Document:

Unassociated Document

    Exhibit
4.1

     

    
      AMENDMENT NO. 2 (this “Amendment”) dated as
of July 14, 2009, to the Rights Agreement dated as of November 6, 2001, as
amended on March 18, 2008 (the “Rights Agreement”),
between NOVEN PHARMACEUTICALS, INC., a corporation organized and existing under
the laws of the State of Delaware (the “Company”), and
AMERICAN STOCK TRANSFER & TRUST LLC, a corporation organized and existing
under the laws of the State of New York, as Rights Agent (the “Rights
Agent”).

      

      WHEREAS the Company and the Rights
Agent have previously entered into the Rights Agreement specifying the terms of
the Rights;

      

      WHEREAS the Board of Directors of the
Company (the “Board”) has
determined that it is in the best interests of the Company and its stockholders
to amend the Rights Agreement as set forth herein immediately prior to and in
connection with the execution of the Agreement and Plan of Merger dated as of
July 14, 2009, among Hisamitsu Pharmaceutical Co., Inc., a Japanese corporation
(“Parent”),
Hisamitsu U.S., Inc., a Delaware corporation and a wholly owned subsidiary of
Parent, (“Holdings”), Northstar
Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Holdings (“Merger
Sub”) and the Company (the “Merger Agreement”),
pursuant to which, among other things, (i) Merger Sub shall commence a cash
tender offer (the “Offer”) to purchase
all of the outstanding shares of common stock, par value $0.0001 per share, of
the Company and (ii) Merger Sub shall merge with and into the Company (the
“Merger”), with
the Company continuing as the surviving corporation;

      

      WHEREAS the Company desires to amend
the Rights Agreement prior to entering into the Merger Agreement to render the
Rights inapplicable to the Merger Agreement, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement;

      

      WHEREAS at a duly convened meeting, the
Board has approved the amendment of the Rights Agreement in the manner set forth
herein;

      

      WHEREAS the Company has directed the
Rights Agent to enter into this Amendment pursuant to Section 26 of the Rights
Agreement; and

      

      WHEREAS capitalized terms used but not
defined herein shall have the respective meanings assigned to them in the Rights
Agreement.

      

      NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company and the Rights Agent, for themselves, their successors and assigns,
agree as follows:

      

      Section 1. Amendment to Rights
Agreement.  The Rights Agreement is hereby amended as
follows:

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      (a) Section 1 of the Rights Agreement
is hereby amended to add the following definitions in the proper alphabetical
order and the paragraphs of Section 1 shall be relettered
accordingly:

      

      “‘Effective Time’ shall
have the meaning set forth in the Merger Agreement.”

      

      “‘Holdings’ shall mean
Hisamitsu U.S., Inc., a Delaware corporation and a wholly owned subsidiary of
Parent.”

      

      “‘Merger Agreement’
shall mean the Agreement and Plan of Merger dated as of July 14, 2009, among the
Company, Parent, Holdings and Merger Sub, as it may be amended from time to
time.”

      

      “‘Merger Sub shall mean
Northstar Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Holdings.”

      

      “‘Merger’ shall have
the meaning set forth in the Merger Agreement.”

      

      “‘Offer’ shall mean the
cash tender offer provided for in the Merger Agreement, as it may be amended
from time to time.”

      

      “‘Parent shall mean
Hisamitsu Pharmaceutical Co., Inc., a Japanese corporation.”

      

      “‘Transactions’ shall
mean (i) the announcement, approval, execution, delivery or amendment of
the Merger Agreement, (ii) the announcement, commencement or amendment of
the Offer, or the acceptance for payment of, or purchase or payment for, shares
of Common Stock pursuant to the Offer, (iii) the announcement or
consummation of the Merger or (iv) the consummation of any of the other
transactions with Parent, Holdings or Merger Sub as contemplated by the Merger
Agreement.”

      

      (b) The definition of “Acquiring
Person” in Section 1(a) of the Rights Agreement is hereby amended to add the
following sentence at the end thereof:

      

      “Notwithstanding
the foregoing or any provision of this Agreement to the contrary, none of
Parent, Holdings, Merger Sub or any of their respective affiliates or associates
shall become, nor shall any of them be deemed to be, an Acquiring Person, either
individually or collectively, by virtue of the Transactions.”

      

      (c) Section 3(b) of the Rights
Agreement is hereby amended to add the following sentence at the end
thereof:

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

      “Notwithstanding
the foregoing, a Distribution Date shall not occur or be deemed to have occurred
as a result of the Transactions.”

      

      (d) Section 25 of the Rights Agreement
is hereby amended to add the following sentence at the end thereof:

      

      “Notwithstanding
anything in this Agreement to the contrary, the Company shall not be obligated
to provide any notice pursuant to Section 25 as a result of the
Transactions.”

      

      (e) Section 7 of the Rights Agreement
is hereby amended to add the following paragraph (g) at the end
thereof:

      

      “(g)
Notwithstanding anything to the contrary in this Agreement, the Rights shall
expire immediately prior to the Effective Time.”

      

      Section 2. Effect of Termination of
Merger Agreement.  This Amendment shall automatically terminate
and be of no further force and effect from and after any termination of the
Merger Agreement, whereupon the Rights Agreement shall automatically be the same
as it existed immediately prior to the execution and delivery of this Amendment,
provided that for the avoidance of doubt, such termination of this Amendment
shall not affect the validity and effect of this Amendment prior to such
termination.  In the event of any termination of the Merger Agreement,
the Company shall promptly deliver to American Stock Transfer & Trust
Company a notice of such termination.

      

      Section 3. Certification.  The
officer of the Company executing this Amendment on behalf of the Company hereby
certifies on behalf of the Company that this Amendment complies with the terms
of Section 26 of the Rights Agreement.

      

      Section 4. Governing
Law.  This Amendment shall be governed by and construed in
accordance with the law of the State of Delaware applicable to contracts to be
made and performed entirely within such State, without giving effect to any
conflict of laws provision or rule.

      

      Section 5. Execution in
Counterparts.  This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.  This Amendment may be executed and delivered by
facsimile transmission.

      

      Section 6. Rights Agreement as
Amended.  Upon the effectiveness of this Amendment, the term
“Rights Agreement” as used in the Rights Agreement shall refer to the Rights
Agreement as amended hereby.

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
 

      Section 7. Descriptive
Headings.  Descriptive headings of the several Sections of this
Amendment are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

      

      Section 8. Severability.  If
any term, provision, covenant or restriction of this Amendment is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

      

      Section 9. Effectiveness.  This
Amendment shall be effective as of the date first written above, and except as
expressly set forth herein, the Rights Agreement shall remain in full force and
effect and otherwise shall be unaffected hereby.

      

      IN WITNESS WHEREOF, the Company and the
Rights Agent have caused this Amendment to be duly executed as of the date first
written above.

       

      
        
          
            
              
                	 	NOVEN
      PHARMACEUTICALS, INC.	 
	 	 	 	 
	
                         

                      	
                          
      by 

                      	/s/ Peter
      Brandt	 
	 	 	 	 

              

            

          

        

      

       

      
         

        
          
            
              
                	 	
                        AMERICAN STOCK TRANSFER
      AND

                        TRUST
    LLC,

                      	 
	 	 	 	 
	
                         

                      	
                          
      by 

                      	/s/ Paula
      Caroppoli	 
	 	 	 	 

              

            

          

        

         

         

      

       

      
        4ex10-1.htm

    Exhibit
10.1

     

    EXECUTION VERSION

     

     

    AMENDED
AND RESTATED

    EMPLOYMENT
AGREEMENT

     

    THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”) is made
and entered into as of the 14th day of July, 2009, by and between NOVEN
PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), and
JEFFREY EISENBERG (“Executive”)
(collectively, the “Parties”).

