Document:

EXHIBIT 10.27

                          REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 22, 2006, by and among Shumate Industries, Inc., a
Delaware corporation (the "Company"), and the purchasers signatory hereto (each
such purchaser, a "Purchaser" and collectively, the "Purchasers").

            This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement").

            The Company and the Purchasers hereby agree as follows:

      1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

            "Advice" shall have the meaning set forth in Section 6(d).

            "Effectiveness Period" shall have the meaning set forth in Section
      2(a).

            "Event" shall have the meaning set forth in Section 2(b).

            "Event Date" shall have the meaning set forth in Section 2(b).

            "Filing Date" means, with respect to the Registration Statement
      required to be filed hereunder, the earlier of (i) the 30th day following
      the filing of the Company's Annual Report on Form 10-KSB for the fiscal
      year ended December 31, 2005 or (ii) April 30, 2006.

            "Holder" or "Holders" means the holder or holders, as the case may
      be, from time to time of Registrable Securities.

            "Indemnified Party" shall have the meaning set forth in Section
      5(c).

            "Indemnifying Party" shall have the meaning set forth in Section
      5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

            "Plan of Distribution" shall have the meaning set forth in Section
      2(a).

            "Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

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            "Prospectus" means the prospectus included in the Registration
      Statement (including, without limitation, a prospectus that includes any
      information previously omitted from a prospectus filed as part of an
      effective registration statement in reliance upon Rule 430A promulgated
      under the Securities Act), as amended or supplemented by any prospectus
      supplement, with respect to the terms of the offering of any portion of
      the Registrable Securities covered by the Registration Statement, and all
      other amendments and supplements to the Prospectus, including
      post-effective amendments, and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "Registrable Securities" means all of the Shares issuable and the
      shares of Common Stock issuable upon exercise of the warrants issued to
      First Montauk Securities Corp. ("First Montauk"), as placement agent on
      behalf of the Company, together with any shares of Common Stock issued or
      issuable upon any stock split, dividend or other distribution,
      recapitalization or similar event with respect to the foregoing.

            "Registration Statement" means the registration statements required
      to be filed hereunder, including (in each case) the Prospectus, amendments
      and supplements to the registration statement or Prospectus, including
      pre- and post-effective amendments, all exhibits thereto, and all material
      incorporated by reference or deemed to be incorporated by reference in the
      registration statement.

            "Rule 415" means Rule 415 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

            "Rule 424" means Rule 424 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

            "Selling Shareholder Questionnaire" shall have the meaning set forth
      in Section 3(a).

      2. Registration.

            (a) On or prior to the Filing Date, the Company shall prepare and
      file with the Commission the Registration Statement covering the resale of
      all of the Registrable Securities for an offering to be made on a
      continuous basis pursuant to Rule 415. The Registration Statement required
      hereunder shall be on Form S-3 (except if the Company is not then eligible
      to register for resale the Registrable Securities on Form S-3, in which
      case the Registration shall be on another appropriate form in accordance
      herewith). The Registration Statement required hereunder shall contain
      (except if otherwise directed by the Holders) substantially the "Plan of
      Distribution" attached hereto as Annex A. Subject to the terms of this
      Agreement, the Company shall use its best efforts to cause the
      Registration Statement to be declared effective under the Securities Act

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      as promptly as possible after the filing thereof, and shall use its best
      efforts to keep the Registration Statement continuously effective under
      the Securities Act until the date when all Registrable Securities covered
      by the Registration Statement have been sold or may be sold without volume
      restrictions pursuant to Rule 144(k) as determined by the counsel to the
      Company pursuant to a written opinion letter to such effect, addressed and
      acceptable to the Company's transfer agent and the affected Holders (the
      "Effectiveness Period"). The Company shall immediately notify the Holders
      via facsimile of the effectiveness of the Registration Statement on the
      same day that the Company receives notification of the effectiveness from
      the Commission. Failure to so notify the Holder within 1 Trading Day of
      such notification shall be deemed an Event under Section 2(b).

            (b) If: (i) a Registration Statement is not filed on or prior to the
      Filing Date (if the Company files a Registration Statement without
      affording First Montauk on behalf of the Holders not participating in the
      1,250,000 Share Offering, and each of the individual Holders participating
      in the 1,250,000 Share Offering, the opportunity to review and comment on
      the same as required by Section 3(a), the Company shall not be deemed to
      have satisfied this clause (i)), or (ii) the Company fails to file with
      the Commission a request for acceleration in accordance with Rule 461
      promulgated under the Securities Act, within five Trading Days of the date
      that the Company is notified (orally or in writing, whichever is earlier)
      by the Commission that a Registration Statement will not be "reviewed," or
      is not subject to further review, or (iii) prior to the date when such
      Registration Statement is first declared effective by the Commission, the
      Company fails to file a pre-effective amendment and otherwise respond in
      writing to comments made by the Commission in respect of such Registration
      Statement within 21 calendar days after the receipt of comments by or
      notice from the Commission that such amendment is required in order for a
      Registration Statement to be declared effective, or (iv) after a
      Registration Statement is first declared effective by the Commission, it
      ceases for any reason to remain continuously effective as to all
      Registrable Securities for which it is required to be effective, or the
      Holders are not permitted to utilize the Prospectus therein to resell such
      Registrable Securities, for in any such case 10 consecutive calendar days
      but no more than an aggregate of 15 calendar days during any 12 month
      period (which need not be consecutive Trading Days)(any such failure or
      breach being referred to as an "Event," and for purposes of clause (i) or
      (iii) the date on which such Event occurs, or for purposes of clause (ii)
      the date on which such five Trading Day period is exceeded, or for
      purposes of clause (iii) the date which such 10 calendar day period is
      exceeded, or for purposes of clause (iv) the date on which such 20 or 30
      calendar day period, as applicable, is exceeded being referred to as
      "Event Date"), then in addition to any other rights the Holders may have
      hereunder or under applicable law, then, on each such Event Date and on
      each monthly anniversary of each such Event Date (if the applicable Event
      shall not have been cured by such date) until the applicable Event is
      cured, the Company shall pay to each Holder an amount in cash, as partial
      liquidated damages and not as a penalty, equal to 1.0% of the aggregate
      purchase price paid by such Holder pursuant to the Purchase Agreement for
      any Registrable Securities then held by such Holder, up to a maximum
      aggregate penalty amount of $150,000 for all Holders. If the Company fails
      to pay any partial liquidated damages pursuant to this Section in full
      within seven days after the date payable, the Company will pay interest
      thereon at a rate of 18% per annum (or such lesser maximum amount that is
      permitted to be paid by applicable law) to the Holder, accruing daily from
      the date such partial liquidated damages are due until such amounts, plus
      all such interest thereon, are paid in full. The partial liquidated
      damages pursuant to the terms hereof shall apply on a daily pro-rata basis
      for any portion of a month prior to the cure of an Event.

