REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (the
“Agreement”)
      is
      entered into as of July 10, 2007, by and among Shumate
      Industries, Inc.,
      a
      Delaware corporation (the “Company”),
      and
Whitebox
      Shumate Ltd.,
      a
      British Virgin Islands corporation (“WSL”
or
      the
“Investor”).

     

    RECITALS
      :

     

    A. The
      Company
      and the
      Investor
      have
      entered into a Note Purchase Agreement of this date (the “Note
      Purchase Agreement”),
      pursuant to which the Investor purchased a $2,000,000 face amount convertible
      promissory note (the “Note”)
      in
      consideration of a $2,000,000 loan and a warrant to purchase shares of the
      Company’s Common Stock (the “Warrant”)
      from
      the Company in consideration of $100.00.

     

    B. As
      a
      condition to the Note Purchase Agreement, the Company has agreed to grant
      certain registration rights with respect to the shares of the Company’s Common
      Stock (or other securities) issuable upon conversion of the Note and/or exercise
      of the Warrant pursuant to the terms of this Agreement.

     

    C. The
      execution of this Agreement is a condition precedent to WSL’s performance
      obligations under the Note Purchase Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing and of the mutual promises and covenants
      contained in this Agreement, and for other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, the parties, intending
      to be legally bound, hereby agree as follows:

     

    ARTICLE
      1.

    DEFINITIONS

     

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

     

    1.1  “Commission”
      shall
      mean the U.S. Securities and Exchange Commission or any other successor federal
      agency at the time administering the Securities Act.

     

    1.2  “Common
      Stock”
      shall
      mean the Company’s common stock, $0.001 par value per share.

     

    1.3  “Exchange
      Act”
      shall
      mean the Securities and 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.4  “Holders”
      shall
      mean and include the Investor and any transferee thereof to whom the
      registration rights conferred by this Agreement have been transferred in
      accordance with Article 10 hereof.

     

    1.5  “Register,” “registered”
      and
“registration”
      refer to
      a registration effected by preparing and filing with the Commission a
      registration statement in compliance with the Securities Act, and the
      declaration or ordering by the Commission of the effectiveness of such
      registration statement.

     

    1.6  “Registrable
      Securities”
      means:
(i)
      all
      shares of Common Stock issuable upon exercise of the Warrant; (ii) all shares
      of
      Common Stock issuable upon conversion of the Note; and
      (iii)
      any and all shares of Common Stock or other securities issuable upon any stock
      split, stock dividend, recapitalization, reclassification, merger, consolidation
      or other similar event with respect to the Common Stock or other securities
      issued or issuable pursuant to subsections (i) and (ii) of this Section 1.6;
      excluding in all cases, however, Registrable Securities sold by a Holder to
      the
      public pursuant to a registered offering or pursuant to Rule 144 promulgated
      by
      the Commission under the Securities Act or sold in a private transaction in
      which the Holder’s registration rights under this Agreement are not
      assigned.

     

    1.7  “Registration
      Expenses”
      shall
      mean all
      expenses incurred by the Company in complying with Articles 2, 3 and 4 hereof,
      including, without limitation, all registration, qualification and Commission,
      National Association of Securities Dealers, Inc., stock exchange and other
      filing fees, printing expenses, escrow fees, fees and disbursements of legal
      counsel for the Company, fees and disbursements of any special counsel engaged
      by the Holders, blue sky fees and expenses, and the expense of any special
      audits incident to or required by any such registration (but excluding the
      compensation of regular employees of the Company, which shall be paid in any
      event by the Company).

     

    1.8  “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.

     

    1.9  “Selling
      Expenses”
      shall
      mean all underwriting fees, discounts, selling commissions and stock transfer
      taxes applicable to the Registrable Securities registered by the
      Holders.

     

    1.10  “Underwriter”
      shall
      mean (whether or not the term is capitalized) a broker-dealer engaged by the
      Company to distribute Registrable Securities as principal or agent.

     

    1.11  “Underwriting” or
      “Underwritten”
      shall
      mean (whether or not the term is capitalized) a method of publicly distributing
      securities through an Underwriter.

     

    
      
         

      

      
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    ARTICLE
      2.

