Exhibit 10.3

GENERAL SECURITY AGREEMENT

This GENERAL SECURITY AGREEMENT (the “Agreement”) is dated August 14, 2017, by
and between Visualant, Incorporated, a Nevada corporation (“Debtor”), and the
undersigned lender set forth on Schedule A hereto (collectively, the “Secured
Party”) and shall be effective upon the filing of a UCC-3 termination statement
to terminate the security interest held by Capital Source Business Finance Group
in all of the assets of the Debtor (the “Effective Date”).

As of the Effective Date, Debtor hereby agrees in favor of Secured Party as
follows:

1.         In consideration for loans made or to be made to Debtor evidenced by
the Senior Secured Convertible Redeemable Debentures of Debtor in the principal
amounts set forth on Schedule A hereto, together with other promissory notes set
forth on Schedule A, payable to the order of Secured Party (such debentures, as
amended, modified, supplemented, replaced or substituted from time to time,
being herein referred to as the “Debentures”), Debtor hereby grants to Secured
Party a continuing security interest in, lien upon and a right of setoff
against, and Debtor hereby assigns to Secured Party, all of Debtor’s right,
title and interest in and to the Collateral described in Section 2, to secure
the full and prompt payment, performance and observance of all present and
future indebtedness, obligations, liabilities and agreements of any kind of
Debtor to Secured Party arising under or in connection with the Debentures,
which is existing now or hereafter (all of the foregoing being herein referred
to as the “Obligations”).  

2.         The Collateral is described on Schedule B annexed hereto as part
hereof and on any separate schedule(s) identified as Collateral at any time or
from time to time furnished by Debtor to Secured Party (all of which are hereby
deemed part of this Security Agreement) and includes claims of Debtor against
third parties for loss or damage to or destruction of any Collateral.

3.         Debtor hereby warrants, represents, covenants and agrees (as of the
date hereof and so long as any Obligation remains outstanding) that: (a) the
chief executive office and other places of business of Debtor, the books and
records relating to the Collateral (except for such records as are in the
possession or control of Secured Party) and the Collateral are located at
Visualant, Incorporated,  500 Union Street, Suite 810, Seattle, WA 98101, and
Debtor will not change any of the same, or merge or consolidate with any person
or change its name or conduct its business under any trade, assumed or
fictitious name, without prior written notice to and consent of Secured Party
(and in the case of location of Collateral, will from time to time notify
Secured Party of the locations thereof); (b) the Collateral is and will be used
in the business of Debtor and not for personal, family, household or farming
use; (c) the Collateral is now, and at all times will be, owned by Debtor free
and clear of all liens, security interests, claims and encumbrances; (d) Debtor
will not abandon or assign, sell, lease, transfer or otherwise dispose of, other
than in the ordinary course of Debtor’s business, nor will Debtor suffer or
permit any of the same to occur with respect to, any Collateral, without prior
written notice to and consent of a designated representative of the Secured
Party; (e) Debtor will make payment or will provide for

