Exhibit 10.61



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                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------


         THIS  REGISTRATION  RIGHTS  AGREEMENT (this  "Agreement") is made as of
this 17th day of May 2000,  by and among  KARTS  INTERNATIONAL  INCORPORATED,  a
Nevada  corporation  (the  "Company"),   and  THE  SCHLINGER  FOUNDATION,   (the
"Investor").

                                   WITNESSETH:
                                   ----------

         WHEREAS, the Investor and the Company are parties to that certain Stock
Purchase  Agreement,  dated as of the date  hereof (the  "Purchase  Agreement"),
whereby the  Investor  shall  purchase and the Company  shall issue  [4,000,000]
shares of the  Company's  Series A Preferred  Stock,  par value $0.001 per share
(the "Series A Preferred");

         WHEREAS,  the obligations of the Investor under the Purchase  Agreement
are  conditioned,  among other  things,  upon the execution and delivery of this
Agreement by the Investor and the Company; and

         WHEREAS, the Company and the Investor desire to be granted and to grant
the rights created herein.

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby  acknowledged,  the  undersigned  parties hereto
agree as follows:

         1.       Definitions.  As used in this  Agreement,  the following terms
shall have the following respective meanings:

                  (a) All  capitalized  terms  used  and not  otherwise  defined
herein shall have the meanings given them in the Purchase Agreement.

                  (b) "Commission"  shall mean the United States  Securities and
Exchange  Commission,  or any other federal agency at the time administering the
Securities Act.

                  (c) "Common Stock" shall mean the Company's  Common Stock, par
value per share $0.001, as authorized on the date of this Agreement.

                  (d) "Conversion  Shares" shall mean the shares of Common Stock
issued or issuable upon conversion of the Series A Preferred.

                  (e) "Exchange Act" shall mean the  Securities  Exchange Act of
1934, as amended, or any similar federal statute,  and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.

                  (f)  "Investors"  shall  mean  Investor  and  any  Person  who
acquires any Registration  Securities from Investor in accordance with the terms
of this Agreement.

                  (g)  "Person"  shall  mean an  individual,  a  corporation,  a
partnership,  a limited liability  company, a joint venture, a trust, an estate,
an  unincorporated  organization,  a  government  and any  agency  or  political
subdivision thereof.

                  (h)  "Registrable  Securities"  shall mean (i) the  Conversion
Shares  or  shares of any  security  of the  Company  issued  or  issuable  upon
conversion  of the  Series A  Preferred;  and (ii) any other  securities  of the
Company   distributable  on,  with  respect  to,  or  in  substitution  of  such
Registrable  Securities,  except  for those  that have been sold or  transferred
pursuant to an effective registration  statement, or pursuant to Rule 144, under
the Securities Act.


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                  (i)  "Registration  Expenses" shall mean all expenses incurred
in effecting  the  registrations  provided  for in Sections 2 and 3,  including,
without limitation,  all registration and filing fees,  printing expenses,  fees
and disbursements of counsel for the Company  underwriting  expenses (other than
fees,  commissions or discounts),  expenses of any Company audits incident to or
required by any such  registration  and Company  expenses of complying  with the
securities  or blue  sky  laws of any  jurisdictions  (but  excluding  fees  and
disbursements of counsel and other agents for the selling holders of Registrable
Securities).

                  (j) "Securities Act" shall mean the Securities Act of 1933, as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

         2.       Demand Registrations.

                  (a) At any time  subsequent to the date hereof,  the holder or
holders of at least  fifty  percent  (50%) of the  Registrable  Securities  then
outstanding, on behalf of all holders of Registrable Securities,  severally from
time to time may notify the Company in writing that such Investor(s)  intends to
offer for public  sale any  Registrable  Securities  (but only if the  aggregate
number of shares of such Registrable Securities to be offered for public sale is
more than fifty percent (50%) of the Registrable  Securities then  outstanding).
Upon receipt of such written  notice,  the Company will use its reasonable  best
efforts to cause the Registrable Securities as may be requested by the Investors
to be included in a registration statement under the Securities Act. The Company
shall not be required to file any  registration  statement for securities  other
than shares of Common Stock,  although any  conversion of Series A Preferred may
be conditioned upon such registration statement becoming effective to the extent
that such  conversion or exercise  relates to Conversion  Shares  covered by the
Investor's  written  notice of an  intended  public  offering.  In the event any
registration  attempted under this Section 2 pursuant to which the Company would
be  responsible  for  the   Registration   Expenses  of  the  Investors  is  not
consummated,  then  the  Company  shall  pay  such  expenses  and  shall  remain
responsible  for  such  expenses  of the  Investors  with  respect  to  two  (2)
consummated registrations made under this Section 2; provided,  however, that if
a registration  attempted  under this Section 2 is not  consummated  solely as a
result of the withdrawal of the Investors  requesting such registration,  unless
such Investors reimburse the Registration  Expenses incurred by the Company such
registration  statement shall count against the two (2) registration  statements
that the Company is  required  to a  consummate.  The  Investors  covered by the
registration  statement who desire to do so may sell such Registrable Securities
in an offering  pursuant to this Section 2 that is  underwritten  ("Underwritten
Offering").  In  any  such  Underwritten  Offering,  the  investment  banker  or
investment  bankers and manager or managers  that will  administer  the offering
will be  selected by the  holders of a majority  of the  Registrable  Securities
included  in  such  offering,  subject  to  approval  of the  Company  not to be
unreasonably withheld.

