Document:

Exhibit 10.13 

SECURITY AGREEMENT 

	DATE:  	May
9, 2006

	DEBTOR:
(Collectively)  	MSO
Holdings, Inc.
                            2333 Waukegan Road
 Suite 175

                          Bannockburn, Illinois 60015 

	SECURED PARTIES:  	
         Each of the holders of the Notes (as hereinafter
defined.

	COLLATERAL AGENT:  	Commonwealth Associates, L.P.
830 Third Avenue, 8th Floor
New York, NY
                          10022

        1.    
Security Interest and Collateral. To secure the payment of outstanding
               principal and interest on certain Secured Convertible Promissory Notes in
the                aggregate principal amount of up to $2,500,000 issued by Debtor from
time to                time in a private placement as described in the Securities
Purchase Agreement,                of even date herewith between the Debtor and the
Secured Parties, by Debtor to                Secured Parties (each a “Note” and
collectively the                “Notes”) and the performance of every
liability and obligation                of every type and description that Debtor may now
or at any time hereafter owe                to Secured Parties under the Notes, whether
such debt, liability or obligation                now exists or is hereafter created or
incurred, and whether it is absolute or                contingent, liquidated or
unliquidated, or sole, joint, several or joint and                several (all such
debts, liabilities and obligations and any amendments,                extensions,
renewals or replacements thereof collectively referred to herein as                the
“Obligations”), Debtor hereby grants Collateral Agent, not
               individually but for the benefit of the Secured Parties (with Collateral
Agent                acting on behalf of the Secured Parties under and pursuant to that
certain                Intercreditor Agreement, dated even herewith, among the Secured
Parties and                Debtor) a first priority security interest (the “Security
               Interest”) in all of Debtor’s property (the
               “Collateral”), including without limitation the
following:  

          	 	A. 	
               Inventory. All inventory of Debtor, whether now owned or hereafter
               acquired and wherever located and other tangible personal property held for sale
               or lease or furnished or to be furnished under contracts of service or consumed
               in Debtor’s business, and all goods of Debtor, whether now owned or
               hereafter acquired and wherever located, including without limitation all
               computer programs embedded in goods, and all other Inventory and Goods of the
               Debtor, as such terms may be defined in the Uniform Commercial Code as may be in
               effect in the State of Delaware from time to time (the “UCC”); 

               

          	 	B. 	
               Equipment. All equipment of Debtor, whether now owned or hereafter
               acquired and wherever located, including but not limited to all present and
               future equipment, machinery, tools, motor vehicles, trade fixtures, furniture,
               furnishings, office and recordkeeping equipment and all goods for use in
               Debtor’s business and all other Equipment of the Debtor, as such term may
               be defined in the UCC, together with all parts, equipment and attachments
               relating to any of the foregoing; 

               

          	 	C. 	
               Accounts, Contract Rights and Other Rights to Payment: Each and every
               right of Debtor to the payment of money, whether such right to payment now
               exists or hereafter arises, whether such right to payment arises out of a sale,
               lease, license, assignment or other disposition of goods or other property by
               Debtor, out of a rendering of services by Debtor, out of a loan by Debtor, out
               of the overpayment of taxes or other liabilities of Debtor, or otherwise arises
               under any contract or agreement, whether such right to payment is or is not
               already earned by performance, and howsoever such right to payment may be
               evidenced, together with all other rights and interests (including all liens and
               security interests) which Debtor may at any time have by law or agreement
               against any account debtor or other obligor obligated to make any such payment
               or against any of the property of such account debtor or other obligor; all
               including but not limited to all present and future debt instruments, chattel
               paper, accounts, license fees, contract rights, loans and obligations receivable
               and tax refunds and all other Accounts of the Debtor, as such term may be
               defined in the UCC; 

               

          	 	D. 	
               Instruments: All instruments, chattel paper, letters of credit or other
               documents of Debtor, whether now owned or hereafter acquired, including but not
               limited to promissory notes, drafts, bills of exchange and trade acceptances;
               all rights and interests of Debtor, whether now existing or hereafter created or
               arising, under leases (where Debtor is the lessor), licenses or other contracts,
               in each case where assignment for security purposes is not expressly prohibited
               by the terms of such instruments and all other Instruments of the Debtor, as
               such term may be defined in the UCC; 

               

          	 	E. 	
               Deposit Accounts and Investment Property: All right, title and interest
               of Debtor in all deposit and investment accounts maintained with any bank,
               savings and loan association, broker, brokerage, or any other financial
               institution, together with all monies and other property deposited or held
               therein, including, without limitation, any checking account, savings account,
               escrow account, savings certificate and margin account, and all securities,
               whether certificated or uncertificated, security entitlements, securities
               accounts, commodity contracts, and commodity accounts and all other Deposit
               Accounts and Investment Property of the Debtor, as such terms may be defined in
               the UCC; 

               

          	 	F. 	
               General Intangibles: All general intangibles of Debtor, whether now owned
               or hereafter acquired, including, but not limited to, applications for patents,
               patents, copyrights, trademarks, trade secrets, good will, tradenames, customer
               lists, permits and franchises, software, all licenses of any of the foregoing
               and the right to use Debtor’s name, and any and all membership interests,
               governance rights, and financial rights in each and every limited liability
               company, and all payment intangibles and all other General Intangibles of the
               Debtor, as such term may be defined in the UCC; 

               

2  

          	 	G. 	
               Chattel Paper: All Chattel Paper of the Debtor, whether tangible or
               electronic, as such term may be defined in the UCC; and 

               

          	 	H. 	
               Supporting Obligations, Embedded Software, etc.: All of Debtor’s
               rights, whether now existing or hereafter acquired, in promissory notes,
               documents, embedded software, letter of credit rights and supporting obligations
               (and security interests and liens securing them) as such terms may be defined in
               the UCC, 

               

together with all substitutions and
replacements for and products of any of the foregoing property and proceeds of any and all
of the foregoing property together with (i) all accessories, attachments, parts,
equipment, accessions and repairs and embedded software now or hereafter attached or
affixed to or used in connection with any such goods, (ii) all warehouse receipts, bills
of lading and other documents of title now or hereafter covering such goods, and (iii) all
books and records of Debtor related to the Collateral. This Agreement creates, and in the
case of after-acquired Collateral, this Agreement will create at the time the Debtor first
has rights in such after-acquired Collateral, in favor of the Secured Parties a valid and
perfected first priority security interest in the Collateral in the United States securing
the payment and performance of the Obligations. 

        2.    
Representations, Warranties and Agreements. Debtor represents, warrants
               and agrees that:  

            2.1.    
               Debtor is a corporation duly organized, validly existing and in good
standing                under the laws of the state of Delaware. Debtor has full power
and authority to                execute this Agreement, to perform Debtor’s
obligations hereunder and to                subject the Collateral to the Security
Interest. Debtor’s taxpayer                identification number is the number shown
at the beginning of this Agreement.  

            2.2.    
               Debtor’s chief place of business is, located at the address shown at
the                beginning of this Agreement. Debtor’s records concerning its
accounts and                contract rights are kept at such address. The Collateral is
located at the                address shown at the beginning of this Agreement, and there
are no other                locations where any of the Collateral may be kept except as
set forth on                Schedule 2.2 hereto. All Collateral has been located at the
address shown at the                beginning of this Agreement or at the locations set
forth on Schedule 2.2, prior                to execution of this Agreement. Debtor will
give at least 30 days’ advance                written notice to Secured Parties of
any change in Debtor’s jurisdiction of                organization or chief place of
business and any change in or addition of any                Collateral location. Debtor
will take all such actions as Secured Parties may                reasonably request to
permit Secured Parties to establish and perfect the                Security Interest in
all jurisdictions Secured Parties deems necessary,                including but not
limited to the execution, delivery or endorsement of any and                all
instruments, documents, assignments, security agreements and other
               agreements and writings that Secured Parties may at any time reasonably
request                in order to secure, protect, perfect or enforce the Security
Interest and                Secured Parties’ rights under this Agreement.  

3 

            2.3.    
               Debtor has (or will have at the time Debtor acquires rights in Collateral
               hereafter arising) absolute title to each item of Collateral, free and
clear of                all security interests, liens and encumbrances. Debtor will keep
all Collateral                free and clear of all security interests, liens and
encumbrances except the                Security Interest, purchase money security
interests granted in connection with                the acquisition of equipment in the
ordinary course of Debtor’s business                and approved by Collateral Agent
and capital leases in an amount not to exceed                $75,000 (each a “Permitted
Lien”), which consent shall not be                unreasonably withheld. Debtor will
defend the Collateral against all claims or                demands of all persons other
than Secured Parties or the holder of any Permitted                Lien. Debtor will
promptly pay or properly and timely contest all taxes and                other
governmental charges levied or assessed upon or against any Collateral or
               upon or against the creation, perfection, priority or continuance of the
               Security Interest.  