    COMPANY
      REGISTRATION

     

    2.1  Notice
      of Registration to Holder.
      If the
      Company determines to register any of its securities, either for its own account
      or the account of a security holder or holders, other than (i) a registration
      relating solely to employee benefit plans on Form S-8 (or any successor form)
      or
      (ii) a registration relating solely to a Commission Rule 145 transaction on
      Form
      S-4 (or any successor form), the Company will:

     

    (a)  promptly
      give Holder written notice thereof and

     

    (b)  include
      in such registration (and any related qualification under blue sky laws or
      other
      compliance), and in any underwriting involved therein, all the Registrable
      Securities specified in a written request or requests, made within 30 days
      after
      receipt of such written notice from the Company described in Section 3.1(a),
      by
      Holder, subject to any reductions in the Registrable Securities to be registered
      made in the manner set forth in Section 3.2(a) or any other reductions required
      due to the Commission’s recent interpretation of Rule 415 of the Securities
      Act.

     

    2.2  Underwriting.
      If the
      registration of which the Company gives notice is for an offering involving
      an
      underwriting, the Company shall so advise the Holder as a part of the written
      notice given pursuant to Section 2.1(a). In such event, the right of the Holder
      to registration pursuant to this Article 2 shall be conditioned upon the
      Holder’s participation in such underwriting and the inclusion of the Holder’s
      Registrable Securities in the underwriting to the extent provided herein. In
      such case, the Holder shall (together with the Company) enter into an
      underwriting agreement in customary form with the managing underwriter selected
      for such underwriting by the Company.

     

    (a)  Notwithstanding
      any other provision of this Article 2, if the managing underwriter determines
      that marketing factors require a limitation of the number of shares to be
      underwritten, the underwriter may exclude some or all Registrable Securities
      from such registration and underwriting. The Company shall so advise the Holder
      of Registrable Securities, and the number of shares of Common Stock to be
      included in such registration shall be allocated as follows: first, for the
      account of the Company, all shares of Common Stock proposed to be sold by the
      Company; and
      second, for the account of the Holder and any other shareholders of the Company
      participating in such registration, the number of shares of Common Stock
      requested to be included in the registration by the Holder and such other
      shareholders in proportion, as nearly as practicable, to the respective amounts
      of Registrable Securities that are proposed to be offered and sold by the Holder
      and such other shareholders of Registrable Securities at the time of filing
      the
      registration statement. No
      Registrable Securities excluded from the underwriting in this Article 2 by
      reason of the underwriters’ marketing limitation shall be included in such
      registration.

     

    
      
         

      

      
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    (b)  The
      Company shall so advise the Holder and the other holders distributing their
      securities through such underwriting of any such limitation, and the number
      of
      shares of Registrable Securities held by the Holder that may be included in
      the
      registration. If the Holder disapproves of the terms of any such underwriting,
      the Holder may elect to withdraw therefrom by written notice to the Company
      and
      the managing underwriter. Any securities excluded or withdrawn from such
      underwriting shall be withdrawn from such registration, but the Holder shall
      continue to be bound by the terms hereof.

     

    (c)  The
      Company shall have the right to terminate or withdraw any registration initiated
      by it under this Article 2 prior to the effectiveness of such registration,
      whether or not the Holder has elected to include Registrable Securities in
      such
      registration.

     

    2.3  Inclusion
      of Shares by the Company. If
      the
      resale distribution of Registrable Securities is being effected by means of
      an
      underwriting and if the managing underwriter will not limit the number of
      Registrable Securities to be underwritten, the Company may include securities
      for its own account or for the account of others in such registration if the
      managing underwriter so agrees. The inclusion of such shares shall be on the
      same terms as the registration of shares held by the Holder. In the event that
      the underwriters exclude some of the securities to be registered, the securities
      to be sold for the account of the Company and any other holders shall be
      excluded in their entirety prior to the exclusion of any Registrable
      Securities.

     

    ARTICLE
      3.

    REQUIRED
      REGISTRATION

     

    3.1  Required
      Registration.
      To the
      extent that all Registrable Securities have not been registered pursuant to
      Section 2 above, within 180 days of the date hereof, the Company will file
      a
      registration statement under the Securities Act on Form SB-2 (or any successor
      to Form SB-2) or a similar long form registration statement, covering the
      registration of the Registrable Securities and will, as soon as practicable,
      use
      its best efforts to effect such registration (including, without limitation,
      filing post-effective amendments, related qualification under blue sky laws
      or
      other compliance) of all the Registrable Securities. If, however, the Company
      is
      eligible for use of Form S-3 (or any comparable or successor form) to register
      the Registrable Securities, the Company may satisfy the requirement of this
      Section 3.1 through the use of such Form.