                  (b) A registration  statement filed pursuant to the request of
the Investors may include other  securities of the Company with respect to which
"piggy-back"  registration rights have been granted,  and may include securities
of the Company  being sold for the account of the  Company;  provided,  however,
that if the Company shall request inclusion in any registration pursuant to this
Section 2 of the securities being sold for its own account,  or if other persons
shall request inclusion in any registration  undertaken pursuant to this Section
2, the Investors shall, on behalf of all entities  requesting  inclusion in such
registration,  offer to  include  such  securities  in the  offering;  provided,
however,  that the Investors may condition any such offer on their acceptance of
reasonable  conditions  (including,  without limitation,  if such offering is an
Underwritten  Offering,  that the Company or any other such  requesting  holders
agree  in  writing  to enter  into an  underwriting  agreement  with  usual  and
customary terms). Notwithstanding any other provisions of this Section 2, if the
representative  of the  underwriters  advises  the  Investors  in  writing  that
marketing   factors  require  a  limitation  on  the  number  of  shares  to  be
underwritten,  the  number of  shares to be  underwritten  and  included  in the
registration  shall be allocated:  (i) first, to the Investor(s)  requiring such
registration,  pro rata  among  such  Investor(s)  on the basis of the number of
shares of  Registrable  Securities  for which each such  Investor has  requested
registration, (ii) second, to the Company, and (iii) third, to the other holders
requesting inclusion in the registration,  pro rata among the respective holders
thereof  on the basis of the  number of shares  for which  each such  requesting
holder has requested  registration.  If a Person who has requested  inclusion in
such  registration  as  provided  above  does not agree to the terms of any such
underwriting, such Person shall be excluded therefrom by written notice from the
Company,  the underwriter or the  Investor(s).  The securities so excluded shall
also be withdrawn from registration.

                  (c)  Except  as  provided  in  Section  2(a) with  respect  to
withdrawn  registration  statements,  all Registration Expenses of the Investors
incurred in connection with  registrations  requested pursuant to this Section 2
shall be borne by the Company.


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         3.       "Piggy-Back" Registrations.

                  (a) If the Company decides to register any of its Common Stock
or  securities  convertible  into or  exchangeable  for Common  Stock  under the
Securities Act on a form which is suitable for an offering for cash or shares of
the  Company  held by third  parties and which is not a  registration  solely to
implement an employee  benefit  plan, a  registration  statement on Form S-4 (or
successor  form) or a transaction to which Rule 145 or any other similar rule of
the Commission is  applicable,  the Company will promptly give written notice to
the Investors of its intention to effect such a registration. Subject to Section
3(b)  below,  the  Company  will  use  all  reasonable  efforts  to  effect  the
registration  under the Securities Act of all  Registrable  Securities  that the
Investor(s)  request(s)  be included in such  registration  by a written  notice
delivered to the Company  within fifteen (15) days after the notice given by the
Company.  The Investors agree that any securities they request to be included in
a Company  registration  pursuant  to this  Section 3 shall be  included  by the
Company on the same form of  registration  statement as has been selected by the
Company  for the  securities  the  Company is  registering  for sale for its own
account.

                  (b) If the registration involves an Underwritten Offering, the
Company will not be required to register Registrable Securities in excess of the
amount that the principal  underwriter  reasonably and in good faith  recommends
may be  included in such  offering  (a  "Cutback"),  which  recommendation,  and
supporting  reasoning,  shall be delivered to the  Investors.  If such a Cutback
occurs,  the  number  of  shares  that  are  entitled  to  be  included  in  the
registration and underwriting  shall be allocated in the following  manner:  (i)
first,  to the  Company  for any  securities  it  proposes  to sell  for its own
account,  (ii) second,  to the Investor(s)  requiring such registration pro rata
among  such  Investor(s)  on the basis of the  number  of shares of  Registrable
Securities  held by the Investors for which each such Investor  above  requested
registration,  and (iii) third, to the other holders requesting inclusion in the
registration,  pro rata among the respective holders thereof on the basis of the
number  of  shares  for  which  each  such   requesting   holder  has  requested
registration.

                  (c) If the Company elects to terminate any registration  filed
under this  Section 3, the  Company  will have no  obligation  to  register  the
securities sought to be included by the Investors in such  registration.  If the
Company  includes in such  registration  any securities to be offered by it, all
Registration Expenses of the Investors will be borne by the Company.

