Exhibit 10.1
 
EXECUTION VERSION
 
 
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is made and entered
into as of the 14th day of July, 2009, by and between NOVEN PHARMACEUTICALS,
INC., a Delaware corporation (the “Company”), and JEFFREY EISENBERG
(“Executive”) (collectively, the “Parties”).
 
Recitals
 
A.           On July 14, 2009, the Company and Hisamitsu Pharmaceutical Co.,
Inc. (“Hisamitsu”) entered into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which (i) Hisamitsu has agreed to cause a subsidiary of
Hisamitsu to commence a tender offer to acquire shares of common stock of the
Company (subject to the terms and conditions set forth in the Merger Agreement)
(the “Tender Offer”) and (ii) at the “Effective Time” (as defined in the Merger
Agreement), a subsidiary of Hisamitsu will merge with and into the Company, with
the Company continuing as the surviving corporation in such merger;
 
B.           Executive and the Company are parties to a letter agreement, dated
as of January 2, 2008 (the “Letter Agreement”), pursuant to which Executive
serves as Executive Vice President of the Company, and an Employment Agreement
(Change of Control), dated as of November 18, 2008 (the “Change of Control
Agreement”); and
 
C.           The Company desires to retain the continued services and dedication
of Executive to the business and affairs of the Company following the Effective
Date (as defined below) as its President and Chief Executive Officer and a
member of its Board of Directors (the “Board”), and Executive desires to
continue to serve the Company in such capacity following the Effective Date, in
each case subject to the terms and conditions herein.
 
Agreement
 
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
in this Agreement, the Parties agree as follows:
 
1.             Employment.
 
1.1           Employment and Term.  The Company agrees to employ Executive and
Executive agrees to serve the Company, on the terms and conditions set forth in
this Agreement, for the period commencing on the day on which the Effective Time
occurs or, if earlier, the first business day following the date on which
representatives of Hisamitsu hold a majority of the seats on the Board (the
earlier of such dates, the “Effective Date”) and expiring on the second
anniversary of the Effective Date, unless sooner terminated as set forth in this
Agreement (the “Term”); provided, however, that commencing on the second
anniversary of the Effective Date and on each annual anniversary date
thereafter, the Term of this Agreement shall be automatically extended for an
additional one (1) year period unless, at least sixty (60) days prior to such
annual anniversary date, the Company shall have delivered to Executive or
Executive shall have delivered to the Company written notice that the Term of
the Executive’s employment under this Agreement will not be extended.
 

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1.2           Duties of Executive.  Executive shall serve as the President and
Chief Executive Officer of the Company and shall have powers and authority
superior to any other officer or employee of the Company or of any subsidiary of
the Company.  Subject to the preceding sentence, during the Term of employment,
Executive shall in good faith use reasonable business efforts to perform all
services as may be commensurate with his position and reasonably assigned to him
by the Board and, following the Effective Time, the Chief Executive Officer of
Hisamitsu and shall exercise such power and authority commensurate with his
position and such other power and authority as may from time to time be
delegated to him by the Board and, following the Effective Time, the Chief
Executive Officer of Hisamitsu.  In addition, following the Effective Time,
Executive shall regularly consult with and provide information to the Chairman
of the Board with respect to the Company’s business and affairs.  Executive
shall be required to report solely to, and shall be subject solely to the
supervision and direction of, the Board and the Chief Executive Officer of
Hisamitsu, and no other person or group shall be given authority to supervise or
direct Executive in the performance of his duties.  Executive shall devote
substantially all of his working time, efforts and attention to the business and
affairs of the Company.  It shall not be a violation of this Agreement for
Executive to: (a) serve on corporate, civic or charitable boards or committees
(it being agreed that in no event shall Executive serve on the board of
directors of more than two other corporations and the acceptance of any new
corporate directorship after the Effective Date of this Agreement shall be
subject to the consent of the Board, which shall not be unreasonably withheld);
(b) deliver lectures, fulfill speaking engagements or teach at educational
institutions; and (c) manage personal investments, so long as such activities do
not unreasonably interfere with the performance of Executive’s responsibilities
as an employee of the Company (or as a director of the Company, if serving as
such), in accordance with this Agreement.
 
2.             Compensation.
 
2.1           Base Salary.  Executive shall receive a base salary at the annual
rate of $475,000 (as increased from time to time, the “Base Salary”) during the
Term of this Agreement, with such Base Salary payable in installments consistent
with the Company’s normal payroll schedule. The Base Salary shall also be
reviewed, at least annually, for merit increases (if any) and may, by action and
in the discretion of the Board, be increased.  Once increased, the Base Salary
may not be decreased.
 
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2.2           Annual Incentive Compensation.  Executive shall participate in the
Company’s annual incentive bonus plan (the “Annual Incentive Bonus Plan”). The
Annual Incentive Bonus Plan will be based on the achievement of Company and
individual performance goals to be established by the Board in consultation with
Executive, with annual target incentive bonuses of at least seventy-five percent
(75%) of the Base Salary, which percentage will not be subject to reduction
notwithstanding any provisions to the contrary contained in any applicable
Annual Incentive Bonus Plan; provided, that, with respect to the fiscal year
2009, any bonus awarded to Executive will be determined by determining (i) the
bonus to which Executive would have been entitled if he had served as Executive
Vice President for the entire fiscal year (at Executive’s prior base salary and
prior target percentage), (ii) the bonus to which Executive would have been
entitled if he had served as Chief Executive Officer for the entire fiscal year
(as provided in this Section 2.2) and (iii) the pro rata portion of each of (i)
and (ii) by reference to the date of this Agreement.  It is intended that
performance measures selected shall be reasonably attainable at target.  It is
agreed that such Annual Incentive Bonus Plan shall not create any implication
that the Board shall award any such bonus or incentive compensation unless
targets are met; provided, that in the event that the Company agrees, in
connection with the transactions contemplated by the Merger Agreement, to
provide guaranteed bonuses to one or more other executives of the Company who
are parties to change of control agreements and who enter into new compensation
arrangements with the Company, then Executive shall be provided with a
guaranteed bonus on the most favorable terms as set forth in any of those
compensation arrangements.
 
