CART MEDIA CONFERENCE

July 9, 2002

Lee Dykstra

John Lopes

Derrick Walker

DERRICK WALKER: Thank you. I appreciate the interest. Good afternoon, everybody. To kind of set the scene as to how we arrived at this point in acquiring the intellectual property rights and some of the stock and inventory of Reynard North America which was the company in the U.K., Reynard Motor Sports, went into liquidation and the receiver in the U.K. wanted to dispose of as many assets as possible. So because our team who are running the Reynard tried to rally all the other teams in interest in trying to acquire this to keep going the mark and to support our racing programs, after numerous conversations with the teams there seemed to be little interest in acquiring those for whatever reason. And we at Walker Racing said well, let's try and see if we can go it alone. We entered into discussions with Adrian Reynard and the receiver and to this day now have successfully completed that agreement and are in possession of the intellectual property rights which really is basically the rights -- sole rights of the design of the Reynard CART car which also includes all of the jigs and molds and fixtures, any software, any data that involves the design of the car. And we have acquired all of the stock, the car parts that are here in the U.K. of which were part of Reynard North America. So we have gained those assets and have set ourselves up as a distributor and a developer of the car going forward making available car parts to any interested parties who race these cars, and we obviously are continuing to develop the car. As we develop the car, we make these developments available to customers who may want to purchase them. That's in short order a quick rundown of where we are at this point in time.

JOHN LOPES: Yes. I first want to commend Derrick because Derrick has served as a leader of the Reynard owners since it appeared earlier in the year that Reynard was in some financial trouble. I think initially, not to speak for Derrick, but this was a move for survival, really to allow the teams that have invested in the Reynard cars to continue operating them this year and ensure parts distribution. I think the second thing is it is a great opportunity for Derrick and his company to launch a new profitable business within the garage. But more directly to your question, Merrill, the spirit of both the grandfathering of the car earlier this year and the -- and the aerofreeze which we put into place what Derrick has done has helped us level the playing field by having multiple manufacturers within the series on a continuing basis. It creates environment for both Lola and Reynard through Derrick's company to both supply our teams for competition in the future. Both at a controlled cost, and secondly, by using current equipment which has proven itself among the finest in the world both from a competitive standpoint and a safety standpoint.

LEE DYKSTRA: I think the freeze, the grandfathering of the chassis is part of sort of an overall master plan as far as our going into 2004-2005. With these two items in place, it eases the transition to the cause for the engine for the next two years because all these parts have been designed or existing the -- conversion to existing cars to Cosworth just made it much easier. It also I think makes for a very competitive environment looking forward to those for two years.

JOHN LOPES: This is John Lopes. What I would like to let you know. Lee, you might want to jump in as well. We see this as an issue we have to address for benefit of fans and overall product. What's happened as you're aware is much of this is function of horsepower and competitiveness of the engine companies. Until we can control that and next year we can and can regulate it, we won't be able to get the car side by side on short ovals. We do have some plans for upcoming testing where we intend on testing the new motor for next year with the road course configuration on track such as Milwaukee where we believe we're going to get them back to side by side racing as we did in the past. Is something we're addressing and Lee and his technical staff are hard at work on that. Lee, do you want to add anything to that?

LEE DYKSTRA: Because of our CART feel -- drivers are so equal that essentially it does make passing very difficult, even if you had more downforce or more horsepower in this case. In the case of Chicago, for instance, number of instances, the lap time difference between the leader and the person at the end -- end of the cue was less than 2/10th of a second per lap. Under those circumstances, even with excess downforce, you're going -- passing is going to be difficult.

DERRICK WALKER: Bob, that's -- that's a two-part question -- two-part answer to that question. There are a number of areas on the CART car that for the 2003 season that can be developed. When we talk about a design freeze that we're going to, we're really carrying on from where we currently are. Right now, for example, the chassis and the gear box has been frozen for some years now. And we've really just added more bigger pieces of the aerodynamic package of the car to that freeze. So to add to those components that are frozen right now, you're going to see the side part configuration, the engine cover and very important areas, the underbody. The parts that really don't affect -- make a big effect on the show but do make a big effect on your pocketbook when it comes to redeveloping big components every year. There are a number of areas around the car that are not frozen which teams are currently developing and that will continue and probably be a lot more work spent in those areas, because we will have -- have to find gains as every team does. The second part of that is when you look at the freeze, what you -- when you look at the development as far as Walker Racing is concerned and impact of the freeze, we are going to be more effective if we have more customers. And when you look at the future of CART, there is a lot of interest on the part of new teams, teams that are in existing formulas or new teams that are wanting to join the series teams that want to come back. When you look at a freeze stability like this, there's a lot of attractive features of that because you can buy existing cars, buy new cars and you will know they will have a shelf life, and you don't have to have a sophisticated bank book, bank account or a development program to do underbody or buy underbody every year when it is frozen. So you'll find a lot of teams coming in. More teams that come along and consider the Reynard car as an option, the more people we get on the list of interested parties, parties that race in this car, the more money we can funnel back into developing the areas that are still available. So it is not that developing goes away. Just big ticket items and wings and underbodies, side parts and engine covers, these components need to stay fixed. And two-year freeze will really help all of that. It will help everybody's budget and competition in general.

