Document:

Exhibit 10.09

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE
AGREEMENT, dated as of ___,  _________, 2012, is entered into by and between CAPITAL ART, INC., a Delaware corporation, with
headquarters located at 6150 Washington Blvd, Culver City, CA – 90232 (the "Company"), and _____________________________________
(the "Buyer") located at

 

_____________________________________________________________________.

 

W I T N E S S E T H:

 

WHEREAS, the Company
is conducting a private placement (the “Offering”) of its 10% Convertible Debentures (the “Debentures”)
pursuant to an exemption from securities registration afforded, inter alia, by Rule 504 under Regulation D ("Regulation D")
as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"), and/or Section 4(2) of the Securities Act; and

 

WHEREAS, in consideration
of the foregoing, the Buyer desires to purchase, and hereby agrees to purchase, upon the terms and subject to the conditions of
this Agreement, a Debenture in the principal amount of $_______________ subject to acceptance of this Agreement by the Company;

 

NOW THEREFORE, in consideration
of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

 

1. AUTHORIZATION
AND ISSUANCE OF DEBENTURES.

 

	1.		AUTHORIZATION. The Company has authorized the sale and issuance of up to $1,000,000
(no minimum) of its Debentures, which shall be convertible into shares of the Company’s common stock, $0.0001 par value,
on the terms provided in the form of Debenture attached hereto as Exhibit A and incorporated herein by this reference.

 

a.PAYMENT
FOR DEBENTURE; CERTAIN DEFINITIONS.

 

(i)           
Concurrently with the issuance of the Debenture to the Buyer, and in full consideration for the Debenture, the Buyer agrees
to pay the sum of $____________ in good U.S. funds to be transmitted to the Company’s bank account via wire-transfer on
the date the parties agree to execute the Debenture, in accordance with instructions of the Company. The parties acknowledge that
time is of the essence with respect to such payment and failure by the Buyer to make such payment promptly shall allow the Company
to cancel this Agreement.

 

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(ii)         
As used herein, the term "Securities" collectively refers to the Debenture and the Common Stock issuable upon
conversion of the Debenture.

 

2.
BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

 

Buyer represents and
warrants to, and covenants and agrees with, the Company as follows:

 

a.       This
Agreement is made with the Buyer in reliance upon the Buyer’s representation to the Company, which by the Buyer’s
execution of this Agreement the Buyer hereby confirms, that the Debenture received by the Buyer will be acquired for investment
for the Buyer’s own account, not as a nominee or agent, and not with a view to resale or distribute any part thereof, and
that the Buyer has no present intention of selling, granting any participation in or otherwise distributing the same. By executing
this Agreement, the Buyer further represents that the Buyer does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Debenture
or any portion thereof. The Buyer represents that it has the full power and authority to enter into this Agreement.

 

b.       As
evidenced by a completed Investor Questionnaire in the form attached hereto as Exhibit B, the Buyer and each of its Members is
(i) an "accredited investor" as that term is defined in Rule 501 of the General Rules and Regulations under
the Securities Act by reason of Rule 501(a)(3), (ii) experienced in making investments of the kind described in this
Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an
entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its affiliates
or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the Securities. The Buyer has adequate means of providing
for current needs and personal contingencies and has no need for liquidity in this investment.

 

c.       The Buyer understands that the Securities being purchased are characterized as “restricted securities” under
the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such Securities may not be resold without registration under the Securities
Act of 1933 (the “Act”) except in certain limited circumstances. Without in any way limiting the representations set
forth above, the Buyer further agrees not to make any disposition of all or any portion of the Debentures or the underlying Common
Stock unless:

 

(i)       There
is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance
with such registration statement;

 

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(ii)       The
Buyer shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and if requested by the Company, the Buyer shall have furnished the Company
with either (i) an unqualified written opinion of counsel who shall be reasonably satisfactory to the Company addressed to the
Company and reasonably satisfactory in form and substance to the Company’s counsel to the effect that the proposed transfer
may be effected without registration under the Act or (ii) a “No Action” letter from the U.S. Securities and Exchange
Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the
staff of the U.S. Securities and Exchange Commission that action be taken with respect thereto, whereupon the holder of such Securities
shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by the holder to the Company;
or

 