     

    Recitals

     

    A.           On
July 14, 2009, the Company and Hisamitsu Pharmaceutical Co., Inc. (“Hisamitsu”) entered
into an Agreement and Plan of Merger (the “Merger Agreement”),
pursuant to which (i) Hisamitsu has
agreed to cause a subsidiary of Hisamitsu to commence a tender offer to acquire
shares of common stock of the Company (subject to the terms and conditions set
forth in the Merger Agreement) (the “Tender Offer”) and
(ii) at the
“Effective
Time” (as defined in the Merger Agreement), a subsidiary of Hisamitsu
will merge with and into the Company, with the Company continuing as the
surviving corporation in such merger;

     

    B.           Executive
and the Company are parties to a letter agreement, dated as of January 2, 2008
(the “Letter
Agreement”), pursuant to which Executive serves as Executive Vice
President of the Company, and an Employment Agreement (Change of Control), dated
as of November 18, 2008 (the “Change of Control
Agreement”); and

     

    C.           The
Company desires to retain the continued services and dedication of Executive to
the business and affairs of the Company following the Effective Date (as defined
below) as its President and Chief Executive Officer and a member of its Board of
Directors (the “Board”), and
Executive desires to continue to serve the Company in such capacity following
the Effective Date, in each case subject to the terms and conditions
herein.

     

    Agreement

     

    NOW, THEREFORE, in consideration of the
premises and mutual covenants set forth in this Agreement, the Parties agree as
follows:

     

    1.    
        Employment.

     

    1.1           Employment and
Term.  The Company agrees to employ Executive and Executive
agrees to serve the Company, on the terms and conditions set forth in this
Agreement, for the period commencing on the day on which the Effective Time
occurs or, if earlier, the first business day following the date on which
representatives of Hisamitsu
hold a majority of the seats on the Board (the earlier of such dates, the “Effective Date”) and
expiring on the second anniversary of the Effective Date, unless sooner
terminated as set forth in this Agreement (the “Term”); provided, however, that
commencing on the second anniversary of the Effective Date and on each annual
anniversary date thereafter, the Term of this Agreement shall be automatically
extended for an additional one (1) year period unless, at least sixty
(60) days prior to such annual anniversary date, the Company shall have
delivered to Executive or Executive shall have delivered to the Company written
notice that the Term of the Executive’s employment under this Agreement will not
be extended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    1.2           Duties of
Executive.  Executive shall serve as the President and Chief
Executive Officer of the Company and shall have powers and authority superior to
any other officer or employee of the Company or of any subsidiary of the
Company.  Subject to the preceding sentence, during the Term of
employment, Executive shall in good faith use reasonable business efforts to
perform all services as may be commensurate with his position and reasonably
assigned to him by the Board and, following the Effective Time, the Chief
Executive Officer of Hisamitsu and shall exercise such power and authority
commensurate with his position and such other power and authority as may from
time to time be delegated to him by the Board and, following the Effective Time,
the Chief Executive Officer of Hisamitsu.  In addition, following the
Effective Time, Executive shall regularly consult with and provide information
to the Chairman of the Board with respect to the Company’s business and
affairs.  Executive shall be required to report solely to, and shall
be subject solely to the supervision and direction of, the Board and the Chief
Executive Officer of Hisamitsu, and no other person or group shall be given
authority to supervise or direct Executive in the performance of his
duties.  Executive shall devote substantially all of his working time,
efforts and attention to the business and affairs of the Company.  It
shall not be a violation of this Agreement for Executive to: (a) serve on
corporate, civic or charitable boards or committees (it being agreed that in no
event shall Executive serve on the board of directors of more than two other
corporations and the acceptance of any new corporate directorship after the
Effective Date of this Agreement shall be subject to the consent of the Board,
which shall not be unreasonably withheld); (b) deliver
lectures, fulfill speaking engagements or teach at educational institutions; and
(c) manage
personal investments, so long as such activities do not unreasonably interfere
with the performance of Executive’s responsibilities as an employee of the
Company (or as a director of the Company, if serving as such), in accordance
with this Agreement.

     

    2.      
      Compensation.

     

    2.1           Base
Salary.  Executive shall receive a base salary at the annual
rate of $475,000 (as increased from time to time, the “Base Salary”) during
the Term of this Agreement, with such Base Salary payable in installments
consistent with the Company’s normal payroll schedule. The Base Salary shall
also be reviewed, at least annually, for merit
increases (if any) and may, by action and in the discretion of the Board, be
increased.  Once increased, the Base Salary may not be
decreased.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.2           Annual Incentive
Compensation.  Executive shall participate in the Company’s
annual incentive bonus plan (the “Annual Incentive Bonus
Plan”). The Annual Incentive Bonus Plan will be based on the achievement
of Company and individual performance goals to be established by the Board in
consultation with Executive, with annual target incentive bonuses of at least
seventy-five percent (75%) of the Base Salary, which percentage will not be
subject to reduction notwithstanding any provisions to the contrary contained in
any applicable Annual Incentive Bonus Plan; provided, that, with
respect to the fiscal year 2009, any bonus awarded to Executive will be
determined by determining (i) the bonus to which
Executive would have been entitled if he had served as Executive Vice President
for the entire fiscal year (at Executive’s prior base salary and prior target
percentage), (ii) the bonus to
which Executive would have been entitled if he had served as Chief Executive
Officer for the entire fiscal year (as provided in this Section 2.2) and (iii) the pro rata
portion of each of (i) and (ii) by reference to the date of this
Agreement.  It is intended that performance measures selected shall be
reasonably attainable at target.  It is agreed that such Annual
Incentive Bonus Plan shall not create any implication that the Board shall award
any such bonus or incentive compensation unless targets are met; provided, that in the
event that the Company agrees, in connection with the transactions contemplated
by the Merger Agreement, to provide guaranteed bonuses to one or more other
executives of the Company who are parties to change of control agreements and
who enter into new compensation arrangements with the Company, then Executive
shall be provided with a guaranteed bonus on the most favorable terms as set
forth in any of those compensation arrangements.

     

    2.3           Long-Term Incentive
Compensation.  Within sixty (60) days following the Effective
Time, the Company shall establish a Management Incentive Plan (the “LTI Plan”) consistent
with the terms and conditions currently agreed to by the Company and Hisamitsu
and shall designate Executive as a participant in the LTI
Plan.  Executive shall have a target award of $1,687,500, and a
maximum award of $3,375,000, under the LTI Plan with respect to the performance
cycle ending December 31, 2013 (or a lower adjusted amount if Executive and the
Company mutually agree in writing on a performance period of less than four
years applicable to Executive).

     

    2.4           Withholding.  All
payments under this Agreement or otherwise pursuant to Executive’s employment
relationship shall be made net of any applicable withholding taxes or other
amounts required to be withheld by law.

