Document:

EX-10.3

STOCK APPRECIATION RIGHTS AGREEMENT (EMPLOYEE)

This document sets forth the terms of a grant of stock appreciation rights (the “Award”)
granted by Noven Pharmaceuticals, Inc., a Delaware corporation (the “Company”), pursuant to a
Certificate of Stock Appreciation Rights (“Certificate”) displayed at the website of Smith Barney
Stock Plan Services. The Certificate, which specifies the person to whom the award is granted
(“Grantee”) and other specific details of the grant, and the electronic acceptance of the
Certificate at the website of Smith Barney Stock Plan Services are incorporated herein by
reference.

BACKGROUND

A. Grantee is an employee of the Company.

	 	B.	 	In consideration of services to be performed, Company desires to afford
Grantee an opportunity to acquire shares of its common stock in accordance with
Company’s 1999 Long-Term Incentive Plan (the “Plan”) as hereinafter provided.

	 	C.	 	Any capitalized terms not otherwise defined herein shall have the meaning
accorded them under the Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties, hereto, intending to be legally bound, agree as
follows:

1. Grant of Award. Subject to the terms and conditions of the Plan and this Grant,
Company hereby grants to Grantee the number of stock appreciation rights (the “Rights”) specified
on the Certificate, with each Right bearing the reference price (the “Reference Price”) specified
on the Certificate. The Rights are granted in respect of the Common Stock, par value $.0001 per
share (“Common Stock”) of the Company.

2. Award Period. The Award may be exercised in accordance with the provisions of
Paragraphs 3, 4 and 5 hereof during the Award Period, which shall begin on the “Award Date”
specified in the Certificate and shall end on the Expiration Date (as defined in paragraph 4). All
rights to exercise the Award shall terminate on the Expiration Date.

3. Exercisability. Subject to the limitations of the Plan and this Award, the Award
shall be exercisable according to the vesting schedule specified on the Certificate. An installment
of this Award shall not become exercisable on the otherwise applicable vesting date if the
Grantee’s Date of Termination (as defined in paragraph 8) occurs on or before such vesting date.
Notwithstanding the foregoing provisions of this paragraph 3, the Award shall become exercisable
with respect to all of the Rights (to the extent it is not then otherwise exercisable) as follows:

	 	A.	 	Rights under this Award shall become fully exercisable upon the Grantee’s
Date of Termination, if the Grantee’s Date of Termination occurs by reason of the
Grantee’s death, Disability (as such term is defined in a certain Employment Agreement
between the Company and the Grantee, dated April 29, 2008, (the “Employment
Agreement”)), termination of Grantee’s employment by the Company without Cause (as
such term is defined in the Employment Agreement), non-renewal by the Company of the
Employment Agreement or by reason of termination of Grantee’s employment by Grantee
for Good Reason (as such term is defined in the Employment Agreement).

	 	B.	 	The Award shall become fully exercisable upon a Change in Control (as defined
in the Plan), if the Grantee’s Date of Termination does not occur on or before the
Change in Control.

	 	C.	 	The Option may be exercised on or after the Date of Termination only as to
that portion of the Rights as to which it was exercisable immediately prior to the
Date of Termination, or as to which it became exercisable on the Date of Termination
in accordance with this paragraph 3.

4. Expiration. The Award Period shall terminate and this Award shall be exercisable
after the Company’s close of business on the last business day that occurs prior to the Expiration
Date. The “Expiration Date” shall be the earliest to occur of:

A. the Expiration Date specified on the Certificate;

	 	B.	 	if the Grantee’s Date of Termination occurs by reason of death, Disability or
Retirement, the one-year anniversary of such Date of Termination;

	 	C.	 	the Grantee’s Date of Termination, if the Grantee’s Date of Termination
occurs as a result of a termination by the Company for Cause (as such term is defined
in the Employment Agreement); or

	 	D.	 	if the Grantee’s Date of Termination occurs for reasons other than death,
Disability, Retirement, or the reasons specified in C above, the 90-day anniversary of
such Date of Termination.