2.3           Long-Term Incentive Compensation.  Within sixty (60) days
following the Effective Time, the Company shall establish a Management Incentive
Plan (the “LTI Plan”) consistent with the terms and conditions currently agreed
to by the Company and Hisamitsu and shall designate Executive as a participant
in the LTI Plan.  Executive shall have a target award of $1,687,500, and a
maximum award of $3,375,000, under the LTI Plan with respect to the performance
cycle ending December 31, 2013 (or a lower adjusted amount if Executive and the
Company mutually agree in writing on a performance period of less than four
years applicable to Executive).
 
2.4           Withholding.  All payments under this Agreement or otherwise
pursuant to Executive’s employment relationship shall be made net of any
applicable withholding taxes or other amounts required to be withheld by law.
 
3.             Expense Reimbursement and Other Benefits.
 
3.1           Expense Reimbursement.  During the Term of Executive’s employment
under this Agreement, the Company, upon the submission of reasonable supporting
documentation by Executive, shall reimburse Executive for all reasonable
expenses actually paid or incurred by Executive in the course of and pursuant to
the business of the Company, including expenses for travel and
entertainment.  Notwithstanding anything herein to the contrary or otherwise,
except to the extent any expense reimbursement provided pursuant to this
Agreement or otherwise is not taxable income to Executive within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”, and Section 409A thereof and its implementing regulations and
guidance, “Section 409A”), (a) the amount of expenses eligible for reimbursement
provided to Executive during any calendar year will not affect the amount of
expenses eligible for reimbursement or in-kind benefits provided to Executive in
any other calendar year, (b) the reimbursements for expenses for which Executive
is entitled to be reimbursed shall be made on or before the last day of the
calendar year following the calendar year in which the applicable expense is
incurred, (c) the right to payment or reimbursement or in-kind benefits
hereunder may not be liquidated or exchanged for any other benefit and (d) the
reimbursements shall be made pursuant to objectively determinable and
nondiscretionary Company policies and procedures regarding such reimbursement of
expenses.
 
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3.2           Employee Benefit Plans.  During the Term of Executive’s employment
under this Agreement, Executive shall be entitled to participate in all
incentive, savings, and retirement plans, practices, policies and programs
provided by the Company to other officer-level executives of the Company, in
each case, in accordance with their respective terms in effect from time to
time.  Nothing in this Agreement shall preclude the Company from amending or
terminating any such plan at any time.
 
3.3           Health and Welfare Benefit Plans.  During the Term of Executive’s
employment under this Agreement, Executive and/or Executive’s family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under health and welfare benefit plans, practices, policies and
programs provided by the Company to other officer-level executives of the
Company, in each case, in accordance with their respective terms in effect from
time to time (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs).  Nothing in this Agreement shall
preclude the Company from amending or terminating any such plan at any time.
 
3.4           Working Facilities.  In connection with his employment by the
Company, Executive shall be based at the Company’s offices in the New York or
Miami areas, as elected by the Executive, unless otherwise agreed to in writing
by the Board, subject to reasonable business travel on behalf of the Company,
which will include, without limitation, quarterly travel to Tokyo, Japan, and
regular travel to the Company’s offices in New York to attend Board
meetings.  During the Term of Executive’s employment under this Agreement, the
Company shall furnish Executive with an office, a secretary and such other
facilities and services suitable to his position and adequate for the
performance of his duties under this Agreement.
 
3.5           Vacation.  During the Term of Executive’s employment under this
Agreement, Executive shall be entitled to paid annual vacation according to the
Company’s policy applicable to other officer-level executives of the Company,
which in no event shall be less than seven (7) weeks per calendar year.
 
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3.6           Fringe Benefits.  During the Term of Executive’s employment under
this Agreement, Executive shall be entitled to fringe benefits according to the
Company’s regular plans, practices, policies and programs applicable to other
officer-level executives of the Company.
 
4.             Termination.
 
4.1           Termination by Either Party.
 
(a)           The Company or Executive may terminate Executive’s employment for
any reason or no reason at any time.
 
(b)           If the Company terminates Executive’s employment without Cause (as
defined in this Section 4) or Executive terminates Executive’s employment with
Good Reason (as defined in this Section 4), subject to Executive’s execution
(and non-revocation, if applicable) of the waiver and release in the form
attached hereto as Exhibit A within thirty (30) days following the Date of
Termination (as defined in this Section 4), the Company shall pay Executive
severance pay in an amount equal to the following:
 
(i)           If such termination occurs during the period of the Term
commencing on the Effective Date and ending on the day prior to the second
anniversary of the Effective Date, Executive shall be paid, in a lump sum within
thirty (30) days following the Date of Termination, (A) an amount equal to two
times the sum of: (x) Executive’s annual Base Salary in effect on the Date of
Termination; plus (y) the Highest Annual Bonus (as defined in this Agreement);
and (B) the Highest Annual Bonus prorated for the number of days during the
current fiscal year that Executive has worked up through the date of
termination.  For this purpose, the “Highest Annual Bonus” is the greater of:
(x) the annual incentive compensation bonus paid or payable by the Company to
Executive pursuant to Section 2.2 of this Agreement (or prior annual incentive
plan of the Company) in respect of the Company’s most recent completed fiscal
year; and (y) the average of the annual incentive compensation bonuses paid or
payable by the Company to Executive pursuant to Section 2.2 of this Agreement
(or prior annual incentive plan of the Company) in respect of the three
completed fiscal years immediately preceding the fiscal year in which the
termination occurs.  In addition, in the event of such a termination within such
period, Executive shall be entitled to the additional benefits set forth on
Exhibit B hereto.
 
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(ii)           If such termination occurs during the period of the Term
commencing on the second anniversary of the Effective Date, Executive shall be
paid eighteen (18) months of Executive’s Base Salary in effect at the date of
such termination within thirty (30) days following the Date of Termination, as
well as a prorated bonus, such prorated bonus being in an amount equal to the
payment that would have been paid to Executive pursuant to the applicable Annual
Incentive Bonus Plan had Executive continued to the end of the applicable
performance period, multiplied by a fraction, the numerator of which is the
number of completed days of employment during such performance period and the
denominator of which is the total number of days in the performance period
(“Termination Prorated Bonus”) and which shall be paid when it would otherwise
have been paid if Executive’s employment had continued.  For purposes of
determining the amount of the Termination Prorated Bonus, subjective performance
criteria shall be disregarded, and Board discretion to adjust the resulting
figure downward shall be applied only if and to the same extent applied to the
Company’s other executive officers.
 