(iii)     The
Buyer shall not have sold, assigned, transferred, pledged or otherwise disposed of the Debentures or underlying Common Stock in
a transaction involving the distribution without consideration of the Securities by the Buyer to any of its members or retired
members, or to the estate of any of its members or retired members, or in a transaction involving the transfer or distribution
of the securities by a corporation to any subsidiary, parent or affiliated corporation of such corporation unless, in each case,
the Buyer shall give written notice to the Company of such Buyer’s intention to effect such transfer, sale, assignment,
pledge or other disposition. The Buyer will cause any such proposed purchaser, assignee, transferee or pledgee of any Debentures
or Common Stock held by the Buyer to agree to take and hold such securities subject to the provisions and upon the conditions
specified in this Agreement.

 

d.       The
Buyer understands that the Debenture is being offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer
set forth herein and in the Investor Questionnaire in order to determine the availability of such exemptions and the eligibility
of the Buyer to acquire the Debenture.

 

e.       The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Debenture, which have been requested by the Buyer.
The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received complete
and satisfactory answers to any such inquiries.

 

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f.       The
Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer has carefully reviewed and understands
the risks of, and other considerations relating to, a purchase of the Debentures and understands that there are substantial risks
in an investment in the Company. The Buyer also understands that certain principals of the Company are involved in business activities
with the Company for which they will receive payment or other compensation, and that certain principals are also principals or
affiliates of other entities which have or will have business dealings with the Company and which therefore may involve conflicts
of interest. At no time has the percentage of profit and/or amount of or type of consideration, profit or loss to be realized,
if any, as a result of Company’s business ever been represented, guaranteed or warranted to the Buyer by the Company, its
agents or any other person, expressly or by implication. The Buyer is not purchasing the Securities as a result of any advertisement
or general solicitation.

 

g.      
The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed
on or made any recommendation or endorsement of the Securities.

 

h.       This
Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and is a valid and binding agreement
of the Buyer enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally

 

i.       Notwithstanding
the provisions hereof or of the Debenture, in no event (except with respect to an automatic conversion of the Debenture as provided
therein) shall Buyer be entitled to convert any Debenture to the extent that, after such conversion, the sum of (1) the number
of shares of Common Stock beneficially owned by Buyer and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the Debenture), and (2) the number of shares of Common
Stock issuable upon the conversion of the Debenture with respect to which the determination of this proviso is being made, would
result in beneficial ownership by Buyer and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). Any issuance by the Company to the Buyer in excess
of the limit contained in this Paragraph 2.i. shall be null and void, ab initio, and upon notice of such invalid issuance,
the Company shall correct its books and cause its transfer agent's books to be corrected forthwith to reflect that the Buyer's
ownership of Common Stock is within the limit set forth herein. Buyer shall immediately deliver any certificates for invalidly
issued Common Stock to the Company. The Company further agrees to (i) immediately reissue certificates for Common Stock to
the extent that a portion of the Common Stock represented by said certificates have been validly issued and (ii) immediately
reissue all or a portion of those shares which were deemed invalidly issued (at a price set forth in the original conversion notices
applicable to such shares) upon notice from the Buyer that the reissuance of such shares would not cause such Buyer to have a
beneficial ownership interest in excess of 4.99%.

 

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j.       It
is understood that the certificates evidencing the Securities will bear the following legend:

 

“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
OF SUCH ACT.”

 

k.       Buyer
represents that it neither is nor will be obligated for any finders' fee or commission nor is it aware of any such fee or commission
payable in connection with this transaction. Buyer agrees to indemnify and to hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which such Buyer or any of its officers, partners, employees, or representatives is responsible.

 

l.       Buyer understands that the number of Shares issuable upon conversion of the Debentures may increase substantially
in certain circumstances. In addition, Buyer understands that the Company may, in the future, issue additional shares of its Common
Stock and that, upon such issuance, Buyer’s position in the Company’s outstanding Common Stock may be reduced.