     

    3.   
         Expense Reimbursement
and Other Benefits.

     

    3.1           Expense
Reimbursement.  During the Term of Executive’s employment under
this Agreement, the Company, upon the submission of reasonable supporting
documentation by Executive, shall reimburse Executive for all reasonable
expenses actually paid or incurred by Executive in the course of and pursuant to
the business of the Company,
including expenses for travel and entertainment.  Notwithstanding
anything herein to the contrary or otherwise, except to the extent any expense
reimbursement provided pursuant to this Agreement or otherwise is not taxable
income to Executive within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended from time to time (the “Code”, and Section
409A thereof and its implementing regulations and guidance, “Section 409A”),
(a) the
amount of expenses eligible for reimbursement provided to Executive during any
calendar year will not affect the amount of expenses eligible for reimbursement
or in-kind benefits provided to Executive in any other calendar year, (b) the
reimbursements for expenses for which Executive is entitled to be reimbursed
shall be made on or before the last day of the calendar year following the
calendar year in which the applicable expense is incurred, (c) the right to
payment or reimbursement or in-kind benefits hereunder may not be liquidated or
exchanged for any other benefit and (d) the reimbursements
shall be made pursuant to objectively determinable and nondiscretionary Company
policies and procedures regarding such reimbursement of expenses.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.2           Employee Benefit
Plans.  During the Term of Executive’s employment under this
Agreement, Executive shall be entitled to participate in all incentive, savings,
and retirement plans, practices, policies and programs provided by the Company
to other officer-level executives of the Company, in each case, in accordance
with their respective terms in effect from time to time.  Nothing in
this Agreement shall preclude the Company from amending or terminating any such
plan at any time.

     

    3.3           Health and Welfare Benefit
Plans.  During the Term of Executive’s employment under this
Agreement, Executive and/or Executive’s family, as the case may be, shall be
eligible for participation in and shall receive all benefits under health and
welfare benefit plans, practices, policies and programs provided by the Company
to other officer-level executives of the Company, in each case, in accordance
with their respective terms in effect from time to time (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs).  Nothing in this Agreement shall preclude the Company
from amending or terminating any such plan at any time.

     

    3.4           Working
Facilities.  In connection with his employment by the Company,
Executive shall be based at the Company’s offices in the New York or Miami
areas, as elected by the Executive, unless otherwise agreed to in writing by the
Board, subject to reasonable business travel on behalf of the Company, which
will include, without limitation, quarterly travel to Tokyo, Japan, and regular
travel to the Company’s offices in New York to attend Board
meetings.  During the Term of Executive’s employment under this
Agreement, the Company shall furnish Executive with an office, a secretary and
such other facilities and services suitable to his position and adequate for the
performance of his duties under this Agreement.

     

    3.5           Vacation.  During
the Term of Executive’s employment under this Agreement,
Executive shall be entitled to paid annual vacation according to the Company’s
policy applicable to other officer-level executives of the Company, which in no
event shall be less than seven (7) weeks per calendar year.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.6           Fringe
Benefits.  During the Term of Executive’s employment under this
Agreement, Executive shall be entitled to fringe benefits according to the
Company’s regular plans, practices, policies and programs applicable to other
officer-level executives of the Company.

     

    4.  
          Termination.

     

    4.1           Termination by Either
Party.

     

    (a)           The
Company or Executive may terminate Executive’s employment for any reason or no
reason at any time.

     

    (b)           If
the Company terminates Executive’s employment without Cause (as defined in this
Section 4) or Executive terminates Executive’s employment with Good Reason
(as defined in this Section 4), subject to Executive’s execution (and
non-revocation, if applicable) of the waiver and release in the form attached
hereto as Exhibit A within thirty (30) days following the Date of Termination
(as defined in this Section 4), the Company shall pay Executive severance
pay in an amount equal to the following:

     

    (i)           If
such termination occurs during the period of the Term commencing on the
Effective Date and ending on the day prior to the second anniversary of the
Effective Date, Executive shall be paid, in a lump sum within thirty (30) days
following the Date of Termination, (A) an amount equal to
two times the
sum of: (x) Executive’s
annual Base Salary in effect on the Date of Termination; plus (y) the Highest
Annual Bonus (as defined in this Agreement); and (B) the Highest Annual
Bonus prorated for the number of days during the current fiscal year that
Executive has worked up through the date of termination.  For this
purpose, the “Highest
Annual Bonus” is the greater of: (x) the annual
incentive compensation bonus paid or payable by the Company to Executive
pursuant to Section 2.2 of this Agreement (or prior annual incentive plan of the
Company) in respect of the Company’s most recent completed fiscal year; and
(y) the
average of the annual incentive compensation bonuses paid or payable by the
Company to Executive pursuant to Section 2.2 of this Agreement (or prior annual
incentive plan of the Company) in respect of the three completed fiscal years
immediately preceding the fiscal year in which the termination
occurs.  In addition, in the event of such a termination within such
period, Executive shall be entitled to the additional benefits set forth on
Exhibit B hereto.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (ii)           If
such termination occurs during the period of the Term commencing on the second
anniversary of the Effective Date, Executive shall be paid
eighteen (18) months of Executive’s Base Salary in effect at the date of
such termination within thirty (30) days following the Date of Termination, as
well as a prorated bonus, such prorated bonus being in an amount equal to the
payment that would have been paid to Executive pursuant to the applicable Annual
Incentive Bonus Plan had Executive continued to the end of the applicable
performance period, multiplied by a fraction, the numerator of which is the
number of completed days of employment during such performance period and the
denominator of which is the total number of days in the performance period
(“Termination Prorated
Bonus”) and which shall be paid when it would otherwise have been paid if
Executive’s employment had continued.  For purposes of determining the
amount of the Termination Prorated Bonus, subjective performance criteria shall
be disregarded, and Board discretion to adjust the resulting figure downward
shall be applied only if and to the same extent applied to the Company’s other
executive officers.

     

    (iii)           On
any such termination of employment, Executive shall be paid, within thirty (30)
days following the Date of Termination, an amount equal to the Base Salary (and
benefits) and annual incentive compensation (for the prior calendar year) earned
by Executive (to the extent such payments have not been made) on or prior to the
Date of Termination but unpaid as of the Date of Termination (but subject to the
terms of the applicable incentive compensation plans), as well as any accrued
but unused vacation in accordance with Company policies.  In addition,
Executive shall be entitled to any amounts due under any Company benefit,
fringe, equity or payroll practices plans or policies in accordance with their
respective terms and any amounts earned on or prior to the Date of Termination
but unpaid as of the Date of Termination under the Company’s long-term incentive
compensation plan (but subject to the terms thereof).  The amounts and
benefits under this Section (iii) shall be referred to as “Accrued
Amounts.”

     

    (c)           If
the Company terminates Executive’s employment with Cause (as defined in this
Section 4) or Executive terminates Executive’s employment without Good
Reason (as defined in this Section 4), the Company shall pay to Executive
his Accrued Amounts.

     

    (d)           If
Executive’s employment terminates due to Executive’s death or Disability (as
defined in this Section 4), the Company shall pay to Executive (or his
estate, beneficiary or legal representative), his Accrued Amounts, as well as a
Termination Prorated Bonus.  For the purposes of this Agreement,
“Disability”
shall mean the absence of the Executive from the Executive’s duties with the
Company on a full time basis for one hundred and eighty (180)  days in any
period of three hundred sixty-five (365) consecutive days as a result of
incapacity due to mental or physical illness (“Disability”).  Upon
the end of the aforesaid period and while the Disability continues,
the Company may terminate the Executive for Disability on written notice (the
date specified in such notice, the “Disability Effective Date”).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (e)           If
the Company gives notice of non extension of the Term of employment under this
Agreement, then, upon the end of the then-current Term, Executive’s employment
hereunder shall end and (so long as no intervening termination of employment has
occurred, in which case Section 4.1(b), (c) or (d) shall apply, as applicable)
such termination shall be treated as a termination (x) to which
Section 4.1(b)(i) of this Agreement applies if such notice is given prior
to the second anniversary of the Effective Date and (y) to which
Section 4.1(b)(ii) applies if given thereafter.