            2.4.    
               Until the Obligations are satisfied in full, Debtor will not, without the
prior                written consent of Collateral Agent, sell any of the Collateral or
enter into                any agreement that is inconsistent with Debtor’s
obligations or Secured                Parties’ rights under this Agreement, except
that Debtor may sell or                discard the Collateral in the ordinary course of
business so long as such                agreements are not inconsistent with Secured
Parties’ rights or                Debtor’s obligations under this Agreement.
Debtor further agrees that it                will not take any action, or permit any
action to be taken by others under its                control, or fail to take any
action, that would affect the validity of the                Collateral or enforcement of
Secured Parties’ rights in the Collateral. In                addition, Debtor agrees
not to enter into any instruments, chattel paper,                letters of credit or
other documents, including but not limited to promissory                notes, drafts,
bills of exchange and trade acceptances, which expressly prohibit
               assignment for security purposes.  

            2.5.    
               This Agreement has been duly and validly authorized by all necessary
corporate                action by Debtor and constitutes the valid and binding
obligation of Debtor,                enforceable in accordance with its terms, except as
such enforceability may be                limited by applicable bankruptcy, insolvency,
reorganization, moratorium,                liquidation or similar laws relating to, or
affecting generally the enforcement                of, creditors’ rights and
remedies or by other equitable principles of                general application.  

            2.6.    
               Debtor will keep all tangible Collateral in good repair, working order and
               condition, normal depreciation excepted, and will, from time to time,
replace                any worn, broken or defective parts thereof.  

            2.7.    
               Debtor will at all reasonable times permit Secured Parties or their
respective                representatives to examine or inspect any Collateral, wherever
located, and to                examine, inspect and copy Debtor’s books and records
pertaining to the                Collateral and its business and financial condition.  

            2.8.    
               If Collateral Agent at any time so requests after the occurrence of an
Event of                Default, Debtor will promptly transfer to Collateral Agent any
instrument,                document, chattel paper, or investment properties constituting
the Collateral,                duly endorsed or assigned by Debtor.  

            2.9.    
               Debtor will keep accurate and complete records pertaining to the
Collateral and                pertaining to Debtor’s business and financial
condition and submit to                Collateral Agent such periodic reports concerning
the Collateral and                Debtor’s business and financial condition as
Collateral Agent may from time                to time reasonably request.  

4 

            2.10.    
               Debtor will at all times keep all tangible Collateral insured against
risks of                fire (including so-called extended coverage), theft, and such
other risks and in                such amounts as are customary in Debtor’s industry
or as Collateral Agent                may otherwise reasonably request, with any loss
payable to Secured Parties to                the extent of their respective interests.
Upon execution of this Agreement,                Debtor will provide Collateral Agent
with evidence of such insurance in the form                of copies of the policies
thereof or certificates of insurance therefor. Debtor                shall give
Collateral Agent immediate notice of the expiration of cancellation                of any
such insurance and shall immediately obtain replacement insurance                coverage
and provide evidence thereof to Collateral Agent.  

            2.11.    
               Debtor will pay when due or reimburse Secured Parties on demand for all
costs of                collection of any of the Obligations and all other out-of-pocket
expenses                (including all reasonable attorneys’ fees and expenses)
incurred by Secured                Parties in connection with the creation, perfection,
satisfaction, protection,                defense or enforcement of the Security Interest
or the Collateral, or the                creation, continuance, protection, defense or
enforcement of this Agreement, or                any or all of the Obligations, including
expenses incurred in any litigation or                bankruptcy or insolvency
proceedings.  

            2.12.    
               The Obligations have been incurred and the Collateral will be used
primarily for                business purposes.  

            2.13.    
               All rights to payment and all instruments, documents, chattel papers and
other                agreements constituting or evidencing Collateral are (or will be
when arising or                issued) the valid, genuine and legally enforceable
obligation, subject to no                defense, set-off or counterclaim (other than
those arising in the ordinary                course of business) of each account debtor
or other obligor named therein or in                Debtor’s records pertaining
thereto as being obligated to pay such                obligation. Debtor will not agree
to any modification, amendment or cancellation                of any such obligation
without Collateral Agent’s’ prior written                consent except
discounts provided by Debtor in the ordinary course of business,                and will
not subordinate any such right to payment to claims of other creditors                of
such account debtor or other obligor.  

            2.14.    
               Debtor will promptly notify Collateral Agent of any material loss of or
damage                to any Collateral or of any adverse change in the prospect of
payment of any                material sums due on or under any instrument, chattel
paper, account or contract                right constituting Collateral.  

            2.15.    
               Debtor will from time to time execute such financing statements or control
               agreements as Collateral Agent may reasonably deem necessary in order to
perfect                the Security Interest and, if any Collateral is covered by a
certificate of                title, execute such documents as may be required to have
the Security Interest                properly noted on a certificate of title. In
addition, Debtor authorizes                Collateral Agent to file any financing
statement Collateral Agent deems                necessary, describing any liens held by
Secured Parties hereunder. Such                financing statements may describe the
Collateral in the same manner as described                herein or may contain an
indication or description of the Collateral that                describes such property
in any other manner as Collateral Agent may determine,                in its reasonable
discretion, is necessary to ensure the perfection of the                Security
Interest, including, without limitation, describing such property as                “all
assets” or “all personal property.” 

5 

            2.16.    
               Debtor will not use or keep any Collateral, or permit it to be used or
kept, for                any unlawful purpose or in violation of any federal, state or
local law, statute                or ordinance.  

            2.17.    
               If Debtor at any time fails to perform or observe any agreement contained
in                this Section 2, and if such failure shall continue for a period of 30
calendar                days after Collateral Agent gives Debtor written notice thereof,
Collateral                Agent may (but need not) perform or observe such agreement on
behalf and in the                name, place and stead of Debtor (or, at Collateral Agent’s
option, in                Collateral Agent’s own name) and may (but need not) take
any and all other                actions that Collateral Agent may reasonably deem
necessary or desirable to cure                or correct such failure. Debtor shall pay
Collateral Agent on demand the amount                of all monies expended and all costs
and expenses (including reasonable                attorneys’ fees and expenses)
incurred by Collateral Agent in connection                with or as a result of
Collateral Agent performing or observing such agreements                or taking such
actions, together with interest thereon from the date expended or                incurred
by Collateral Agent at the highest rate then applicable to any of the
               Obligations. To facilitate the performance or observance by Collateral
Agent of                such agreements of Debtor (in the event Debtor does not cure any
such failure                during the above-described 30-day period), Debtor hereby
irrevocably appoints                (which appointment is coupled with an interest)
Collateral Agent, or its                delegate, as the attorney-in-fact of Debtor with
the right (but not the duty)                from time to time to create, prepare,
complete, execute, deliver, endorse or                file, in the name and on behalf of
Debtor, any and all instruments, documents,                financing statements, and
other agreements and writings required to be obtained,                executed, delivered
or endorsed by Debtor under this Section 2.  

        3.    
Account Verification and Collection Rights of Collateral Agent.
               Collateral Agent shall have the right to verify any accounts in the name
of                Debtor or in Collateral Agent’s own name; and Debtor, whenever
requested                pursuant to the terms of this Section, shall furnish Collateral
Agent with                duplicate statements of the accounts, which statements may be
mailed or                delivered by Collateral Agent for that purpose. Collateral Agent
may at any time                after the occurrence of an Event of Default notify any
account debtor, or any                other person obligated to pay any amount due, that
such chattel paper, account,                or other right to payment has been assigned
or transferred to Collateral Agent                for security and shall be paid directly
to s Collateral Agent. If Collateral                Agent so requests at any time after
the occurrence of an Event of Default,                Debtor will so notify such account
debtors and other obligors in writing and                will indicate on all invoices to
such account debtors or other obligors that the                amount due is payable
directly to Collateral Agent. At any time after Collateral                Agent or Debtor
gives such notice to an account debtor or other obligor,                Collateral Agent
may (but need not), in Collateral Agent’s own name or in                Debtor’s
name, demand, sue for, collect or receive any money or property at                any
time payable or receivable on account of, or securing, any such chattel
               paper, account, or other right to payment, or grant any extension to, make
any                compromise or settlement with or otherwise agree to waive, modify,
amend or                change the obligations (including collateral obligations) of any
such account                debtor or other obligor.  