     

    3.2 Underwriting.
      If
      the
      registration is for an underwritten offering, the provisions of Sections 2.2(a),
      (b) and (c) and Section 2.3 hereof shall apply to such
      registration.

     

    3.3 Contingent
      Additional Interest; Effect of Particular Note Conversions.
      The
      required registration statement under this Article 3 is the Registration
      Statement referred to in Section 2(b) of the Note, as to which the failure
      to so
      timely file as provided in Section 3.1 above, or to obtain effectiveness within
      270 days of the date hereof, will give rise to the Company’s obligation to pay
      Contingent Additional Interest under the Note. To the extent that pursuant
      to
      Sections 3(d) and 3(b)(ii) of the Note, the registration rights as to
      Registrable Securities issuable upon conversion of the Note become governed
      by
      the registration rights agreement relating to a Subsequent Equity Financing
      (as
      that term is defined in Section 2(c) of the Note), the registration rights
      as to
      Registrable Securities issuable upon exercise of the Warrant, and as to
      Registrable Securities not governed by the Section 3(b)(ii) of the Note, will
      continue to be governed by this Agreement.

     

    
      
         

      

      
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    ARTICLE
      4.

    REGISTRATION
      ON FORM S-3

     

    4.1  Request
      for Registration.
      The
      Company shall use its reasonable best efforts to continue to qualify for
      registration on Form S-3 or any comparable or successor form. At all times
      when
      the Company is eligible to use of Form S-3, and in addition to the rights
      contained above in Articles 2 and 3, the Holder shall have the right to request
      registrations on Form S-3. Such requests shall be in writing and shall state
      the
      number of Registrable Securities to be disposed of and the intended methods
      of
      disposition of such securities. The Company shall not be obligated to effect
      any
      such registration if in a given 6-month period, the Company has effected a
      registration of Registrable Securities within the preceding 6-month
      period.

     

    4.2  Underwriting.
      If the
      registration is for an underwritten offering, the provisions of Sections 2.2(a),
      (b) and (c) and Section 2.3 hereof shall apply to such registration.


     

    ARTICLE
      5.

    EXPENSES
      OF REGISTRATION

     

    All
      Registration Expenses incurred in connection with any registration,
      qualification or compliance pursuant to Articles 2, 3 and 4 hereof, shall be
      borne by the Company; provided, however, that any expenses incurred as a result
      of any amendment described in Section 2.2(a) shall be borne by the Holder of
      the
      Registrable Securities being registered in such registration. All Selling
      Expenses relating to Registrable Securities registered by the Holder shall
      be
      borne by the Holder of such Registrable Securities (if there are multiple
      Holders, then pro rata on the basis of the number of securities so
      registered).

     

    ARTICLE
      6.

    REGISTRATION
      PROCEDURES

     

    6.1  In
      the
      case of each registration effected by the Company pursuant to this Agreement,
      the Company will keep the Holder advised in writing as to the initiation of
      each
      registration and as to the completion thereof. The Company agrees to use its
      reasonable best efforts to effect or cause such registration to permit the
      sale
      of the Registrable Securities covered thereby by the Holder thereof in
      accordance with the intended method or methods of distribution thereof described
      in such registration statement. In connection with any registration of any
      Registrable Securities, and except as otherwise provided in Article 5 hereof,
      the Company shall, at its expense:

     

    (a)  prepare
      and file with the Commission a registration statement with respect to such
      Registrable Securities and use its reasonable best efforts to cause such
      registration statement filed to become effective;

     

    
      
         

      

      
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    (b)  maintain
      the effectiveness of such registration statement until the earlier of (A) two
      years after the date that the registration statement filed pursuant to Section
      3.1 is first declared effective by the Commission, (B) the date on which all
      of
      the Registrable Securities covered by a registration statement may be sold
      by
      the Holder pursuant to Rule 144(k) or (C) such time as all of the Registrable
      Securities have been publicly sold pursuant to a registration
      statement;

     