         4.       Procedure for  Registration.  Whenever the Company is required
under this  Agreement to register  Registrable  Securities,  it agrees to do the
following:

                  (a) use  its  commercially  reasonable  efforts  to keep  such
registration statement continuously effective for 180 days (and, with respect to
one registration on Form S-3, for up to two years, if requested by the Investors
selling Registrable Securities) to complete the proposed distribution;  upon the
occurrence  of any event  that would  cause the  registration  statement  or the
prospectus contained therein to contain a material misstatement or omission, the
Company  shall file  promptly  an  appropriate  amendment  to such  registration
statement correcting any such misstatement or omission;

                  (b)  prepare  and file  with  the  Commission  a  registration
statement with respect to such Registrable  Securities and prepare and file with
the Commission such amendments and post-effective amendments to the registration
statement as may be necessary to keep the registration  statement  effective for
180 days (and,  with  respect  to one  registration  on Form S-3,  for up to two
years, if requested by the Investors selling Registrable Securities) to complete
the  proposed  distribution;  cause the  prospectus  to be  supplemented  by any
required prospectus  supplement,  and as so supplemented to be filed pursuant to
Rule 424 under the  Securities  Act,  and to comply  fully  with the  applicable
provisions of Rules 424 and 430A under the  Securities  Act in a timely  manner;
and  comply  with the  provisions  of the  Securities  Act with  respect  to the
disposition of all securities covered by such registration  statement during the
applicable  period  in  accordance  with  the  intended  method  or  methods  of
distribution by the sellers thereof set forth in such registration  statement or
supplement to the prospectus;


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                  (c) advise the  underwriter(s),  if any, and selling Investors
promptly and, if requested by such  Persons,  to confirm such advice in writing,
(i) when the prospectus or any prospectus supplement or post-effective amendment
has  been  filed,  and,  with  respect  to  the  registration  statement  or any
post-effective  amendment thereto,  when the same has become effective,  (ii) of
any request by the Commission for  amendments to the  registration  statement or
amendments  or  supplements  to the  prospectus  or for  additional  information
relating  thereto,  (iii) of the  issuance by the  Commission  of any stop order
suspending the effectiveness of the registration  statement under the Securities
Act or of the suspension by any state securities commission of the qualification
of the Registrable  Securities for offering or sale in any jurisdiction,  or the
initiation  of any  proceeding  for any of the preceding  purposes,  (iv) of the
existence of any fact or the  happening of any event that makes any statement of
a  material  fact  made  in the  registration  statement,  the  prospectus,  any
amendment  or  supplement  thereto,  or any document  incorporated  by reference
therein  untrue,  or that  requires the making of any additions to or changes in
the  registration  statement or the  prospectus in order to make the  statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending  the  effectiveness  of  the  registration  statement  or  any  state
securities  commission  or  other  regulatory  authority  shall  issue  an order
suspending the qualification or exemption from  qualification of the Registrable
Securities  under state  securities or blue sky laws,  the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;

                  (d) furnish to each of the selling  Investors  and each of the
underwriter(s),  if any,  before  filing  with  the  Commission,  copies  of the
registration  statement or any prospectus  included therein or any amendments or
supplements  to any such  registration  statement or prospectus  (including  all
documents   incorporated   by  reference   after  the  initial  filing  of  such
registration statement), and the Company will consult with the selling Investors
of  Registrable  Securities  covered  by  such  registration  statement  or  the
underwriter(s),  if any, prior to the filing of such  registration  statement or
prospectus;

                  (e)   if   requested   by   any   selling   Investor   or  the
underwriter(s), if any, incorporate in the registration statement or prospectus,
pursuant  to  a  supplement  or  post-effective  amendment  if  necessary,  such
information as such selling Investor and underwriter(s),  if any, may reasonably
request to have  included  therein,  with  respect to the number of  Registrable
Securities  being sold to such  underwriter(s),  the  purchase  price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold  in such  offering  and  make  all  required  filings  of  such  prospectus
supplement or post-effective  amendment as soon as practicable after the Company
is notified of the matters to be incorporated  in such prospectus  supplement or
post-effective amendment;

                  (f)  furnish  to  each  selling   Investor  and  each  of  the
underwriter(s),  if any,  without charge,  at least one copy of the registration
statement,  as first filed with the Commission,  and of each amendment  thereto,
including  all  documents  incorporated  by  reference  therein and all exhibits
(including exhibits incorporated therein by reference);

                  (g)  deliver  to  each  selling   Investor  and  each  of  the
underwriter(s),  if any,  without  charge,  as  many  copies  of the  prospectus
(including each preliminary  prospectus) and any amendment or supplement thereto
as such Persons  reasonably may request;  the Company hereby consents to the use
of the prospectus and any amendment or supplement thereto by each of the selling
Investors  and  each of the  underwriter(s),  if any,  in  connection  with  the
offering and the sale of the Registrable Securities covered by the prospectus or
any amendment or supplement thereto;

