Document:

Exhibit
      10.9

    

    ADVISORY
      SERVICES AGREEMENT - JAMES B. PANTHER

    

    This
      Advisory Services Agreement (the “Agreement”)
      is
      made and entered into May 9, 2007 (the “Effective
      Date”),
      by
      and between (i) James B. Panther II, whose principal business address is 2038
      Corte del Nogal, Suite 110, Carlsbad, California 92011 (the “Consultant”)
      and
      (ii) VoIP, Inc., a Texas corporation, whose principal place of business is
      151
      South Wymore Road, Suite 3000, Altamonte Springs, Florida 32714 (the
“Company”).
      Consultant and Company may hereinafter be referred to individually as a “party”
or collectively as the “parties.”

    

    WHEREAS,
      the
      Company requires the Services as defined and set forth herein; 

    

    WHEREAS,
      Consultant is qualified to provide the Company with the Services and is desirous
      to perform such Services for the Company; and

    

    WHEREAS,
      the
      Company wishes to induce Consultant to provide the Services and wishes to
      contract with the Consultant regarding the same and compensate Consultant in
      accordance with the terms herein;

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants contained in this Agreement, and for
      good
      and valuable consideration, the receipt of which is hereby acknowledged, it
      is
      agreed as follows: 

    

    1.     APPOINTMENT.

    

    The
      Company hereby engages Consultant and Consultant agrees to render the Services
      to the Company as a consultant upon the terms and conditions hereinafter set
      forth.

    

    2.     TERM.

    

    The
      term
      of this Agreement shall begin as of the date of this Agreement, and shall
      terminate 120 days thereafter, or earlier in accordance with Section 9.

    

    3.     SERVICES.

    

    During
      the term of this Agreement, Consultant shall provide the Company with the
      following “Services.”
      However, the Services shall be limited to making recommendations and offering
      advice to the Company’s Officers, Directors and other key Company personnel. As
      an offsite advisor, Consultant will rely upon the Company’s management to, in
      the Company’s sole discretion, accept or reject its recommendations. Under no
      circumstances, even in the event that Consultant is to perform onsite analysis,
      shall Consultant be responsible for making any decisions on behalf of the
      Company.

    

    a.     Advise
      internal management, with particular focus on strategic planning, organizational
      and corporate structure, and overall business analysis with the ultimate goal
      of
      preparing the company for capital market investor due diligence;

    

    b.     Advise
      the Company in regard to the size of any offering of the Company’s securities
      and the structure and terms of the offering in light of the current market
      environment;

    

    c.     Work
      with the Company to develop a long-term growth, capital structure and financing
      strategy.

    

    d.     Provide
      introductions to NASD member firm banking relationships, funding and financing
      firms, specifically including, but not limited to, C.E. Unterberg Towbin, and,
      on a best efforts basis, seek an engagement that is in the best interests of
      the
      Company. The Company hereby agrees to provide an “Acknowledgement
      of Introduction,”
a
      specimen of which is attached hereto as Exhibit
      A
      for each
      banking, funding or financing firm, specifically including but not limited
      to
      C.E. Unterberg Towbin (each a “Consultant
      Protected Relationship”),
      that
      Consultant introduces the Company to. Each Acknowledgement of Introduction
      shall
      grant Consultant the exclusive right to assist in any negotiations regarding
      the
      financing and relationship between the Consultant Protected Relationship and
      the
      Company. The Company shall additionally agree that by providing Consultant
      with
      an Acknowledgement of Introduction and commencing the negotiation of a business
      relationship with a Consultant Protected Relationship (even if an
      Acknowledgement of Introduction was not tendered), that for two (2) years
      following Consultant’s introduction or for two (2) years subsequent to the
      receipt of an Acknowledgement of Introduction, regardless of a termination
      of
      this Consultant Protected Relationship, that Consultant shall be compensated
      in
      accordance with Section 4 of this Agreement. Should Consultant’s rights to
      receive the Section 4 Compensation be compromised in any way (including for
      example, by not holding Consultant’s compensation in escrow at the time of the
      closing of any such financial transaction), Company hereby consents to
      injunctive relief, benefiting the Consultant, in order to segregate all related
      monies due and owing to Consultant under this term of the Agreement, in addition
      to appropriate monetary damages. Damages shall be equal to an amount of money
      equal to not less than the amount of financial benefit Consultant would have
      received had the Company complied with the Section 4 Compensation terms. The
      term “Consultant Protected Relationship” shall include any person or entity that
      Consultant introduced to the Company in connection with this Agreement, or
      a
      third party person or entity that has a business or other affiliation with
      any
      person or entity that Consultant introduced to the Company in connection with
      Consultant’s services under this Agreement. Unless authorized by Consultant in
      writing, under no other circumstances, shall Company make any effort to contact
      a Consultant Protected Relationship. 

     

     

    
      
         

      

      
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    e.     In
      the event that the Company has a prior existing business relationship with
      a
      party introduced by Consultant as a potential Consultant Protected Relationship,
      then the Company shall have a positive obligation to deliver in writing such
      a
      notification of a prior business relationship within 48 hours of the time that
      Consultant makes an introduction. The failure to provide Consultant with notice
      of a prior business relationship shall forever waive the Company's right to
      subsequently assert that they had a prior existing business relationship with
      that respective introduction. 

    

    f.     Consultant
      agrees to provide the Services on a timely basis via: meetings with Company
      representatives which may include other professionals; conferences calls with
      Company representatives and other professionals; and/or written correspondence
      and documentation. Consultant cannot guarantee the results on behalf of the
      Company, but shall pursue all avenues that it deems reasonable through its
      network of contacts.

    

    4.     COMPENSATION.     In
      connection with this Agreement, The Company shall pay Consultant the following
      fees:

    

    a.     Cash.
      (i)
      Within five days of the effectiveness of this Agreement (“Payment
      Date One”)
      and
      (ii) on the 61st
      day of
      the effectiveness of this Agreement (“Payment
      Date Two”),
      Company shall pay Consultant a cash fee equal to $187,500.00. 

    

    b.     Securities.
      Within
      5 days of the effectiveness of this Agreement, Consultant shall be issued and
      shall receive 250,000 free trading shares of the Company’s common stock
      registered on Form S-8 (the “Securities”).

    

    c.     Options.
      By or
      before Payment Date One, Consultant shall have an option to purchase 1,875,000
      common Company shares (“Option
      One Shares”)
      for
      $.18 per share. By or before Payment Date Two, Consultant shall have an option
      to purchase 1,875,000 common Company shares (“Option
      Two Shares”)
      for
      $.18 per share. The Option Two Shares, if such an option to purchase such common
      shares is exercised, shall be registered in a Form S-8 registration statement
      and shall be delivered to Consultant free of any restrictive legend.

    

    d.     Warrants.
      Within
      5 business days of the execution of this Agreement, Consultant shall be issued
      a
      Common Stock Purchase Warrants (the “Warrant”),
      attached hereto as Exhibit
      B.

