EX-10.1






Exhibit 10.1




EMPLOYMENT AGREEMENT

(Change of Control)




This Employment Agreement (“Agreement”), dated as of      , is entered into between
Noven Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and      
(the “Executive”).



The Board of Directors of the Company (the “Board”), has determined that it is in the
best interests of the Company and its shareholders to assure that the company will have the
continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined in Section 2) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and
risks created by a pending or threatened Change of Control and to encourage the Executive’s full
attention and dedication to the Company currently and in the event of any threatened or pending
Change of Control and to provide the Executive with compensation and benefits arrangements upon a
Change of Control which promote continued service of the Executive to the Company, thereby
potentially enhancing the value received by shareholders in the Change of Control, and which are
competitive with those of other corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this Agreement.



In consideration of the foregoing and the mutual promises contained below, and in
consideration of the Executive’s entry into non-competition covenants under the Confidentiality and
Invention Agreement or any other separate agreement with the Company, Executive and the Company
agree as set forth below.



1. Certain Definitions.



(a) “Effective Date” shall mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with the
Company is terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i) was at the request
of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or in anticipation of the Change of Control, then for all
purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date
of such termination of employment.



(b) “Change of Control Period” shall mean the period commencing on the date hereof and
ending on the third anniversary of such date; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the “Renewal Date”) the Change of
Control Period may be extended by the Company so as to terminate three years from such Renewal Date
by the Company giving notice to the Executive that the Change of Control Period shall be so
extended.



2. Change of Control. For the purpose of this Agreement, a “Change of
Control” shall mean the occurrence of one of the following events after the date of this
Agreement:



(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934), (an “Acquiring Person”) shall acquire voting securities
of the Company and immediately thereafter is a beneficial owner (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of 40% or more of either (i) the then
outstanding shares of common stock of the Company or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that an
Acquiring Person shall not include the Company, any of its affiliated companies (as defined in
Section 4(b)(i) hereof), any employee benefit plan of the Company or its affiliated companies, or
any person or entity organized, appointed or established by the Company or its affiliated companies
for or pursuant to the terms of any such plan); or



(b) During any period of two consecutive years, individuals who at the beginning of such
period constitute the Board, and any new director (other than a director who is a representative or
nominee of an Acquiring Person) whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least a majority of the directors then still in
office who either were directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a majority of the Board; or



(c) The shareholders of the Company approve a merger or consolidation of the Company with any
other corporation, and the merger or consolidation has been consummated, other than a merger or
consolidation which would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent corporation (within the meaning of Section
424(e) of the Internal Revenue Code of 1986, as amended (the “Code”)) of such surviving
entity) at least a majority of the Outstanding Company Voting Securities, such surviving entity or
the parent corporation of such surviving entity outstanding immediately after such merger or
consolidation; or



(d) the shareholders of the Company approve a plan of reorganization (other than a
reorganization under the United States Bankruptcy Code) or complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets, and the Company has taken the first substantive step pursuant to the plan of
reorganization or complete liquidation or the sale or disposition has been consummated; provided,
however, that a Change of Control shall not be deemed to have occurred in the event of: (i) a sale
or conveyance in which the Company continues as the ultimate parent holding company of an entity or
entities that conduct all or substantially all of the business or businesses formerly conducted by
the Company, or (ii) any transaction undertaken for the purpose of incorporating the Company under
the laws of another jurisdiction, if such transaction does not materially affect the beneficial
ownership of the Company’s capital stock.



3. Employment Period. The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company, in accordance with
the terms and provisions of this Agreement, for the period commencing on the Effective Date and
ending on the second anniversary of such date (the “Employment Period”). The foregoing
notwithstanding, it shall not constitute a breach of this Section 3 for the employment of the
Executive to terminate in accordance with Section 5 prior to the end of the Employment Period.



4. Terms of Employment.



(a) Position and Duties.



(i) During the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held, exercised and
assigned at any time during the 90-day period immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the location where the Executive was employed
immediately preceding the Effective Date or any office which is the headquarters of the Company and
is less than 35 miles from such location. For purposes of this Agreement, if Executive has
authority, duties and responsibilities that relate to the Company’s status as a publicly held
company immediately preceding the Effective Date, the Executive’s authority, duties and
responsibilities shall be deemed commensurate only if they continue to relate to the ultimate
parent corporation (whether or not that company is a publicly held company).



(ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially full attention and
time during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the performance of the 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. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.



(b) Compensation.