(iii)           On any such termination of employment, Executive shall be paid,
within thirty (30) days following the Date of Termination, an amount equal to
the Base Salary (and benefits) and annual incentive compensation (for the prior
calendar year) earned by Executive (to the extent such payments have not been
made) on or prior to the Date of Termination but unpaid as of the Date of
Termination (but subject to the terms of the applicable incentive compensation
plans), as well as any accrued but unused vacation in accordance with Company
policies.  In addition, Executive shall be entitled to any amounts due under any
Company benefit, fringe, equity or payroll practices plans or policies in
accordance with their respective terms and any amounts earned on or prior to the
Date of Termination but unpaid as of the Date of Termination under the Company’s
long-term incentive compensation plan (but subject to the terms thereof).  The
amounts and benefits under this Section (iii) shall be referred to as “Accrued
Amounts.”
 
(c)           If the Company terminates Executive’s employment with Cause (as
defined in this Section 4) or Executive terminates Executive’s employment
without Good Reason (as defined in this Section 4), the Company shall pay to
Executive his Accrued Amounts.
 
(d)           If Executive’s employment terminates due to Executive’s death or
Disability (as defined in this Section 4), the Company shall pay to Executive
(or his estate, beneficiary or legal representative), his Accrued Amounts, as
well as a Termination Prorated Bonus.  For the purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties
with the Company on a full time basis for one hundred and eighty (180)  days in
any period of three hundred sixty-five (365) consecutive days as a result of
incapacity due to mental or physical illness (“Disability”).  Upon the end of
the aforesaid period and while the Disability continues, the Company may
terminate the Executive for Disability on written notice (the date specified in
such notice, the “Disability Effective Date”).
 
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(e)           If the Company gives notice of non extension of the Term of
employment under this Agreement, then, upon the end of the then-current Term,
Executive’s employment hereunder shall end and (so long as no intervening
termination of employment has occurred, in which case Section 4.1(b), (c) or (d)
shall apply, as applicable) such termination shall be treated as a termination
(x) to which Section 4.1(b)(i) of this Agreement applies if such notice is given
prior to the second anniversary of the Effective Date and (y) to which
Section 4.1(b)(ii) applies if given thereafter.
 
(f)           Any Termination Prorated Bonus, if any, shall be paid at the time
it would be paid if the Executive continued employment. Notwithstanding anything
contained in any Annual Incentive Bonus Plan, payment of any Termination
Prorated Bonus pursuant to this Section 4.1 shall be in complete and total
satisfaction of any obligation of the Company to Executive under such Annual
Incentive Bonus Plan with respect to the performance period to which the
Termination Prorated Bonus relates.
 
4.2           Termination for Cause by Company.  In the case of the Company
terminating this Agreement, “Cause” means any one or more of the following:
 
(a)           a material act or acts of personal dishonesty taken by Executive
which is either (x) at the expense of the Company, or (y) reasonably likely to
bring significant disrepute to the Company;
 
(b)           any violation by Executive of his material obligations under this
Agreement (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on his part and which is
not remedied within ten business days after receipt of written notice from the
Company;
 
(c)           the conviction (or plea of no contest) of Executive for any
criminal act which is a felony or a misdemeanor in each case involving moral
turpitude; or
 
(d)           a material breach by Executive of his Confidentiality and
Invention Agreement with the Company;
 
Termination of this Agreement for Cause by the Company shall be effective only
upon a majority vote of the Board; provided however, that Executive shall first
be given an opportunity to make a presentation to the Board in Executive’s
defense.
 
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4.3           Termination for Good Reason by Executive.  In the case of
Executive terminating his employment under this Agreement, “Good Reason” means,
without Executive’s prior written consent, the occurrence of any of the
following events following the Effective Date: (A) (i) any diminution in
Executive’s title or material diminution in Executive’s authority, duties,
responsibilities or reporting lines as President and Chief Executive Officer of
the Company (other than temporarily as a result of Executive’s physical or
mental incapacity), excluding any such diminution arising by reason of the
Company no longer being a public company, or (ii) the assignment to Executive of
duties inconsistent with such positions; and provided, that the foregoing shall
not be violated by the Board’s good faith actions with regard to acquisitions,
dispositions or realignment of the Company’s lines of business; or (B) a
material breach by Company of this Agreement including, without limitation, as
to location of office, travel or compensation.  In order for a termination by
Executive to constitute a termination for Good Reason, Executive must notify the
Company of the circumstances claimed to constitute Good Reason in writing not
later than the sixtieth (60th) day after it has arisen or occurred and must
provide the Company with at least thirty (30) days within which to cure such
circumstances before terminating employment, and, failing a cure, Executive must
terminate his employment within thirty (30) days following the expiration of
such cure period.
 
4.4           Notice of Termination.  Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other Party given in accordance with Section 8.  For purposes
of this Agreement, a “Notice of Termination” means a written notice which:
(a) indicates the specific termination provision in this Agreement relied upon;
(b) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated; and (c) if the Date of Termination
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the giving of such
notice, but subject to compliance with and further notice and cure provisions
contained herein). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company under this Agreement or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights under this Agreement.
 
4.5           Date of Termination.  “Date of Termination” means: (a) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be; (b) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination; and (c) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
 
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4.6           Resolution of Disputes.  If, during the period commencing on the
Effective Date and ending on the day prior to the second anniversary of the
Effective Date, there shall be any dispute between the Company and the Executive
(but excluding any dispute by Executive not in good faith) (a) as to whether
Cause existed or (b) as to whether Good Reason existed, then, unless and until
there is a final arbitration award pursuant to Section 16 or final
non-appealable judgment by a court of competent jurisdiction declaring that such
termination was for Cause or was not with Good Reason, the Company shall pay all
amounts, and provide all benefits, to the Executive and/or the Executive’s
family or other beneficiaries, as the case may be, that the Company would be
required to pay pursuant to this Section 4 as though such termination were by
the Company without Cause or by the Executive with Good Reason; provided,
however, that the Company shall not be required to pay any disputed amounts
pursuant to this paragraph except upon receipt of a written promise by or on
behalf of the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
 
5.             Restrictive Covenants.
 
5.1           Confidentiality and Intellectual Property.  Executive has
previously executed the Company’s Confidentiality and Invention Agreement and,
from and after the Effective Date, shall materially comply therewith; provided,
that any express provision therein that is substantially similar in intent to an
express provision of this Section 5 shall be superseded.
 
