Exhibit 10.4 NSE 2Q 10-Q




        STOCK
ACQUISITION AGREEMENT, made and entered into effective as of 12:00:01 am, August 1, 2003,
among NU SKIN ENTERPRISES, INC., a Delaware corporation (“NSE”), Orrin T.
Colby III, an individual (“Purchaser”), and Cygnus Resources Inc., a
Delaware corporation (“Cygnus”) 



WITNESSETH: 



        WHEREAS,
NSE owns, as of the date of this Agreement, all of the issued and outstanding capital
stock of Cygnus, consisting of 1,000 shares of Common Stock, $0.001 par value (the
“Cygnus Shares”); 



        WHEREAS,
NSE desires to transfer to Purchaser, and Purchaser desires to acquire the Cygnus Shares
(the “Stock Acquisition”), all on the terms and subject to the conditions
hereinafter set forth in exchange for, and in consideration for, the Cash Consideration
(as defined herein) upon the terms and subject to the conditions set forth herein; 



        WHEREAS,
Cygnus is liable for the outstanding obligations and costs related to the employee medical
benefit claims left unpaid by Meridian Benefit, Inc. and Intercare Health Plan, and NSE is
willing to agree to assume such liabilities; 



        WHEREAS,
pursuant to that certain Settlement and Mutual Release Agreement dated as of February 3,
2003 between Cygnus, AdvantEdge Business Group, L.L.C., and various other related parties,
AdvantEdge currently owes Cygnus approximately $110,000 (the “AdvantEdge
Proceeds”), and Cygnus is willing to assign its rights to the AdvantEdge Proceeds
as a way to offset the Meridian Liabilities assumed by NSE; 



        WHEREAS,
pursuant to that certain Continuing Guarantee executed by NSE on September 23, 2002 NSE
agreed to guarantee the obligations of Cygnus under a policy of group health insurance
issued to Cygnus by IHC effective as of October 1, 2002 and ending on December 31, 2003
(the “IHC Guarantee”), and the parties desire to take such actions as are
necessary so that the IHC Guarantee does not continue, or have efficacy, beyond the
current term of the Cygnus group health insurance policy; 



        WHEREAS,
the parties desire to make certain representations, warranties, covenants and other
agreements in connection herewith; 



        NOW,
THEREFORE, in consideration of the premises and the mutual agreements and covenants
hereinafter set forth, NSE, Purchaser and Cygnus hereby agree as follows: 



ARTICLE I 



ACQUISITION AND TRANSFER 



        SECTION
1.01. Acquisition and Transfer of Cygnus Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter defined), NSE shall assign,
transfer, convey and deliver to Purchaser the Cygnus Shares and deliver one or more
certificates representing such Cygnus Shares (the “Cygnus Share
Certificates”) to Purchaser as provided in Section 1.03 below in consideration of
the Purchase Price described in Section 1.03 below. 






        SECTION
1.02. Closing. The Closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place as soon as practicable after execution of
this Agreement, but not later than August 20, 2003, and shall take place at the offices of
NSE at 75 West Center Street, Provo, Utah 84601. 



        SECTION
1.03. Delivery of Shares and Payment of Purchase Price. 



         (a)       
          At the Closing, NSE shall deliver to Purchaser the Cygnus Share Certificates
          evidencing the Cygnus Shares duly endorsed in the name of Purchaser or his
          designee. 



         (b)       
          Subject to the terms and conditions set forth herein, in consideration for the
          assignment, transfer, conveyance and delivery of the Cygnus Shares, Purchaser
          will make annual payments (the “Annual Payments”) to NSE in cash, by
          check, or by wire transfer no later than 31 days after each Annual Payment Due
          Date (described below), equal to the lesser of (i) Cygnus’ Adjusted EBIT
          (as defined below) for the twelve months just ended on the applicable Annual
          Payment Due Date and (ii) the amount listed opposite the corresponding Annual
          Payment Due Date (the “Amount”). 