5. Method of Exercise. Subject to this Agreement and the Plan, the Award may be
exercised in whole or in part by complying with such procedures as the Committee may establish or,
if no such procedure is established, then by filing a written notice with the Secretary of the
Company at its corporate headquarters prior to the Company’s close of business on the Expiration
Date. Such notice shall specify the number of Rights the Grantee elects to exercise. The Award
shall not be exercisable if and to the extent the Company determines that such exercise would
violate applicable state or Federal securities laws or the rules and regulations of any securities
exchange on which the Common Stock is traded. If the Company makes such a determination, it shall
use all reasonable efforts to obtain compliance with such laws, rules or regulations. In making any
determination hereunder, the Company may rely on the opinion of counsel for the Company. Subject
to the withholding of applicable payroll, withholding and other taxes in accordance with Section 6
below, upon the exercise of Rights (or as promptly thereafter as practicable), the Company shall
issue to the Grantee a number of shares of Common Stock (rounded down to nearest whole number)
equal to the product of (i) the number of Rights exercised multiplied by (ii) the difference
between the Fair Market Value on the date of exercise and the Reference Price.

6. Withholding. All deliveries and distributions under this Agreement are subject to
withholding of all applicable taxes. At the election of the Grantee, and subject to such rules and
limitations as may be established by the Committee from time to time, such withholding obligations
may be satisfied through the surrender of shares of Common Stock which the Grantee already owns, or
to which the Grantee is otherwise entitled under the Plan.

7. Transferability. Except as otherwise provided in the Plan or this paragraph 7, the
Rights are not transferable other than as designated by the Grantee by will or by the laws of
descent and distribution, and during the Grantee’s life, may be exercised only by the Grantee.
However, the Grantee, with the approval of the Committee, may transfer the Rights for no
consideration to or for the benefit of the Grantee’s Immediate Family (including, without
limitation, to a trust for the benefit of the Grantee’s Immediate Family or to a partnership or
limited liability company of which only one or more members of the Grantee’s Immediate Family hold
an interest), subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to the Rights prior to such transfer. The
foregoing right to transfer the Rights shall apply to the right to consent to amendments to this
Agreement and, in the discretion of the Committee, shall also apply to the right to transfer
ancillary rights associated with the Rights. The term “Immediate Family” shall mean the Grantee’s
spouse, parents, children, sisters, brothers and grandchildren (whether by blood, marriage or
adoption) and, for this purpose, shall also include the Grantee.

8. Definitions. For purposes of this Agreement, the terms used in this Agreement shall
be subject to the following:

	 	A.	 	Date of Termination. The Grantee’s “Date of Termination” shall be the first
day occurring on or after the Grant Date on which the Grantee is not employed by the
Company or any Subsidiary, regardless of the reason for the termination of employment;
provided that a termination of employment shall not be deemed to occur by reason of
(a) a transfer of the Grantee between the Company and a Subsidiary or between two
Subsidiaries; (b) the Grantee taking a leave of absence from the Company or a
Subsidiary approved by the Grantee’s employer, or (c) Grantee ceasing to be employed
by the Company or any of its Subsidiaries but continuing to serve the Company without
interruption as an Outside Director of the Company; provided, however, that in the
case of this clause c, if Grantee thereafter ceases to serve as an Outside Director of
the Company without immediately resuming service as an employee of the Company or any
of its Subsidiaries then Grantee’s “Date of Termination” shall be the first day on
which Grantee no longer serves as an Outside Director. If, as a result of a sale or
other transaction, the Grantee’s employer ceases to be a Subsidiary (and the Grantee’s
employer is or becomes an entity that is separate from the Company), the occurrence of
such transaction shall be treated as the Grantee’s Date of Termination caused by the
Grantee being discharged by the employer.

	 	B.	 	Disability. Except as otherwise provided by the Committee, the Grantee shall
be considered to have a “Disability” during the period in which the Grantee is unable,
by reason of a medically determinable physical or mental impairment, to engage in the
duties of Grantee’s employment with the Company, which condition has, or, in the
opinion of an independent physician selected by the Committee, is expected to have, a
duration of not less than 180 days.

	 	C.	 	Retirement. “Retirement” of the Grantee shall mean, with the approval of the
Committee, the occurrence of the Grantee’s Date of Termination on or after the date
the Grantee attains age 55.

	 	D.	 	Plan Definitions. Except where the context clearly implies or indicates the
contrary, a word, term, or phrase used in the Plan is similarly used in this
Agreement.

