**Exhibit 4.7**

 

**VITAL LIVING, INC.**

 

**CERTIFICATE OF DESIGNATION OF PREFERENCES,**

**RIGHTS AND LIMITATIONS**

**OF**

**10% SERIES A PREFERRED STOCK**

 

Theundersigned, Bradley D. Edson and Stuart Benson, do herebycertify that:

 

# 1.                                       They are theChief Executive Officer and Secretary, respectively, of Vital Living, Inc., aNevada corporation (the “Company”).

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# 2.                                       The Company isauthorized to issue 50,000,000 shares of preferred stock.

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# 3.                                       The followingresolutions were duly adopted by the Board of Directors:

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WHEREAS, the Articles of Incorporation of theCompany, as amended, provides for a class of its authorized stock known aspreferred stock, comprised of 50,000,000 shares, $0.001 par value, issuablefrom time to time in one or more series;

 

WHEREAS, the Board of Directors of theCompany is authorized to fix the dividend rights, dividend rate, voting rights,conversion rights, rights and terms of redemption and liquidation preferencesof any wholly unissued series of preferred stock and the number of sharesconstituting any series and the designation thereof, of any of them; and

 

WHEREAS, it is the desire of the Board ofDirectors of the Company, pursuant to its authority as aforesaid, to fix therights, preferences, restrictions and other matters relating to a series of thepreferred stock, which shall consist of up to 10,000,000 shares of the50,000,000 shares of preferred stock which the corporation has the authority toissue, as follows:

 

NOW, THEREFORE, BE IT RESOLVED, that theBoard of Directors does hereby provide for the issuance of a series ofpreferred stock for cash or exchange of other securities, rights or propertyand does hereby fix and determine the rights, preferences, restrictions andother matters relating to such series of preferred stock as follows:

 

**TERMS OF PREFERRED STOCK**

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The rights, preferences, restrictions andother matters relating to the 10% Series A Preferred Stock are as follows:

 

## 1.                                       DESIGNATION.  The Preferred Stock is designated as theCompany’s 10% Series A Preferred Stock (the “Preferred Stock”) and is subjectto the terms and conditions of the Stock Purchase Agreement (the “PurchaseAgreement”) of even date herewith between the Company and the Investor.

 

## 2.                                       DIVIDENDPROVISIONS.  The holders of thePreferred Stock will be entitled to a preferred dividend at the rate of 10% perannum.  Dividends on the Preferred Stockwill be cumulative and shall be paid in additional shares of Preferred Stock ata price equal to $1.00 per shares and will contain all the rights andprivileges and be subject to all the terms and conditions as set forthherein.  Dividends shall be paidsemi-annually.

 

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3.                                       LIQUIDATIONPREFERENCE.

 

### (a)                                  Inthe event of any liquidation, dissolution or winding up of this corporation,either voluntary or involuntary, subject to the rights of series of preferredstock that may from time to time come into existence, the holders of PreferredStock shall be entitled to receive, prior and in preference to any distributionof any of the assets of this corporation to the holders of Common Stock byreason of their ownership thereof, an amount per share equal to the sum of (i)$1.00 for each outstanding shares of Preferred Stock (the “Original Series AIssue Price”) and (ii) an amount equal to 12% of the Original Series A IssuePrice for each 12 months that has passed since the date of issuance of anyPreferred Stock plus any accrued or declared but unpaid dividends on such share(such amount (of declared but unpaid dividends) being referred to herein as the“Premium”).  If upon the occurrence ofsuch event, the assets and funds thus distributed among the holders of thePreferred Stock shall be insufficient to permit the payment to such holders ofthe full aforesaid preferential amounts, then, subject to the rights of seriesof preferred stock that may from time to time come into existence, the entireassets and funds of the corporation legally available for distribution shall bedistributed ratably among the holders of the Preferred Stock in proportion tothe preferential amount each such holder is otherwise entitled to received.

 

### (b)                                 Uponthe completion of the distribution required by subparagraph (a) of this Section3 and any other distribution that may be required with respect to series ofpreferred stock that may from time to time come into existence, the remainingassets of the corporation available for distribution to stockholders shall bedistributed among the holders of Preferred Stock and Common Stock pro ratabased on the number of shares of Common Stock held by each (assuming conversionof all such Preferred Stock).