      Annual
Payment Schedule: 




	Annual Payment Due Date

December 31,
	Amount

	2004	 	$  25,000	 
	2005	 	$  75,000	 
	2006	 	$125,000	 
	2007	 	$175,000	 
	2008	 	$225,000	 
	2009	 	$255,000	 





         (i)       
          “Adjusted EBIT” shall mean annual calendar year earnings from Cygnus
          operations before deduction of interest payments and income taxes, as determined
          in accordance with generally accepted accounting principles (“GAAP”)
          consistently applied, minus 3.0% of the client employee wages earned during the
          same period. Adjusted EBIT shall be determined by Cygnus promptly after the
          close of each fiscal year, and copies of its report setting forth its
          computation of EBIT shall be submitted in writing to NSE as soon as practicable
          after the close of each fiscal year. NSE shall have reasonable access to the
          books and records of Cygnus to verify the computations of Adjusted EBIT made by
          Cygnus. Unless NSE notifies Cygnus within 45 days after receipt of the report
          that it objects to the computation of Adjusted EBIT set forth therein, such
          report shall be binding and conclusive for purposes of this Agreement. If NSE
          notifies Cygnus within 45 days after receipt of the report that it objects to
          the computation of Adjusted EBIT set forth therein, NSE and Cygnus shall
          negotiate in good faith to determine Adjusted EBIT for that period. If no
          agreement is reached within 30 days, the determination shall be made by a
          mutually agreeable third-party independent certified public accountant, whose
          determination shall be binding and conclusive on the parties. If the independent
          accountant determines that Adjusted EBIT has been materially understated by
          Cygnus, Cygnus shall pay the independent accountant’s fees, costs, and
          expenses. Otherwise, NSE shall pay such costs, fees, and expenses. 



         (ii)       
          Purchaser shall have no further obligation to make payments to NSE hereunder
          following the December 31, 2009 Annual Payment Due Date, provided,
          however, that this provision shall in no way be construed so as to
          relieve Purchaser from liability for defaults in payments of amounts otherwise
          due as provided in Section 1.03 (b). 









         (iii)       
          Notwithstanding the foregoing, if, with respect to any given Annual Payment Due
          Date, Purchaser is obligated to make an Annual Payment equal to Adjusted EBIT as
          provided above, Purchaser shall be obligated during the following year
          thereafter to make quarterly payments equal to the Adjusted EBIT for the
          applicable quarter until the Deficiency Amount (as defined below) has been paid
          in full. If such quarterly payments do not result in the Deficiency Amount being
          paid in full, then the remaining unpaid portion of the Deficiency Amount shall
          be eliminated as a Deficiency Amount, carried over to the following Annual
          Payment Due Date and added to the corresponding Amount, with the resulting
          amount replacing such corresponding Amount listed in the Annual Payment Schedule
          above. For purposes of the foregoing, the “Deficiency Amount” with
          respect to any particular Annual Payment Due Date shall mean the difference, if
          any, between the corresponding Amount and Adjusted EBIT. 



         (iv)       
          Purchaser may, without penalty, prepay Amounts not yet due. The amounts of any
          such prepayments shall be deducted from the Amount due for the following Annual
          Payment Due Date, with the resulting amount replacing such corresponding Amount
          listed in the Annual Payment Schedule above. 



         (v)       
          “Purchase Price” shall mean the aggregate of all payments required to
          be made pursuant to this Section 1.03. In no event shall the Purchase Price
          exceed $880,000. 



         (vi)       
          Purchaser shall be entitled to rely on the funds of Cygnus as the sole source of
          funds for payment of the Purchase Price. Purchaser shall not be obligated to pay
          the Purchase Price out of any source other than the funds of Cygnus.
          Notwithstanding the foregoing, if with respect to any given Annual Payment Due
          Date there is a Deficiency Amount, , the foregoing provisions of Section
          1.03(b)(vi) shall be void and have no effect with respect to that portion of the
          Deficiency Amount equal to any distribution from Cygnus that Purchaser receives
          or becomes entitled to (other than reasonable compensation and Purchase Price
          payments) with respect to the accounting year corresponding to such Annual
          Payment Due Date. 



         (vii)       
          Notwithstanding the foregoing, in the event that (a) Cygnus is acquired by means
          of a stock acquisition, reorganization, merger, consolidation or the like, (b)
          Cygnus sells, leases, or otherwise transfers or conveys all or substantially all
          of its assets, or (c) is otherwise liquidated, dissolved, or wound up, then
          $880,000 (less any amount of the Purchase Price already paid) shall become
          immediately due and payable. This provision shall in no way be construed to
          alter the provisions of Section 1.03(b)(iv), (v), or (vi). 