5.2           Non-Competition and Non-Solicitation.  Executive agrees that, both
during employment and for a period of eighteen (18) months following the
termination of this Agreement or his employment for any reason, Executive will
not, directly or indirectly (in any capacity, on Executive’s own behalf or on
behalf of any other person or entity):
 
(a)           Anywhere in the World, own an interest in any business, including
but not limited to, an individual proprietorship, partnership, corporation,
joint stock company, joint venture, limited liability company, trust or other
form of business entity, or unincorporated organization (except for (i) an
ownership interest not exceeding five percent (5%) of a publicly-traded entity
and (ii) equity compensation, as provided in Section 5.2(b)), that is a Company
Competitive Business or a Hisamitsu Competitive Business (in each case as
defined by this Agreement).  For purposes of this Agreement, (i) “Company
Competitive Business” shall mean any business that is engaged in the
acquisition, manufacture, development or sale of any product which materially
competes in the same markets as any material product of Noven Pharmaceuticals,
Inc. or any of its subsidiaries (the “Company Group”) or which is under active
development by the Company Group and is reasonably expected to be a material
product of the Company Group; provided, however, that Company Competitive
Business shall not include any business having $5 billion or greater in annual
revenues (in the fiscal year preceding Executive’s termination from employment
with the Company) which business does not acquire, manufacture, develop, or sell
any non-hormonal treatment for menopause (the “Special Exception”); and (ii)
“Hisamitsu Competitive Business” shall mean any business that is engaged in the
acquisition, manufacture, development or sale of any material product which
materially competes in the same markets as any product of Hisamitsu or any of
its subsidiaries (excluding the Company Group) (the “Hisamitsu Group”) or which
is under active development by the Hisamitsu Group and is reasonably expected to
be a material product of the Hisamitsu Group, but only if Executive had
substantial exposure to research, development, sales, marketing or other
material non-public strategic information with respect to such product as part
of Executive’s responsibilities to the Company, and subject to the Special
Exception;
 
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(b)           Anywhere in the World, as an individual proprietor, principal,
partner, shareholder, joint venturer, member, trustee, officer, director,
consultant, broker, employee, agent, trustee, independent contractor, or in any
manner whatsoever, perform any work for or provide any services to or receive
any remuneration from any person or entity that is a Company Competitive
Business or a Hisamitsu Competitive Business; provided, that being employed by
(and receiving compensation (including equity compensation) from) an employer
with a Company Competitive Business or a Hisamitsu Competitive Business,
standing alone, shall not be considered a violation of this Agreement so long as
(A) the employer has more than one discrete and readily distinguishable part of
its business, (B) Executive’s duties are not at or involving the part of the
business of the employer that constitutes a Company Competitive Business or a
Hisamitsu Competitive Business, including, without limitation, serving in a
capacity where any person involved in the Company Competitive Business or
Hisamitsu Competitive Business reports to Executive (excluding, however,
reporting arrangements of two or more levels so long as the revenue of the
Company Competitive Business or the Hisamitsu Competitive Business is not
material to the employer and is (or is projected to be) two-thirds or less of
the revenue of the corresponding Hisamitsu or Company business during the
applicable period) and (C) Executive notifies the Company of such employment
prior to commencement of his employment with such new employer.  For this
purpose, “employment” and corollary terms shall mean the provision of services
to any such person or entity as employee, independent contractor or in any other
capacity;
 
(c)           Divert or attempt to divert from the Company or otherwise
tortiously interfere with any business relationship which exists/existed between
the Company and any specific prospective or existing client of the Company Group
or the Hisamitsu Group other than in the good faith performance of his duties
for permitted activities hereunder; and/or
 
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(d)           Hire or engage any Company employee or exclusive contractor to
enter into an employment or business relationship with any other person or
entity or recruit, solicit or otherwise induce any Company employee or exclusive
contractor to terminate his/her employment or engagement with the Company. This
covenant applies as to any employee or exclusive contractor who, at the time of
the recruitment/hire, is currently employed or engaged with the Company or who
was employed or engaged with the Company at any time during the six month period
preceding the date of the attempted employment, recruitment, or solicitation.
The hiring, recruitment or solicitation of any such Company employee or
exclusive contractor by an entity with which Executive is employed or associated
shall not be deemed to be a direct or indirect act on Executive’s own behalf if
such hiring, recruitment, or solicitation results from a general solicitation
for candidates and Executive did not assist the entity in identifying the
individual(s) hired, recruited or solicited.  Furthermore, the foregoing shall
not be violated by advertising not targeted at Company employees or exclusive
contractors or by serving as a reference upon request with regard to an entity
with which Executive is not associated.
 
5.3           Enforcement and Survival.  It is the intention of the Company and
Executive that this Section 5 be enforceable to the fullest extent permissible.
Accordingly, Executive agrees that in the event that any restriction stated in
this Section, or any portion thereof, shall be declared or held to be invalid or
unenforceable by a court of competent jurisdiction, then such restriction shall
be amended or modified, as necessary, to render it valid and enforceable.
 
(a)           Executive further agrees that a breach of this Section 5 would
result in irreparable and continuing damage to the Company. Accordingly,
notwithstanding anything in this Agreement to the contrary, in the event of a
breach or threatened breach by Executive, the Company shall be entitled to
pursue immediately any and all remedies it may have against Executive in a court
of competent jurisdiction by specific performance, injunction, or such other
remedies and relief as may be available. Executive’s obligations under this
Section 5 are independent of any obligation of the Company. The existence of any
other claim or cause of action by Executive, including but not limited to, any
other claim or cause of action under this Agreement, does not constitute a
defense to the enforcement by the Company of the covenants contained in this
Section; provided, however, in the event the Company ceases (or fails) to pay
Executive any severance pay to which Executive is entitled in accordance with
the terms of Section 4 of this Agreement which is not remedied within ten (10)
business days after receipt of written notice from Executive, Executive shall
then be relieved of all obligations under subsections 5.2(a) and
5.2(b).  Executive agrees that prior to the commencement of any employment or
consulting relationship with any person or entity, Executive will advise the
person or entity of the restrictive covenant terms contained in this Agreement.
 
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(b)           The covenants provided for in this Section 5 shall survive the
termination of this Agreement and of Executive’s employment.
 
6.             Service of Executive as Director.  For so long as Executive
serves as an employee of the Company, the Executive shall serve as a member of
the Board.  Executive’s current Indemnity Agreement with the Company shall
continue in full force and effect (except for such amendments thereto to which
Executive agrees in writing).
 
