SMG Industries (SMGI) 8-K/A Entry into a Material Definitive Agreement

Exhibit 10.13

SECURITY AGREEMENT

(Corporate)

This Security Agreement("Agreement") is made September 19, 2017,byandbetweenCRESTMARK BANK, whose addressis726Highlandia Drive,BatonRouge,Louisiana ("Crestrnark")andSMG INDIUM RESOURCES LTD.,aDelawarecorporation, whose addressis710 North Post OakDrive,Suite 400,Houston,Texas 77024("Guarantor").

BACKGROUND:

BORROWER, M G CLEANERS, LLC,a Texaslimitedliability company ("Borrower")hasobtained from Crestrnark aLineof Credit Loanin the original principalamount of One Million andno/100 Dollars ($1,000,000.00)("Loan") asdetailedin theLoanand Security Agreement dated May 11, 2017 ("Loan Agreement") andanyand all relatednotes,astheymay be amended orrestated,between Borrower and Crestrnark,includingany and all amendments,modifications,or extensions thereof ("LoanDocuments");and

As a condition tocontinuing the Loan toBorrower,Crestrnarkis requiringthat Guarantor execute a Corporate Guaranty ("Guaranty") of the Loan andsecuresuch Guarantybygranting a security interesttoCrestmark inall,or certain, of Guarantor's assets ("Collateral"), asfurther definedin Paragraph 2below.

NOW, THEREFORE,for andinconsiderationhereof, theGuarantor agrees as follows:

1.          GRANT OF SECURITY INTEREST:GuarantorherebygrantstoCrestmark a continuing security interestinthe "Collateral"defined in Paragraph2belowto secw-e (i) the repayment of any Indebtedness (asdefinedin the Loan Agreement) arising underthe Guaranty,asthesame maybeamended,modified,altered, extended orreaffirmed, from timetotime;(ii)therepayment of the Indebtedness, including the Loan and all otherloansand advances(includingall renewals and extensions thereof) to Borrowerorany guarantor; and (iii) all obligations of anyandevery kind and natureheretofore, noworhereafterowing to CrestmarkfromGuarantor,howeverincurred or evidenced (collectively,"Liabilities")plusallinterest, costs,expenses, andreasonableattorneys' fees, which maybemadeor incurred byCrestmark inthe disbursement,administration, and collection of said Liabilities, and intheprotection,maintenance,andliquidationof the Collateral. This Agreement willcontinuein effect aslongas any Liabilities of Guarantor or Borrower to Crestrnark are outstanding and unpaid.

2.          COLLATERAL:The"Collateral" covered by this AgreementisaJJ of Guarantor's personal property, whereverlocated,which Guarantor now owns or shall hereafter acquire or create, immediatelyupon theacquisition orcreationthereof,includingwithoutlimitationall: (a) Accounts (including health-careinsurancereceivables); (b) Chattel Paper (whethertangibleor electronic); (c) Inventory; (d) Goods (other than Inventory),butincluding Equipment; (e) Instruments,includingPromissory Notes; (f) Investment Property and Securities; (g) Documents;(h) DepositAccounts; (i) CommercialTortClaims specifically identifiedbyCrestrnark;(k) Money;(l)Letters of Credit and Letter of Credit Rights; (m) General Intangibles (including paymentintangiblesand software); (n) Supporting Obligations; and(o)totheextentnotlisted above as original collateral, all proceeds and products of the foregoing.

Termsusedand not otherwise definedin thisAgreement shall have the meaning given suchtermsin the Michigan Uniform Commercial Code. Intheevent themeaningofanyterm defined intheMichigan Uniform Codeisamended afterthedate ofthisAgreement,the meaning ofsuch term asused in thisAgreement shallbethat ofthemore encompassing of: (i) the definition contained in the Michigan Uniform Commercial Code priortothe amendment, and (ii) the definition contained in the Michigan Uniform Commercial Code after the amendment.

The partiesagree thatthe foregoing description is meant to cover "all assets"ofGuarantor.

