April 3, 2007

Dear Stockholder:

     The 2007 Annual Meeting of Stockholders of Noven Pharmaceuticals, Inc. will convene at 10:00 a.m. on Friday, May 18, 2007. The meeting will be held at Noven’s facilities located at 13800 S.W. 119^th Ave., Miami, FL 33186. Details regarding the business to be conducted at the meeting are described in the accompanying Notice of Annual Meeting and Proxy Statement.

     Your vote on these matters is important. Whether or not you plan to attend the meeting, I hope you will vote as soon as possible. Most of you may now vote your shares over the Internet, as well as by telephone or by mailing a traditional proxy card. Voting over the Internet, by telephone or by written proxy will assure that your shares are voted if you do not attend in person. Please review the instructions on the enclosed proxy card or voting instruction card regarding which of these options is available to you, and how to vote your shares.

     We hope you will participate in your Annual Meeting, if not in person, then by proxy. If you are able to attend, the Board of Directors, as well as the executive officers of Noven, look forward to seeing you there. We appreciate your continued support.

Sincerely yours,


ROBERT C. STRAUSS
President, Chief Executive Officer
& Chairman of the Board

TIME		10:00 a.m. on Friday, May 18, 2007
PLACE		13800 S.W. 119th Ave. Miami, Florida 33186

ITEMS OF BUSINESS			1.			To elect seven members to the Board of Directors.
			2.			To approve an amendment to Noven’s 1999 Long-Term Incentive Plan.
			3.			To approve the material terms of the performance goals under Noven’s 1999 Long-Term Incentive Plan.
			4.			To ratify the appointment of Deloitte & Touche LLP as Noven’s independent registered public accounting firm.
			5.			To transact such other business as may properly come before the meeting and any adjournment thereof.

RECORD DATE		You are entitled to vote if you were a Noven stockholder at the close of business on March 19, 2007.
ANNUAL REPORT		Noven’s 2006 Annual Report, which is not a part of the proxy soliciting material, is enclosed.
PROXY VOTING		If you own shares of record, you will find enclosed a proxy card or cards and an envelope in which to return the card(s). Whether or not you plan to attend this meeting, please sign, date and return your enclosed proxy card(s) as soon as possible so your shares can be voted at the meeting in accordance with your instructions. Any proxy may be revoked in the manner described on page 2 in the accompanying Proxy Statement at any time prior to its exercise at the meeting. If you hold your shares in street name, you may instruct your broker or nominee to vote your shares by following instructions that the broker or nominee provides you.

Jeff T. Mihm
Vice President, General Counsel &
Corporate Secretary

This Proxy Statement and accompanying proxy card are being distributed on or about April 6, 2007.

TABLE OF CONTENTS

		Page
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING			1
PROPOSAL 1 — ELECTION OF DIRECTORS			5
Governance of the Company			7
Related Party Transactions			11
Stockholder Communication with Directors			11
Director Compensation			13
Executive Compensation			15
Compensation Discussion and Analysis			15
Summary Compensation Table			26
Grants of Plan-Based Awards in 2006			28
Outstanding Equity Awards at 2006 Year-End			29
Option Exercises and Stock Vested in 2006			30
Non-qualified Deferred Compensation in 2006			30
Change of Control and Termination Payments			32
PROPOSAL 2 — APPROVAL OF AMENDMENT TO THE NOVEN PHARMACEUTICALS, INC. 1999 LONG-TERM INCENTIVE PLAN			36
PROPOSAL 3 — APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE NOVEN PHARMACEUTICALS, INC. 1999 LONG-TERM INCENTIVE PLAN			42
PROPOSAL 4 — RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			44
OTHER INFORMATION			47
Share Ownership of Certain Beneficial Owners and Management			47
Compliance with Section 16(a) of the Securities Exchange Act of 1934			49
Delivery of Voting Materials			49
APPENDIX A — NOVEN PHARMACEUTICALS, INC. 1999 LONG-TERM INCENTIVE PLAN

