EXHIBIT 10.3

SECURITY AGREEMENT

This Security Agreement (the “Security Agreement”) dated as of March 9, 2019 by
and between Puradyn Filter Technologies Incorporated, a Delaware corporation
with its principal place of business located at 2017 High Ridge Road, Boynton
Beach, Florida  33426 (the “Company”), and Christian Meissner, an individual
located at ____________________________________________________ (the “Secured
Party”).

BACKGROUND

The Company is issuing the Secured Party a 5% Senior Secured Revolving
Promissory Note in the aggregate principal amount of up to $250,000 (the “Note”)
pursuant to the terms of that certain Revolving Credit Agreement of even date
herewith by and between the Company and the Secured Party (the “Revolving Credit
Agreement”).  In order to induce the Secured Party to enter into the Revolving
Credit Agreement, the Company has agreed to pledge and grant a security interest
in the collateral described herein to the Secured Party on the terms and
conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties hereto
agree as follows:

1.

Definitions.  All capitalized terms used herein which are not defined shall have
the meanings given to them in the Note.

2.

Pledge and Grant of Security Interest. To secure the full and punctual payment
and performance of (a) all indebtedness obligations and liabilities of the
Company to the Secured Party under the Note and (b) all indebtedness,
obligations and liabilities of the Company to Secured Party whether now existing
or hereafter arising, direct or indirect, liquidated or unliquidated, absolute
or contingent, due or not due and whether under, pursuant to or evidenced by the
Note (collectively, the “Indebtedness”), the Company hereby transfers, pledges,
assigns, hypothecates, transfers and grants to the Secured Party a security
interest in the personal property described on Schedule A annexed hereto
(collectively, the “Collateral”).

3.

Representations and Warranties of the Company.  The Company represents and
warrants to the Secured Party (which representations and warranties shall be
deemed to continue to be made until all of the Indebtedness has been paid in
full in cash) that:

(a)

The execution, delivery and performance by the Company of this Security
Agreement and the pledge of the Collateral hereunder do not and will not result
in any violation of any agreement, indenture, instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation
applicable to the Company;

(b)

This Security Agreement constitutes the legal, valid, and binding obligation of
the Company enforceable against the Company in accordance with its terms;

(c)

No consent or approval of any person, corporation, governmental body, regulatory
authority or other entity, is or will be necessary for the execution, delivery
and performance of this Security Agreement or, the exercise by the Secured Party
of any rights with respect to the Collateral or for the pledge and assignment
of, and the grant of a security interest in, the Collateral hereunder;

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(d)

There are no pending or, to the best of the Company’s knowledge, threatened
actions or proceedings before any court, judicial body, administrative agency or
arbitrator which may materially adversely affect the Collateral;

(e)

The Company has the requisite power and authority to enter into this Security
Agreement and to pledge and assign the Collateral to Secured Party in accordance
with the terms of this Security Agreement;

(f)

The Company owns each item of the Collateral set forth on Schedule A and, except
for the pledge and security interest granted to Secured Party hereunder or as
disclosed in the Company’s SEC Reports (as defined under the Revolving Credit
Agreement dated even herewith), the Collateral is free and clear of any other
security interest, pledge, claim, lien, charge, hypothecation, assignment,
offset or encumbrance whatsoever (collectively, “Liens”); and

(g)

The pledge and assignment of the Collateral and the grant of a security interest
under this Security Agreement vests in the Secured Party all rights of the
Company in the Collateral as contemplated by this Security Agreement.

4.

Affirmative Covenants.  Until such time as all of the Indebtedness has been paid
in full in cash, the Company shall:

(a)

Defend the Collateral against the claims and demands of all other parties and
keep the Collateral free from all Liens, except for the Liens granted to Secured
Party under this Security Agreement or in the ordinary course of business;

(b)

In the event the Company comes into possession of any portion of the Collateral
in violation of the terms of this Security Agreement, hold the same in trust for
Secured Party and deliver to Secured Party such Collateral in the form received
no later than ten (10) business days following the Company’s receipt thereof;

(c)

In the event any portion of the Collateral is held by a third party, take all
action that Holder may request so as to maintain the validity, enforceability,
perfection and priority of Secured Party’s security interest in the Collateral;

(d)

Within ten (10) business days of receipt thereof by the Company, deliver to
Secured Party all notices and statements relating to the Collateral received by
the Company or any third party holding the Collateral;

(e)

Notify Secured Party promptly of (a) any adverse event relating to the
Collateral or any adverse change in the value of the Collateral and (b) the
Company’s intention to commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect);

(f)

At the written request of Secured Party at any time and from time to time, at
the Company’s sole expense, promptly take such action and execute and deliver
such control agreements (and cause any financial institution and/or brokerage
Company at which any of the Collateral is maintained to enter into one or more
control agreements in favor of and on terms satisfactory to Secured Party) and
further instruments and documents as Secured Party may reasonably request in
order to more fully perfect, evidence or effectuate the pledge and assignment
hereunder and the security interest granted hereby and to enable Secured Party
to exercise and enforce his rights and remedies hereunder.  Secured Party is
hereby authorized to file one or more financing or continuation statements under
the Uniform