     

    (f)           Any
Termination Prorated Bonus, if any, shall be paid at the time it would be paid
if the Executive continued employment. Notwithstanding anything contained in any
Annual Incentive Bonus Plan, payment of any Termination Prorated Bonus pursuant
to this Section 4.1 shall be in complete and total satisfaction of any
obligation of the Company to Executive under such Annual Incentive Bonus Plan
with respect to the performance period to which the Termination Prorated Bonus
relates.

     

    4.2           Termination for Cause by
Company.  In the case of the Company terminating this
Agreement, “Cause” means any one
or more of the following:

     

    (a)           a
material act or acts of personal dishonesty taken by Executive which is either
(x) at the expense of the Company, or (y) reasonably likely to bring significant
disrepute to the Company;

     

    (b)           any
violation by Executive of his material obligations under this Agreement (other
than as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on his part and which is not remedied within
ten business days after receipt of written notice from the Company;

     

    (c)           the
conviction (or plea of no contest) of Executive for any criminal act which is a
felony or a misdemeanor in each case involving moral turpitude; or

     

    (d)           a
material breach by Executive of his Confidentiality and Invention Agreement with
the Company;

     

    Termination
of this Agreement for Cause by the Company shall be effective only upon a
majority vote of the Board; provided however, that
Executive shall first be given an opportunity to make a presentation to the
Board in Executive’s defense.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    4.3           Termination for Good Reason
by Executive.  In the case of Executive terminating his
employment under this Agreement, “Good Reason” means,
without Executive’s prior written consent, the occurrence of any of the
following events following
the Effective Date: (A) (i) any diminution in
Executive’s title or material diminution in Executive’s authority, duties,
responsibilities or reporting lines as President and Chief Executive Officer of
the Company (other than temporarily as a result of Executive’s physical or
mental incapacity), excluding any such diminution arising by reason of the
Company no longer being a public company, or (ii) the assignment to
Executive of duties inconsistent with such positions; and provided, that the
foregoing shall not be violated by the Board’s good faith actions with regard to
acquisitions, dispositions or realignment of the Company’s lines of business; or
(B) a
material breach by Company of this Agreement including, without limitation, as
to location of office, travel or compensation.  In order for a
termination by Executive to constitute a termination for Good Reason, Executive
must notify the Company of the circumstances claimed to constitute Good Reason
in writing not later than the sixtieth (60th) day after it has arisen or
occurred and must provide the Company with at least thirty (30) days within
which to cure such circumstances before terminating employment, and, failing a
cure, Executive must terminate his employment within thirty (30) days following
the expiration of such cure period.

     

    4.4           Notice of
Termination.  Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of Termination to
the other Party given in accordance with Section 8.  For purposes of
this Agreement, a “Notice of
Termination” means a written notice which: (a) indicates the
specific termination provision in this Agreement relied upon; (b) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated; and (c) if the Date
of Termination is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen (15) days after the
giving of such notice, but subject to compliance with and further notice and
cure provisions contained herein). The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company under this Agreement or preclude the Executive or
the Company from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights under this Agreement.

     

    4.5           Date of
Termination.  “Date of Termination”
means: (a) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be; (b) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination; and (c) if the
Executive’s employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

     

    
      
        
        

      

      
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    4.6           Resolution of
Disputes.  If, during the period commencing on the Effective
Date and ending on the day prior to the second anniversary of the Effective
Date, there shall be any dispute between the Company and the Executive (but
excluding any dispute by Executive not in good faith) (a) as to whether
Cause existed or (b) as to whether
Good Reason existed, then, unless and until there is a final arbitration award
pursuant to Section 16 or final non-appealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or was not with Good
Reason, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive’s family or other beneficiaries, as the case may
be, that the Company would be required to pay pursuant to this Section 4 as
though such termination were by the Company without Cause or by the Executive
with Good Reason; provided, however, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of a written promise by or on behalf of the
Executive to repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.

     

    5.  
          Restrictive
Covenants.

     

    5.1           Confidentiality and
Intellectual Property.  Executive has previously executed the
Company’s Confidentiality and Invention Agreement and, from and after the
Effective Date, shall materially comply therewith; provided, that any
express provision therein that is substantially similar in intent to an express
provision of this Section 5 shall be superseded.

     

    5.2           Non-Competition and
Non-Solicitation.  Executive agrees that, both during
employment and for a period of eighteen (18) months following the
termination of this Agreement or his employment for any reason, Executive will
not, directly or indirectly (in any capacity, on Executive’s own behalf or on
behalf of any other person or entity):

     

    (a)           Anywhere
in the World, own an interest in any business, including but not limited to, an
individual proprietorship, partnership, corporation, joint stock company, joint
venture, limited liability company, trust or other form of business entity, or
unincorporated organization (except for (i) an ownership
interest not exceeding five percent (5%) of a publicly-traded entity and (ii) equity
compensation, as provided in Section 5.2(b)), that is a Company Competitive
Business or a Hisamitsu Competitive Business (in each case as defined by this
Agreement).  For purposes of this Agreement, (i) “Company Competitive
Business” shall mean any business that is engaged in the acquisition,
manufacture, development or sale of any product which materially competes in the
same markets as any material product of Noven Pharmaceuticals, Inc. or any of
its subsidiaries (the “Company Group”) or
which is under active development by the Company Group and is reasonably
expected to be a material product of the Company Group; provided, however, that Company
Competitive Business shall not include any business having $5 billion or greater
in annual revenues (in the fiscal
year preceding Executive’s termination from employment with the Company) which
business does not acquire, manufacture, develop, or sell any non-hormonal
treatment for menopause (the “Special Exception”);
and (ii) “Hisamitsu
Competitive Business” shall mean any business that is engaged in the
acquisition, manufacture, development or sale of any material product which
materially competes in the same markets as any product of Hisamitsu or any of
its subsidiaries (excluding the Company Group) (the “Hisamitsu Group”) or
which is under active development by the Hisamitsu Group and is reasonably
expected to be a material product of the Hisamitsu Group, but only if Executive
had substantial exposure to research, development, sales, marketing or other
material non-public strategic information with respect to such product as part
of Executive’s responsibilities to the Company, and subject to the Special
Exception;

     

    
      
        
        

      

      
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    (b)           Anywhere
in the World, as an individual proprietor, principal, partner, shareholder,
joint venturer, member, trustee, officer, director, consultant, broker,
employee, agent, trustee, independent contractor, or in any manner whatsoever,
perform any work for or provide any services to or receive any remuneration from
any person or entity that is a Company Competitive Business or a Hisamitsu
Competitive Business; provided, that being
employed by (and receiving compensation (including equity compensation) from) an
employer with a Company Competitive Business or a Hisamitsu Competitive
Business, standing alone, shall not be considered a violation of this Agreement
so long as (A)
the employer has more than one discrete and readily distinguishable part of its
business, (B)
Executive’s duties are not at or involving the part of the business of the
employer that constitutes a Company Competitive Business or a Hisamitsu
Competitive Business, including, without limitation, serving in a capacity where
any person involved in the Company Competitive Business or Hisamitsu Competitive
Business reports to Executive (excluding, however, reporting arrangements of two
or more levels so long as the revenue of the Company Competitive Business or the
Hisamitsu Competitive Business is not material to the employer and is (or is
projected to be) two-thirds or less of the revenue of the corresponding
Hisamitsu or Company business during the applicable period) and (C) Executive notifies
the Company of such employment prior to commencement of his employment with such
new employer.  For this purpose, “employment” and corollary terms
shall mean the provision of services to any such person or entity as employee,
independent contractor or in any other capacity;

     