7.             Governing Law and Venue.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without reference
to principles of conflicts of laws. For any action allowed by this Agreement to
be filed in a court of law, the parties agree that for any such action, venue
shall be exclusively in the state in which Executive’s principal office is
located and agree that any dispute concerning the interpretation or application
of this Agreement shall be heard BY A JUDGE AND NOT A JURY. The parties waive
any and all objection to jurisdiction or venue.
 
8.             Notices:  Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or when deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
 
If to the Company:
 
Noven Pharmaceuticals, Inc.
11960 S.W. 144th Street
Miami, Florida 33186
Attention: Chairman of Compensation Committee
 
With a copy to:
 
Hisamitsu Pharmaceutical Co., Inc.,
Marunouchi, 1-11-1, Chiyoda-Ku
Tokyo, 100-6221, Japan
Fax:  81-3-5293-1708
Attention:  Mr. Nobuo Tsutsumi, General Manager of Legal Department
 
If to Executive:
 
Jeffrey Eisenberg
 
(at the last address provided by Executive to the Company’s Human Resources
Department)
 
or to such other addresses as either Party hereto may from time to time give
notice of to the other in the aforesaid manner.
 
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9.             Successors.
 
(a)           This Agreement is personal to Executive and without the prior
written consent of the Company shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by Executive’s legal representatives.
 
(b)           This Agreement shall inure to the benefit of, be enforceable by,
and be binding upon the Company’s successors and permitted assigns.  The Company
may only assign this Agreement to an entity acquiring all or substantially all
of its assets.
 
(c)           The Company will require any successors or permitted assigns
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement, and to assure that it is
financially capable of performing, all of the Company’s financial obligations
under this Agreement, in the same manner and to the same extent that the Company
would be required to perform them if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law or otherwise.
 
10.           Severability.  In the event that any paragraph or provision of
this Agreement shall be held to be illegal or unenforceable, the entire
Agreement shall not fall on account thereof, but shall otherwise remain in full
force and effect, and such paragraph or provision shall be enforced to the
maximum extent permissible.
 
11.           Waivers.  The waiver by either Party hereto of a breach or
violation of any term or provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach or violation.
 
12.           Damages.  Nothing contained herein shall be construed to prevent
the Company or Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement.
 
13.           No Third Party Beneficiary.  Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
(other than the Parties hereto and, in the case of Executive, his heirs,
personal representative(s) and/or legal representative) any rights or remedies
under or by reason of this Agreement.
 
14.           Full Settlement.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others.
 
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15.           Certain Additional Payments by the Company.
 
(a)           Anything in this Agreement to the contrary notwithstanding, in the
event that any payment, distribution or other action by the Company to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (but
determined without regard to any additional payments required under this
Section 15) (each a “Payment”), would be subject to an excise tax imposed by
Section 4999 of the Code, or any interest or penalties are incurred by the
Executive with respect to any such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), the Company shall make a payment to the Executive (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes
(including any Excise Tax) imposed upon the Gross-Up Payment, the Executive
retains (or has had paid to the Internal Revenue Service on his behalf) an
amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed
upon the Payments, plus (y) the product of (i) any deductions disallowed because
of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross
income, multiplied by (ii) the actual applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at his actual marginal rates of federal
income taxation for the calendar year in which the Gross-Up Payment is to be
made.
 
(b)           Subject to the provisions of paragraph (c) of this Section 15, all
determinations required to be made under this Section 15 (including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and
the assumptions to be utilized in arriving at such determination) shall be made
by the Company’s independent public accountants (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the applicable change of
control transaction, the Executive shall appoint (with the consent of the
Company, which consent shall not be unreasonably withheld or delayed) another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 15, shall be paid by the Company to the Executive within five (5) days
of the receipt of the Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive’s applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 15 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
 
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(c)           The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
 
(i)             give the Company any information reasonably requested by the
Company relating to such claim,
 
(ii)            take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
 
(iii)           cooperate with the Company in good faith in order effectively to
contest such claim, and
 
(iv)           permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 15(c), the Company shall control all
proceedings taken in connection with such contest and, at its reasonable option,
may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall reasonably determine; provided, however, that if
the Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
 
15

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(d)           If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 15(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of Section 15(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 15(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
 
(e)           Subject to any earlier time limits set forth in this Section 15,
all payments and reimbursements to which Executive is entitled under this
Section 15 shall be paid to or on behalf of Executive not later than the end of
the taxable year of Executive next following the taxable year of Executive in
which Executive (or the Company, on Executive’s behalf) remits the related taxes
(or, in the event of an audit or litigation with respect to such tax liability,
not later than the end of the taxable year of the Executive next following the
taxable year of Executive in which there is a final resolution of such audit or
litigation (whether by reason of completion of the audit, entry of a final and
non-appealable judgment, final settlement, or otherwise)).
 