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING

Q:		Why am I receiving these materials?
A:		The Board of Directors (the “Board”) of Noven Pharmaceuticals, Inc. (“Noven”) is providing these proxy materials to solicit your proxy in connection with Noven’s annual meeting of stockholders, which will take place on May 18, 2007. You are invited to attend the meeting and are requested to vote on the proposals described in this Proxy Statement.
Q:		What information is contained in these materials?
A:		The information included in this Proxy Statement relates to the proposals to be voted on at the meeting, the voting process, the compensation of directors and Noven’s most highly paid officers, and other required information. We are also sending Noven’s 2006 Annual Report with these materials, but it does not constitute part of our proxy soliciting material.
Q:		What proposals will be voted on at the meeting?
A:		There are four proposals scheduled to be voted on at the meeting:

		•		Election of seven directors;
		•		Approval of an amendment to Noven’s 1999 Long-Term Incentive Plan (the “1999 Plan”);
		•		Approval of the material terms of the performance goals under the 1999 Plan; and
		•		Ratification of the appointment of Deloitte & Touche LLP as Noven’s independent registered public accounting firm.

		We will also consider and vote upon any other proposal properly brought before the meeting and any adjournment thereof.
Q:		What are the Board’s voting recommendations?
A:		The Board recommends that you vote your shares:

		•		“For” each of the nominees named herein to the Board;
		•		“For” the approval of the amendment to the 1999 Plan;
		•		“For” the approval of the material terms of the performance goals under the 1999 Plan; and
		•		“For” the ratification of the appointment of Deloitte & Touche LLP.

Q:		What shares can I vote?
A:		You may vote all shares that you owned as of March 19, 2007, which is the record date. These shares include (1) those held directly in your name as the stockholder of record and (2) those held for you as the beneficial owner through a stockbroker, bank or other nominee. Each share of Noven’s common stock outstanding as of the close of business on March 19, 2007, the record date, is entitled to one vote at the annual meeting. On the record date, approximately 24,767,845 shares of common stock were issued and outstanding.

Q:		What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:		Stockholder of Record
		If your shares are registered directly in your name with Noven’s Transfer Agent, American Stock Transfer and Trust Company, you are considered the stockholder of record for those shares and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your proxy directly to Noven or to vote in person at the meeting. Noven has enclosed a proxy card for you to use.
		Beneficial Owner
		If you hold shares in a stock brokerage account or through a bank or other nominee, you are considered the beneficial owner of shares held in street name and your broker or nominee is forwarding these proxy materials to you. Your broker or nominee is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker on how to vote, but since you are not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a signed proxy from the record holder giving you the right to vote the shares. As a beneficial owner, you are, however, welcome to attend the meeting. Your broker or nominee has enclosed a voting instruction card for you to use.
Q:		How can I vote my shares in person at the meeting?
A:		You may vote shares you hold directly in your name as the stockholder of record in person at the annual meeting. If you choose to do so, please bring the enclosed proxy card or proof of identification. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the meeting. If you hold your shares in street name, you must obtain a signed proxy from the record holder in order to vote these shares in person at the meeting.
Q:		How can I vote my shares without attending the meeting?
A:		Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct your vote without attending the meeting. If you hold your shares directly, you may vote by granting a proxy. If you hold your shares in street name, you may instruct your broker or nominee to vote your shares by following instructions that the broker or nominee provides for you. Most brokers offer voting over the Internet, by telephone or by mail. Please refer to the instructions included on your proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee.
Q:		May I change my vote?
A:		Yes, you may change your proxy instructions at any time prior to the vote at the annual meeting. If you are a stockholder of record, you must (1) file with Noven’s Corporate Secretary a written notice of revocation or (2) timely deliver a valid, later-dated proxy. For shares you own beneficially, you may change your vote by submitting new voting instructions to your broker or nominee. Your attendance at the meeting will not revoke your previously granted proxy unless you give written notice of revocation to Noven’s Corporate Secretary before the vote at the meeting or you vote by written ballot at the meeting.