    

    e.     Success
      Fee Credit.
      In the
      event that the Company obtains financing, in any form, as a result of business
      dealings between a Consultant Protected Relationship and the Company, Consultant
      shall receive a Success Fee Credit (the “Success
      Fee Credit”)
      in the
      amount of $100,000 for the initial $1,000,000 in financing received by the
      Company and ten percent (10%) of any financing received by the Company in excess
      of $1,000,0001 .
      The
      Success Fee Credit shall be split between the Consultant and other third parties
      as listed in Exhibit
      C.
      All
      Success Fee Credit funds may only be utilized as a credit towards the exercise
      price of any warrants issued to the Consultant or his assigns by the
      Company2 .
      All
      Success Fee Credit funds shall be accounted for and booked by the Company for
      the benefit of the parties as outlined in Exhibit
      C,
      until
      such time as the same Success Fee Credit funds have been used. Any Success
      Fee
      Credits funds shall not bear interest. 

    

    All
      compensation delivered and paid to Consultant pursuant to this Agreement shall
      be deemed completely earned, due, payable and non-assessable as of the date
      the
      compensation is tendered to Consultant by the Company or the Company's transfer
      agent. Once compensation is tendered to Consultant, there shall be no refunds
      or
      diminishment of the same regardless of any event.

     

    
      

      
        1     For
          example, if the Company were to obtain
          $1,600,000 in financing as a result of a Consultant Protected Relationship,
          Consultant would be entitled to receive a Success Fee Credit of $160,000.
          

      

      
        2     As
          a further extension of the example in Footnote
          1 above, if the Consultant or his assignee was issued a warrant to purchase
          1,000,000 Company common shares for $.20 per share, and the Consultant
          or his
          assignee elected to apply the above $160,000 Success Fee Credit, then the
          Company would only receive $40,000 in addition to the $160,000 Success
          Fee
          Credit towards the purchase of the warrants.

      

    

    
      
         

      

      
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    5.     REPRESENTATIONS
      AND WARRANTIES OF COMPANY.

    

      The
      Company hereby represents, warrants and agrees as follows:

      

    a.     This
      Agreement has been authorized, executed and delivered by the Company and, when
      executed by the Consultant will constitute the valid and binding agreement
      of
      the Company enforceable against the Company in accordance with its terms, except
      as enforcement thereof may be limited by bankruptcy, insolvency or
      reorganization, moratorium or other similar laws relating to or affecting
      creditors’ rights generally or by general equitable principles. 

      

    b.     The
      financial statements, audited and unaudited (including the notes thereto)
      provided to Consultant, (the “Financial
      Statements”),
      will
      present fairly the financial position of the Company as of the dates indicated
      and the results of operations and cash flows of the Company for the periods
      specified. Such Financial Statements will be prepared in conformity with
      generally accepted accounting principles applied on a consistent basis
      throughout the periods involved except as otherwise stated therein.

    

    c.     The
      Company is validly organized, existing and with active status under the laws
      the
      State of Texas.

    

    d.     The
      securities to be issued to Consultant, if any, have all been authorized for
      issuance and when issued, delivered and tendered to the Consultant by the
      Company will be validly issued, fully paid and non-assessable.

      

    e.     Since
      date of the most recent of the Financial Statements, there has not been any
      (A)
      material adverse change in the business, properties, assets, rights, operations,
      condition (financial or otherwise) or prospects of the Company, (B) transaction
      that is material to the Company, except transactions in the ordinary course
      of
      business, (C) obligation that is material to the Company, direct or contingent,
      incurred by the Company, except obligations incurred in the ordinary course
      of
      business, (D) change that is material to the Company or in the common shares
      or
      outstanding indebtedness of the Company, or (E) dividend or distribution of
      any
      kind declared, paid, or made in respect of the common shares. 

    

    f.     The
      Company shall be deemed to have been made a continuing representation of the
      accuracy of any and all facts, material information and data which it supplies
      to Consultant and acknowledges its awareness that Consultant will rely on such
      continuing representation in disseminating such information and otherwise
      performing its advisory functions. Consultant in the absence of notice in
      writing from the Company, will rely on the continuing accuracy of material,
      information and data supplied by the Company. Consultant represents that he
      has
      knowledge of and is experienced in providing the aforementioned
      services.

    

    6.     STATUS
      OF WORK PRODUCT AND OTHER PROPERTY.
      Upon
      expiration of this Agreement and/or termination of this Agreement (or at any
      time upon request by the Company), Consultant will immediately return to the
      Company all Company property (including but not limited to all documents,
      electronic files/records, keys, records, computer disks, or other tangible
      or
      intangible things that may or may not relate to or otherwise constitute
      confidential information or trade secrets (as defined by applicable law) that
      Consultant created, used, possessed, or maintained while in the employ of the
      Company, from whatever source. This provision does not apply to purely personal
      documents of Consultant, but does apply to business calendars, Rolodexes,
      customer lists, contact sheets, computer programs, disks, and their contents,
      and like information that may contain some personal matters of
      Consultant.

    

    7.     INDEMNIFICATION.
      The
      Company agrees to indemnify the Consultant and hold it harmless against any
      losses, claims, damages or liabilities incurred by the Consultant, in connection
      with, or relating in any manner, directly or indirectly, to the Consultant
      rendering the Services in accordance with the Agreement, unless it is determined
      by a court of competent jurisdiction that such losses, claims, damages or
      liabilities arose out of the Consultant’s breach of this Agreement, sole
      negligence, gross negligence, willful misconduct, dishonesty, fraud or violation
      of any applicable law. Additionally, the Company agrees to reimburse the
      Consultant immediately for any and all expenses, including, without limitation,
      attorney fees, incurred by the Consultant in connection with investigating,
      preparing to defend or defending, or otherwise being involved in, any lawsuits,
      claims or other proceedings arising out of or in connection with or relating
      in
      any manner, directly or indirectly, to the rendering of any Services by the
      Consultant in accordance with the Agreement (as defendant, nonparty, or in
      any
      other capacity other than as a plaintiff, including, without limitation, as
      a
      party in an interpleader action). The Company further agrees that the
      indemnification and reimbursement commitments set forth in this paragraph shall
      extend to any controlling person, strategic alliance, partner, member,
      shareholder, director, officer, employee, agent or subcontractor of the
      Consultant and their heirs, legal representatives, successors and assigns.
      The
      provisions set forth in this Section shall survive any termination of this
      Agreement.

     

     

    
      
         

      

      
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    8.     COMPLIANCE
      WITH SECURITIES LAWS.
      The
      Company understands that any and all Compensation outlined in this Agreement
      shall be paid solely and exclusively as consideration for the aforementioned
      consulting efforts made by Consultant on behalf of the Company as an independent
      contractor. The parties performing the services outlined in this Agreement
      are
      natural persons and shall only provide advisory services internally to the
      Company. Consultant’s engagement does not involve the marketing of any Company
      securities.

    

    9.     MISCELLANEOUS.

    

    a.     Termination
      and Renewal:
      This
      Agreement may be terminated by Company only upon written notice to Consultant
      and Consultant’s failure to cure said material breach within 45 days from
      receipt of said notice. 