 

### (c)                                  (i)                                     Forpurposes of this Section 3, a liquidation, dissolution or winding up of thiscorporation shall be deemed to be occasioned by, or to include, (A) theacquisition of the corporation by another entity by means of any transaction orseries of related transactions (including, without limitation, anyreorganization, merger or consolidation but, excluding any merger effectedexclusively for the purpose of changing the domicile of the corporation); or(B) a sale of all or substantially all of the assets of the corporation; unlessthe corporation’s shareholders of record as constituted immediately prior tosuch acquisition or sale will, immediately after such acquisition or sale (byvirtue of securities issued as consideration for the corporation’s acquisitionor sale or otherwise) hold at least 50% of the voting power of the surviving oracquiring entity.

 

(ii)                                  In any of suchevents, if the consideration received by the corporation is other than cash,its value will be deemed its fair market value.  Any securities shall be valued as follows:

 

#### (A)                              Securities notsubject to investment letter or other similar restrictions on freemarketability (covered by (B) below):

 

##### (1)                                  If traded on asecurities exchange or through NASDAQ National Market, the value shall bedeemed to be the average of the closing prices of the securities on suchexchange over the thirty-day period ending three (3) days prior to the closing;

 

##### (2)                                  If activelytraded over-the-counter, the value shall be deemed to be the average of theclosing bid or sale prices (whichever is applicable) over the thirty-day periodending three (3) days prior to the closing; and

 

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##### (3)                                  If there is noactive public market, the value shall be the fair market value thereof, asmutually determined by the corporation and the holders of at least a majorityof the voting power of all then outstanding shares of Preferred Stock.

 

#### (B)                                The method ofvaluation of securities subject to investment letter or other restrictions onfree marketability (other than restrictions arising solely by virtue of ashareholder’s status as an affiliate or former affiliate) shall be to make anappropriate discount from the market value determined as above in (A)(1), (2)or (3) to reflect the approximate fair market value thereof, as mutuallydetermined by the corporation and the holders of at least a majority of thevoting power of all then outstanding shares of such Preferred Stock.

 

(iii)                             In the event therequirements of this subsection 3(c) are not complied with, this corporationshall forthwith either:

 

#### (A)                              cause suchclosing to be postponed until such time as the requirements of this Section 3have been complied with; or

 

#### (B)                                cancel suchtransaction, in which event the rights, preferences and privileges of theholders of the Preferred Stock shall revert to and be the same as such rights,preferences and privileges existing immediately prior to the date of the firstnotice referred to in subsection 3(c)(iv) hereof.

 

(iv)                              The corporation shallgive each holder of record of Preferred Stock written notice of such impendingtransaction not later than ten (10) days prior to the shareholders’ meetingcalled to approve such transaction, or ten (10) days prior to the closing ofsuch transaction, whichever is earlier, and shall also notify such holders inwriting of the final approval of such transaction.  The first of such notices shall describe the material terms andconditions of the impending transaction and the provisions of this Section 3,and the corporation shall thereafter give such holders prompt notice of anymaterial changes.  The transaction shallin no event take place sooner than twenty (20) days after the corporation has giventhe first notice provided for herein or sooner than ten (10) days after thecorporation has given notice of any material changes provided for herein;provided, however, that such periods may be shortened upon the written consentof the holders of Preferred Stock that are entitled to such notice rights orsimilar notice rights and that represent at least a majority of the votingpower of all then outstanding shares of such Preferred Stock.

 

4.                                       REDEMPTION.

 

### (a)                                  Thiscorporation may following twelve (12) months from the date hereof (the “RedemptionDate”), at the option of the Board of Directors, redeem in whole or in part thePreferred Stock by paying in cash in exchange for the shares of Preferred Stockto be redeemed a sum equal to $1.50 per share of Series A Preferred Stock (asadjusted for any stock dividends, combinations or splits with respect to suchshares) plus all declared or accumulated but unpaid dividends on such shares(the “Redemption Price”).  Anyredemption effected pursuant to his subsection (4)(a) shall be made on a prorata basis among the holders of the Preferred Stock in proportion to the numberof shares of Preferred Stock  then heldby them.