         (viii)       
          Purchaser hereby pledges and assigns to NSE, and hereby grants to NSE a first
          priority security interest in all of Purchaser’s right, title and interest
          in and to the Cygnus Shares and any derivatives thereof as collateral security
          for payment of the Purchase Price when due. Purchaser shall deliver to NSE the
          certificate(s) representing the Cygnus Shares along with an executed blank stock
          assignment. Upon default by Purchaser of his obligation to pay the Purchase
          Price in accordance with the terms of this Agreement, NSE shall have the right
          to transfer to or register in the name of NSE the Cygnus Shares. So long as all
          Purchase Price payments are made as they become due under this Agreement,
          Purchaser shall have the right to vote all of the Cygnus shares. Purchaser shall
          not sell, transfer, encumber, or otherwise dispose of any part of the Cygnus
          Shares without the prior written consent of NSE. This pledge of shares shall
          continue until the full Purchase Price is paid according to the terms of this
          Agreement, at which time the Cygnus Shares shall be promptly delivered to
          Purchaser. 







ARTICLE II 



REPRESENTATIONS AND
WARRANTIES OF NSE 



        NSE
represents and warrants to Purchaser that the statements contained in this Article II are
true and correct as of the date hereof, and will be true as of the Closing. 



	  	
SECTION
2.01. Organization. Authority and Qualification of Cygnus: Execution and Delivery. 
(a) Cygnus (i) is a corporation duly organized, validly existing and in good standing
under the laws of its 






jurisdiction of incorporation, (ii)
has all the necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on the business as
it has been and is currently conducted by it. 



         (b)       
          Cygnus is duly licensed or qualified to do business and is in good standing in
          each jurisdiction in which the properties owned or leased by it or the operation
          of its business makes such licensing or qualification necessary, except where
          the failure to be so licensed or qualified would not result in a material
          adverse effect on Cygnus. 



         (c)       
          All corporate actions taken by Cygnus have been duly authorized, and Cygnus has
          not taken any action that conflicts with, constitutes a default under or results
          in a violation of any provision of its Certificate of Incorporation or Bylaws in
          any material way. 



        SECTION
2.02. Due Execution and Delivery by Cygnus and NSE. This Agreement has been duly
executed and delivered by Cygnus and NSE, and (assuming due authorization, execution and
delivery by Purchaser) this Agreement constitutes legal, valid and binding obligations of
Cygnus and NSE enforceable against Cygnus and NSE in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors’ rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. 



        SECTION
2.03. Capital Stock of Cygnus; NSE’s Ownership of Cygnus Shares. 



         (a)       
          The authorized capital stock of Cygnus consists of 1,000,000 shares of capital
          stock, 600,000 of which are designated as “Common Stock”, and 400,000
          of which are designated as “Preferred Stock”. As of the date hereof,
          1,000 shares of Common Stock are issued and outstanding, all of which are duly
          authorized, validly issued, fully paid and nonassessable. Except for the Cygnus
          Shares, there are no other equity securities of Cygnus outstanding. There are no
          options, warrants, convertible securities or other rights, agreements,
          arrangements or commitments of any character relating to the capital stock of
          Cygnus or obligating Cygnus or NSE to issue or sell any shares of capital stock
          of, or any other interest in, Cygnus. There are no outstanding contractual
          obligations of Cygnus to repurchase, redeem or otherwise acquire any of its
          shares or to provide funds to, or make any investment (in the form of a loan,
          capital contribution, or otherwise) in, any other person. 





         (b)       
          As of the date hereof, NSE is the record and beneficial owner of and has good
          and valid title to the Cygnus Shares, free and clear of all encumbrances (except
          for restrictions on transfer imposed by applicable securities laws). Upon
          consummation of the transaction contemplated by this Agreement and registration
          of the Cygnus Shares in the name of Purchaser, Purchaser will own all the issued
          and outstanding capital stock of Cygnus free and clear of all encumbrances. Upon
          consummation of the transaction contemplated by this Agreement, the Cygnus
          Shares will be fully paid and nonassessable. There are no voting trusts,
          stockholder agreements, proxies or other agreements or understandings in effect
          with respect to the voting or transfer of any of the Cygnus Shares. 