    

    b.     Modification:
      This
      Agreement sets forth the entire understanding of the parties with respect to
      the
      subject matter hereof. This Agreement may be amended only in writing signed
      by
      both parties.

    

    c.     Notices:
      Any
      notice required or permitted to be given hereunder shall be in writing and
      shall
      be mailed or otherwise delivered in person to the parties at the addresses
      set
      forth above.

    

    d.     Waiver:
      Any
      waiver by either party of a breach of any provision of this Agreement shall
      not
      operate as or be construed to be a waiver of any other breach of that provision
      or of any breach of any other provision of this Agreement. The failure of a
      party to insist upon strict adherence to any term of this Agreement on one
      or
      more occasions will not be considered a waiver or deprive that party of the
      right thereafter to insist upon adherence to that term of any other term of
      this
      Agreement.

    

    e.     Assignment:
      Compensation under this Agreement is assignable at the sole discretion of the
      Consultant.

    

    f.     
      Severability:
      If any
      provision of this Agreement is invalid, illegal, or unenforceable, the balance
      of this Agreement shall remain in effect. If any provision is inapplicable
      to
      any person or circumstance, it shall nevertheless remain applicable to all
      other
      persons and circumstances. If any compensation provision is deemed unenforceable
      or illegal, then in the case of the delivery of common stock to the Consultant,
      Consultant shall be entitled to receive a cash benefit equal to the value of
      the
      common stock that would have been tendered had such a provision not been illegal
      or unenforceable.

    

    g.     Arbitration:
      Any
      dispute or other disagreement arising from or out of this Agreement shall be
      submitted to arbitration under the rules of the American Arbitration Association
      and the decision of the arbiter(s) shall be enforceable in any court having
      jurisdiction thereof. Arbitration shall occur only in San Diego County, CA.
      The
      interpretation and the enforcement of this Agreement shall be governed by
      California Law as applied to residents of the State of California relating
      to
      contracts executed in and to be performed solely within the State of California.
      

    

    h.     Governing
      Law:
      The
      subject matter of this Agreement shall be governed by and construed in
      accordance with the laws of the State of California (without reference to its
      choice of law principles), and to the exclusion of the law of any other forum,
      without regard to the jurisdiction in which any action or special proceeding
      may
      be instituted. EACH PARTY HERETO AGREES TO SUBMIT TO THE PERSONAL JURISDICTION
      AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN THE COUNTY OF SAN DIEGO,
      CALIFORNIA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF, IN CONNECTION WITH,
      OR
      BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND ENFORCEMENT OF THIS
      AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN THAT SUCH COURTS
      CONSTITUTE AN INCONVENIENT FORUM. AS A MATERIAL INDUCEMENT FOR THIS AGREEMENT,
      EACH PARTY SPECIFICALLY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY ISSUES SO
      TRIABLE. If it becomes necessary for any party to institute legal action to
      enforce the terms and conditions of this Agreement, the prevailing party shall
      be awarded reasonable attorneys fees, expenses and costs.

    

    i.   
        Specific
      Performance:
      The
      Company and the Consultant shall have the right to demand specific performance
      of the terms, and each of them, of this Agreement.

    

    j.   
        Execution
      of the Agreement:
      The
      Company, the party executing this Agreement on behalf of the Company, and the
      Consultant, have the requisite corporate power and authority to enter into
      and
      carry out the terms and conditions of this Agreement, as well as all
      transactions contemplated hereunder. All corporate proceedings have been taken
      and all corporate authorizations and approvals have been secured which are
      necessary to authorize the execution, delivery and performance by the Company
      and the Consultant of this Agreement. This Agreement has been duly and validly
      executed and delivered by the Company and the Consultant and constitutes a
      valid
      and binding obligation, enforceable in accordance with the respective terms
      herein. Upon delivery of this Agreement, this
      Agreement, and the other agreements and exhibits referred to herein, will
      constitute the valid and binding obligations of Company,
      and
      will be enforceable in accordance with their respective terms. Delivery may
      take
      place via facsimile transmission.

     

     

    
      
         

      

      
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    k.     Joint
      Drafting.
      This
      Agreement shall be deemed to have been drafted jointly by the Parties hereto,
      and no inference or interpretation against any one party shall be made solely
      by
      virtue of such party allegedly having been the draftsperson of this Agreement.
      The parties have each conducted sufficient and appropriate due diligence with
      respect to the facts and circumstances surrounding and related to this
      Agreement. The parties expressly disclaim all reliance upon, and prospectively
      waive any fraud, misrepresentation, negligence or other claim based on
      information supplied by the other party, in any way relating to the subject
      matter of this Agreement. 

    

    l.   
        Acknowledgments
      and Assent.
      The
      parties acknowledge that they have been given at least ten (10) days to consider
      this Agreement and that they were advised to consult with an independent
      attorney prior to signing this Agreement and that they have in fact consulted
      with counsel of their own choosing prior to executing this Agreement. The
      parties may revoke this Agreement for a period of three (3) days after signing
      this Agreement, and the Agreement shall not be effective or enforceable until
      the expiration of this three (3) day revocation period. The parties agree that
      they have read this Agreement and understand the content herein, and freely
      and
      voluntarily assent to all of the terms herein.

    

    m.     Exhibits:
      Exhibits A thru C.

     

    

    SIGNATURE
      PAGE FOLLOWS

    

    

    IN
      WITNESS WHEREOF, this Agreement has been executed by the parties as of the
      date
      first above written.

     

     

    
      	COMPANY	 	 	CONSULTANT
	 	 	 	 
	VOIP, INC.	 	 	JAMES B. PANTHER II
	 	 	 	 
	/s/
              Anthony J.
              Cataldo 	 	 	/s/
              James B.
              Panther II 
	
              
By:
              Anthony J. Cataldo	 	 	
              
By:
              James B. Panther II
	
              Its:
                Chief Executive Officer 

            	 	 	
              An:
                Individual

            

    

    

    A
      FACSIMILE COPY OF THIS AGREEMENT SHALL HAVE THE SAME LEGAL EFFECT AS AN ORIGINAL
      OF THE SAME.

     

    
 

    
      
         

      

      
        5EMPLOYMENT
      AGREEMENT

    

    This
      Employment Agreement (this “Agreement”) is made and entered into effective as of
      the 10th
      day of
      May, 2007 (the “Effective Date”), by and between SHUMATE
      INDUSTRIES, INC.,
      a
      Delaware corporation (hereafter referred to as the “Company”), and LARRY
      C. SHUMATE (hereafter
      referred to as “Executive”). The Company and Executive may sometimes hereafter
      be referred to singularly as a “Party” or collectively as the
“Parties.”

    

    W
      I T N E S S E T H:

    

    1.
      Employment and Duties of Executive

    

    On
      the
      terms and subject to the conditions hereinafter set forth, and beginning as
      of
      the Effective Date, the Company employs Executive as its President and Chief
      Executive Officer and the Executive will serve as the Company’s employee in that
      position. Executive shall also have such additional powers, authority,
      functions, duties, and responsibilities as may be reasonably assigned to him,
      from time to time, by the Board of Directors of the Company (the “Board”).