DERRICK WALKER: You're right. It was a stampede over at Lola site because there wasn't any clear indication what was happening to the Reynard. and I'm sure you can appreciate, Rick, what it is like when you got a company that has gone into liquidation and dealing with receiver and dealing with people that in the U.K. are looking for money and bills to be paid. These things take time to sort out. So the Reynard has been on ice for some time as a car and a company only just recently. And that's why we're having this conference call so we can sort of alert everybody to the fact that Reynard is back and here is how it is going to function, is that we've got those issues dealt with. Now we're out there putting together the programs so that people can really see whether a Reynard is worth considering. I will tell you I've had a lot of interest from new teams that are coming in looking at the Reynard as an option and believe it or not -- if I told you, I would have to kill you. Believe it or not, we've had existing Lola teams saying what are you doing on the Reynard teams over there? So I think there is -- there is some interest in seeing the Reynard continue. From a sales point of view, I would say if I was pitching Reynard I would say here is our selling points. We got a car that is simpler than the Lola, we believe. We think it is reliable. Certainly with the restructuring of the company and now the new ownership, they are certainly more affordable than they were. We cut out a lot of middlemen, dealing directly with the customer. And let's face it, it is in our interest to have people buy the Reynard parts and race Reynard because the more people come along the better return on our investment into the program and more we can put into the Reynard car going forward. So we want to make it affordable, and we want that brand to continue. CART wants it to continue so we've got to do a real good job in the next few months in racing and developing and setting up this new company to handle this new acquisition so that when people start making their decision they're going to think of Reynard as well as Lola; not just Lola as you rightly say it has been a bit of a stampede.

LEE DYKSTRA: It may help a little bit. Obviously he's the lightest person that we have as a driver, and his main competitor Paul is maybe one of the heaviest, and it may equalize things up a bit. I'm sure the competitor is looking for anything to slow him down.

LEE DYKSTRA: We can do circuit simulations and stuff. Essentially it varies from racetrack to racetrack if the weight affects it. From instances 10 pounds is worth approximately 1/10th of a second, something like that. As close as our racing is, I'm sure it will tighten up the feel.

LEE DYKSTRA: Owners have voted to do this effectively at mid Ohio. What we're looking at as we currently stand we have a weight for the car 1565 without fuel in the car, eventually ready to go but without fuel. We will weigh the drivers, eventually get an average for the drivers and then adjust that -- that weight -- based on 1565, we'll adjust that as plus and minus relative to average of the drivers.

DERRICK WALKER: Given there's a freeze on the chassis as it is right now for the next two years, we will -- we will reproduce those cars to those specifications because that's what the rules will allow us. But to be quite honest, my goal right now is to find interested parties, whether they be financial or technical with an ability to look at the future of this car and a car to meet the future rules. And I would think that there has to be a new car coming out sometime in 2005. So I figure we've got a couple of years to develop as a company to the point -- produce a car that's not a Reynard but a whatever. And finding the partners to help make that happen, that's one of my key business objectives to try to take advantage of this opportunity that I think I'm very fortunate I've got. I would like to take a little time to actually thank Adrian Reynard for helping us with a very difficult situation for him dealing with a company that he started and obviously benefited from and enjoyed. For him to, you know, scuttle it and have to deal with the breaking up of the company, it was a difficult situation. And he helped us out a tremendous amount. So I certainly want to maximize that opportunity that he's given us here and CART rules have fallen into my hands. They allowed me some time with a freeze situation to seek other partners, for their financial or technical to figure out how I can take this -- this foundation and do a 2005 car for CART.

DERRICK WALKER: Yes, I am.