Q:		How are votes counted?
A:		In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees. For the other proposals, you may vote “FOR”, “AGAINST” or “ABSTAIN”. If you “ABSTAIN”, it has the same effect as a vote “AGAINST”. If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board.
Q:		What is the voting requirement to approve each of the proposals?
A:		In the election of directors, each director requires the affirmative “FOR” vote of a plurality of those shares represented, in person or by proxy, and entitled to vote at the meeting. The other proposals require the affirmative “FOR” vote of a majority of those shares represented, in person or by proxy, and entitled to vote at the meeting.
Q:		What happens if I do not provide voting instructions to my broker?
A:		If you are a beneficial owner and do not provide the stockholder of record with voting instructions, your broker or other nominee, in its discretion, may either leave your shares unvoted or vote your shares on routine matters. The election of directors and the proposal to ratify the appointment of Deloitte & Touche LLP should be treated as routine matters. The proposals to approve the amendment to the 1999 Plan and the performance goals under the 1999 Plan are not considered routine matters and, as a result, without your voting instructions, your broker or other nominee cannot vote your shares. If your broker or other nominee does not vote your shares, your shares will constitute broker non-votes, as described in “What is the quorum requirement for the meeting?” below. In tabulating the voting result for any particular proposal, shares which constitute broker non-votes are not considered represented at the meeting.
Q:		What does it mean if I receive more than one proxy or voting instruction card?
A:		It means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.
Q:		Where can I find the voting results of the meeting?
A:		We will announce preliminary voting results at the meeting and publish final results in Noven’s quarterly report on Form 10-Q for the second quarter of 2007.
Q:		What happens if additional proposals are presented at the meeting?
A:		Other than the four proposals described in this Proxy Statement, we do not expect any matters to be presented for a vote at the annual meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of Noven’s nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.
Q:		What is the quorum requirement for the meeting?
A:		The quorum requirement for holding the meeting and transacting business is a majority of the outstanding shares entitled to be voted. The shares may be present in person or represented by proxy at the meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence

		of a quorum. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote such shares.
Q:		Who will bear the cost of soliciting votes for the meeting?
A:		Noven will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. However, if you choose to vote over the Internet, you will bear the expenses for your Internet access. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by Noven’s directors, officers, and employees, who will not receive any additional compensation for such solicitation activities. We have retained the services of Georgeson Shareholder Communications, Inc. to aid in the solicitation of proxies (and for certain consulting services related to Proposal 2) for a fee of approximately $11,000 plus per call fees for any individual solicitations and certain out of pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.
Q:		May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as directors?
A:		Yes, you may submit proposals for consideration at future stockholder meetings, including director nominations.
		Stockholder Proposals for Presentation at Meeting: Our By-laws govern the submission of nominations for director or other business proposals that a stockholder wishes to have considered at a meeting of stockholders, but which are not included in Noven’s Proxy Statement for that meeting. Under our By-laws, nominations for director or other business proposals to be addressed at our next annual meeting may be made by a stockholder entitled to vote who has delivered a notice to the Corporate Secretary of Noven no later than the close of business on February 6, 2008 and not earlier than December 8, 2007, which dates are based on the mailing of this Proxy Statement on April 6, 2007. The notice must contain the information required by the By-laws.
		These advance notice provisions are in addition to, and separate from, the requirements that a stockholder must meet in order to have a proposal included in the Proxy Statement under the rules of the Securities and Exchange Commission.
		A proxy granted by a stockholder will give discretionary authority to vote on any matters introduced pursuant to the above advance notice By-law provisions, subject to applicable rules of the Securities and Exchange Commission.
		Stockholder Proposals for Inclusion in Proxy: In order for a stockholder proposal to be considered for inclusion in Noven’s Proxy Statement for next year’s annual meeting, the written proposal must be received by Noven’s Corporate Secretary no later than December 8, 2007. Such proposals also will need to comply with Securities and Exchange Commission regulations regarding the inclusion of stockholder proposals in company sponsored proxy materials.
		Copy of By-law Provisions: You may contact Noven’s Corporate Secretary at Noven’s headquarters for a copy of the relevant By-law provisions regarding the requirements for making stockholder proposals and nominating director candidates.

PROPOSAL 1 — ELECTION OF DIRECTORS

     The seven persons named below were designated by the Board as nominees for election as directors. All of the nominees have served as directors since the last annual meeting. Information regarding the business experience of each nominee and their service on boards of directors of public companies is provided below. All directors are elected annually to serve until the next annual meeting and until their respective successors are elected.

The Board recommends a vote FOR the election to the Board of each of the following nominees.

