AGREEMENT AND PLAN OF MERGER

AMONG

NU SKIN INTERNATIONAL, INC.

A UTAH CORPORATION

PHARMANEX LICENSE ACQUISITION CORPORATION

A UTAH CORPORATION AND A WHOLLY-OWNED

SUBSIDIARY OF NU SKIN INTERNATIONAL, INC.

CARODERM, INC.

A UTAH CORPORATION

AND

CERTAIN SHAREHOLDERS OF CARODERM, INC.

DATED AS OF

MARCH 7, 2006

AGREEMENT AND PLAN OF MERGER

        THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of March
7, 2006 by and among Nu Skin International, Inc., a Utah corporation (“Parent”),
Pharmanex License Acquisition Corporation, a Utah corporation and a wholly-owned
subsidiary of Parent (“Purchaser”), Caroderm, Inc., a Utah corporation
(“Caroderm”), and the following shareholders of Caroderm: E. Dallin Bagley,
Werner Gellermann and Paul S. Bernstein (such shareholders collectively, the
“Shareholders”). Reference is made to Article IX for the definitions of certain
terms used in this Agreement.

        In consideration of the mutual agreements contained in this Agreement,
and for other good and valuable consideration, the value, receipt and
sufficiency of which are acknowledged, the parties agree as follows:

ARTICLE I
THE MERGER

        1.1         The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Caroderm will be merged with Purchaser (the
“Merger”) in accordance with the provisions of the Revised Business Corporation
Act of the State of Utah (the “Utah Act”). Following the Merger, the Purchaser
will continue as the surviving corporation (the “Surviving Corporation”) and the
separate corporate existence of Caroderm will cease. Caroderm and Purchaser are
sometimes referred to collectively herein as the “Constituent Corporations.”

        1.2         The Closing. The closing of the Merger contemplated by this
Agreement (the “Closing” or “Closing Date”) will take place upon execution of
this Agreement by each of the parties hereto.

        1.3         Effective Time. According to the terms of this Agreement, on
the Closing Date (or on such other date as the parties may agree), Caroderm and
Purchaser will file with the Utah Division of Corporations and Commercial Code
(the “Utah Division”) appropriate articles of merger (the “Articles of Merger”)
and make all other filings or recordings required by the Utah Act in connection
with the Merger. The Merger will be consummated on the later of the date on
which the Articles of Merger have been filed with the Utah Division or such time
as is agreed upon by the parties and specified in the Articles of Merger. The
time the Merger becomes effective in accordance with the Utah Act is referred to
in this Agreement as the “Effective Time.”

        1.4         Effects of the Merger. The Merger will have the effects set
forth in this Agreement and Section 16-10a-1106 of the Utah Act. Without
limiting the generality of the foregoing, as of the Effective Time, the
Surviving Corporation will succeed to all the properties, rights, privileges,
powers, franchises and assets of the Constituent Corporations, and all debts,
liabilities and duties of the Constituent Corporations will become debts,
liabilities and duties of the Surviving Corporation.

        1.5         Organizational Documents. At the Effective Time, the
articles of incorporation and bylaws of Purchaser (as in effect immediately
prior to the Effective Time) will become the articles of incorporation and
bylaws of the Surviving Corporation until thereafter amended in accordance with
their respective terms and the Utah Act.

        1.6         Directors and Officers. The directors and the officers of
Purchaser at the Effective Time will be the initial directors and officers of
the Surviving Corporation and will hold office from the Effective Time in
accordance with the articles of incorporation and bylaws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.

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         1.7          Conversion of Shares. As of the Effective Time, by virtue
of the Merger and without any action on the part of Caroderm, Parent or
Purchaser:

          1.7.1         Merger Consideration. Each of the shares of Caroderm’s
capital stock (other than any Dissenting Shares) issued and outstanding
immediately prior to the Effective Time (such aggregate number of common shares,
the “Caroderm Shares”) will be converted into the right to receive cash in an
aggregate amount equal to the Per Share Merger Consideration. The “Per Share
Merger Consideration” shall consist of the aggregate cash sum of Four Million
Dollars ($4,000,000), subject to the Holdback (the “Merger Consideration”),
divided by the Caroderm Shares.

          1.7.2         Conversion of Shares of Purchaser. Each issued and
outstanding share of capital stock of Purchaser shall be converted into one
share of common stock of the Surviving Corporation.

        1.8         Funding of Holdback. At the Closing, Parent shall deduct Two
Million Dollars ($2,000,000) from the Merger Consideration and withhold such
amount for future distribution in accordance with the provisions of Section
7.3.3. Such amount shall be withheld, on a pro rata basis, from the Merger
Consideration otherwise deliverable to Caroderm’s shareholders on delivery of
their Caroderm Stock Certificates in accordance with Section 2.1.

ARTICLE II
PAYMENT

        2.1         Surrender of Caroderm Stock Certificates. From and after the
Effective Time, each holder of a stock certificate that immediately prior to the
Effective Time represented outstanding Caroderm Shares (a “Caroderm Stock
Certificate”) will be entitled to receive in exchange therefor, upon surrender
thereof to Parent, the Per Share Merger Consideration into which the Caroderm
Shares evidenced by such Caroderm Stock Certificate were converted pursuant to
the Merger. No interest will be payable on the Per Share Merger Consideration to
be paid to any holder of a Caroderm Stock Certificate irrespective of the time
at which such Caroderm Stock Certificate is surrendered for exchange.

        2.2         Caroderm Stock Certificate Surrender Procedures;
Transmittals. No later than five (5) business days after the Effective Time,
Caroderm will have mailed to each record holder of a Caroderm Stock Certificate
a letter of transmittal in a form mutually agreeable to the parties, including
instructions for use in effecting the surrender of Caroderm Stock Certificates
for the Per Share Merger Consideration to which such holder is entitled. Upon
the surrender to Parent of a Caroderm Stock Certificate together with a duly
executed and completed letter of transmittal and all other documents and other
materials required by Parent to be delivered in connection therewith, following
the Effective Time, the holder will be entitled to receive the aggregate Per
Share Merger Consideration into which the Caroderm Stock Certificate so
surrendered has been converted in accordance with the provisions of this
Agreement. Until so surrendered, each outstanding Caroderm Stock Certificate
will be deemed from and after the Effective Time, for all corporate purposes, to
evidence the right to receive the aggregate Per Share Merger Consideration into
which the Caroderm Shares represented by such Caroderm Stock Certificate have
been converted in accordance with the provisions of this Agreement.

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        2.3         Transfer Books. The stock transfer books of Caroderm will be
closed at the Effective Time, and no transfer of any Caroderm Shares will
thereafter be recorded on any of the stock transfer books. In the event of a
transfer of ownership of any Caroderm Shares prior to the Effective Time that is
not registered in Caroderm’s stock transfer records at the Effective Time, the
Per Share Merger Consideration into which such Caroderm Shares have been
converted in the Merger will be paid to the transferee in accordance with the
provisions of Section 2.2 only if the Caroderm Stock Certificate is surrendered
as provided in Section 2.2 and accompanied by all documents required to evidence
and effect such transfer (including evidence of payment of any applicable stock
transfer taxes).

        2.4         Dissenters Rights. Notwithstanding anything in this
Agreement to the contrary, Caroderm Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has complied with all of the relevant
provisions of Section 16-10a-1301 et. seq. of the Utah Act regarding appraisal
for such shares (“Dissenting Shares”), will not be converted into a right to
receive the Per Share Merger Consideration, unless such holder fails to perfect
or withdraws or otherwise loses its right to appraisal. Each holder of
Dissenting Shares who becomes entitled to payment for such Dissenting Shares
under the provisions of the Utah Act, will receive payment thereof from the
Surviving Corporation and such Dissenting Shares will no longer be outstanding
and will automatically be canceled and retired and will cease to exist.

        2.5         Lost Caroderm Stock Certificates. If any Caroderm Stock
Certificate has been lost, stolen or destroyed, upon the making of an affidavit
(in form and substance reasonably acceptable to Parent) of that fact by the
person making such a claim, Parent will deliver in exchange for the affidavit
representing such lost, stolen or destroyed Caroderm Stock Certificate the Per
Share Merger Consideration pursuant to Section 2.2.

        2.6         No Rights as Stockholder. From and after the Effective Time,
the holders of Caroderm Stock Certificates will cease to have any rights as a
stockholder of the Surviving Corporation except as otherwise expressly provided
in this Agreement or by applicable Laws, and Parent will be entitled to treat
each Caroderm Stock Certificate that has not yet been surrendered for exchange
solely as evidence of the right to receive the aggregate Per Share Merger
Consideration to which such holder is entitled.

        2.7         Escheat. Neither Parent, Purchaser nor Caroderm will be
liable to any former holder of Caroderm Shares for any portion of the Per Share
Merger Consideration delivered to any public official pursuant to any applicable
abandoned property, escheat or similar Law. In the event any Caroderm Stock
Certificate has not been surrendered for the Merger Consideration prior to the
sixth anniversary of the Closing Date, or prior to such earlier date as of which
such Caroderm Stock Certificate or the Per Share Merger Consideration payable
upon the surrender thereof would otherwise escheat to or become the property of
any Governmental Entity, then the Per Share Merger Consideration otherwise
payable upon the surrender of such Caroderm Stock Certificate will, to the
extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all rights, interests and adverse claims of any
person.