    (c)           Divert
or attempt to divert from the Company or otherwise tortiously interfere with any
business relationship which exists/existed between the Company and any specific
prospective or existing client of the Company Group or the Hisamitsu Group other
than in the good faith performance of his duties for permitted activities
hereunder; and/or

     

    
      
        
        

      

      
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    (d)           Hire
or engage any Company employee or exclusive contractor to enter into an
employment or business relationship with any other person or entity or recruit,
solicit or otherwise induce any Company employee or exclusive contractor to
terminate his/her employment or engagement with the Company. This covenant
applies as to any employee or exclusive contractor who, at the time of the
recruitment/hire, is currently employed or engaged with the Company or who was
employed or engaged with the Company at any time during the six month period
preceding the date of the attempted employment, recruitment, or solicitation.
The hiring, recruitment or solicitation of any such Company employee or
exclusive contractor by an entity with which Executive is employed or associated
shall not be deemed to be a direct or indirect act on Executive’s own behalf if
such hiring, recruitment, or solicitation results from a general solicitation
for candidates and Executive did not assist the entity in identifying the
individual(s) hired, recruited or solicited.  Furthermore, the
foregoing shall not be violated by advertising not targeted at Company employees
or exclusive contractors or by serving as a reference upon request with regard
to an entity with which Executive is not associated.

     

    5.3           Enforcement and
Survival.  It is the intention of the Company and Executive
that this Section 5 be enforceable to the fullest extent permissible.
Accordingly, Executive agrees that in the event that any restriction stated in
this Section, or any portion thereof, shall be declared or held to be invalid or
unenforceable by a court of competent jurisdiction, then such restriction shall
be amended or modified, as necessary, to render it valid and
enforceable.

     

    (a)           Executive
further agrees that a breach of this Section 5 would result in irreparable and
continuing damage to the Company. Accordingly, notwithstanding anything in this
Agreement to the contrary, in the event of a breach or threatened breach by
Executive, the Company shall be entitled to pursue immediately any and all
remedies it may have against Executive in a court of competent jurisdiction by
specific performance, injunction, or such other remedies and relief as may be
available. Executive’s obligations under this Section 5 are independent of any
obligation of the Company. The existence of any other claim or cause of action
by Executive, including but not limited to, any other claim or cause of action
under this Agreement, does not constitute a defense to the enforcement by the
Company of the covenants contained in this Section; provided, however, in the event
the Company ceases (or fails) to pay Executive any severance pay to which
Executive is entitled in accordance with the terms of Section 4 of this
Agreement which is not remedied within ten (10) business days after receipt of
written notice from Executive, Executive shall then be relieved of all
obligations under subsections 5.2(a) and 5.2(b).  Executive agrees
that prior to the commencement of any employment or consulting relationship with
any person or entity, Executive will advise the person or entity of the
restrictive covenant terms contained in this Agreement.

     

    
      
        
        

      

      
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    (b)           The
covenants provided for in this Section 5 shall survive the termination of
this Agreement and of Executive’s employment.

     

    
      6.            
Service of Executive
as Director.  For so long as Executive serves as an employee of
the Company, the Executive shall serve as a member of the
Board.  Executive’s current Indemnity Agreement with the Company shall
continue in full force and effect (except for such amendments thereto to which
Executive agrees in writing).

       

      7.            
Governing Law and
Venue.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without reference to principles
of conflicts of laws. For any action allowed by this Agreement to be filed in a
court of law, the parties agree that for any such action, venue shall be
exclusively in the state in which Executive’s principal office is located and
agree that any dispute concerning the interpretation or application of this
Agreement shall be heard BY A JUDGE AND NOT A JURY. The parties waive any and
all objection to jurisdiction or venue.

       

      8.            
Notices:  Any
notice required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given when delivered by hand or when
deposited in the United States mail, by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

       

    

    If to the
Company:

     

    Noven
Pharmaceuticals, Inc.

    11960
S.W. 144th Street

    Miami,
Florida 33186

    Attention:
Chairman of Compensation Committee

     

    With a
copy to:

     

    Hisamitsu
Pharmaceutical Co., Inc.,

    Marunouchi,
1-11-1, Chiyoda-Ku

    Tokyo,
100-6221, Japan

    Fax: 
81-3-5293-1708

    Attention:  Mr.
Nobuo Tsutsumi, General Manager of Legal Department

     

    If to
Executive:

     

    Jeffrey
Eisenberg

     

    (at the
last address provided by Executive to the Company’s Human Resources
Department)

     

    or to
such other addresses as either Party hereto may from time to time give notice of
to the other in the aforesaid manner.

     

    
      
        
        

      

      
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    9.   
         Successors.

     

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

     

    (b)           This
Agreement shall inure to the benefit of, be enforceable by, and be binding upon
the Company’s successors and permitted assigns.  The Company may only
assign this Agreement to an entity acquiring all or substantially all of its
assets.

     

    (c)           The
Company will require any successors or permitted assigns (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement, and to assure that it is financially
capable of performing, all of the Company’s financial obligations under this
Agreement, in the same manner and to the same extent that the Company would be
required to perform them if no such succession had taken place. As used in
this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law or
otherwise.

     

    
      10.          
Severability.  In
the event that any paragraph or provision of this Agreement shall be held to be
illegal or unenforceable, the entire Agreement shall not fall on account
thereof, but shall otherwise remain in full force and effect, and such paragraph
or provision shall be enforced to the maximum extent permissible.

       

      11.          
Waivers.  The
waiver by either Party hereto of a breach or violation of any term or provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach or violation.

       

      12.          
Damages.  Nothing
contained herein shall be construed to prevent the Company or Executive from
seeking and recovering from the other damages sustained by either or both of
them as a result of its or his breach of any term or provision of this
Agreement.

       

      13.          
No Third Party
Beneficiary.  Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person (other than
the Parties hereto and, in the case of Executive, his heirs, personal
representative(s) and/or legal representative) any rights or remedies under or
by reason of this Agreement.

       

      14.          
Full
Settlement.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others.

       

      
        
          
          

        

        
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      15.          
Certain Additional
Payments by the Company.

       

    

    (a)           Anything
in this Agreement to the contrary notwithstanding, in the event that any
payment, distribution or other action by the Company to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (but determined without regard to
any additional payments required under this Section 15) (each a “Payment”), would be
subject to an excise tax imposed by Section 4999 of the Code, or any
interest or penalties are incurred by the Executive with respect to any such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), the
Company shall make a payment to the Executive (a “Gross-Up Payment”) in
an amount such that after payment by the Executive of all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had
paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up
Payment equal to the sum of (x) the Excise
Tax imposed upon the Payments, plus (y) the product
of (i) any
deductions disallowed because of the inclusion of the Gross-Up Payment in the
Executive’s adjusted gross income, multiplied by (ii) the actual
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made. For purposes of determining the amount
of the Gross-Up Payment, the Executive shall be deemed to pay federal income
taxes at his actual marginal rates of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made.

     

    (b)           Subject
to the provisions of paragraph (c) of this Section 15, all determinations
required to be made under this Section 15 (including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment, and the assumptions to
be utilized in arriving at such determination) shall be made by the Company’s
independent public accountants (the “Accounting Firm”)
which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the applicable change of control
transaction, the Executive shall appoint (with the consent of the Company, which
consent shall not be unreasonably withheld or delayed) another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 15, shall be paid
by the Company to the Executive within five (5) days of the receipt of the
Accounting Firm’s determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 15 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

     

    
      
        
        

      

      
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    (c)           The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten (10) business days after the Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

     

    (i)          
  give the Company any information reasonably requested by the Company
relating to such claim,

     

    (ii)     
      take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney
reasonably selected by the Company,

     

    (iii)           cooperate
with the Company in good faith in order effectively to contest such claim,
and

     

    (iv)           permit
the Company to participate in any proceedings relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 15(c), the
Company shall control all proceedings taken in connection with such contest and,
at its reasonable option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
reasonably determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.