Sidney Braginsky Director since 1992 Age 69		Mr. Braginsky is President and Chief Executive Officer of Atropos Technology Inc. (consulting and venture capital) and Chairman of Digilab LLC (molecular spectroscopy). From 1970 through 1999, Mr. Braginsky served Olympus America, Inc. in a variety of roles, most recently as President and Chief Operating Officer. Mr. Braginsky serves on the board of directors of Mediscience (optical biopsy development), Diomed Holdings (laser technology), Geneva Acquisition Corporation (acquisitions) and Electro-Optical Sciences, Inc. (surgical and medical instruments).
John G. Clarkson, M.D. Director since 2000 Age 64		Dr. Clarkson is the Executive Director of the American Board of Ophthalmology and the Dean Emeritus and Professor of Ophthalmology, Miller School of Medicine at the University of Miami. From 1995 to 2006, he served as Professor and Senior Vice President for Medical Affairs and Dean, University of Miami School of Medicine. Dr. Clarkson serves as a director of the American Board of Medical Specialties and as a trustee for the Evelyn F. McKnight Brain Research Foundation.
Donald A. Denkhaus Director since 2004 Age 61		Mr. Denkhaus has, since January 2004, served as the executive chairman of TM Systems, LLC (international language services). Since 2005, he has also served as President and Chief Executive Officer of Integrity Risk Advisors (consulting). Mr. Denkhaus was a partner with Arthur Andersen LLP from 1980 to 2002 and served as Arthur Andersen’s audit practice director responsible for Florida and Puerto Rico from 1999 to 2002. For a one-year period in 2002 and 2003, Mr. Denkhaus was employed as a principal with Ernst & Young LLP where he provided audit services and assisted in the transition of Arthur Andersen audit clients and personnel to Ernst & Young.

Pedro P. Granadillo Director since 2004 Age 59		Mr. Granadillo was employed by Eli Lilly and Company (pharmaceuticals) from 1970 until 2004. From 1998 to 2004, he served as Eli Lilly’s Senior Vice President overseeing manufacturing, quality and human resources and from 1993 to 1998, he served as Vice President of Human Resources. Mr. Granadillo serves on the board of directors of First Indiana Corporation (banking), First Indiana Bank, N.A. (banking) and Haemonetics Corporation (medical devices).
Robert G. Savage Director since 2004 Age 53		Mr. Savage has been the President of Strategic Imagery LLC (pharmaceutical consulting) since May 2003. He served as Group Vice President and President — General Therapeutics & Inflammation Business of Pharmacia Corporation from 2002 until its acquisition by Pfizer, Inc. in 2003. From 1996 through 2001, Mr. Savage served Johnson & Johnson in a variety of roles, most recently as Chairman of Johnson & Johnson’s Pharmaceutical Group. From 1985 to 1996, he served Roche Holding AG in a variety of marketing, business development and operations positions, most recently as Vice President — Marketing, Hoffmann-La Roche, Inc. Mr. Savage serves as the non-executive chairman of EpiCept Corporation (pharmaceuticals) and as the presiding director of The Medicines Company, Inc. (pharmaceuticals).
Robert C. Strauss Director since 1997 Age 65		Mr. Strauss has been President, Chief Executive Officer & Chairman of the Board of Noven since June 2001. From December 1997 through September 2000, he served as President & Chief Executive Officer and as a Director of Noven, and from September 2000 to June 2001, he served as Co-Chairman of Noven. From March 1997 to July 1997, he served as President and Chief Operating Officer and a Director of IVAX Corporation (pharmaceuticals). From 1983 to 1997, he served in various executive positions with Cordis Corporation, most recently as its Chairman of the Board, President and Chief Executive Officer.

Wayne P. Yetter Director since 2001 Age 61		Mr. Yetter has been Chief Executive Officer of Verispan LLC (health care information) since September 2005. From November 2004 to September 2005, he served as the Chief Executive Officer of Odyssey Pharmaceuticals, Inc., the specialty pharmaceutical division of Pliva d.d. From 2003 to 2005, he served on the Advisory Board of Alterity Partners (mergers and acquisition advisory firm). From September 2000 to June 2003, Mr. Yetter served as Chairman and Chief Executive Officer of Synavant Inc. (pharmaceutical marketing/ technology services). From 1999 to 2000, Mr. Yetter served as Chief Operating Officer at IMS Health, Inc. (information services for the health care industry). From 1997 to 1999, he served as President and Chief Executive Officer of Novartis Pharmaceuticals Corporation (pharmaceuticals). From 1991 to 1994, Mr. Yetter served as General Manager and then President of Astra Merck, a division of Merck & Co. From 1994 to 1997, he served as President and Chief Executive Officer of Astra Merck, Inc. (pharmaceuticals). Mr. Yetter serves on the board of directors of Matria Healthcare, Inc. (disease management), EpiCept Corporation (pharmaceuticals), Alteon, Inc. (pharmaceuticals) and HAPC, Inc. (healthcare acquisitions).