        2.8         Accounting. Upon the request of any Shareholder, but not
more often than once in any six-month period, Parent shall provide to the
Shareholders an accounting of all payments of Merger Consideration to holders of
the Caroderm Shares.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT

        Parent or Purchaser, as set forth below, hereby represents and warrants
to Caroderm and the Shareholders as follows:

        3.1         Corporate Organization; Officers and Directors. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah and has full corporate power and authority to carry on its
business as now conducted. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah and has full
corporate power and authority to carry on its business as now conducted. Parent
directly owns and has power to vote all of the outstanding capital stock of
Purchaser. Purchaser was formed for the purpose of effecting the Merger and has
not conducted, and will not conduct, any business prior to the Effective Time
other than that which is necessary to effectuate the Merger.

        3.2         Authority Relative to this Agreement; No Violation.

          3.2.1         Authority. Each of Parent and Purchaser has the
corporate power to enter into this Agreement, to carry out its obligations
hereunder, to perform and comply with all the terms and conditions hereof to be
performed and complied with by it, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance and compliance with all the terms and conditions hereof to be
performed and complied with, and the consummation of the transactions
contemplated hereby, by Parent and Purchaser have been duly authorized by all
requisite corporate action on the part of each of Parent and Purchaser. This
Agreement has been duly and validly executed and delivered by each of Parent and
Purchaser and is the legal, valid and binding obligation of each of Parent and
Purchaser enforceable against each of them in accordance with its terms. Any
reference in this Article III to an agreement being “enforceable” shall be
deemed to be qualified to the extent such enforceability is subject to (i) laws
of general application relating to bankruptcy, insolvency, reorganization,
moratorium and the relief of debtors, and similar laws affecting creditors’
rights and remedies generally, and (ii) the availability of specific
performance, injunctive relief and other equitable remedies, regardless of
whether enforcement is sought in a proceeding at law or in equity.

          3.2.2         Compliance with Organizational Documents and Laws.
Neither the execution and delivery of this Agreement by Parent and Purchaser,
the performance and compliance by Parent and Purchaser of and with the terms and
conditions hereof to be performed and complied with by Parent and Purchaser, nor
the consummation by Parent and Purchaser of the transactions contemplated hereby
will (i) violate, conflict with or result in a breach of, any provision of the
Organizational Documents of Parent or Purchaser or (ii) assuming that the
approvals referred to in Section 3.3 are obtained, (A) violate, conflict with or
result in a breach of any Law applicable to Parent or Purchaser or any of the
respective properties or assets of Parent or Purchaser, which violation,
conflict or breach is material to Parent or Purchaser or could prevent or
materially delay Parent or Purchaser from consummating the transactions
contemplated hereby.

        3.3         Consents and Approvals. There are no consents, approvals or
authorizations of or designations, declarations or filings with any Governmental
Entities or any other person on the part of Parent required for the validity of
the execution and delivery by Parent and Purchaser of this Agreement or the
performance and compliance by them of and with the terms and conditions of this
Agreement to be performed and complied with by them or the consummation of the
transactions contemplated hereby, other than (i) the filing of the Articles of
Merger in accordance with the Utah Act, (ii) compliance with

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any applicable requirements of the Securities Act and the Exchange Act and (iii)
such actions as may be required under any applicable state securities or blue
sky laws.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CARODERM AND THE SHAREHOLDERS

        Except as set forth on the Disclosure Schedule, Caroderm and the
Shareholders, jointly and severally, hereby represent and warrant to Parent and
Purchaser as follows:

        4.1         Organization and Qualification. Caroderm is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full corporate power and authority to carry on its
business as now being conducted. Caroderm is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
wherein the character of its properties owned or leased or the nature of its
activities makes such qualification legally required, except where the failure
to be so qualified would not, taken together, have a Material Adverse Effect.
Copies of the Caroderm Organizational Documents, as in effect on the date
hereof, including all amendments thereto, have been previously delivered by
Caroderm to Parent. Caroderm’s current and former officers and/or directors
consist exclusively of the Shareholders and Robert McClane.

        4.2         Capitalization. There are 10,000,000 duly authorized shares
of Caroderm common stock, no par value, of which 2,025,946 shares are issued and
outstanding. All of the issued and outstanding shares of capital stock of
Caroderm have been duly authorized and are validly issued, fully paid, and
nonassessable. Section 4.2 of the Disclosure Schedule sets forth the name of
each holder of Caroderm Shares and the number of Caroderm Shares held by such
holder. There are no outstanding options, warrants, calls, stock appreciation
rights or other rights, or convertible debt or security, or any share reserved
for issuance or any arrangement, subscription agreement, plan, or commitment,
relating to the issued (including treasury stock) or unissued capital stock or
other securities of Caroderm granted or made by Caroderm or to which Caroderm is
a party. Caroderm has no option, equity incentive or similar plan. Caroderm is
not a party or subject to any agreement or understanding and, to the Knowledge
of Caroderm or the Shareholders, other than in connection with this Agreement,
there is no agreement or understanding between any persons that affects or
relates to the voting or giving of written consents with respect to any
securities of Caroderm or the voting by any director or shareholder of Caroderm.
No shareholder of Caroderm or any Affiliate thereof is indebted to Caroderm, and
Caroderm is not indebted to any of its shareholders or any Affiliate thereof.
Caroderm is not under any contractual or other obligation to register any of its
presently outstanding securities or any of its securities that could have been
issued in the future. There are no rights of refusal, co-sale rights or
registration rights granted by Caroderm with respect to any of Caroderm’s
capital stock. Each shareholder of Caroderm that is an individual is either a
citizen or a resident of the United States and, in either case, is not subject
to federal backup withholding taxes.

        4.3         Subsidiaries. Caroderm has no subsidiaries. Caroderm does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, limited liability company,
joint venture or other business association or entity.

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        4.4          Authority Relative to this Agreement; No Violation;
Consents.

          4.4.1         Authority; Approval; Due Execution. Caroderm has the
corporate power to enter into this Agreement, to carry out its obligations
hereunder, to perform and comply with all the terms and conditions hereof to be
performed and complied with by it, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Caroderm,
the performance and compliance with all the terms and conditions hereof to be
performed and complied with by Caroderm, and the consummation by Caroderm of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Caroderm, including approval of the Merger by
the holders of at least ninety-six percent (96%) of the Caroderm Shares. The
approval by the holders of such percentage of Caroderm Shares, voting together
as a single class, is sufficient to approve the Merger in accordance with the
requirements of the Utah Act and Caroderm’s Organizational Documents. The Board
of Directors of Caroderm, by unanimous written consent effective February 17,
2006, (i) determined that this Agreement, the Merger and the transactions
contemplated thereby are advisable and in the best interests of holders of
Caroderm Shares, and (ii) resolved to recommend to holders of Caroderm Shares
that such holders approve and adopt the Merger and this Agreement. This
Agreement has been duly and validly executed and delivered by Caroderm and is a
legal, valid and binding obligation of Caroderm enforceable against Caroderm in
accordance with its terms. Any reference in this Article IV to an agreement
being “enforceable” shall be deemed to be qualified to the extent such
enforceability is subject to (i) laws of general application relating to
bankruptcy, insolvency, reorganization, moratorium and the relief of debtors,
and similar laws affecting creditors’ rights and remedies generally, and (ii)
the availability of specific performance, injunctive relief and other equitable
remedies, regardless of whether enforcement is sought in a proceeding at law or
in equity.

          4.4.2         Compliance with Organizational Documents and Laws.
Except as disclosed in Section 4.4.2 of the Disclosure Schedule, neither the
execution and delivery of this Agreement by Caroderm, the performance and
compliance by Caroderm of and with the terms and conditions hereof to be
performed and complied with by it, nor the consummation by Caroderm of the
transactions contemplated hereby will: (i) violate, conflict with or result in a
breach of, any provision of the Organizational Documents of Caroderm; or (ii)
assuming that the approvals referred to in Section 4.6 are obtained, (A)
violate, conflict with or result in a breach of any Law applicable to Caroderm
or any of the properties or assets of Caroderm, which violation, conflict or
breach is material to Caroderm or could prevent Caroderm from consummating the
transactions hereby or (B) violate, conflict with, result in a breach of, result
in the impairment of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, result in the creation
or imposition of any Lien upon any of the properties or assets of Caroderm
under, or require any consent, approval, waiver, exemption, amendment,
authorization, notice or filing under, any of the terms, conditions or
provisions of, any Material Contract to which Caroderm is a party or by which
any of its properties or assets may be bound or affected, except for Liens
created by or through Parent or Purchaser.

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        4.5         Financial Statements, Financial Condition and Books and
Records of Caroderm.