DERRICK WALKER: Yeah. I would say we've been looking in any direction to find the right kind of partners who are looking -- who see CART as a viable operation and investment to get involved in it again. I think there is a need into keeping CART going and a competitive format. Companies who are out there who look at this opportunity as a way to get in or to rejoin the CART series were interested in talking. In the meantime, the vehicle that we're using give you more of an explanation how we're doing what we're doing, is we talk to a few of the Reynard technical staff in England when this thing happened, and they were interested in keeping the mark going as well. And they've gone out and it is a group of four to five engineers and production manager, and they have formed a new company in England. They have a contract for us to do some additional development and manufacturing of the parts, and their company is called Oxford Racing Development. It is headed up by Barry Ward, mechanical engineer of Reynard and Simon Dawson who is the manager of Reynard. They started their own little company because they have a contract from us that says we need their services and their help. It may be these young guys starting their own company in a couple years or less are able to step up and carry on from where Reynard left off. So we're not excluding any possibility. One of the advantages that's helped us get us to where we're at is a lot of the Reynard car, although designed and many parts were made by Reynard, when they had huge customer orders as they did, they actually sent out a lot of the components, the subcontractors who made the parts for Reynard and they controlled the design and the quality of the manufacturing. So when we go with our new company Oxford Racing Developments, they know the subcontractors very well. They go with the rights of the design, we can reproduce a lot of the car. You can see there's sort of an unusual situation that's involved and come out of what was, you know, a difficult situation for Reynard. It has emerged and has some life and there is a real goal for 2005 to try and see if we can really be a force to be reckoned with.

DERRICK WALKER: No. These are Reynard. Anybody that's going to buy anything we're selling, I think if we try to represent it with something other than that, they may think twice about the decision. What we want to be -- be as a facilitator of services to those customers. If those customers want to buy Reynards, that's what we want to sell them, because that's what we've bought. 2005 is another matter. Like I said, if we get an investor or party that comes to a table and participate in CART, whether it is a sheer business for profit or venture or whether it is interest in having a competitive manufacturing company, we may call it something else. For me it doesn't really matter. It's Reynard as far as I'm concerned, and as long as it continues to be a Reynard, I'll be quite happy because I'm a big fan of Reynard.

DERRICK WALKER: Yes, indeed. The company I referred to, Oxford Racing Developments, is pure Reynard. They're -- exemployees out of Reynard. Barry Ward is a senior mechanical engineer with Reynard and a key individual in the whole design of the car. He was a chief designer right up until the end there. Simon Head is a -- an aeroengineer, graduate engineer in aerodynamics. He's been looking after the Reynard design last year and he continues on in the new venture. As I mentioned before, Simon Dawson who was the man responsible for the production of the Reynard cars and getting all the components together from all the subcontractors. So he was a key component in the organization of pulling all it together and shipping it over to Reynard here in America. So I think I've got -- of the people that were available, I've got very key people. And what makes it really unique is these young people see for the first time a real opportunity to become entrepreneurs in their own right. They have a vested interest, an expertise, and they like us have gained from what was a demise of a great manufacturer, they have benefitted and been given an opportunity to see if they can make something off that platform. So we're all a lot of young guys that didn't wake up and say this is what we want to do. You know, there was a situation that happened, and we all looked around and said wonder what we can do here. It started off that way but gained a lot of business sense and vision about this thing. So we're all working really hard to see if we can measure up and be a supplier to CART in 2005 in different -- different brand maybe or who knows, a continuation of the Reynard mark.

LEE DYKSTRA: We've actually reduced the RPM rather than the boost. So essentially we're looking at about 12,000 RPM for reliability. Mostly reliability comes from reduced RPM as opposed to a boost. Because we're an individual supplier we're free to do anything with the boost to achieve the goals we want. One of the goals is to reduce the horsepower of this unit to allow us to do some other things aerodynamicwise and that sort of thing to improve the racing on ovals like we were speaking of earlier.

JOHN LOPES: There have been as you know multiple incidents with Townsend this year.

JOHN LOPES: The incident that occurred, it was enormous booboo. It might have been an understatement of the day. Townsend made a less than judicious move, and Wally thought it was in the best interest of the competitors who were racing on the tracks to park him for the day. I support the decision. I also support Wally's decision to handle Townsend's situation in the fashion that he has over the past 48 hours, and that is to levy a fine and basically put Townsend on notice that he's got one more strike. I think Wally is responsible not only for Townsend's best interest but for the best interest of the other drivers on the track. And in particular what was disturbing to him, I believe, with what occurred this weekend was that Townsend was not in contention for the win in the race and took out a championship competitor. And it just is evidence that he didn't fully think things through. I think in Wally's mind I think it probably will benefit Townsend in the long run and gave him time to think on Sunday afternoon.

