<PAGE>
                                                                    EXHIBIT 10.2


                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of the 5th day of November, 2003 by and between NOVEN
PHARMACEUTICALS, INC., a Delaware corporation (hereinafter called the
"Company"), and ROBERT C. STRAUSS (hereinafter called the "Executive").

                                    RECITALS

         A. The Board of Directors of the Company (the "Board") recognizes and
desires to assure the Company of Executive's continued employment in an
executive capacity and to compensate him therefor.

         B. Executive is willing to make his services available to the Company
on the terms and conditions hereinafter set forth.

         C. The Company and Executive desire to amend and restate in its
entirety their existing Employment Agreement, dated as of December 12, 1997 (the
"Existing Agreement").

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:

         1. EMPLOYMENT.

                  1.1. EMPLOYMENT AND TERM. The Company hereby agrees to
continue to employ Executive and Executive hereby agrees to serve the Company,
on the terms and conditions set forth herein, for the period commencing on the
date hereof and expiring on December 31, 2006 (the "Initial Term") unless sooner
terminated as hereinafter set forth; PROVIDED, HOWEVER, that commencing on
January 1, 2007 and each January 1 thereafter, the Initial Term of this
Agreement shall automatically be extended for one additional year unless at
least ninety (90) days prior to such January 1 date, the Company shall have
delivered to Executive or Executive shall have delivered to the Company written
notice that the term of Executive 's employment hereunder will not be extended.

                  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 diligently perform all services as may be reasonably
assigned to him by the Board, and shall exercise such power and authority as may
from time to time be delegated to him by the Board. In addition, 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 or any committee thereof at duly called meetings thereof, and no
other person or group shall be given authority to supervise or



<PAGE>

direct Executive in the performance of his duties. Executive shall devote
substantially all his working time and attention to the business and affairs of
the Company (excluding any vacation and sick leave to which Executive is
entitled), render such services to the best of his ability, and use his
reasonable best efforts to promote the interests 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 directorship after the date hereof 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 in accordance with this Agreement. Notwithstanding
the foregoing, it is agreed and acknowledged that Executive presently serves on
the board of directors of four other corporations, and that he shall not be
deemed to be in breach of this Agreement if he reduces the number of such other
directorships he holds to no more than three within twelve months from the date
hereof and two within twenty-four months from the date hereof.

                  1.3. PLACE OF PERFORMANCE. In connection with his employment
by the Company, Executive shall be based at the Company's principal executive
offices except for travel reasonably necessary in connection with the Company's
business. The Company shall not, without the written consent of Executive,
relocate or transfer its principal executive offices outside Dade or Broward
County, Florida.

         2. COMPENSATION.

                  2.1. BASE SALARY. Executive shall receive a base salary at the
annual rate of not less than $522,500 (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 at any time or from time to time. The Base
Salary, if increased, shall not thereafter be decreased for any reason.

                  2.2. INCENTIVE COMPENSATION. Executive shall be entitled to
receive such bonus payments or incentive compensation as may be determined at
any time or from time to time by the Board (or any authorized committee hereof)
in its discretion. Such potential bonus payments and/or incentive compensation
shall be considered at least annually by the Board (it being agreed that such
consideration shall not create any implication that the Board shall award any
such bonus or incentive compensation). In addition, and without limiting the
generality of the foregoing, (i) Executive shall be entitled to participate in
the Company's 2003 Management Incentive Plan, a copy of which is attached hereto
as EXHIBIT A, as well as all similar short-term management incentive plans that
may be adopted by the Company, the Board and/or the Board's Compensation and
Stock Option Committee (the "Committee") in the future, and (ii) the Committee
shall consider, at least annually and in connection with awards to other Company
executives, stock option and other equity-based incentive awards to Executive
(it being agreed that such consideration shall not create any implication that
the Committee shall award any such options or other equity-based incentive
awards).




                                       2
<PAGE>

                  2.3 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 hereunder, 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.