          4.5.1         Caroderm Financial Statements. Caroderm has delivered to
Purchaser the following financial statements (all such financial statements
collectively, the “Financial Statements”): (i) the unaudited consolidated
balance sheet of Caroderm and the related unaudited consolidated statement of
cash flows as of and for the years ended December 31, 2005, December 31, 2004
and December 31, 2003, and the unaudited consolidated statement of operations
and shareholders’ equity as of and for the years ended December 31, 2005,
December 31, 2004 and December 31, 2003; and (ii) the unaudited consolidated
balance sheet of Caroderm (the “Most Recent Balance Sheet”), and the related
unaudited consolidated statement of cash flows as of and for the month ended
January 31, 2006 and the unaudited consolidated statement of operations and
shareholders’ equity as of and for the month ended January 31, 2006 (such
preceding financial statements collectively, the “Most Recent Financial
Statements”). The Financial Statements are true and correct, have been prepared
consistently from year to year and, with respect to statements of operations and
cash flows, present fairly in all material respects the results of operations of
Caroderm for the respective periods covered, and with respect to balance sheets,
present fairly in all material respects the consolidated financial condition of
Caroderm as of their respective dates; provided however that the Most Recent
Financial Statements are subject to year-end adjustments which will not be
material. Section 4.5.1 of the Disclosure Schedule sets forth all of Caroderm’s
liabilities and indebtedness.

          4.5.2         Books and Records. The books of account, minute books,
stock record books, and other records of Caroderm that have been provided to
Parent are complete and correct in all material respects. The minute books of
Caroderm contain accurate records of all corporate action taken by Caroderm’s
shareholders, its Board of Directors, and the committees of its Board of
Directors. At the Effective Time, all of those books and records will be in the
possession of the Surviving Corporation. Caroderm maintains appropriate and
sufficient financial records that allow it to properly and completely prepare
the Financial Statements and other financial reports.

        4.6         No Consents. There are no consents, approvals or
authorizations of or designations, declarations or filings with any Governmental
Entities or any other person on the part of Caroderm required for the validity
of the execution and delivery by Caroderm of this Agreement or the performance
and compliance by it of and with the terms and conditions of this Agreement to
be performed and complied with by it or the consummation of the transactions
contemplated hereby, other than as set forth in Section 4.6 of the Disclosure
Schedule.

        4.7         Absence of Material Changes or Events. Except as disclosed
in Section 4.7 of the Disclosure Schedule, since the date of the Most Recent
Balance Sheet, Caroderm has conducted its business only in the ordinary course,
and since the date of the Most Recent Balance Sheet, there has been no Material
Adverse Effect on Caroderm’s business, assets or operations. Except as referred
to in this Agreement or as disclosed in Section 4.7 of the Disclosure Schedule,
Caroderm has not entered into or agreed to enter into any transaction, agreement
or commitment, suffered the occurrence of any event or events or experienced any
change in financial condition, business, results of operations or otherwise
that, in the aggregate, has (i) interfered with its normal and usual operations
of the business or business prospects of the business or (ii) resulted in a
Material Adverse Effect on its business, assets, operations, prospects or
condition (financial or other) or could reasonably be expected to have such a
Material Adverse Effect.

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        4.8         Taxes and Tax Returns. Except as set forth in Section 4.5.1
of the Disclosure Schedule, Caroderm has filed all federal, state and local Tax
and information returns which are required to be filed by it and such returns
are true and correct. Except as set forth in Section 4.5.1 of the Disclosure
Schedule, Caroderm has paid all Taxes, interest and penalties, if any, reflected
in such Tax returns or otherwise due and payable by it. Caroderm has no
Knowledge of any material additional assessments or any basis therefor. The
reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) on the
balance sheet of Caroderm as of the Most Recent Balance Sheet accurately
reflects all liabilities of Caroderm for such Taxes or other governmental
charges. Except as set forth in Section 4.5.1 of the Disclosure Schedule,
Caroderm has withheld or collected from each payment made to its employees and
other service providers the amount of all Taxes required to be withheld or
collected therefrom and has paid over such amounts to the appropriate taxing
authorities. Any Tax deficiencies proposed as a result of any governmental
audits have been paid or settled, there are no present disputes or audits as to
Taxes payable by Caroderm and, to Caroderm’s Knowledge, no such additional Taxes
or audits have been proposed or threatened.

        4.9         Employees.

          4.9.1         Agreements; Benefit Plans. Caroderm does not sponsor,
maintain or contribute to, and has never sponsored, maintained or contributed to
or incurred any obligation or liability under any pension, retirement,
profit-sharing, life, health, accident or other employee benefit plan, practice,
policy or arrangement, including, but not limited to, any employee benefit plan
within the meaning of Section 3(3) of ERISA. No other Person that is treated as
a single employer with Caroderm under Section 414(b), (c), (m) or (o) of the
Code has ever maintained, sponsored or contributed to any employee benefit plan
that is subject to Title IV of ERISA or Section 412 of the Code.

          4.9.2         Employees; Compensation. Section 4.9.2 of the Disclosure
Schedule sets forth a true and correct list of all of Caroderm’s employees,
together with each employee’s annual rate of compensation (including all bonus
amounts paid to such employees since December 31, 2004). Except as set forth in
Section 4.9.2 of the Disclosure Schedule: (i) as of the date of this Agreement,
no officer or employee of Caroderm has obtained any binding and effective
commitment of Caroderm to pay to him or her any amounts following the Effective
Date (other than amounts owed to any such employee for services rendered during
the normal pay period ending on or prior to the Closing Date), (ii) Caroderm is
not obligated to provide health or welfare benefits to retirees or other former
employees of Caroderm or any other employer, or their dependents, (iii) Caroderm
is not a party to any collective bargaining agreement or other labor agreement
with any union or labor organization or to any conciliation agreement with the
Department of Labor, the Equal Employment Opportunity Commission or any federal,
state or local agency which requires equal employment opportunities or
affirmative action in employment, and (iv) there is no strike, dispute,
slowdown, work stoppage or lockout pending against or involving Caroderm.
Included in Section 4.9.2 of the Disclosure Schedule is a list of all employees
and officers of Caroderm for which Caroderm does not have such a nondisclosure
agreement. To the Knowledge of Caroderm or the Shareholders, no employee (or
person performing similar functions) of Caroderm is in violation of any such
agreement or any employment agreement, noncompetition agreement, patent
disclosure agreement, invention assignment agreement, proprietary information
agreement or other contract or agreement relating to the relationship of such
employee with Caroderm or any other party. All employees of Caroderm are
employed on an “at will” basis, and are eligible to work and are lawfully
employed in the United States. Except as contemplated herein and except as
disclosed on Section 4.9.2 of the Disclosure Schedule, no officer or employee
has a right to severance benefits or other payouts as a result of the
transactions contemplated hereby. Section 4.9.2 of the Disclosure Schedule sets

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  forth the practice of Caroderm with respect to payment of severance benefits
to terminated employees.

        4.10         Broker’s Fees. Neither Caroderm nor any of its officers or
directors has employed any broker, finder or investment banker or incurred any
liability for any broker’s fees, financial advisory fees, investment banker’s or
finder’s fees in connection with any of the transactions contemplated by this
Agreement.

        4.11         Litigation. Except as set forth in Section 5.4 of this
Agreement, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental agency or authority or arbitration tribunal
by which Caroderm is bound, or to which any of its assets, properties,
securities or businesses is subject. As of the date hereof there are no actions,
suits, claims, legal, administrative or arbitral proceedings or investigations,
pending or, to the Knowledge of Caroderm or the Shareholders, threatened against
Caroderm or any of its assets or properties.

        4.12         Authorizations; Compliance with Laws. Caroderm holds all
authorizations, permits, licenses, variances, exemptions, orders and approvals
required by Governmental Entities for the lawful conduct of its business taken
as a whole, to own or hold under lease the properties and assets it owns or
holds under lease and to perform all of its obligations under the agreements to
which it is a party (the “Permits”), except for such authorizations, permits,
licenses, variances, exemptions, orders and approvals which the failure to hold,
taken together, would not have a Material Adverse Effect. Caroderm is in
compliance with the terms of the Permits except where the failure to be in such
compliance will not, taken together, have a Material Adverse Effect. Caroderm is
and has been in compliance with all federal, state, local and foreign laws,
rules, regulations, ordinances, decrees and orders applicable to the operation
of its business, to its employees, or to its property, except where the failure
to comply would, individually or in the aggregate, not have a Material Adverse
Effect. Caroderm has not received any written notification of any asserted
present or past unremedied material failure by Caroderm to comply with any of
such laws, rules, ordinances, decrees or orders.

        4.13         Absence of Defaults. Caroderm is not in default under or in
violation of any provision of its Organizational Documents, or in material
default or violation of any Material Contract and, to the Knowledge of Caroderm
or the Shareholders, no event has occurred which, with notice, lapse of time
and/or action by a third party, would constitute or result in such a default or
violation, except where such default or violation would not have a Material
Adverse Effect.

        4.14         Material Contracts. Except as set forth in Section 4.14 of
the Disclosure Schedule, as of the date of this Agreement, Caroderm is not a
party to any of the following (the “Material Contracts”). True copies of such
Material Contracts, including all amendments and supplements thereto, have been
delivered to Parent:

          4.14.1         any contract or agreement with any current or former
officer, director, or principal stockholder, or any partnership, corporation,
limited liability company, joint venture, or other entity with which any such
person is an Affiliate;

          4.14.2         any contract or agreement with any labor union or
association representing any employee;

          4.14.3         any indenture, mortgage, promissory note, loan
agreement or other agreement or commitment for the borrowing of money or for a
line of credit;

9

          4.14.4         any lease, sublease or other agreement pursuant to
which it is a lessee of or holds or operates any real or personal property owned
by any third party;

          4.14.5         any option or other executory agreement or other
agreement with remaining obligations thereunder to purchase or acquire any
interest in assets or property other than in the ordinary course of business;

          4.14.6         any option or other executory agreement or other
agreement with remaining obligations thereunder to sell or dispose of any
interest in assets or property other than in the ordinary course of business;

          4.14.7         any contract or agreement relating to joint ventures or
similar arrangements by which the assets, properties, rights, or business is
affected;

          4.14.8         any license of rights of or by Caroderm;

          4.14.9         any contract or agreement which could reasonably be
expected to result in a payment by Caroderm;

          4.14.10         any contract or agreement under which Caroderm has the
obligation to issue or sell any security;

                  4.14.11         any contract or agreement under which Caroderm
currently provides, or may, in the future, provide services or currently sells
or distributes or may, in the future, sell or distribute any products to others;

                  4.14.12         any employment agreement, whether express or
implied, or any other agreement for services that contains severance or
termination pay liabilities or obligations; and

                  4.14.13         any Material Contract that contains a
noncompetition or exclusivity agreement or other arrangement that would prevent
Caroderm from carrying on its business as currently conducted anywhere in the
world.