        4.    
Events of Default. The occurrence of any of the following shall, at the
               sole option of the Secured Parties, be an Event of Default:  

          	 	A. 	
               Any “Event of Default” (as defined in such agreement) by Debtor under
               the Notes or any other agreement evidencing the Obligations, which default is
               not cured within any grace period granted with respect to such default or, if no
               specific grace period is granted with respect to such default, where such
               default is not cured within five (5) business days after written notice thereof
               from any Secured Party; 

               

6 

          	 	B. 	
               Debtor’s failure to comply with any representation, warranty or covenant
               hereunder if not cured within thirty (30) days after written notice, unless such
               failure is such that it cannot be cured in which event no such cure period shall
               apply; 

               

          	 	C. 	
               Transfer or disposition of any of the Collateral, except as permitted by this
               Agreement; or 

               

          	 	D. 	
               Attachment, execution or levy on any of the Collateral. 

               

        5.    
Remedies upon Event of Default. Upon the occurrence of an Event of
               Default and at any time thereafter, Collateral Agent may exercise any one
or                more of the following rights and remedies:  

            5.1.    
               declare all Obligations to be immediately due and payable, which shall
then be                immediately due and payable, without presentment or other notice
or demand;  

            5.2.    
               exercise and enforce any or all rights and remedies available upon default
to a                secured party under the Uniform Commercial Code, including but not
limited to                the right to take possession of any Collateral, proceeding
without judicial                process if permitted by law or by judicial process, and
the right to use, sell,                lease or otherwise dispose of any or all of the
Collateral, and in connection                therewith, Collateral Agent may require
Debtor to make the Collateral available                to Collateral Agent at a place to
be designated by Collateral Agent that is                reasonably convenient to all
parties, and if notice to Debtor of any intended                disposition of Collateral
or any other intended action is required by law in a                particular instance,
such notice shall be deemed commercially reasonable if                given (in the
manner specified in Section 8.2) at least 10 business days prior                to the
date of intended disposition or other action; or  

            5.3.    
               exercise or enforce any or all other rights or remedies available to
Secured                Parties by law or agreement against the Collateral, including
specifically the                right to use the Collateral, against Debtor or against
any other person or                property.  

All rights and remedies of Secured
Parties shall be cumulative and may be exercised singularly or concurrently, at Collateral
Agent’s option, and the exercise or enforcement of any one such right or remedy shall
neither be a condition to nor bar the exercise or enforcement of any other. 

        6.    Other
Personal Property. Unless at the time Collateral Agent takes           possession of
any tangible Collateral, or within seven days thereafter, Debtor           gives written
notice to Collateral Agent of the existence of any goods, papers           or other
property of Debtor, not affixed to or constituting a part of such           Collateral,
but which are located or found upon or within such Collateral,           Collateral Agent
shall not be responsible or liable to Debtor for any action           taken or omitted by
or on behalf of Secured Parties with respect to such           property without actual
knowledge of the existence of any such property or           without actual knowledge
that it was located or to be found upon or within such           Collateral.  

7 

        7.    Assignment
of Insurance. Debtor hereby assigns to Collateral Agent, as           additional
security for the payment of the Obligations, any and all moneys           (including but
not limited to proceeds of insurance and refunds of unearned           premiums) due or
to become due under, and all other rights of Debtor under or           with respect to,
any and all policies of insurance covering the Collateral, and           Debtor hereby
directs the issuer of any such policy to pay any such moneys           directly to
Collateral Agent. Both before and after the occurrence of an Event           of Default,
Collateral Agent may (but need not), in Collateral Agent’s name           or in
Debtor’s name, execute and deliver proofs of claim, receive all such
          moneys, endorse checks and other instruments representing payment of such
          moneys, and adjust, litigate, compromise or release any claim against the
issuer           of any such policy.  

        8.    Indemnity.
Debtor agrees to defend, indemnify and hold harmless the           Secured Parties and
their respective officers, employees, and agents against all           obligations,
demands, claims, and liabilities claimed or asserted by any third           party that
such third party has an interest in the Collateral that is senior to           or
superior to the security interest granted to Secured Parties hereunder,           except
for such losses arising from or out of the gross negligence or willful
          misconduct of the Secured Party seeking such indemnity.  

        9.    Termination
of Security Interest. In the event of conversion of the Notes           to capital
stock of Debtor as provided in the Notes, this Agreement and the           security
interest granted hereunder shall automatically terminate. In the event           any
holder of Notes shall exercise all or any portion of the optional conversion
          rights in such holder’s Note, any rights of such holder in the Collateral
          and under this Agreement shall thereupon terminate.  

        10.    Conduct
No Waiver: Remedies Cumulative. No course of dealing on the part           of any
Secured Party, nor any delay or failure on the part of any Secured Party           in
exercising any right, power or privilege shall operate as a waiver of such
          right, power or privilege or otherwise prejudice the rights or remedies of such
          Secured Party; nor shall any single or partial exercise thereof preclude any
          further exercise thereof or the exercise of any other right, power or
privilege.           No right or remedy conferred upon or reserved to any Secured Party
under this           Agreement or any other agreement relating to issuance of the Notes
or any one of           them, is intended to be exclusive of any other right or remedy,
and every right           and remedy shall be cumulative and in addition to every other
right or remedy           granted hereunder or thereunder or now or hereafter existing
under.  

        11.    Collateral
Agent. Debtor acknowledges and agrees that Collateral Agent           shall have the
right to act on behalf of the Secured Parties (but not to the           exclusion of the
individual rights of the Secured Parties set forth herein), and           the Securities
Parties acknowledge and agree that Debtor may rely upon actions           taken by
Collateral Agent in its capacity as such for purposes of exercising the           rights
and remedies of the Secured Parties hereunder. For purposes of this           Agreement,
the Collateral Agent shall constitute a Secured Party.  

8 

        12.    Miscellaneous.  

            12.1.              This
Agreement can be waived, modified, amended, terminated or discharged, and           the
Security Interest can be released, only explicitly in a writing signed by           the
Secured Parties holding not less than a majority in interest of the Notes. A
          waiver signed by each Secured Party shall be effective only in the specific
          instance and for the specific purpose given. Mere delay or failure to act shall
          not preclude the exercise or enforcement of any of such Secured Party’s
          rights or remedies.  

            12.2.              All
notices to be given to Debtor or Collateral Agent hereunder shall be deemed
          sufficiently given if delivered or mailed by registered or certified mail,
          postage prepaid, to the party entitled thereto at its address set forth above
or           at such other address as Debtor or Collateral Agent may subsequently provide
to           the other in the manner prescribed by this Section.  

            12.3.              Collateral
Agent’s duty of care with respect to Collateral in its           possession (as
imposed by law) shall be deemed fulfilled if Collateral Agent           exercises
reasonable care in physically safekeeping such Collateral or, in the           case of
Collateral in the custody or possession of a bailee or other third           person,
exercises reasonable care in the selection of the bailee or other third           person,
and Collateral Agent need not otherwise preserve, protect, insure or           care for
any Collateral. Collateral Agent shall not be obligated to preserve any           rights
Debtor may have against prior parties, to realize on the Collateral at           all or
in any particular manner or order, or to apply any cash proceeds of           Collateral
in any particular order of application.  

            12.4.              This
Agreement shall be binding upon and inure to the benefit of Debtor and each
          Secured Party and their respective successors and assigns and shall take effect
          when signed by Debtor and delivered to Collateral Agent, and Debtor waives
          notice of Secured Parties’ acceptance hereof.  

            12.5.              A
carbon, photographic or other reproduction of this Agreement or of any
          financing statement signed by Debtor shall have the same force and effects as
          the original for all purposes of a financing statement.  

            12.6.              This
Agreement shall be governed by the internal laws of the State of Delaware.           If
any provision or application of this Agreement is held unlawful or
          unenforceable in any respect, such illegality or unenforceability shall not
          affect other provisions or applications which can be given effect and this
          Agreement shall be construed as if the unlawful or unenforceable provision or
          application had never been contained herein or prescribed hereby.  

            12.7.              DEBTOR
AND THE SECURED PARTIES EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY           TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS           AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT           CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR           STATUTORY CLAIMS.  

            12.8.              All
representations and warranties contained in this Agreement shall survive the
          execution, delivery and performance of this Agreement and the creation and
          payment of the Obligations.  

9 

        This
Agreement has been duly executed by the parties as of the date first set forth above. 

		
		
MSO HOLDINGS, INC.
		

By: /s/ Steven Straus
		       Name: Steven Straus
		       Title: President
		
Commonwealth Associates, L.P.
		