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the payment, when due, of all taxes, assessments or contributions or other
public or private charges which have been or may be levied or assessed against
Debtor, whether with respect to the Collateral, to any wages or salaries paid by
Debtor, or otherwise, will deliver to Secured Party, on demand, certificates or
other evidence satisfactory to Secured Party attesting thereto and shall cause
Debtor’s subsidiaries to take any such action as described under this section
3(e); (f) Debtor will use the Collateral for lawful purposes only, with all
reasonable care and caution and in conformity in all material respects with all
applicable laws, ordinances and regulations; (g) Debtor will, at Debtor’s sole
cost and expense, keep the Collateral in good order, repair, running condition
and in substantially the same condition as on the date hereof, reasonable wear
and tear excepted, and Debtor will not, without the prior written consent of
Secured Party, alter or remove any identifying symbol or number upon any of the
Collateral; (h) Secured Party shall at all times during normal business hours
have free access to and right of inspection of any Collateral and any papers,
instruments and records pertaining thereto (and the right to make extracts from
and to receive from Debtor originals or true copies of such records, papers and
instruments upon request therefor) and Debtor hereby grants to Secured Party a
security interest in all such records, papers and instruments to secure the
payment, performance and observance of the Obligations; (i) the Collateral is
now and shall remain personal or intangible property, and Debtor will not permit
any other types of Collateral to become a fixture without prior written notice
to and consent of Secured Party and without first making all arrangements, and
delivering, or causing to be delivered, to Secured Party all instruments and
documents, including, without limitation, waivers and subordination agreements
by any landlords or mortgagees, requested by and satisfactory to Secured Party
to preserve and protect the primary security interest granted herein against all
persons; (j) Debtor will, at its sole cost and expense, perform all acts and
execute all documents requested by Secured Party from time to time to evidence,
perfect, maintain or enforce Secured Party’ first priority security interest
granted herein or otherwise in furtherance of the provisions of this Security
Agreement; (k) at any time and from time to time, Debtor shall, at its sole cost
and expense, execute and deliver to Secured Party such financing statements
pursuant to the Uniform Commercial Code (“UCC”), applications for certificate of
title and other papers, documents or instruments as may reasonably be requested
by Secured Party in connection with this Security Agreement, and to the extent
permitted by applicable law, Debtor hereby authorizes Secured Party to execute
and file at any time and from time to time one or more financing statements or
copies thereof or of this Security Agreement with respect to the Collateral
signed only by Secured Party, and Debtor agrees to pay any recording tax or
similar tax arising in connection with the filing of any such financing
statement and further agrees to pay any additional recording or similar tax
which is incurred in connection therewith; (l) Debtor assumes all responsibility
and liability arising from the Collateral; (m) in their discretion, Secured
Party may, at any time and from time to time, upon the occurrence and during the
continuance of a Default (as hereinafter defined), subject to the Uniform
Commercial Code as in effect in the State of New York, demand, sue for, collect
or receive any money or property at any time payable or receivable on account of
or in exchange for, or make any compromise or settlement deemed desirable by
Secured Party with respect to, any Collateral, and/or extend the time of
payment, arrange for payment in installments, or otherwise modify the terms of,
or release, any of the Obligations and/or the Collateral, or any obligor, maker,
endorser, acceptor, surety or guarantor of, or any Party to, any of the
Obligations or the Collateral, all without notice

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to or consent by Debtor and without otherwise discharging or affecting the
Obligations, the Collateral or the second priority security interest granted
herein; (n) in their discretion, Secured Party may, at any time and from time to
time, for the account of Debtor, pay any amount or do any act required of Debtor
hereunder and which Debtor fails to do or pay, and any such payment shall be
deemed an advance by Secured Party to Debtor payable on demand together with
interest at the highest rate then payable on any of the Obligations; (o) Debtor
will promptly pay Secured Party for any and all reasonable sums, costs, and
expenses which Secured Party may pay or incur pursuant to the provisions of this
Security Agreement or in perfecting, defending, protecting or enforcing this
Security Agreement or the first priority security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with the
provisions hereof, including but not limited to all reasonable search, filing
and recording fees, taxes, fees and expenses for the service and filing of
papers, premium on bonds and undertakings, fees of marshals, sheriffs,
custodians, auctioneers, court costs, collection charges, travel expenses, and
reasonable attorneys’ fees, all of which together with interest at the highest
rate then payable on any of the Obligations, shall be part of the Obligations
and be payable on demand; (p) upon the occurrence and during the continuance of
a Default, any proceeds of the Collateral received by Debtor shall not be
commingled with other property of Debtor, but shall be segregated, held by
Debtor in trust for Secured Party, and immediately delivered to Secured Party in
the form received, duly endorsed in blank where appropriate to effectuate the
provisions hereof, the same to be held by Secured Party as additional Collateral
hereunder or, at Secured Party’ option, to be applied to payment of the
Obligations, whether or not due and in any order; (q) in their sole discretion,
Secured Party may, at any time and from time to time during normal business
hours, assign, transfer or deliver to any transferee of any Obligations, any
Collateral, whereupon Secured Party shall be fully discharged from all
responsibility and the transferee shall be vested with all powers and rights of
Secured Party hereunder with respect thereto, but Secured Party shall retain all
rights and powers with respect to any Collateral not assigned, transferred or
delivered; and (r) upon reasonable request of Secured Party, at any time and
from time to time, Debtor shall, at its cost and expense, execute and deliver to
Secured Party reports as to the Collateral listing all items thereof, describing
the condition of same and setting forth the value thereof (lower of cost or
market) all in form and substance reasonably satisfactory to Secured Party.

4.         The term Default as used in this Security Agreement shall mean any
Event of Default, as such term is defined in the Debentures.