                  (h) prior to any public  offering of  Registrable  Securities,
the Company  shall use its  reasonable  best  efforts to register or qualify the
Registrable   Securities   under  the  securities  or  blue  sky  laws  of  such
jurisdictions as the selling Investors or underwriter(s), if any, may reasonably
request  and do any and  all  other  acts  or  things  reasonably  necessary  or
advisable to enable the  disposition in such  jurisdictions  of the  Registrable
Securities covered by the registration  statement;  provided,  however, that the
Company  shall not be required  to register or qualify as a foreign  corporation
where it is not now so qualified or to take any action that would  subject it to
the  service of process in suits or to  taxation,  other than as to matters  and
transactions relating to the registration  statement,  in any jurisdiction where
it is not now so subject;

                  (i)   cooperate   with   the   selling   Investors   and   the
underwriter(s),  if any, to facilitate  the timely  preparation  and delivery of
certificates  representing Registrable Securities to be sold and not bearing any
restrictive  legends;  and  enable  such  Registrable  Securities  to be in such
denominations and registered in such names as the holders or the underwriter(s),
if any, may request  prior to any sale of  Registrable  Securities  made by such
underwriter(s);


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                  (j) if any fact or event  contemplated by clause (c)(iv) above
shall exist or have occurred,  promptly  prepare a supplement or  post-effective
amendment to the  registration  statement or related  prospectus or any document
incorporated  therein by reference or file any other required  document so that,
as  thereafter  delivered  to the  purchasers  of  Registrable  Securities,  the
prospectus  will not contain an untrue  statement of a material  fact or omit to
state any material fact necessary to make the statements therein not misleading;

                  (k)  cooperate  and assist in any filings  required to be made
with the National  Association of Securities  Dealers,  Inc. ("NASD") and in the
performance of any due diligence investigation by any underwriter (including any
"qualified  independent  underwriter")  that  is  required  to  be  retained  in
accordance with the rules and regulations of the NASD;

                  (l)  otherwise use its  reasonable  efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its  security  holders,  as  soon as  practicable,  a  consolidated  earnings
statement meeting the requirements of the Securities Act and Rule 158 thereunder
(which need not be audited) for the  twelve-month  period (i)  commencing at the
end  of  any  fiscal  quarter  in  which  Registrable  Securities  are  sold  to
underwriters in a firm or best efforts Underwritten Offering or (ii) if not sold
to  underwriters  in such an  offering,  beginning  with the first  month of the
Company's  first  fiscal  quarter  commencing  after the  effective  date of the
registration statement;

                  (m)  enter  into  such  customary  agreements   (including  an
underwriting agreement in customary form) in order to expedite or facilitate the
disposition of such Registrable Securities;

                  (n) make available for inspection by any holder of Registrable
Securities   included   in  such   registration   statement,   any   underwriter
participating in any disposition  pursuant to such registration  statement,  and
any  attorney,  accountant  or  other  agent  retained  by any  such  seller  or
underwriter (collectively,  the "Inspectors"),  all financial and other records,
pertinent corporate documents and properties of the Company  (collectively,  the
"Records"),  as shall be reasonably  necessary to enable them to exercise  their
due diligence  responsibility,  and cause the Company's officers,  directors and
employees to supply all information  reasonably  requested by any such Inspector
in connection with such registration statement;  provided that records which the
Company determines,  in good faith, to be confidential and which it notifies the
Inspectors are confidential  shall not be disclosed by the Inspectors unless (i)
the  disclosure of such Records is necessary to avoid or correct a  misstatement
or omission in the registration statement or (ii) the release of such Records is
ordered  pursuant  to a  subpoena  or  other  order  from a court  of  competent
jurisdiction;  provided,  further, each holder of Registrable  Securities agrees
that it will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction,  give notice to the Company and allow the Company, at
its expense,  to undertake  appropriate  action and to prevent disclosure of the
Records deemed confidential; and

                  (o) in an  Underwritten  Offering,  use  its  reasonable  best
efforts to obtain a cold comfort  letter from the Company's  independent  public
accountants in customary form and covering such matters of the type  customarily
covered by cold comfort  letters as the holders of a majority of the Registrable
Securities being sold reasonably request.

         5.       Limitation on Registration;  Lock-Up Agreement;  Suspension of
                  Sales.

                  (a) The  Company  is not  required  to file  more than two (2)
registration  statements in total under  Section 2(a).  The Company may postpone
the  filing  of  any  registration  statement  required  under  Section  2 for a
reasonable  period of time,  not to exceed  ninety (90) days, if the Company has
been advised by legal counsel that such filing would require the disclosure of a
material fact, and the Company determines reasonably and in good faith that such
disclosure would have a detrimental effect on the Company.

                  (b) If (i)  in  the  good  faith  judgment  of  the  Board  of
Directors  of the  Company,  a required  registration  under  Section 2 would be
detrimental to the Company and the Board of Directors of the Company  concludes,
as a  result,  that it is  essential  to defer the  filing of such  registration
statement at such time,  and (ii) the Company  shall  furnish to the Investors a
certificate  signed by the  President  of the Company  stating  that in the good
faith judgment of the Board of Directors of the Company, it would be detrimental
to the Company for such  registration  statement or amendment to be filed in the
near  future and that it is,  therefore,  essential  to defer the filing of such
registration  statement or  amendment,  then the Company shall have the right to
defer such  filing for a period of not more than one  hundred  and eighty  (180)
days after receipt of the request of the Investors,  and, provided further, that
the Company shall not defer its  obligation in this manner more than once in any
twelve-month period.

