Exhibit 4.3
SECURED CONVERTIBLE PROMISSORY
NOTE
THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS.
THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND THIS SECURITY
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OF IT UNDER THE ACT OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE MAKER THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE ACT. THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS NOTE AND
THE SECURITIES PURCHASE AGREEMENT, DATED MAY __, 2006 (THE
“PURCHASE AGREEMENT”), AND NO TRANSFER OF THIS SECURITY
SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL
HAVE BEEN COMPLIED WITH. THE TRANSFERABILITY OF THIS SECURITY IS
SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THE
PURCHASE AGREEMENT, A COPY OF WHICH WILL BE PROVIDED TO THE HOLDER
HEREOF UPON WRITTEN REQUEST TO THE MAKER.
MSO HOLDINGS, INC.
SECURED CONVERTIBLE PROMISSORY NOTE
THIS SENIOR SECURED NOTE IS MADE
AND DELIVERED PURSUANT TO THE PURCHASE AGREEMENT AND SUBJECT TO THE
TERMS AND CONDITIONS THEREOF. THIS SECURED NOTE IS SECURED BY THE
COLLATERAL DESCRIBED IN A CERTAIN SECURITY AGREEMENT, DATED AS OF
EVEN DATE HEREWITH (THE “SECURITY
AGREEMENT”).
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$_______________
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May 9, 2006
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FOR
VALUE RECEIVED, MSO Holdings, Inc., a Delaware corporation (the
“Maker”), promises to pay to the order of
______________________ or its registered assigns (the
“Holder”), upon written request to Maker by the Holder,
on the date which shall be the earlier of (i) the closing of a
Qualified Financing (as defined below), or (ii) January 1, 2008,
provided that the Holder must make such written request to Maker at
least ninety (90) days in advance if such request is made pursuant
to subsection (ii) above (the “Maturity Date”), the
principal amount of _________________ Dollars ($______), together
with all accrued and unpaid interest thereon, unless this Secured
Convertible Promissory Note (this “Note”) is sooner
converted into capital stock of the Maker in accordance with the
terms set forth herein. All capitalized terms used but not defined
herein shall have the meaning set forth in the Purchase
Agreement.
1.
Interest Rate . The unpaid balance of the principal amount
of this Note shall accrue simple interest (the
“Interest”) at a rate of 10% per annum (the
“Interest Rate”). Interest shall begin accruing as of
the date hereof and continue through the Maturity Date or the date
of conversion of this Note into capital stock of the Maker,
whichever shall occur first. Interest shall accrue on a monthly
basis and shall be computed on the basis of a 365-day year, for the
actual number of days involved.
2.
Prepayment . The Maker may prepay any outstanding principal
or accrued Interest under this Note at any time without penalty
upon written notice to the Holder, provided that the Holder is
provided at least five (5) business days to exercise its conversion
rights set forth in Section 3(b) below prior to the date of such
prepayment.
3.
Conversion into Capital Stock .
(a)
Optional Conversion at Qualified Financing . If after the
date of this Note the Maker issues and sells equity securities to
investors (the “Investors”) in a bona fide arms length
transaction that results in aggregate gross proceeds of new money
to the Maker of at least $2,000,000 (excluding the conversion of
any indebtedness) (a “Qualified Financing”), and this
Note is not then repaid in full, then at the option of the Holder,
the outstanding principal balance and all unpaid accrued Interest
on this Note, or any portion thereof, may be converted by the
Holder at the closing of such Qualified Financing into that number
of shares of the equity security sold to such Investors in the
Qualified Financing determined by dividing the amount of principal
of, and accrued interest on, this Note by eighty percent (80%) of
the price per share paid by such Investors in the Qualified
Financing. Upon such conversion the Holder shall be entitled to all
of the contractual rights of the Investors granted in connection
with the Qualified Financing on the same terms and conditions as
the Investors and, by acceptance of this Note, agrees to enter into
the contracts evidencing such rights. Promptly after the date of
the request from the Holder to convert this Note in accordance with
this Section 3(a), Holder shall surrender this Note to Maker for
cancellation in exchange for a certificate representing the
applicable number of shares of equity securities issued in the
Qualified Financing; provided, however, that in the event that the
Holder elects to convert only a portion of the principal of, or
accrued interest on, this Note, upon such surrender, Maker shall
issue to the Holder a new note with the same terms as contained
herein, except that such note shall be issued as of the date of the
conversion and the original principal amount thereof shall be equal
to the principal and interest on this Note not so
converted.
(b)
Mandatory Conversion at Qualified Financing .
Notwithstanding the foregoing, in the event that a majority in
interest of the holders of the notes issued pursuant to the
Purchase Agreement elect pursuant to the foregoing Section 3(a) to
convert their notes, then all of the principal of, and accrued
interest on this Note shall automatically convert on the basis
provided in such Section as of the closing of such Qualified
Financing. In such event, Maker shall give the Holder notice of
such closing. Promptly after the receipt of such notice, Holder
shall surrender this Note to Maker for cancellation in exchange for
a certificate representing the applicable number of shares of
equity securities issued in the Qualified Financing.
(c)
Voluntary Conversion to Series A-1 Convertible Preferred
Stock . At any time after the date of this Note, the Holder may
request that payment be made in whole or in part in a number of
shares of Maker’s Series A-1 Preferred Stock, determined by
dividing the outstanding principal amount of this Note, plus any
accrued Interest, in each case to the extent the Holder desires to
convert the same, by $0.25 per share (subject to adjustment for
stock splits, reverse stock splits, stock dividends,
recapitalizations, combinations and the like) (the “Series
A-1 Conversion Price”). Promptly after the date of the
request from the Holder to convert this Note in accordance with
this Section 3(c), Holder shall surrender this Note to Maker for
cancellation in exchange for a certificate representing the
applicable number of shares of Series A-1 Preferred Stock;
provided, however, that in the event that the Holder elects to
convert only a portion of the principal of, or accrued interest on,
this Note, upon such surrender, Maker