                  3.2. INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the term
of Executive's employment hereunder, Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies and programs
applicable to other key executives of the Company and its subsidiaries, in each
case comparable to those currently in effect or as subsequently amended. Such
plans, practices, policies and programs, in the aggregate, shall provide
Executive with compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits and reward
opportunities provided at any time hereafter with respect to other key
executives.

                  3.3. WELFARE BENEFIT PLANS. During the term of Executive's
employment hereunder, Executive and Executive's family shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs in effect at any time
hereafter with respect to other key executives. In addition, and without
limiting the generality of the foregoing, (i) at Executive's option, reimburse
Executive for all costs of an annual physical examination, (ii) reimburse
Executive for up to $2,500 of annual financial and tax planning assistance, and
(iii) notwithstanding anything herein to the contrary, during the time period
commencing with the termination of Executive's employment for retirement,
termination without "Cause" (as hereinafter defined) and voluntary termination
with "Good Reason" and ending on Executive's death, the Company shall afford
Executive the opportunity to participate in a Continuation of Medical Benefits
Plan (or similar plan) in the same capacity as that of any other active senior
executive (with the regular employee portion of the premium due and payable by
Executive annually on a pre-paid basis), and upon Executive's death, his spouse
shall be eligible for COBRA benefits as a participant to the extent permitted by
law (the post-employment medical benefits contemplated by this clause (iii) are
referred to herein as the "Post-Employment Medical Benefits"). Notwithstanding
the foregoing, (a) in no event shall the Company, in connection with providing
the Post-Employment Medical Benefits, be required to pay a greater premium than
that paid by it for providing medical benefits for any other employee of the
Company in the same category as Executive (e.g. insurance for husband and wife)
and (b) if the (i) Company's health insurer on the date of termination (the
"Termination Date Health Insurance Provider") does not permit the provision of
Post-Employment Medical Benefits as provided above or (ii) Termination Date
Health Insurance Provider permits the provision of Post-Employment Medical
Benefits and the Company thereafter changes its health insurance provider and
such new



                                       3
<PAGE>

provider does not permit the provision of Post-Employment Medical Benefits at
the costs set forth above, then the Company can discharge in full any
obligations for providing Post-Employment Medical Benefits hereunder by paying
Executive a lump sum equal to the Discharge Amount (as hereafter defined). For
purposes hereof, the "Discharge Amount" means the net present value of the
stream of the Company's portion of payments for health premiums for the
estimated balance (the "Balance") of Executive's life which shall be based upon
the premiums being paid by the Company for health insurance benefits or
Post-Employment Medical Benefits, as the case may be, at the time the Company's
obligation to make the Discharge Payment arises. The Balance shall be determined
by an actuary utilized by the Company. The Net Present Value shall be determined
by the Company's independent certified accounting firm utilizing a reasonable
discount factor. The determination of the Balance and the Net Present Value as
provided above shall be final, conclusive and binding on the parties hereto.

                  3.4. WORKING FACILITIES. During the term of Executive's
employment hereunder, 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 hereunder.

                  3.5. AUTOMOBILE ALLOWANCE. During the term of Executive's
employment hereunder, the Company shall provide Executive with a non-accountable
automobile allowance of Eight Hundred Fifty Dollars ($850.00) per month, which
amount is intended to compensate Executive for wear and tear and, in addition,
reimburse Executive for all costs of gasoline, oil, repairs, maintenance,
insurance and other expenses incurred by Executive by reason of the use of
Executive's automobile for Company business from time to time.

                  3.6. VACATION. During the Initial Term, Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its subsidiaries as in effect at any
time hereafter with respect to other key executives of the Company and its
subsidiaries; PROVIDED, HOWEVER, that in no event shall Executive be entitled to
less than five weeks paid vacation per year.