    

    2.
      Place of Employment

    

    The
      required duties of Executive under this Agreement shall be performed by
      Executive at the Company’s offices in the Cornroe, Montgomery County, Texas, and
      in such other place or places to which Company may, from time to time, request
      Executive to travel in connection with Executive’s duties under this Agreement.

    

    3.
      Time to be Devoted to Contractual Duties of Executive

    

    Executive
      shall give his best efforts and endeavors, on a full time basis, to the
      discharge of his duties under this Agreement and shall not, at any time during
      the Term (as defined in Agreement Paragraph 4), engage in any business activity
      other than the business activities permitted or required hereunder, or enter
      into the services of or be employed in any capacity or for any purpose by any
      individual, firm, association, organization, partnership (general or limited),
      corporation, limited liability company, or other party or legal entity other
      than the Company (or any affiliate of the Company), on a fee or salary or other
      compensatory basis, it being the intention of the Company and Executive that
      the
      capacity in which Executive is hired by the Company under this Agreement
      represents a full-time duty and responsibility. The foregoing shall not be
      interpreted to (a) prohibit Executive from engaging in recreational, charitable,
      religious, or community service activities outside the scope of Executive’s
      employment under this Agreement, or from making passive investments in
      businesses or enterprises, (b) prohibit Executive from holding stock or other
      equity interests in a publicly traded entity (even if such entity is competitive
      with the Company so long as such ownership does not exceed one percent (1%));
      or
      (c) prohibit Executive from taking part in a real estate ventures, so long
      as:
      (i) such activities or investments, individually or in the aggregate, do not
      interfere or require services on the part of Executive that interfere with
      Executive’s performance of his duties and obligations under this Agreement; (ii)
      such activities or investments do not involve or relate to any activities or
      business in competition with the business of the Company or any affiliates
      of
      the Company (except as provided in item (b) above), and (iii) Executive has
      complied with Paragraph 10 of this Agreement with respect to each such activity
      and investment.

    

    
      
         

      

      
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    4.
      Term of Employment

    

    The
      term
      of the Company’s employment of Executive shall be for a period of three (3)
      years from the Effective Date (such period being referred to as the “Initial
      Term”). After the expiration of the Initial Term, the employment of Executive
      shall continue for successive three (3) month periods. The Initial Term
plus
      any
      period or periods of time during which the employment of Executive continues
      with the Company after the expiration of the Initial Term is sometimes referred
      to as the “Term.”

    

    5.
      Compensation of Executive

    

    A. As
      compensation for the services and duties performed and to be performed by
      Executive as provided in this Agreement, the Company agrees to pay Executive
      a
      salary in the amount of ONE HUNDRED EIGHTY FIVE THOUSAND DOLLARS ($185,000)
      per
      annum (“Base Salary”), less applicable withholding, F.I.C.A., and other lawful
      deductions, such salary to be payable semi-monthly, in equal installments,
      in
      arrears, and otherwise in accordance with the Company’s payroll policies in
      effect from time to time. The Compensation Committee of the Board will review
      Executive's compensation annually to consider possible upward adjustments (it
      being agreed that the base salary shall not be reduced during the Initial
      Term).

    

    B. Executive
      may also receive bonuses, from time to time, in the discretion of the
      Compensation Committee of the Board, depending upon Executive’s performance and
      achievement of specific goals, and upon the profitability of the Company, which
      bonuses may be payable in cash, options, and common stock, in the discretion
      of
      the Compensation Committee of the Board. 

    

    C. Executive
      shall be authorized to incur, and shall be entitled to receive prompt
      reimbursement for, all reasonable expenses incurred by Executive in performing
      his duties and carrying out the responsibilities hereunder, including business
      meals, entertainment, and travel expenses, provided that Executive complies
      with
      all of the applicable policies, practices and procedures of the Company related
      to the submission of expense reports, receipts, or similar documentation of
      those expenses. The Company shall either pay directly, or reimburse Executive
      for such expenses in accordance with Company policies.

    

    D. In
      addition to the amounts set forth above, for the term of Executive’s employment,
      the Company agrees to provide to Executive, at the Company’s sole expense,
      health insurance coverage for Executive (with any such coverage for Executive’s
      dependents, if desired by Executive, to be provided at the Company’s sole
      expense) under the health insurance plan maintained by the Company from time
      to
      time. The Company shall also provide, at the Company’s sole expense, life
      insurance coverage on Executive’s life in a face amount at least equal to base
      salary, and shall also provide Executive with both long term and short term
      disability insurance for Executive in amounts and under terms acceptable to
      the
      Company, all at the Company’s sole cost and expense. Also, Executive shall have
      the option to participate in any salary deferral, 401(k), SEP, or savings plan
      or other similar plan which the Company or its successors or assigns makes
      available to its employees. Executive shall be required to comply with the
      conditions attendant to coverage by such plans and shall comply with and be
      entitled to benefits only in accordance with the terms and conditions of such
      plans as they may be amended from time to time.

    

    
      
         

      

      
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    E. During
      the Term, Executive shall be entitled to four (4) weeks of annual vacation
      time
      per calendar year determined in accordance with the vacation policies of the
      Company from time to time in effect. To the extent that Executive does not
      utilize the full amount of vacation time allotted in any given calendar year,
      Executive will receive a cash payment within 30 days of the end of such calendar
      year for any used vacation time. Such cash payment will be calculated based
      upon
      Executive’s Base Salary for the calendar year in which such unused vacation time
      occurred.

    

    F. Executive
      shall also be entitled to a vehicle allowance of $800 per month.

    

    G. No
      additional compensation (above the compensation referred to in this
      Paragraph 5) shall be due or payable by Company to Executive under this
      Agreement, but nothing in this Agreement shall prohibit the Company from paying
      Executive any additional amount as a bonus or otherwise, as the Company may
      determine from time to time.

    

    6.
       Covenants,
      Representations, and Warranties of Executive

    

    A. Executive
      covenants, agrees, and promises that during the Term: (a) except as
      permitted under this Agreement, Executive will not engage, directly or
      indirectly, in any business other than the business of the Company, except
      at
      the direction of or with the prior written approval of the Company;
      (b) Executive will truthfully and accurately make, maintain, and preserve
      all records and reports that the Company may from time to time request or
      require; (c) Executive will fully account for all money, records, goods, wares,
      merchandise, and other property belonging to the Company and/or to the Company’s
      clients of which Executive has custody, and will pay over and/or deliver same
      promptly whenever and however Executive may be directed to do so;
      (d) Executive
      will (i) make reasonable efforts to obey all rules, regulations, and special
      instructions applicable to him and (ii) be loyal and faithful to the Company
      at
      all times; and (e) Executive agrees that upon termination of his employment
      under this Agreement for any reason he will immediately surrender and turn
      over
      to the Company all books, records, forms, mailing lists, client lists, potential
      client lists, specifications, formulae, data, processes, papers, and writings
      related to the Company’s business and all other property belonging to the
      Company together with, except as hereinafter set forth, all copies of the items
      mentioned in this Agreement Paragraph 6.A., it being understood and agreed
      that
      the same are the Company’s sole property.