 

### (b)                                 Subjectto the rights of series of preferred stock which may from time to time comeinto existence, at least thirty (30) but no more than sixty (60) days prior toeach Redemption Date, written notice shall be mailed, first class postageprepaid, to each holder of record (at the close of business on the business daynext preceding the day on which notice if given) of the Preferred Stock to beredeemed at the address last shown on the records of this corporation for suchholder, notifying

 

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### such holder of the redemption to be effected,specifying the number of shares to be redeemed from such holder, the RedemptionDate, the Redemption Price, the place at which payment may be obtained andcalling upon such holder to surrender to this corporation, in the manner and atthe place designated, his, her or its certificate or certificates representingthe shares to be redeemed (the “Redemption Notice”).  Except as provided in subsection (4)(c) on or after theRedemption Date, each holder of Preferred Stock to be redeemed shall surrenderto this corporation the certificate or certificates representing such shares,in the manner and at the place designated in the Redemption Notice, andthereupon the Redemption Price of such shares shall be payable to the order ofthe person whose name appears cancelled. In the event loss than all the shares represented by any suchcertificate are redeemed, a new certificate shall be issued representing theunredeemed shares.

 

### (c)                                  Fromand after the Redemption Date, unless there shall have been a default inpayment of the Redemption Price, all rights of the holders of shares ofPreferred Stock designated for redemption in the Redemption Notice as holdersof Preferred Stock (except the right to receive the Redemption Price withoutinterest upon surrender of their certificate or certificates) shall cease withrespect to such shares, and such shares shall not thereafter be transferred onthe books of this corporation or be deemed to be outstanding for any purposewhatsoever.  Subject to the rights ofseries of preferred stock which may from time to time come into existence, ifthe funds of the corporation legally available for redemption of shares ofPreferred Stock on any Redemption Date are insufficient to redeem the totalnumber of shares of Preferred Stock to be redeemed on such date, those fundswhich are legally available will be used to redeem the maximum possible numberof such shares ratably among the holders of such shares to be redeemed basedupon their holdings of Preferred Stock. The shares of Preferred Stock not redeemed shall remain outstanding andentitled to all the rights and preferences provided herein.  Subject to the rights of series of preferredstock which may from time to time come into existence, at any time thereafterwhen additional funds of the corporation are legally available for theredemption of shares of Preferred Stock, such funds will immediately be used toredeem the balance of the shares which the corporation has become obliged toredeem on any Redemption Date but which it has not redeemed.

 

5.                                       CONVERSION.  The holders of the Preferred Stock shallhave conversion rights as follows (the “Conversion Rights”):

 

### (a)                                  Rightto Convert.  Each share of PreferredStock shall be convertible, at the option of the holder thereof, at any timefollowing the first anniversary of the date of issuance of such share and on orprior to the fifth (5th) day prior to the Redemption Date, if any,as may have been fixed in any Redemption Notice with respect to the PreferredStock, at the office of this corporation or any transfer agent of such stock,into such number of fully paid and nonassessable shares of Common Stock as isdetermined by dividing the Original Series A Issue Price by the ConversionPrice applicable to such share, determined as hereafter provided, in effect onthe date the certificate is surrendered for conversion.  The Conversion Price per share for shares ofPreferred Stock shall be calculated as follows:

 

If the Preferred Stock isconverted between the first anniversary and prior to the fifteenth (15th)month from the date of issuance, the Conversion Price per share shall be equalto the Original Series A Issue Price; or

 

If following the fifteenth (15th)month from the date of issuance of the corporation’s Common Stock is publiclytraded on NASDAQ, Over-the-Counter Bulletin Board or other national stockexchange, the Conversion Price shall be 60% of the average closing price of theCommon Stock for the 30 days prior to the date of conversion (“TradingConversion Price”), however, in no event shall the Conversion Price be lessthan the Original Series A Issue Price.

 

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(b)                                 AutomaticConversion.  Each share of PreferredStock shall automatically be converted into shares of Common Stock on the firstday of the eighteenth (18th) month following the original issue dateof the Preferred Stock, at a Conversion Price equal to the greater of theTrading Conversion Price or the Original Series A Issue Price.