By: /s/ Robert A. O'Sullivan
		       Name: Robert A. O'Sullivan
		       Title: CEO/President

[Signature Page to
Security Agreement]  

XI 

Schedule 2.2 

Other Collateral
LocationsExhibit 10.14 

INTERCREDITOR AGREEMENT 

        THIS
INTERCREDITOR AGREEMENT (this “Agreement”) is made as of May 9th, 2006,
by and among Commonwealth Associates, L.P., in its capacity as collateral agent (the
“Collateral Agent”), acting for and on behalf of the holders of those
certain Secured Convertible Promissory Notes (collectively, the “Notes”)
issued under that (a) that certain Securities Purchase Agreement, dated as of the date
hereof (the “Purchase Agreement”) (each holder of a Note and including,
without limitation, the Collateral Agent, a “Lender” and, collectively,
the “Lenders”), and MSO Holdings, Inc., a Delaware corporation (the
“Borrower”). 

RECITALS 

        Pursuant
to the Note Purchase Agreement, the Borrower has executed and delivered the Notes to the
Lenders in the principal amounts shown on Exhibit A attached hereto, as it may be
amended from time to time to reflect the issuance of Notes in the “First
Closing”, “Second Closing” and each “Interim Closing”
contemplated by the Purchase Agreement. 

        As
of the date hereof, the Borrower has executed and delivered that certain Security
Agreement (the “Security Agreement”) in favor of the Lenders, to secure
the prompt and full payment and performance of the Borrower’s obligations under the
Notes. 

        The
parties have entered into this Agreement in order to establish the relative rights,
remedies and priorities as among the Lenders with respect to the collateral covered by the
Security Agreement for the benefit of all of the Lenders and to grant certain authority to
the Collateral Agent to act on behalf of the Lenders. 

        NOW,
THEREFORE, in consideration of the Purchase Agreements, the Notes and the covenants and
conditions set forth below, the Collateral Agent, the Lenders and the Borrower agree as
follows: 

ARTICLE 1

DEFINITIONS 

        For
purposes of this Agreement and except as otherwise defined, capitalized terms used herein
shall have the following meanings: 

        “Business
Day” means any day other than a Saturday, Sunday or legal holiday on which banks
in Chicago, Illinois are open for the transaction of a substantial part of their
commercial banking business. 

        “Collateral”
means all property and rights to property upon or in which a lien or security interest has
been or will be granted to the Collateral Agent, for the benefit of the Lenders, under the
Security Agreement or to any other, similar instrument or document now or later delivered
or to be delivered to the Collateral Agent. 

        “Collection
Damages” means all liabilities, damages, costs, claims, expenses and losses
incurred by or on behalf of the Lenders arising out of or incidental to (a) collection of
the Obligations, (b) protection, maintenance and liquidation of the Collateral, and/or (c)
enforcement by Lenders of the Notes or the Security Agreement. 

        “Default”
means any event which with the giving of notice or the lapse of time, or both, might
become an Event of Default. 

        “Event
of Default” means the occurrence of any event of default under the Notes or the
Security Agreement, subject to the expiration of any applicable cure period. 

        “Lien”
means any mortgage, pledge, assignment, lien, encumbrance or security interest of any
kind. 

        “Note
Documents” means the Purchase Agreements, the Notes, the Security Agreement, and
this Agreement, together with all amendments, changes, extensions, modifications,
refinancings, refundings, renewals, replacements, restatements or supplements to any of
the foregoing. 

        “Note
Debt” means, collectively, the principal amount outstanding and owing under the
Notes, plus all interest accrued and unpaid under the Notes, plus all other amounts which
may be owing from the Borrower to the Lenders under the Notes from time to time. 

        “Obligations”
means the Note Debt, all amounts now or later owing under the Security Agreement and/or
the other Note Documents, and any Collection Damages, together with all extensions,
amendments, renewals or replacements of or to the foregoing. 

        “Other
Obligations” means all indebtedness, liabilities, debts, obligations of the
Borrower to Persons other than the Lenders. 

        “Person”
means any individual, corporation, limited liability company, partnership, joint venture,
trust, business unit, unincorporated organization, or other organization, whether or not a
legal entity, or any governmental authority. 

        “Pro
Rata Share” means, as to each Lender, the fraction determined by dividing the
outstanding principal of, and accrued interest on, the Notes of such Lender by the
aggregate outstanding principal of, and accrued but unpaid interest on, all of the Notes,
in each case as of the time determined. 

ARTICLE 2

COLLATERAL 

        2.1.    Interest in
Collateral. The Collateral shall be held by the Collateral           Agent for the
benefit of all of the Lenders to secure the Obligations. Each           Lender shall have
an undivided interest in the Collateral, with the distribution           of the proceeds
thereof to be as described in Section 2.2 hereof.  

2 

        2.2.    Distribution
of Proceeds of Collateral. All proceeds of any realization           on the
Collateral received by any Lender shall be delivered to the Collateral           Agent.
Without limiting the foregoing, after the occurrence of any Default or           Event of
Default, if any Lender shall obtain payment of any Obligations from the
          Collateral or from the Borrower by direct or indirect payment, including,
          without limitation, any payment under any guaranty, lien, counterclaim, or
right           of set-off, that Lender shall immediately deliver the same to the
Collateral           Agent for distribution in accordance with this Section. All proceeds
of any           realization on the Collateral received by the Collateral Agent
subsequent to and           during the continuance of any Event of Default shall be
allocated and           distributed by the Collateral Agent as follows:  

            2.2.1    
First, to the payment of all costs and expenses, including, without limitation, all
attorneys fees, of the Collateral Agent in connection with the enforcement of the Note
Documents and otherwise administering this Agreement;  

            2.2.2    
Second, to each Lender, and among them in accordance with their respective Pro Rata
Shares, up, and to be applied, to the Obligations owing to each Lender;  

            2.2.3    
Third, to the payment of any costs, expenses (including without limitation all attorneys
fees), or any other indebtedness or liabilities owing to the Lenders under the Note
Documents and not described above, on a pro rata basis in accordance with the Obligations
consisting of such amounts, to be applied, for purposes of this Agreement, to the payment
of such liabilities; and  

            2.2.4    
Fourth, to the Borrower or to such other Person as may be legally entitled to such
proceeds.  

        2.3.    Rescission
or Repayment. The Lenders agree among themselves that if any           payment
described in this Article 2 shall be rescinded or must otherwise be           repaid,
each Lender which shall have shared the benefit of such payment shall,           by
repurchase of Obligations theretofore sold or by distributions to other
          Lenders, or otherwise, return its share of that benefit to each Lender whose
          payment shall have been rescinded or otherwise restored so that the allocation
          of payments is in accordance with Section 2.2 hereof. The Borrower agrees that
          any Lender so purchasing such Obligations may, to the fullest extent permitted
          by law, exercise all rights of payment, including setoff, bankers lien or
          counterclaim, with respect to such purchased Obligations as fully as if such
          Lender were the original holder of such Obligations in the amount of such
          purchase and that the rights of payment, including setoff, bankers lien or
          counterclaim, under its original Obligations, of any Lender making
distributions           to other Lenders hereunder shall not be affected by the making of
such           distributions.  

        2.4.    Termination
of Security Interest and this Agreement. In the event of           conversion of the
Notes to capital stock of the Borrower as provided in the           Notes or payment in
full thereof, this Agreement shall terminate. In the event           any holder of Notes
shall exercise all or any portion of the optional conversion           rights in such
holder’s Note, any rights of such holder in the Collateral           and under this
Agreement and the Security Agreement shall thereupon terminate.  

3 

ARTICLE 3

DEFAULT 

        3.1.    Enforcement
of Rights. Upon the occurrence and during the continuance of           any Event of
Default, the Collateral Agent shall exercise and enforce all rights           and
remedies available to the Collateral Agent or the Lenders under this           Agreement,
any of the Note Documents (including particularly, without           limitation, the
Security Agreement) or applicable law. The Collateral Agent           shall have the
exclusive right to foreclose or enforce any remedies against any           of the
Collateral.  

        3.2.    Rights
in Insolvency Proceedings. In the event of any insolvency or           bankruptcy
proceeding involving the Borrower or the Collateral, the Collateral           Agent will
have the exclusive right to vote and exercise the rights and interest           of the
Lenders therein.  

        3.3.    No
Amendment. At any time when any Default or Event of Default shall have
          occurred and be continuing, the Borrower will not, directly or indirectly, pay
          or permit to be paid to any Lender, and the Lenders will not accept, any
          remuneration, whether by way of supplemental or additional interest, fees or
          otherwise, as consideration for or as inducement to the entering into of any
          amendment, supplement, waiver or consent with respect to any Note Document
          unless such remuneration is concurrently therewith paid, on the same terms,
          ratably to all Lenders (based upon, in the case of any Lender, the outstanding
          principal amount under such Lender’s Note as it relates to the total
          outstanding principal amount under the Note Purchase Agreement).  