(i) Base Salary. During the Employment Period, the Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid in equal installments on a monthly
or more frequent basis, at least equal to twelve times the highest monthly base salary paid or
payable to the Executive by the Company and its affiliated companies in respect of the twelve-month
period immediately preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be increased at any
time and from time to time as shall be substantially consistent with increases in base salary
generally awarded in the ordinary course of business to other Peer Executives (as defined below) of
the Company and its affiliated companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary
shall not be reduced after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies” shall include any company controlled by, controlling or under common
control with the Company.




	 	(ii)	 	Annual Bonus. In addition to Annual Base Salary, the Executive (A)
shall be awarded, for the fiscal year during which the Change of Control occurred and
the next following fiscal year during the Employment Period, an annual bonus (the
“Annual Bonus”) in cash at least equal to the average annualized (for any
fiscal year consisting of less than twelve full months or with respect to which the
Executive has been employed by the Company for less than twelve full months) bonus
paid or payable, including by reason of any deferral, to the Executive by the Company
and its affiliated companies in respect of the three fiscal years immediately
preceding the fiscal year in which the Effective Date occurs (the “Recent Average
Bonus”), and (B) shall be provided an opportunity to earn an Annual Bonus, for
any fiscal year beginning during the Employment Period after the end of the fiscal
years covered by clause (A), with the following terms:






	 	(a)	 	Target bonus payable for performance at a designated target
level which shall be a percentage of Annual Base Salary not less than the
percentage of Executive’s then annual base salary represented by Executive’s
highest target bonus amount established prior to the Change of Control and
with respect to the year in which the Change of Control occurred or, if no
annual bonus was established for that year, with respect to the immediately
preceding year






	 	(b)	 	Bonus payable at amounts in excess of the target bonus for
performance at designated levels in excess of the designated target level,
consistent with the bonus program as in effect prior to the Change of Control






	 	(c)	 	Minimum bonus payable for performance at a designated
threshold level will equal 50% of target bonus, with bonus amounts payable
interpolated for performance between threshold and target






	 	(d)	 	No bonus will be payable for performance below the designated
threshold level






	 	(e)	 	The Board or its compensation committee shall determine the
performance requirements, but such requirements must be reasonably related to
the Company’s business plan, with the target performance level determined by
the Board or its compensation committee to be reasonably likely to be attained
(taking into account the business plan) and not more difficult to attain than
the target level of performance applicable to annual bonus opportunities of
other senior executives for that fiscal year, and the above-target performance
requirements and threshold performance requirements being specified for the
same type of performance and with levels that vary in difficulty of attainment
from the level of target performance by customary increments based on the most
favorable terms of the Company’s annual bonus program in effect in the three
fiscal years beginning immediately before the Change of Control.






	 	(f)	 	Each such Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.





(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other Peer Executives of the Company and
its affiliated companies, but in no event shall such plans, practice, policies and programs provide
the Executive with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate,
than the most favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to other Peer Executives of the Company and
its affiliated companies.



(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, 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 affiliated companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other Peer Executives of the
Company and its affiliated companies, but in no event shall such plans, practices, policies and
programs provide the Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the Executive at any
time during the 90-day period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to other Peer Executives
of the Company and its affiliated companies.



(v) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable employment expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other Peer Executives of the Company and its affiliated companies.



(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled
to fringe benefits in accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other Peer Executives of the Company and
its affiliated companies.



(vii) Office and Support Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other Peer Executives of the Company
and its affiliated companies.



(viii) Vacation. During the Employment Period, the Executive shall be entitled to
paid vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other Peer Executives of the Company and
its affiliated companies.



(ix) “Peer Executives.” For purposes of this Agreement, references to “peer
executives of the Company and its affiliated companies” shall refer only to Executives based in the
United States.



5. Termination of Employment.



(a) Death or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written notice in
accordance with Section 12(b) of its intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”), provided that,
within the 30 days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For 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 180 consecutive business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive’s legal representative (such agreement as to
acceptability not to be withheld unreasonably).



(b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of 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 (other than as a result of incapacity due to physical or mental illness) 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 in each case involving moral turpitude, or
(iv) a material breach of Executive’s Confidentiality and Invention Agreement with the Company.
The requirement of written notice from the Company specifying the breach is mandatory, and shall
provide at least ten days for such breach to be remedied.



(c) Good Reason. The Executive’s employment may be terminated during the Employment
Period by the Executive for Good Reason. For purposes of this Agreement, “Good Reason”
shall mean:



(i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 4(a) or any other action by the Company which
results in a diminution in such position (including any action which results in a diminution of
status, offices, titles and reporting levels or requirements), 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 promptly after receipt of written notice
thereof given by the Executive;



(ii) any failure by the Company to comply with any of the provisions of Section 4(b), other
than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of written notice thereof given by the Executive;



(iii) the Company’s requiring the Executive to be based at any office or location other than
that described in Section 4(a)(i)(B);



(iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or



(v) any failure by the Company to comply with and satisfy Section 11(c), provided that such
successor has received at least ten days prior written notice from the Company or the Executive of
the requirements of Section 11(c).