         4. TERMINATION.

                  4.1. TERMINATION FOR CAUSE. Notwithstanding anything contained
to the contrary in this Agreement, this Agreement may be terminated by the
Company for Cause. As used in this Agreement, "Cause" shall only mean (i) any
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, (ii) subject to the following sentences, any violation
by Executive of Executive's material obligations under this Agreement which is
demonstrably willful and deliberate on Executive's part and which is not
remedied within ten business days after receipt of written notice from the
Company, (iii) the conviction of Executive for any criminal act which is a
felony or a misdemeanor involving moral turpitude, or (iv) a material breach of
the Confidentiality and Invention Agreement referenced in Section 6.1 hereof.
Upon any determination by the Company's Board of Directors that Cause exists
under clause (ii) of the preceding sentence, the Company shall cause a special
meeting of the Board to be called and held at a time mutually convenient to the
Board and Executive, but in no event later than ten (10) business days after
Executive's receipt of the notice contemplated by clause (ii). Executive shall
have the right to appear before such special meeting of the Board with legal




                                       4
<PAGE>

counsel of his choosing to refute any determination of Cause specified in such
notice, and any termination of Executive's employment by reason of such Cause
determination shall not be effective until Executive is afforded such
opportunity to appear. Any termination for Cause pursuant to clause (i), (iii)
or (iv) of the first sentence of this Section 4.1 shall be made in writing to
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. Upon any termination pursuant
to this Section 4.1, Executive shall be entitled to be paid his Base Salary to
the date of termination and the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination).

                  4.2. DISABILITY. Notwithstanding anything contained in this
Agreement to the contrary, the Company, by written notice to Executive, shall at
all times have the right to terminate this Agreement, and Executive's employment
hereunder, if Executive shall, as the result of mental or physical incapacity,
illness or disability, fail to perform his duties and responsibilities provided
for herein for a period of more than one hundred twenty (120) days in any
12-month period. Upon any termination pursuant to this Section 4.2, Executive
shall be entitled to be paid his Base Salary to the date of termination and the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination and
the provision of Post-Employment Medical Benefits).

                  4.3. DEATH. In the event of the death of Executive during the
term of his employment hereunder, the Company shall pay to the estate of the
deceased Executive an amount equal to the sum of (x) any unpaid amounts of his
Base Salary to the date of his death, plus (y) six months of Base Salary, and
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
Executive's death).

                  4.4. TERMINATION WITHOUT CAUSE. At any time the Company shall
have the right to terminate Executive's employment hereunder by written notice
to Executive; PROVIDED, HOWEVER, that the Company shall:

                                    (i) pay to Executive in a lump sum in cash
within 30 days of the effective date of such termination the sum of (x)
Executive's annual Base Salary through the date of such termination notice, PLUS
(y) the product of (1) the greater of (A) the annual bonus paid or payable by
the Company including by reason of deferral, to Executive in respect of the
Company's most recent fiscal year, and (B) the "Recent Average Bonus," as
hereinafter defined (such greater amount is referred to herein as the "Highest
Annual Bonus"), MULTIPLIED BY (2) a fraction, the numerator of which is the
number of days in the current fiscal year through the date of such termination
notice, and the denominator of which is 365, PLUS (z) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid;

                                    (ii) provide the Post-Employment Medical
Benefits; and

                                    (iii) pay to Executive in a lump sum, in
cash within 30 days after the effective date of such termination or 30 days
after the effectuation of a "Change of Control" with respect to a Third Party
Requested Termination (as hereinafter defined) an amount



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<PAGE>

equal to the product of (A)2.0 (2.75 in the event of (i) any termination
pursuant to clause (e) of the following definition of "Good Reason," (ii) any
termination of Executive other than for Cause at the request of a third party
who has taken steps reasonably calculated to effect a "Change in Control"
provided that such a "Change of Control" is effectuated within ninety (90) days
after the effective date of such termination (a "Third Party Requested
Termination") or (iii) any termination of Executive, other than for Cause,
within six months following a "Change in Control"), MULTIPLIED BY (B) the sum of
(x) Executive's annual Base Salary as in effect at the effective date of
termination, PLUS (y) the Highest Annual Bonus (the "Termination Payment"). The
Company shall be deemed to have terminated Executive's employment pursuant to
this Section 4.4 if such employment is terminated (i) by the Company without
Cause, or (ii) by Executive voluntarily for "Good Reason," as hereinafter
defined. For purposes of this Agreement, (i) "Recent Average Bonus" means the
average annual bonus paid or payable by the Company, including by reason of
deferral, to Executive in respect of the three fiscal years immediately
preceding the fiscal year in which Executive's employment termination occurs,
and (ii) "Good Reason" means:

