-
pete against it. In October 1981, the two companies
lines of credit with banks, loans relating to the purchase
or development of service centers, and real estate lease
signed an agreement (Exhibit DJ. For $1 million Jiffy
obligations. Ernst & Whinney provided introductions to
Lube sold convertible preferred stock representing 29
several banks and, at Hindman's request, participated in
percent of the company to Pennzoil. The agreement al-
key meetings with the bankers.
lowed Pennzoil to place four members on Jiffy Lube's
Financing also was obtained through the sale of stock
board of directors. Pennzoil agreed to guarantee $6.3
to directors, officers, employees, and other investors.
million of real estate financing. Service centers devel
oped with the financing guaranteed by Pennzoil were
EXHIBIT D
Pennzoil Agreement
Pennzoil will purchase 10,000 shares of Jiffy Lube Convertible Preferred Stock for $1,000,000.
Cumulative dividends of $12 per preferred share are payable quarterly. Any deficiency must be paid or declared before setting
aside any funds for any junior stock. These shares are redeemable by Jiffy Lube at any time after November 17, 1985, upon pay-
ment In cash of $1 10 per share plus an amount equal to all accrued dividends. They can be converted at the option of Pennzoil Into
common stock at a conversion price of $0.553 per share of each $1.00 Preferred Stock value.
Pennzoil shall have the option of electing the greater of 3 or 30 percent of the members of the board of directors of Jiffy Lube.
Jiffy Lube agrees to furnish Pennzoil certain financial Information, Including audited financial statements within 150 days after the
close of each fiscal year, and unaudited statements within 45 days after the close of the first three fiscal quarters.
Jim Hindman, and then Jiffy Lube, shall have the right of first refusal should Pennzoil desire to sell any of its shores of Jiffy Lube
stock. Pennzoil has the right of first refusal should Jim Hindman decide to sell any of his shores of Jiffy Lube stock.
Pennzoil agrees to Issue a commitment to guarantee $6,250,000 worth of Indebtedness to be Incurred In connection with the fi-
nancing of real estate site acquisition and construction cost In connection with the erection of Jiffy Lube centers. These units are to be
built east of the Mississippi River and generally along the eastern seaboard.
Pennzoil agrees to guarantee an additional $1,000,000 in order to finance Jiffy Lube's purchase from Pennzoil of four units which
Pennzoil has financed under its "Build to Sult" program.
Any units built using financing guaranteed by Pennzoil will be required to enter Into a Lube Center Sales Agreement and to execute
a Pennzoil Sign Agreement. Pennzoil will have the right to approve the selection of new sites to be financed under this agreement.

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royalties and rental income, because of the sale of the
chase of the Pennzoil stock. His major remaining assets
company stores.
Because of its dependence on franchise royalties,
are his interests in W. James Hindman, Lid. (75 percent
Jiffy Lube needs to quickly increase the number of fran-
ownership], and several other nursing home partner-
chises. Much of the growth to date has come through the
ships (these might be worth as much as $3 million].
Hindman has considered disposing of his partnership
acquisition of existing chains. Franchise agreements for
new units are typically made with individuals for one or
interests to provide cash for Jiffy Lube. However, Hind-
man's tax basis in these (approximately $200K] is for
two service centers. Experience to date has proven that
less than the current market value, and he views the out
the sale and development of new franchises can be ac-
right sale of them as a last resort because of the fox con-
celerated when Jiffy Lube offers to provide or arrange for
sequences. Several other investors in W. James Hind-
real estate and construction financing-
man, Lid., are also shareholders in Jiffy Lube and seem
willing to use their investments to raise cash for Jiffy
Lube.
Possible Alternatives
Another source Jiffy Lube has considered is a second
Hindman has already used the majority of his liquid as-
private placement with existing shareholders. Specific
sets in his prior contributions to Jiffy Lube and in the pur-
terms haven't been discussed, and it is unknown how
much these investors would be willing to contribute.
EXHIBIT G
Projected Statement of Operations and Balance Sheet
Projected Statement of Operations
Year Ended
March 31, 1983
(projected)
Revenues:
Sales by company-operated units
$3,877,000
Initial franchise fees
685,000
Franchise royalties
542,000
Rental Income from franchisees
276,000
Net gain on sales of company-operated units
40,000
Miscellaneous
41,000
Total revenues
5,461,000
Expenses:
Company-operated units:
Cost of products sold
1,300,000
Salaries and wages
1,090,000
Depreciation and amortization
180,000
Interest
258,000
Rent
308,000
Other
1,250,000
Total units expenses
4,386,000
Commissions
136,000
Selling, general, and administrative expenses
2,749,000
Interest expense
762,000
Total expenses
8,033,000
Net loss
$(2,572,000)

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EXHIBIT J
Ownership at March 1983
Shares
Percent
Common stock
Jim Hindman, president/CEO
2,133,333
69%
Gilbert Campbell, director
285,710
Others (less than 5%%)
675,775
22
3,094,818
100%
Series A 12% cumulative preferred stock:
Jim Hindman
7,255
Others (less than 5%]
5,815
13,070
100%
(Convertible at the option of the holders Into approximately 1,568,000 shares of common stock.)
$12.00 cumulative convertible preferred stock:
Jim Hindman
10,000
100%
(Convertible at the option of the holders Into approximately 1,808,000 shares of common stock.]

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