        SECTION
2.04. No Conflict. Assuming that all required consents, approvals, authorizations
and other actions described in Section 3.06 have been obtained, the execution, delivery
and performance of this Agreement by Cygnus and NSE and the consummation of the
transaction contemplated herein in the manner contemplated hereby do not and will not
violate, conflict with or result in the breach of any provision of the charter or by-laws
of Cygnus. 



ARTICLE III 



REPRESENTATIONS AND
WARRANTIES OF PURCHASER 



        Purchaser
represents and warrants to NSE as follows: 



        SECTION
3.01. Investment Purpose. Purchaser is acquiring the Cygnus Shares solely for the
purpose of investment and not with a view to, or for offer or sale in connection with, any
distribution thereof. 



ARTICLE IV 



ADDITIONAL AGREEMENTS
AND COVENANTS 



        SECTION
4.01. Assumption of Liabilities. 



         (a)       
          NSE agrees to and hereby does expressly assume and agree to pay, discharge,
          perform, satisfy and resolve the Meridian Liabilities (as defined in Section
          4.01(b) below). NSE does not agree to assume any liabilities or obligations of
          Cygnus other than the Meridian Liabilities, provided, however, that this does
          not negate the indemnification obligations provided in Article VI. 



         (b)       
          “Meridian Liabilities” include any and all liabilities or obligations
          of any kind, character, or description, whether known or unknown, absolute or
          contingent, accrued or unaccrued, disputed or undisputed, liquidated or
          unliquidated, secured or unsecured, joint or several or otherwise, arising out
          of or related to employee benefit claims left unpaid by Meridian Benefit, Inc.
          and Intercare Health Plan , including but not limited to payments of medical
          claims, legal and all other costs and expenses, governmental and regulatory
          fines, and claims by or obligations to brokers, third party administrators,
          AdvantEdge, Meridian, or any other person in relation thereto. Meridian
          Liabilities expressly include, but are not limited to, the corresponding
          compliance liabilities related to the United States Department of Labor and
          other governmental authorities, including penalties, fines, adverse claims and
          the like from such authorities. 



         (c)       
          NSE agrees to keep Cygnus reasonably informed of the status of the resolution of
          the Meridian Liabilities on an on-going basis, including making permanently
          available all pertinent records, files, correspondence, and the like. NSE also
          agrees to promptly inform Cygnus of any matters it is aware of related to the
          Meridian Liabilities which could reasonably impact the business of Cygnus in any
          material way. 








        SECTION
4.02. Assignment of AdvantEdge Proceeds. Cygnus agrees to and hereby does assign to
NSE its rights to receive the AdvantEdge Proceeds (as previously defined herein). If
AdvantEdge pays any of the AdvantEdge proceeds to Cygnus, Cygnus agrees that NSE is the
legal owner of these funds, and Cygnus will immediately pay or forward these funds to NSE.
In addition, Cygnus agrees to inform AdvantEdge of this assignment of proceeds as soon as
practicable after the Closing. NSE agrees to hold Cygnus harmless from any costs or other
liabilities incurred by NSE in pursuit of the AdvantEdge Proceeds. 



        SECTION
4.03. IHC Guarantee. Cygnus agrees that it will not renew, extend or otherwise
continue its current policy of group health insurance issued by IHC beyond the current
policy period ending December 31, 2003 unless and until IHC has released NSE from its
guarantee obligations under the IHC Guarantee (as previously defined herein). 



        SECTION
4.04. Liability Insurance. The parties agree that after the Closing, Cygnus shall
be responsible for obtaining its own liability insurance, and that NSE shall have no
obligation to maintain liability insurance on behalf of Cygnus. NSE agrees to provide
Cygnus with copies of any insurance policies it is aware of that are in Cygnus’ name,
and to inform Cygnus within 10 business days of any removal of Cygnus’ name or
property from any liability insurance carried by NSE on Cygnus’ behalf. 



        SECTION
4.05 Intercompany Agreements. NSE and Cygnus agree that all agreements, contracts,
and the like between NSE (or its affiliates) and Cygnus shall be terminated as of the
Closing Date, and after the Closing Date, neither party shall be bound thereby or have any
liability thereunder, other than unsatisfied obligations incurred pursuant to such
agreements, contracts, and the like prior to the Closing Date. 