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                  (c) Each holder of Registrable Securities agrees not to effect
or request any public sale or distribution  of securities  which are the same as
or  which  are  similar  in  nature  as  the  securities  of the  Company  being
registered,  during the fourteen (14) days prior to and during the 90-day period
beginning  on,  the  effective  date of a  registration  statement  filed by the
Company  (except  as part of such  registration),  but only if and to the extent
requested in writing (with reasonable prior notice) by the managing  underwriter
or underwriter in the case of an  Underwritten  Offering or, if such offering is
not  underwritten,  by the  Company of  securities  similar  to the  Registrable
Securities;  provided,  however,  that all officers and directors of the Company
then  holding  Common  Stock of the  Company  and all  holders  of at least five
percent  (5%) of the  Company's  outstanding  Common  Stock  enter into  similar
agreements.

                  (d)  The  Company  agrees  (i) not to  effect  or  initiate  a
registration  statement for any public sale or  distribution  of any  securities
similar  to  those  being  registered,  or any  securities  convertible  into or
exchangeable or exercisable for such  securities,  during the fourteen (14) days
prior to, and during the 90-day period  beginning on, the effective  date of any
registration  statement  in which the  holders  of  Registrable  Securities  are
participating (except as part of such registration); and (ii) that any agreement
entered  into on or  after  the date of this  Agreement  pursuant  to which  the
Company issues or agrees to issue any privately placed  securities shall contain
a  provision  under  which  holders of such  securities  agree not to effect any
public sale or distribution of any such securities  during the periods described
in (i) above,  in each case  including a sale pursuant to Rule 144 under the Act
(except as part of any such registration, if permitted).

                  (e) Each holder of Registrable  Securities  agrees that,  upon
receipt of notice  from the Company of the  occurrence  of any event of the kind
described  in  Section  4(c)(ii-iv),  such  holder  will  forthwith  discontinue
disposition  of such  Registrable  Securities  following the effective date of a
registration  statement covering such Registrable Securities until such holder's
receipt of copies of the prospectus supplement and/or  post-effective  amendment
contemplated  by Section  4(j), or until it is advised in writing by the Company
that the use of the  applicable  prospectus  may be resumed and, in either case,
has  received  copies  of  any  additional  or  supplemental  filings  that  are
incorporate  or deemed to be  incorporated  by reference in such  prospectus  or
registration statement.

         6.       Indemnification.

                  (a) The Company  agrees to indemnify  and hold  harmless  each
Investor and each Person,  if any, who controls any Investor  within the meaning
of Section 15 of the  Securities Act or Section 20 of the Exchange Act, from and
against any and all losses,  claims,  damages,  liabilities and expenses arising
out of or based  upon any untrue  statement  or alleged  untrue  statement  of a
material fact  contained in any  registration  statement or  prospectus  (or any
amendment or supplement  thereto),  or arising out of or based upon any omission
or alleged  omission  to state  therein a material  fact  required  to be stated
therein or  necessary  to make the  statements  therein not  misleading,  except
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any untrue  statement or omission or alleged untrue  statement or
omission  which has been made therein or omitted  therefrom in reliance upon and
in  conformity  with the  information  relating to the  Investors  furnished  in
writing  to the  Company  by  the  Investors  expressly  for  use in  connection
therewith.  The  foregoing  indemnity  agreement  shall  be in  addition  to any
liability which the Company may otherwise have.

                  (b) If any action, suit or proceeding shall be brought against
the  Investors  or any  Person  controlling  the  Investors  in respect of which
indemnity may be sought against the Company,  the Investors or such  controlling
Person shall promptly notify the parties against whom  indemnification  is being
sought  (collectively  the  "Indemnifying  Parties"  and  each an  "Indemnifying
Party"),  and such  Indemnifying  Parties  shall  assume  the  defense  thereof,
including  the  employment  of counsel  and  payment  of all fees and  expenses;