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16.          Negotiation and Arbitration.  If the Parties should have a material
dispute arising out of or relating to this Agreement or the Parties’ respective
rights and duties hereunder, except as otherwise provided for by Section 5, then
the Parties will resolve such dispute in the following manner: (a) any Party may
at any time deliver to the other a written dispute notice setting forth a brief
description of the issue for which such notice initiates the dispute resolution
mechanism contemplated by this Section; (b) during the twenty (20) day period
following the delivery of the notice described in clause (a) above, appropriate
representatives of the various Parties will meet and seek to resolve the
disputed issue through negotiation; (c) if representatives of the Parties are
unable to resolve the disputed issue through negotiation, then within ten
(10) days after the period described in clause (b) above, the Parties will refer
the issue (to the exclusion of a court of law) to final and binding arbitration
in the county in which Executive’s principal offices are located. In any
arbitration pursuant to this Agreement: (x) the rules and regulations (“Rules”)
promulgated by the American Arbitration Association (“AAA”) shall apply to the
proceedings and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof; (y) discovery shall be allowed
and governed by the Florida Code of Civil Procedure; and (z) the award or
decision shall be rendered by a majority of the members of a Board of
Arbitration consisting of three (3) members, one of whom shall be appointed by
each of the respective Parties and the third of whom shall be the chairman of
the panel and be appointed by mutual agreement of said two Party-appointed
arbitrators. In the event of failure of said two arbitrators to agree within
thirty (30) days after the commencement of the arbitration proceeding upon the
appointment of the third arbitrator, the third arbitrator shall be appointed by
the AAA in accordance with the Rules. In the event that either Party shall fail
to appoint an arbitrator within ten (10) days after the commencement of the
arbitration proceedings, such arbitrator and the third arbitrator shall be
appointed by the AAA in accordance with the Rules. Nothing set forth above shall
be interpreted to prevent the Parties from agreeing in writing to submit any
dispute to a single arbitrator in lieu of a three (3) member Board of
Arbitration. Upon the completion of the selection of the Board of Arbitration
(or if the Parties otherwise agree in writing to a single arbitrator) an award
or decision shall be rendered within no more than thirty (30) days.
Notwithstanding the foregoing, the request by either Party for preliminary or
permanent injunctive relief, whether prohibitive or mandatory, shall not be
subject to arbitration and may be adjudicated by the courts located within the
county in which Executive’s offices are located. ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT,
OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS WAIVED.  The Company
agrees to pay promptly as incurred, to the full extent permitted by law, all
reasonable legal fees and expenses which Executive may reasonably incur as a
result of any dispute or contest (regardless of the outcome thereof) by the
Company, the Executive (but excluding disputes or contests by Executive not in
good faith or that are frivolous) or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any dispute or contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code; provided, that this sentence
shall not apply to disputes or contests by the Company (i) involving enforcement
of the provisions of Section 5 by injunctive or other, similar equitable relief,
or (ii) for damages for the violation of Section 5 (unless such dispute or
contest for damages also involves a claim by Executive that amounts owed to him
hereunder have not been paid).  Amounts shall be invoiced within sixty (60) days
of being incurred and shall be paid within fifteen (15) days after being
invoiced.
 
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17.           Compliance with Code Section 409A.
 
(a)           General.  It is the intention of both the Company and Executive
that the benefits and rights to which Executive could be entitled pursuant to
this Agreement comply with Section 409A, to the extent that the requirements of
Section 409A are applicable thereto, and the provisions of this Agreement shall
be construed in a manner consistent with that intention. If Executive or the
Company believes, at any time, that any such benefit or right that is subject to
Section 409A does not so comply, it shall promptly advise the other and shall
negotiate reasonably and in good faith to amend the terms of such benefits and
rights such that they comply with Section 409A (with the most limited possible
economic effect on Executive and on the Company).
 
(b)           Distributions on Account of Separation from Service.  No payment
or benefit which is nonqualified deferred compensation within the meaning of
Section 409A required to be paid under this Agreement on account of termination
of Executive’s employment shall be made unless and until Executive incurs a
“separation from service” within the meaning of Section 409A.
 
(c)           Six Month Delay for Specified Employees.  If Executive is a
“specified employee,” then no payment or benefit that is payable on account of
Executive’s “separation from service”, as that term is defined for purposes of
Section 409A, shall be made before the date that is six months after Executive’s
“separation from service” (or, if earlier, the date of Executive’s death) if and
to the extent that such payment or benefit constitutes nonqualified deferred
compensation under Section 409A and such deferral is required to comply with the
requirements of Section 409A. Any payment or benefit delayed by reason of the
prior sentence shall be paid out or provided in a single lump sum at the end of
such required delay period in order to catch up to the original payment
schedule.  For purposes of this Section, Executive shall be considered to be a
“specified employee” if, at the time of his or her separation from service,
Executive is a “key employee”, within the meaning of Section 416(i) of the Code,
of the Company (or any person or entity with whom the Company would be
considered a single employer under Section 414(b) or Section 414(c) of the Code)
any stock in which is publicly traded on an established securities market or
otherwise.
 
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(d)           No Acceleration of Payments.  Neither the Company nor Executive,
individually or in combination, may accelerate any payment or benefit that is
subject to Section 409A, except in compliance with Section 409A and the
provisions of this Agreement, and no amount that is subject to Section 409A
shall be paid prior to the earliest date on which it may be paid without
violating Section 409A.
 
(e)           Treatment of Each Installment as a Separate Payment.  For purposes
of applying the provisions of Section 409A to this Agreement, each separately
identified amount to which Executive is entitled under this Agreement shall be
treated as a separate payment. In addition, to the extent permissible under
Section 409A, any series of installment payments under this Agreement shall be
treated as a right to a series of separate payments.
 
(f)           Selection of Payment Dates.  If any Section of this Agreement
provides for payment within a time period, the determination of when such
payment shall be made shall be solely in the discretion of the Company.
 
18.          Merger Clause.  Effective as of the Effective Date, this Agreement
contains the complete, full, and exclusive understanding of Executive and the
Company as to its subject matter and shall, on such date, supersede the Letter
Agreement and the Change of Control Agreement (it being understood that, during
the period commencing on the date of this Agreement and ending on the Effective
Date (the “Interim Period”), the Letter Agreement and the Change of Control
Agreement shall continue to be fully effective in accordance with their terms);
provided, that Executive shall provide Hisamitsu with copies of any notices
Executive provides to the Company under the Letter Agreement and the Change of
Control Agreement during the Interim Period at the same time such notices are
provided to the Company.  Any amendments to this Agreement shall be effective
and binding on Executive and the Company only if any such amendments are in
writing and signed by both Parties.  In the event that the Merger Agreement is
terminated by the parties thereto, this Agreement shall cease to be of force or
effect, and neither the Company nor Executive shall have any right, claim,
liability or obligation hereunder.  In addition, this Agreement shall cease to
be of force or effect, and neither the Company nor Executive shall have any
right, claim, liability or obligation hereunder, in the event that (i) the
Tender Offer is consummated and, immediately following the consummation of the
Tender Offer, Hisamitsu owns (directly or indirectly) less than a majority of
the Fully Diluted Shares (as defined in the Merger Agreement) or (ii) a third
party unaffiliated with Hisamitsu and its affiliates owns a majority of the
Fully Diluted Shares.  In the event that either of the immediately preceding two
sentences is applicable, the Letter Agreement and the Change of Control
Agreement shall continue to be fully effective in accordance with their terms as
in effect immediately prior to the date of this Agreement.
 
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19.           No Set-off; Sole Right to Severance Pay.  In the event of any
termination of employment under this Agreement, Executive shall be under no
obligation to seek other employment and there shall be no offset against any
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that Executive may obtain.  The
payments to be provided to Executive pursuant to Section 4 of this Agreement
shall constitute the exclusive payments in the nature of severance or
termination pay or salary continuation which shall be due to Executive upon a
termination of employment and shall be in lieu of any other such payments under
any plan, program, policy or other arrangement of the Company or any of its
affiliates.
 