 

m.       Buyer
understands that the tax consequences of ownership of Debentures are not susceptible to prediction, and audit adjustments to Company’s
income tax returns, new rulings of the Internal Revenue Service, court decisions or legislative changes may have an adverse effect
on one or more of the tax consequences of an investment in the Company, including its status as a corporation for federal income
tax purposes, and Buyer thereby might experience serious adverse tax effects. BUYER ACKNOWLEDGES THAT BUYER HAS BEEN ADVISED TO
CONSULT BUYER’S OWN ATTORNEY CONCERNING THE COMPANY, THE DEBENTURES AND THIS AGREEMENT, AND ALL THE OTHER RELATED DOCUMENTATION,
AND TO CONSULT WITH INDEPENDENT TAX COUNSEL REGARDING THE TAX CONSEQUENCES OF PARTICIPATING IN THE COMPANY AS A HOLDER OF THE
DEBENTURES.

 

n.       The
Buyer recognizes that the transfer of the Debenture to Buyer will be based on the representations and warranties set forth herein.
Buyer hereby acknowledges that Buyer understands the meaning and legal consequences of the representations, warranties and covenants
in this Agreement and that the Company and its officers, directors, controlling persons, agents, investors and attorneys have
relied upon such representations, warranties and covenants, and the Buyer hereby agrees to indemnify and hold harmless the Company
and all of its shareholders, all affiliates of the Company and the management of the Company, their affiliates, and each partner,
investor, agent, attorney, investor, officer, and/or director thereof from and against any and all loss, expense, damage or liability,
including costs and reasonable attorneys’ fees due to or arising out of (a) the Buyer’s breach of any such representations,
warranties or covenants; (b) the Buyer’s transfer or distribution of any Debenture in violation of the Securities Act, or
any applicable state securities or Blue Sky laws; and/or (c) any and all claims made by or involving any person or entity other
than the Buyer, claiming any interest, right, title, power or authority regarding the Buyer’s purchase of the Debentures.
Notwithstanding the foregoing, however, no representation, warranty, acknowledgment or agreement made herein by the Buyer shall
in any manner be deemed to constitute a waiver of any rights granted to such Buyer under applicable federal or state securities
laws. All representations, warranties and covenants contained in this Agreement and the indemnification contained in this paragraph,
shall survive the effective date of this Agreement and the issuance of the Debenture by the Company.

 

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3. COMPANY
REPRESENTATIONS, ETC.

 

The Company represents
and warrants and hereby covenants and agrees with Buyer that:

 

a.       CONCERNING
THE DEBENTURE AND THE SHARES. The Debentures have been duly authorized and, when issued, will be duly and validly issued, fully
paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such holder. There are
no preemptive rights of any stockholder of the Company, as such, to acquire the Securities.

 

b.       COMPANY STATUS. The Company is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power to own its properties and to carry on its business as now being
conducted.

 

c.       AUTHORIZED
SHARES. The Company has of December 31st, 2012, 450,000,000 authorized shares of Common Stock, 17,583,421 of which are outstanding
as of the date hereof. There also 50,000,000 authorized shares of Preferred Stock, none of which are outstanding.

 

d.       AUTHORIZATION.
This Agreement, the Debenture and the transactions contemplated hereby and thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and this Agreement and the Debenture, when executed
and delivered by or on behalf of the Company, will be, valid and binding agreements of the Company enforceable in accordance with
their respective terms, subject, as to enforceability, to general principles of equity and to bankruptcy, insolvency, moratorium,
and other similar laws affecting the enforcement of creditors' rights generally.

 

e.       APPROVALS.
No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained by the Company for the issuance and sale of the
Securities to the Buyer as contemplated by this Agreement.

 

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f.       ABSENCE
OF CERTAIN CHANGES. Except as set forth in the Company Disclosure Schedule attached hereto, there has been no material adverse
change and no material adverse development in the business, properties, operations, condition (financial or otherwise), or results
of operations of the Company and its subsidiaries, taken as a whole. The Company has not (i) incurred or become subject to
any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with
past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices;
(iii) declared or made any payment or distribution of cash or other property to stockholders with respect to its capital
stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold,
assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business
consistent with past practices; (v) suffered any substantial losses or waived any rights of material value, whether or not
in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any changes
in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced
any material problems with labor or management in connection with the terms and conditions of their employment.

 

g.       ABSENCE
OF LITIGATION. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company, threatened against or affecting the Company, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the properties, business or financial condition, results of operation or prospects of
the Company and its subsidiaries taken as a whole or the transactions contemplated by this Agreement or the Debenture or which
would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations
under, any of the Transaction Agreements.