3.          PERFECTION OF SECURITY INTEREST:Guarantor hereby irrevocably authorizes Crestmark to filefinancingstatement(s)describing theCollateral in all public offices deemed necessarybyCrestmark, andtotake any and all actions,including,without limitation,filingallfmancingstatements, continuation financing statements and all other documents that Crestmarkmay reasonablydetermine to be necessarytoperfect and maintain Crestrnark's security interestsinthe Collateral. Guarantor shallhavepossession oftheCollateral,except whereexpresslyotherwise providedin thisAgreement or where Crestmark chooses to perfectitssecurityinterestby possession, whether ornotin additionto the filingof afinancingstatement. Where Collateralisinthepossession of athirdparty, Guarantor willjoinwith Crestrnarkinnotifyingthethird party of Crestrnark's security interest and obtaining an acknowledgement from the third party thatitisholding theCollateral forthe benefitof Crestmark. Guarantor will cooperate with Crestmarkin obtainingcontrol with respecttoCollateral consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights, and Electronic ChattelPaper.Guarantor will not create any Chattel Paper without placing alegendon the Chattel Paper acceptable to Crestmarkindicating tbatCrestmark has a securityinterestin the Chattel Paper.Guarantorshall pay the cost offilingorrecordingall financing statement(s) and otherdocuments.Guarantor agrees topromptlyexecute and deliver to Crestmark allfinancingstatements,continuation financing statements, assignments, certificates of title, applications for vehicle titles, affidavits, reports,notices, schedulesofAccounts,designationsof Inventory,letters of authority and all other documentsthatCrestmark may reasonably requestinform satisfactory to Crestmarktoperfect and maintain Crestrnark's securityinterestsintheCollateral.Inorder to fully consummate all of the transactions contemplated hereunder,Guarantorshallmake appropriateentrieson its books and recordsdisclosingCrestmark's securityinterests in theCollateral.

4.          REPRESENTATIONS AND WARRANTIES:Guarantorrepresentsand warrants that (a)theCollateralisfreeand clear of all liens orsecurity interests,except Crestmark's securityinterestand any Permitted Encumbrance described on Exhibit A attached hereto; (b) all Chattel Paper constituting Collateral evidences a perfectedsecurityinterestinthe goods coveredbyit free from all otherliensand security interests; (c)Crestmarkhas a security interest in the Collateral; (d)ifInventoryisrepresented or covered by documents of title, Guarantoristheowner of the documentsfreeof all liens andsecurityinterests other thanCrestmark'ssecurityinterestand warehousemen's charges, if any, notdelinquent;(e) the Guarantor'sexactlegalname and the address of the Guarantor's chief executive office are as set forth in the first paragraph of thisAgreement;(f)theState under which Guarantor is organized is assetforth in the first paragraph ofthisAgreement; (g) all Collateral consisting of Goods is located in the State where the Guarantor's chief executive officeis locatedexcept as otherwise disclosed in a schedule attachedtothis Agreement; (h) theCollateral, whereverlocated,iscovered by this Agreement; (i) each Account, Chattel Paper and General Intangible constitutingCollateralis genuine and enforceable against the account debtor according toits terms,andit,and the transaction out of whichitarose,comply with all applicable laws and regulations, the amount represented by Guarantor toCrestmarkas owing byeachaccount debtor is the amount actually owing and is not subject to setoff, credit,allowance or adjustment except any discount forpromptpayment, nor bas any account debtor returned the goods or disputed hisliability,there has been no default accordingtothetermsof any suchCollateral,and no step hasbeentakentoforeclose thesecurityinterest it evidences or to otherwise enforce its payment; U) the execution and delivery of this Agreement and any instrumentsevidencing Liabilitieswill not violate nor constituteabreachofGuarantor's Articles of Incorporation, By-Laws, or any agreement orrestrictionof any type whatsoever to which Guarantor is a party orissubject;(k)all financial statements and information relating toGuarantordelivered ortobe deliveredbyGuarantor to Crestmark are true and correct and prepared inaccordancewith generally accepted accounting principles, and there has been no material adverse change in the financial condition ofGuarantor sincethe submission of anysuchfinancialinformationto Crestmark;(1)thereare no actions or proceedings which are threatened or pending against Guarantor which might result in any material adverse change in Guarantor's financial condition or which might materially affect any of Guarantor'sassets;and (m) Guarantor has duly filedall federal,state, and othergovernmentaltax returns which Guarantor is required by law to file, and will continue to filesameduringsuchtime as any of the Liabilitieshereunderremain owingtoCrestrnark,and all suchtaxesrequired tobepaid have been paid,infull.