ARTICLE 4 

COLLATERAL AGENT 

        4.1.    Appointment
and Authorization. Each of the Lenders hereby appoints           Commonwealth
Associates, L.P. as Collateral Agent, subject to removal as           provided in Section
4.8 hereof, and authorizes the Collateral Agent to execute,           deliver and perform
as its agent, each Note Document to which the Collateral           Agent is or is
intended to be a party in the capacity as agent (including the           power to execute
or authorize the execution of financing or similar statements,           notices or
documents), to take such action as agent on its behalf and to           exercise such
powers under this Agreement and the Note Documents as are           delegated to the
Collateral Agent by their terms, together with all such powers           as are
reasonably incidental thereto. In performing its functions and duties           under
this Agreement, the Collateral Agent shall act solely as agent of the           Lenders
and does not assume and shall not be deemed to have assumed any           obligations
towards or relationship of agency or trust with or for the Borrower.  

        4.2.    Rights
of Collateral Agent. The Collateral Agent, in the Collateral           Agent’s
capacity as a Lender, shall have the same rights and powers           hereunder as any
other Lender and may exercise or refrain from exercising the           same as though it
were not the Collateral Agent. The Collateral Agent may           (without having to
account to any Lender) consult to, lend money to, and           generally engage in any
kind of service, trust, financial advisory, fiduciary or           other business
relationship with the Borrower (including, without limitation,           with a
representative of the Collateral Agent as a director for the Borrower) as           if it
were not acting as Collateral Agent, and may accept fees and other
          consideration therefor without having to account for the same to the Lenders.  

4 

        4.3.    Scope
of Duties; Liability.  

            4.3.1    
Subject to the terms hereof and of the Note Documents, the Collateral Agent agrees to
receive, hold, administer and enforce the Collateral and the Security Agreement, and to
foreclose upon, collect and dispose of the Collateral and to apply the proceeds, in such
manner and on such terms as are set forth herein, solely for the benefit of the Lenders,
and otherwise to perform its duties and obligations as Collateral Agent hereunder and
under each Note Document to which it is a party in accordance with their respective
terms, provided, however, that the Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the Note
Documents, and shall not, by reason of this Agreement or any other Note Document, have a
fiduciary relationship with any Lender, and no implied covenants, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or otherwise exist
against the Collateral Agent. The Collateral Agent shall not be required to exercise any
discretion or take any action, but shall in all cases be fully protected in acting, or in
refraining from acting, in response to the written consent or request of Lenders holding
an aggregate Pro Rata Share of greater than or equal to one-half (0.5); provided,
however, that the Collateral Agent need not take any action which in its judgment may
expose it to personal liability (unless the Collateral Agent is fully indemnified to its
satisfaction, as determined in its sole discretion) or which is contrary to this
Agreement, the Note Documents or applicable law; and provided further, however, that any
such consent or request described in this sentence to any action or omission shall be
binding upon all of the Lenders.  

            4.3.2    
The Collateral Agent shall not be liable to the Lenders for any action taken or not taken
by it in connection with this Agreement with the consent or at the request of Lenders
holding an aggregate Pro Rata Share of greater than or equal to one-half (0.5) or in the
absence of the Collateral Agent’s gross negligence or willful misconduct. The
Collateral Agent shall not be responsible for or have any duty to ascertain, inquire into
or verify (a) any statement, warranty or representation made in connection with this
Agreement, the Note Documents or any borrowing by the Borrower, (b) the performance or
observance of any covenants or agreements of the Borrower, or the satisfaction of any
condition for a borrowing by the Borrower, or (c) the validity, effectiveness, legal
enforceability, value or genuineness of this Agreement, any of the Note Documents or any
other instrument or writing furnished in connection herewith or the perfection or
priority of any lien or security interest under the Security Agreement or otherwise with
respect to any property or assets of the Borrower.  

            4.3.3    
The Collateral Agent shall promptly provide to all of the Lenders copies of all reports,
notices or other communications provided by the Borrower to Collateral Agent under the
Security Agreement and shall act on behalf of any Lender that so requests for purposes of
exercising such Lender’s individual rights under the Security Agreement; provided,
however, that the Collateral Agent need not take any such action which in its judgment
may expose it to personal liability (unless the Collateral Agent is fully indemnified to
its satisfaction by the requesting Lender, as determined in its sole discretion) or which
is contrary to this Agreement, the Note Documents or applicable law.  

5 

        4.4.    Reliance.
The Collateral Agent shall be entitled to rely upon any           certificate, notice or
other document (including any facsimile or e-mail           transmission or any oral
communication that is confirmed in writing) believed by           the Collateral Agent to
be genuine and correct and to have been signed or sent           or made by or on behalf
of a proper Person. The Collateral Agent may rely           conclusively upon
certifications from the Lenders as to the amount of           Obligations at any time
owing to each of them. The Collateral Agent may employ           agents for any
reasonable purpose relating to its duties hereunder and may           consult with legal
counsel (who may be counsel for the Collateral Agent, the           Lenders or the
Borrower), independent public accountants and other experts           selected by the
Collateral Agent and shall not be liable to the Lenders (except           as to money or
other property actually received by it or its authorized agents)           for the
negligence or misconduct of any such agent selected by it with           reasonable care
or in good faith or for any action taken or omitted to be taken           by it in good
faith in accordance with the advice of such counsel, accountants           or experts.  

        4.5.    Defaults.
The Collateral Agent shall not be deemed to have knowledge of           the occurrence of
any Default or Event of Default, unless the Collateral Agent           has received
written notice from a Lender or the Borrower specifying such           Default or Event
of Default and expressly stating that such notice is a           “notice of default”.
In the event that the Collateral Agent receives           such a notice, the Collateral
Agent shall give reasonably prompt written notice           thereof to the Lenders and
shall provide a copy of such notice to each Lender.           Collateral Agent may take
such action (but shall be under no obligation           whatsoever to do so), or refrain
from taking such action with respect thereto,           as it shall deem advisable,
acting in good faith, in the best interests of the           Lenders to prevent waste or
other deterioration, diminution in value or other           loss of the Collateral. Any
Lender giving notice of an Event of Default shall           send a copy to each of the
Borrower and the Collateral Agent.  

        4.6.    Non-Reliance
by Lenders. Each Lender acknowledges and agrees that it has           not relied on
the Collateral Agent or any other Lender in connection with its           analysis of the
Borrower, the Collateral and the Note Documents and it will           continue to make
its own analysis and decisions in taking or not taking action           under this
Agreement or the other Note Documents. The Collateral Agent shall not           be
required to keep itself informed as to the performance or observance by the
          Borrower of this Agreement, the Note Documents or any other documents referred
          to or provided for herein or to inspect the properties or books of the
Borrower.           Except as expressly required by the terms and conditions of this
Agreement, the           Collateral Agent shall have no duty or responsibility to provide
any Lender with           any information concerning the affairs, financial condition or
business of the           Borrower which may come into the possession of the Collateral
Agent.  

        4.7.    Indemnification.
The Lenders agree to indemnify the Collateral Agent (to           the extent not
reimbursed by the Borrower, or not covered by distributions under           Section 2
hereof, but without limiting any obligation of the Borrower to make           such
reimbursement), ratably according to the respective outstanding principal
          amounts under the Notes of (and the Obligations then owing to) each of the
          Lenders, from and against any and all claims or liabilities, costs, expenses or
          disbursements of any kind or nature whatsoever which may be imposed on,
incurred           by, or asserted against the Collateral Agent in any way relating to or
arising           out of the enforcement by Collateral Agent of this Agreement or the
Note           Documents or any action taken or omitted by the Collateral Agent under
this           Agreement or any of the Note Documents at the direction of the Lenders,
provided           that no Lender shall be liable for any portion of such claims,
liabilities,           costs, expenses or disbursements resulting from the Collateral
Agent’s           gross negligence or willful misconduct. Each Lender agrees to
reimburse the           Collateral Agent promptly upon demand for its Pro Rata Share of
any liabilities           (including reasonable attorneys’ fees and disbursements)
incurred by the           Collateral Agent in connection with the preservation of any
rights of the           Collateral Agent or the Lenders under, or the enforcement of, or
legal advice in           respect of rights or responsibilities under, this Agreement or
any of the Note           Documents to the extent that the Collateral Agent is not
reimbursed for such           expenses by the Borrower, or under Section 2; provided,
however, that the           Collateral Agent shall subsequently reimburse such Lender or
Lenders in           accordance with the amounts they paid to the extent any of such
expenses are           subsequently reimbursed by the Borrower.  