        4.15         Insurance Policies. Caroderm has no insurance policies.

      4.16         Intellectual Property.

          4.16.1         Caroderm Intellectual Property. Section 4.16.1 of the
Disclosure Schedule sets forth an accurate and complete list of all United
States and foreign (a) patents, patent rights, patent applications, and
continuing (continuation, divisional, or continuation-in-part) applications,
re-issues, extensions, renewals, and re-examinations thereof and patents issued
thereon (“Patents”); (b) registered and material unregistered trademarks and
service marks, trademark and service mark rights, trade names, and domain names
(“Marks”); (c) registered and material unregistered copyrights; (d) trade
secrets and inventions, whether patentable or unpatentable; (e) other
intellectual, industrial, or proprietary rights; (f) pending applications for
and registrations of any of the foregoing; and (g) license rights to any of the
foregoing (collectively “Intellectual Property”); that are owned by Caroderm
(the “Caroderm Intellectual Property”).

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          4.16.2         Sublicenses or Other Liens. Except as set forth in
Section 4.16.2 of the Disclosure Schedule, Caroderm has not granted any
licenses, sublicenses, or other rights under or to, nor do any other Liens exist
upon, any of the Caroderm Intellectual Property, including but not limited to
that certain Patent License Agreement that was entered into between the
University of Utah Research Foundation, a Utah non-profit corporation (the
“University”), and Spectrotek, L.C. and was subsequently assigned to Caroderm
(the “Caroderm Patent License”).

          4.16.3         Adverse Claims Regarding Ownership and Validity of
Patent Rights. Except as set forth in Section 4.16.3 of the Disclosure Schedule,
neither Caroderm nor any Shareholder has Knowledge of any claim (a) challenging
the University’s ownership of the patent(s) licensed to Caroderm under the
Caroderm Patent License or suggesting that any other Person has any claim of
legal or beneficial ownership with respect to those Patent(s), nor to the
Knowledge of Caroderm and each Shareholder is there a reasonable basis for any
such claim; (b) challenging the validity or enforceability of the patent(s)
licensed to Caroderm under the Caroderm Patent License, nor to the Knowledge of
Caroderm and each Shareholder is there a reasonable basis for any such claim; or
(c) asserting or suggesting that any Person other than Caroderm has any rights
within the scope of the rights granted to Caroderm under the Caroderm Patent
License, nor to the Knowledge of Caroderm and each Shareholder is there a
reasonable basis for any such claim.

          4.16.4 No Violation. Except as set forth in Section 4.16.4 of the
Disclosure Schedule, to the Knowledge of Caroderm and each Shareholder, no
person is materially infringing, misappropriating, diluting, or otherwise
violating any Caroderm Intellectual Property, including but not limited to
practicing any technology, producing any products, or providing any services
that misappropriate or otherwise infringe upon Caroderm’s rights under the
Caroderm Patent License.

        4.17         Environmental Matters. (i) Caroderm is and has been in
compliance with all applicable Environmental Laws; (ii) Caroderm is not subject
to any liability under any Environmental Law; and (iii) Caroderm has not
received any notice from any governmental body alleging that Caroderm is or may
be in violation of, or liable under, any Environmental Law.

        4.18         Labor. There are no material labor disputes, employee
grievances or disciplinary actions pending or, to the Knowledge of Caroderm or
the Shareholders, threatened against or involving Caroderm or any of its present
or former employees. Caroderm has complied with all provisions of law relating
to employment and employment practices, terms and conditions of employment,
wages and hours that are material to the business of Caroderm, and Caroderm is
not engaged in any unfair labor practice and has no liability for any arrears of
wages or Taxes or penalties for failure to comply with any such provisions of
law. There is no labor strike, dispute, slowdown or stoppage pending or, to the
Knowledge of Caroderm or the Shareholders, threatened against or affecting
Caroderm, and Caroderm has not experienced any material work stoppage or other
labor difficulty since its incorporation. No collective bargaining agreement is
binding on Caroderm. Neither Caroderm nor the Shareholders has any Knowledge of
any organizational efforts presently being made or threatened by or on behalf of
any labor union with respect to Caroderm’s employees.

        4.19         Insider Interests. Except as set forth in the Disclosure
Schedule, (i) no shareholder or officer, director or employee of Caroderm has
any interest (other than as a holder of Caroderm capital stock) in any material
real property, personal property, technology or intellectual property rights
used in or directly pertaining to Caroderm’s business, including, without
limitation, inventions, patents, trademarks or trade names, or in any material
agreement, contract, arrangement or obligation relating to Caroderm, its present
or prospective business or its operations; (ii) there are no material
agreements, understandings or proposed transactions between Caroderm and any of
its officers, directors, shareholders or Affiliates; and (iii) Caroderm and its
officers and directors have no material ownership or management

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interest in any entity that presently provides any material services, produces
and/or sells any material products or product lines, or engages in any material
activity that is the same, similar to or competitive with any activity or
business in which Caroderm is now engaged.

        4.20         Full Disclosure. No information provided by Caroderm to
Parent or Purchaser in this Agreement (including, but not limited to, the
Financial Statements and all information in the Disclosure Schedule and the
other exhibits hereto) contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements so made or
information so delivered not misleading.

ARTICLE V
ADDITIONAL AGREEMENTS

        5.1         Additional Agreements; Further Assurances. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable on the part
of such party, to consummate and make effective the transactions contemplated by
this Agreement at the earliest practicable date, including using its
commercially reasonable best efforts to obtain all required consents, approvals,
waivers, exemptions, amendments and authorizations, give all notices, and make
or effect all filings, registrations, applications, designations and
declarations; and each party shall cooperate fully with the other (including by
providing any necessary information) with respect to the foregoing. Caroderm and
Parent each will make commercially reasonable efforts to conduct its business so
that its representations and warranties shall be true and correct at the
Effective Time with the same force and effect as if such representations and
warranties were made anew at and as of the Effective Time. In the event any
claim, action, suit, investigation or other proceeding by any Governmental
Entity or other person is commenced which questions the validity or legality of
the Merger or any of the other transactions contemplated hereby or seeks damages
in connection therewith, the parties agree to cooperate and use commercially
reasonable efforts to defend against such claim, action, suit, investigation or
other proceeding and, if an injunction or other order is issued in any such
action, suit, or other proceeding, to use all reasonable efforts to have such
injunction or other order lifted, and to cooperate reasonably regarding any
other impediment to the consummation of the transactions contemplated by this
Agreement. Each party shall give prompt written notice to the other of (i) the
occurrence or failure to occur of any event which occurrence or failure has
caused or could reasonably be expected to cause any representation or warranty
of Caroderm or Parent as the case may be, contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Effective Time or
that will result in the failure to satisfy any of the conditions specified in
Article V and (ii) any failure of Caroderm or Parent as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder.

        5.2         Publicity. Subject to compliance with applicable Laws,
neither Caroderm nor Parent will, prior to the Effective Time, issue, or permit
to be issued any press release or other announcement or public disclosure of
matters related to this Agreement or the transactions contemplated hereby
without the prior written consent of the other party, except as may be required
by applicable Law, court process or by obligations pursuant to any applicable
listing agreement of Parent. To the extent disclosure is required, the parties
agree to consult with each other and give to each other the opportunity to
review and comment on any such disclosure. Caroderm acknowledges and agrees that
the disclosure of this Agreement and the transactions contemplated hereby by
Parent (i) on a Form 8-K filed with the Securities and Exchange Commission at
any time after the date hereof, or (ii) in a customary press release or on a
customary analyst call, will not be violation of this Section 5.2. Parent and
Purchaser agree that Caroderm may

12

disclose matters related to this Agreement and the transactions contemplated
hereby to Caroderm shareholders who shall not be under any confidentiality
obligations in connection therewith.

        5.3         Releases; Lawsuit and Appeal.

                 5.3.1        Lawsuit and Appeal. Notwithstanding any other
representation or warranty of Caroderm in this Agreement, and

notwithstanding any other provision of this Agreement, Caroderm acknowledges
that it is entering into this Agreement with full knowledge of the pending
litigation between Caroderm and Affiliates of Parent, which is described as
follows:

                (a)     On or about July 16, 2004, Caroderm filed a lawsuit
against Nu Skin Enterprises, Inc. and Niksun Acquisition Corporation
(collectively “Nu Skin”) in Third Judicial District Court of Salt Lake County,
State of Utah, Case No. 040914826 (the “Lawsuit”) concerning a licensing dispute
over certain technology licensed from the University.