5.          COVENANTS:Guarantor covenants andagreesthat while any of theLiabilitiesremain unperformedandunpaid it will: (a)preserve its legal existenceand not, in one transaction or aseries ofrelated transactions, merge into orconsolidatewithany other entity, orsellall orsubstantiallyall ofitsassets;(b)not changethestatewhere it is located; (c) neither change its name, form of business entity nor address of its chiefexecutiveoffice without giving written notice toCrestmarkthereof atleastthirty (30) days prior to the effective date ofsuchchange, and Guarantoragreesthatall documents,instruments,and agreements demanded byCrestmarkin response to such changeshallbe prepared, filed, and recorded at Guarantor's expense priortothe effective date ofsuchchange; (d) not use the Collateral, nor permit theCollateralto be used, for any unlawful purpose, whatsoever; (e) maintain theCollateralinfirst-classcondition and repair; and(f)indemnify and hold Crestmark harmless against claims of any persons or entities not a party to this Agreement concerning disputes arisingovertheCollateral.

6.          GUARANTOR REMAINS LIABLE:Anything contained herein to the contrary notwithstanding, (a)Guarantorshall remainliableunderthe contracts and agreements included in the Collateral to performallof its duties andobligationsto the same extentasif thisAgreementhad not been executed,(b)the exercise byCrestmarkof any ofits rightsunder the Loan Agreement, Loan Documents, including the Guaranty, or this AgreementshalJnot releasetheGuarantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c)Crestmark shallhaveno obligation orlia bilityunderthecontractsand agreements included in theCollateral byreason of thisAgreement, norshall Crestrnark be obligated to perform any oftheobligations or duties of Guarantor thereunder or to take any actiontocollect orenforceany claim for payment assigned thereunder.

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7.          INSURANCE,TAXES,ETC.:Guarantor shall(a) pay all taxes, levies, assessments, judgments and charges of any kinduponor relating to the Collateral, to Guarantor's business, and to Guarantor's ownership or use of any of its assets, income or gross receipts; (b) at its own expense, keepandmaintain all of theCollateralfully insured against loss ordamage by fire,theft,explosion andother risks insuch amounts, with such companies,undersuchpoliciesand in such form as shallbesatisfactory to Crestmark,which policiesshall expressly providethat loss thereundershallbe payable toCrestmarkas its interest may appear(and Crestmark shallhavea security interest inthe proceeds ofsuchinsmance and mayapply anysuch proceedswhich maybe receivedbyit toward paymentof Guarantor'sLiabilities,whetheror not due,insuch order ofapplicationas Crestmarkmay determine);(c)maintainatits ownexpense publicliabilityandproperty damageinsuranceinsuchamountswith suchcompanies, undersuchpoliciesandinsuch form as shallbereasonably satisfactory to Crestmark;and,uponCrestmark'srequest,shall furnish Crestmarkwithsuchpolicies and evidence of paymentofpremiumsthereon.IfGuarantor at anytime hereaftershould fail toobtainor maintain any of thepolicies requiredabove or pay apremium inwhole or inpartrelating thereto, or shallfailtopayany such tax,assessment,levy,or charge or todischargeany suchlienorencumbrance, thenCrestmark, without waiving or releasing anyobligation or defaultof Guarantorhereunder,mayat any time hereafter (butshaJJ beunder no obligation to doso)make such paymentor obtain suchdischargeor obtain and maintain suchpoliciesofinsurance and paysuch premiums, and take such actionwith respect thereto asCrestmarkdeemsadvisable. All sums sodisbursed byCrestmark, includingreasonableattorneys'fees, court costs,expenses,and otherchargesrelatingthereto,shall be part of Guarantor'sLiabilities,securedhereby,and payableon demand.