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Commercial Code (as in effect from time to time, the “UCC”) relating to the
Collateral, naming Secured Party as “secured party”;

(g)

Furnish to Secured Party such other information relating to the Collateral as
Secured Party may from time to time reasonably request; and

(h)

Not sell, exchange, assign or otherwise dispose of, or grant any option with
respect to, any Collateral, other than in the ordinary course of business, in
connection with an existing Lien, and/or in connection with the sale of any
inventory.

5.

Events of Default.

The term “Event of Default” wherever used herein shall mean the occurrence of
any one or more of the following events:

(a)

An “Event of Default” under the Note shall have occurred and shall not have been
cured during any applicable cure or grace period;

(b)

The Company’s failure to comply with or perform any of its undertakings or
obligations under this Security Agreement or the Note which failure has not been
cured by the Company within ten (10) days of written notice; or

(c)

Any representation, warranty, statement or covenant made or furnished to Secured
Party by or on behalf of the Company in connection with this Security Agreement,
the Note or the Revolving Credit Agreement proves to have been false in any
material respect when made or furnished or is breached, violated or not complied
with and which failure has not been cured by the Company within ten (10) days of
written notice.

6.

Remedies.

Upon the occurrence of an Event of Default, the Secured Party may:

(a)

Demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose,
realize upon the Collateral (or any part thereof) and/or otherwise deal with the
Collateral in any and all respects as the holder thereof, in each case as
Secured Party may determine in his sole discretion;

(b)

Transfer the Collateral into his names or into the names of his nominee or
nominees;

(c)

Subject to the requirements of applicable law, sell, assign and deliver the
whole or, from time to time any part of the Collateral, with or without demand,
advertisement or notice of the time or place of sale or adjournment thereof or
otherwise (all of which are hereby waived, except such notice as is required by
applicable law and cannot be waived), for such price or prices and on such terms
as Secured Party in his sole discretion may determine.  

In addition to the foregoing, Secured Party shall have all of the rights and
remedies of a secured party under applicable law and the UCC.

7.

Proceeds of Collateral Agreement.  The proceeds of any disposition of the
Collateral under this Security Agreement shall be applied as follows:

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(a)

First, to the payment of all costs, expenses and charges of Secured Party and to
the reimbursement of Secured Party for the prior payment of such costs, expenses
and charges incurred in connection with the care and safekeeping of the
Collateral (including, without limitation, the expenses of any sale or any other
disposition of any of the Collateral), the expenses of any taking, attorneys’
fees and expenses, court costs, any other fees or expenses incurred or
expenditures or advances made by Secured Party in the protection, enforcement or
exercise of its rights, powers or remedies hereunder, with interest on any such
reimbursement at the rate prescribed in the Note from the date of payment;

(b)

Second, to the payment of the Note, in whole or in part, in such order as
Noteholder may elect, whether or not such Note is then due;

(c)

Third, to such persons, firms corporations or other entities as required by
applicable law including, without limitation the UCC; and

(d)

Fourth, to the extent of any surplus to the Company or as a court of competent
jurisdiction may direct.

In the event that the proceeds of any collection, recovery, receipt,
appropriation, realization or sale are insufficient to satisfy the Note, the
Company shall be liable for the deficiency together with interest thereon at the
rate prescribed in the Note plus the costs and fees of any attorneys employed by
Secured Party to collect such deficiency.

8.

No Waiver.  Any and all of Secured Party’s rights with respect to the Liens
granted under this Security Agreement shall continue unimpaired, and the Company
shall be and remain obligated in accordance with the terms hereof,
notwithstanding (a) the bankruptcy, insolvency or reorganization of the Company,
(b) the release or substitution of any item of the Collateral at any time, or of
any rights or interests therein, or (c) any delay, extension of time, renewal,
compromise or other indulgence granted by Holder in reference to the Note.  The
Company hereby waives all notice of any such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consents to be
bound hereby as fully and effectively as if the Company had expressly agreed
thereto in advance.  No delay or extension of time by Secured Party in
exercising any power of sale, option or other right or remedy hereunder, and no
failure by Secured Party to give notice or make demand, shall constitute a
waiver thereof, or limit, impair or prejudice Secured Party’s right to take any
action against the Company or to exercise any other power of sale, option or any
other right or remedy.

9.

Captions.  All captions in this Security Agreement are included herein for
convenience of reference only and shall not constitute part of this Security
Agreement for any other purpose.  

10.

Miscellaneous.

(a)

This Security Agreement constitutes the entire and final agreement among the
parties with respect to the subject matter hereof and may not be changed,
terminated or otherwise varied except by a writing duly executed by the parties
hereto.