Governance of the Company

     Pursuant to Noven’s By-Laws and the Delaware General Corporation Law, Noven’s business, property and affairs are managed under the direction of the Board. Members of the Board are kept informed of Noven’s business through discussions with the Chief Executive Officer and other senior officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees.

     The Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. The Board has also adopted Corporate Governance Guidelines which, in conjunction with Noven’s Certificate of Incorporation, By-Laws, committee charters and the Code of Business Conduct and Ethics, form the framework for the governance of Noven. Noven’s Corporate Governance Guidelines and the Code of Business Conduct and Ethics are posted in the “Investor Relations-Governance” section of our company website: http://www.noven.com. If, in the future, we should amend our Code of Business Conduct and Ethics or grant a waiver to our Chief Executive Officer, Chief Financial Officer or principal accounting officer with respect to our Code of Business Conduct and Ethics, then we will post the amendment or a description of the waiver in the “Investor Relations-Governance” section of our company website.

     Noven’s Corporate Governance Guidelines provide that the Board should have a significant majority of independent directors and that the expectation of the Board is that the number of employee directors should not exceed two. The Board has determined that all of the directors, other than Mr. Strauss, are “independent” as such term is defined by the applicable listing standards of the Nasdaq Stock Market. The Board based this determination primarily on a review of the responses of the directors to questions regarding their employment, affiliations and family and other relationships.

     In accordance with Noven’s Corporate Governance Guidelines, the Chairman of the Nominating and Corporate Governance Committee (Mr. Yetter) has been appointed as the lead independent director. As the lead independent director, Mr. Yetter presides at executive sessions of the independent directors, which are held at each regularly scheduled meeting of the Board. The lead independent director is also responsible for coordinating the activities of the other independent directors.

     The Board held five meetings in 2006, and each director who served as a director during 2006 attended more than 75% of the aggregate of the meetings of the Board and the Committees on which he served. We typically schedule a Board meeting in conjunction with our annual meeting and expect that our directors will attend the annual meeting, absent a valid reason, such as a schedule conflict. Last year, six of the seven individuals then serving as directors attended our annual meeting.

     The Board has three standing committees: (1) Nominating and Corporate Governance, (2) Audit and (3) Compensation. The Board has adopted a written charter for each of the three committees. The committee charters are posted in the “Investor Relations-Governance” section of our company website: http://www.noven.com. Under these charters, each of the standing committees has the authority to retain and pay the fees of any advisor it deems necessary to carry out its duties.

Nominating and Corporate Governance Committee

     The Nominating and Corporate Governance Committee provides assistance to the Board in identifying, screening and recommending candidates to serve as directors of Noven. The Committee also oversees matters of corporate governance and provides advice to the Board with respect to Board organization, membership and function.

     The Nominating and Corporate Governance Committee is responsible for proposing to the Board nominees for election or re-election to the Board, based upon recommendations from the Chairman, the Chief Executive Officer, other Board members, and Noven stockholders. Recommendations from stockholders should be submitted to Noven in accordance with the procedures set forth in the Q&A information beginning on page 4. The Nominating and Corporate Governance Committee is empowered to engage third-party executive search firms to assist it in identifying candidates.

     Board candidates are considered by the Nominating and Corporate Governance Committee on a case-by-case basis using various criteria, such as a candidate’s business and industry experience, personal and professional reputation, professional skill, status as an “independent” director, financial expertise and the current composition of the Board. There are no minimum criteria for nomination to the Board, and there are no separate processes or criteria for evaluating candidates nominated by stockholders. After completing this review of the candidate and conducting in-person or telephone interviews, the Nominating and Corporate Governance Committee recommends which candidate or candidates should be nominated for election to the Board. As a general matter, the Nominating and Corporate Governance Committee believes that the continuing services of qualified incumbents promotes stability and continuity in the Board, contributing to the Board’s ability to work as a collective body, while giving Noven the benefit of the familiarity and insight into the Company’s affairs that its directors have accumulated during their tenure. Noven has no term limits or mandatory retirement age with respect to its Board members.