5.         Upon the occurrence and during the continuance of any Default,
Secured Party may, without notice to (except as herein set forth or as set forth
in the Debentures) or demand upon Debtor, declare any Obligations immediately
due and payable and Secured Party shall have the following rights and remedies
(to the extent permitted by applicable law and the Uniform Commercial Code then
in effect in the State of New York) in addition to all rights and remedies of a
Secured Party under the UCC or of Secured Party under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:

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(a)        Secured Party may, at any time and from time to time, with or without
judicial process or the aid and assistance of others, (i) enter upon any
premises in which any Collateral may be located and, without resistance or
interference by Debtor, take possession of the Collateral, (ii) dispose of any
part or all of the Collateral on any such premises, (iii) require Debtor to
assemble and make available to Secured Party at the expense of Debtor any part
or all of the Collateral at any place and time designated by Secured Party which
is reasonably convenient to both parties, (iv) remove any part or all of the
Collateral from any such premises for the purpose of effecting sale or other
disposition thereof (and if any of the Collateral consists of motor vehicles,
Secured Party may use Debtor’s license plates), and (v) sell, resell, lease,
assign and deliver, grant options for or otherwise dispose of any part or all of
the Collateral in its then condition or following any commercially reasonable
preparation or processing, at public or private sale or proceedings or
otherwise, by one or more contracts, in one or more parcels, at the same or
different times, with or without having the Collateral at the place of sale or
other disposition, for cash and/or credit, and upon any terms, at such place(s)
and time(s) and to such person(s) as Secured Party deems best, all without
demand, notice or advertisement whatsoever except that where an applicable
statute requires reasonable notice of sale or other disposition Debtor hereby
agrees that the sending of ten days’ notice by overnight mail, postage prepaid,
to any address of Debtor set forth in this Security Agreement shall be deemed
reasonable notice thereof.  If any Collateral is sold by Secured Party upon
credit or for future delivery, Secured Party shall not be liable for the failure
of the purchaser to pay for same and in such event Secured Party may resell or
otherwise dispose of such Collateral.  Secured Party may buy any part or all of
the Collateral at any public sale and, if any part or all of the Collateral is
of a type customarily sold in a recognized market or is of the type which is the
subject of widely distributed standard price quotations, Secured Party may buy
such Collateral at private sale and in each case may make payment therefor by
any means, whether by credit against the Obligations or otherwise.  Secured
Party may apply the cash proceeds actually received from any sale or other
disposition to the reasonable expenses of retaking, holding, preparing for sale,
selling, leasing and the like, to reasonable attorneys’ fees and all legal,
travel and other expenses which may be incurred by Secured Party in attempting
to collect the Obligations, proceed against the Collateral or enforce this
Security Agreement or in the prosecution or defense of any action or proceeding
related to the Obligations, the Collateral or this Security Agreement; and then
to the Obligations in such order and as to principal or interest as Secured
Party may desire; and Debtor shall remain liable and will pay Secured Party on
demand any deficiency remaining, together with interest thereon at the highest
rate then payable on the Obligations and the balance of any expenses unpaid,
with any surplus to be paid to Debtor, subject to any duty of Secured Party
imposed by law to the holder of any subordinate security interest in the
Collateral known to Secured Party.

(b)        Secured Party may, at any time and from time to time, as appropriate,
after the occurrence and during the continuance of a Default set off and apply
to the payment of the Obligations, any Collateral in or coming into the
possession of Secured Party or their agents, without notice to Debtor and in
such manner as Secured Party may in their discretion determine.

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8.         Secured Party’s prior recourse to any Collateral shall not constitute
a condition of any demand, suit or proceeding for payment or collection of the
Obligations nor shall any demand, suit or proceeding for payment or collection
of the Obligations constitute a condition of any recourse by Secured Party to
the Collateral.  Any suit or proceeding by Secured Party to recover any of the
Obligations shall not be deemed a waiver of, or bar against, subsequent
proceedings by Secured Party with respect to any other Obligations and/or with
respect to the Collateral.  No act, omission or delay by Secured Party shall
constitute a waiver of their rights and remedies hereunder or otherwise.  No
single or partial waiver by Secured Party of any covenant, warranty,
representation, Default or right or remedy which they may have shall operate as
a waiver of any other covenant, warranty, representation, Default, right or
remedy or of the same covenant, warranty, representation, Default, right or
remedy on a future occasion.  Debtor hereby waives presentment, notice of
dishonor and protest of all instruments included in or evidencing any
Obligations or Collateral, and all other notices and demands whatsoever (except
as expressly provided herein).

9.         Debtor hereby agrees to pay, on demand, all out-of-pocket expenses
reasonably incurred by Secured Party in connection with the enforcement of the
Debentures, and this Security Agreement, including, without limitation, the fees
and disbursements of counsel to Secured Party.