    (c)  prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus included therein as may be necessary
      to effect and maintain the effectiveness of such registration statement as
      may
      be required by the applicable rules and regulations of the Commission and the
      instructions applicable to the form of such registration statement and furnish
      to the Holder of the Registrable Securities covered thereby copies of any such
      supplement or amendment prior to this being used and filed with the
      Commission;

     

    (d)  promptly
      notify the Holder of Registrable Securities to be included in a registration
      statement hereunder, the sales or placement agent, if any, therefor and the
      managing underwriter of the securities being sold, and confirm such advice
      in
      writing, (A) when such registration statement or the prospectus included therein
      or any prospectus amendment or supplement or post-effective amendment has been
      filed, and, with respect to such registration statement or any post-effective
      amendment, when the same has become effective, (B) of the issuance by the
      Commission of any stop order suspending the effectiveness of such registration
      statement or the initiation of any proceedings for that purpose, (C) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification of the Registrable Securities for sale in any jurisdiction or
      the
      initiation or threatening of any proceeding for such purpose or (D) if,
      to
      the Company’s knowledge, it shall be the case, at any time when a prospectus is
      required to be delivered under the Securities Act, that such registration
      statement or prospectus, or any document incorporated by reference in any of
      the
      foregoing, contains an untrue statement of a material fact or omits to state
      any
      material fact required to be stated therein or necessary to make the statements
      therein not misleading in light of the circumstances then existing;

     

    (e)
      notwithstanding anything herein to the contrary, the Company may, at any time,
      suspend the effectiveness of any Registration Statement for a period of up
      to 60
      consecutive days or 90 days in the aggregate in any calendar year, as
      appropriate (a “Suspension Period”), by giving notice to each holder of
      Registrable Securities to be included in the Registration Statement, if the
      Company shall have determined, after consultation with its counsel, that the
      Company is required to disclose any material corporate development which the
      Company determines could reasonably be expected to have a material effect on
      the
      Company. Each holder of Registrable Securities agrees by acquisition of such
      Registrable Securities that, upon receipt of any notice from the Company of
      a
      Suspension Period or an event described under Section 6.1(d), such holder shall
      forthwith discontinue disposition of such Registrable Securities covered by
      such
      Registration Statement or Prospectus until such holder (i) is advised in
      writing by the Company that the use of the applicable Prospectus may be resumed,
      (ii) has received copies of a supplemental or amended prospectus, if
      applicable and (iii) has received copies of any additional or supplemental
      filings which are incorporated or deemed to be incorporated by reference in
      such
      Prospectus. The Company shall prepare, file and furnish to each holder of
      Registrable Securities immediately upon the expiration of any Suspension Period,
      appropriate supplements or amendments, if applicable, to the Prospectus and
      appropriate documents, if applicable, incorporated by reference in the
      Registration Statement. The Company agrees to use its best efforts to cause
      any
      Suspension Period to be terminated as promptly as possible;

     

    
      
         

      

      
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    (f)
      use
      its reasonable best efforts to obtain the withdrawal of any order suspending
      the
      effectiveness of such registration statement or any post-effective amendment
      thereto or of any order suspending or preventing the use of any related
      prospectus or suspending the qualification of any Registrable Securities
      included in such registration statement for sale in any jurisdiction at the
      earliest practicable date;

     

    (g)
      furnish to the Holder of Registrable Securities to be included in such
      registration statement hereunder, each placement or sales agent, if any,
      therefor and each underwriter, if any, thereof a conformed copy of such
      registration statement, each such amendment and supplement thereto (in each
      case
      excluding all exhibits and documents incorporated by reference) and such number
      of copies of the registration statement (excluding exhibits thereto and
      documents incorporated by reference therein unless specifically so requested
      by
      the Holder, agent or underwriter, as the case may be) of the prospectus included
      in such registration statement (including each preliminary prospectus and any
      summary prospectus), in conformity with the requirements of the Securities
      Act,
      as the Holder, agent, if any, and underwriter, if any, may reasonably request
      in
      order to facilitate the disposition of the Registrable Securities owned by
      the
      Holder sold by such agent or underwritten by such underwriter and to permit
      the
      Holder, agent and underwriter to satisfy the prospectus delivery requirements
      of
      the Securities Act;

     