9. Forfeiture Provisions.

	 	A.	 	Forfeiture of gain and unexercised rights in certain circumstances. If (a)
Grantee’s Date of Termination occurs for any of the reasons specified in clause C of
paragraph 4 of this Award during the twelve months following any exercise of all or
any portion of the Rights, or (b) during the eighteen months after Grantee’s Date of
Termination Grantee violates any non-competition, confidentiality or other duty or
obligation Grantee has to the Company then (1) this Award shall and all Rights be
deemed to have terminated effective as of the earlier of (A) the Grantee’s Date of
Termination and (B) the date on which Grantee entered into such activity, unless
terminated sooner by operation of another term or condition of this Award or the Plan,
and (2) Grantee shall pay to Company the amount of any gain realized or payment
received as a result of the exercise of this Award during such eighteen month period,
as applicable.

	 	B.	 	Right of Set-Off. By accepting this agreement, Grantee consents to a
deduction from any amounts the Company owes Grantee from time to time (including
amounts owed to Grantee as wages or other compensation, fringe benefits, or vacation
pay, as well as any other amounts owed to Grantee by the Company), to the extent of
the amounts Grantee owes the Company under paragraph A above. Whether or not the
Company elects to make any set-off in whole or in part, if the Company does not
recover by means of set-off the full amount Grantee owes it, calculated as set forth
above, Grantee agrees to pay immediately the unpaid balance to the Company.

	 	C.	 	Committee Discretion. Grantee may be released from its obligations under
paragraphs A and B above only if the Committee (or its duly appointed agent)
determines in its sole discretion that such action is in the best interests of the
Company.

10. Heirs and Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by
merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s
assets and business. If any rights exercisable by the Grantee or benefits deliverable to the
Grantee under this Agreement have not been exercised or delivered, respectively, at the time of the
Grantee’s death, such rights shall, subject to the terms and conditions of the Plan and this Award,
be exercisable by the Designated Beneficiary, and such benefits shall be delivered to the
Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan. The
“Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Grantee in a
writing filed with the Committee in such form and at such time as the Committee shall require. If a
deceased Grantee fails to designate a beneficiary, or if the Designated Beneficiary does not
survive the Grantee, any rights that would have been exercisable by the Grantee and any benefits
distributable to the Grantee shall be exercised by or distributed to the legal representative of
the estate of the Grantee. If a deceased Grantee designates a beneficiary but the Designated
Beneficiary dies before the Designated Beneficiary’s exercise of all rights under this Agreement or
before the complete distribution of benefits to the Designated Beneficiary under this Agreement,
then any rights that would have been exercisable by the Designated Beneficiary shall be exercised
by the legal representative of the estate of the Designated Beneficiary, and any benefits
distributable to the Designated Beneficiary shall be distributed to the legal representative of the
estate of the Designated Beneficiary.

11. Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the Committee shall have all
powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of
the Agreement by the Committee and any decision made by it with respect to the Agreement is final
and binding on all persons.

12. Plan Governs. Notwithstanding anything in this Agreement to the contrary, the
terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained
by the Grantee from the office of the Secretary of the Company; and this Agreement is subject to
all interpretations, amendments, rules and regulations promulgated by the Committee from time to
time pursuant to the Plan. By accepting this Agreement, the Grantee acknowledges receipt of a copy
of the Plan and of the most recent Prospectus relating to the Plan.

13. Not An Employment Contract. The Award will not confer on the Grantee any right
with respect to continuance of employment or other service with the Company or any Subsidiary, nor
will it interfere in any way with any right the Company or any Subsidiary would otherwise have to
terminate or modify the terms of such Grantee’s employment or other service at any time.

14. Notices. Any written notices provided for in this Agreement or the Plan shall be
in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or
overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed
received three business days after mailed but in no event later than the date of actual receipt.
Notices shall be directed, if to the Grantee, at the Grantee’s address indicated by the Company’s
records, or if to the Company, at the Company’s principal executive office.

15. No Fractional Shares. In accordance with Section 5 of the Award, shares of Common
Stock to be issued upon exercise of Rights will be determined by rounding down to the nearest whole
number. Except as otherwise determined in writing by the Committee, no fractional amounts, whether
in the form of shares of Common Stock or cash, will be issued upon exercise of the Rights.

16. No Rights As Shareholder. The Grantee shall not have any rights of a shareholder
with respect to the Rights or any shares of Common Stock issued in respect thereof, until a stock
certificate has been duly issued following exercise of the Rights as provided herein.