    

    B. Executive
      hereby represents and warrants to Company that (a) Executive is experienced
      in
      the subject matter of this Agreement and fully competent to exercise and
      discharge his duties and obligations under this Agreement, and (b) the execution
      of this Agreement by Executive does not violate the terms or conditions of
      any
      prior employment agreements to which Executive has been a party, and at the
      time
      of execution of this Agreement, Executive is not a party to any other employment
      or consulting agreement and any other employment agreement between the
      Executive, on the one hand, and the Company (and/or its affiliates), is
      terminated and the Company (and/or its affiliates) is (are) released from all
      obligations thereunder.

    

    
      
         

      

      
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    7.
      Termination

    

    A. The
      employment of Executive may be terminated upon the occurrence of any one of
      the
      following events:

    

    (a) Business
      Reason.
      The
      Company may, at its election, and for any reason (i.e., any lawful reason other
      than Cause) and effective immediately (or such longer period as determined
      by
      the Company in its sole discretion), terminate Executive’s employment upon
      written notice to Executive. Executive, effective no less than thirty (30)
      days
      after written notice thereof to the Company, may resign his employment with
      the
      Company. A
      resignation for “Good Reason” shall mean a resignation of your employment within
      sixty (60) days of the occurrence of any of the following events: (i) without
      your written consent, a material reduction of your duties, position or
      responsibilities; (ii) without your written consent, a significant reduction
      by
      the Company in your base salary as in effect immediately prior to such
      reduction; or (iii) without your written consent, a requirement that you
      relocate your office to a location more than seventy (70) miles from its
      then-current location. A resignation of your employment for any other reason
      or
      in any other circumstances will be a resignation “Without Good
      Reason.”

    

    (b) With
      Cause.
      The
      Company may, upon written notice effective immediately, terminate the employment
      of Executive at any time during the Term for “Cause.” For purposes of this
      Agreement, “Cause” shall mean the following: (i)
      if
      Executive should be convicted of or pleads nolo
      contendre
      to any
      felony offense or to a crime of moral turpitude (whether or not a felony);
      (ii)
if
      Executive should be unable or incapable of performing the essential functions
      of
      his job position for a period of thirty (30) consecutive days in any twelve
      (12)
      month period, or one hundred twenty (120) days during any twelve (12) month
      period, whether or not such days are consecutive (as used herein, “unable or
      incapable of performing essential job functions” shall mean the inability of
      Executive, on account of a mental, physical, or other condition, to perform
      his
      essential job functions as determined by at least two of three medical
      physicians or by agreement of the Company and Executive or his designee (if
      the
      determination is to be made by medical physicians, the Executive or his designee
      shall appoint one such physician, the Company shall appoint one, and the two
      so
      appointed shall appoint the third medical physician)); (iii) if Executive should
      (1) misappropriate funds or property of the Company, or of any affiliate of
      the Company, (2) secure or attempt to secure personally any profit in
      connection with any transaction entered into on behalf of the Company or of
      any
      affiliate of the Company, or (3) make any material misrepresentation to the
      Company or any affiliate of the Company; (iv) if Executive fails to comply
      with
      any of his duties and obligations under this Agreement and such failure
      continues for fifteen (15) days after written notice to Executive from the
      Company of such failure; (v) if
      Executive fails to comply with the Conflict of Interest Guidelines attached
      as
Exhibit ”A”
      to this
      Agreement, and such failure continues for five (5) days after notice to
      Executive; (vi) if
      Executive shall give notice of resignation under Paragraph 7.A(a); or (vii)
if
      Executive commits an act involving dishonesty, theft, or conduct that one could
      reasonably expect to impair or injure the reputation of, or harm, the Company
      or
      any affiliate of the Company.

    

    
      
         

      

      
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    (c) Death
      of Executive.
      This
      Agreement will terminate automatically on the death of the
      Executive.

    

    B. In
      the
      event of the termination of the employment of Executive, Executive shall be
      entitled to compensation under Paragraph 5.A earned by him prior to the
      date of termination as provided herein. Additionally, if during the Initial
      Term, the Executive resigns with good reason or the Company terminates
      Executive’s employment with the Company for any
      reason
      other
      than under Paragraph 7.A(b)(i), 7.A.(b)(iii), 7.A.(b)(iv), 7.A.(b)(v), or
      7.A.(b)(vii) or if during the Initial Term, Executive’s employment with the
      Company is terminated due to Executive’s death under Paragraph 7.A(c), then
      Executive (or his estate, as applicable) shall be entitled to and shall receive,
      as his or its sole and exclusive remedy (Executive hereby waiving all other
      rights or remedies in the event of such a termination), a severance payment
      equal to six (6) months’ of Executive’s base salary (computed using the annual
      compensation then payable to Executive under Paragraph 5.A) for six (6)
      months, which shall be paid monthly following the termination of employment
      for
      the balance of the Initial Term. Additionally, in the event the Company
      terminates Executive’s employment under Paragraph 7.A(a) hereof, the duration of
      Executive’s covenants under Paragraph 10 hereof shall last until the expiration
      of six (6) months from the date of such termination (however, the Company may
      extend the duration of such covenant to up to twelve (12) months from the date
      of such termination by increasing the severance payment payable to Executive
      under the immediately preceding sentence to up to twelve (12) month’s base
      salary - but the Company shall be under no obligation to do so).
      If: (i) Executive resigns from his employment with the Company under
      Paragraph 7.A(a) at any time; or (ii) during the Initial Term, the
      Company terminates the employment of Executive pursuant to Paragraph 7.A(b)(i),
      7.A(b)(iii), 7.A(b)(iv), 7.A(b)(v), 7.A(b)(vi), or 7.A(b)(vii); or
      (iii) subsequent to the Initial Term, the Company terminates the employment
      of Executive pursuant to any provision of Paragraph 7.A(b); or (iv) subsequent
      to the Initial Term, Executive’s employment with the Company is terminated due
      to Executive’s death under Paragraph 7.A(c), then the Company shall have the
      obligation to pay to Executive all amounts earned under Paragraph 5.A prior
      to the termination of employment, but the Company shall have no obligation
      to
      pay Executive any amount otherwise coming due and payable under this Agreement
      after the date of such termination and Executive shall be entitled to no other
      or further compensation as of the date of termination of his employment or
      thereafter. Additionally, if, after the Initial Term, the Company (but
not
      Executive) terminates Executive’s employment under Paragraph 7.A(a) or
      Paragraph 7.A.(b)(ii), Executive shall be entitled, as his sole and exclusive
      remedy (Executive hereby waiving all other rights or remedies in the event
      of
      such a termination) a severance payment equal to six (6) month’s salary (based
      on the annual compensation payable to Executive under Paragraph 5.A), which
      shall be paid monthly for six (6) months following the termination of
      employment; provided, however, if Executive becomes employed or otherwise earns
      income from sources other than the Company during such six (6) month period,
      then the Company’s obligation to pay such severance payment shall be reduced
      dollar for dollar by each dollar received by Executive during such six (6)
      month
      period.