    (h)
      use
      its reasonable best efforts to (A) register or qualify the Registrable
      Securities to be included in such registration statement under such other
      securities laws or blue sky laws of such states of the United States or the
      District of Columbia to be designated by the Holder participating in such
      registration and each placement or sales agent, if any, therefor and
      underwriter, if any, thereof, as the Holder and each underwriter, if any, of
      the
      securities being sold shall reasonably request (provided, that the Company
      shall
      not be required to use its best efforts to register or qualify the Registrable
      Securities in more than 15 such jurisdictions unless the expenses thereof are
      borne by the Holder requesting such efforts), (B) keep such registrations or
      qualifications in effect and comply with such laws at all times during the
      period described in Section 6.1(b) above and (C) take any and all such actions
      as may be reasonably necessary or advisable to enable the Holder, agent, if
      any,
      and underwriter to consummate the disposition in such jurisdictions of such
      Registrable Securities; provided, however, that in order to fulfill the
      foregoing obligations under this Section 6.1(g), the Company shall not (unless
      otherwise required to do so in any jurisdiction) be required to (1) qualify
      generally to do business as a foreign company or a broker-dealer, (2) execute
      a
      general consent to service of process or (3) subject itself to taxation;
      and

     

    
      
         

      

      
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    (i)
      furnish, at the request of the Holder participating in the registration, on
      the
      date that such Registrable Securities are delivered to the underwriters for
      sale, if such securities are being sold through underwriters, or, if such
      securities are not being sold through underwriters, on the date that the
      registration statement with respect to such securities becomes effective, (i)
      an
      opinion, dated as of such date, of the counsel representing the Company for
      the
      purposes of such registration, in form and substance as is customarily given
      to
      underwriters in an underwritten public offering and reasonably satisfactory to
      the Holder requesting registration, addressed to the underwriters, if any,
      and
      to the Holder requesting registration of Registrable Securities and (ii) a
      letter dated as of such date, from the independent certified public accountants
      of the Company, in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering
      and reasonably satisfactory to the Holder requesting registration, addressed
      to
      the underwriters, if any, and if permitted by applicable accounting standards,
      to the Holder requesting registration of Registrable Securities.

     

    6.2  The
      Company may require the Holder of Registrable Securities as to which any
      registration is being effected to furnish to the Company such information
      regarding the Holder and the Holder’s method of distribution of such Registrable
      Securities as the Company may from time to time reasonably request in writing.
      The Holder agrees to notify the Company as promptly as practicable of any
      inaccuracy or change in information previously furnished by the Holder to the
      Company or of the occurrence of any event in either case as a result of which
      any prospectus relating to such registration contains or would contain an untrue
      statement of a material fact regarding the Holder or the distribution of such
      Registrable Securities or omits to state any material fact regarding the Holder
      or the distribution of such Registrable Securities required to be stated therein
      or necessary to make the statements therein not misleading in light of the
      circumstances then existing, and promptly to furnish to the Company any
      additional information required to correct and update any previously furnished
      information or required so that such prospectus shall not contain, with respect
      to the Holder or the distribution of such Registrable Securities, an untrue
      statement or a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein not misleading in
      light of the circumstances then existing.

     

    6.3  The
      Holder will (i) comply with the provisions of the Securities Act with respect
      to
      disposition of the Registrable Securities to be included in any registration
      statement filed by the Company and (ii) comply with the “Plan of Distribution”
section of the current prospectus relating to any registration statement
      covering Registrable Securities filed by the Company.

     

    
      
         

      

      
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    6.4 The
      Holder, by the Holder’s acceptable of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested in connection with the
      preparation and filing of any Registration Statement hereunder and in responding
      to any comments of the Commission in connection therewith.

     

    ARTICLE
      7.

    INDEMNIFICATION

     