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provided,  however,  that failure to so notify an  Indemnifying  Party shall not
relieve such  Indemnifying  Party from any liability unless and to the extent it
is prejudiced as a result of such failure. The Investors or any such controlling
Person shall have the right to employ separate counsel in any such action,  suit
or  proceeding  and to  participate  in the  defense  thereof,  but the fees and
expenses  of such  counsel  shall be at the  expense  of the  Investors  or such
controlling Person unless (i) the Indemnifying Parties have agreed in writing to
pay such fees and expenses,  (ii) the Indemnifying Parties have failed to assume
the defense and employ  counsel,  or (iii) the named parties to any such action,
suit or proceeding  (including any impleaded parties) include both the Investors
or such  controlling  Person and the  Indemnifying  Parties and the Investors or
such  controlling  Person shall have been advised in writing by its counsel that
representation of such indemnified party and any Indemnifying  Party by the same
counsel  would be  inappropriate  under  applicable  standards  of  professional
conduct  (whether  or not  such  representation  by the  same  counsel  has been
proposed) due to actual or potential  differing interests between them (in which
case the  Indemnifying  Party  shall not have the right to assume the defense of
such action,  suit or proceeding on behalf of the Investors or such  controlling
Person).  It is understood,  however,  that the  Indemnifying  Parties shall, in
connection  with  any one  such  action,  suit or  proceeding  or  separate  but
substantially  similar  or related  actions,  suits or  proceedings  in the same
jurisdiction  arising out of the same general  allegations or circumstances,  be
liable  for the  reasonable  fees  and  expenses  of only one  separate  firm of
attorneys  (in addition to any local  counsel) at any time for the Investors and
controlling  Persons not having actual or potential differing interests with the
Investors or among themselves,  which firm shall be designated in writing by the
Investors,  and that all such fees and expenses  shall be reimbursed as they are
incurred. The Indemnifying Parties shall not be liable for any settlement of any
such action, suit or proceeding  effected without their written consent,  but if
settled  with such  written  consent,  or if there be a final  judgment  for the
plaintiff in any such action, suit or proceeding, the Indemnifying Parties agree
to  indemnify  and hold  harmless  the  Investors,  to the  extent  provided  in
paragraph (a) hereof, and any such controlling Person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.

                  (c)  Each  Investor,  severally  and not  jointly,  agrees  to
indemnify and hold harmless the Company, and its directors and officers, and any
Person  who  controls  the  Company  within  the  meaning  of  Section 15 of the
Securities  Act or  Section  20 of the  Exchange  Act to the same  extent as the
indemnity  from the Company to the  Investors set forth in paragraph (a) hereof,
but only with  respect to  information  relating to such  Investor  furnished in
writing by or on behalf of such Investor  expressly for use in the  registration
statement or prospectus; provided, however, that no Investor shall be liable for
any claims hereunder in an amount in excess of the net proceeds received by such
Investor  from  the  sale  of  the  Registrable   Securities   pursuant  to  the
registration  statement.  If any  action,  suit or  proceeding  shall be brought
against the Company,  any of its directors or officers,  or any such controlling
Person  based on the  registration  statement or  prospectus,  and in respect of
which  indemnity may be sought against the Investors  pursuant to this paragraph
(c),  the  Investors  shall have the rights and duties  given to the  Company by
paragraph  (b) above  (except that if the Company shall have assumed the defense
thereof the  Investors  shall not be required to do so, but may employ  separate
counsel  therein  and  participate  in the  defense  thereof,  but the  fees and
expenses of such counsel shall be at the Investors'  expense),  and the Company,
its  directors  and  officers,  and any such  controlling  Person shall have the
rights and duties given to the Investors by paragraph (b) above.

                  (d) If the  indemnification  provided for in this Section 6 is
unavailable  (except if  inapplicable  according to its terms) to an indemnified
party  under  paragraphs  (a) or (c) hereof in respect  of any  losses,  claims,
damages,  liabilities  or expenses  referred to  therein,  then an  Indemnifying
Party, in lieu of indemnifying such indemnified  party,  shall contribute to the
amount  paid or payable by such  indemnified  party as a result of such  losses,
claims,  damages,   liabilities  or  expenses  (i)  in  such  proportion  as  is
appropriate to reflect the relative benefits received by the Company, on the one
hand,  and the  Investors,  on the other  hand,  from their sale of  Registrable
Securities (it being expressly  understood and agreed that the relative benefits
received by the Company  from the sale of the  Registrable  Securities  shall be
equal to the amount of net proceeds received by the Company from the sale of the
Registrable Securities to the Investors),  or (ii) if the allocation provided by
clause (i) above is not  permitted by applicable  law, in such  proportion as is
appropriate to reflect not only the relative  benefits referred to in clause (i)
above but also the  relative  fault of the  Company,  on the one  hand,  and the
Investors,  on the other hand,  in connection  with the  statements or omissions
that resulted in such losses, claims, damages,  liabilities or expenses, as well
as any  other  relevant  equitable  considerations.  The  relative  fault of the
Company,  on the one  hand,  and the  Investors,  on the  other  hand,  shall be
determined by reference  to, among other  things,  whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by the  Investors,  on the other  hand,  and the  parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission.


                                       7
<PAGE>

                  (e) The Company and the  Investors  agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata  allocation or by any other method of  allocation  that does not take
account of the equitable  considerations referred to in paragraph (d) above. The
amount  paid or  payable  by an  indemnified  party as a result  of the  losses,
claims,  damages,  liabilities  and expenses  referred to in paragraph (d) above
shall be deemed to include,  subject to the  limitations  set forth  above,  any
legal  or  other  expenses  reasonably  incurred  by such  indemnified  party in
connection with  investigating  any claim or defending any such action,  suit or
proceeding.  Notwithstanding  the  provisions  of this Section 6, the  Investors
shall not be required to contribute  any amount in excess of the amount by which
the net proceeds received by them in connection with the sale of the Registrable
Securities  exceeds the amount of any damages which the Investors have otherwise
been  required to pay by reason of such untrue or alleged  untrue  statement  or
omission or alleged omission.  No person guilty of fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.