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      3. Registration Procedures

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Not less than five Trading Days prior to the filing of the
      Registration Statement or any related Prospectus or any amendment or
      supplement thereto (i) furnish to First Montauk on behalf of the Holders
      not participating in the 1,250,000 Share Offering, and each of the
      individual Holders participating in the 1,250,000 Share Offering, copies
      of all such documents proposed to be filed (including documents
      incorporated or deemed incorporated by reference to the extent requested
      by such Person) which documents will be subject to the review of such
      Holders, and (ii) cause its officers and directors, counsel and
      independent certified public accountants to respond to such inquiries as
      shall be necessary, in the reasonable opinion of respective counsel to
      conduct a reasonable investigation within the meaning of the Securities
      Act. The Company shall not file the Registration Statement or any such
      Prospectus or any amendments or supplements thereto to which the Holders
      of a majority of the Registrable Securities shall reasonably object in
      good faith, provided that the Company is notified of such objection in
      writing no later than 5 Trading Days after First Montauk, and each of the
      individual Holders participating in the 1,250,000 Share Offering, has been
      so furnished copies of such documents. Each Holder agrees to furnish to
      the Company a completed Questionnaire in the form attached to this
      Agreement as Annex B (a "Selling Shareholder Questionnaire") not less than
      two Trading Days prior to the Filing Date or by the end of the fourth
      Trading Day following the date on which First Montauk, and each of the
      individual Holders participating in the 1,250,000 Share Offering, receives
      draft materials in accordance with this Section.

            (b) (i) Prepare and file with the Commission such amendments,
      including post-effective amendments, to the Registration Statement and the
      Prospectus used in connection therewith as may be necessary to keep the
      Registration Statement continuously effective as to the applicable
      Registrable Securities for the Effectiveness Period and prepare and file
      with the Commission such additional Registration Statements in order to
      register for resale under the Securities Act all of the Registrable
      Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement, and as so supplemented
      or amended to be filed pursuant to Rule 424; (iii) respond as promptly as
      reasonably possible to any comments received from the Commission with
      respect to the Registration Statement or any amendment thereto and, as
      promptly as reasonably possible, upon request, provide First Montauk on
      behalf of the Holders not participating in the 1,250,000 Share Offering,
      and each of the individual Holders participating in the 1,250,000 Share
      Offering, true and complete copies of all correspondence from and to the
      Commission relating to the Registration Statement; and (iv) comply in all
      material respects with the provisions of the Securities Act and the
      Exchange Act with respect to the disposition of all Registrable Securities
      covered by the Registration Statement during the applicable period in
      accordance with the intended methods of disposition by the Holders thereof
      set forth in the Registration Statement as so amended or in such
      Prospectus as so supplemented.

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            (c) Notify First Montauk, on behalf of the Holders not participating
      in the 1,250,000 Share Offering, of Registrable Securities to be sold, and
      each of the individual Holders participating in the 1,250,000 Share
      Offering, as promptly as reasonably possible and (if requested by First
      Montauk on behalf of the Holders not participating in the 1,250,000 Share
      Offering, or each individual Holder participating in the 1,250,000 Share
      Offering) confirm such notice in writing promptly following the day (i)(A)
      when a Prospectus or any Prospectus supplement or post-effective amendment
      to the Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a "review" of the
      Registration Statement and whenever the Commission comments in writing on
      the Registration Statement (the Company shall upon request provide true
      and complete copies thereof and all written responses thereto to First
      Montauk on behalf of the Holders not participating in the 1,250,000 Share
      Offering, and to each individual Holder participating in the 1,250,000
      Share Offering); and (C) with respect to the Registration Statement or any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other Federal or state governmental
      authority during the period of effectiveness of the Registration Statement
      for amendments or supplements to the Registration Statement or Prospectus
      or for additional information; (iii) of the issuance by the Commission or
      any other federal or state governmental authority of any stop order
      suspending the effectiveness of the Registration Statement covering any or
      all of the Registrable Securities or the initiation of any Proceedings for
      that purpose; (iv) of the receipt by the Company of any notification with
      respect to the suspension of the qualification or exemption from
      qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (v) of the occurrence of any event or passage of time that
      makes the financial statements included in the Registration Statement
      ineligible for inclusion therein or any statement made in the Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the
      Prospectus, as the case may be, it will not contain any untrue statement
      of a material fact or omit to state any material fact required to be
      stated therein or necessary to make the statements therein, in light of
      the circumstances under which they were made, not misleading.