        SECTION
4.06. Use of NSE Resources. The parties agree that until September 30, 2003, Cygnus
may continue to utilize the facilities, equipment, administrative resources, technical
support, and the like in a manner consistent with its use of such prior to the Closing at
no cost to Cygnus, provided, however, that if such NSE facility and
resources are used by Cygnus in a manner that exceeds current practice, or if Cygnus
desires to continue to utilize the facilities and resources of NSE after September 30,
2003, it may only do so pursuant to an arrangement acceptable to NSE that provides for
payment by Cygnus for such use of resources. NSE is under no obligation to allow Cygnus to
continue its occupation of NSE premises or use of its resources after September 30, 2003. 



        SECTION
4.07. Confidentiality. NSE and Purchaser each agree to, and shall cause each of
their respective agents, representatives and affiliates to: (i) treat and hold as
confidential (and not disclose or provide access to any person to) all information
relating to trade secrets, processes, patent and trademark applications, product
development, pricing and marketing plans, policies and strategies, operations methods,
product development techniques, new personnel acquisition plans and all other confidential
information with respect to Cygnus (in the case of NSE) and NSE (in the case of
Purchaser), (ii) in the event that NSE or Purchaser or any agent, representative,
affiliate, employee, officer or director of each becomes legally compelled to disclose any
such information, provide NSE or Purchaser, as the case may be, with prompt written notice
of such requirement so that NSE or Purchaser, as the case may be, may seek a protective
order or other remedy or waive compliance with this Section 4.07 and (iii) in the event
that such protective order or other remedy is not obtained, or NSE or Purchaser, as the
case may be, waives compliance with this Section 4.07 furnish only that portion of such
confidential information which is legally required to be provided and exercise its best
efforts to obtain assurances that confidential treatment will be accorded such
information. NSE and Purchaser each agrees and acknowledges that remedies at law for any
breach of their obligations under this Section 4.07 are inadequate and that in addition
thereto NSE and Purchaser shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach. 





        SECTION
4.08. Regulatory and Other Authorizations: Notices and Consents. 



         (a)       
          NSE and Purchaser shall cooperate in obtaining (or causing Cygnus to obtain) all
          authorizations, consents, orders and approvals of all governmental authorities
          and officials that may be or become necessary for the execution and delivery of,
          and the performance of, obligations pursuant to this Agreement and will
          cooperate in promptly seeking to obtain all such authorizations, consents,
          orders and approvals. 



         (b)       
          NSE and Purchaser shall cooperate in giving promptly such notices to third
          parties and use their best efforts to obtain such third party consents and
          estoppel certificates as may be necessary or desirable in connection with the
          transactions contemplated by this Agreement. 



         (c)       
          NSE and Purchaser agree that, in the event any consent, approval or
          authorization necessary or desirable to preserve for Cygnus any right or benefit
          under any lease, license, contract, commitment or other agreement or arrangement
          to which Cygnus is a party is not obtained prior to the Closing, NSE will,
          subsequent to the Closing, cooperate with Purchaser in attempting to obtain such
          consent, approval or authorization as promptly thereafter as practicable. 



        SECTION
4.09 Records, Files, etc. NSE agrees to provide originals or copies of all records,
files, data and other documents, electronic or otherwise, pertinent to the business of
Cygnus. 



        SECTION
4.10 Tax Returns. NSE agrees to continue filing consolidated tax returns for Cygnus
through the period ending as of the date hereof. 



        SECTION
4.11. Further Action. Each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all appropriate action, do or cause to be done all things
necessary, proper or advisable under applicable law, and execute and deliver such
documents and other papers, as may be required to carry out the provisions of this
Agreement and consummate and make effective the transactions contemplated by this
Agreement. 



ARTICLE V 



CONDITIONS TO CLOSING 



        SECTION
5.01. Conditions to Obligations of all parties. The obligations of each party to
consummate the transaction contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions by the other parties: 



         (a)       
          Representations, Warranties, and Covenants. The representations and
          warranties of the other parties contained in this Agreement shall have been true
          and correct when made and shall be true and correct in all material respects as
          of the Closing, with the same force and effect as if made as of the Closing, and
          the covenants and agreements contained in this Agreement to be complied with by
          the other parties on or before the Closing shall have been complied with in all
          material respects. 