6 

        4.8.    Resignation,
Removal and Replacement. The Collateral Agent may resign as           such at any
time upon (30) thirty days’ prior written notice to the           Borrower and the
other Lenders. The Collateral Agent may be removed at any time           by the vote of
Lenders holding an aggregate Pro Rata Share of greater than or           equal to
one-half (0.5) for any or no reason. In the event of any such           resignation or
removal, the Lenders shall, by an instrument in writing delivered           to the
Borrower and the Collateral Agent appoint a successor, which shall be (a)           a
Lender, (b) a financial institution organized under the laws of the United
          States or any state thereof and having a combined capital and surplus of at
          least $100,000,000, or (c) any financial institution that is a subsidiary of a
          company having a combined capital and surplus of at least $100,000,000 so long
          as such company unconditionally guarantees the obligations of such financial
          institution, as Collateral Agent. Any successor to the Collateral Agent shall
          execute and deliver to the Borrower and the Lenders an instrument accepting
such           appointment and thereupon such successor, without further act, deed,
conveyance           or transfer shall become vested with all of the properties, rights,
interests,           powers, authorities and obligations of its predecessor hereunder
with like           effect as if originally named as the Collateral Agent, and the
Collateral Agent           ceasing to act shall be discharged therefrom. Upon request of
such successor,           the Borrower and the Collateral Agent ceasing to act shall
execute and deliver           such instruments of conveyance, assignment and further
assurance and do such           other things as may reasonably be required for more fully
and certainly vesting           and confirming in such successor all such properties,
rights, interests, powers,           authorities and obligations. The provisions of this
Article 4 shall thereafter           remain effective for the Collateral Agent ceasing to
act with respect to any           actions taken or omitted to be taken by such Collateral
Agent while acting as           the Collateral Agent.  

ARTICLE 5

NEGATIVE COVENANTS OF
BORROWER 

        For
so long as any of the Notes remain outstanding, the Borrower shall not (by amendment,
merger, consolidation or otherwise), without first obtaining the written approval of the
Lenders holding an aggregate Pro Rata Share of greater than or equal to one-half (0.5),
take any of the following actions, as applicable: 

7 

        5.1.     authorize,
pay or declare a dividend (other than dividends payable solely in           Common Stock)
on any shares of the capital stock of the Borrower, or otherwise           make any
distribution on any of its equity securities, other than Permitted           Repurchases
(as defined below);  

        5.2.      authorize
or issue, or obligate itself to issue, whether by reclassification,
          recapitalization, share exchange, merger or otherwise, any other equity
          security, including any security (other than Series A-1 Convertible Preferred
          Stock) convertible into or exercisable for any equity security, having rights,
          preferences or privileges over, or being on a parity with, the Series A-1
          Convertible Preferred Stock, with respect to voting (other than the pari passu
          voting rights of Common Stock), dividends, redemption, conversion, liquidation,
          registration or preemptive rights or otherwise;  

        5.3.         except
as approved by the Board of Directors, sell or issue any shares of Common           Stock
for consideration other than cash;  

        5.4.              make
any loans; guarantee the debt or performance obligation of any third party;
          enter into any joint venture, partnership or other strategic relationship; or
          invest in partially owned subsidiaries in excess of $250,000 in any twelve (12)
          month period;  

        5.5.              create
any subsidiary other than a wholly owned subsidiary;  

        5.6.              effect
any amendment, alteration, repeal or waiver of any provision of the           Borrower’s
Certificate of Incorporation or Bylaws, whether by merger,           consolidation or
otherwise, including, without limitation, any increase or           decrease in the
number of authorized shares of Common Stock and/or Preferred           Stock;  

        5.7.              (a)
be acquired by another entity by means of any transaction or series of           related
transactions (including, without limitation, any reorganization, merger           or
consolidation, but excluding any merger effected exclusively for the purpose           of
changing the domicile of the Borrower); (b) sell, license, assign or           otherwise
dispose of all or substantially all of the assets of the Borrower           intended to
be a disposition of the Borrower’s business, or (c) liquidate           or dissolve;  

        5.8.              except
as approved by the Board of Directors, dispose of more than ten percent           (10%)
of its assets, other than in the ordinary course of business;  

        5.9.              approve
or authorize any material alteration or material change in the           Borrower’s
business;  

        5.10.             redeem,
purchase or otherwise acquire for value any share or shares of the           capital
stock of the Borrower; provided, however, that this restriction shall           not apply
to the repurchase of Common Stock from employees, officers, directors,
          consultants or other persons performing services for the Borrower or any
          subsidiary pursuant to agreements under which the Borrower has the option to
          repurchase such shares at cost upon the occurrence of certain events, such as
          the termination of employment, or at any price pursuant to the Borrower’s
          exercise of a right first refusal to repurchase such shares (“Permitted
          Repurchases”);  

        5.11.             enter
into any transaction with any of its officers, directors, stockholders or
          affiliates or any entity in which any officer, director or stockholder of the
          Borrower, or any of their respective affiliates may have any interest, unless
          such transaction is in the ordinary course of business on terms no less
          favorable than those available at such time from non-affiliated parties; or  

8 

        5.12.             incur
any Indebtedness for Borrowed Money that is not expressly subordinated in
          payment and priority to the obligations of the Borrower under the Notes (for
          purposes of this paragraph, “Indebtedness for Borrowed Money” means
          (a) all obligations (whether interest, principal, fees, penalties or otherwise)
          of the Borrower for borrowed money, (b) all obligations of the Borrower
          evidenced by bonds, debentures, notes or other similar instruments, (c) all
          obligations of the Borrower to pay deferred purchase price of property or
          services, except trade accounts payable arising in the ordinary course of the
          business of the Borrower, consistent with past practice, (d) all obligations of
          the Borrower as lessee under capitalized leases that are in excess of $75,000
in           the aggregate, and (e) any of the foregoing guaranteed by the Borrower.  

ARTICLE 6

GENERAL CONDITIONS 

        6.1.    Amendments.
No amendment, modification, termination or waiver of any           provision of this
Agreement or of any of the Note Documents (whether directly,           or by amendment to
a provision in another document), nor any consent to any           departure therefrom,
shall be effective unless the same shall be in writing and           signed by each of
the Collateral Agent and a majority in interest of the Lenders           (in accordance
with their Pro Rata Shares) and, to the extent such amendment,           modification,
termination or waiver adversely affects the Borrower, the           Borrower. Any
amendment, waiver or consent under this Agreement or any of the           Note Documents
shall be effective only in the specific instance and for the           specific purpose
for which it is given.  

        6.2.    Notices.  

            6.2.1    
All notices and other communications shall be delivered or sent to Collateral Agent and
the Lenders, as applicable, at the respective addresses and numbers for notices set forth
on Exhibit A attached hereto or to such other address as may be designated by the
Collateral Agent or any Lender by written notice to the other parties in compliance with
this Section.  

            6.2.2    
All such notices and communications shall be either (a) mailed, postage prepaid, either
by registered or certified mail, return receipt requested, in which case such notice will
be effective on the first to occur of receipt or the third Business Day following the
postmark date, (b) delivered by overnight express carrier, marked for overnight delivery
and with all overnight delivery charges prepaid, in which case such notice will be
effective on the next Business Day following the date on which the notice is consigned
for delivery, or (c) given by telephone, e-mail or facsimile transmission, in which case
such notice will be effective upon receipt, provided that any such notice shall be
confirmed in writing in the manner required in the foregoing clauses (a) and (b). Each
notice will be deemed received, even if delivery is refused by the recipient.  

9 

        6.3.    Conduct
No Waiver: Remedies Cumulative. No course of dealing on the part           of the
Collateral Agent or any Lender, nor any delay or failure on the part of           the
Collateral Agent or any Lender in exercising any right, power or privilege
          shall operate as a waiver of such right, power or privilege or otherwise
          prejudice the rights or remedies of the Collateral Agent or such Lender; nor
          shall any single or partial exercise thereof preclude any further exercise
          thereof or the exercise of any other right, power or privilege. No right or
          remedy conferred upon or reserved to the Collateral Agent or any Lender under
          this Agreement or any of the Note Documents, is intended to be exclusive of any
          other right or remedy, and every right and remedy shall be cumulative and in
          addition to every other right or remedy granted hereunder or thereunder or now
          or hereafter existing under.  

        6.4.    Expenses.
The Borrower shall pay or reimburse the Collateral Agent and,           to the extent
provided in subpart (d) below, each Lender, for the payment of:  

            6.4.1    
the reasonable fees and expenses of counsel to the Collateral Agent in connection with
advising the Collateral Agent as to its rights and responsibilities with respect thereto,
and in connection with any amendments, waivers or consents in connection therewith;  

            6.4.2    
all stamp and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing or recording of this Agreement, the Security Agreement,
and the consummation of the transactions contemplated hereby, and any and all liabilities
with respect to or resulting from any delay by the Borrower in paying or omitting to pay
such taxes or fees;  

            6.4.3    
all reasonable fees and expenses and other customary charges of the Collateral Agent in
connection with its administration and monitoring of the Collateral, including, without
limitation, reasonable fees and expenses incurred in connection with the collateral
audits performed as described in Section 2.7, and  

            6.4.4    
all costs and expenses of the Collateral Agent and, following the occurrence and during
the continuance of any Default or Event of Default, the Lenders (including, without
limitation, reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any amendment, waiver or
enforcement of, or the exercise or preservation of any rights under this Agreement or any
of the Note Documents.  