8.          INFORMATION:Guarantorshallpermit Crestmark or its agents to have accesstoandtoinspect and verify the Collateral inthename of CrestmarkorGuarantor. Guarantor willmakesame available at anytime for such ptrrposes.In addition,Guarantor shallpromptlysupply Crestmark withfinancialand such other informationconcerning itsaffairs and assets asCrestmark may request fromtime totime.

9.          CARE, CUSTODY, AND DEALINGS WITH COLLATERAL.Crestmark shallhave no liability toGuarantor withrespect toCrestmark's care and custody of any CollateralinCrestmark'spossessionand shall havenodutytosell, smrender, collector protect thesame orto preserverights againstprior partiesor totakeanyactionwith respect thereto beyond thecustodythereof,exercisingthat reasonable custodial carewhichitwould exercise in holding similarinterests forits own account. Crestmark shall onlybe liableforitsactsof grossnegligence. Crestmarkis herebyauthorized and empoweredto takethefollowingsteps,either prioror subsequentto default hereunder:(a)to dealdirectly withissuers,entities,owners,transferagents andcustodians toeffectchangesin theregisteredname ofanysuch Collateral,toeffect substitutionsandreplacements thereofnecessitated by anyreason(includingbyreasonofrecapitalization,merger,acquisition, debt restructtrring orotherwise), toexecute and deliver receipts therefor andtotakepossession thereof;(b) to communicate anddeal directlywithpayorsof instruments (including securities,promissory notes,lettersof credit,certificatesofdeposits andotherinstruments),which may be payable to or for the benefitofGuarantor at any time, withrespectto thetermsof paymentthereof;(c) intheGuarantor's name,to agreetoanyextensionof payment,any substitutionof Collateral or any other action or event with respect to the Collateral; (d)tonotifypartieswho have an obligationto payor deliver anything of value (including money or securities) with respecttothe Collateraltopay or deliverthesamedirectlyto Crestmark onbehalf ofGuarantor and toreceiveandreceipt forany suchpaymentor deliveryinGuarantor'snameasan additiontotheCollateral; (e) to surrenderrenewablecertificates or anyotherinstrumentsor securities forming aportionoftheCollateral which may permit or require reissuance,renewalor substitution at any time andto immediately take possessionof and receivedirectlyfromthe issuer,makeror other obligor, the substituted instrument orsecurities; (f)toexerciseany rightwhich Guarantormay havewithrespectto anyportion ofthe Collateral, including rightstoseekand receiveinformation with respect thereto; and (g) to door performany otheractandtoenjoy all other benefits withrespecttotheCollateral as Guarantor could initsownname.

10.         DISPOSITION OF COLLATERAL.Crestmark doesnotauthorize,andGuarantoragreesnot to make any sales or leasesof any oftheCollateral,license any of the Collateral, or grant any other securityinterest inany of the Collateral;provided, however,that untilsuch timeas Crestmark shall notify Guarantor of the revocation of such power and authority,Guarantor (a)mayonly in the ordinary comse of itsbusiness,at its ownexpense,sell,lease orfurnishundercontracts of service any ofthe inventory normally heldby Guarantor for such purpose; (b)may useandconsumeany rawmaterials,work in process or materials,the useand consumption of whichisnecessary in ordertocarry on Guarantor'sbusiness;and (c) will atitsown expense, endeavor tocollect,as and whendue,all accountsduewith respectto anyoftheCollateral,including thetaking of such action withrespecttosuchcollection asCrestrnark may reasbnablyrequest or,in theabsence of suchrequest,asGuarantormay deem advisable.A salein theordinary course of businessdoes notinclude atransferinpartial ortotalsatisfaction of adebt.To the extent Guarantorusesany proceeds ofanyofthe LiabilitiestopurchaseCollateral, Guarantor's repayment oftheLiabilities shall apply on a"first-in-first-out"basisso thattheportion oftheLiabilitiesused topurchasea particular itemof Collateral shall bedeemedpaidinthe chronological ordertheGuarantorpurchasedthe Collateral.