            (d) Use commercially reasonable efforts to avoid the issuance of,
      or, if issued, obtain the withdrawal of (i) any order suspending the
      effectiveness of the Registration Statement, or (ii) any suspension of the
      qualification (or exemption from qualification) of any of the Registrable
      Securities for sale in any jurisdiction, at the earliest practicable
      moment.

            (e) Furnish to each Holder, without charge, at least one conformed
      copy of the Registration Statement and each amendment thereto, including
      financial statements and schedules, all documents incorporated or deemed
      to be incorporated therein by reference to the extent requested by such
      Person, and all exhibits to the extent requested by such Person (including
      those previously furnished or incorporated by reference) promptly after
      the filing of such documents with the Commission.

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            (f) Promptly deliver to each Holder, without charge, as many copies
      of the Prospectus or Prospectuses (including each form of prospectus) and
      each amendment or supplement thereto as such Persons may reasonably
      request in connection with resales by the Holder of Registrable
      Securities. Subject to the terms of this Agreement, the Company hereby
      consents to the use of such Prospectus and each amendment or supplement
      thereto by each of the selling Holders in connection with the offering and
      sale of the Registrable Securities covered by such Prospectus and any
      amendment or supplement thereto, except after the giving on any notice
      pursuant to Section 3(c).

            (g) Prior to any resale of Registrable Securities by a Holder, use
      its commercially reasonable efforts to register or qualify or cooperate
      with the selling Holders in connection with the registration or
      qualification (or exemption from the Registration or qualification) of
      such Registrable Securities for the resale by the Holder under the
      securities or Blue Sky laws of such jurisdictions within the United States
      as any Holder reasonably requests in writing, to keep the Registration or
      qualification (or exemption therefrom) effective during the Effectiveness
      Period and to do any and all other acts or things reasonably necessary to
      enable the disposition in such jurisdictions of the Registrable Securities
      covered by the Registration Statement; provided, that the Company shall
      not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in any such jurisdiction where it is not then so subject or file a general
      consent to service of process in any such jurisdiction.

            (h) If NASDR Rule 2710 requires any broker-dealer to make a filing
      prior to executing a sale by a Holder, make an Issuer Filing with the
      NASDR, Inc. Corporate Financing Department pursuant to NASDR Rule
      2710(b)(10)(A)(i) and use commercially reasonable efforts to respond
      within five Trading Days to any comments received from NASDR in connection
      therewith, and pay the filing fee required in connection therewith.

            (i) If requested by the Holders, cooperate with the Holders to
      facilitate the timely preparation and delivery of certificates
      representing Registrable Securities to be delivered to a transferee
      pursuant to the Registration Statement, which certificates shall be free,
      to the extent permitted by the Purchase Agreement, of all restrictive
      legends, and to enable such Registrable Securities to be in such
      denominations and registered in such names as any such Holders may
      request.

            (j) Upon the occurrence of any event contemplated by Section
      3(c)(v), as promptly as reasonably, possible, prepare a supplement or
      amendment, including a post-effective amendment, to the Registration
      Statement or a supplement to the related Prospectus or any document
      incorporated or deemed to be incorporated therein by reference, and file
      any other required document so that, as thereafter delivered, neither the
      Registration Statement nor such Prospectus will contain an untrue
      statement of a material fact or omit to state a material fact required to
      be stated therein or necessary to make the statements therein, in light of

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      the circumstances under which they were made, not misleading. If the
      Company notifies the Holders in accordance with clauses (ii) through (v)
      of Section 3(c) above to suspend the use of any Prospectus until the
      requisite changes to such Prospectus have been made, then the Holders
      shall suspend use of such Prospectus. The Company will use its best
      efforts to ensure that the use of the Prospectus may be resumed as
      promptly as is practicable. The Company shall be entitled to exercise its
      right under this Section 3(j) to suspend the availability of a
      Registration Statement and Prospectus, subject to the payment of partial
      liquidated damages pursuant to Section 2(b), for a period not to exceed 60
      days (which need not be consecutive days) in any 12 month period.

            (k) Comply with all applicable rules and regulations of the
      Commission.

            (l) The Company may require each selling Holder to furnish to the
      Company a certified statement as to the number of shares of Common Stock
      beneficially owned by such Holder and, if required by the Commission, the
      person thereof that has voting and dispositive control over the Shares.
      During any periods that the Company is unable to meet its obligations
      hereunder with respect to the registration of the Registrable Securities
      solely because any Holder fails to furnish such information within three
      Trading Days of the Company's request, any liquidated damages that are
      accruing at such time as to such Holder only shall be tolled and any Event
      that may otherwise occur solely because of such delay shall be suspended
      as to such Holder only, until such information is delivered to the
      Company.

      4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Common Stock is then
listed for trading, (B) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving no more
than a customary brokerage commission in connection with such sale, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons

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retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.