        6.5.    Obligations.
Each of the Lenders agrees to furnish to the Collateral           Agent, at any time and
from time to time as requested by the Collateral Agent, a           written certification
as to the amount of Obligations owing to the Lender, and           any other pertinent
information with respect to such Obligations, all as the           Collateral Agent may
reasonably request in connection with its administration of           this Agreement.  

        6.6.    Invalidated
Payments. If any amount distributed by the Collateral Agent           to a Lender in
accordance with the provisions hereof is subsequently required to           be returned
or repaid by the Collateral Agent to the Borrower, a guarantor, or           any of their
respective representatives or successors in interest, whether by           court order,
settlement of any preference, fraudulent conveyance or similar           claim or
otherwise, such Lender shall, promptly upon its receipt of notice from           the
Collateral Agent (which notice shall include copies of any relevant court           order
or settlement agreement), pay the Collateral Agent such amount with           interest
(to the extent the Collateral Agent is required to pay interest with           respect to
such returned or repaid payment), provided, that if any Lender shall           fail to
promptly pay the Collateral Agent any such amount, the Collateral Agent           may
deduct such amount from any amounts payable thereafter to such Lender. The
          obligations of each of the Lenders under this Section shall survive the
          repayment of the Obligations and the termination of the Note Documents. Nothing
          contained in this Section shall be deemed to give the Collateral Agent the
right           to compromise any Obligations owed to any Lender.  

10 

        6.7.    Further
Assurances. Each Lender agrees to execute and deliver to the           others any and
all such further instruments and documents and take such further           actions as may
be reasonably requested, to the end that the respective terms and           provisions of
this Agreement and the Note Documents may be carried out promptly           and fully.
Without limiting the generality of the foregoing, each Lender agrees           to
cooperate fully with each other Lender in authorizing and directing the
          Collateral Agent to take all actions reasonably necessary or desirable to
ensure           the preservation or protection of all or any portion of the Collateral,
          including without limitation, authorizing and directing expenditures by the
          Collateral Agent in connection therewith and to prepare and file proofs of
claim           and other pleadings and motions in connection with any insolvency
proceeding.  

        6.8.    Severability.
In case any one or more of the obligations of the Borrower           under this Agreement
or the Security Agreement shall be invalid, illegal or           unenforceable in any
jurisdiction, the validity, legality and enforceability of           the remaining
obligations of the Borrower shall not in any way be affected or           impaired
thereby, and such invalidity, illegality or enforceability in one           jurisdiction
shall not affect the validity, legality or enforceability of the           obligations of
the Borrower under this Agreement or the Security Agreement in           any other
jurisdiction.  

        6.9.    Waiver
of Jury Trial. THE LENDERS, THE COLLATERAL AGENT AND THE BORROWER,           AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL           KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO           A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR           ANY
RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY           THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
          WRITTEN) OR ACTIONS OF ANY OF THEM RELATING TO OR IN CONNECTION WITH THIS
          AGREEMENT OR ANY OF THE OBLIGATIONS.  

        6.10.    Successors
and Assigns. This Agreement shall be binding upon and inure to           the benefit
of the parties and their respective permitted successors and           assigns. the
Borrower may not assign any of its rights or obligations without           the prior
written consent of the Collateral Agent and the Lenders, which consent           may be
withheld in their sole discretion.  

        6.11.    Governing
Law. This Agreement is a contract made under, an shall be           governed by and
construed in accordance with, the laws of the State of Delaware           applicable to
contracts made and to be performed entirely within such State, and           without
giving effect to choice of law principles of such State.  

11 

        6.12.    Counterparts;
Facsimile Signatures. This Agreement may be executed in any           number of
counterparts, all of which taken together shall constitute one and the           same
instrument, and any of the parties hereto may execute this Agreement by           signing
any such counterpart. Any facsimile signature of this Agreement shall be           fully
enforceable as if it were an original signature.  

        6.13.    Entire
Agreement. This Agreement and the Note Documents embody the entire
          agreement and understanding between and among the Borrower, Lenders and
          Collateral Agent relating to the specific terms and conditions set forth
herein.  

        6.14.    Conflict
with Other Agreements. The parties agree that in the event of           any actual
conflict between the provisions of this Agreement and the provisions           of any
Note Document or any other agreement or instrument, the provisions of the
          specific Note Document shall control.  

        6.15.    Third
Party Rights. The terms and conditions of this Agreement are solely           for the
benefit of the Lenders and the Collateral Agent and their respective           successors
and assigns, and no other Person (including without limitation the           Borrower)
shall have any right, remedy, claim, benefit, priority or other           interest under,
or because of the existence of, this Agreement, whether as third           party
beneficiary or otherwise.  

[SIGNATURES ON
FOLLOWING PAGE] 

12 

        The
parties have caused their duly authorized representatives to execute and deliver this
Agreement as of the day and year first written above. 

		
		
BORROWER:
		
MSO HOLDINGS, INC.
		
By: /s/ Steven Straus
		       Steven Straus
		       Its President
		
COLLATERAL AGENT:
		
COMMONWEALTH ASSOCIATES, L.P.
		

By: /s/ Robert A. O'Sullivan
		Name: Robert A. O'Sullivan
		Title: CEO/President

MSO HOLDINGS, INC.

INTERCREDITOR AGREEMENT
SIGNATURE PAGE 

        The
parties have caused their duly authorized representatives to execute and deliver this
Agreement as of the day and year first written above. 

NAME OF LENDER 

RICHARD SCHONINGER 

/s/ Richard Schoninger 

ADDRESS FOR NOTICE 

25 Columbus Circle,
 Apt
69C
 New York, NY  10019
 Tel:  (917) 853-2954
 Fax: 

NAME OF LENDER 

BRUCE S. SCHONBRAUN 

/s/ Bruce S. Schonbraun  

ADDRESS FOR NOTICE 

c/o The Schonbraun McCann
Group LLP
 101 Eisenhower Parkway
 Roseland, NJ  07068
 Attn:  Bruce S. Schonbraun 
Tel:
 (973) 364-0400
 Fax:  (973) 228-3005 

NAME OF LENDER 

RICHARD O. ULLMAN 

/s/ Richard O. Ullman  

ADDRESS FOR NOTICE 

c/o NVA
1200 Route 46

West Clifton, NJ  07013
 Tel:  (973) 574-2405 
Fax:  (973) 574-2404 

NAME OF LENDER 

TIMOTHY J. OSTROWSKI 

/s/ Timothy J. Ostrowski  

ADDRESS FOR NOTICE 

1525 Sequoia Trail
Glenview, IL  60025
 Tel:  (847) 729-1746
 Fax:  (847) 729-1746 

NAME OF LENDER 

FRANK BONVINO  

/s/ Frank Bonvino  

ADDRESS FOR NOTICE 

2506 Sandy Creek Drive

Westlake Village, CA  91361
 Tel:  (818) 991-9811
 Fax:  (818) 889-4064 

NAME OF LENDER 

TERRENCE L. MEALY 

/s/ Terrence L. Mealy  

ADDRESS FOR NOTICE 

1821 Briarwood Lane

Muscatine, IA  52761
 Tel:  (563) 263-0804
 Fax:  (563) 263-0829 

NAME OF LENDER 

NEW ENGLAND PARTNERS CAPITAL,
L.P.
By:  NEP Capital, LLC, Its General Partner 

      By: /s/ John Rousseau

             Name: John Rousseau

             Title: President  

ADDRESS FOR NOTICE 

One Boston Place, Suite
3630
 Boston, MA  02108 
Attn:  John Rousseau 
 Tel:  (627) 624-8400 
Fax:  (627) 624-8416 

NAME OF LENDER 

LBJ HOLDINGS, LLC
By:
 HSP Group, Inc., Its Manager 

      By: /s/ Brian
Potiker
             Name:  Brian Potiker
             Title:  Vice
President 

ADDRESS FOR NOTICE 

c/o HSP Group, Inc.
 3366
N. Torrey Pines Court, Suite 210
 La Jolla, CA  92037
 Attn:  Lonnie Valentino
 Tel:  (858)
657-9400 
Fax:  (858) 657-9031 

2 

NAME OF LENDER 

RMC CAPITAL LLC 

By: /s/ Michael Acks
       Name:
 Michael Acks
       Title:  President 

ADDRESS FOR NOTICE  

3291 North Buffalo Drive,
Suite 8
 Las Vegas, NV  89129
 Attn:  Michael Acks 
Tel:  (702) 256-4332
 Fax:  (702) 256-7209 

NAME OF LENDER  

MORGAN INVESTORS X
 By:
Jess S. Morgan & Co., Inc.
       Its Managing General Partner  

       By: /s/ Gary
Levenstein
       Name:  Gary Levenstein
       Title:
 President, Investment Division 

ADDRESS FOR NOTICE 

c/o Jess S. Morgan & Co.,
Inc.
 16830 Ventura Blvd., Suite 411
 Encino, CA  91436
 Attn:  Gary Levenstein
 Tel:  (323)
634-2409 
Fax:  (818) 783-2175 

NAME OF LENDER 

SENECA HEALTH PARTNERS,
L.P. I
 By:  Seneca Partners GP, LLC 

      By: /s/ Rajesh
Kothari
             Name:  Rajesh Kothari       
             Title:
Secretary 

ADDRESS FOR NOTICE 

c/o Seneca Partners, Inc.