    

    C. If
      your
      employment with the Company is terminated by the Company “Without Cause” (as
      defined herein) or if you resign “With Good Reason” you shall be entitled to the
      same level of health (i.e. medical, vision and dental) coverage and benefits
      as
      in effect for you on the day immediately preceding the day of termination of
      employment; provided, however that (A) you constitute a qualified beneficiary,
      as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as
      amended; and (B) you elect continuation coverage pursuant to the Consolidated
      Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time
      period prescribed pursuant to COBRA. The Company shall continue to provide
      you
      with such health coverage until the earlier of (i) the date you are no longer
      eligible to receive continuation coverage pursuant to COBRA, or (ii) twelve
      (12)
      months from the termination date.

    

    
      
         

      

      
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    8.
      Confidential Information; Ideas

    

    A. 
      The
      Company promises that it will give Executive access to some or all of its
      Confidential Information (as defined in this Paragraph 8.A.) during his
      employment under this Agreement, including, without limitation, certain trade
      secrets, know-how, mailing lists, clients lists, potential client lists,
      employee records, and other sensitive, proprietary, or confidential information
      and knowledge concerning the business of the Company, and/or affiliates of
      the
      Company (hereafter collectively referred to as “Confidential Information”) which
      the Company desires to protect. Executive understands that such Information
      is
      sensitive, proprietary, or confidential, and he agrees that he will not, at
      any
      time (and whether during or after Executive’s employment with the Company),
      reveal such Confidential Information to anyone outside the Company. The term
      “Confidential Information,” as used in this Agreement, shall not include
      information that (a) is already known to Executive from sources other than
      the Company; (b) is or becomes generally available to the public other than
      as a result of a disclosure by Executive; (c) is disclosed to Executive by
      a person or entity who is not bound by any agreement regarding the confidential
      nature of such information; or (d) is required to be disclosed by law or by
      regulatory or judicial process. The provisions of this Paragraph 8 shall survive
      any termination or expiration of this Agreement, and the termination of
      Executive’s employment with the Company (for whatever cause or
      reason).

    

    B. Executive
      agrees that all ideas, improvements, inventions, discoveries, systems,
      techniques, formulas, devices, methods, processes, programs, designs, models,
      prototypes, copyrightable works, mask works, trademarks, service marks, trade
      dress, software programs, hardware improvements, business slogans, and other
      things of value conceived, reduced to practice or made or learned by Executive,
      either alone or with others, while employed by the Company and for twelve (12)
      months thereafter that relate to the Company's business and/or the business
      of
      affiliates of the Company (hereinafter collectively referred to as the “Ideas”)
      belong to and shall remain the sole and exclusive property of the Company
      forever. Further, Executive agrees to promptly and fully disclose to the
      Company’s President such Ideas in writing. In addition, Executive agrees,
      without additional compensation, to cooperate and do any and all lawful things
      requested by Company necessary or useful to ensure that the ownership by the
      Company of such Ideas is protected. This cooperation includes, but is not
      limited to, executing all documents required by the Company, and otherwise
      assisting Company to vest title of such Ideas in Company and to obtain, maintain
      and enforce for Company’s benefit, any patents, copyrights, mask work
      registration, trade and service mark registrations, or other legal protection
      for any Ideas in any and all countries, during or after employment with Company.
      Executive will continue to assist Company as provided in the preceding sentence
      even after termination of Executive’s employment with Company, but Company shall
      compensate Executive at a reasonable rate after his termination for the time
      actually spent by Executive in response to a written request by Company.
If
      Company is unable for any reason to secure Executive's signature on any document
      needed in connection with the actions specified in the preceding paragraph,
      Executive hereby irrevocably designates and appoints Company and its duly
      authorized officers and agents as Executive's agent and attorney-in-fact to
      act
      for and on Executive's behalf to execute, verify, and file any such documents
      and to do all other lawfully permitted acts to further the purposes of the
      preceding paragraph with the same legal force and effect as if executed by
      Executive. Executive hereby waives and quitclaims to Company any and all claims,
      of whatever nature, which Executive has or may have later for infringement
      of
      any proprietary rights assigned by Executive to Company. Executive hereby
      assigns to the Company all of Executive’s right, title, and interest in and to
      all such Ideas and all patents, trademarks, copyrights, other registrations,
      and
      applications which may be obtained as a result of the Ideas, throughout the
      United States and all foreign countries. Executive agrees that no Ideas shall
      be
      regarded as having been conceived, reduced to practice, made, or learned by
      Executive prior to Executive's employment. Executive's
      obligations under this Agreement shall continue after his termination of
      employment with the Company. This Agreement shall inure to the benefit of
      Company, its successors (including by merger) and assigns, and is binding upon
      the assigns, executors, and administrators and other legal representatives
      of
      Executive.

    

    
      
         

      

      
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    9.
      Arbitration

    

    A. If
      any
      dispute between the Company and Executive arises out of or is related to this
      Agreement, Executive’s employment, or Executive’s separation from employment
      with Company for any reason, and the parties to this Agreement cannot resolve
      the dispute, the Company and Executive shall submit the dispute to final and
      binding arbitration. The arbitration shall be conducted in accordance with
      the
      American Arbitration Association’s (“AAA”) National Rules for the Resolution of
      Employment Disputes (“Rules”). If the parties cannot agree to an arbitrator, an
      arbitrator will be selected through the AAA’s standard procedures and Rules.
      Company and Executive shall share the costs of arbitration, unless the
      arbitrator rules otherwise. Company and Executive agree that the arbitration
      shall be held in Houston, Texas. 
      Arbitration of the parties’ disputes is mandatory, and in lieu of any and all
      civil causes of action or lawsuits either party may have against the other
      arising out of or related to this Agreement, Executive’s employment, or
      Executive’s separation from employment with Company, with the exception that
      Company alone may seek a temporary restraining order and temporary injunctive
      relief in a court to enforce the protective covenants as provided in Agreement
      Paragraph 10.C..
      Executive acknowledges that by agreeing to this provision, he knowingly
      and voluntarily waives
      any right he may have to a jury trial based on any claims he has, had, or may
      have against the Company,
      including any right to a jury trial under any local, municipal, state or federal
      law including, without limitation, claims under Title VII of the Civil Rights
      Act of 1964, 42 U.S.C. Section 1981, the Americans With Disabilities Act of
      1990, the Age Discrimination In Employment Act of 1967, the Family Medical
      Leave
      Act, the Sarbanes-Oxley Act, the Older Workers Benefit Protection Act, the
      Texas
      Commission on Human Rights Act, claims of harassment, discrimination or wrongful
      termination, and any other statutory or common law claims.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    B. Before
      the arbitration hearing is conducted, the arbitrator shall have the authority
      to
      consider and grant a motion to dismiss and motion for summary judgment by
      applying the standards governing these motions under Federal Rules of Civil
      Procedure 12 and 56. The arbitrator shall issue a written decision and award,
      which shall explain the basis of the decision. The decision and award shall
      be
      exclusive, final, and binding on both Executive and the Company, and all heirs,
      executors, administrators, successors, and assigns. 

