PROMISSORY NOTE

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

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

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

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

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

This Note is executed and delivered in connection with, and subject to the terms and conditions contained in, the Loan Agreement. Advances and payments hereunder may, at the option of the Lender, be recorded on this Note or on the books and records of the Lender and will be prima facie evidence of said advances, payments and the unpaid balance of this Note. All payments will first be applied to the payment of accrued interest and the balance will be ap