     In addition to identifying, screening and recommending qualified candidates to serve as directors, the Nominating and Corporate Governance Committee:

	•		reviews potential conflicts of interest involving prospective Board members;
	•		annually reviews and makes recommendations to the Board concerning the Corporate Governance Guidelines;
	•		reviews the structure of the Board and the skills and experience of its members;
	•		studies and makes recommendations to the Board concerning the size, composition, compensation and functioning of the Board; and
	•		reviews and makes recommendations to the Board regarding the composition and responsibilities of Board Committees.

     All of the members of the Nominating and Corporate Governance Committee are “independent” as such term is defined by the applicable listing standards of the Nasdaq Stock Market.

Members: Mr. Yetter (Chairperson) and Dr. Clarkson
Meetings held last year: Three

Audit Committee

     The primary responsibility of the Audit Committee is to oversee Noven’s financial reporting processes and the audits of Noven’s financial statements on behalf of the Board and to report the results of its activities to the Board. The Committee:

	•		is directly responsible for the appointment and termination (subject, if applicable, to stockholder ratification), compensation, evaluation and oversight of the work of the independent registered public accounting firm;
	•		oversees the resolution of disagreements between management and the independent registered public accounting firm in the event that they arise, including resolution of disagreements between management and the auditor regarding financial reporting;
	•		reviews with the individual responsible, if any, for the internal audit function, the independent registered public accounting firm and management of Noven the scope of their proposed audits for the current year and the proposed audit procedures to be utilized;
	•		reviews and pre-approves both audit and permissible non-audit services provided by the independent registered public accounting firm and their possible impact on that firm’s independence;
	•		reviews and discusses with the independent registered public accounting firm any relationships between the auditor and Noven that may impact that firm’s independence;
	•		reviews and advises the Board on the selection, performance, compensation and removal of the individual, if any, responsible for Noven’s internal audit function, and the activities, organizational structure, and qualifications of the individuals involved in the internal audit function;
	•		reviews and discusses with management and the independent registered public accounting firm the financial statements of Noven to be included in its periodic filings with the Securities and Exchange Commission and other relevant reports (such as reports of internal controls over financial reporting) or financial information submitted by Noven to any governmental body, or the public;

	•		discusses with management and the independent registered public accounting firm the quality, not just acceptability, of the accounting principles (including accounting policies that may be viewed as critical), and the reasonableness of significant judgments, and reviews and considers with the independent registered public accounting firm the matters required to be discussed by Statement of Auditing Standards No. 61, Communication With Audit Committees, as amended by SASs 89 and 90 and Rule 2-07 of Regulation S-X;
	•		discusses with management and the independent registered public accounting firm Noven’s critical accounting policies and confers with management and the independent registered public accounting firm on significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects on the financial statements of alternative methods permitted by generally accepted accounting principles;
	•		discusses with management and the independent registered public accounting firm as appropriate the integrity of Noven’s financial reporting processes and the quality and adequacy of Noven’s internal controls and disclosure controls, including Noven’s systems to monitor and manage business risk;
	•		reviews management’s assertion on its assessment of the effectiveness of internal controls over financial reporting as of the end of the most recent calendar year and the independent registered public accounting firm’s report on and attestation of management’s assertions, as well as all material issues raised by management’s assessment of internal controls over financial reporting;
	•		meets with the independent registered public accounting firm outside the presence of management, and discusses the independent registered public accounting firm’s evaluation of Noven’s financial and accounting personnel and the cooperation that the independent registered public accounting firm received during the course of the audit;
	•		reviews and, if appropriate, approves or ratifies “related party transactions”;
	•		establishes procedures for the receipt, retention and treatment of complaints regarding Noven’s accounting, internal accounting controls, or auditing matters; and
	•		sets hiring policies for current or former partners, principals, or professional employees of the independent registered public accounting firm.

     The Board of Directors, in its business judgment, has determined that each Audit Committee member is “independent” as such term is defined by the applicable listing standards of the Nasdaq Stock Market and under Section 10A(m)(3) of the Securities Exchange Act of 1934. Noven has identified Donald A. Denkhaus as an “audit committee financial expert” as that term is defined in applicable regulations of the Securities and Exchange Commission.

