Form Of Private Placement Subscription

KARTS INTERNATIONAL INCORPORATED LETTERHEAD]


Ervin L. Betts 25 Garner Street Norwalk, CT 06854


RE: PRIVATE PLACEMENT SUBSCRIPTION PARTICIPATION OPTION NOTICE


Dear Ervin L. Betts:


Karts International Incorporated (the"Company") is in the process of preparing a secondary public offering of the Company's securities and is simultaneously attempting to gain SmallCaps listing status of the Company's common shares and common stock purchase warrants on Nasdaq's market quotation system. To help facilitate the Company's application to Nasdaq, the Company is currently in the process of effectuating a reverse split whereby existing security holders will receive two shares (or warrants) in the exchange for every three shares (or warrants) owned. The resulting reduction in the number of outstanding securities should have a positive effect on the market price of the Company's securities and help the Company meet Nasdaq's initial listing requirements. Additionally, in working with Nasdaq on the listing application, the Company has been informed that Nasdaq will not pass favorably on the Company's application if any securities have been issued by the Company within the immediate prior twelve month period in any "bridge financing" transaction. The Company has determined that the recently closed private placement of preferred stock and redeemable common stock purchase warrants as closed on November 15, 1996 (the "Private Placement") may be determined by Nasdaq as such a "bridge financing" transaction.


Therefore, in order for the Company to satisfy Nasdaq's listing criteria and move forward with the proposed secondary offering, the Company must formally offer you a choice of the following two options with regard to the Private Placement in which you are a subscriber ("Subscriber"):


(i) The Company hereby offers each Subscriber the right to receive a
refund of the original Private Placement funds submitted to the
Company with simple interest applied thereon at 12.0% per annum (or
the legal rate prescribed by governing state law, if any). If this
option is selected, funds will be payable to the Subscriber on the day
of closing of the secondary offering upon surrender of the
Subscriber's preferred stock and warrant certificates; or,


(ii) The Subscriber may retain the original participation in the Private
Placement. This includes commitments of all monies and securities as
described in the subscription documents. Additionally, for each unit
of the Private Placement purchased, the Subscriber will receive an
additional 20,000 redeemable common stock purchase warrants with an
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