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11.        DEFAULT:

A.           The occurrence of any of the following events without notice or demand of any kind, shall constitute a Default under this Agreement; (a) the non-payment, when due, of any amount payable on any of theLiabilitiesor anyextensionor renewal thereof or the failure to perform any agreement of Guarantor contained herein or in the Guaranty; (b)anystatement, representation or warranty ofGuarantorherein or in the Guaranty,or in any other writing furnished byGuarantorto Crestmark, at any time,is untrue in any respect as of the date made; (c) any Obligor (which term, as used herein, shall mean Guarantor or Borrower and each other party primarily or secondarily liable on any of the Liabilities) becomes insolvent or unable to pay debts as they mature or makes an assignment for the benefit of creditors, conveys any assets to a trusteeforthe benefit of Obligor's creditors, conveys substantially all of its assets, or any proceeding is instituted by or against any Obligor allegingthat suchObligor is insolvent or unable to pay debts as they mature or a petition of any kind is filed under the Federal Bankruptcy Act by or against such Obligor; (d) entry of any final judgment, and the expiration of any appeal period related thereto, against any Obligor or order of attachment, execution,sequestrationor other order in the nature of a writ is levied on the Collateral;(e)dissolution,merger, consolidation, or transfer of a substantial part of the property of any Obligor;(t)the occurrenceofa Defaultasset forth inthe Loan Agreement.

B.           Upontbe occurrence of a Default, the notesandall other Liabilities may (notwithstanding any provisions thereof) at theoptionofCrestmarkand withoutdemandor notice of any kind, be declared, and thereuponimmediately shallbecome due and payable, and Crestmark may exercisefrom timeto time any rights and remedies, including the righttoimmediate possession of theCollateral,available to it under the Loan Agreement, Loan Documents and applicablelaw. Guarantor agreestoassemble, atitsexpense,all the CoJlateral at a convenient place acceptableto Crestmark andto pay all costs ofCrestmarkof collection of the notes andallother Liabilities, and to pay all costs of theenforcement ofthis Agreement, including reasonable attorneys' fees and expenses oflocatingthe Collateral and repairing any realty or other property to which any of theCollateralmay be affixed or be a part.

C.           If any notification of intended dispositionofanyoftheCollateralis required by law, such notification, if mailed,shallbe deemedreasonably andproperly given ifsentat least ten(10)days beforesuchdisposition,postage pre-paid, addressed to the Guarantoreitherat the address shown above or at any other address of the Guarantor appearing on the records ofCrestmarkand tosuchother parties as may be required by the Michigan Uniform CommercialCode.Guarantor acknowledges thatCrestmarkmay be unabletoeffectapublic sale of all or any portionof theCollateral because of certain legal and/or practicalrestrictionsand provisions which may be applicable to theCollateraland, therefore,may be compelled to resort tooneor more privatesalesto a restricted group of offereesandpurchasers.Guarantor consents toanysuchprivate salesomade even thoughatplaces and upon terms less favorable than if theCollateralweresold at publicsale. Crestmark shallhave no obligation to clean-uporotherwisepreparetheCollateralforsale.Crestmark may complywith anyapplicablestateorfederallaw requirements in connectionwitha dispositionoftheCollateraland compliance will not be consideredtoadversely affectthe commercial reasonablenessofanysaleof theCollateral. Crestmarkmayspecificallydisclaim any warranties as to the Collateral. ffCrestmark sellsany of theCollateralupon credit,Guarantor willbe credited onlywithpayments actually made by the purchaser,receivedbyCrestmarkand applied to the indebtedness of the purchaser. Tn the event the purchaserfailsto pay for theCollateral,Crestrnark mayresellthe Collateral and theGuarantor shallbe creditedwith theproceeds of sale. Crestmark shall have no obligation to marshal any assets in favor of the Guarantor. Guarantor waives the right to jury trial in any proceeding instituted with respect totheCollateral. Out of the net proceedsfromsale or disposition of theCollateral, Crestrnark shallretain all theLiabilitiesthen owing to it and the actual cost of collection (including reasonable attorney fees) andshall tenderany excessto Guarantoror its successors or assigns. If the Collateralshallbe insufficient to pay the entire Liabilities, Guarantor shall paytoCrestmark the resulting deficiency upon demand. Guarantor expressly waivesanyand all claims of any nature,kind ordescription which it has or may hereafter have againstCr stmarkor its representatives, by reason oftaking, sellingor collecting any portionoftheCollateral. Guarantorconsents to releases oftheCollateral at any time(includingprior to default) and tosalesof the Collateral in groups, parcels or portions,or asan entirety,asCrestmark shalldeem appropriate. Guarantor expressly absolvesCrestmark fromany loss or decline in marketvalue of anyCollateral by reasonofdelay in the enforcement or assertion ornonenforcementof any rights or remedies under this Agreement.Guarantoragrees that Crestmarkshall,upon the occurrence ofan Event of Default,havetheright to peacefully retake any of the collateral. Guarantorwaivesany right it may have in such instance to a judicial hearing prior tosuchretaking.