Members: Messrs. Denkhaus (Chairperson), Braginsky and Granadillo
Meetings held last year: Eight

Compensation Committee

     The Compensation Committee provides assistance to the Board in fulfilling its responsibility to oversee and participate in the creation and administration of Noven’s executive compensation programs and practices. The Committee:

	•		reviews and determines the annual salary, bonus, equity compensation and other benefits of the executive officers of Noven;
	•		reviews, approves and, if appropriate, negotiates all employment, termination and other compensation-related agreements with the executive officers of Noven;
	•		reviews the operation of Noven’s executive compensation programs and establishes and reviews policies for their administration; and
	•		administers Noven’s equity compensation plans including approving grants of equity compensation under Noven’s 1999 Long-Term Incentive Plan.

     All of the members of the Compensation Committee are “independent” within the meaning of the applicable listing standards of the Nasdaq Stock Market.

Members: Dr. Clarkson (Chairperson), Messrs. Granadillo and Savage
Meetings held last year: Six

Related Party Transactions

     The Board has adopted a policy and procedures for the review and approval of transactions in which Noven and its directors, executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. The policy covers any related party transaction that meets the minimum threshold for disclosure in Noven’s proxy statement under the relevant Securities and Exchange Commission rules. The Audit Committee is responsible for reviewing and, if appropriate, approving or ratifying any related party transactions.

     In determining whether to approve, disapprove or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, (i) whether the transaction is on terms no less favorable to Noven than terms that would otherwise be generally available to Noven if the transaction was entered into under the same or similar circumstances with a party unaffiliated with Noven and (ii) the extent of the interest of the related party in the transaction.

     Noven was not a party to any related party transaction that would be required to be disclosed under Item 404 of Regulation S-K in 2006, and historically has not entered into related party transactions since at least 1998.

Stockholder Communication with Directors

     As specified in our Corporate Governance Guidelines, Noven stockholders who want to communicate with the Board or any individual Director may write to:

Noven Pharmaceuticals, Inc.
11960 S.W. 144^th Street
Miami, Florida 33186
Attn: General Counsel

     The letter should include a statement indicating that the sender is a Noven stockholder. The General Counsel will review all stockholder letters to the Board and depending on the subject matter will:

	•		Regularly forward any letter that deals with the function of the Board or committees of the Board (or is otherwise appropriate for Board attention) to the director or directors to whom it is addressed;
	•		Attempt to handle the inquiry directly if it relates to routine or ministerial matters, including requests for information about Noven and stock-related matters; or
	•		Not forward the letter if it relates to an improper or irrelevant topic.

     The General Counsel or another member of management will, at each meeting of the Board, present a summary of all letters received since the last meeting that were not forwarded to the Board and will make those letters available to the Board upon request.

Director Compensation

     The following table provides information on Noven’s compensation and reimbursement practices for non-employee directors. Directors who are employed by Noven do not receive any additional compensation for their Board activities and are not included in this table.

Director Compensation in 2006

																		Change in Pension
																		Value and
																		Non-Qualified
														Non-Equity				Deferred
		Fees Earned or Paid				Stock Awards				Option Awards				Incentive Plan				Compensation				All Other
Name		in Cash				(1)(2)				(2)(3)				Compensation				Earnings				Compensation				Total
Sidney Braginsky		$	29,250			$	75,000			$	0			$	0			$	0			$	0			$	104,250
John G. Clarkson			38,500				75,000				0				0				0				0				113,500
Donald A. Denkhaus			49,000				75,000				0				0				0				0				124,000
Pedro P. Granadillo			41,500				75,000				0				0				0				0				116,500
Robert G. Savage			33,250				75,000				0				0				0				0				108,250
Wayne P. Yetter			34,750				75,000				0				0				0				0				109,750

		Outstanding				Outstanding Option
Name		Stock Awards				Awards
Sidney Braginsky			5,724				37,500
John G. Clarkson			5,724				15,000
Donald A. Denkhaus			5,724				30,000
Pedro P. Granadillo			5,724				22,500
Robert G. Savage			5,724				30,000
Wayne P. Yetter			5,724				40,000

     Noven uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, Noven considers the significant amount of time that directors expend in fulfilling their duties to Noven as well as the skill-level required by Noven of members of the Board. The Board sets director compensation based on the joint recommendations of the Nominating and Corporate Governance Committee and Compensation Committee.