      5. Indemnification

            (a) Indemnification by the Company. The Company shall,
      notwithstanding any termination of this Agreement, indemnify and hold
      harmless each Holder, the officers, directors, agents, brokers (including
      brokers who offer and sell Registrable Securities as principal as a result
      of a pledge or any failure to perform under a margin call of Common
      Stock), investment advisors and employees of each of them, each Person who
      controls any such Holder (within the meaning of Section 15 of the
      Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the
      fullest extent permitted by applicable law, from and against any and all
      losses, claims, damages, liabilities, costs (including, without
      limitation, reasonable attorneys' fees) and expenses (collectively,
      "Losses"), as incurred, arising out of or relating to any untrue or
      alleged untrue statement of a material fact contained in the Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the
      case of any Prospectus or form of prospectus or supplement thereto, in
      light of the circumstances under which they were made) not misleading,
      except to the extent, but only to the extent, that (i) such untrue
      statements or omissions are based solely upon information regarding such
      Holder furnished in writing to the Company by such Holder expressly for
      use therein, or to the extent that such information relates to such Holder
      or such Holder's proposed method of distribution of Registrable Securities
      and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement, such Prospectus or such
      form of Prospectus or in any amendment or supplement thereto (it being
      understood that the Holder has approved Annex A hereto for this purpose)
      or (ii) in the case of an occurrence of an event of the type specified in
      Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
      Prospectus after the Company has notified such Holder in writing that the
      Prospectus is outdated or defective and prior to the receipt by such
      Holder of the Advice contemplated in Section 6(d). The Company shall
      notify the Holders promptly of the institution, threat or assertion of any
      Proceeding of which the Company is aware in connection with the
      transactions contemplated by this Agreement.

            (b) Indemnification by Holders. Each Holder shall, severally and not
      jointly, indemnify and hold harmless the Company, its directors, officers,
      agents and employees, each Person who controls the Company (within the
      meaning of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), and the directors, officers, agents or employees of such controlling
      Persons, to the fullest extent permitted by applicable law, from and
      against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder's failure to comply with the prospectus
      delivery requirements of the Securities Act or (y) any untrue or alleged
      untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or any form of prospectus, or in any amendment
      or supplement thereto or in any preliminary prospectus, or arising out of

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      or relating to any omission or alleged omission of a material fact
      required to be stated therein or necessary to make the statements therein
      not misleading (i) to the extent, but only to the extent, that such untrue
      statement or omission is contained in any information so furnished in
      writing by such Holder to the Company specifically for inclusion in the
      Registration Statement or such Prospectus or (ii) to the extent that (1)
      such untrue statements or omissions are based solely upon information
      regarding such Holder furnished in writing to the Company by such Holder
      expressly for use therein, or to the extent that such information relates
      to such Holder or such Holder's proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing
      by such Holder expressly for use in the Registration Statement (it being
      understood that the Holder has approved Annex A hereto for this purpose),
      such Prospectus or such form of Prospectus or in any amendment or
      supplement thereto or (2) in the case of an occurrence of an event of the
      type specified in Section 3(c)(ii)-(v), the use by such Holder of an
      outdated or defective Prospectus after the Company has notified such
      Holder in writing that the Prospectus is outdated or defective and prior
      to the receipt by such Holder of the Advice contemplated in Section 6(d).
      In no event shall the liability of any selling Holder hereunder be greater
      in amount than the dollar amount of the net proceeds received by such
      Holder upon the sale of the Registrable Securities giving rise to such
      indemnification obligation.

            (c) Conduct of Indemnification Proceedings. If any Proceeding shall
      be brought or asserted against any Person entitled to indemnity hereunder
      (an "Indemnified Party"), such Indemnified Party shall promptly notify the
      Person from whom indemnity is sought (the "Indemnifying Party") in
      writing, and the Indemnifying Party shall have the right to assume the
      defense thereof, including the employment of counsel reasonably
      satisfactory to the Indemnified Party and the payment of all fees and
      expenses incurred in connection with defense thereof; provided, that the
      failure of any Indemnified Party to give such notice shall not relieve the
      Indemnifying Party of its obligations or liabilities pursuant to this
      Agreement, except (and only) to the extent that it shall be finally
      determined by a court of competent jurisdiction (which determination is
      not subject to appeal or further review) that such failure shall have
      prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
      in any such Proceeding and to participate in the defense thereof, but the
      fees and expenses of such counsel shall be at the expense of such
      Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
      in writing to pay such fees and expenses; (2) the Indemnifying Party shall
      have failed promptly to assume the defense of such Proceeding and to
      employ counsel reasonably satisfactory to such Indemnified Party in any
      such Proceeding; or (3) the named parties to any such Proceeding
      (including any impleaded parties) include both such Indemnified Party and
      the Indemnifying Party, and such Indemnified Party shall reasonably
      believe that a material conflict of interest is likely to exist if the
      same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying
      Party in writing that it elects to employ separate counsel at the expense

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      of the Indemnifying Party, the Indemnifying Party shall not have the right
      to assume the defense thereof and the reasonable fees and expenses of one
      separate counsel shall be at the expense of the Indemnifying Party). For
      purposes of this Section 5(c), the term "conflict of interest" shall mean
      that there are one or more legal defenses available to the Indemnified
      Party that are different from or additional to those available to the
      Indemnifying Party or such other Indemnified Parties, as applicable, which
      different or additional defenses make joint representation inappropriate.
      The Indemnifying Party shall not be liable for any settlement of any such
      Proceeding effected without its prior written consent, which consent shall
      not be unreasonably withheld. No Indemnifying Party shall, without the
      prior written consent of the Indemnified Party, effect any settlement of
      any pending Proceeding in respect of which any Indemnified Party is a
      party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of such Proceeding.

            Subject to the terms of this Agreement, all reasonable fees and
      expenses of the Indemnified Party (including reasonable fees and expenses
      to the extent incurred in connection with investigating or preparing to
      defend such Proceeding in a manner not inconsistent with this Section)
      shall be paid to the Indemnified Party, as incurred, within ten Trading
      Days of written notice thereof to the Indemnifying Party; provided, that
      the Indemnified Party shall promptly reimburse the Indemnifying Party for
      that portion of such fees and expenses applicable to such actions for
      which such Indemnified Party is not entitled to indemnification hereunder,
      determined based upon the relative faults of the parties.