 

h.       ABSENCE OF EVENTS OF DEFAULT. There is no Event of Default (or its equivalent term), and no event which, with the
giving of notice or the passage of time or both, would become an Event of Default (or its equivalent term, as so defined in such
agreement), has occurred and is continuing, which would have a material adverse effect on the Company's financial condition or
results of operations.

 

i.       NO
DEFAULT. The Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which
it or its property is bound.

 

j.       USE OF PROCEEDS. The proceeds from the sale of the Debentures will be used by the Company to purchase the Frank Worth
Archive and/or other iconic photography assets and for general capital purposes.

 

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k.       BROKERS FEE. The Company represents that it neither is nor will be obligated for any finders' fee or commission nor
is it aware of any such fee or commission payable in connection with this transaction The Company agrees to indemnify and to hold
harmless the Buyer from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses
of defending against such liability or asserted liability) for which the Company or any of its officers, partners, employees, or
representatives is responsible.

 

l.       FILINGS.
The Company agrees to make all necessary filings in connection with the sale of the Debentures under any federal and state securities
laws and regulations.

 

4. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.

 

The Buyer understands
that unless one or more of such conditions is waived by the Company, the Company's obligation to sell the Debenture on the Closing
Date to the Buyer, pursuant to this Agreement, is conditioned upon:

 

a.       The
receipt and acceptance by the Buyer of this Agreement as evidenced by execution of this Agreement by the Buyer for ________________________
Dollars ($___________) in aggregate principal amount of the Debenture;

 

b.       Completion and delivery to the Company by the Buyer of an Investment Questionnaire in the form attached hereto as Exhibit
B;

 

c.       Delivery
by the Buyer to the Company of good funds as payment in full of an amount equal to the Purchase Price for the Debenture.

 

d.       The accuracy on the Closing Date of the representations and warranties of the Buyer contained in this Agreement as
if made on the Closing Date, and the performance by the Buyer on or before the Closing Date of all covenants and agreements of
the Buyer required to be performed on or before the Closing Date;

 

e.       The
Company shall have obtained all necessary Blue Sky law permits and qualifications, or secured an exemption therefrom, required
by any state for the offer and sale of the Debentures except as such permits, qualifications or filings for exemption may be made
following the Closing; and

 

f.       There
shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

 

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5. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

 

The Company understands
that unless one or more of such conditions is waived by the Buyer, the Buyer's obligation to purchase the Debenture on the Closing
Date is conditioned upon:

 

a.       Acceptance by the Company of this Agreement for the sale of the Debenture, as indicated by execution of this Agreement;

 

b.       Delivery by the Company to the Buyer of the Debenture, in accordance with this Agreement; and

 

c.
      The accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained in
this Agreement as if made on the Closing Date and the performance of or compliance with all covenants and agreements of the
Company required to be performed or complied with on or before the Closing Date.

 

6. GOVERNING LAW; MISCELLANEOUS.

 

a.       This
Agreement and all agreements entered into in connection herewith shall be governed by and interpreted in accordance with the laws
of the State of California for contracts to be wholly performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Any litigation based thereon, or arising out of, under, or in connection with, this agreement
or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Company or Buyer shall be
brought and maintained exclusively in the state or Federal courts of the State of California, sitting in the City of Los Angeles.
The Company hereby expressly and irrevocably submits to the jurisdiction of the state and federal Courts of the State of California
for the purpose of any such litigation as set forth above and irrevocably agrees to be bound by any final judgment rendered thereby
in connection with such litigation. The Company further irrevocably consents to the service of process by registered mail, postage
prepaid, or by personal service within or without the State of California. The Company hereby expressly and irrevocably waives,
to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any such litigation has been brought in any inconvenient
forum. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect
to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under this Agreement
and the related agreements entered into in connection herewith.

 

b.       A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.

 

c.       This
Agreement may be signed in one or more counterparts, each of which shall be deemed an original.

 

d.       The
headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

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e.       If
any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

 

f.       This
Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.

 

g.       This
Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

 

7. NOTICES.

 

Any notice or communication
required or permitted by this Agreement shall be given in writing addressed as follows:

 

	COMPANY:	
        CAPITAL ART, INC.