300 Park Street, Suite 400
 Birmingham, MI  48009
 Attn:  Rajesh Kothari 
Tel:  (248)
723-6650 
Fax:  (248) 723-6651 

NAME OF LENDER  

ECHO CAPITAL GROWTH
CORPORATION 

By:  /s/ Paul J. Hill

       Name:  Paul
J. Hill
       Title:  President 

3 

ADDRESS FOR NOTICE 

2000-1874 Scarth Street

Regina, Saskatchewan Canada  S4P4B3
 Attn:  Paul J. Hill
 Tel:  (306) 777-0600
 Fax:  (306)
352-7599 

NAME OF LENDER  

HARVARD DEVELOPMENTS, INC. 

By: /s/ Terry Downie
       Name:
 Terry Downie
       Title:  Vice President, Finance 

ADDRESS FOR NOTICE 

2000-1874 Scarth Street

Regina, Saskatchewan Canada  S4P4B3
 Attn:  Terry Downie 
Tel:
 Fax: 

NAME OF LENDER  

RICKY SANDLER 

/s/ Ricky Sandler  

ADDRESS FOR NOTICE 

c/o Eminence Capital, LLC

55 east 55th Street, 25th Floor 
New York, NY  10022
 Tel:  212-418-2100 
Fax:  212-418-2140 

NAME OF LENDER 

SHEA VENTURES, LLC 

By: /s/ Edmund H. Shea,
Jr.
       Name:  Edmund H. Shea, Jr.
       Title:  Manager 

ADDRESS FOR NOTICE 

655 Brea Canyon Road

Walnut, CA  91789
 Attn:  Ed Shea
 Tel:  (909) 594-9500
 Fax:  (909) 869-0840 

NAME OF LENDER 

CLK, INC. 

By:  /s/ Craig L.
Krumwiede
       Name:  Craig L. Krumwiede
       Title:  President 

ADDRESS FOR NOTICE 

17700 North Pacesetter
Way
 Scottsdale, AZ  85255
 Attn:  Craig L. Krumwiede
 Tel:  (480) 348-1118
 Fax:  (480)
348-8976 

4 

NAME OF LENDER 

ALBIN F. MOSCHNER 

/s/ Albin F. Moschner  

ADDRESS FOR NOTICE 

660 Northcroft Court
 Lake
Forest, IL  60045 
Tel:  (847) 606-1201
 Fax:  (847) 615-1053 

NAME OF LENDER 

MARK KUBOW 

/s/ Mark Kubow  

ADDRESS FOR NOTICE 

20743 W. High Ridge Drive

Kildeer, IL  60047 
Tel:  (847) 550-5018 
Fax:  (312) 577-0441 

NAME OF LENDER 

ANGELO J. BUFALINO 

/s/ Angelo J. Bufalino  

ADDRESS FOR NOTICE 

95 E. North Avenue 
Lake
Forest, IL  60045
 Tel:  (312) 609-7850
 Fax:  (312) 609-5005 

NAME OF LENDER 

CHRISTOPHER J. PERRY 

/s/ Christopher J. Perry  

ADDRESS FOR NOTICE 

830 Hill Road
 Winnetka,
IL  60093 
Tel:  (312) 873-7330 
Fax:  (312) 873-7301 

5 

NAME OF LENDER 

STEVE STRAUS 

/s/ Steve Straus  

ADDRESS FOR NOTICE 

57 E. Laurel Avenue
 Lake
Forest, IL  60045 
Tel:
 Fax: 

NAME OF LENDER 

ALBERT HENRY 

/s/ Albert Henry  

ADDRESS FOR NOTICE 

1265 Loch Lane
Lake Forest, IL  60045

Tel:  (847) 971-4061 
Fax:  (847) 735-9976 

MSO HOLDINGS, INC.

INTERCREDITOR AGREEMENT
SIGNATURE PAGE 

EXHIBIT A  

SCHEDULE OF LENDERS 

	

	Name	Address	Principal Amount ($) of Note issued in
		

			First Closing	Second Closing	Interim Closings	Total
	

	Richard Schoninger	Longwing Real Estate Ventures	$16,965	$37,265		$54,230
		262 Central Park West				
		Apt. 6C				
		New York, NY 10024				
	

	Bruce S. Schonbraun	SAFRIS McCann, LLC	$ 13,585	$ 29,799		$ 43,384
		Bertsky & Co., LLC				
		101 Eisnhower Parkway				
		Roseland, NJ 07068				
		Attn: Susan Miele-Motyka				
	

	Richard Ullman	1200 Route 46 West	$50,895	$111,795		$162,690
		Clifton, NJ 07013				
	

	Tim Ostrowski	1525 Sequoia Trail	$3,380	$7,466		$10,846
		Glenview, IL 60025				
	

	Frank Bonvino	2506 Sandycreek Drive	$6,825	$14,867		$21,692
		Westlake Village, CA 91361				
	

	Terrence L. Mealy	1821 Briarwood Lane	$16,965	$37,265		$54,230
		Muscatine, IA 52761				
	

	New England Partners	One Boston Place, Suite 3630	$101,855	$223,525		$325,380
	Capital, LP	Boston, MA 02108				
		Attn: John Rousseau				
	

A-1 

	

			Principal Amount ($) of Note issued in
	

						
	

	LBJ Holdings, LLC	3366 N. Torrey Pines Court	$6,825	$14,867		$21,692
		Suite 21				
		La Jolla, CA 92037				
		Attn: Brian Potiker				
	

	RMC Capital	3291 North Buffalo Drive	$33,930	$74,530		$108,460
		Suite 8				
		Las Vegas, NV 89129				
		Attn: Michael Acks				
	

	Morgan Investors X	16830 Ventura Blvd.	$33,930	$74,530		$108,460
		Suite 411				
		Encino, CA 91436				
		Attn: Gary Levenstein				
	

	Seneca Health Partners,	300 Park Street, Suite 400	$54,340	$119,196		$173,530
	 L.P. I	Birmingham, MI 48009				
		Facsimile No.: 248-723-6651				
		Attn: Raj Kothari				
	

	Echo Capital Growth LP I	2000-1874 Scarth Street	$33,930	$74,530		$108,460
		Regina, SK S4P4B3				
		Attn: Paul Hill				
	

	Harvard Developments,	2000-1874 Scarth Street	$64,480	$141,579		$206,059
	 Inc.	Regina, SK S4P4B3				
		Attn: Terry Downie				
	

	Ricky Sandler	1175 Park Avenue, Apt. 14A	$3,380	$7,466		$10,846
		New York, NY 10128				
	

A-2 

	

			Principal Amount ($) of Note issued in
	

						
	

	Shea Ventures, LLC	655 Brea Canyon Road	$169,715	$372,585		$542,300
		Walnut, CA 91789				
		Attn: Ed Shea				
	

	CLK, Inc.	17700 North Pacesetter Way	$3,380	$7,466		$10,846
		Scottsdale, AZ 85255				
		Attn: Craig L. Krumwiede				
	

	Al Moschner	660 Northcroft Court	$ 13,585	$ 29,799		$ 43,384
		Lake Forest, IL 60045				
	

	Mark Kubow	Navigant Consulting, Inc.	$8,450	$18,665		$27,115
		20743 W. High Ridge Drive				
		Kildeer, IL 60047				
	

	Angelo Bufalino	95 E. North Avenue	$3,380	$7,466		$10,846
		Lake Forest, IL 60045				
	

	Chris Perry	830 Hill Road	$6,825	$14,867		$21,692
		Winnetka, IL 60093				
	

	Steve Straus	57 E. Laurel Avenue	$3,380	$7,466		$10,846
		Lake Forest, IL 60045				
	

	Al Henry	1265 Loch Lane	$44,205	$97,045		$141,250
		Lake Forest, IL 60045				
	

A-3

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