         (b)       
          Governmental Consents. All authorizations, consents, orders, and
          approvals of all governmental authorities and officials that may be necessary
          for the execution and delivery of, and the performance of, obligations pursuant
          to this Agreement shall have been obtained. 





         (c)       
          Intercompany Payables. The books of NSE shall have been adjusted
          appropriately to reflect the capitalization by NSE of the approximately $690,000
          intercompany debt owed by Cygnus to NSE on the closing books for July 2003, and
          NSE shall have delivered to Purchaser Cygnus’ unaudited balance sheet for
          the period ended July 31, 2003, reflecting such capitalization. 



         (d)       
          Cygnus Financial Statements. NSE shall have delivered to Purchaser copies
          of the balance sheet, income statement, and statement of cash flows of Cygnus
          for the period ending July 31, 2003. Such financial statements shall reflect the
          capitalization of intercompany debt as provided in Section 5.01(c). 



         (e)       
          Schedule of Cygnus Assets. NSE shall have delivered to Purchaser a
          complete schedule of the assets that, to the knowledge of NSE, are owned by
          Cygnus as of July 31, 2003. 



         (f)       
          Schedule of Cygnus Liabilities. NSE shall have delivered to Purchaser a
          complete schedule of liabilities that, to the knowledge of NSE, are owed by
          Cygnus as of the date hereof. This schedule of liabilities is the same as that
          referenced below in Section 6.02(e). 



         (g)       
          Officers and Directors. Each current officer and director of Cygnus shall
          have resigned from their respective positions, effective as of the Closing. 



         (h)       
          Corporate Documents. NSE shall have delivered to Purchaser originals of
          the Stock Register, Articles of Incorporation, Bylaws, Board Minute Book, and
          Corporate Seal. 



ARTICLE VI 



INDEMNIFICATION 



        SECTION
6.01. Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Agreement, the indemnification provisions of
this Article VI and all statements contained in this Agreement or other document delivered
pursuant to this Agreement or in connection with the transaction contemplated by this
Agreement (collectively, the “Acquisition Documents”), shall survive the
Closing. Neither the survival nor the liability of the parties with respect to their
representations and warranties shall be reduced by any investigation made at any time by
or on behalf of any other party. 



        SECTION
6.02. Indemnification by NSE. Purchaser, his affiliates and their successors and
assigns, and the officers, directors, employees and agents of Purchaser, his affiliates,
and their successors and assigns (each an “Indemnified Party”) shall be
indemnified and held harmless by NSE (the “Indemnifying Party”) for any
and all liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, attorneys’ and
consultants’ fees and expenses) actually suffered or incurred by them (including,
without limitation, any action brought or otherwise initiated by any of them) (hereinafter
a “Loss”), arising out of or resulting from: 



         (a)       
          the breach of any representation or warranty made by NSE contained in the
          Acquisition Documents; 






         (b)       
          the breach of any covenant or agreement by NSE contained in the Acquisition
          Documents; 



         (c)       
          any liabilities or obligations of Cygnus arising from or relating to actions or
          inactions of Cygnus or the conduct of its business prior to the Closing,
          including, but not limited to, taxes, assessments, penalties, fines, and
          interest associated with the filing of consolidated tax returns by NSE through
          the date hereof; or 



         (d)       
          any and all Losses suffered or incurred by Cygnus by reason of or in connection
          with any claim or cause of action of any third party to the extent arising out
          of any action, inaction, event, condition, liability or obligation of Cygnus
          prior to the Closing. 



         (e)       
          Notwithstanding the foregoing, the indemnification obligations provided by NSE
          in this Section 6.02 do not apply to the liabilities described in Schedule
          6.02(e), relating to ordinary course liabilities of Cygnus as reflected in
          Cygnus’ books as of the date hereof, and any such liabilities relating to
          the period between the date hereof and the Closing. 