 

[Remainder of Page Intentionally Left Blank]
 
 

 
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
 
 

 
COMPANY:
NOVEN PHARMACEUTICALS, INC.
                 
 
By:
/s/ Peter Brandt       Name:  Peter Brandt        Title:    President & Chief
Executive Officer           

 
 

 
EXECUTIVE:
                 
 
By:
/s/ Jeffrey F. Eisenberg           Jeffrey F. Eisenberg                  

 
 
 
 
 
 
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EXHIBIT A
 
WAIVER AND RELEASE
 
This Waiver and General Release (the “Agreement”) is entered into by and between
NOVEN PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), and JEFFREY
EISENBERG (“Executive”) (collectively, the “Parties”).
 
RECITALS
 
WHEREAS, the Company and Executive have agreed to a separation of employment;
and
 
WHEREAS, the Parties desire to resolve all matters between them, including all
matters related to and/or arising out of Executive’s employment with the Company
(including, without limitation, the ending of Executive’s employment with the
Company), and the facts and circumstances underlying the same, and to settle and
compromise any and all claims and differences between them, of any sort, origin,
or description.
 
NOW, THEREFORE, in consideration of the premises and of the mutual promises and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Executive and the Company agree as follows:
 
1. Termination of Employment.  As of [INSERT DATE], Executive’s employment with
the Company has ended.  Executive shall no longer be eligible to participate in,
or be covered by, any employee benefit plan or program offered by or through the
Company, and he shall not receive any benefits or payments from the Company,
except as otherwise specified in this Agreement.
 
2. Payments.  Executive shall also be entitled to [the payments identified in
Section 4 of the Employment Agreement, as applicable and Sections 15 and 16 of
the Employment Agreement].
 
3. Benefits.  Executive shall also be entitled to [the benefits identified in
Section 4 of the Employment Agreement, as applicable].  Executive shall [also be
entitled to payment under the LTI Plan, in accordance with the terms of the LTI
Plan.]
 
4. General Waiver and Release of All Claims.  [To be modified as necessary to
comport with applicable state and local laws and to comply with then-current
state of the law].  In exchange for the promises contained in this Agreement,
Executive agrees that Executive or any person acting by, through, or under
Executive, VOLUNTARILY, KNOWINGLY AND WILLINGLY RELEASES AND FOREVER DISCHARGES
the Company, including its parent and subsidiary corporations, affiliates, all
related domestic and foreign businesses, entities, corporations, and
partnerships, including but not limited to
_______________________________________________, as well as, in such capacity,
all current and former directors, officers, executives, shareholders, partners,
employees, successors in interest, predecessors, representatives, agents,
insurers, attorneys, divisions, joint venturers, investors, and assigns and each
of them (collectively “Company Releasees”), FROM ANY AND ALL CLAIMS OR
OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER whether now known or unknown and
later discovered, suspected or unsuspected, which arose on or before the
Effective Date (as herein defined) of this Agreement; provided, however, that
Executive does not waive any vested rights in any Company plan or program or any
right to be provided a defense or to be indemnified that he may have under any
indemnification agreement or the Company’s Articles of Incorporation or
Bylaws.  Executive understands that this release includes but is not limited to
any right that Executive may have relating in any way to Executive’s employment
by the Company or the conclusion of such employment, including without
limitation any claims under the law of contracts or torts, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Sections 621 et
seq.), including the Older Workers Benefit Protection Act of 1990; Title VII of
the Civil Rights Act of 1964, as amended (42 U.S.C. Sections 2000e et seq.),
including the Civil Rights Act of 1991 and the Civil Rights Acts of 1886, 1970
and 1971 (42 U.S.C. Sections 1981 et seq.); the Americans With Disabilities Act
(42 U.S.C. Sections 12101 et seq.); and the Rehabilitation Act of 1973; or any
other federal, state, or local statutory or common laws relating to
discrimination or employment.  Executive declares and represents that the
Executive has been paid all wages or other compensation owed by any or all of
the Company Releasees and represents that he has not suffered any on-the-job
injuries or work-related accidents or injuries, occupational diseases or
disabilities, whether temporary, permanent, partial, or total, for which the
Executive has not been fully compensated.  Executive further agrees that he has
been granted all leave, including all leave under the Family and Medical Leave
Act, to which he may have been entitled, if any.
 
 
 
 

--------------------------------------------------------------------------------

 
 
Executive agrees that he will not institute any action or actions, cause or
causes of action (in law or in equity), suits, debts, liens, claims, demands,
now known or unknown and later discovered, suspected or unsuspected, fixed or
contingent which Executive may have or claim to have in state or federal court,
or with any state, federal or local government agency or with any administrative
or advisory body arising from or attributable to any or all of the Company
Releasees, including but not limited to, all employee benefit plans sponsored or
administered by Company.  Executive also agrees that if a claim is prosecuted in
Executive’s name before any court or administrative agency, Executive waives and
agrees not to take any award of money or other damages from such
suit.  Executive also agrees that if a claim is prosecuted in Executive’s name,
Executive will immediately request, in writing, that the claim on Executive’s
behalf be withdrawn.  Executive also agrees that he is waiving on behalf of
Executive and Executive’s attorneys all claims for attorneys’ fees, expenses and
court costs, including the same at all appellate levels.
 
5. Review and Revocation.  Executive acknowledges that he has been advised in
writing to consult with an attorney before signing this Agreement and that he
has been afforded the opportunity to consider the terms of this Agreement for
twenty-one (21) days prior to its execution.  Executive understands that he can
use all or any part of this 21-day period to decide whether to sign this
Agreement.  Executive and Company agree that any material or non-material
changes which may be made in this Agreement after the Agreement is initially
provided to the Executive shall not re-start the running of the 21-day
period.  Executive further acknowledges that he has read this Agreement in its
entirety; that he fully understands all of its terms and their significance;
that he has signed it voluntarily and of his own free will; and that he intends
to abide by its provisions without exception.
 
6. Effective Date and Revocation.  So long as Executive does not revoke this
Agreement, this Agreement shall become effective on the eighth day following the
date the Executive signs this Agreement (“Effective Date”).  For a period of
seven (7) days following the date the Executive signs this Agreement, Executive
may revoke this Agreement by providing written notice of revocation to:  [INSERT
CONTACT PERSON].  In the event that Executive revokes the Agreement prior to the
eighth day after his execution of it, this Agreement and the promises contained
herein shall automatically be null and void.
 
