LOCKBOX
      AGREEMENT

    


    THIS
      AGREEMENT, is
      executed effective the 19th day of October, 2005, between SHUMATE INDUSTRIES
      INC. (formerly EXCALIBUR INDUSTRIES, INC.), a Delaware corporation
      (“Industries”), SHUMATE MACHINE WORKS, INC., a Texas corporation (“Machine”),
      and STILLWATER NATIONAL BANK AND TRUST COMPANY, a national banking association
      (the "Lender"). Industries and Machine are sometimes referred to hereafter
      collectively as “Account Holders.”

    


    WHEREAS,
      Account Holders and SNB entered into and executed a certain Amended and Restated
      Loan Agreement (the “Loan Agreement”) of even date herewith, whereby SNB agreed
      to loan and did loan Account Holders certain funds for the uses and purposes
      therein set forth;

    


    WHEREAS,
      as a part and parcel of the same transaction, and in order to secure the payment
      of same, Account Holders granted SNB a security interest in the Account Holders’
accounts receivables; and

    


    WHEREAS,
      Account Holders requested SNB to enter into this Agreement for the purpose
      of
      timely applying the proceeds of the accounts receivable processed under the
      terms of this Agreement to the obligations of Account Holders in favor of
      SNB;

    


    NOW,
      THEREFORE, in consideration of the execution of this Agreement and other good
      and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, it is agreed by and between the parties hereto as
      follows:

    


    1) Certain
      Defined Terms.
      Unless
      otherwise defined herein, terms defined in the Loan Agreement shall have the
      same meanings and interpretation when used herein. 

    


    2) Lockbox.
      SNB
      maintains P.O. Box 2648, Oklahoma City, Oklahoma, 73126 (the “Lockbox”). The
      Lockbox shall be designated by Account Holders on their invoices as the point
      of
      remittance for payments on their accounts receivable when the accounts are
      not
      disputed or not submitted as payments in full if in an amount less than the
      full
      invoice.

    


    3) Notice
      to Account Debtors.
      Account
      Holders will, within three (3) business days after execution of this Agreement,
      send notices to all of Account Holders’ account debtors instructing the account
      and contract debtors to send to the Lockbox all payments on account. Account
      Holders agree that, without the prior written consent of the Lender, Account
      Holders will not revoke or alter the instructions contained in such notices
      until such time as all of the indebtedness has been finally paid in full. The
      Lender may also provide notice to Account Holders’ account and contract debtors
      at any time in such a manner as Lender deems appropriate.

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    4) Receipts/Processing.
      During
      normal business days of SNB, SNB will cause the contents of the Lockbox to
      be
      removed and taken to SNB for processing. Upon removal of the contents of the
      Lockbox, employees of SNB will separate the contents of the Lockbox so only
      mail
      addressed to Account Holders will be processed under this Agreement. Account
      Holders direct SNB to open all contents of the Lockbox addressed to Account
      Holders. The items representing payments on accounts receivable shall be
      processed as follows: Deposit all checks, money orders or other like instruments
      in Account No. at SNB. SNB shall then process these items for collections in
      its
      ordinary course of business. In addition, SNB will prepare a list of items
      deposited showing the name of the maker and the amount of the check or other
      instrument. SNB shall furnish Account Holders with copies of all deposit slips
      showing all deposits to the account pursuant to this Agreement and copies of
      all
      checks or other instruments included in the deposit at the time and in the
      manner specified in paragraph 8.

    


    5) Payment
      of Debts.
      SNB is
      directed to remove from the Lockbox all collected funds and apply the amount
      removed to the interest payments due under the Revolving Note (as defined in
      the
      Loan Agreement) or any note into which it may be renewed. If any item is
      returned unpaid after the amount of the item is applied to the interest payment
      of the Revolving Note, the payment on the Revolving Note shall be reversed
      effective the date of the payment on the Revolving Note. All uncollected or
      returned items will be forwarded to Account Holder for Account Holder's
      action.

    


    6) Improper/Returned
      Items.
      Any
      check or other instrument handled by SNB pursuant to this Agreement which is
      improper or otherwise appears to employees of SNB to be non-payable in a proper
      manner will be forwarded to Account Holder rather than deposited in the account
      as above set forth.

    


    7) Notation
      of Items.
      If SNB
      notices any notation on checks or other instruments which indicated the checks
      or other instruments are tendered as full payment of all obligations due by
      the
      maker to the Account Holder and such checks or other instruments are in an
      amount different from the invoice, if any, submitted with the payments, SNB
      is
      directed to deposit the check or other instrument in the account of Account
      Holder. Account Holder warrants that receipt of a copy of the check or other
      instrument is sufficient notification of the notation and fulfills all duties
      of
      SNB to Account Holder under this Agreement or otherwise.

    


    8) Accounting.
      SNB
      shall furnish Account Holder photocopies of all checks or other instruments
      processed under this Agreement, photocopies of deposit slips and the contents
      of
      any envelope. Same will be furnished to the Account Holder by SNB depositing
      same in the United States Mail, by first-class mail, within three (3) business
      days of processing by SNB. Account Holder may request SNB telecopy copies of
      the
      checks or other instruments and/or the deposit slips or may request SNB hold
      all
      items for pickup by Account Holder.

    


    9) Standard
      of Care.
      SNB
      shall use reasonable and ordinary care in performing its obligations under
      this
      Agreement and shall not be liable or responsible to Account Holder for any
      damages it may sustain by reason of the failure of SNB to exercise ordinary
      care
      in performing its duties under this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, we the undersigned have executed this Agreement the date and
      year first above written.

    


    


    
      	 	 	
              SHUMATE
                INDUSTRIES, INC., (formerly EXCALIBUR INDUSTRIES, INC.), a Delaware
                corporation

            
	 	 	 
	 	 	By: /s/
              Matthew C.
              Flemming                                       
                          
	 	 	Name: Matthew C. Flemming
	 	 	Title: Chief Financial Officer
	 	 	 
	 	 	 
	 	 	SHUMATE MACHINE WORKS, INC.
	 	 	a Texas corporation
	 	 	 
	 	 	By: /s/
              Matthew C.
              Flemming                                                  
                
	 	 	Name: Matthew C. Flemming
	 	 	Title: CFO
	 	 	 
	 	 	 
	 	 	STILLWATER NATIONAL BANK AND TRUST COMPANY,
              a
              national banking association
	 	 	 
	 	 	By: /s/
              Michael
              Mattson                                    
                                    
              
	 	 	Name: Michael Mattson
	 	 	Title: Vice
              President


    

    
 

    
      
         

      

      
        3