     

    
      
        
        

      

      
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    (d)           If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to Section 15(c), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s complying
with the requirements of Section 15(c)) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 15(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be
paid.

     

    (e)           Subject
to any earlier time limits set forth in this Section 15, all payments and
reimbursements to which Executive is entitled under this
Section 15 shall be paid to or on behalf of Executive not later than
the end of the taxable year of Executive next following the taxable year of
Executive in which Executive (or the Company, on Executive’s behalf) remits the
related taxes (or, in the event of an audit or litigation with respect to such
tax liability, not later than the end of the taxable year of the Executive next
following the taxable year of Executive in which there is a final resolution of
such audit or litigation (whether by reason of completion of the audit, entry of
a final and non-appealable judgment, final settlement, or
otherwise)).

     

    
      
        
        

      

      
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      16.         
Negotiation and
Arbitration.  If the Parties should have a material dispute
arising out of or relating to this Agreement or the Parties’ respective rights
and duties hereunder, except as otherwise provided for by Section 5, then the
Parties will resolve such dispute in the following manner: (a) any Party may
at any time deliver to the other a written dispute notice setting forth a brief
description of the issue for which such notice initiates the dispute resolution
mechanism contemplated by this Section; (b) during the
twenty (20) day period following the delivery of the notice described in
clause (a) above, appropriate representatives of the various Parties will meet
and seek to resolve the disputed issue through negotiation; (c) if
representatives of the Parties are unable to resolve the disputed issue through
negotiation, then within ten (10) days after the period described in clause
(b) above, the Parties will refer the issue (to the exclusion of a court of law)
to final and binding arbitration in the county in which Executive’s principal
offices are located. In any arbitration pursuant to this Agreement: (x) the rules and
regulations (“Rules”) promulgated
by the American Arbitration Association (“AAA”) shall apply to
the proceedings and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof; (y) discovery
shall be allowed and governed by the Florida Code of Civil Procedure; and (z) the award or
decision shall be rendered by a majority of the members of a Board of
Arbitration consisting of three (3) members, one of whom shall be appointed
by each of the respective Parties and the third of whom shall be the chairman of
the panel and be appointed by mutual agreement of said two Party-appointed
arbitrators. In the event of failure of said two arbitrators to agree within
thirty (30) days after the commencement of the arbitration proceeding upon
the appointment of the third arbitrator, the third arbitrator shall be appointed
by the AAA in accordance with the Rules. In the event that either Party shall
fail to appoint an arbitrator within ten (10) days after the commencement
of the arbitration proceedings, such arbitrator and the third arbitrator shall
be appointed by the AAA in accordance with the Rules. Nothing set forth above
shall be interpreted to prevent the Parties from agreeing in writing to submit
any dispute to a single arbitrator in lieu of a three (3) member Board of
Arbitration. Upon the completion of the selection of the Board of Arbitration
(or if the Parties otherwise agree in writing to a single arbitrator) an award
or decision shall be rendered within no more than thirty (30) days.
Notwithstanding the foregoing, the request by either Party for preliminary or
permanent injunctive relief, whether prohibitive or mandatory, shall not be
subject to arbitration and may be adjudicated by the courts located within the
county in which Executive’s offices are located. ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT,
OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS
WAIVED.  The Company agrees to pay promptly as incurred, to the
full extent permitted by law, all reasonable legal fees and expenses which
Executive may reasonably incur as a result of any dispute or contest (regardless
of the outcome thereof) by the Company, the Executive (but excluding disputes or
contests by Executive not in good faith or that are frivolous) or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
dispute or contest by the Executive about the amount of any payment pursuant to
this Agreement), plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code;
provided, that
this sentence shall not apply to disputes or contests by the Company (i) involving
enforcement of the provisions of Section 5 by injunctive or other, similar
equitable relief, or (ii) for damages for
the violation of Section 5 (unless such dispute or contest for damages also
involves a claim by Executive that amounts owed to him hereunder have not been
paid).  Amounts shall be invoiced within sixty (60) days of being
incurred and shall be paid within fifteen (15) days after being
invoiced.

       

      
        
          
          

        

        
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      17.          
Compliance with Code
Section 409A.

       

    

    (a)           General.  It
is the intention of both the Company and Executive that the benefits and rights
to which Executive could be entitled pursuant to this Agreement comply with
Section 409A, to the extent that the requirements of Section 409A are applicable
thereto, and the provisions of this Agreement shall be construed in a manner
consistent with that intention. If Executive or the Company believes, at any
time, that any such benefit or right that is subject to Section 409A does not so
comply, it shall promptly advise the other and shall negotiate reasonably and in
good faith to amend the terms of such benefits and rights such that they comply
with Section 409A (with the most limited possible economic effect on Executive
and on the Company).

     

    (b)           Distributions on Account of
Separation from Service.  No payment or benefit which is
nonqualified deferred compensation within the meaning of Section 409A
required to be paid under this Agreement on account of termination of
Executive’s employment shall be made unless and until Executive incurs a
“separation from service” within the meaning of Section 409A.

     

    (c)           Six Month Delay for
Specified Employees.  If Executive is a “specified employee,”
then no payment or benefit that is payable on account of Executive’s “separation
from service”, as that term is defined for purposes of Section 409A, shall
be made before the date that is six months after Executive’s “separation from
service” (or, if earlier, the date of Executive’s death) if and to the extent
that such payment or benefit constitutes nonqualified deferred compensation
under Section 409A and such deferral is required to comply with the
requirements of Section 409A. Any payment or benefit delayed by reason of
the prior sentence shall be paid out or provided in a single lump sum at the end
of such required delay period in order to catch up to the original payment
schedule.  For purposes of this Section, Executive shall be considered
to be a “specified employee” if, at the time of his or her separation from
service, Executive is a “key employee”, within
the meaning of Section 416(i) of the Code, of the Company (or any person or
entity with whom the Company would be considered a single employer under
Section 414(b) or Section 414(c) of the Code) any stock in which is
publicly traded on an established securities market or otherwise.

     

    
      
        
        

      

      
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    (d)           No Acceleration of
Payments.  Neither the Company nor Executive, individually or
in combination, may accelerate any payment or benefit that is subject to Section
409A, except in compliance with Section 409A and the provisions of this
Agreement, and no amount that is subject to Section 409A shall be paid prior to
the earliest date on which it may be paid without violating Section
409A.

     

    (e)           Treatment of Each
Installment as a Separate Payment.  For purposes of applying
the provisions of Section 409A to this Agreement, each separately identified
amount to which Executive is entitled under this Agreement shall be treated as a
separate payment. In addition, to the extent permissible under Section 409A, any
series of installment payments under this Agreement shall be treated as a right
to a series of separate payments.

     

    (f)           Selection of Payment
Dates.  If any Section of this Agreement provides for payment
within a time period, the determination of when such payment shall be made shall
be solely in the discretion of the Company.