        6150 Washington BLVD

        Culver City, CA 90232

        ATTN: Klaus Moeller

        Telephone No.: (310) 202-7166

        Fax No.: (310) 202-7156

         

	BUYER:	
        _____________________________

         

 

 

 

_____________________________

 

_____________________________

 

ATTN: _______________________

 

Telephone No.: _______________________

 

Telephone No.: _______________________

 

All notices shall be served personally by
Fax, by overnight express mail service or other overnight courier, or by first class registered or certified mail, postage prepaid,
return receipt requested. If served personally, or by telecopy, notice shall be deemed delivered upon receipt (provided that if
served by telecopy, sender has written confirmation of delivery); if served by overnight express mail or overnight courier, notice
shall be deemed delivered forty-eight (48) hours after deposit; and if served by first class mail, notice shall be deemed delivered
seventy-two (72) hours after mailing. Any party may give written notification to the other parties of any change of address for
the sending of notices, pursuant to any method provided for herein.

 

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8.       SURVIVAL OF REPRESENTATIONS
AND WARRANTIES.

 

The Company's and the Buyer's
representations and warranties herein shall survive, for a period of two (2) years the execution and delivery of this Agreement
and the delivery of the Debenture and the Purchase Price, and shall inure to the benefit of the parties and their respective successors
and assigns.

 

PURCHASE PRICE OF THE DEBENTURE:
$_____________

 

SIGNATURES

 

IN WITNESS WHEREOF, the undersigned
represents that the foregoing statements are true and correct and that it has caused this Securities Purchase Agreement to be duly
executed on its behalf as of this ___,  __________, 2012.

 

 

________________________

 

 

 

 

By: _______________________

 

Name: _____________________

 

Title: ______________________

 

Date: ______________________

 

 

 

As of the date set forth below, the undersigned
hereby accepts this Agreement and represents that the foregoing statements are true and correct and that it has caused this Securities
Purchase Agreement to be duly executed on its behalf.

 

 

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Capital Art, Inc., a Delaware corporation

 

 

 

By: _______________________________

 

Name: ____________________________

 

Title: ______________________________

 

Date: _______________________________

 

 

 

    	Page 12 of 12Exhibit 10.10 

 

DEBENTURE

 

THIS DEBENTURE HAS BEEN ACQUIRED FOR INVESTMENT AND NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF (“SECURITIES”) HAVE BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES MAY NOT BE OFFERED, RESOLD,
PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THIS DEBENTURE IS SUBJECT
TO THE TERMS AND CONDITIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN CAPITAL ART, INC. AND THE HOLDER HEREOF AND DATED AS OF
EVEN DATE HEREWITH.

 

US $_________

 

CAPITAL ART, INC.

 

10% CONVERTIBLE DEBENTURE DUE DECEMBER 31st,
2015

 

FOR VALUE RECEIVED, between
CAPITAL ART, INC., a Delaware corporation (the "Company") promises to pay to _______________________, the registered
holder hereof (the "Holder"), the principal sum of _________________ Dollars (US $_________) on December 31st,
2015 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time in arrears (i) prior
to the Maturity Date, quarterly, on the last day of March, June, September and December of each year, (ii) upon
conversion as provided herein or (iii) on the Maturity Date, at the rate of ten percent (10%) per annum accruing from ____,
 __________, 2012, the date of the issuance of this Debenture (the “Issuance Date”). Accrual of interest shall
commence on the first such business day to occur after the Issuance Date and shall continue to accrue on basis of a 365-day year
for actual days elapsed until payment in full of the principal sum has been made or duly provided for, or the full amount of the
principal has been converted and there is no remaining principal balance to be paid. The Holder understands and acknowledges that
this Debenture is one in a series of up to $1,000,000 (no minimum) of Debentures being sold by the Company on the terms set forth
herein.

This Debenture is subject to the following additional
provisions:

 

1.The Debenture is exchangeable
for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration or transfer or exchange.

 

2.The Company shall be
entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder
shall execute and deliver all required documentation in connection therewith.

 

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3.This Debenture has
been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities
laws. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in
the name of such other person, that it receive reasonable transfer documentation, including but not limited to legal opinions,
that the issuance of the Debenture in such other name does not and will not cause a violation of the Act or any applicable state
or foreign securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may
treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.