                  (f) The indemnity  and  contribution  agreements  contained in
this Section 6 and the  representations  and warranties of the Company set forth
in  this  Agreement  shall  remain  operative  and in  full  force  and  effect,
regardless of any investigation  made by or on behalf of any of the Investors or
any Person controlling the Investors,  the Company, its directors or officers or
any Person  controlling the Company.  A successor to the Investors or any Person
controlling the Investors,  or to the Company,  its directors or officers or any
Person  controlling  the  Company  shall  be  entitled  to the  benefits  of the
indemnity,  contribution and reimbursement  agreements contained in this Section
6.

                  (g) No  Indemnifying  Party shall,  without the prior  written
consent of the  indemnified  party,  effect  any  settlement  of any  pending or
threatened action,  suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought  hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such  indemnified  party from all  liability  on claims  that are the subject
matter of such action, suit or proceeding.

         7.       Rule 144  Requirements.  If the Company becomes subject to the
reporting  requirements of the Exchange Act, the Company will use its reasonable
best efforts to file with the Commission such  information as the Commission may
require and will use its  reasonable  best  efforts to make  available  Rule 144
under the Securities Act (or any successor exemptive rule).

         8.       Obligations  of Investors and Others in a  Registration.  Each
Investor agrees timely to furnish such information regarding such Person and the
securities  sought to be registered and to take such other action as the Company
may reasonably  request in connection with the  registration,  qualification  or
compliance. The Company may exclude from any registration statement any Investor
that timely fails to comply with the  provisions of the preceding  sentence.  If
the registration involves an underwriter,  each Investor agrees upon the request
of such underwriter,  not to sell any unregistered securities of the Company for
a period of ninety (90) days  following the effective  date of the  registration
statement for such  offering and to enter into an  underwriting  agreement  with
such  underwriters  containing  usual and customary  terms and  provisions.  The
Investors  agree not to affect  the sale of  securities  under any  registration
statement  until they have received a prospectus,  as needed,  and notice of the
effectiveness  of the  registration  statement of which the  prospectus  forms a
part.

         9.       Preparation;  Reasonable Investigation. In connection with the
preparation and filing of each  registration  statement under the Securities Act
pursuant to this  Agreement,  the Company  will give the holders of  Registrable
Securities registered under such registration statement, their underwriters,  if
any,  and  one  counsel  or  firm  of  counsel  and  one  accountant  or firm of
accountants  representing  all  the  holders  of  Registrable  Securities  to be
registered under such registration statement,  the opportunity to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment thereof or supplement thereto.

         10.      Rule 144A.  The Company  agrees that,  upon the request of any
holder of  Registrable  Securities or any  prospective  purchaser of Registrable
Securities  designated by a holder,  the Company shall promptly  provide (but in
any case within  fifteen  (15) days of a request)  to such  holder or  potential
purchaser, the following information:


                                       8
<PAGE>

                  (a) a brief  statement  of the nature of the  business  of the
Company and any subsidiaries and the products and services they offer;

                  (b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial statements of the
Company for the two (2) most recent  fiscal  years (such  financial  information
shall be audited, to the extent reasonably available); and

                  (c)  such   other   information   about   the   Company,   any
subsidiaries,  and their business, financial condition and results of operations
as the  requesting  holder or purchaser  of such  Registrable  Securities  shall
request  in order to comply  with  Rule  144A,  as  amended,  and in  connection
therewith the anti-fraud provisions of the federal and state securities laws.

         The Company  hereby  represents  and  warrants  to any such  requesting
holder and any prospective purchaser of Registrable  Securities from such holder
that the information  provided by the Company  pursuant to this Section 10 will,
as of their dates,  not contain any untrue  statement of a material fact or omit
to state a material  fact  necessary in order to make the  statements  made,  in
light of the circumstances under which they were made, not misleading.

         11.      Limitations  on Subsequent  Registration  Rights.  The Company
will not, without the prior written consent of the holder or holders of at least
a  majority  of the then  outstanding  Registrable  Securities,  enter  into any
agreements  with any  holder  or  prospective  holder of any  securities  of the
Company which would grant such holder or prospective holder  registration rights
with respect to the  securities of the Company which are senior or pari passu to
the rights granted to the Investors hereunder.

         12.      Consent  to be  Bound.  Each  subsequent  holder  of  Series A
Preferred or Registrable  Securities  must consent in writing to be bound by the
terms and  conditions of this  Agreement in order to acquire the rights  granted
pursuant to this Agreement.

