PROMISSORY
      NOTE

    (Revolving
      Note)


     

    
      	
              $1,000,000.00

            	
               October
                19,
                2005

            


    

    Oklahoma
      City, Oklahoma

    


    FOR
      VALUE
      RECEIVED, the undersigned SHUMATE MACHINE WORKS, INC., a Texas corporation
      ("Machine") and SHUMATE INDUSTRIES INC. (formerly EXCALIBUR INDUSTRIES, INC.),
      a
      Delaware corporation ("Industries") (Machine, Holdings, and Industries are
      collectively referred to herein as the "Borrowers"), jointly and severally
      promise to pay to the order of STILLWATER NATIONAL BANK AND TRUST COMPANY,
      and
      its successors and assigns (the "Lender") at 1500 South Utica Avenue, Tulsa,
      Oklahoma 74104, or at such other place as may be designated in writing by the
      Lender, the principal sum of ONE MILLION DOLLARS ($1,000,000.00) (the “Face
      Amount”), or so much thereof which is actually outstanding from time to time,
      together with interest thereon at the interest rates hereinafter stated, payable
      as set forth below.

    


    Unless
      otherwise defined herein, all terms defined or referenced in that certain Loan
      Agreement of even date herewith between the Borrowers and the Lender (the "Loan
      Agreement") will have the same meanings herein as therein.

    


    Borrower
      shall be permitted to obtain advances from the Lender in accordance with the
      terms of this Note and the Loan Agreement of amounts having the aggregate
      principal balance at any one time not exceeding the lesser of (a) the Borrowing
      Base or (b) the Face Amount. Borrowers agree to be liable for all sums advanced
      in accordance with the Loan Agreement.

    


    Interest
      on this Note will be paid at the interest rate equal to the Prime Rate plus
      two
      percent (2%) per annum, adjusted on each day on which a change in the Prime
      Rate
      occurs (the "Interest Rate"). "Prime Rate" means the prime rate as published
      in
      the "Money Rates" Section of the Wall
      Street Journal,
      which
      rate is not necessarily the lowest rate of interest charged by the Lender.
      All
      interest hereon shall be calculated for the actual number of days elapsed at
      a
      per diem charge based on a year consisting of 360 days.

    


    Interest
      on this Note will be paid monthly commencing on November 30, 2005, with payments
      on the last day of each calendar month thereafter. The entire unpaid principal
      balance of this Note and all accrued interest hereon will be due and payable
      on
      October 19, 2006 (the "Maturity Date"). In addition, should the principal
      balance of this Note exceed the Borrowing Base, Borrowers shall immediately
      notify Lender of such event and Borrowers shall immediately, without the
      necessity of Lender making a demand or giving notice to Borrowers or to any
      person obligated to pay the indebtedness of this Note, pay Lender so much of
      the
      outstanding principal so that the then remaining principal balance shall equal
      or be less than the Borrowing Base.

    


    This
      Note
      is executed and delivered in connection with, and subject to the terms and
      conditions contained in, the Loan Agreement. Advances and payments hereunder
      may, at the option of the Lender, be recorded on this Note or on the books
      and
      records of the Lender and will be prima facie evidence of said advances,
      payments and the unpaid balance of this Note. All payments will first be applied
      to the payment of accrued interest and the balance will be applied in reduction
      of the principal balance hereof provided that no payment will be applied to
      this
      Note until received by the Lender in collected funds.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    The
      Borrowers will have the right to prepay this Note in whole or in part at any
      time and from time to time without premium or penalty.