For purposes of this Section 5(c), (A) the requirement of written notice from the Executive
specifying the grounds for Good Reason is mandatory in all cases, but Good Reason will exist if the
Company fails to remedy any such grounds for Good Reason within ten days, and (B) any good faith
determination of “Good Reason” made by the Executive shall be conclusive.



(d) 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 hereto
given in accordance with Section 12(b). For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) 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 (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date (which date shall be not
more than 15 days after the giving of such notice). 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 hereunder or
preclude the Executive or the Company from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.



(e) Date of Termination. "Date of Termination” means (i) 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, (ii)
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 (iii) 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.



6. Obligations of the Company Upon Termination.



(a) Good Reason; Other Than for Cause or Disability. If, during the Employment
Period, the Company shall terminate the Executive’s employment other than for Cause or Disability
or the Executive shall terminate employment for Good Reason:



(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date
of Termination the aggregate of the following amounts:



A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, and (2) the product of (x) the greater of (i) the Annual Bonus paid or
payable, including by reason of any deferral, to the Executive (and annualized for any fiscal year
consisting of less than twelve full months or for which the Executive has been employed for less
than twelve full months) for the most recently completed fiscal year during the Employment Period,
if any, and (ii) the Recent Average Bonus (such greater amount shall be hereinafter referred to as
the “Highest Annual Bonus”) and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the denominator of which is
365, (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as
the “Accrued Obligations”), and payments of deferred compensation pursuant to Section 6(e);
and



B. the amount (such amount shall be hereinafter referred to as the “Severance Amount”)
equal to the product of (1) two and (2) the sum of (x) the Executive’s Annual Base Salary and (y)
the Highest Annual Bonus; and, provided further, that such amount shall be reduced by the present
value (determined as provided in Section 280G(d)(4) of the Code) of any other amount of severance
relating to salary or bonus continuation to be received by the Executive upon termination of
employment of the Executive under any agreement, severance plan, policy or arrangement of the
Company or its subsidiaries or affiliated companies; and



(ii) for the remainder of the Employment Period, or such longer period as any plan, program,
practice or policy may provide, the Company shall continue benefits to the Executive and/or the
Executive’s family at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b) (iv) and Section
4(b)(vi) if the Executive’s employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Company and its affiliated companies as in
effect and applicable generally to other Peer Executives and their families during the 90-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other Peer Executives of the Company and
its affiliated companies and their families, (such continuation of such benefits for the applicable
period herein set forth shall be hereinafter referred to as “Welfare Benefit Continuation). If the
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 the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Employment Period and to have retired on
the last day of such period; and



(iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive and/or the Executive’s family any other amounts or benefits required to be paid or
provided or which the Executive and/or the Executive’s family is eligible to receive pursuant to
this Agreement and under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies as in effect and applicable generally to other Peer Executives
and their families during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally thereafter with respect to other peer executives
of the Company and its affiliated companies and their families (such other amounts and benefits
shall be hereinafter referred to as the “Other Benefits”).



(iv) Except to the extent this benefit is provided under (ii) or (iii) above, 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 in effect in the one year
period before the Change of Control, provided that Executive may elect within 15 days of
termination to receive, in lieu of such benefits, a cash payment equal to the present value of such
benefits.



(v) If any benefit to be provided under (ii) or (iii) above cannot be so provided under the
terms of the plan or program, or legal limitations on such plan or program, in lieu of such benefit
the Company shall pay to Executive an amount in cash equivalent (on an after-tax basis from the
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 the Executive under the plan or program would have
been borne by the Executive (in an equal dollar amount) under such individual arrangement.



(b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, employment under this Agreement shall terminate without further
obligations to the Executive’s legal representatives under this Agreement, other than for (i)
payment of Accrued Obligations (which shall be paid to the Executive’s estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination), payment of deferred
compensation obligations pursuant to Section 6(e), and the timely payment or provision of the
Welfare Benefit Continuation and Other Benefits (excluding, in each case, Death Benefits (as
defined below)) and (ii) payment to the Executive’s estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination of an amount equal to the present value
(determined as provided in Section 280G(d)(4) of the Code) of any cash amount to be received by the
Executive or the Executive’s family as a death benefit pursuant to the terms of any plan, policy or
arrangement of the Company and its affiliated companies, but not including any proceeds of life
insurance covering the Executive to the extent paid for directly or on a contributory basis by the
Executive (which shall be paid in any event as an Other Benefit) (the benefits included in this
clause (b) shall be hereinafter referred to as the “Death Benefits”).