 

4.     A.Optional Conversion.
At any time from the Issuance Date through the Maturity Date, the Holder may opt to convert all or any portion of the principal
balance of the Debenture into shares of Common Stock of the Company, $0.0001 par value per share ("Common Stock") by
submitting the original Debenture for cancellation on the books and records of the Company together with a Notice of Conversion
in the form annexed hereto as Exhibit A (the “Notice of Conversion”) setting forth the amount of principal being converted.
Upon submission of the original Debenture and demand for conversion by the Holder, the Company shall issue shares of its Common
Stock to Holder at a rate of $0.80 per share (the "Conversion Rate").

 

B.Automatic Conversion/Early
Repayment. On the condition that the Company is not then in default hereunder, any portion of the principal balance of the
Debentures not previously converted as of the Maturity Date shall be deemed to be automatically converted on the Maturity Date,
and, upon delivery of certificates representing Common Stock issued upon such conversion to the Holder, the Debenture shall terminate
and, with the exception of accrued but unpaid interest, the Company shall have no further obligation to repay the Debenture. Upon
receipt of certificates representing the Common Stock issued to the Holder upon such automatic conversion, the Holder shall deliver
the terminated Debenture to the Company for cancellation; provided, however, that failure of the Holder to deliver the original
Debenture to the Company shall have no effect on the termination of the Debenture. The company at its sole option can force conversion
if the shares trade at or above $3.00 on any trading day. The company at its sole discretion can also opt to repay the debenture
at which time the principle amount, a 10% prepayment penalty and all accrued interest is due to the Debenture holder.

 

C.The Company shall,
at its expense, take all actions and use all means necessary and diligent to transmit the certificates representing the Common
Stock issuable upon conversion of the Debenture to the Holder via express courier, by electronic transfer or otherwise, within
three (3) business days after receipt by the Company of the original Debenture and the Notice of Conversion, or the Maturity Date
in the case of automatic conversion. In the event of a partial conversion of this Debenture under subsection A above, the Company
shall also deliver a new Debenture to the Holder in an amount equal to the principal balance less the amount converted under the
Notice of Conversion. The maturity date of any such Debenture reissued shall be the same as the Maturity Date. In no event will
fractional shares be issued on any conversion. In lieu of any fraction of a share, the Company shall deliver its check for the
dollar amount of the less than full share remainder.

 

    	2

    	 

    

 

5.If the Company merges
or consolidates with another corporation or sells or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee
agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and
amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number
of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale
or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any proposed merger,
consolidation or sale or transfer of all or substantially all of the assets of the Company (a "Sale"), the Holder hereof
shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice
of such Sale from the Company. In the event the Holder hereof shall elect not to convert, the Company may but is not required to
prepay all outstanding principal and accrued interest on this Debenture by paying the Redemption Amount contemplated by Section 5
hereof, less all amounts required by law to be deducted, upon which tender of payment following such notice, the right of conversion
shall terminate. If the Company determines not to prepay all outstanding principal and accrued interest on this Debenture, lawful
and adequate provision shall be made whereby the Holder of this Debenture shall thereafter have the right to purchase, upon the
basis and on the terms and conditions specified in this Debenture, in lieu of the shares of common stock of the Company theretofore
purchasable upon conversion of this Debenture, an equal number of shares of stock of the surviving corporation in such consolidation
or merger, at the same price per share, regardless of the market value of such shares, and upon the same terms as would apply upon
the conversion of this Debenture had such consolidation or merger not taken place. Notwithstanding anything which may be or appear
to be to the contrary herein, Holder shall have no right to approve or disapprove any merger or proposed merger of Company.

 

6.The Company covenants
that it will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issue upon
conversion of the Debentures, such number of shares of Common Stock as shall then be issuable upon the conversion of all of the
outstanding Debentures. The Company covenants that all shares of Common Stock which shall be so issuable shall be duly and validly
issued and fully paid and nonassessable.

 

    	3

    	 

    

 

7.The Company may deem
and treat any person in whose name this Debenture is registered on its records as the absolute owner of this Debenture for the
purpose of making payments and giving notices hereunder, and for all other purposes. The Company shall not be affected by any notice
to the contrary. A Holder of this Debenture, or such person’s address of record, may be changed only upon prior written notice
to the Company and a showing of compliance with Section 11 below. The Company shall reflect any such change no later than ten (10)
business days after its receipt of such written notice and showing of compliance with Section 11, whichever is the last to occur.