                (b)     The Lawsuit concluded with a five-day trial, after which
the Court entered Final Judgment in favor of Nu Skin on June 9, 2005, denying
all claims brought by Caroderm and granting Nu Skin’s request for a declaratory
judgment (“Judgment”), which was supported by detailed Findings of Fact and
Conclusions of Law.

                (c)     On June 21, 2005, Caroderm filed a Notice of Appeal,
appealing the Judgment, and on July 11, 2005, Caroderm filed its Docketing
Statement in the Utah Court of Appeals, Appeal No. 20050559 (“Appeal”), which
Appeal is currently pending.

                5.3.2          Caroderm Release. Except as set forth in this
Agreement (including with respect to payment of, and liability for,legal fees
and costs of Parent and Purchaser), Caroderm and the Shareholders hereby release
and forever discharge Nu Skin, Parent, Purchaser, and their respective officers,
directors, shareholders, representatives, employees, counsel, insurers, agents,
assigns, and Affiliates from and against any and all claims (including those in
law or equity), demands, rights, obligations, debts, expenses, liabilities,
damages, including attorneys fees, defenses, or causes of action, whether or not
alleged, recited, described, or currently asserted, whether known or unknown,
suspected or unsuspected, fixed or contingent, which they have, may have, or
could assert against the other, arising out of, concerning, or relating to the
Lawsuit or the Appeal.

                 5.3.3         Parent Release. Except as otherwise set forth in
this Agreement (including with respect to payment of, and liability for, legal
fees and costs of Caroderm and the Shareholders), Parent and Purchaser hereby
release and forever discharge Caroderm and its officers, directors,
shareholders, representatives, employees, counsel, agents, assigns, and
Affiliates from and against any and all claims (including those in law or
equity), demands, rights, obligations, debts, expenses, liabilities, damages,
including attorneys fees, defenses, or causes of action, whether or not alleged,
recited, described, or currently asserted, whether known or unknown, suspected
or unsuspected, fixed or contingent, which they have, may have, or could assert
against the other, arising out of, concerning, or relating to the Lawsuit or the
Appeal.

         5.4          Confidentiality; Non-competition. For a period of two (2)
years from the date hereof, each of the Shareholders agrees that he shall not:

    (a)        disclose any information related to either of Caroderm’s or Nu
Skin’s respective businesses, including, but not limited to, inventions, ideas,
technical data, trade secrets, research, products, services, development,
processes, designs, drawings, engineering, marketing, client or customer lists,
vendor or supplier lists, finances and personnel information; or

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    (b)        without the express prior written consent of Purchaser, directly
or indirectly, own, manage, control or participate (including in a consulting,
advisory or other similar role) in the ownership, management or control of, or
be related or otherwise affiliated in any manner (including as an employee) with
any business that (i) competes with the former business of Caroderm and (ii)
utilizes the Raman technology that is the subject of the Caroderm Patent
License.

Notwithstanding the foregoing, the Shareholders shall have no confidentiality
obligations with respect to information that (i) was publicly known and made
generally available in the public domain prior to the date hereof; (ii) becomes
publicly known and made generally available after the date hereof through no
action or inaction of any Shareholder; (iii) is obtained by a Shareholder from a
third party without a breach of such third party’s obligations of
confidentiality; or (iv) is required to be disclosed by applicable law.

        5.5          Acknowledgement of Shareholders. Each of the Shareholders
agrees and acknowledges that the time limitation and the geographic scope on the
restrictions in Section 5.4 are reasonable. The Shareholders also acknowledge
and agree that the limitations in Section 5.4 are reasonably necessary for the
protection of Purchaser and its Affiliates and that, through the transactions
contemplated in this Agreement, the Shareholders will receive adequate
consideration for any loss of opportunity associated therewith. In the event
that any term, word, clause, phrase, provision, restriction, or section of
Section 5.4 is more restrictive than permitted by the law of the jurisdiction in
which Purchaser and/or its Affiliates seeks enforcement, the provisions of
Section 5.4 will be limited but only to the extent that a judicial determination
finds the same to be unreasonable or otherwise unenforceable. Notwithstanding
any judicial determination that any term, word, clause, phrase, provision or
restriction of Section 5.4 is not specifically enforceable, the parties intend
that Purchaser and its Affiliates will nonetheless be entitled to recover
monetary damages as a result of any breach thereof. Each of the Shareholders
agrees that a breach by any of the Shareholders of Section 5.4 will cause
irreparable injury to Purchaser and/or its Affiliates not adequately compensable
in monetary damages alone or through other legal remedies. Therefore, in the
event of a breach, Purchaser or its Affiliates shall be entitled to preliminary
and permanent injunctive relief, specific performance, and other equitable
relief, in addition to damages and all other available remedies.

ARTICLE VI
REQUIRED DELIVERIES IN CONNECTION WITH THIS AGREEMENT

        Required Deliveries in Connection with this Agreement. The parties, as
applicable, shall deliver the following in connection with the execution of this
Agreement:

          6.1 Caroderm Approval. Caroderm shall have obtained a written consent
of shareholders approving the Merger and all of the transactions contemplated by
this Agreement from holders of at least ninety-six percent (96%) of the Caroderm
Shares.

          6.2 Opinion of Counsel for Caroderm. Parent shall have received the
opinion letter of Blackburn & Stoll, counsel for Caroderm, dated the Closing
Date, substantially in the form of Exhibit A.

          6.3 Board Approval. Caroderm shall have obtained a written consent of
its directors approving the Merger and all of the transactions contemplated by
this Agreement.

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          6.4         Termination and Release Agreements. Each of the
Shareholders shall have executed and delivered to Parent a Termination and
Release Agreement, in the form attached as Exhibit B hereto.

          6.5         Caroderm Certificates. Parent shall have received a
certificate of the Secretary of Caroderm, in form and substance customary for
transactions of the type contemplated hereby, as to the authenticity and
effectiveness of the actions of Caroderm’s Board of Directors and holders of
Caroderm Shares authorizing the Merger and the transactions contemplated by this
Agreement. Parent shall have also received a certificate of the Chief Executive
Officer of Caroderm, in form and substance customary for transactions of the
type contemplated hereby, confirming that (i) the representations and warranties
set forth in Article IV hereof, including, without limitation, the
representations and warranties set forth in Section 4.5 above, are true and
correct; and (ii) that, as of the Closing Date, Caroderm: (A) shall have
satisfied all accrued or outstanding liabilities, including without limitation
all fees and costs, legal and otherwise, related to the Merger, the Lawsuit and
the Appeal, (B) has no accounts receivable, and (C) has never had revenues
attributable to sales of services or products.

          6.6         Capitalization Spreadsheet. Parent shall have received
from Caroderm a spreadsheet (the “Spreadsheet”), attached as Exhibit C, which
spreadsheet shall be dated as of the Closing Date and shall set forth, as of the
Closing Date and immediately prior to the Effective Time, the following true and
correct factual information relating to holders of Caroderm Shares: (i) the
names of all of Caroderm’s shareholders; and (ii) the number of Caroderm Shares
held by such persons and the respective certificate numbers.

          6.7         Termination of Agreements and Employee and Consulting
Relationships. Caroderm shall terminate the employment of its sole employee
immediately prior to the Effective Time. Caroderm shall terminate each
consulting agreement to which it is a party prior to the Effective Time. The
agreements set forth on Exhibit D hereto shall have been terminated as of the
Effective Time (pursuant to the agreements set forth in Section 6.4 above).

          6.8         Dismissal of Appeal. Caroderm shall prepare and deliver a
Stipulated Dismissal of Appeal (“Dismissal”), dismissing the Appeal with
prejudice. Such Dismissal shall be filed with the Utah Court of Appeals on the
Closing Date.

          6.9         Consent of University of Utah Research Foundation. The
parties shall have received a written consent from the University acknowledging
and agreeing that the transactions contemplated by this Agreement will not
result in the termination, revocation or modification of any material provision
or right under either of (i) the Caroderm Patent License., or (ii) that certain
Amended and Restated Patent License Agreement between the University and
Nutriscan, Inc. (such agreements collectively, the “License Agreements”).

          6.10         Amended License Agreement. Parent (or an Affiliate of
Parent) and the University shall have entered into a new patent license
agreement, or an amendment(s) to the License Agreements (or, in the discretion
of Parent, shall have agreed upon the form of such an agreement to be entered
into following execution of this Agreement), the terms of which are agreeable to
Parent in its sole discretion, related to the technology that is the subject of
the License Agreements. Caroderm shall have paid to the University all unpaid
license fees owing to the University pursuant to the Caroderm Patent License as
of the Closing Date.

15

          6.11         Tax Returns. Following the Closing, Purchaser shall cause
the Surviving Corporation to file final, separate income Tax returns for
Caroderm covering the period through the Closing Date, which Tax returns shall
include any taxable income earned through and including the Closing Date. Prior
to filing such returns, Purchaser shall provide copies of the returns to Sellers
for their review and comment. All such returns shall be prepared in a manner
consistent with Caroderm’s historic Tax reporting practices. To the extent
provided in Section 7.3.2.1(iii) below, the Shareholders shall indemnify
Purchaser for any Taxes shown as due on such returns.