    

    C. Both
      Executive and the Company understand that, by agreeing to arbitration, they
      are
      agreeing to substitute one legitimate dispute resolution forum (arbitration)
      for
      another (litigation), and thereby are waiving the right to have disputes
      resolved in court

    

    10.
      Restrictive Covenants

    

    A. As
      an
      inducement for Company’s agreement to employ Executive, to provide Executive
      with trade secrets and other Confidential Information, and to enter into this
      Agreement, Executive hereby agrees that during the Term, and for a period of
      twenty-four (24) full calendar months after (i) the expiration of the Term
      (as
      the same may be extended) or (ii) the termination of Executive’s employment with
      the Company for whatever reason or cause (whichever may occur later), or for
      the
      maximum period of time permitted by law, whichever is less, Executive shall
      not,
      whether for profit or not, whether on his own behalf or on behalf of any person
      or firm in any capacity whatsoever, engage in the “Prohibited Activity” (as
      hereinafter defined) within the “Relevant Geographical Area” (as hereinafter
      defined). Serving as a partner, member, trustee, receiver, custodian, manager,
      stockholder, officer, director, owner, joint venturer, associate, employee,
      consultant, adviser or in any other capacity whatsoever with respect to any
      person or firm engaged in the Prohibited Activity within the Relevant
      Geographical Area shall be conclusively deemed engagement in the Prohibited
      Activity within the Relevant Geographical Area regardless of whether such
      service is for profit or whether such person or firm engages in the Prohibited
      Activity for profit . In this Agreement, the phrase “Prohibited Activity” shall
      mean, directly or indirectly: (i) soliciting the Company’s customers; or (ii)
      working independently or for any person or firm involved in any business engaged
      in by the Company and/or by any of its subsidiaries or affiliates during the
      Term, including, without limitation, steel fabrication. For purposes of this
      Agreement, the phrase “Relevant Geographical Area” shall mean the area within
      political boundaries of the State of Texas and any and all other areas in which
      the Company or any of its subsidiaries or affiliates transact business;
      provided, however, if the geographic area defined in this Agreement Paragraph
      10.A. exceeds the maximum geographic area permitted by law or for any other
      reason does not state a geographic area within which the provisions of this
      Paragraph 10 A. are enforceable, then the provisions of this Paragraph 10
      A. shall apply within the maximum geographic area permitted by law in which
      such
      provisions are enforceable.

    

    B. As
      an
      inducement for Company’s agreement to employ Executive, to provide Executive
      with trade secrets and other Confidential Information, and to enter into this
      Agreement, Executive hereby agrees that during the Term, and for a period of
      twenty-four (24) full calendar months after: (i) the expiration of the Term
      (as
      the same may be extended) or (ii) the termination of Executive’s employment with
      the Company for whatever reason or cause (whichever may occur later), or for
      the
      maximum period of time permitted by law, whichever is less, Executive shall
      not
      induce or attempt to influence or persuade any employee of Company or any of
      its
      affiliates to terminate his employment with the Company (or with the applicable
      affiliate).

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    C. In
      addition to all other remedies at law and in equity which the Company might
      have
      for Executive’s breach of the covenants set forth in this Paragraph 10, the
      Parties agree that in the event of any breach or attempted or threatened breach
      of any such covenant, the Company shall also have the right to obtain a
      temporary restraining order, temporary injunction and permanent injunction
      against Executive prohibiting such breach or attempted or threatened breach,
      merely by proving the existence of such breach, or attempted or threatened
      breach (by a preponderance of the evidence) and without the necessity of proving
      either inadequacy of legal remedy or irreparable harm.

    

    D. Executive’s
      covenants set forth in this Paragraph 10 are independent and severable from
      every other provision of this Agreement; and the breach of any other provision
      of this Agreement by the Company or any other agreement between Executive and
      the Company shall not affect the validity of the provisions of this Paragraph
      10
      or constitute a defense of Executive in any suit or action brought by the
      Company to enforce the provisions of this Paragraph 10 or to seek any relief
      from Executive’s breach thereof.

    

    E. Each
      of
      the Parties agree and stipulate that: (i) the agreements and covenants not
      to
      compete contained in this Paragraph 10 are fair and reasonable in light of
      all
      of the facts and circumstances of the relationship between Executive and the
      Company; (ii) the consideration provided by the Company is not illusory; and
      (iii) the consideration given by the Company under this Agreement gives rise
      to
      the Company’s interest in restraining and prohibiting Executive from engaging in
      the Prohibited Activity within the Relevant Geographical Area as provided under
      this Paragraph 10 and the covenants not to engage in the Prohibited Activity
      within the Relevant Geographical Area pursuant to this Paragraph 10 are designed
      to enforce such consideration. The Parties are aware, however, that in certain
      circumstances, courts have refused to enforce certain agreements not to compete.
      Therefore, in furtherance of and not in derogation of the provisions of the
      preceding sentence, the Parties agree that if a court should decline to enforce
      the any of the provisions of this Paragraph 10, such affected provisions shall
      be deemed to be modified to restrict competition with the Company to the maximum
      extent, in both time and geography, which the court shall find enforceable.
      The
      provisions of this Paragraph 10 shall survive any termination or expiration
      of
      this Agreement, and the termination of Executive’s employment with the Company
      (for whatever cause or reason, as modified by Paragraph 7.B of this
      Agreement).

    

    
      
         

      

      
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    11.
      Notice

    

    Any
      and
      all notices permitted or required to be given under the terms of this Agreement
      shall be in writing and may be served by certified mail, with return receipt
      requested and proper postage prepaid, addressed to the Party to be notified
      at
      the appropriate address specified below, or by delivering the same in person
      to
      such Party, or by prepaid telegram addressed to the Party to be notified at
      said
      address, or by Federal Express or another nationally recognized courier service
      addressed to the Party to be notified at said address. Notice given by certified
      mail as aforesaid shall be deemed given and received three (3) days after
      mailing, whether or not actually received. Any notice given in any other above
      authorized manner shall be deemed received upon actual receipt; but shall also
      be deemed received upon attempted delivery if such delivery is not accepted.
      The
      addresses of the parties are as follows:

    

    
      	 	
              If to the Company: 

            	 	
              Shumate Industries, Inc. 

              12060 FM 3083 

              Conroe,
                TX 77301

              Attention:
                Chairman Compensation Committee of the 

              Board
                of Directors

            
	 	 	 	 
	 	If to Executive: 	 	Larry C. Shumate
              15719
                Lakeway Drive

              Willis,
                Texas 77318

            

    

                    

    The
      address of any Party may be changed by notice given in the manner provided
      in
      this Paragraph.

    

    12.
      General Provisions

    

    A. This
      Agreement may not be assigned by Executive. This Agreement may be assigned
      in
      whole or in part by the Company. Executive expressly agrees to honor and accept
      such assignment or other transfer and, upon the consummation thereof, to attorn
      to the Company’s assignee and to perform his duties and obligations hereunder
      for the benefit of the Company’s assignee as if the Company’s assignee were the
      Company named herein. Executive further agrees that, upon the consummation
      of
      such assignment or other transfer, all references herein to the Company shall
      become and shall be deemed to be references to the Company’s assignee and the
      Company shall be relieved of all obligations hereunder.