DERRICK WALKER: Very much so. He's settled down and kind of jump back to the conversation you were just having about Townsend. People obviously thank God for (inaudible) but this time last year we had less than a stellar performance in Toronto. I think to my count we punted off three cars in the race and got a similar warning from Wally. And from that point on I think we started to get the message through to Tora who is really just overdriving and trying too aggressively. I see Townsend very much in a similar vein. I think the guy is obviously very talented and was driving as hard as he can. That's the problem you get sometimes. You get a driver who's young, keen and driving a car that maybe on the day isn't a winner, and he's trying to make up the difference. That's a common mistake for a rookie, is he tries too hard and it catches him out. When I looked at that incident with Townsend, and I know nothing about it, I would say there's a lot more going on behind Townsend that probably affected his judgment when it came to breaking for the corner that, you know, led to the incident. It was a mistake and quite rightly Wally has taken a position on it. And Tora did much the same mistakes last year when he was in a similar position. So I think that's -- that's the thing we teams got to do and the series has got to do is help these guys through the difficult situations. Not necessarily pat them on the back and tell them they have done a great job when they have done a less than acceptable level of performance, but see if there's any talent there that will come to the head and learn from the experience. I would be surprised if Townsend isn't really going to benefit a great deal from this.

JOHN LOPES: If I could add to that, this is John, one of our responsibilities is to mentor the younger drivers and part of the process this week is Wally spent a significant time talking with Townsend and with Jim McGee as to what can be done to help Townsend progress as a driver. He's very talented, he's a young American talent that we want to keep competing in CART. We believe he's going to return to a fine driver. We also view this as part of his learning process.

LEE DYKSTRA: I'm not sure whether I agree. Certainly now the horsepowers are equal, tires are the thing. I think moves we're making mark next year as far as increased downforce and that sort of thing will make for more passing opportunities. Part of the situation as far as passing also involves the number of cars on the racetrack. So, you know, if we're looking at increased number because of what we're doing here as far as the rules, I think there will be more passing opportunities as well.

JOHN LOPES: Another thing to add to what Lee said, Bridgestone has come to us discussing the possibility of two separate tire compounds for next year going to back to where we were in the past; one being standard tire and second being option tire. Something Lee and his staff are discussing with them right now. We haven't made any decisions on that.

DERRICK WALKER: If I could add a little to that remark, I think that situation, this situation varies from track to track. On the ovals you tend to find the reason for not being able to overtake is that we have high horsepower levels and we want to keep the speeds within reasonable levels. And we've over the years rather than change the formula or rejuiced, we tried to notch the horsepower down but never done a big enough bite out of it to make a big enough difference without disadvantaged one of the manufacturers or all of them at one time or another. So we've been stuck with this horsepower level which has been too high for the kind of racetracks we run on. And we've taken it away by taking the grip away from the cars; therefore, the driver can't run as much throttle and go so fast with the corners. When we go to the rules next year where rejuicing the horsepower, golden opportunity for Lee and competition committee to look at the package what kind of grip levels, what kind of downforce levels do these cars need to help give them more grip in corners but not have over all speed be too high and too dangerous. On the ovals, that sort of works and will have some effect on the road courses but less of. On the road courses it is function of track, how much room there is and places to overtake and competition as we said over and over again. As we get better and better at it, the front to the back difference becomes closer and closer. And so it -- it is really always going to be there when you have a competitive pack like you have. Something we're going to keep working on, but it is not an easy solution when dealing with a track that has only a few places or some of these tracks have a few places where you can overtake. And the difference in the teams is going to be very, very close because we're competitive. What the formula going forward does, though, which is different than -- when you talk about engines in particular, we're really going to have a situation where the engines, because they're going to cost less, they're going to be more affordable to more teams. So if we get more competition turning up at the races and stronger competition, that -- and available equipment to everybody, that's going to help the competition. It is also going to help in the way that we're going to have equal horsepower levels from team to team. So you don't have a manufacturer who has a huge advantage or has a chosen few teams who can get it and the rest can't. So I think there's some positives into the formula we're heading to. It is not -- it is not all to be viewed as though we're -- dummy and down here. We're actually going to increase interesting parts of racing that we've lost over the years.

LEE DYKSTRA: I think with the current rule, the button goes away in that these guys are running full rich all the time. So the button was there essentially to go back to a full rich for a short period of time whether it is a length to make a pass or whatever. Under the current -- the way we're racing right now, essentially there's not an overtake button.