        SECTION
6.03. Indemnification by Cygnus. NSE, its affiliates and their successors and
assigns, and the officers, directors, employees and agents of NSE, its affiliates, and
their successors and assigns (each an “Indemnified Party”) shall be
indemnified and held harmless by Cygnus (the “Indemnifying Party”)
for any and all liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, attorneys’ and
consultants’ fees and expenses) actually suffered or incurred by them (including,
without limitation, any action brought or otherwise initiated by any of them) (hereinafter
a “Loss”), arising out of or resulting from: 



         (a)       
          the breach of any representation or warranty made by Purchaser contained in the
          Acquisition Documents; 



         (b)       
          the breach of any covenant or agreement by Cygnus or Purchaser contained in the
          Acquisition Documents; 



         (c)       
          liabilities incurred by NSE pursuant to the IHC Guarantee arising out of actions
          or inactions of Cygnus or the conduct of its business after the Closing; 



         (d)       
          any liabilities or obligations of Cygnus arising from or relating to actions or
          inactions of Cygnus or the conduct of its business after the Closing; or 



         (e)       
          any and all Losses suffered or incurred by NSE by reason of or in connection
          with any claim or cause of action of any third party to the extent arising out
          of any action, inaction, event, condition, liability or obligation of Cygnus
          after the Closing. 






        SECTION
6.04. Indemnification Procedures. An Indemnified Party shall give the applicable
Indemnifying Party notice of any matter which an Indemnified Party has determined has
given or could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises. If an Indemnified
Party shall receive notice of any claim by a third party, the Indemnified Party shall give
the applicable Indemnifying Party notice of such third party claim within 30 days of the
receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release such Indemnifying Party from any of its
obligations under this Article VI except to the extent the indemnifying party is
materially prejudiced by such failure and shall not relieve such Indemnifying Party from
any other obligation or liability that they may have to any Indemnified Party otherwise
than under this Article VI. If any Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party hereunder against any Losses that may result
from such third party claim, then such Indemnifying Party shall be entitled to assume and
control the defense of such third party claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party within five
days of the receipt of such notice from the Indemnified Party; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest that
would make it inappropriate in the judgment of the Indemnified Party, in its sole and
absolute discretion, for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its own
counsel, in each jurisdiction for which the Indemnified Party determines counsel is
required, at the expense of the Indemnifying Party. In the event the Indemnifying Party
exercises the right to undertake any such defense against any such third party claim as
provided above, the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the Indemnifying Party’s
expense, an witnesses, pertinent records, materials and information in the Indemnified
Party’s possession or under the Indemnified Party’s control relating thereto as
is reasonably required by the Indemnifying Party. Similarly, in the event the Indemnified
Party is, directly or indirectly, conducting the defense against any such third party
claim, the Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party’s expense, all
such witnesses, records, materials and information in the Indemnifying Party’s
possession or under the Indemnifying Party’s control relating thereto as is
reasonably required by the Indemnified Party. No such third party claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified Party. 



ARTICLE VII 



GENERAL PROVISIONS 



        SECTION
7.01. Expenses. Except as otherwise specified in this Agreement, all costs and
expenses, including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the transaction
contemplated hereby shall be paid by the party incurring such costs and expenses, whether
or not the Closing shall have occurred. 



        SECTION
7.02. Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to have been
duly given or made upon receipt by delivery in person, by courier service, by cable, by
telecopy, by telegram, by telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance with this
Section 7.02): 





(a) 



if to NSE: 



Nu Skin Enterprises, Inc.

One Nu Skin Plaza

75 West Center

Provo, Utah 84601

Telecopy:(801) 345-3899

Attention: D. Matthew Dorny 



(b) 



if to Purchaser or Cygnus: 



Orrin T. Colby III

 406 Oakley St. 

Salt Lake City, UT 84116

 Telecopy: (801) 406-0209

 Attention: Orrin T. Colby III 



        SECTION
7.03. Headings. The descriptive headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. 



        SECTION
7.04. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest extent
possible. 



        SECTION
7.05. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, between the parties with respect to
the subject matter hereof. 



        SECTION
7.06. Assignment. This Agreement may not be assigned by operation of law or
otherwise without the express written consent of the other parties (which consent may be
granted or withheld in the sole discretion of such other parties); provided, however,
that NSE may assign this Agreement to an affiliate of NSE without the consent of the
other parties, provided further, however that no such assignment shall release NSE
from its payment and performance obligations herewith, and that NSE agrees to notify
Purchaser and Cygnus of such assignment within 15 days. 