ARTICLE VII
TERMINATION AND WAIVER; INDEMNIFICATION

        7.1         Fees and Expenses. All fees and expenses incurred in
connection with the transactions contemplated hereby will be paid by the party
incurring such expenses.

        7.2         Waiver. At any time, the parties hereto may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) except as prohibited by law, waive compliance with any of the agreements
or conditions contained herein that are for the benefit of such party or its
shareholders. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid if set forth in an instrument in writing signed on
behalf of such party.

        7.3         Indemnification.

          7.3.1         Survival of Representations and Warranties. All of the
representations and warranties of Caroderm and Parent contained in this
Agreement shall survive the Closing and continue in full force and effect until
two years following the Closing Date (the “Survival Period”).

         7.3.2         Indemnification Provisions for Benefit of Parent.

          7.3.2.1 Subject to the limitations set forth in this Article VII, from
and after the Closing, the Parent, Purchaser, the Surviving Corporation, their
officers, directors and Affiliates (including each of the successors, assigns
and agents of the foregoing) (the “Parent Indemnified Parties”) shall be
indemnified and held harmless from and against, and shall be reimbursed solely
through the Holdback for the following liabilities and Losses (the “Indemnified
Losses”):

(i)         any and all Losses arising out of any inaccuracy or
misrepresentation in, or breach of, any representation or warranty made by
Caroderm or the Shareholders in this Agreement, together with the Disclosure
Schedules, or in any document delivered in connection with Agreement by Caroderm
or the Shareholders;

(ii)         any and all Losses arising out of any failure by Caroderm or the
Shareholders to perform or comply, in whole or in part, with any covenant or
agreement in this Agreement;

16

(iii)         all liability for Taxes of Caroderm (including, without
limitation, any and all liability associated with the matter disclosed in
Section 4.5.1 of the Disclosure Schedule) assessed during or attributable to any
taxable period ending on or prior to the Closing Date (and for any taxable
period beginning before the Closing Date and ending after the Closing Date, the
portion ending at the end of the Closing Date) to the extent such Taxes exceed
the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
as a current liability on the face of the Most Recent Balance Sheet (rather than
in any notes thereto);

(iv)         any Loss resulting from a claim, demand, cause of action, suit,
proceeding, hearing or investigation by any person or entity relating to
Caroderm’s operations on or before the Closing Date (including, without
limitation, any and all actions relating to the issuance of shares of capital
stock of Caroderm, the approval of the transactions contemplated by this
Agreement, or the matters identified on Schedule 4.7 of the Disclosure
Schedule); and

(v)         any expenses of Caroderm incurred in connection with the
transactions contemplated hereby;

  provided, however, that Parent Indemnified Parties shall not have any right to
be indemnified from and against any losses resulting from, arising out of,
relating to, in the nature of, or caused by any of the matters set forth in
Section 7.3.2.1 (i) – (v) until the Parent Indemnified Parties have suffered, in
the aggregate, Losses by reason of all such breaches in excess of the Threshold
(at which point Parent Indemnified Parties will be entitled to indemnification
as described above in this Section 7.3.2.1, including the first $25,000 of such
Losses); and

                provided further, that in no event shall the aggregate amount
paid to the Parent Indemnified Parties exceed the Holdback.

          7.3.2.2 The Parent Indemnified Parties shall be indemnified through
the portion of the Merger Consideration constituting the Holdback. A Parent
Indemnified Party shall not be entitled to be reimbursed with respect to any
claims made by the Parent Indemnified Party after the expiration of the Survival
Period. To claim indemnification through the Holdback, Parent must reasonably
believe in good faith that there are potential Indemnified Losses that are
likely to result in actual Indemnified Losses provide notice to the
Representative (the “Claim Notice”) setting forth the estimated amount of such
potential Indemnified Losses (the “Reserve Amount”) and the facts and
circumstances on which such Reserve Amount is based. The Representative may
dispute any Reserve Amount contained in the Claim Notice provided, however, that
the Representative shall have notified Parent in writing of each disputed item,
specifying the amount thereof in dispute, the calculation of the disputed amount
and setting forth, in reasonable detail, the basis for such dispute, within 30
calendar days of the Representative’s receipt of the Claim Notice. The
Representative shall be deemed to have agreed with all other items and amounts
contained in the Claim Notice. In the event of such a dispute, Parent and the
Representative shall attempt in good faith to reconcile their differences. If
Parent and the Representative are unable to reach a resolution within 30
calendar days after receipt by Parent of the Representative’s written notice of
dispute,

17

  Parent and the Representative shall submit the items remaining in dispute for
resolution under Section 7.3.4.

          7.3.3         Indemnity Holdback. The “Holdback” shall consist of Two
Million Dollars ($2,000,000) of the Merger Consideration to be withheld by the
Parent at the Closing and, to the extent all or any portion of the Holdback
becomes payable to the Caroderm shareholders pursuant to the provisions of this
Section 7.3.3, shall be paid to the Caroderm shareholders, on a pro rata basis,
as an element of the Merger Consideration. Nothing contained in this Agreement
shall be construed to limit any rights of the Parent Indemnified Parties for
full indemnification or otherwise against any Caroderm shareholder severally
with respect to the failure of such Caroderm shareholder to have good, valid and
marketable title to any Caroderm Shares held by holder as represented herein,
free and clear of all Liens or to have the full right, capacity and authority to
vote all of such Caroderm Shares in favor of the Merger and any other
transaction contemplated by this Agreement; provided that in no event shall any
Caroderm shareholder have liability to the Parent Indemnified Parties for Losses
in excess of the Merger Consideration payable to such Caroderm shareholder. On
expiration of one year from the date hereof, One Million Dollars ($1,000,000) of
the Holdback less any (i) amounts used to compensate a Parent Indemnified Party
as provided in this Article VII and (ii) amounts constituting a Reserve Amount
at such time, shall be distributed to the Caroderm shareholders, pro rata in
proportion to the amount each was entitled to receive of the Merger
Consideration. On expiration of the Survival Period, all remaining amounts in
the Holdback that have not been used to compensate a Parent Indemnified Party as
provided in this Article VII or which do not constitute a Reserve Amount, shall
be distributed to the Caroderm shareholders, pro rata in proportion to the
amount each was entitled to receive of the Merger Consideration. Notwithstanding
the foregoing, if, prior to the first anniversary of the Closing Date, the
Shareholders shall have delivered to Purchaser from each of the holders of
Caroderm Shares a consent to the Merger (in the form delivered by the
Shareholders to Purchaser in connection with the approval of the Merger), then,
on the first anniversary of the Closing Date, the entire Holdback, less any (i)
amounts used to compensate a Parent Indemnified Party as provided in this
Article VII and (ii) amounts constituting a Reserve Amount at such time, shall
be distributed to the Caroderm shareholders. On resolution of the claim
underlying any Reserve Amount or on expiration of Survival Period without a
formal proceeding having been filed against the Parent Indemnified Parties with
respect to the underlying claim, any Reserve Amounts shall be distributed to the
shareholders of Caroderm in the same proportion as set forth above. On any
distribution from the Holdback, interest or other earnings accrued on the
Holdback amount shall be allocated between Parent and the shareholders of
Caroderm based on the respective portions of the Holdback amount otherwise
received by them pursuant to this section. Notwithstanding the foregoing, any
two or more Caroderm shareholders may agree to allocate as between themselves
any payments to be received by such shareholders from Parent and Parent shall
make payment according to such allocation if Parent is instructed to do so in a
writing signed by the Caroderm shareholders in question.

         7.3.4         Procedure for Indemnification.

          7.3.4.1 A Parent Indemnified Party shall give a Claim Notice of any
claim for indemnification under this Article VII (a “Claim”) to the
Representative, on behalf of the indemnifying parties, reasonably promptly after
the assertion against a Parent Indemnified Party of any claim by a third party
(a “Third Party Claim”) or, if such Claim is not in respect of a Third Party
Claim, reasonably promptly after the discovery of facts on which the Parent
Indemnified Party intends to base a Claim for indemnification pursuant to
Article VII; provided, however, that the failure or delay to so notify the
Representative shall not relieve the indemnifying party of any obligation or
liability that

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  the indemnifying party may have to the Parent Indemnified Party except to the
extent that the Representative demonstrates that the indemnifying parties’
ability to defend or resolve such Claim is adversely affected thereby. Any such
Claim Notice shall describe the facts and circumstances on which the asserted
Claim for indemnification is based and shall specify how such Parent Indemnified
Party intends to recover such funds pursuant to this Agreement and the basis for
the determination of the amount which the Parent Indemnified Party intends to
recover.