 

### (c)                                  Mechanicsof Conversion.  Before any holder ofPreferred Stock shall be entitled to convert the same into shares of CommonStock, he shall surrender the certificate or certificates therefore, dulyendorsed, at the office of this corporation or of any transfer agent for thePreferred Stock, and shall give written notice to this corporation at its principalcorporate office, of the election to convert the same and shall state thereinthe name or names in which the certificate or certificates for shares of CommonStock are to be issued.  Thiscorporation shall, as soon as practicable thereafter, issue and deliver at suchoffice to such holder of Preferred Stock, or to the nominee or nominees of suchholder, a certificate or certificates for the number of shares of Common Stockto which such holder shall be entitled as aforesaid.  Such conversion shall be deemed to have been made immediatelyprior to the close of business on the date of such surrender of the shares ofPreferred Stock to be converted, and the person or persons entitled to receivethe shares of Common Stock issuable upon such conversion shall be treated forall purposes as the record holder or holders of such shares of Common Stock asof such date.

 

### (d)                                 NoImpairment.  This corporation willnot, by amendment of its Articles of Incorporation or through anyreorganization, recapitalization, transfer of assets, consolidation, merger,dissolution, issue or sale of securities or any other voluntary action, avoidor seek to avoid the observance or performance of any of the terms to beobserved or performed hereunder by this corporation, but will at all times ingood faith assist in the carrying out of all the provisions of this Section 5and in the taking of all such action as may be necessary or appropriate inorder to protect the Conversion Rights of the holders of the Preferred Stockagainst impairment.

 

### (e)                                  Reservationof Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out ofits authorized but unissued shares of Common Stock, solely for the purpose ofeffecting the conversion of the shares of the Preferred Stock, such number ofits shares of Common Stock as shall from time to time be sufficient to effectthe conversion of all outstanding shares of the Preferred Stock; and if at anytime the number of authorized but unissued shares of Common Stock shall not besufficient to effect the conversion of all then outstanding shares of thePreferred Stock, in addition to such other remedies as shall be available tothe holder of such Preferred Stock, this corporation will take such corporateaction as may, in the opinion of its counsel, be necessary to increase itsauthorized but unissued shares of Common Stock to such number of shares asshall be sufficient for such purposes, including, without limitation, engagingin best efforts to obtain the requisite shareholder approval of any necessaryamendment to the corporation’s Articles of Incorporation.

 

### (f)                                    Notice.  Any notice required by the provisions ofthis Section 5 to be given to the holders of shares of Preferred Stock shall bedeemed given if deposited in the United States mail, postage prepaid, andaddressed to each holder of record at his address appearing on the books ofthis corporation.

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6.                                       VOTINGRIGHTS.  The holder of each share ofPreferred Stock shall not have any voting rights.

 

## 7.                                       PROTECTIVEPROVISIONS.  So long as any sharesof Preferred Stock are outstanding, this corporation shall not without firstobtaining the approval (by vote or written consent, as provided by law) of theholders of Preferred Stock which is entitled, other than solely by law, to votewith respect

 

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## to the matter,and which Preferred Stock represents at least a majority of the voting power ofthe then outstanding  shares of suchPreferred Stock:

 

### (a)                                  sell,convey, or otherwise dispose of or encumber all or substantially all of itsproperty or business or merge into or consolidate with any other corporation(other than a wholly-owned subsidiary corporation) or effect any transaction orseries of related transactions in which more than fifty percent (50%) of thevoting power of the corporation is disposed of;

 

### (b)                                 alteror change the rights, preferences or privileges of the shares of PreferredStock so as to affect adversely the shares;

 

### (c)                                  increaseor decrease (other than by redemption or conversion) the total number ofauthorized shares of preferred stock;

 

### (d)                                 authorizeor issue, or obligate itself to issue, any other equity security, including anyother security convertible into or exercisable for any equity security (i)having a preference over, or being on a parity with, the Preferred Stock withrespect to dividends or upon liquidation, or (ii) having rights similar to anyof the rights of the Preferred Stock; or

 

### (e)                                  amendthe corporation’s Articles of Incorporation or by-laws.

 

RESOLVED, FURTHER, that the Chairman, thechief executive officer, president or any vice president, and the secretary orany assistant secretary, of the Corporation be and they hereby are authorizedand directed to prepare and file a Certificate of Designation of Preferences,Rights and Limitations in accordance with the foregoing resolution and theprovisions of Nevada law.

 

IN WITNESS WHEREOF, the undersigned haveexecuted this Certificate this 7th day of August, 2003.

 

 
| /s/ Bradley  D. Edson                      |                      | /s/ Stuart  Benson |   |
|--------------------------------------------|---------------------------|--------------------|--------|
| Bradley D.  Edson, Chief Executive Officer | Stuart  Benson, Secretary |

 

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