            (d) Contribution. If the indemnification under Section 5(a) or 5(b)
      is unavailable to an Indemnified Party or insufficient to hold an
      Indemnified Party harmless for any Losses, then each Indemnifying Party
      shall contribute to the amount paid or payable by such Indemnified Party,
      in such proportion as is appropriate to reflect the relative fault of the
      Indemnifying Party and Indemnified Party in connection with the actions,
      statements or omissions that resulted in such Losses as well as any other
      relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among
      other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the parties' relative intent, knowledge, access to information and
      opportunity to correct or prevent such action, statement or omission. The
      amount paid or payable by a party as a result of any Losses shall be
      deemed to include, subject to the limitations set forth in this Agreement,
      any reasonable attorneys' or other reasonable fees or expenses incurred by
      such party in connection with any Proceeding to the extent such party
      would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section was available to such party
      in accordance with its terms.

            The parties hereto agree that it would not be just and equitable if
      contribution pursuant to this Section 5(d) were determined by pro rata
      allocation or by any other method of allocation that does not take into
      account the equitable considerations referred to in the immediately
      preceding paragraph. Notwithstanding the provisions of this Section 5(d),

                                       10
<PAGE>

      no Holder shall be required to contribute, in the aggregate, any amount in
      excess of the amount by which the proceeds actually received by such
      Holder from the sale of the Registrable Securities subject to the
      Proceeding exceeds the amount of any damages that such Holder has
      otherwise been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission, except in the case of fraud by
      such Holder.

            The indemnity and contribution agreements contained in this Section
      are in addition to any liability that the Indemnifying Parties may have to
      the Indemnified Parties.

      6. Miscellaneous

            (a) Remedies. In the event of a breach by the Company or by a
      Holder, of any of their obligations under this Agreement, each Holder or
      the Company, as the case may be, in addition to being entitled to exercise
      all rights granted by law and under this Agreement, including recovery of
      damages, will be entitled to specific performance of its rights under this
      Agreement. The Company and each Holder agree that monetary damages would
      not provide adequate compensation for any losses incurred by reason of a
      breach by it of any of the provisions of this Agreement and hereby further
      agrees that, in the event of any action for specific performance in
      respect of such breach, it shall waive the defense that a remedy at law
      would be adequate.

            (b) No Piggyback on Registrations. Except as set forth on Schedule
      6(b) attached hereto, neither the Company nor any of its security holders
      (other than the Holders in such capacity pursuant hereto) may include
      securities of the Company in a Registration Statement other than the
      Registrable Securities. No Person has any right to cause the Company to
      effect the registration under the Securities Act of any securities of the
      Company. The Company shall not file any other registration statements
      until 60 Trading Days following the date that the Registration Statement
      required hereunder is declared effective by the Commission, provided that
      this Section 6(b) shall not prohibit the Company from filing amendments to
      registration statements already filed.

            (c) Compliance. Each Holder covenants and agrees that it will comply
      with the prospectus delivery requirements of the Securities Act as
      applicable to it in connection with sales of Registrable Securities
      pursuant to the Registration Statement.

            (d) Discontinued Disposition. Each Holder agrees by its acquisition
      of such Registrable Securities that, upon receipt of a notice from the
      Company of the occurrence of any event of the kind described in Section
      3(c), such Holder will forthwith discontinue disposition of such
      Registrable Securities under the Registration Statement until such
      Holder's receipt of the copies of the supplemented Prospectus and/or
      amended Registration Statement or until it is advised in writing (the
      "Advice") 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 incorporated or deemed to be incorporated by
      reference in such Prospectus or Registration Statement. The Company will
      use its best efforts to ensure that the use of the Prospectus may be
      resumed as promptly as is practicable. Except as otherwise provided in
      Section 3(j), the Company agrees and acknowledges that any periods during
      which the Holder is required to discontinue the disposition of the
      Registrable Securities hereunder shall be subject to the provisions of
      Section 2(b).

                                       11
<PAGE>

            (e) Piggy-Back Registrations. If at any time during the
      Effectiveness Period there is not an effective Registration Statement
      covering all of the Registrable Securities and the Company shall determine
      to prepare and file with the Commission a registration statement relating
      to an offering for its own account or the account of others under the
      Securities Act of any of its equity securities, other than on Form S-4 or
      Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in
      connection with any acquisition of any entity or business or equity
      securities issuable in connection with the stock option or other employee
      benefit plans, then the Company shall send to each Holder a written notice
      of such determination and, if within fifteen days after the date of such
      notice, any such Holder shall so request in writing, the Company shall
      include in such registration statement all or any part of such Registrable
      Securities such Holder requests to be registered, subject to customary
      underwriter cutbacks applicable to all holders of registration rights.

            (f) Amendments and Waivers. The provisions of this Agreement,
      including the provisions of this sentence, may not be amended, modified or
      supplemented, and waivers or consents to departures from the provisions
      hereof may not be given, unless the same shall be in writing and signed by
      the Company and each Holder of the then outstanding Registrable
      Securities. Notwithstanding the foregoing, a waiver or consent to depart
      from the provisions hereof with respect to a matter that relates
      exclusively to the rights of Holders and that does not directly or
      indirectly affect the rights of other Holders may be given by Holders of
      all of the Registrable Securities to which such waiver or consent relates;
      provided, however, that the provisions of this sentence may not be
      amended, modified, or supplemented except in accordance with the
      provisions of the immediately preceding sentence.

            (g) Notices. Any and all notices or other communications or
      deliveries required or permitted to be provided hereunder shall be
      delivered as set forth in the Purchase Agreement.