                           (a) the assignment to Executive of any duties
inconsistent in any respect with Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 1.2 of this Agreement, or any other
action by the Company, which results in a significant diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company within ten (10) business days after receipt of notice
thereof given by Executive;

                           (b) any failure by the Company to comply with any of
the provisions of Section 2, Section 3 or Section 7 of this Agreement, other
than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by Executive;

                           (c) the Company's requiring Executive to be based at
any office or location other than Miami-Dade County or Broward County, Florida,
except for travel reasonably required in the performance of Executive's
responsibilities;

                           (d) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement; or

                           (e) any voluntary termination by Executive during the
six-month period following the effective date of any "Change in Control."

         5. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall mean:

                           (a) The acquisition (other than by or from the
Company), at any time after the date hereof, by any person, entity or "group",
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act"), of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either the then
outstanding shares of common stock or the combined voting power of the



                                       6
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Company's then outstanding voting securities entitled to vote generally in the
election of directors; or

                           (b) The six (6) individuals who, after the
appointment of Executive as a director pursuant to Section 7 hereof, constitute
the Board (as of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or

                           (c) Approval by the shareholders of the Company of
(A) a reorganization, merger or consolidation with respect to which persons who
were the shareholders of the Company immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more than 51% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, (B) a liquidation or dissolution of the Company, or (C) the sale of
all or substantially all of the assets of the Company, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale is
subsequently abandoned.

                           (d) The approval by the Board of a distribution (or
series of distributions) of assets representing more than 50% of the Company's
current assets.

         6. RESTRICTIVE COVENANTS.

                  6.1. CONFIDENTIALITY. Executive agrees to comply with the
Company's Confidentiality and Invention Agreement heretofore executed by him.

                  6.2. NONSOLICITATION OF EMPLOYEES. While employed by the
Company and for a period of twenty-four (24) months thereafter, Executive shall
not directly or indirectly, for himself or for any other person, firm,
corporation, partnership, association or other entity, attempt to employ or
enter into any contractual arrangement with any employee or former employee of
the Company, unless such employee or former employee has not been employed by
the Company for a period in excess of six months.

                  6.3. NON-COMPETITION. While employed by the Company and for a
period of twenty-four (24) months thereafter, Executive shall not, directly or
indirectly, whether as principal, agent, shareholder (except as set forth below)
or in any other capacity, whether or not compensation is received, engage or
participate in any activity for, be employed by, assist or have an equity
interest in (other than as a passive investor of no more than ten percent (10%)
with no involvement in the management or conduct of the affairs of business of
such entity) any business or other entity which is or plans to develop,
manufacture, market or sell any pharmaceutical product designed to compete
directly with the transdermal/transoral topical or other products of the Company
and its subsidiaries which are under active development or are manufactured,
marketed or sold or other businesses in which the Company is engaged during the



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term of Executive's employment hereunder. Executive acknowledges that the
provisions of this Section 6.3 are reasonably necessary for the purposes of
protecting the Company's legitimate business interests and goodwill. It is
accordingly the intention of the parties that this Section 6.3 be enforceable to
the fullest extent permissible under applicable law. Executive agrees, however,
that in the event any restriction or limitation of this Section 6.3, or any
portion thereof, shall be declared or held to be invalid or unenforceable by a
court of competent jurisdiction, then such restriction or limitation shall be
deemed amended to substitute or modify it, as either or both may be necessary,
to render it valid and enforceable.