(c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, employment under this Agreement shall
terminate without further obligations to the Executive under this Agreement, other than for (i)
payment of Accrued Obligations (which shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination), payments of deferred compensation pursuant to Section 6(e),
and the timely payment or provision of the Welfare Benefit Continuation and Other Benefits
(excluding, in each case, Disability Benefits (as defined below)) and (ii) payment to the Executive
in a lump sum in cash within 30 days of the Date of Termination of an amount equal to the present
value (determined as provided in Section 280G(d)(4) of the Code) of any cash amount to be received
by the Executive as a disability benefit pursuant to the terms of any plan, policy or arrangement
of the Company and its affiliated companies, but not including any proceeds of disability insurance
covering the Executive to the extent paid for directly or on a contributory basis by the Executive
(which shall be paid in any event as an Other Benefit) (the benefits included in this clause (c)
shall be hereinafter referred to as the “Disability Benefits”).



(d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, employment under this Agreement shall terminate
without further obligations to the Executive under this Agreement, other than the obligation to pay
to the Executive Annual Base Salary through the Date of Termination and payments of deferred
compensation pursuant to Section 6(e) to the extent theretofore unpaid. If the Executive
terminates employment during the Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.



(e) Deferred Compensation Payouts. Upon any termination of employment, payments shall
be made to the Executive (or to Executive’s legal representatives following death) of vested
deferred compensation at such times as specified under the documents governing the deferred
compensation plan or arrangement, subject to applicable limitations under Code Section 409A to
ensure that no additional taxes apply thereunder.



7. Non-exclusivity of Rights. Except as provided in Sections 6(a)(ii), 6(b), 6(c) and
6(d), nothing in this Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.



8. Full Settlement: Resolution of Disputes.



(a) The payment by the Company to the Executive of the amounts required by this Agreement
shall serve as a full settlement of any and all claims which the Executive may have against the
Company arising out of or in connection with the termination of the Executive’s employment by the
Company.



(b) 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 the
Executive or others. In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as provided in Section 6(a)(ii), such amounts shall not be
reduced whether or not the Executive obtains other employment. The Company agrees to pay promptly
as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any dispute or contest (regardless of the outcome thereof) by
the Company, the Executive 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.



(c) If there shall be any dispute between the Company and the Executive (i) in the event of
any termination of the Executive’s employment by the Company, whether such termination was for
Cause, or (ii) in the event of any termination of employment by the Executive, whether Good Reason
existed, then, unless and until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the determination by the
Executive of the existence of Good Reason was not made in good faith, 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 or provide pursuant to
Section 6(a) 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 an undertaking 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.



9. 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 or distribution 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 9)
(a “Payment”) would be subject to the excise tax imposed by section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax”), then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.



(b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Deloitte & Touche LLP (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 Change of Control, the Executive shall
appoint 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 9, 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 9(c) 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.



(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 it 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 9(c), the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or forgo 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 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.



(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(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 9(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 9(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.



10. Confidential Information. The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive’s employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement). After termination
of the Executive’s employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.



11. Successors.



(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.



(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
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 assume expressly 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 as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.



12. Miscellaneous.



(a) This Agreement shall be governed by and construed in accordance with the laws of the State
of Florida, without reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives. Notwithstanding the foregoing, the parties hereto
agree without the requirement of further consent that this Agreement will be amended, to the extent
required, to comply with the requirements of section 409A of the Code and applicable regulations.



(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:




If to the Executive:




To the Executive’s most recent address


according to the Company’s records.




If to the Company:




Noven Pharmaceuticals, Inc.


11960 S.W. 144th Street


Miami, Florida 33186


Attention: General Counsel



or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.



(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.



(d) The Company may withhold from any amounts payable under this Agreement such Federal, state
or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.



(e) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not be
deemed to be a waiver of such provision or right or any other provision or right of this Agreement.



(f) The Executive and the Company acknowledge that, except as may otherwise be provided under
any other written agreement between the Executive and the Company, the employment of the Executive
by the Company is “at will” and, prior to the Effective Date, may be terminated by either the
Executive or the Company at any time. Moreover, if prior to the Effective Date, the Executive’s
employment with the Company terminates, then the Executive shall have no further rights under this
Agreement. From and after the Effective Date, this Agreement shall supersede any prior agreement
between the parties with respect to the subject matter hereof.



(g) This Agreement shall supersede and replace any Employment Agreement (Change in Control)
between the Company and Executive dated prior to the date of this Agreement.



IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.




Noven Pharmaceuticals, Inc.




     


Robert C. Strauss


President, Chief Executive Officer &


Chairman of the Board




     


Executive