          7.3.4.2 If, within 30 days of the receipt by the Representative of a
Claim Notice, the Representative contests in writing to the Parent Indemnified
Party that Losses identified in such Claim Notice constitute indemnifiable
Claims (the “Representative Notice”), then the Parent Indemnified Party and the
Representative, acting in good faith, shall attempt to reach agreement with
respect to the contested portions of such Claims. Unless a Claim is contested
within such 30-day period, the Parent Indemnified Party shall, subject to the
other terms of this Article VII, be paid the amount of the Losses related to
such Claim or the uncontested portion thereof. The Representative shall not
object to any Claim unless (i) it believes in good faith that the Parent
Indemnified Party is not entitled to be indemnified with respect to the Losses
specified therein, or (ii) it lacks sufficient information to assess the
validity or amount of the Claim. If the Representative objects to a Claim on the
basis that it lacks sufficient information, it shall promptly request from the
Parent Indemnified Party any additional information reasonably necessary for it
to assess such Claim and the Parent Indemnified Party shall, to the extent the
Parent Indemnified Party reasonably can, provide additional information
reasonably requested. Upon receipt of such additional information, the
Representative shall review it as soon as reasonably practicable and notify the
Parent Indemnified Party of any withdrawal or modification of the objection. If
the Parent Indemnified Party and the Representative are unable to reach
agreement with respect to any contested Claims within 45 days of the delivery of
the Representative Notice, the matter shall be settled by binding arbitration in
Salt Lake City, Utah as set forth below. All claims shall be settled in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the “AAA Rules”). The Representative and the Parent
Indemnified Party shall each designate one arbitrator within 15 days after the
termination of such 45-day period. The Representative and the Parent Indemnified
Party shall cause such designated arbitrators mutually to agree upon and
designate a third arbitrator; provided, however, that (i) failing such agreement
within 70 days of delivery of the Representative Notice, the third arbitrator
shall be appointed in accordance with the AAA Rules and (ii) if either the
Representative or the Parent Indemnified Party fails to timely designate an
arbitrator, the dispute shall be resolved by the one arbitrator timely
designated. The fees and expenses of the arbitrators shall be paid one-half by
the Parent and one-half by the shareholders of Caroderm (from the Holdback
amounts or otherwise). The Representative and the Parent Indemnified Party shall
cause the arbitrators to decide the matter to be arbitrated pursuant hereto
within 30 days after the appointment of the last arbitrator. The final decision
of the majority of the arbitrators shall be furnished to the Representative and
the Parent Indemnified Party in writing and shall constitute the conclusive
determination of the issue in question binding upon the Representative, the
shareholders of Caroderm, and the Parent Indemnified Party, and shall not be
contested by any of them. Such decision may be used in a court of law only for
the purpose of seeking enforcement of the arbitrators’ decision.

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          7.3.4.3 The indemnifying party will have the right to defend the
Parent Indemnified Party against the Third Party Claim at the indemnifying
party’s sole expense with counsel of its choice reasonably satisfactory to the
Parent Indemnified Party so long as the indemnifying party conducts the defense
of the Third Party Claim actively and diligently; provided, however, that,
notwithstanding the foregoing, Parent may elect to assume the defense and handle
any such Third Party Claim if it determines in good faith that the resolution of
such Third Party Claim could result in a material adverse impact on the
business, operations, assets, liabilities (absolute, accrued, contingent or
otherwise), condition (financial or otherwise) or prospects of Parent; and
provided further that the indemnifying person is also a person against whom the
Third Party Claim is made and the Parent Indemnified Party determines in good
faith that joint representation would be inappropriate). The Parent Indemnified
Party may retain separate co-counsel and participate in the defense of the Third
Party Claim which shall be at the Parent Indemnified Party’s sole cost and
expense so long as the indemnifying party conducts the defense of the Third
Party Claim actively and diligently. The Parent Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the indemnifying
party, and the indemnifying party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Parent Indemnified Party which consent shall not be
unreasonably withheld.

          7.3.5 Indemnification Provision for Benefit of the Caroderm
shareholders. In the event Parent breaches any of its covenants, representations
and warranties contained in this Agreement, provided that any of the
shareholders of Caroderm or the Representative makes a written claim for
indemnification against Parent (in the same manner as provided for with respect
to a Parent Indemnified Party) within the Survival Period (or any time on or
before the date that is thirty (30) months following the Closing Date if the
covenant in question relates to the non-payment of the Merger Consideration),
then Parent agrees to indemnify each of the shareholders of Caroderm and any
director, officer, representative or agent thereof (the “Caroderm Indemnified
Parties”) from and against any Losses (including, with respect to payment of,
and liability for, attorneys; fees and costs of the Caroderm Indemnified
Parties) the Caroderm Indemnified Parties may suffer through and after the date
of the claim for indemnification resulting from, arising out of, relating to or
caused by the breach; provided however that Parent shall not have any obligation
to indemnify the Caroderm Indemnified Parties from and against any losses
resulting from, arising out of, relating to, in the nature of, or caused by the
breach of any representation or warranty until the Caroderm Indemnified Parties
have suffered, in the aggregate, Losses by reason of all such breaches in excess
of the Threshold (at which point Parent will be obligated to indemnify the
Caroderm Indemnified Parties from and against all such Losses, including the
first $25,000 of such Losses); provided however, that in no event shall the
aggregate amount paid to the Caroderm Indemnified Parties exceed Two Million
Dollars ($2,000,000) plus the amount of all attorneys’ fees and related costs
actually incurred by the Caroderm Indemnified Parties prevailing in an action to
enforce any obligation or covenant hereunder. Any notice to be delivered
pursuant to this Section by any Caroderm Indemnified Party may be delivered by
the Representative on behalf of such Caroderm Indemnified Party. The procedures
set forth in Section 7.3.4 shall be fully applicable with respect to claims by a
Caroderm Indemnified Party or the Representative, subject to appropriate changes
to properly denominate the correct parties.

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          7.3.6         Cooperation. If requested by the indemnifying party, the
indemnified party shall, at the expense of the indemnifying party, reasonably
cooperate in the defense or prosecution of any suit, action, claim, proceeding
or investigation for which such indemnifying party is being called upon to
indemnify the indemnified party pursuant to this Section, and the indemnified
party shall furnish such records, information and testimony and attend all such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection therewith and, if appropriate, the
indemnified party shall make any reasonable counterclaim against the party
asserting such suit, action, claim, proceeding or investigation or any
reasonably cross-complaint against any person in connection therewith and the
indemnified party further agrees to take such other actions as it deems
reasonable pursuant to any request by an indemnifying party to reduce or
eliminate any Losses for which the indemnifying party would have responsibility.
Without limiting the foregoing, Caroderm and the Shareholders agree that each
will cooperate fully in the dismissal of the Appeal, by, among other things,
filing any documents reasonably necessary related to the termination of the
litigation between Caroderm and Nu Skin.

          7.3.7         Sole Remedy. This Section 7.3 constitutes the sole
remedy any Party may have with respect to any breach of the representations,
warranties and covenants contained in this Agreement, except as specifically
provided in Section 8.3.

          7.3.8         Caroderm Representative. E. Dallin Bagley (or such other
person or entity that shall be designated by E. Dallin Bagley) shall serve as
the representative of Caroderm and/or the Caroderm shareholders with respect to
any matters arising pursuant to this Section 7 (the “Representative”). The
Representative is hereby fully authorized with respect to the Holdback to: (i)
receive all notices or other documents given or to be given by Parent under this
Agreement; (ii) receive and accept service of legal process in connection with
any claim or other proceeding arising under this Agreement; (iii) undertake,
compromise, defend and settle any such suit or proceeding; (iv) engage special
counsel, accountants and other advisors and incur such other expenses in
connection with any matter arising under this Agreement as the Representative
deems appropriate; (v) take such other action as the Representative may deem
appropriate, including without limitation, (A) taking any actions required or
permitted under this Agreement to protect or enforce the Caroderm shareholders’
rights, and (B) all such other matters as the Representative may deem necessary
or appropriate to carry out the intents and purposes of this Agreement.

ARTICLE VIII
GENERAL PROVISIONS

        8.1         Notices. No notice or other communication shall be deemed
given unless sent in any of the manners, and to the attention of the persons,
specified in this Section 8.1. All notices and other communications hereunder
shall be in writing and shall be deemed given or delivered to any party (i) upon
delivery to the address of such party specified below if delivered personally,
(ii) one business day after being sent by reputable overnight courier (charges
prepaid) or (iii) five business days after being sent by registered or certified
mail (return receipt requested), in any case to the parties at the following
addresses or telecopy numbers (followed promptly by personal, courier or
certified or registered mail delivery) (or at such other addresses for a party
as will be specified by like notice):

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To Caroderm and the Caroderm Representative:

Caroderm, Inc.
2350 Oakhill Drive
Holladay, Utah 84121
Fax No.: (801) 274-8009
Attn.: E. Dallin Bagley

with a copy to:

Blackburn & Stoll
257 East 200 South, Suite 800
Salt Lake City, Utah 84111
Fax No.: (801) 578-3552
Attn: Eric L. Robinson

To Parent and Purchaser:

Nu Skin International, Inc.
75 West Center Street
8th Floor
Provo, Utah 84601
Fax No.: (801) 345-3899
Attn.: D. Matthew Dorny

with a copy to:

Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Fax No.: (801) 532-7750
Attn.: Brian G. Lloyd

        8.2         VENUE. EACH OF THE PARTIES SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN UTAH IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ALL
CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT. EACH OF THE PARTIES
WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR
PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT
BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. ANY PARTY MAY MAKE SERVICE
ON ANY OTHER PARTY BY SENDING OR DELIVERING A COPY OF THE PROCESS TO THE PARTY
TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES
IN SECTION 8.1. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR
PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR IN EQUITY.

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        8.3         Specific Performance and Other Remedies. The parties hereto
acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties agree, therefore, that in the event that
any party violates or fails or refuses to perform any covenant or agreement made
by such party herein, the non-breaching party or parties may, subject to the
terms of this Agreement and in addition to any remedies at law for damages or
other relief, institute and prosecute an action in any court of competent
jurisdiction to enforce specific performance of such covenant or agreement or
seek any other equitable relief. The prevailing party in any such proceeding
shall be entitled to reimbursement for all its costs and expenses (including
reasonable attorneys fees) relating to such proceeding from the non-prevailing
party.