7. No Admission of Liability.  The execution of this Agreement does not
constitute an admission by any Company Releasee or Executive of any violation of
any civil rights or other employment discrimination statute, or any other legal
statute, provision, regulation, ordinance, order or action under common law or
of any wrongdoing of any kind, and this Agreement shall not be offered or used
to establish any such liability.
 
8. No re-Employment.  [Executive agrees that he will not seek reemployment with
the Company or work on the property of the Company or any related entity as a
contractor or in any other capacity at any time in the future.]
 
9. Restrictive Covenants.  Notwithstanding anything in this Agreement, and
specifically notwithstanding the “Entire Agreement” clause of this Agreement,
any and all restrictive covenants, including but not limited to any
non-competition, non-solicitation, intellectual property or confidentiality
covenants, included in any agreement by and between the Executive and the
Company (or any entity related to the Company), including but not limited to the
Employment Agreement [INSERT ANY OTHER EXPRESS REFERENCES TO EMPLOYMENT
AGREEMENT(S) AND OTHER SOURCES OF RESTRICTIVE COVENANTS HERE], shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect in accordance with their terms subsequent to the Effective Date of this
Agreement.
 
 
 
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10. Return of Property.  Executive agrees that all property of the Company or
any related entity, including but not limited to any trade secrets, confidential
information, business documents, books, records, accounts, credit cards and/or
equipment, has been returned to the Company as of the date the Executive
executes this Agreement.  It is acknowledged the Executive may retain his
rolodex and electronic address book.
 
11. Cooperation.  Executive agrees to reasonably cooperate with the Company and
its attorneys in connection with any threatened or pending litigation against
the Company or its Affiliates as to matters with regard to his employment period
with the Company (other than those in which he may be personally liable to the
Company), and to make himself, upon reasonable notice, to prepare for and appear
at deposition or trial in connection with any such matters; provided, however,
that such cooperation does not unreasonably interfere with the performance of
services by Executive for any employer subsequent to the Company.  The Company
shall promptly reimburse any reasonable expenses incurred by Executive in
connection with such cooperation.
 
12. Severability.  In the event that any provision of this Agreement shall be
held to be illegal or unenforceable, the entire Agreement shall not fall on
account thereof, but shall otherwise remain in full force and effect, and such
paragraph or provision shall be enforced to the maximum extent permissible.
 
13. Entire Agreement.  This Agreement constitutes the complete understanding
between the parties and supersedes all prior agreements between the parties,
except the non-competition and non-solicitation and confidentiality and
intellectual property covenants contained in the Employment Agreement and the
Indemnity Agreement [INSERT BY EXPRESS REFERENCE ANY OTHER AGREEMENTS THAT ARE
TO SURVIVE THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY RESTRICTIVE
COVENANTS INCLUDED IN ANY SUCH AGREEMENTS].  The parties acknowledge that the
other has not made any representation to him or it other than as set forth
herein.  Any modification of this Agreement shall be in writing and signed by
each of the parties.
 
14. Governing Law; Jurisdiction and Venue.  This Agreement shall be governed by
and construed in accordance with the laws of the State of Florida without
reference to principles of conflicts of laws.  For any action allowed by this
Agreement to be filed in a court of law, the parties agree that for any such
action, venue shall be exclusively in the state in which Executive’s principal
office is located; agree that any dispute concerning the interpretation or
application of this Agreement shall be resolved in accordance with Section 16 of
the Employment Agreement, which shall continue in full force and effect.  The
parties waive any and all objections to jurisdiction or venue.
 
15. Successors and Assigns.  The Company may assign this Agreement to the same
extent it may assign the Employment Agreement.  Executive shall not assign this
Agreement, but it shall inure to the benefit of the Executive’s executors,
administrators and heirs.  This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the Company and its successors and permitted
assigns.  The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement, and to assure that it is financially
capable of performing, all of the Company’s financial obligations under this
Agreement, in the same manner and to the same extent that the Company would be
required to perform them if no such succession had taken place.  As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law or otherwise.
 
 
 
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The undersigned have executed this Agreement as of the date first forth above.
 

 
NOVEN PHARMACEUTICALS, INC.
(“Company”)
         
 
By:
        in his/her capacity as authorized representative of the Company        
     Print Name:                Title:                Date:                    
  EXECUTIVE                     By:               Print Name:              
 Date:            

 
 
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Exhibit B
Additional Benefits

In the event of a termination of employment to which Section 4.1(b)(i) applies,
Executive will be entitled to the following additional benefits:
 
For the remainder of the period from the Date of Termination until the day prior
to the second anniversary of the Effective Date, or such longer period as any
plan, program, practice or policy may provide, the Company shall continue
benefits to Executive and/or Executive’s family at least equal to those which
would have been provided to them in accordance with the medical, welfare
(excluding severance and disability or similar salary continuation plans) and
fringe benefit plans, programs, practices and policies of the Company and its
affiliated companies as generally in effect during such period, subject to
paragraph (c) below (excluding tax-qualified plans).  If Executive becomes
re-employed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.   For purposes of
determining eligibility of Executive for retiree benefits pursuant to such
plans, practices, programs and policies, Executive shall be considered to have
remained employed until the day prior to the second anniversary of the Effective
Date and to have retired on the last day of such period.
 
Except to the extent this benefit is provided under clause (a) above or is
otherwise an Accrued Amount, the Company shall provide Executive with
outplacement benefits for a one-year period on terms consistent with the highest
level of such benefits provided under policies and practices as generally in
effect during such period.
 
If any benefit (including a medical plan coverage) to be provided under clause
(a) above is a taxable benefit and is not a death benefit, the Company shall
provide such benefit to Executive by paying to Executive, on the sixtieth day
after said termination, an amount in cash equivalent (on an after-tax basis from
Executive’s point of view) to the Company’s cost of providing such benefit to
Executive on an individual basis, but assuming that any cost to Executive under
the plan or program would have been borne by Executive (in an equal dollar
amount) under such individual arrangement.  In addition, the Company shall
permit Executive and his dependents to participate in the Company’s medical
plans until the second anniversary (or such later date as required under COBRA)
at the COBRA premium cost.
 
 
 
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