            (h) Successors and Assigns. This Agreement shall inure to the
      benefit of and be binding upon the successors and permitted assigns of
      each of the parties and shall inure to the benefit of each Holder. The
      Company may not assign its rights or obligations hereunder without the
      prior written consent of all of the Holders of the then-outstanding
      Registrable Securities. Each Holder may assign their respective rights
      hereunder in the manner and to the Persons as permitted under the Purchase
      Agreement.

            (i) No Inconsistent Agreements. Neither the Company nor any of its
      subsidiaries has entered, as of the date hereof, nor shall the Company or
      any of its subsidiaries, on or after the date of this Agreement, enter
      into any agreement with respect to its securities, that would conflict
      with or violate the provisions hereof or of any of the Transaction
      Documents. Except as set forth on Schedule 6(i), neither the Company nor
      any of its subsidiaries has previously entered into any agreement granting
      any registration rights with respect to any of its securities to any
      Person that has not been satisfied in full.

                                       12
<PAGE>

            (j) Execution and Counterparts. This Agreement may be executed in
      any number of counterparts, each of which when so executed shall be deemed
      to be an original and, all of which taken together shall constitute one
      and the same Agreement. In the event that any signature is delivered by
      facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile
      signature were the original thereof.

            (k) Governing Law. All questions concerning the construction,
      validity, enforcement and interpretation of this Agreement shall be
      determined with the provisions of the Purchase Agreement.

            (l) Cumulative Remedies. The remedies provided herein are cumulative
      and not exclusive of any remedies provided by law.

            (m) Severability. If any term, provision, covenant or restriction of
      this Agreement is held by a court of competent jurisdiction to be invalid,
      illegal, void or unenforceable, the remainder of the terms, provisions,
      covenants and restrictions set forth herein shall remain in full force and
      effect and shall in no way be affected, impaired or invalidated, and the
      parties hereto shall use their commercially reasonable efforts to find and
      employ an alternative means to achieve the same or substantially the same
      result as that contemplated by such term, provision, covenant or
      restriction. It is hereby stipulated and declared to be the intention of
      the parties that they would have executed the remaining terms, provisions,
      covenants and restrictions without including any of such that may be
      hereafter declared invalid, illegal, void or unenforceable.

            (n) Headings. The headings in this Agreement are for convenience of
      reference only and shall not limit or otherwise affect the meaning hereof.

            (o) Independent Nature of Holders' Obligations and Rights. The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be
      responsible in any way for the performance of the obligations of any other
      Holder hereunder. Nothing contained herein or in any other agreement or
      document delivered at any closing, and no action taken by any Holder
      pursuant hereto or thereto, shall be deemed to constitute the Holders as a
      partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Holders are in any way acting in concert
      with respect to such obligations or the transactions contemplated by this
      Agreement. Each Holder shall be entitled to protect and enforce its
      rights, including without limitation the rights arising out of this
      Agreement, and it shall not be necessary for any other Holder to be joined
      as an additional party in any proceeding for such purpose.

                            *************************

                                       13
<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.

                                SHUMATE INDUSTRIES, INC.

                                By: /s/ Matthew C. Flemming
                                    --------------------------------------------
                                    Name:  Matthew C. Flemming
                                    Title: CFO

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       14
<PAGE>

                    [HOLDER'S SIGNATURE PAGE TO SHUMATE RRA]

Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       15
<PAGE>

                                     ANNEX A

                              Plan of Distribution

      The Selling Stockholders (the "Selling Stockholders") of the common stock
("Common Stock") of Shumate Industries, Inc., a Delaware corporation (the
"Company") and any of their pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on any stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
Selling Stockholders may use any one or more of the following methods when
selling shares:

            o     ordinary brokerage transactions and transactions in which the
                  broker-dealer solicits purchasers;

            o     block trades in which the broker-dealer will attempt to sell
                  the shares as agent but may position and resell a portion of
                  the block as principal to facilitate the transaction;

            o     purchases by a broker-dealer as principal and resale by the
                  broker-dealer for its account;

            o     an exchange distribution in accordance with the rules of the
                  applicable exchange;

            o     privately negotiated transactions;

            o     settlement of short sales entered into after the date of this
                  prospectus;

            o     broker-dealers may agree with the Selling Stockholders to sell
                  a specified number of such shares at a stipulated price per
                  share;

            o     a combination of any such methods of sale;

            o     through the writing or settlement of options or other hedging
                  transactions, whether through an options exchange or
                  otherwise; or

            o     any other method permitted pursuant to applicable law.

      The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

      Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NADSR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

                                       16
<PAGE>

      In connection with the sale of the Common Stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also, on or after the date of this Prospectus, sell shares of
the Common Stock short and deliver these securities to close out their short
positions, or loan or pledge the Common Stock to broker-dealers that in turn may
sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

      The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

      The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus. Each Selling
Stockholder has advised us that they have not entered into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.

      We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

                                       17
<PAGE>

      Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the Common Stock for a period of two
business days prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of the Common Stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale.

                                       18
<PAGE>

                                                                         Annex B

                            SHUMATE INDUSTRIES, INC.

                 Selling Securityholder Notice and Questionnaire

      The undersigned beneficial owner of common stock, par value $0.001 per
share (the "Common Stock"), of Shumate Industries, Inc., a Delaware corporation
(the "Company"), (the "Registrable Securities") understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (the "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act"), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
February 22, 2006 (the "Registration Rights Agreement"), among the Company and
the Purchasers named therein. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

      Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

                                     NOTICE

      The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.

                                       19
<PAGE>

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1. Name.

