Document:

Exhibit 10.58 2005 NSE FORM 10-K Caroderm Agreement

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. 

2

        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. 

3

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 

4

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. 

5

        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. 

6

        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. 

7

        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”). 

10

	  	        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 

11

 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 

               

-13-

          		    (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. 

14

	  	        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 

18

	  	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. 

19

	  	        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. 

20

	  	        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): 

21

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. 

22

        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. 

23

“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. 

25

“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. 

26

“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] 

27

        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. BernsteinExhibit 10.59 to NSE FORM 10-K King Termination Agreement

March 2, 2006 

Dear Richard: 

It is our understanding that you will
terminate your employment with Nu Skin Enterprises effective June 9, 2006. 

The following have been agreed to by
Yourself and Nu Skin: 

     	1. 	
          By March 1, 2006 you will vacate the 9th floor office. 

          

     	2. 	
           Nu Skin
          will continue to employ you until June 9, 2006. 

          

     	3. 	
          Nu Skin will pay you a severance total of $200,000 minus the time employed from
          March 1, 2006 to June 9, 2006. A lump sum payment of $137,108 will be made to
          you after June 9, 2006 once Nu Skin receives a signed severance agreement. 

          

     	4. 	
          You will have 90 days after June 9, 2006 to exercise any vested stock options 

          

     	5. 	
          You will retain your cell phone and lap top computer. You will transfer the cell
          phone service to your personal account no later than one week from June 9, 2006.
          You will also allow removal from your lap top any software owned and licensed by
          Nu Skin by June 9, 2006. 

          

     	6. 	
          You will transfer your Big Planet e-mail account paid by the company to your
          personal account within two weeks after March 1, 2006. 

          

     	7. 	
          Between March 1, 2006
          and June 9, 2006 you will be available to the company to assist with any
          transition needs. 

          

     	8. 	
         You will continue use of your current Nu Skin e-mail
          address during the March 1, 2006 to June 9, 2006 time period.  

          

     	9. 	
         You will have
          access to the employee store under the standing VP benefit arrangements until
          June 9, 2007.  

          

     	10. 	
         If you become employed by another company prior to June 9,
          2006, all benefits will cease as of that date and a prorated severance amount
          for the period remaining until June 9, 2006 will be paid you.

          

If you have any questions please feel
free to contact me. 

Sincerely, 

/s/ Ritch Wood
Ritch Wood
CFO Nu Skin
Enterprises

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