 

8.This Debenture constitutes
an unsecured, general obligation of the Company. The payment of any amounts owing on this Debenture shall be pari passu
in right of payment to the payment in full of all other unsecured debt of the Company, whether outstanding on the Issuance Date
or thereafter created, incurred or guaranteed.

 

9.All payments contemplated
hereby to be made "in cash" shall be made in immediately available good funds in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of public and private debts. All payments of cash and each
delivery of shares of Common Stock issuable to the Holder as contemplated hereby shall be made to the Holder at the address last
appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time; except that the Holder
may designate, by notice to the Company, a different delivery address for any one or more specific payments or deliveries.

 

10.The Holder may transfer
this Debenture, or any interest therein, only in the event that either (i) all the Debentures are registered under the Securities
Act of 1933, or (ii) there exists an exemption from registration under federal or applicable state securities laws for such transaction.
In the event Holder asserts such an exemption, the Company may request an opinion of legal counsel at the expense of Holder. This
Debenture may be transferred only on the records of the Company upon written request to transfer in the form specified by the Company,
delivered to the Company at its principal business offices, together with this facsimile of the Debenture. Transfer of the Debenture
or any interest therein may be denied by the Company if, in its sole discretion, it determines the foregoing restrictions on transfer
have not been satisfied.

 

11.Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction, or mutilation of any Debenture, and of indemnity satisfactory
to it, and upon reimbursement to the Company of all expenses incidental thereto, and upon surrender and cancellation of any such
Debenture if mutilated, the Company will make and deliver a new Debenture of like tenor in lieu of any such Debenture so lost,
stolen, destroyed, or mutilated. Any new Debenture made and delivered in accordance with the provisions of this Section 12 shall
be dated as of the date from which unpaid interest has then accrued on the Debenture so lost, stolen, destroyed, or mutilated.

 

    	4

    	 

    

 

12.This Debenture may
be amended or supplemented only by a writing signed by the Company and the Holder.

 

13.This Debenture and
all agreements entered into in connection herewith shall be governed by and interpreted in accordance with the laws of the State
of California for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding
the conflict of laws. Any litigation based thereon, or arising out of, under, or in connection with, this agreement or any course
of conduct, course of dealing, statements (whether oral or written) or actions of the Company or Holder shall be brought and maintained
exclusively in the state or Federal courts of the State of California, sitting in the City of Los Angeles. The Company hereby expressly
and irrevocably submits to the jurisdiction of the state and federal Courts of the State of California for the purpose of any such
litigation as set forth above and irrevocably agrees to be bound by any final judgment rendered thereby in connection with such
litigation. The Company further irrevocably consents to the service of process by registered mail, postage prepaid, or by personal
service within or without the State of California. The Company hereby expressly and irrevocably waives, to the fullest extent permitted
by law, any objection which it may have or hereafter may have to the laying of venue of any such litigation brought in any such
court referred to above and any claim that any such litigation has been brought in any inconvenient forum. To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect to itself or its property, the
Company hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the related agreements entered
into in connection herewith.

14.In case any provision
of this Debenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

 

15.The terms and conditions
hereof shall be binding upon the Holder, its heirs, assigns and successors in interest to the same extent and in the same manner
as the terms and conditions are binding on all Holders.

 

16.Should a dispute arise
from this Debenture, the parties agree that the prevailing party or parties shall be entitled to recover from the non-prevailing
party or parties their costs, including reasonable attorneys’ fees and expert witness fees.

 

17.The following shall
constitute an "Event of Default":

 

a.       The Company shall default in the payment
of principal or interest on this Debenture and same shall continue uncured for a period of thirty (30) business days after
its receipt of written notice thereof; or

 

b.       The Company fails to issue shares of
Common Stock to the Holder upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this
Debenture, fails to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture
and when required by this Debenture, and such transfer is otherwise lawful, and any such failure shall continue uncured for five
(5) business days; or

 

    	5

    	 

    

 

c.       The Company shall fail to
perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of this Debenture
and such failure shall continue uncured for a period of twenty (20) days after written notice from the Holder of such failure;
or

 

d.       The Company shall (1) admit
in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver
for its or for a substantial part of its property or business; or

 

e.       A trustee, liquidator or receiver
shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged
within sixty (60) days after such appointment; or

 

f.       Any governmental agency or
any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or
any substantial portion of the properties or assets of the Company and custody or control is not reacquired by the Company within
sixty (60) days thereafter; or