    


    If
      a
      payment owing hereunder is more than ten (10) days late, the Borrowers will
      be
      charged ten percent (10%) of such unpaid payment or $500.00, whichever is less,
      as a late charge, or in the alternative, at the Lender's option, while any
      Default exists hereunder or under the Loan Agreement or in the performance
      or
      observance of any of the terms, covenants or conditions of this Note or any
      of
      the documents evidencing or securing this Note or of any instrument now or
      hereafter securing the payment of the indebtedness evidenced hereby, the entire
      unpaid principal balance hereof shall bear interest at the per annum rate equal
      to six percent (6%) in excess of the then current interest rate payable
      hereunder, but not less than fifteen percent (15%). During the existence of
      any
      such Default, the Lender may apply payments received on any amounts due
      hereunder, or under the terms of any instrument now or hereafter evidencing
      or
      securing such indebtedness, as the Lender may determine, and if the Lender
      so
      elects, notice of election being expressly waived, the principal hereof
      remaining unpaid, together with accrued interest, shall at once become due
      and
      payable. Any and all additional interest at the rate provided in this paragraph
      which has accrued shall be payable at the time of, and as a condition precedent
      to, the curing of any Default.

    


    The
      Borrowers jointly and severally agree that if, and as often as, this Note is
      placed in the hands of an attorney for collection or to defend or enforce any
      of
      the Lender's rights hereunder or under any instrument securing payment of this
      Note, the Borrowers will pay the Lender's reasonable attorneys' fees and
      expenses, all court costs and all other reasonable expenses incurred by the
      Lender in connection therewith.

    


    This
      Note
      is issued by the Borrowers and accepted by the Lender pursuant to a lending
      transaction negotiated, consummated, and to be performed in Oklahoma. Payment
      of
      this Note is secured by a certain Security Agreement of even date (the "Security
      Agreement"). This Note is to be construed according to the internal laws of
      the
      State of Oklahoma. All actions with respect to this Note, the Security Agreement
      or any other instrument securing payment of this Note may be instituted in
      the
      state or federal courts in Tulsa County, Oklahoma, or Oklahoma County, Oklahoma,
      as the Lender may elect, and by execution and delivery of this Note, the
      Borrowers jointly and severally irrevocably and unconditionally submit to the
      jurisdiction (both subject matter and personal) of each such court and
      irrevocably and unconditionally waives: (a) any objection the Borrowers might
      now or hereafter have to the venue in any such court; and (b) any claim that
      any
      action or proceeding brought in any such court has been brought in an
      inconvenient forum.

    


    On
      the
      failure to pay any principal or interest when due hereunder, or under certain
      other promissory notes (as defined or described in the Loan Agreement), or
      on
      the occurrence of any Default under the Loan Agreement, as defined or described
      therein, at the option of the Lender, the entire indebtedness evidenced by
      this
      Note will become immediately due, payable and collectible then or thereafter
      as
      the Lender might elect, regardless of the date of maturity hereof. Failure
      by
      the Lender to exercise such option will not constitute a waiver of the right
      to
      exercise the same in the event of any subsequent Default.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    The
      makers, endorsers, sureties, guarantors and all other persons who may become
      liable for all or any part of this obligation severally waive presentment for
      payment, protest and notice of nonpayment. Said parties consent to any extension
      of time (whether one or more) of payment hereof, release of all or any part
      of
      the security for the payment hereof or release of any party liable for the
      payment of this obligation. Any such extension or release may be made without
      notice to any such party and without discharging such party's liability
      hereunder.

    


    IN
      WITNESS WHEREOF, the Borrowers have executed this instrument effective the
      date
      first above written.

     

    
      
        	 	 	SHUMATE MACHINE WORKS, INC., a Texas
                corporation
	 	 	 
	 	 	By: /s/
                Matthew C. Flemming
	 	 	Name: Matthew
                C. Flemming
	 	 	Title: CFO
	 	 	 
	 	 	 
	 	 	SHUMATE INDUSTRIES, INC. (formerly
                EXCALIBUR
                INDUSTRIES, INC., a Delaware corporation
	 	 	
              
	 	 	 
	 	 	By: /s/
                Matthew C. Flemming
	 	 	Name: Matthew
                C. Flemming
	 	 	Title: CFO
	 	 	 
	 	 	(the "Borrowers")
	 	 	 
	 	 	 


      

    

     

    
      
        
        

      

      
        3