D.           GUARANTORAGREES THAT CRESTMARKSHALL, INTHE EVENT OF ANY DEFAULT,HAVE THE RIGHTTO PEACEFULLY RETAKEANYOFTHE COLLATERAL, GUARANTOR WAIVES ANYRIGHTIT MAY HAVE,INSUCHINSTANCE,TOA JUDICIAL HEARINGPRIORTOSUCH RETAKING.

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12.         GENERAL:Time shall be deemed of theveryessence of this Agreement.Exceptas otherwise defined in this Agreement, all terms in this Agreementshallhave the meanings provided by theMichigan UniformCommercialCode. Crestmark shallbe deemed to have exercised reasonablecarein the custody and preservation of any Collateral initspossession if ittakessuch action for that purpose as Guarantor requests in writing, but failure of Crestmark to comply with any such request shallnotof itself be deemed a failure to exercise reasonable care,and failure of Crestmarktopreserve or protect anyrightswith respect to such Collateral against any prior parties or to do any act with respect to the preservation of such Collateral not sorequestedby Guarantor shall not be deemed a failure to exercise reasonable care in the custody and preservation of such Collateral. Anydelayon the part of Crestmark in exercising any power,privilege or right hereunder,or under any other instrument executed by Guarantor to Crestmark in connection herewith shall not operate as a waiver thereof,andnosingle or partial exercise thereof,ortheexercise of anyother power, privilege or right shall preclude other or further exercisethereof,or the exercise of any other power, privilege or right. The waiver by Crestmark of any Default by Guarantor shall not constitute a waiver of anysubsequent defaults,but shall berestrictedto the default so waived. If any part of this Agreement shall be contrary to any law which Crestmark might seek to apply or enforce,or should otherwise be defective, the other provisionsofthisAgreement shall not be affected thereby, but shall continue in full force and effect. All rights,remedies and powers of Crestmark hereunder are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all rights,remedies and powers given hereunder or in or by any other instruments or by the Michigan Uniform Commercial Code,or anylawsnow existing or hereafter enacted.

This Agreement has been delivered in Michigan, and shall be construed in accordance with thelawsof the State of Michigan. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law,but if any provision ofthisAgreement shall be prohibitedbyor invalid under applicable law,such provision shallbeineffective totheextent of such prohibition or invalidity, without invalidating the remainder of such provision or theremainingprovisions of this Agreement. The rights and privileges of Crestmark hereunder shallinureto the benefit of itssuccessorsand assigns and this Agreement shall be binding on all heirs,executors,administrators,assigns and successorsof Guarantor.

13.         COUNTERPARTS: This Agreement may be executed in several counterparts,and each executed counterpart shall constituteanoriginal instrument,but such counterparts shall together constitute but one and the same instrument.

14.         ENTIRE AGREEMENT:Guarantor acknowledges that this is the entire agreement between the parties except to the extent that writings signed by the party to be charged are specifically incorporatedhereinby reference either in this Agreement or in such writings, and acknowledgesreceipt ofa true and complete copy of this Agreement.

The Guarantor hereto executes this Agreement on the date and year first above written.

GUARANTOR:
SMG INDIUM RESOURCES LTD.,
a Delaware corporation
By:	/s/ Matthew C. Flemming
	Matthew C. Flemming, CEO and Chairman

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EXHIBITA

Permitted Encumbrances

None

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