(b)

No waiver of any term or condition of this Security Agreement, whether by delay,
omission or otherwise, shall be effective unless in writing and signed by the
party sought to be charged, and then such waiver shall be effective only in the
specific instance and for the purpose for which given.

(c)

In the event that any provision of this Security Agreement or the application
thereof to the Company or any circumstance in any jurisdiction governing this
Security Agreement shall,

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to any extent, be invalid or unenforceable under any applicable statute,
regulation, or rule of law, such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform to
such statute, regulation or rule of law, and the remainder of this Security
Agreement and the application of any such invalid or unenforceable provision to
parties, jurisdictions, or circumstances other than to whom or to which it is
held invalid or unenforceable shall not be affected thereby, nor shall same
affect the validity or enforceability of any other provision of this Security
Agreement.

(d)

This Security Agreement shall be binding upon the Company, and the Company’s
successors and assigns, and shall inure to the benefit of Secured Party and its
successors and assigns.

(e)

Any notice or other communication required or permitted pursuant to this
Security Agreement shall be given in accordance with the notice provisions of
the Note.

(f)

This Security Agreement shall be governed by and construed and enforced in all
respects in accordance with the laws of the State of Florida and jurisdiction
shall be in the state or federal courts in Palm Beach County, Florida.

(g)

EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS SECURITY
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED
OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES
AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

(h)

THE PARTIES HERETO EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF EACH COURT
OF COMPETENT JURISDICTION LOCATED IN THE STATE OF FLORIDA FOR ALL PURPOSES IN
CONNECTION WITH THIS SECURITY AGREEMENT.  ANY JUDICIAL PROCEEDING BY THE PARTIES
AGAINST ANY OTHER PARTY INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN
ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS SECURITY AGREEMENT
SHALL BE BROUGHT IN A STATE OR FEDERAL COURT LOCATED IN PALM BEACH COUNTY,
FLORIDA.  THE PARTIES HERETO WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF
ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.

(i)

This Security Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which when taken together shall
constitute one and the same agreement.  Any signature delivered by a party by
facsimile transmission shall be deemed an original signature hereto.

[signature page to follow]

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IN WITNESS WHEREOF, the parties have duly executed this Security Agreement as of
the day and year first written above.

Puradyn Filter Technologies Incorporated

 

 

 

 

By:

/s/ Edward S. Vittoria

 

Edward S. Vittoria, Chief Executive Officer

SECURED PARTY

/s/ Christian Meissner

Name:  Christian Meissner

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SCHEDULE A

Description of Collateral

The Company hereby grants, pledges, and assigns for the benefit of the Secured
Party, and there is hereby created in favor of the Secured Party, a security
interest in and to all of the Company’s right, title, and interest in, to, and
under all assets and all personal property of the Company and its subsidiaries,
whether now or hereafter existing, or now owned or hereafter acquired, including
but not limited to the following (collectively, “Collateral”):

a.

All accounts, chattel paper, contracts, contract rights, accounts receivable,
tax refunds, note receivable, documents, other choses in action and general
intangibles, including, but not limited to, proceeds of inventory and returned
goods and proceeds from the sale of goods and services, and all rights, liens,
securities, guaranties, remedies and privileges related thereto, including the
right of stoppage in transit and rights and property of any kind forming the
subject matter of any of the foregoing (“Accounts Receivable”);

b.

All savings, demand, certificate of deposit or other accounts in the name of the
Company or in which the Company has any right, title or interest, including but
not limited to all sums now or at any time hereafter on deposit, and any
renewals, extensions or replacements of and all other property which may from
time to time be acquired directly or indirectly using the proceeds of any of the
foregoing;

c.

All inventory and equipment of every type or description wherever located,
including, but not limited to all raw materials, parts, containers, work in
process, finished goods, goods in transit, wares, merchandise furniture,
fixtures, hardware, machinery, tools, parts, supplies, automobiles, trucks,
other intangible property of whatever kind and wherever located associated with
the Company’s business, tools and goods returned for credit, repossessed,
reclaimed or otherwise reacquired by the Company;

d.

All documents of title and other property from time to time received, receivable
or otherwise distributed in respect of, exchange or substitution for or addition
to any of the foregoing including, but not limited to, any documents of title.

e.

All know-how, information, permits, patents, copyrights, goodwill, trademarks,
trade names, licenses and approvals held by the Company, including all other
intangible property of the Company;

f.

All assets of any type or description that may at any time be assigned or
delivered to or come into possession of the Company for any purpose for the
account of the Company or as to which the Company may have any right, title,
interest or power, and property in the possession or custody of or in transit to
anyone for the account of the Company, as well as all proceeds and products
thereof and accessions and annexations thereto; and

g.

All proceeds (including but not limited to insurance proceeds) and products of
and accessions and annexations to any of the foregoing.