      (a)   Full Legal Name of Selling Securityholder

            ____________________________________________________________________

      (b)   Full Legal Name of Registered Holder (if not the same as (a) above)
            through which Registrable Securities Listed in Item 3 below are
            held:

            ____________________________________________________________________

      (c)   Full Legal Name of Natural Control Person (which means a natural
            person who directly you indirectly alone or with others has power to
            vote or dispose of the securities covered by the questionnaire):

            ____________________________________________________________________

2. Address for Notices to Selling Securityholder:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone: _____________________________________________________________________
Fax: ___________________________________________________________________________
Contact Person: ________________________________________________________________

3. Beneficial Ownership of Registrable Securities:

      (a)   Type and Number of Registrable Securities beneficially owned:

            ____________________________________________________________________
            ____________________________________________________________________
            ____________________________________________________________________

                                       20
<PAGE>

4. Broker-Dealer Status:

      (a)   Are you a broker-dealer?

                                 Yes |_| No |_|

      Note: If yes, the Commission's staff has indicated that you should be
            identified as an underwriter in the Registration Statement.

      (b)   Are you an affiliate of a broker-dealer?

                                 Yes |_| No |_|

      (c)   If you are an affiliate of a broker-dealer, do you certify that you
            bought the Registrable Securities in the ordinary course of
            business, and at the time of the purchase of the Registrable
            Securities to be resold, you had no agreements or understandings,
            directly or indirectly, with any person to distribute the
            Registrable Securities?

                                 Yes |_| No |_|

      Note: If no, the Commission's staff has indicated that you should be
            identified as an underwriter in the Registration Statement.

5. Beneficial Ownership of Other Securities of the Company Owned by the Selling
   Securityholder.

      Except as set forth below in this Item 5, the undersigned is not the
      beneficial or registered owner of any securities of the Company other than
      the Registrable Securities listed above in Item 3.

      (a)   Type and Amount of Other Securities beneficially owned by the
            Selling Securityholder:

            ____________________________________________________________________
            ____________________________________________________________________

                                       21
<PAGE>

6. Relationships with the Company:

      Except as set forth below, neither the undersigned nor any of its
      affiliates, officers, directors or principal equity holders (owners of 5%
      of more of the equity securities of the undersigned) has held any position
      or office or has had any other material relationship with the Company (or
      its predecessors or affiliates) during the past three years.

      State any exceptions here:

      __________________________________________________________________________
      __________________________________________________________________________

      The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.

      By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of the
Registration Statement and the related prospectus.

      IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:                          Beneficial Owner:
       --------------------                       ------------------------------

                                By:
                                    --------------------------------------------
                                    Name:
                                    Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                            Shumate Industries, Inc.
                                  12060 FM 3083
                               Conroe, Texas 77301
                       Attention: Matthew C. Flemming, CFO

                                       22
<PAGE>

                                  Schedule 6(i)

Piggyback Registration Rights:

A. Earl Swift - 416,667 shares
Stillwater National Bank and Trust Company - 2,368,000 common shares
Stillwater National Bank and Trust Company - shares issuable upon conversion of
convertible note in the principal amount of $2,500,000, convertible at $1.00 per
shareExhibit 10.28

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SHUMATE INDUSTRIES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

                                    Right to Purchase 250,000 shares of Common
                                    Stock of Shumate Industries, Inc. (subject
                                    to adjustment as provided herein)

                          COMMON STOCK PURCHASE WARRANT

No. 2006-A-001                                     Issue Date: February 22, 2006

      SHUMATE INDUSTRIES, INC., a corporation organized under the laws of the
State of Delaware (the "Company"), hereby certifies that, for value received,
First Montauk Securities Corporation, or its assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company at
any time after the February 22, 2006 ("Issue Date") until 5:00 p.m., E.S.T on
the fifth anniversary of the Issue Date (the "Expiration Date"), up to 250,000
fully paid and nonassessable shares of Common Stock at a per share purchase
price of $0.63. The aforedescribed purchase price per share, as adjusted from
time to time as herein provided, is referred to herein as the "Purchase Price."
The number and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. The Company may reduce the
Purchase Price without the consent of the Holder. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the "Purchase Agreement"), dated February 22,
2006, entered into by the Company and Holders of its Common Stock.

      As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:

      (a) The term "Company" shall include Shumate Industries, Inc. and any
corporation, which shall succeed or assume the obligations of Shumate
Industries, Inc. hereunder.

      (b) The term "Common Stock" includes (a) the Company's Common Stock, no
par value per share, as authorized on the date of the Purchase Agreement, and
(b) any other securities into which or for which any of the securities described
in (a) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

      (c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

      (d) The term "Warrant Shares" shall mean the Common Stock issuable upon
exercise of this Warrant.

                                       1
<PAGE>

      1. Exercise of Warrant.

            1.1. Number of Shares Issuable upon Exercise. From and after the
Issue Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 2.

            1.2. Full Exercise. This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and surrender of the original Warrant within four (4)
days of exercise, to the Company at its principal office or at the office of its
Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire
transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect.

            1.3. Partial Exercise. This Warrant may be exercised in part (but
not for a fractional share) by surrender of this Warrant in the manner and at
the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying (a)
the number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may request, the whole number of shares of Common
Stock for which such Warrant may still be exercised.

            1.4. Fair Market Value. Fair Market Value of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:

                  (a) If the Company's Common Stock is traded on an exchange or
is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ"), National Market System, the NASDAQ Capital Market or the
American Stock Exchange, LLC, then the closing or last sale price, respectively,
reported for the last business day immediately preceding the Determination Date;

                  (b) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System, the NASDAQ Capital Market or the
American Stock Exchange, Inc., but is traded in the over-the-counter market,
then the average of the closing bid and ask prices reported for the last
business day immediately preceding the Determination Date;

                  (c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Holder and the Company agree,
or in the absence of such an agreement, by arbitration in accordance with the
rules then standing of the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided; or

                  (d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.