    

    B. This
      Agreement shall be governed by, construed, and enforced in accordance with
      the
      internal, local laws of the State of Texas (without regard to conflicts of
      law
      rules) and the obligations of the Company and Executive shall be performable
      in
      Harris County, Texas.

    

    C. The
      Company agrees to provide to the Executive all rights of indemnification to
      the
      fullest extent permitted by law and by the Company’s certificate of
      incorporation and bylaws as well as advancement of attorneys’ fees and costs as
      incurred during the pendency of a claim or action. The Company agrees to
      maintain director’ and officers’ insurance for the benefit of the Executive
      providing coverage identical to that of other senior executive officers of
      the
      Company. The indemnification and directors’ and officers’ coverage shall extend
      to actions and services undertaken or performed by the Executive or omissions,
      not only as an employee of the Company, but as an employee, agent, director
      or
      consultant of any other entity for which the Executive renders services at
      the
      request of the Company.

    

    D. This
      Agreement contains the entire agreement between the Parties relative to the
      subject matter hereof and supersedes and replaces all prior communications
      and
      agreements (oral or written) between Executive and the Company. No variation,
      modification, or change of this Agreement shall be binding upon either Party
      hereto unless set forth in a document duly executed by both
      Parties.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    E. This
      Agreement is intended to express the Parties’ mutual intent, and irrespective of
      the Party preparing this document, no rule of construction shall be applied
      against such Party, as both Parties have actively participated in the
      preparation and negotiation of this Agreement.

    

    F. No
      consent or waiver, express or implied, by a Party to or of any breach or default
      by the other Party in the performance by the other Party of its obligations
      under this Agreement shall be deemed or construed to be a consent or waiver
      to
      or of any other breach or default in the performance by such other Party of
      the
      same or any other obligation of such Party under this Agreement (e.g., any
      waiver or consent from the Company with respect to any term or provisions of
      this Agreement or any other aspect of Executive’s conduct or employment shall be
      effective only in the specific instance and for the specific purpose for which
      given and shall not be deemed, regardless of frequency given, to be a further
      or
      continuing waiver or consent and the failure or delay of the Company at any
      time
      or times to require performance of, or to exercise any of its powers, rights,
      or
      remedies with respect to any term or provision of this Agreement or any other
      aspect of Executive’s conduct or employment in no manner [except as otherwise
      expressly provided herein] shall affect the Company’s right at a later time to
      enforce any such term or provision). Failure on either Party’s part to complain
      of any act or failure to act of the other Party or to declare the other Party
      in
      default, irrespective of how long such failure or default continues, shall
      not
      constitute a waiver by such Party of such Party's rights under this
      Agreement.

    

    G. If
      any
      provision of this Agreement or the application thereof to any person or
      circumstance shall be invalid or unenforceable to any extent, the remainder
      of
      this Agreement and the application of such provision to other persons or
      circumstances shall not be affected thereby and shall be enforced to the
      greatest extent permitted by law.

    

    H. This
      Agreement shall inure to the benefit of and be binding upon the undersigned
      Parties and their respective permitted successors and permitted assigns.
      Whenever, in this instrument, a reference to any Party is made, such reference
      shall be deemed to include a reference to such Party’s permitted successors and
      permitted assigns; however, neither this Paragraph 12.H nor any other
      portion of this Agreement shall be interpreted to constitute a consent to any
      assignment or other transfer of this Agreement or any part hereof other than
      pursuant to and in accordance with this Agreement’s other
      provisions.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    I. The
      prevailing Party in any dispute between the Parties to this Agreement, arising
      out of the interpretation, application, or enforcement of any provision of
      this
      Agreement, shall be entitled to recover all of its reasonable attorneys' fees
      and costs, whether suit be filed or not, including, without limitation, costs
      and attorneys' fees related to or arising out of any arbitration or trial or
      appellate proceedings or petition for review before any other
      court.

    

    J. Executive
      agrees to diligently adhere to the Conflict of Interest Guidelines attached
      hereto as Exhibit “A”.

    

    EXECUTED,
      in multiple counterparts,
      each of
      which shall have the force and effect of an original, on the Effective
      Date.

    

    
      	
              “Company”

               

              SHUMATE
                INDUSTRIES, INC.

              a
                Delaware corporation

               

               

              By: 
                /s/
                Matthew C. Flemming

              
                

              

              Matthew
                C. Flemming,

              Chief
                Financial Officer

            	 	
              “Executive”

               

               

               

               

               

              /s/
                Larry C. Shumate  

                

              

              Larry
                C. Shumate

            

    

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

       

    

    EXHIBIT
      “A”

    TO
      EMPLOYMENT AGREEMENT

    

    SHUMATE
      INDUSTRIES, INC.

    Conflict
      of Interest Guidelines

    

    1. It
      is the
      policy of the Company to conduct its affairs in strict compliance with the
      letter and spirit of the law and to adhere to the highest principles of business
      ethics. Accordingly, all officers, employees, and independent contractors must
      avoid activities which are in conflict, or give the appearance of being in
      conflict, with these principles and with the interests of the Company. The
      following are potentially compromising situations which must be avoided. Any
      exceptions must be reported to the Company’s Board of Directors and written
      approval for continuation must be obtained.

    

    A.  Revealing
      confidential information to outsiders or misusing confidential information.
      Unauthorized divulging of information is a violation of this policy whether
      or
      not for personal gain and whether or not harm to the Company is
      intended.

    

    B.  Accepting
      or offering substantial gifts, excessive entertainment, favors, or payments
      which may be deemed to constitute undue influence.

    

    C.  Participating
      in civic or professional organizations that involve divulging the Company’s
      confidential information.

    

    D.  Initiating
      or approving any form of personal or social harassment of employees in violation
      of any laws.

    

    E.  Execution
      of transactions involving insurance products or services or other products
      or
      services not approved by the Company’s Board of Directors or permitted pursuant
      to any existing employment agreement.

    

    F.  Improperly
      using or disclosing to the Company any proprietary information or trade secrets
      of any former employer or other person or entity with whom obligations of
      confidentiality exist.

    

    G.  Unlawfully
      discussing prices, costs, customers, sales, or markets with competing companies
      or their employees.

    

    H.  Violation
      of any applicable law, rule and/or regulation, state and/or
      federal.

    

    I.  Improperly
      using or authorizing the use of any inventions which are the subject of patent
      claims of any other person or entity.

    

    
      
         

      

      
        
          Exhibit
            "A"

          Page 1

        

        
          

        

      

      
         

      

    

     

    J. Engaging,
      directly or indirectly, in any business other than performance of employee’s
      duties under this Agreement except at the direction of or with the prior written
      approval of the Company’s Board of Directors.

    

    2. Each
      officer, employee, and independent contractor must take every necessary action
      to ensure compliance with these guidelines and to bring problem areas to the
      attention of higher management for review. Violations of this conflict of
      interest policy may result in discharge without warning.

    

    
      
         

      

      
        
          Exhibit
            "A"

          Page 2

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