     

    
      18.         
Merger
Clause.  Effective as of the Effective Date, this Agreement
contains the complete, full, and exclusive understanding of Executive and the
Company as to its subject matter and shall, on such date, supersede the Letter
Agreement and the Change of Control Agreement (it being understood that, during
the period commencing on the date of this Agreement and ending on the Effective
Date (the “Interim
Period”), the Letter Agreement and the Change of Control Agreement shall
continue to be fully effective in accordance with their terms); provided, that
Executive shall provide Hisamitsu with copies of any notices Executive provides
to the Company under the Letter Agreement and the Change of Control Agreement
during the Interim Period at the same time such notices are provided to the
Company.  Any amendments to this Agreement shall be effective and
binding on Executive and the Company only if any such amendments are in writing
and signed by both Parties.  In the event that the Merger Agreement is
terminated by the parties thereto, this Agreement shall cease to be of force or
effect, and neither the Company nor Executive shall have any right, claim,
liability or obligation hereunder.  In addition, this Agreement shall
cease to be of force or effect, and neither the Company nor Executive shall have
any right, claim, liability or obligation hereunder, in the event that (i) the Tender Offer
is consummated and, immediately following the consummation of the Tender Offer,
Hisamitsu owns (directly or indirectly) less than a majority of the Fully
Diluted Shares (as defined in the Merger Agreement) or (ii) a third party
unaffiliated with Hisamitsu and its affiliates owns a majority of the Fully
Diluted Shares.  In the event that either of the immediately preceding
two sentences is applicable, the Letter Agreement and the Change of Control
Agreement shall continue to be fully effective in accordance with their terms as
in effect immediately prior to the date of this Agreement.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      19.          
No Set-off; Sole Right
to Severance Pay.  In the event of any termination of
employment under this Agreement, Executive shall be under no obligation to seek
other employment and there shall be no offset against any amounts due Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment that Executive may obtain.  The payments to be
provided to Executive pursuant to Section 4 of this Agreement shall constitute
the exclusive payments in the nature of severance or termination pay or salary
continuation which shall be due to Executive upon a termination of employment
and shall be in lieu of any other such payments under any plan, program, policy
or other arrangement of the Company or any of its affiliates.

       

    

     

    

    [Remainder
of Page Intentionally Left Blank]

     

     

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

     

    
      
        	 	
                COMPANY:

                NOVEN PHARMACEUTICALS, INC.

              	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Peter
      Brandt	 
	 	 	Name: 
      Peter Brandt 	 
	 	 	Title:   
      President & Chief Executive Officer 	 
	 	 	 	 

      

    

     

     

    
      
        
          	 	
                  EXECUTIVE:

                	 
	 	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Jeffrey
      F. Eisenberg	 
	 	 	    Jeffrey
      F. Eisenberg	 
	 	 	 	 
	 	 	 	 

        

      

       

    

     

     

     

     

     

    21

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A

       

      WAIVER
AND RELEASE

       

      This
Waiver and General Release (the “Agreement”) is
entered into by and between NOVEN PHARMACEUTICALS, INC., a Delaware corporation
(the “Company”), and
JEFFREY EISENBERG (“Executive”)
(collectively, the “Parties”).

       

      RECITALS

       

      WHEREAS,
the Company and Executive have agreed to a separation of employment;
and

       

      WHEREAS,
the Parties desire to resolve all matters between them, including all matters
related to and/or arising out of Executive’s employment with the Company
(including, without limitation, the ending of Executive’s employment with the
Company), and the facts and circumstances underlying the same, and to settle and
compromise any and all claims and differences between them, of any sort, origin,
or description.

       

      NOW,
THEREFORE, in consideration of the premises and of the mutual promises and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Executive and the Company agree as follows:

       

      1. Termination of
Employment.  As of [INSERT
DATE], Executive’s employment with the Company has
ended.  Executive shall no longer be eligible to participate in, or be
covered by, any employee benefit plan or program offered by or through the
Company, and he shall not receive any benefits or payments from the Company,
except as otherwise specified in this Agreement.

       

      2. Payments.  Executive
shall also be entitled to [the
payments identified in Section 4 of the Employment Agreement, as applicable and
Sections 15 and 16 of the Employment Agreement].

       

      3. Benefits.  Executive
shall also be entitled to [the
benefits identified in Section 4 of the Employment Agreement, as
applicable].  Executive shall [also be
entitled to payment under the LTI Plan, in accordance with the terms of the LTI
Plan.]

       

      4. General Waiver and Release
of All Claims.  [To be
modified as necessary to comport with applicable state and local laws and to
comply with then-current state of the law].  In exchange for
the promises contained in this Agreement, Executive agrees that Executive or any
person acting by, through, or under Executive, VOLUNTARILY, KNOWINGLY AND
WILLINGLY RELEASES AND FOREVER DISCHARGES the Company, including its parent and
subsidiary corporations, affiliates, all related domestic and foreign
businesses, entities, corporations, and partnerships, including but not limited
to _______________________________________________, as well as, in such
capacity, all current and former directors, officers, executives, shareholders,
partners, employees, successors in interest, predecessors, representatives,
agents, insurers, attorneys, divisions, joint venturers, investors, and assigns
and each of them (collectively “Company Releasees”),
FROM ANY AND ALL CLAIMS OR OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER whether
now known or unknown and later discovered, suspected or unsuspected, which arose
on or before the Effective Date (as herein defined) of this Agreement; provided, however, that
Executive does not waive any vested rights in any Company plan or program or any
right to be provided a defense or to be indemnified that he may have under any
indemnification agreement or the Company’s Articles of Incorporation or
Bylaws.  Executive understands that this release includes but is not
limited to any right that Executive may have relating in any way to Executive’s
employment by the Company or the conclusion of such employment, including
without limitation any claims under the law of contracts or torts, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C.
Sections 621 et seq.), including the Older Workers Benefit Protection Act
of 1990; Title VII of the Civil Rights Act of 1964, as amended (42 U.S.C.
Sections 2000e et seq.), including the Civil Rights Act of 1991 and the
Civil Rights Acts of 1886, 1970 and 1971 (42 U.S.C. Sections 1981 et seq.);
the Americans With Disabilities Act (42 U.S.C. Sections 12101 et seq.); and
the Rehabilitation Act of 1973; or any other federal, state, or local statutory
or common laws relating to discrimination or employment.  Executive
declares and represents that the Executive has been paid all wages or other
compensation owed by any or all of the Company Releasees and represents that he
has not suffered any on-the-job injuries or work-related accidents or injuries,
occupational diseases or disabilities, whether temporary, permanent, partial, or
total, for which the Executive has not been fully
compensated.  Executive further agrees that he has been granted all
leave, including all leave under the Family and Medical Leave Act, to which he
may have been entitled, if any.

       

       

       

      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      

       

       

      Executive
agrees that he will not institute any action or actions, cause or causes of
action (in law or in equity), suits, debts, liens, claims, demands, now known or
unknown and later discovered, suspected or unsuspected, fixed or contingent
which Executive may have or claim to have in state or federal court, or with any
state, federal or local government agency or with any administrative or advisory
body arising from or attributable to any or all of the Company Releasees,
including but not limited to, all employee benefit plans sponsored or
administered by Company.  Executive also agrees that if a claim is
prosecuted in Executive’s name before any court or administrative agency,
Executive waives and agrees not to take any award of money or other damages from
such suit.  Executive also agrees that if a claim is prosecuted in
Executive’s name, Executive will immediately request, in writing, that the claim
on Executive’s behalf be withdrawn.  Executive also agrees that he is
waiving on behalf of Executive and Executive’s attorneys all claims for
attorneys’ fees, expenses and court costs, including the same at all appellate
levels.