                  6.4. INJUNCTION. It is recognized and hereby acknowledged by
the parties hereto that a breach by Executive of any of the covenants contained
in Section 6.2 or 6.3 of this Agreement will cause irreparable injury to the
Company's legitimate business interests and goodwill. As a result, Executive
recognizes and hereby acknowledges that the Company shall be entitled (without
the posting of bond or security or the proving of actual damages) to an
injunction from any court of competent jurisdiction enjoining and restraining
any violation of any or all of the covenants contained in Section 6 of this
Agreement by Executive or any of his affiliates, associates, partners or agents,
either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other remedies the Company may possess.

         7. ELECTION OF EXECUTIVE AS DIRECTOR. For so long as Executive serves
as an employee of the Company, the Company shall cause the nomination of
Executive as a director of the Company at each shareholder meeting at which
election of directors is considered.

         8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.

         9. 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 and
                                    Stock Option Committee

  If to Executive:                  Robert C. Strauss
                                    760 San Bruno
                                    Coral Gables, Florida 33146

  With a copy to:                   Greenberg Traurig, LLP
                                    2375 E. Camelback Road, Suite 700
                                    Phoenix, Arizona  85016
                                    Attention:  Bruce E. Macdonough

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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<PAGE>

         10. 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 assigns.

                           (c) The Company will require any successor (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 in the same manner and to the same
extent that the Company would be required to perform it 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.

         11. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.

         12. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.

         13. 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.

         14. 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.

         15. 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 (it being agreed that nothing herein shall require any
severance or other payment following a proper termination of Executive's
employment for Cause). In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement.



                                       9
<PAGE>

         16. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

                           (a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined 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 16) (each a "Payment"), would be
subject to an excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (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 highest 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 the highest 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 16, all determinations required to be made under this Section 16
(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 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, 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 16, shall be paid by the Company to the Executive within five 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 16 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount



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<PAGE>

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.

                           (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 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
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 16(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



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<PAGE>

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.

                           (d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 16(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 16(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 16(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 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.

         17. REIMBURSEMENT OF LEGAL EXPENSES. The Company shall promptly
reimburse Executive for up to $5,000 of all reasonable legal fees incurred by
Executive in connection with the preparation, negotiation and execution of this
Agreement and ancillary documents.

         18. DISPUTE RESOLUTION. If the parties should have a material
dispute arising out of or relating to this Agreement or the parties' respective
rights and duties hereunder, then the parties will resolve such dispute in the
following manner: (i) 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
18, (ii) during the thirty (30) day period following the delivery of the notice
described in Section 18(i) above, appropriate representatives of the various
parties will meet and seek to resolve the disputed issue through negotiation,
(iii) if representatives of the parties are unable to resolve the disputed issue
through negotiation, then within ten (10) days after the period described in
Section 18(ii) above, the parties will refer the issue (to the exclusion of a
court of law) to final and binding arbitration in Miami, Florida, regardless of
principles of conflicts laws. In any arbitration pursuant to this Agreement, (i)
the AAA Commercial Arbitration Rules and AAA Optional Rules for Emergency
Measures of Protection shall apply to the proceedings and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof, (ii) discovery shall be allowed and governed by the Florida Code of
Civil Procedure, and (iii) 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 agree otherwise in writing, a single
arbitrator), an award or decision shall be rendered within no more than thirty
(30) days.



                                       12
<PAGE>

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 only by the courts of the State of
Florida. 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.

         19. EXISTING AGREEMENT. The Existing Agreement is hereby superceded by
this Agreement; PROVIDED, HOWEVER, that nothing herein shall adversely effect
(i) the compensation, stock options and other benefits heretofore paid, granted
or otherwise provided by the Company to Executive prior to the date hereof, or
(ii) the Company's existing contractual and other indemnification obligations
owed to Executive.





                                       13
<PAGE>

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

                                  COMPANY:

                                  NOVEN PHARMACEUTICALS, INC.


                                  By: /s/ Jeffrey F. Eisenberg
                                      ------------------------------------------
                                      Jeffrey F. Eisenberg,
                                      Vice President - Strategic Alliances,
                                      General Counsel and Corporate Secretary



                                  EXECUTIVE:


                                  /s/ Robert C. Strauss
                                  ----------------------------------------------
                                  ROBERT C. STRAUSS











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