    7.1  The
      Company will indemnify the Holder, each of its officers, directors and partners,
      and the Holder’s legal counsel and independent accountants, if any, and each
      person controlling any such persons within the meaning of Section 15 of the
      Securities Act, with respect to which registration, qualification or compliance
      has been effected pursuant to this Agreement, and each underwriter, if any,
      and
      each person who controls any underwriter within the meaning of Section 15 of
      the
      Securities Act, against all expenses, claims, losses, damages and liabilities
      (or actions in respect thereof), including any of the foregoing incurred in
      settlement of any litigation, commenced or threatened, arising out of or based
      on any untrue statement (or alleged untrue statement) of a material fact
      contained in any registration statement, prospectus, offering circular or other
      document, or any amendment or supplement thereof, incident to any such
      registration, qualification or compliance, or based on 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, or any violation by
      the
      Company of any rule or regulation promulgated under the Securities Act or any
      state securities laws applicable to the Company and relating to action or
      inaction by the Company in connection with any such registration, qualification
      or compliance, and will reimburse each such Holder, each of its officers,
      directors and partners and the Holder’s legal counsel and independent
      accountants, and each person controlling any such persons, each such underwriter
      and each person who controls any such underwriter, for any reasonable legal
      and
      any other expenses reasonably incurred in connection with investigating,
      preparing or defending any such claim, loss, damage, liability or action;
      provided, however, that the Company will not be liable in any such case to
      the
      extent that any such claim, loss, damage, liability or expense arises out of
      or
      is based on any untrue statement or omission or alleged untrue statement or
      omission made in reliance upon and in conformity with written information
      furnished to the Company by such Holder, officers, directors, partners, legal
      counsel, accountants, underwriter or controlling persons, and expressly intended
      for use in such registration statement, prospectus, offering circular or other
      document, or any amendment or supplement thereof; and provided further, that
      the
      Company shall not be liable in any such case to the extent that any such loss
      arises out of or is based upon an untrue statement or alleged untrue statement
      or omission made in any preliminary prospectus or prospectus if (i) such Holder
      failed to send or deliver a copy of the prospectus or prospectus supplement
      with
      or prior to the delivery of written confirmation of the sale of Registrable
      Securities and (ii) the prospectus or prospectus supplement would have corrected
      such untrue statement or omission. If requested, the Company shall also
      indemnify underwriters, selling brokers, dealer managers and similar securities
      industry professionals participating in the distribution, their officers,
      directors, agents and employees and each person who controls such persons
      (within the meaning of Section 15 of the Securities Act or Section 20 of the
      Exchange Act) to the same extent as provided above with respect to the
      indemnification of the holders of Registrable Securities.

     

    
      
         

      

      
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    7.2  The
      Holder will, if Registrable Securities held by the Holder are included in the
      securities as to which such registration, qualification or compliance is being
      effected, indemnify the Company, each of its directors and officers and its
      legal counsel and independent accountants, each underwriter, if any, of the
      Company’s securities covered by such a registration statement, and each person
      who controls the Company or such underwriter within the meaning of Section
      15 of
      the Securities Act, against all expenses, claims, losses, damages and
      liabilities (or actions in respect thereof), including any of the foregoing
      incurred in settlement of any litigation, commenced or threatened, arising
      out
      of or based on any untrue statement (or alleged untrue statement) of a material
      fact contained in any such registration statement, prospectus, offering circular
      or other document, or any amendment or supplement thereto, incident to any
      such
      registration, qualification or compliance or based on 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, and will reimburse
      the
      Company, such directors, officers, partners, legal counsel, independent
      accountants, underwriters or control persons for any legal or any other expenses
      reasonably incurred in connection with investigating, preparing or defending
      any
      such claim, loss, damage, liability or action, in each case to the extent,
      but
      only to the extent, that such untrue statement (or alleged untrue statement)
      or
      omission (or alleged omission) is made in such registration statement,
      prospectus, offering circular, other document or amendment or supplement in
      reliance upon and in conformity with written information furnished to the
      Company by the Holder and expressly intended for use in such registration
      statement, prospectus, offering circular or other document, or any amendment
      or
      supplement thereof; provided, however, that the obligations of the Holder
      hereunder shall be limited to an amount equal to the proceeds to the Holder
      of
      Registrable Securities sold as contemplated herein.