        SECTION
7.07. No Third Party Beneficiaries. Except for the provisions of Article VII
relating to Indemnified Parties, this Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their permitted assigns and nothing herein, express
or implied, is intended to or shall confer upon any other Person any legal or equitable
right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 



        SECTION
7.08. Amendment. This Agreement may not be amended or modified except by an
instrument in writing signed by, or on behalf of, each party. 





        SECTION
7.09. Waiver. Any party may (a) extend the time for the performance of any of the
obligations or other acts of an other party, (b) waive any inaccuracies in the
representations and warranties of an other party contained herein or in any document
delivered by an other party pursuant thereto or (c) waive compliance with any of the
agreements or conditions of an other party contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a waiver of
any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of
any other term or condition, of this Agreement. The failure of any party to assert any of
its rights hereunder shall not constitute a waiver of any of such rights. 



        SECTION
7.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
UTAH, EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF UTAH. 



        SECTION
7.11. Counterparts. This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall constitute one and
the same agreement. 



        SECTION
7.12. Specific Performance. The parties hereto agree that irreparable damage would
occur in the event any provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity. 







        IN
WITNESS WHEREOF, the NSE, Purchaser, and Cygnus have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly authorized. 



NU SKIN ENTERPRISES,
INC., a Delaware corporation (“NSE”) 



By:        /s/ Mark L. Adams

Name:    Mark L. Adams

Title:      Vice President



ORRIN T. COLBY III, an
individual (“PURCHASER”) 



/s/ Orrin T. Colby III 



CYGNUS RESOURCES, INC.,
a Delaware corporation (“CYGNUS”) 



By:        /s/ Paul D. Swan

Name:    Paul D. Swan

Title:      President







   SCHEDULE 6.02(e) 



CYGNUS LIABILITES 



		
	Accounts Payable	 	 	 
	     	 	 	 
	Trade Payables	 	92,361	 
	     	 	 	 
	     Accounts Payables Total	 	 	92,361
	     	 	 	 
	     	 	 	 
	Accrued Liabilities	 	 	 
	     	 	 	 
	     Wages Payable	 	(357	)
	     Accrued Payroll Taxes	 	9,612	 
	     Other Accrued Liabilities	 	116,722	 
	     Cafeteria Plan (125) Payable	 	(5437	)
	     401(k) Payable	 	1,452	 
	     Other Accruals - Clearing	 	17,279	 
	     Sales Tax - AP	 	(254	)
	     Social Security W/H	 	4,531	 
	     Medicare W/H	 	1,210	 
	     Federal W/H	 	1,384	 
	     State W/H	 	32,894	 
	     City Tax	 	736	 
	     	 	 	 
	Accrued Liabilities Total	 	 	179,772 
	 	 	 	 
	Cygnus Liabilities TOTAL	 	 	272,133












ASSIGNMENT SEPARATE
FROM CERTIFICATE 



        FOR
VALUE RECEIVED, Nu Skin Enterprises, Inc. hereby sells, assigns, and transfers unto Orrin
T. Colby III, one thousand (1,000) shares of the Common Stock of Cygnus Resources, Inc.,
standing in the undersigned’s name on the books of said corporation, represented by
Certificate No. 001, and does hereby irrevocably constitute and appoint D. Matthew Dorny
attorney to transfer the said stock on the books of the said corporation with full power
of substitution in the premises. 



Dated:_________________________ 



NU SKIN ENTERPRISES, INC. 



By:___________________________

Name:

Title:











ASSIGNMENT SEPARATE
FROM CERTIFICATE 



        FOR
VALUE RECEIVED, Orrin T. Colby hereby sells, assigns, and transfers unto Nu Skin
Enterprises, Inc. _______________ (_______) shares of the Common Stock of Cygnus
Resources, Inc., standing in the undersigned’s name on the books of said corporation,
represented by Certificate(s) No. _________, and does hereby irrevocably constitute and
appoint _________________ attorney to transfer the said stock on the books of the said
corporation with full power of substitution in the premises. 



Dated:_________________________ 



_________________ 



(signature) 



_________________ 



(print name) 












[This assignment may only be
completed and delivered in accordance with the terms of the Stock Acquisition Agreement
dated as of August 1, 2003 between the signatory hereof and Nu Skin Enterprises, Inc.]