        8.4         Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

        8.5         Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement between the
parties hereto in respect of the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties
hereto with respect to such subject matter, (ii) is not intended to confer upon
any other person any rights or remedies hereunder, (iii) shall be governed in
all respects, including validity, interpretation and effect, by the internal
law, not the law of conflicts, of the State of Utah and (iv) may not be amended,
modified or supplemented except by written agreement of the parties hereto. This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original but all of which together shall constitute but a single
agreement.

        8.6         Assignment. This Agreement (including the documents and
instruments referred to herein) may not be assigned by any party. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their permitted successors and assigns, and any reference to a party hereto
shall also be a reference to a permitted successor or assign.

        8.7         Language. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any person.

        8.8         Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law, which renders any such provision prohibited or unenforceable
in any respect.

ARTICLE IX
DEFINITIONS

As used in the Agreement, the terms below shall have the meanings set forth
below.

“AAA Rules” is defined in Section 7.3.4.2.

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“Affiliate” means any person (i) that directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, an other person, (ii) that directly or beneficially owns or holds ten
percent (10%) or more of any equity interest in the other person or (iii) ten
percent (10%) or more of whose voting stock is owned directly or beneficially or
held by the other person.

“Appeal” is defined in Section 5.3.1.

“Articles of Merger” is defined in Section 1.3.

“Benefit Plans” is defined in Section 4.9.1.

“Caroderm” is defined in the first page hereof.

“Caroderm Indemnified Parties” is defined in Section 7.3.5.

“Caroderm Patent License” is defined in Section 4.16.2

“Caroderm Shares” is defined in Section 1.7.1.

“Caroderm Stock Certificate” is defined in Section 2.1.

“Claim” is defined in Section 7.3.4.1.

“Claim Notice” is defined in Section 7.3.2.2.

“Closing” is defined in Section 1.2.

“Closing Date” is defined in Section 1.2.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Constituent Corporations” is defined in Section 1.1.

“Disclosure Schedule” means the schedule delivered by Caroderm and the
Shareholders to Parent simultaneously with the execution and delivery of this
Agreement.

“Dismissal” is defined in Section 6.7.

“Dissenting Shares” is defined in Section 2.4.

“Effective Time” is defined in Section 1.3.

“Environmental Law” means any and all existing federal, international, state or
local statutes, laws, regulations, ordinances, orders, policies, or decrees and
the like, relating to public health or safety, pollution or protection of human
health or the environment, including natural resources, including but not
limited to the Clean Air Act, 42 U.S.C. 7401 et seq., the Clean Water Act, 33
U.S.C. 1251 et seq., the Resource Conservation Recovery Act (“RCRA”), 42 U.S.C.
6901 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., and the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),
42 U.S.C. 9601 et seq. and any similar or implementing state or local law, or
any common law, which governs: (i) the existence, clean-up, removal and/or
remedy of contamination or threat of contamination on or about real property;
(ii) the emission, discharge or release, of hazardous

24

materials or contaminants into the environment; (iii) the control of hazardous
materials or contaminants; or (iv) the use, generation, transport, treatment,
storage, disposal, removal, recycling, handling or recovery of hazardous
materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended (together
with the rules and regulations promulgated thereunder).

“Financial Statements” is defined in Section 4.5.1.

“GAAP” means the United States generally accepted accounting principles, as
consistently applied.

“Governmental Entities” means, collectively, any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any foreign country or any state, county, city or other political
subdivision.

“Holdback” is defined in Section 7.3.3.

“Indemnified Losses” is defined in Section 7.3.2.1.

“Intellectual Property” is defined in Section 4.16.

“Judgment” is defined in Section 5.3.1.

“Knowledge” means the actual knowledge of the officers and directors of a party
or the knowledge that such officer or director would reasonably be expected to
have or obtain through the due performance of their duties; provided that the
Knowledge of prior officers and directors of acquired entities shall not be
attributed to the current officers and directors under this definition.

“Laws” means, collectively, any domestic (federal, state, or local) or foreign
law, statute, ordinance, rule, regulation, judgment, decree, order, writ, permit
or license of any Governmental Entity.

“Lawsuit” is defined in Section 5.3.1.

“License Agreements” is defined in Section 6.8.

“Liens” means all mortgages, liens, pledges, claims, charges, security interests
or other encumbrances.

“Losses” shall mean all damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities (whether liquidated or accrued), obligations, Taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys’ fees and expenses including, but not limited to, those arising from
or relating to actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees and rulings
including, without limitation, with respect to attorneys fees and other costs
and expenses incurred in connection with the enforcement of this Agreement.
Losses shall be computed net of (i) any insurance proceeds actually received
from insurance maintained by the Indemnified Party or any third party (without
consideration of deductibles) for the event or occurrence giving rise to the
Losses, and (ii) any amounts actually received from any third parties based on
claims related to the event or occurrence giving rise to the Losses that the
Indemnified Party has against such third parties which reduce the Losses that
would otherwise be sustained.

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“Marks” is defined in Section 4.16.1.

“Material Adverse Effect” means any change, effect, occurrence or state of facts
that is materially adverse to the business, financial condition, operations or
results of operations of a person and its Subsidiaries, taken as a whole;
provided, however, that the following are excluded from the definition of
“Material Adverse Effect” and from the determination of whether such a Material
Adverse Effect has occurred: (i) changes in Laws (including without limitation,
common law, rules and regulations or the interpretation thereof) or applicable
accounting regulations and principles; or (ii) any change in the relationship of
a person and its Subsidiaries with their respective employees, customers and
suppliers, which change results directly from the announcement, pendency, or
consummation of the transactions and actions contemplated in this Agreement.

“Material Contracts” is defined in Section 4.14.

“Merger” is defined in the Section 1.1.

“Merger Consideration” is defined in Section 1.7.1.

“Most Recent Balance Sheet” is defined in Section 4.5.1.

“Nu Skin” is defined in Section 5.3.1.

“Organizational Documents” means the articles or certificate of incorporation,
articles or certificate of formation, bylaws, operating agreement, limited
liability company agreement or other similar formation and/or governing
documents.

“Parent” is defined in the first page hereof.

“Parent Indemnified Parties” is defined in Section 7.3.2.1.

“Patents” is defined in Section 4.16.1.

“Per Share Merger Consideration” is defined in Section 1.7.1.

“Permits” is defined in Section 4.12.

“person” means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization.

“Purchaser” is defined in the first page hereof.

“Representative” is defined in Section 7.3.8.

“Representative Notice” is defined in Section 7.3.4.2.

“Reserve Amount” is defined in Section 7.3.2.2.

“Reserve Amount Notice” is defined in Section 7.3.2.2.

“SEC” means the United States Securities and Exchange Commission.

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“Securities Act” means the Securities Act of 1933, as amended (together with the
rules and regulations promulgated thereunder).

“Spreadsheet” is defined in Section 6.5.

“Subsidiary” means an entity that is controlled either directly or indirectly by
the person or in which the person directly or indirectly owns or controls more
than fifty percent of its equity.

“Survival Period” is defined in Section 7.3.1.

“Surviving Corporation” is defined in Section 1.1.

“Taxes” means (i) all federal, state, county, local, foreign and other taxes of
any kind whatsoever (including, without limitation, income, profits, premium,
estimated, excise, sales, use, occupancy, license, gross receipts, franchise, ad
valorem, severance, capital levy, production, transfer, payroll, stamp,
occupation, withholding, employment, unemployment, disability, social security,
real property, personal property, transfer import duties and other governmental
charges and assessments), whether or not measured in whole or in part by net
income, and including deficiencies, interest, additions to tax and penalties
with respect thereto, whether disputed or not and (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(iii) as a result of being (A) a “transferee” within the meaning of Section 6901
of the Code (or any other applicable law) of another person, (B) a member of an
affiliated, consolidated, unitary or combined group for any period, or otherwise
by operation of law, or (C) pursuant to a tax sharing, tax allocation, or tax
indemnity agreement.

“Third Party Claim” is defined in Section 7.3.4.1.

“Threshold” shall mean Twenty Five Thousand Dollars ($25,000).

“University” is defined in Section 4.16.2.

“Utah Act” is defined in Section 1.1.

“Utah Division” is defined in Section 1.3.

[remainder of page intentionally left blank; signature page follows]

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        IN WITNESS WHEREOF, Parent, Purchaser, Caroderm and the Shareholders
have caused this Agreement to be signed as of the date first written above by
their respective officers or representatives thereunto duly authorized.

PARENT:

Nu Skin International, Inc.

By:    /s/ Ritch N. Wood
Name: Ritch N. Wood
Title: CFO

PURCHASER:

Pharmanex License Acquisition Corporation

By:    /s/ Ritch N. Wood
Name: Ritch N. Wood
Title: Vice President

CARODERM:

Caroderm, Inc.

By:     /s/ Dallin Bagley
Name: Dallin Bagley
Title: President

SHAREHOLDERS:

/s/ E. Dallin Bagley
E. Dallin Bagley

/s/ Werner Gellermann
Werner Gellermann

/s/ Paul S. Bernstein
Paul S. Bernstein