         13.      Assignability  of Registration  Rights.  Subject to Section 12
hereof,  the  registration  rights set forth in this Agreement are assignable to
each assignee as to the Series A Preferred,  the Conversion Shares or each share
of Registrable  Securities conveyed in accordance herewith who agrees in writing
to be bound by the terms and conditions of this Agreement.  The term "seller" as
used in this Agreement refers to a holder of the Registrable  Securities selling
such shares.

         14.      Amendment,   Termination  and  Waiver.   Except  as  otherwise
provided herein, no amendment, modification, termination or cancellation of this
Agreement shall be effective  unless made in a writing signed by the Company and
the holders of at least  two-thirds of the then  outstanding  Series A Preferred
(including, for such purposes, any Registrable Securities).

         15.      Specific Performance. The Company and the Investors agree that
the rights created by this  Agreement are unique,  and that the loss of any such
right is not susceptible to monetary quantification.  Consequently,  the parties
agree that an action for specific  performance  (including for temporary  and/or
permanent  injunctive relief) of the obligations  created by this Agreement is a
proper remedy for the breach of the  provisions of this  Agreement,  without the
necessity  of  proving  actual  damages.  If the  parties  hereto  are forced to
institute  legal  proceedings  to enforce  their rights in  accordance  with the
provisions of this Agreement,  the prevailing party shall be entitled to recover
its reasonable expenses,  including attorneys' fees, in connection with any such
action.

         16.      Miscellaneous.

                  (a) Except as  otherwise  specifically  provided  herein,  all
notices, requests, demands and other communications provided for hereunder shall
be in  writing  and shall be deemed  effectively  given  (i) upon  receipt  when
personally delivered, (ii) one (1) day after being sent by overnight delivery or
telecopy providing  confirmation or receipt of delivery, or (iii) three (3) days
after being sent by certified or registered  mail,  postage and charges prepaid,
return receipt  requested,  to the applicable  party at the addresses  indicated
below:


                                       9
<PAGE>

         If to the Company:
         -----------------

                  Karts International Incorporated
                  P. O. Box 695
                  62204 Commercial Street
                  Roseland, Louisiana 70456
                  Attention:  President
                  Telephone: 504-747-1111
                  Telecopy:   504-747-2700

         With a copy to:
         --------------

                  Rick Gudner, Esq.
                  Jackson Walker, L.L.P.
                  901 Main Street, Suite 6000
                  Dallas, Texas 75202
                  Telephone: 214-953-6167
                  Telecopy:   214-953-5822

         If to the Investors:
         -------------------

                  The Schlinger Foundation
                  1944 Edison Street
                  Santa Ynez, California 93460
                  Attention: Evert Schlinger
                  Telephone: 905-686-1618
                  Telecopy:   905-686-1618
                  E-mail: ____________________


         With a copy to:
         --------------

                  Jenkens & Gilchrist, a Professional Corporation
                  1445 Ross Avenue, Suite 3200
                  Dallas, Texas 75202
                  Attention: W. Alan Kailer, Esq.
                  Telephone: 214-855-4361
                  Telecopy: 214-855-4300
                  E-mail: akailer@jenkens.com

or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written  notice to the other  parties  complying as to delivery
with the terms of this paragraph (a).

                  (b) This Agreement and the legal relations between the parties
arising  hereunder  shall be governed by and  interpreted in accordance with the
laws  of the  State  of  Texas.  The  parties  hereto  agree  to  submit  to the
jurisdiction  of the federal and state courts of the State of Texas with respect
to the breach or  interpretation of this Agreement or the enforcement of any and
all  rights,  duties,  liabilities,  obligations,  powers,  and other  relations
between the parties arising under this Agreement.

                  (c) This  Agreement,  the Purchase  Agreement,  including  all
exhibits,  schedules and attachments  thereto, and all other agreements executed
in  connection   herewith  and   therewith,   constitute  the  full  and  entire
understanding  and agreement between the parties regarding the matters set forth
herein  and  therein.   Except  as  otherwise  expressly  provided  herein,  the
provisions  hereof  shall  inure to the  benefit  of,  and be  binding  upon the
successors, assigns, heirs, executors and administrators of the parties hereto.

                  (d)  This   Agreement   may  be  executed  in  any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.


                                       10
<PAGE>

                  (e) If any  provision  of this  Agreement  shall be held to be
illegal,   invalid   or   unenforceable,    such   illegality,   invalidity   or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal,  invalid or unenforceable  any other provision of this
Agreement,  and this  Agreement  shall be  carried  out as if any such  illegal,
invalid or unenforceable provision were not contained herein.





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                                       11
<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have caused this  Registration
Rights Agreement to be duly executed as of the date first set forth above.

                                THE COMPANY:

                                KARTS INTERNATIONAL INCORPORATED

                                By:    _________________________________________
                                Name:  Charles Brister

                                Title: President and CEO

                                THE INVESTORS:

                                THE SCHLINGER FOUNDATION

                                By:    _________________________________________
                                Name:  _________________________________________
                                Title: _________________________________________







                                       12