 

g.       Any money judgment, writ or
warrant of attachment, or similar process in excess of Two Hundred Thousand ($200,000) Dollars in the aggregate shall be entered
or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed
for a period of sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder;
or

 

h.       Bankruptcy, reorganization,
insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60)
days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings
or admit the material allegations of, or default in answering a petition filed in any such proceeding; or

 

    	6

    	 

    

 

Then, or at any time thereafter,
and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall
not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder
may, at its option, consider this Debenture immediately due and payable in cash (and not by conversion into Common Stock), without
presentment, demand, protest or notice of any kinds, all of which are hereby expressly waived, anything herein or in any note
or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's
rights and remedies provided herein, or any other rights or remedies afforded by law.

 

18.Nothing contained
in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive
notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.

 

19.Time is of the essence
as to the performance of each and every obligation of the Company and Holder pursuant to this Debenture.

 

20.       A.On the conditions
that the Company (i) is not in default under this Debenture (and no event has occurred that would ripen into a default with
the passage of time), and (ii) has previously honored all prior Redemption Notices, the Company may, at its option, repay,
in whole or in part, the then outstanding principal balance of this Debenture on the Redemption Date (defined below) set by the
Redemption Notice (after deducting the principal subject to outstanding Conversion Notices) at the Redemption Price (as defined
below). This Debenture is redeemable, in whole or in part, by the Company by providing written notice (the "REDEMPTION NOTICE")
to the Holder via facsimile at its address set forth herein or on the Company’s Debenture Register between the hours of 6:30
a.m. and 3:00 p.m. Pacific Time (the "REDEMPTION NOTICE DATE"). Within ten (10) business days after the Redemption
Notice Date, the Company shall make payment of the Redemption Price (as defined below) in immediately available funds to the Holder
(such date of payment referred to as the "REDEMPTION DATE”).

 

B.In the event the
Company serves a Redemption Notice, the Redemption Price shall be equal to 110% of the outstanding principal balance of the Debenture.
The debenture owner will have the right at such time to convert the outstanding amount into common shares of the Company at $0.80
per share provided that the Notice of Conversion must be received within five (5) business days following the Redemption Notice
Date.

 

C. The Notice of Redemption
shall set forth (i) the Redemption Date and the place fixed for redemption, (ii) the Redemption Price, (iii) a statement
of or reference to the conversion right set forth herein, and (iv) confirmation that the Company has the full Redemption Price
reserved. The notice shall specify the principal balance hereof to be redeemed. If the Company fails to comply with the redemption
provisions set forth herein by the Redemption Date, the redemption will be declared null and void and the Company shall not be
permitted to serve another Redemption Notice.

 

    	7

    	 

    

 

(a) the full amount of the Redemption
Price in cash, available in a demand or other immediately available account in a bank or similar financial institution, specifically
allotted for such redemption;

 

(b) immediately available credit facilities,
in the full amount of the Redemption Price, with a bank or similar financial institution specifically allotted for such redemption;
or

 

(c)  combination of the items set
forth in (i) and (ii) above, aggregating the full amount of the Redemption Price.

 

Notwithstanding the foregoing, in the event
the redemption is expected to be made contemporaneously with the closing of a public offering of the Company's securities for an
amount in excess of the Redemption Price, the Company shall not be required to have the full amount of the Redemption Price available
to it as set forth above.

 

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed by an officer thereunto duly authorized.

 

Dated: as of ___, ___________, 2012.

 

	 	CAPITAL ART, INC., a Delaware Corporation
	 	 
	 	By: ____________________
	 	 
	 	 
	 	(Print Name)
	 	 
	 	 
	 	(Title)

 

    	8

    	 

    

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the
Debenture)

 

The undersigned hereby
irrevocably elects to convert $ ________________ of the principal amount of the above Debenture No.  ___ into Shares of Common
Stock of CAPITAL ART, INC., a Delaware corporation (the "Company") according to the conditions hereof, as of the date
written below.

 

Conversion Date*

 

____________________

 

Applicable Conversion Price

 

$0.80

 

 

 

Signature

 

____________________

          [Name]

 

Address:

 

_________________

_________________

 

* This original Debenture must be received
by the Company by the third business day following the Conversion Date.

 

 

    	9

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