10.       In the event of any litigation with respect to any matter connected
with this Security Agreement, the Obligations, the Collateral or the Debentures,
Debtor hereby waives the right to a trial by jury and all rights of setoff.
 Debtor hereby waives personal service of any process in connection with any
such action or proceeding and agrees that the service thereof may be made by
certified or registered mail directed to Debtor at any address of Debtor set
forth in this Security Agreement.  In the alternative, Secured Party may in
their discretion effect service upon Debtor in any other form or manner
permitted by law.

11.       Upon the payment in full or conversion of the Debentures and
satisfaction of all Obligations in accordance with the Debentures, the security
interest granted hereby in the Collateral shall terminate and all rights to the
Collateral under this Agreement shall revert to Debtor.  Upon any such
termination, the Secured Party shall execute and deliver UCC–3 financing
statement releases or other documents of release reasonably requested by Debtor.

12.       Secured Party may assign their rights and obligation hereunder to any
Affiliate of Secured Party provided that such Affiliate assumes all of the
liabilities or obligations of Secured Party hereunder.  For purposes of this
section, “Affiliate” of any person means any other person or entity which,
directly or indirectly, controls or is controlled by that person, or is under
common control with that person or entity.  “Control” (including, with
correlative meaning, the terms “controlled by” and “under common control with”),
as used with respect to any person or entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.  

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13.       All terms herein shall have the meanings as defined in the UCC, unless
the context otherwise requires.  No provision hereof shall be modified, altered,
waived, released, terminated or limited except by a written instrument expressly
referring to this Security Agreement and to such provision, and executed by the
Party to be charged.  The execution and delivery of this Security Agreement has
been authorized by the Board of Directors of Debtor and by any necessary vote or
consent of shareholders of Debtor.  This Security Agreement and all Obligations
shall be binding upon the successors and assigns of Debtor and shall, together
with the rights and remedies of Secured Party hereunder, inure to the benefit of
Secured Party, their executors, administrators, successors, permitted endorsees
and permitted assigns.  This Security Agreement and the Obligations shall be
governed in all respects by the laws of the State of New York applicable to
contracts executed and to be performed in such state.  If any term of this
Security Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby.  Secured
Party is authorized to annex hereto any schedules referred to herein.  Debtor
acknowledges receipt of a copy of this Security Agreement.

14.       All notices and other communications under this Agreement shall be in
writing and shall be deemed given when delivered personally, by overnight mail
or delivery service or mailed by certified mail, return receipt requested, to
the parties.

IN WITNESS WHEREOF, the undersigned have executed or caused this security
agreement to be executed on the date first above set forth.

COMPANY:

VISUALANT, INCORPORATED

By: /s/ Ronald P. Erickson

Name: Ronald P. Erickson

Title:   Chief Executive Officer and President

Address of Debtor:

Visualant, Incorporated

500 Union Street

Suite 810

Seattle, WA 98101

Secured Party:

/s/ Clayton Struve

Clayton Struve, an individual

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SCHEDULE A

Lender: Clayton Struve

Senior Secured Convertible Redeemable Debenture: $360,000

Promissory Note in the amount of $275,000, dated as of [          ]

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SCHEDULE B

The property covered by this Security Agreement means the collateral in which
the Secured Party is granted a security interest by this Agreement and which
shall include the following personal property of the Debtor, whether presently
owned or existing or hereafter acquired or coming into existence, wherever
situated, and all additions and accessions thereto and all substitutions and
replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in
connection therewith:

(i)            All goods, including, without limitation, (A) all machinery,
equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices
and other equipment of every kind and nature and wherever situated, together
with all documents of title and documents representing the same, all additions
and accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with any Debtor’s businesses and all improvements thereto; and (B)
all inventory;

(ii)           All contract rights and other general intangibles, including,
without limitation, all partnership interests, membership interests, stock or
other securities, rights under any of the Organizational Documents, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”,
licensed from any third party or developed by any Debtor), computer software
development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, Intellectual Property and income tax
refunds;

 

(iii)          All accounts, together with all instruments, all documents of
title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;

(iv)          All documents, letter-of-credit rights, instruments and chattel
paper;

(v)           All commercial tort claims;

(vi)          All deposit accounts and all cash (whether or not deposited in
such deposit accounts);

(vii)         All investment property;

(viii)        All supporting obligations;

  

(ix)          All files, records, books of account, business papers, and
computer programs; and

(x)           the products and proceeds of all of the foregoing Collateral set
forth in clauses (i)-(ix) above.

For

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Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited
by applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in such asset and, to
the extent permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.

For purposes herein, “Intellectual Property” means the collective reference to
all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

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