                                       2
<PAGE>

            1.5. Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the Holder hereof acknowledge in
writing its continuing obligation to afford to such Holder any rights to which
such Holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Holder any such rights.

            1.6. Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the Holder of the Warrants
pursuant to Subsection 2.2, such bank or trust company shall have all the powers
and duties of a warrant agent (as hereinafter described) and shall accept, in
its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

            1.7 Delivery of Stock Certificates, etc. on Exercise. The Company
agrees that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within four (4) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share of Common Stock, together with any other stock or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise.

      2. Adjustment for Reorganization, Consolidation, Merger, etc.

            2.1. Reorganization, Consolidation, Merger, etc. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in this Section 2.

            2.2. Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrants after the effective date of
such dissolution pursuant to this Section 2 to a bank or trust company (a
"Trustee") having its principal office in New York, NY, as trustee for the
Holder of the Warrants.

            2.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 2, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the Other Securities and property receivable

                                       3
<PAGE>

on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 3. In the event this Warrant does not continue in full force
and effect after the consummation of the transaction described in this Section
2, then only in such event will the Company's securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered to
the Trustee as contemplated by Section 2.2.

            2.4. Extraordinary Events Regarding Common Stock. In the event that
the Company shall (a) issue additional shares of the Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 2.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 2) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 2) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

      3. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder of the Warrant.

      4. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrants, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

      5. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the "Transferor Endorsement Form") and together with
an opinion of counsel reasonably satisfactory to the Company that the transfer
of this Warrant will be in compliance with applicable securities laws, the
Company at its expense, twice, only, but with payment by the Transferor of any

                                       4
<PAGE>

applicable transfer taxes, will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor. No such transfers shall result
in a public distribution of the Warrant.

      6. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.

      7. Registration Rights. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in the Subscription Agreement. The terms of the Subscription Agreement are
incorporated herein by this reference.

      8. Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date in connection with that number of Common Stock which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates on an exercise date, and
(ii) the number of Common Stock issuable upon the exercise of this Warrant with
respect to which the determination of this limitation is being made on an
exercise date, which would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding Common Stock on such date. For
the purposes of the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the
Holder shall not be limited to aggregate exercises which would result in the
issuance of more than 4.99%. The restriction described in this paragraph may be
waived, in whole or in part, upon sixty-one (61) days prior written notice from
the Holder to the Company. The Holder may allocate which of the equity of the
Company deemed beneficially owned by the Subscriber shall be included in the
4.99% amount described above and which shall be allocated to the excess above
4.99% provided such allocations are consistent with applicable law.

      9. Warrant Agent. The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to Section
1, exchanging this Warrant pursuant to Section 5, and replacing this Warrant
pursuant to Section 6, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

      10. Transfer on the Company's Books. Until this Warrant is transferred on
the books of the Company, the Company may treat the registered holder hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

      11. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if

                                       5
<PAGE>

delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company to: Shumate Industries,
Inc., 12060 FM 3083, Conroe, Texas 77301, Attn: President, CEO, telecopier
number: (936) 539-9396, with a copy by telecopier only to: Ellenoff Grossman &
Schole LLP, 370 Lexington Avenue, New York, New York 10017, telecopier number:
(212) 370-7889, (ii) if to the Holder, to the address and telecopier number
listed on the first paragraph of this Warrant, with an additional copy by
telecopier only to: Sichenzia Ross Friedman Ference LLP, telecopier number:
(212) 930-9725, Attn: Richard A. Friedman, Esq., and (iii) if to the Broker, to:
First Montauk Securities Corp., 328 Newman Springs Road, Red Bank, NJ 07701,
Attn: Ernest Pellegrino, Director of Corporate Finance, telecopier: (732)
842-9047.

      12. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York. Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

                            [Signature Page Follows]

                                       6
<PAGE>

      IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.

                                        SHUMATE INDUSTRIES, INC.

                                        By: /s/ Matthew C. Flemming
                                            ------------------------------------
                                        Name:  Matthew C. Flemming
                                        Title: CFO

WITNESS:

------------------------------------

                                       7
<PAGE>

                                    Exhibit A

                              FORM OF SUBSCRIPTION
                   (to be signed only on exercise of Warrant)

TO: SHUMATE INDUSTRIES, INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):

___ ________ shares of the Common Stock covered by such Warrant.

The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):

___ $__________ in lawful money of the United States.

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to _____________________________________________________
whose address is
________________________________________________________________________________
________________________________________________________________________________

Number of Shares of Common Stock Beneficially Owned on the date of exercise:
Less than five percent (5%) of the outstanding Common Stock of Shumate
Industries, Inc..

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act"), or pursuant to an exemption from
registration under the Securities Act.

Dated:___________________
                                        ----------------------------------------
                                        (Signature must conform to name of
                                        holder as specified on the face of the
                                        Warrant)

                                        ----------------------------------------

                                        ----------------------------------------
                                        (Address)

                                       8
<PAGE>

                                    Exhibit B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To be signed only on transfer of Warrant)

            For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of SHUMATE INDUSTRIES, INC. to which the within Warrant
relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
SHUMATE INDUSTRIES, INC. with full power of substitution in the premises.

--------------------------------------------------------------------------------
Transferees              Percentage Transferred               Number Transferred
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Dated: ______________, ___________
                                        ----------------------------------------
                                        (Signature must conform to name of
                                        holder as specified on the face of the
                                        warrant)

Signed in the presence of:

---------------------------------       ----------------------------------------
        (Name)
                                        ----------------------------------------
                                                (address)

ACCEPTED AND AGREED:
[TRANSFEREE]
                                        ----------------------------------------

                                        ----------------------------------------
                                                (address)

---------------------------------
       (Name)

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