     

    7.3  Each
      party entitled to indemnification under this Section 7 (the “Indemnified
      Party”)
      shall
      give notice to the party required to provide indemnification (the “Indemnifying
      Party”)
      promptly after such Indemnified Party has actual knowledge of any claim as
      to
      which indemnity may be sought, and shall permit the Indemnifying Party to assume
      the defense of any such claim or any litigation resulting therefrom, provided
      that counsel for the Indemnifying Party, who shall conduct the defense of such
      claim or litigation, shall be approved by the Indemnified Party (whose approval
      shall not unreasonably be withheld). The Indemnified Party may participate
      in
      such defense at such party’s expense; provided, however, that the Indemnifying
      Party shall bear the expense of such defense of the Indemnified Party if
      representation of both parties by the same counsel would be inappropriate due
      to
      actual or potential conflicts of interest. The failure of any Indemnified Party
      to give notice as provided herein shall not relieve the Indemnifying Party
      of
      its obligations under this Agreement, unless such failure is prejudicial to
      the
      ability of the Indemnifying Party to defend the action. No Indemnifying Party,
      in the defense of any such claim or litigation, shall, except with the consent
      of each Indemnified Party, consent to entry of any judgment or enter into any
      settlement which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party of a release from all
      liability in respect of such claim or litigation.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    7.4  If
      the
      indemnification provided for in Section 7.1 or 7.2 is unavailable or
      insufficient to hold harmless an Indemnified Party, then each Indemnifying
      Party
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of the expenses, claims, losses, damages or liabilities (or actions
      or
      proceedings in respect thereof) referred to in Section 7.1 or 7.2, in such
      proportion as is appropriate to reflect the relative fault of the Company on
      the
      one hand and the sellers of Registrable Securities on the other hand in
      connection with statements or omissions which resulted in such losses, claims,
      damages or liabilities (or actions or proceedings in respect thereof) or
      expenses, as well as any other relevant equitable considerations. The relative
      fault 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
      or the sellers of Registrable Securities and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      untrue statement or omission. The Company and the Holders agree that it would
      not be just and equitable if contributions pursuant to this Section 7.4 were
      to
      be determined by pro rata allocation (even if all Sellers of Registrable
      Securities were treated as one entity for such purpose) or by any other method
      of allocation which does not take account of the equitable considerations
      referred to in the first sentence of this Section 7.4. The amount paid by an
      Indemnified Party as a result of the expenses, claims, losses, damages or
      liabilities (or actions or proceedings in respect thereof) referred to in the
      first sentence of this Section 7.4 shall be deemed to include any legal or
      other
      expenses reasonably incurred by such Indemnified Party in connection with
      investigating or defending any claim, action or proceeding which is the subject
      of this Section 7.4. 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. The obligations of sellers of Registrable Securities to
      contribute pursuant to this Section 7.4 shall be several in proportion to the
      respective amount of Registrable Securities sold by them pursuant to a
      registration statement.

     

    ARTICLE
      8.

    RULE
      144 REPORTING

     

    With
      a
      view to making available the benefits of certain rules and regulations of the
      Commission which may at any time permit the sale of securities of the Company
      to
      the public without registration, the Company agrees to use its best efforts
      to:

     

    8.1  Make
      and
      keep public information regarding the Company available as those terms are
      understood and defined in Rule 144 under the Securities Act; and

     

    8.2  File
      with
      the Commission in a timely manner all reports and other documents required
      of
      the Company under the Securities Act and the Exchange Act after the date hereof.
      To this end, the Company will comply with its public filing and reporting
      obligations set forth in Section 6.2 of the Note Purchase
      Agreement.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    ARTICLE
      9.

    TRANSFER
      OF REGISTRATION RIGHTS

     

    The
      rights to cause the Company to register Registrable Securities under this
      Agreement may be assigned by the Holder to Whitebox Advisors, LLC (“Whitebox
      Advisors”)
      or to a
      transferee or assignee of Registrable Securities that (i) is a subsidiary,
      parent or affiliated entity, general partner or limited partner, member or
      retired partner or member of the Holder or of Whitebox Advisors, (ii) is an
      affiliated fund, a follow-on fund or predecessor fund of the Holder or a related
      fund or of Whitebox Advisors, (iii) is a Holder’s family member or trust
      for the benefit of an individual Holder or (iv) acquires at least
      50,000 shares
      of
      Registrable Securities (as adjusted for stock splits, stock dividends, stock
      combinations, reclassifications, recapitalizations, mergers, consolidations
      or
      other similar events); provided, however, (A) the transferor shall, within
      ten days before such transfer, furnish to the Company written notice of the
      name
      and address of such transferee or assignee and the securities with respect
      to
      which such registration rights are being assigned and (B) such transferee
      shall agree in writing to be subject to all restrictions set forth in this
      Agreement. In each case, such rights may only be transferred together with
      the
      underlying Registrable Securities in a transfer permitted by the Securities
      Act
      and applicable state securities laws. Any such transferee or assignee shall
      be
      deemed a Holder hereunder (and references to the singular Holder herein will
      thereafter mean the several Holders). If there is more than one Holder, then
      actions taken hereunder (such as to demand registration not otherwise undertaken
      by the Company) shall be by the Holders of a majority-in-interest of the
      Registrable Securities.