       

      5. Review and
Revocation.  Executive acknowledges that he has been advised in
writing to consult with an attorney before signing this Agreement and that he
has been afforded the opportunity to consider the terms of this Agreement for
twenty-one (21) days prior to its execution.  Executive understands
that he can use all or any part of this 21-day period to decide whether to sign
this Agreement.  Executive and Company agree that any material or
non-material changes which may be made in this Agreement after the Agreement is
initially provided to the Executive shall not re-start the running of the 21-day
period.  Executive further acknowledges that he has read this
Agreement in its entirety; that he fully understands all of its terms and their
significance; that he has signed it voluntarily and of his own free will; and
that he intends to abide by its provisions without exception.

       

      6. Effective Date and
Revocation.  So long as Executive does not revoke this
Agreement, this Agreement shall become effective on the eighth day following the
date the Executive signs this Agreement (“Effective
Date”).  For a period of seven (7) days following the date the
Executive signs this Agreement, Executive may revoke this Agreement by providing
written notice of revocation to:  [INSERT
CONTACT PERSON].  In the event that Executive revokes the
Agreement prior to the eighth day after his execution of it, this Agreement and
the promises contained herein shall automatically be null and void.

       

      7. No Admission of
Liability.  The execution of this Agreement does not constitute
an admission by any Company Releasee or Executive of any violation of any civil
rights or other employment discrimination statute, or any other legal statute,
provision, regulation, ordinance, order or action under common law or of any
wrongdoing of any kind, and this Agreement shall not be offered or used to
establish any such liability.

       

      8. No
re-Employment.  [Executive agrees that he will not seek
reemployment with the Company or work on the property of the Company or any
related entity as a contractor or in any other capacity at any time in the
future.]

       

      9. Restrictive
Covenants.  Notwithstanding anything in this Agreement, and
specifically notwithstanding the “Entire Agreement” clause of this Agreement,
any and all restrictive covenants, including but not limited to any
non-competition, non-solicitation, intellectual property or confidentiality
covenants, included in any agreement by and between the Executive and the
Company (or any entity related to the Company), including but not limited to the
Employment Agreement [INSERT
ANY OTHER EXPRESS REFERENCES TO EMPLOYMENT AGREEMENT(S) AND OTHER SOURCES OF
RESTRICTIVE COVENANTS HERE], shall survive the execution and delivery of
this Agreement and shall continue in full force and effect in accordance with
their terms subsequent to the Effective Date of this Agreement.

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      10. Return of
Property.  Executive agrees that all property of the Company or
any related entity, including but not limited to any trade secrets, confidential
information, business documents, books, records, accounts, credit cards and/or
equipment, has been returned to the Company as of the date the Executive
executes this Agreement.  It is acknowledged the Executive may retain
his rolodex and electronic address book.

       

      11. Cooperation.  Executive
agrees to reasonably cooperate with the Company and its attorneys in connection
with any threatened or pending litigation against the Company or its Affiliates
as to matters with regard to his employment period with the Company (other than
those in which he may be personally liable to the Company), and to make himself,
upon reasonable notice, to prepare for and appear at deposition or trial in
connection with any such matters; provided, however, that such
cooperation does not unreasonably interfere with the performance of services by
Executive for any employer subsequent to the Company.  The Company
shall promptly reimburse any reasonable expenses incurred by Executive in
connection with such cooperation.

       

      12. Severability.  In
the event that any provision of this Agreement shall be held to be illegal or
unenforceable, the entire Agreement shall not fall on account thereof, but shall
otherwise remain in full force and effect, and such paragraph or provision shall
be enforced to the maximum extent permissible.

       

      13. Entire
Agreement.  This Agreement constitutes the complete
understanding between the parties and supersedes all prior agreements between
the parties, except the non-competition and non-solicitation and confidentiality
and intellectual property covenants contained in the Employment Agreement and
the Indemnity Agreement [INSERT BY
EXPRESS REFERENCE ANY OTHER AGREEMENTS THAT ARE TO SURVIVE THIS AGREEMENT,
INCLUDING BUT NOT LIMITED TO ANY RESTRICTIVE COVENANTS INCLUDED IN ANY SUCH
AGREEMENTS].  The parties acknowledge that the other has not
made any representation to him or it other than as set forth
herein.  Any modification of this Agreement shall be in writing and
signed by each of the parties.

       

      14. Governing Law; Jurisdiction
and Venue.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without reference to
principles of conflicts of laws.  For any action allowed by this
Agreement to be filed in a court of law, the parties agree that for any such
action, venue shall be exclusively in the state in which Executive’s principal
office is located; agree that any dispute concerning the interpretation or
application of this Agreement shall be resolved in accordance with
Section 16 of the Employment Agreement, which shall continue in full force
and effect.  The parties waive any and all objections to jurisdiction
or venue.

       

      15. Successors and
Assigns.  The Company may assign this Agreement to the same
extent it may assign the Employment Agreement.  Executive shall not
assign this Agreement, but it shall inure to the benefit of the Executive’s
executors, administrators and heirs.  This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the Company and its
successors and permitted assigns.  The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement,
and to assure that it is financially capable of performing, all of the Company’s
financial obligations under this Agreement, in the same manner and to the same
extent that the Company would be required to perform them if no such succession
had taken place.  As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law or
otherwise.

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      The
undersigned have executed this Agreement as of the date first forth
above.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        	 	
                                                                                NOVEN
      PHARMACEUTICALS, INC. 
(“Company”)

                                                                              	 
	 	 	 	 
	
                                                                                 

                                                                              	
                                                                                By:
      

                                                                              	 	 
	 	 	in
      his/her capacity as authorized representative of the Company	 
	 	 	 	 
	 	 Print
      Name:	 	 
	 	 	 	 
	 	 Title:	 	 
	 	 	 	 
	 	 Date:	 	 
	 	 	 	 
	 	 	 	 
	 	EXECUTIVE	 
	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	 	 	 
	 	Print
      Name:	 	 
	 	 	 	 
	 	 Date:	 	 
	 	 	 	 

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      

      Exhibit
B

      Additional
Benefits

      

      In the
event of a termination of employment to which Section 4.1(b)(i) applies,
Executive will be entitled to the following additional benefits:

       

      For the
remainder of the period from the Date of Termination until the day prior to the
second anniversary of the Effective Date, or such longer period as any plan,
program, practice or policy may provide, the Company shall continue benefits to
Executive and/or Executive’s family at least equal to those which would have
been provided to them in accordance with the medical, welfare (excluding
severance and disability or similar salary continuation plans) and fringe
benefit plans, programs, practices and policies of the Company and its
affiliated companies as generally in effect during such period, subject to
paragraph (c) below (excluding tax-qualified plans).  If Executive
becomes re-employed with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of
eligibility.   For purposes of determining eligibility of
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, Executive shall be considered to have remained employed until the day
prior to the second anniversary of the Effective Date and to have retired on the
last day of such period.

       

      Except to
the extent this benefit is provided under clause (a) above or is otherwise an
Accrued Amount, the Company shall provide Executive with outplacement benefits
for a one-year period on terms consistent with the highest level of such
benefits provided under policies and practices as generally in effect during
such period.

       

      If any
benefit (including a medical plan coverage) to be provided under clause (a)
above is a taxable benefit and is not a death benefit, the Company shall provide
such benefit to Executive by paying to Executive, on the sixtieth day after said
termination, an amount in cash equivalent (on an after-tax basis from
Executive’s point of view) to the Company’s cost of providing such benefit to
Executive on an individual basis, but assuming that any cost to Executive under
the plan or program would have been borne by Executive (in an equal dollar
amount) under such individual arrangement.  In addition, the Company
shall permit Executive and his dependents to participate in the Company’s
medical plans until the second anniversary (or such later date as required under
COBRA) at the COBRA premium cost.

       

       

       

      5

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