LEE DYKSTRA: '02, '03, '04. We may revisit at the beginning of '04 as far as adjustments to maybe allow a single air upgrade or something like that. For 2003 we will be doing stuff though to incorporate possibly the road course rear wing for some of the ovals that serve, you know, enhancements.

DERRICK WALKER: Good question. I don't know the short answer to that. If I can find a sufficient sponsorship to offer toward a ride for next year, I certainly would do that. I think Tora enjoys the CART series. My comments with him about oval tracks, although I think he runs the ovals very well, he's never seen as something he's particularly interested in doing a lot of. I think his heart is in road racing because that's his background. It is up to me to come up with a deal that says, Tora, would you want to continue racing in CART? That's certainly one of the objectives that I'm currently working on. But it is a little too early yet to know the answer to that question.

DERRICK WALKER: I can tell you my ambition is to have a two-car competitive program, and I'm still working on that theory. I've done that in the past and need to get back there, and getting back there means first I got to find the corporate dollars to pick and put the team together whether it's the right car, the right driver, the right number of people and right amount of development. There's many aspects of it you can't do when you don't have the massive money that you have to nowadays to be very competitive. We're trying to get back there, and certainly two cars work better than one. I would tell that you currently right now Patrick Racing and I are working closely together because there's a single car team that has identical equipment. So we can meet common ground and share a lot of data that helps see what the other team is doing and helps strengthen us both as single teams. So getting back to two car venture for Walker Racing is certainly a major goal of mine.

DERRICK WALKER: Actually to tell you the truth, I worked on this deal before the freeze really took effect or actually became reality. So I did -- to be honest, I really got involved in this Reynard deal because at that point I got about 12 or 13, 14 maybe races left of the season to run and got a car that was currently no longer in production. So I didn't hear anybody saying to me hey, why don't you go buy a Lola, here is a ton of money. I got people that hired us to go race with this equipment, and I got to figure a way around it. As I said in my introduction, I thought all the teams could stick together because I really thought we had a massive purchasing power that we could put it all in one bucket. Actually become our own manufacturers and take a share in this entity, but not many of my team owners thought this was a vision they wanted to take up. So in the end I was the only man standing. As I said, Adrian Reynard really helped me a lot to be able to take this opportunity. So I really did it for myself to protect a program for this year. Then CART has made what I think is a good move considering their objectives in the current environment to freeze these -- this car and these major components further. That just played, you know, into our hand to say well, okay. If that's going to stay around another couple years, then we better get a lot more serious about this and see how we can give it a life beyond 2002.

DERRICK WALKER: Yes. I kind of was to tell you the truth. But it seemed -- I don't know this for a fact. It seemed that the teams that were running the Hondas, there was a general impression that they were more aware of that perhaps Reynard was not being -- was not going to be strong enough to be a viable consideration for them, and so there was -- I think there was a lot more planning going on to buy Lola's before Reynard finally closed his doors. So I think there was a movement in that. Then when it finally happened, whatever I was saying, it was already -- train had left the station at that point. When you look at Reynard customers today, we have Forsythe team who have a lot of resources and a lot of expertise. They were already doing a fair amount themselves. So they liked the idea that somebody was producing parts for them that they didn't want to make. But they didn't need to by their reckoning immediately jump into a situation where they acquired Reynard. And Patricks and ourselves, we had every interest in seeing it going. I don't know, I just ended up with being the most interested of anybody, so here I go. And I'm quite looking forward to it right now. I'm quite enthusiastic and interested to see if I can motivate some other entities to become involved and partner with me and help make something of it.

DERRICK WALKER: Sometimes I've done that but I don't care to mention that because they weren't as successful as I think this one is going to be.

DERRICK WALKER: Good question. What we have done, we meaning Walker Racing, we've taken the -- the parts that are currently inventory of parts that we purchased from Reynard North America and housed them under our facility to reduce overheads. We have a development program, engineering staff that have been working on developing areas of the car as the rule permits. We had -- we were doing that already. And with the contract that we've done with the engineers and the ex-employees of Reynard in the U.K., they are doing production and they are doing development as well. So we coordinate everybody -- everybody's effort and work on supplying parts to anybody that wants to buy them and we -- we produce development and offer it for sale to anybody who wants to race it. It is as simple as that. And we've so far -- we've just, you know, really getting into it. So far it's been working rather well.

MERRILL CAIN: Thank you talking to us about the chassis situation, we appreciate that. It is all certainly very good news. With Derrick taking over operations of Reynard Chassis we know everything is in good hands and CART has another strong manufacturers in the series. Thank you very much for your time, Derrick. And thank you, John, and Lee as well.