17. Amendment. This Agreement may be amended by written agreement of the Grantee and
the Company, without the consent of any other person.

18. Law Governing. This Award shall be governed in accordance with and governed by the
internal laws of the State of Florida.

19. Receipt of Plan. Grantee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award
subject to all of the terms and provisions thereof. Grantee has reviewed the Plan and this Award
in their entirety, has had an opportunity to obtain the advice of counsel and Grantee’s tax advisor
prior to accepting this Award, and fully understands all provisions of the Plan and this Award.

20. Acknowledgement of Grantee. As a material inducement to Company to grant the Award
to Grantee, Grantee represents and warrants to the Company that Grantee is not now in violation and
has not at any time violated any non-competition, confidentiality or other duty or obligation
Grantee has to the Company.

IN WITNESS WHEREOF, the Company has caused these presents to be executed in its name and on
its behalf, all as of the Grant Date.

COMPANY:

NOVEN PHARMACEUTICALS, INC.

By:_/s/ Jeff Mihm     

Jeff Mihm

Vice President and General Counsel

GRANTEE:

_/s/ Peter Brandt     

	 	 	Peter Brandt

(Acceptance designated electronically at

the website of Smith Barney Stock Plan Services)EX-10.4

April 29, 2008

W. Neil Jones

c/o Noven Pharmaceuticals, Inc.

11960 SW 144th Street

Miami, Florida 33186

Dear Neil:

 

This letter confirms the arrangement regarding your resignation as Vice President Sales and
Marketing of Noven Pharmaceuticals, Inc. (”Noven”).

1. Noven has expressed its desire that you continue your employment with Noven until May 31, 2008
in order to ensure an orderly transition of your position to your successor.

2. It is understood and agreed that you will: (a) continue to perform your regular duties as
Noven’s Vice President Sales and Marketing, but providing that you may telecommute from your home
until the earlier of May 31, 2008 and (b) you will assist the Corporation in the transition of the
position of Vice President Sales and Marketing to your successor from the date hereof through May
31, 2008.

3. In exchange for (i) continuing your employment through May 31, 2008 (or such earlier date
as may be mutually agreed to the by the parties) (the “Employment Separation Date”) in accordance
with paragraph 2 and (ii) signing the Confidential Separation Agreement and General Release of All
Claims attached hereto as Exhibit A, Noven agrees to the following:

	 	a.	 	You will be paid a retention bonus of, One Hundred Thousand and 00/100 dollars
($100,000), which amount will be paid in 9 bi-weekly installments commencing on the
Employment Separation Date.

	 	b.	 	You will be paid all of your accrued but unused vacation time which you had
earned through the Employment Separation Date.  You will not continue to earn vacation
or other paid time off after the Employment Separation Date.

	 	c.	 	The equity awards (stock options and SSARs) listed in Exhibit 1 attached hereto
will continue to vest through the Employment Separation Date.  All vesting will cease
as of that date and you will have 12 months from your Employment Separation Date with
which to exercise any and all vested awards under and in accordance with the Noven’s
1999 Long Term Incentive Plan, provided, however that this provision shall not extend
the original seven year term of any of your equity awards.

	 	d.	 	Your participation in Noven’s medical and dental insurance programs at employee
rates will continue for you and your covered dependents during the time period that you
receive separation pay, up to and including the end of the month in which the last
check representing separation pay is issued, so long as you continue to contribute your
“employee contribution” for medical coverage during such period.

	 	e.	 	You will have the option to elect to continue your health care coverage for an
additional 18 months under COBRA, provided you pay the full monthly premium cost of the
coverage.  Detailed information on COBRA will be provided to you under separate
cover.   

4. The parties acknowledge that this agreement is not an employment contract, that you will
continue to be an employee “at will”, and that we retain the right to terminate you for any reason
or no reason at any time; provided that if you are terminated for any reason other than for cause
prior to May 31, 2008, then you will be entitled to the benefits listed in paragraph 3 hereof.

If you have any questions please do not hesitate to contact me. Otherwise, please indicate your
acceptance of the terms and conditions set forth herein by signing this letter where indicated
below.

 

NOVEN PHARMACEUTICALS, INC.

Sincerely,

/s/ Carolyn Donaldson

Carolyn Donaldson

Vice President, Human Resources

Agreed to and Accepted by:

/s/ W. Neil Jones

W. Neil Jones

Dated: 5/4/08

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