     

    ARTICLE
      10.

    MISCELLANEOUS

     

    10.1  Governing
      Law.
      The
      internal laws of the state of Minnesota shall govern the interpretation,
      validity and performance of the terms of this agreement, regardless of the
      law
      that might be applied under principles of conflicts of law.

     

    10.2  Successors
      and Assigns.
      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.

     

    10.3  Entire
      Agreement.
      This
      Agreement constitutes the full and entire understanding and agreement between
      the parties with regard to the subject matter hereof.

     

    10.4  Termination.
      The
      right of the Holder to request inclusion in any registration under Article
      2 or
      4 shall terminate on the date hereafter when (i) the Holder (together with
      its
      affiliates, partners, members and former partners and members) beneficially
      holds less than 1% of the Company’s Common Stock and (ii) all Registrable
      Securities held by or issuable to the Holder (and its affiliates, partners,
      members and former partners and members) upon conversion of the Note or upon
      exercise of the Warrant may be sold under Rule 144 during any 90 day
      period.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    10.5  Notices.
      All
      notices, requests, consents, and other communications hereunder shall be in
      writing and shall be deemed effectively given and received when delivered in
      person or by national overnight courier service or by certified or registered
      mail, return receipt requested, or by telecopier, addressed as
      follows:

     

    	(a)  	
            if
              to the Company, at

          


    	 	 


    	 	
            Shumate
              Industries, Inc.

            12060
              FM 3083

            Conroe,
              Texas 77301

            Attention:
              Matthew C. Flemming, Chief Financial Officer

            Facsimile:
              (936) 539-9396

          


    	 	 


    	 	
            with
              a copy to:

             

            Spectrum
              Law Group, LLP

            1900
              Main Street, Suite 125

            Irvine,
              California 92614

            Attention:
              Marc A. Indeglia, Esq.

            Facsimile:
              (949) 851-5940

          


    	 	 


    	(b)  	if to WSL, at


    	 	 


    	 	
            Whitebox
              Advisors, LLC

            3033
              Excelsior Boulevard, Suite 300

            Minneapolis,
              Minnesota 55416

            Attention:
              Jonathan Wood, Chief Financial Officer

            Facsimile:
              (612) 253-6151

            


            with
              a copy to:

             

            Messerli
              & Kramer P.A.

            150
              South Fifth Street, Suite 1800

            Minneapolis,
              Minnesota 55402

            Attention:
              Jeffrey C. Robbins, Esq.

            Facsimile:
              (612) 672-3777

          


      

    (c) if
      to any
      other Holder, to the address reflected on the records of the Company, or such
      other address or addresses as shall have been furnished in writing by such
      party
      to the Company and to the other parties to this Agreement.

     

    10.6  Severability.
      The
      invalidity, illegality or unenforceability of one or more of the provisions
      of
      this Agreement in any jurisdiction shall not affect the validity, legality
      or
      enforceability of the remainder of this Agreement in such jurisdiction or the
      validity, legality or enforceability of this Agreement, including any such
      provision, in any other jurisdiction, it being intended that all rights and
      obligations of the parties hereunder shall be enforceable to the fullest extent
      permitted by law.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    10.7  Titles
      and Subtitles.
      The
      titles of the sections and subsections of this Agreement are for convenience
      of
      reference only and are not to be considered in construing this
      Agreement.

     

    10.8  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together constitute one instrument.

     

    IN
      WITNESS WHEREOF,
      the
      undersigned have hereunto affixed their signatures.

    
      	 	 	 	 
	Whitebox
              Shumate Ltd.	 	 	Shumate
              Industries, Inc.
	 	 	 	 
	 	 	 	 
	By	 	 	By
	
              
                

              

              Jonathan
                Wood, 

              Chief
                Financial Officer

            	 	 	
              
                

              

              Matthew
                C. Flemming,

              Chief
                Financial Officer

            


    

     

    
      
         

      

      
        -14-