Cash Compensation Paid to Board Members

     Upon re-election to the Board at the 2006 Annual Meeting, each non-employee director received an annual cash retainer of $20,000. Non-employee directors also receive attendance fees of $1,500 for each Board and committee meeting attended in person and $750 for each Board and committee meeting attended by telephone. The chair of the Audit Committee receives an additional annual retainer of $10,000 and each other committee chair receives an additional annual retainer of $5,000. Noven reimburses directors for their expenses incurred related to their Board membership.

Equity Compensation Paid to Board Members

     Commencing in May 2006, Noven began granting restricted stock to non-employee directors under the 1999 Plan in lieu of the stock options that were previously granted to these directors. Under Noven’s current director compensation program, each non-employee director is granted restricted stock valued at $150,000 upon election to the Board and then receives annual grants of restricted stock valued at $100,000 upon re-election to the Board at Noven’s annual meeting. The Board may increase or decrease the value of the awards from time to time based on such factors as the Board deems relevant. The number of shares of restricted stock granted will be determined based on the market price of Noven’s common stock on the date of grant.

Deferred Compensation Program

     Directors can defer receipt of their fees and their restricted stock grants by participating in Noven’s non-qualified deferred compensation plan. A more complete description of the plan is described below on page 30 under “Non-qualified Deferred Compensation in 2006.”

Executive Compensation

Compensation Discussion and Analysis

     This section discusses Noven’s compensation policies and programs applicable to Noven’s Chief Executive Officer (“CEO”), Chief Financial Officer and the three other executive officers named in the Summary Compensation Table on page 26 (collectively, we refer to these five executive officers as the “named executive officers”).

Compensation Philosophy and Objectives

     The core objectives of Noven’s compensation programs are to secure and retain the services of high quality executives and to provide compensation to Noven’s executives that is commensurate and aligned with the company’s performance and long-term stockholder value.

     Noven seeks to achieve these objectives through three principal compensation programs. Each of these programs has a different purpose and is intended to reward achievement of different goals.

Program		Purpose
Base Salary and Benefits		Recruit and retain key employees
Annual Incentive Plan		Reward the achievement of selected financial and non-financial goals
Long-term Incentive Pay		Enhance long-term stockholder value by aligning the interests of executives with with those of stockholders

     These compensation programs are designed to reward current and long-term objectives. Achievement of current objectives is rewarded through base salary and the annual incentive plan, while long-term incentive pay in the form of equity grants is intended to link a significant portion of compensation to long-term stock price appreciation realized by Noven’s stockholders.

     Noven’s overall compensation levels have been chosen to attract the talent needed to achieve and maintain Noven’s position as a leading transdermal drug delivery company. Noven targets cash compensation (base salary and the annual incentive award) at the median and total compensation between the median and the 75^th percentile of peer companies (as discussed below) provided commensurate levels of performance are attained.

     As a general philosophy, the Compensation Committee believes that, as an officer’s position and responsibilities increase, a greater percentage of that officer’s total compensation should be tied to performance, and therefore at risk. Thus, individuals with greater roles and responsibilities associated with achieving Noven’s performance targets bear a greater proportion of the risk that those goals may not be achieved and receive a greater proportion of the reward if those goals are met

or surpassed. In accordance with these principles, incentive compensation (i.e., the annual incentive plan at target and the grant date fair value of the annual equity grant) represented almost 70% of the CEO’s total compensation in 2006 and an average of almost 60% of the total compensation for the other named executive officers in 2006. The mix between the three components of Noven’s executive compensation program is set forth in the following table which shows each component of the named executive officers’ compensation in 2006 as an approximate percentage of their total compensation:

Executive		Base Salary				Annual Incentive Pay				Value of Equity Grant
						(at 100% of target)
Robert C. Strauss			32	%			19	%			49	%
Jeffrey F. Eisenberg			43	%			20	%			37	%
W. Neil Jones			40	%			18	%			40	%
Juan Mantelle			41	%			19	%			40	%
Diane M. Barrett			41	%			18	%			41	%

Role of Compensation Committee

     Noven’s executive compensation policies and programs are established and administered by the Compensation Committee, which consists of three non-employee, independent directors: Dr. John G. Clarkson (Chairman), Pedro P. Granadillo and Robert G. Savage. A discussion of the specific duties and responsibilities of the Compensation Committee under its written charter can be found on page 11.

     The Compensation Committee has retained a compensation consultant to assist the Compensation Committee in the design and implementation of various Noven executive compensation polices and programs. This consultant, Pearl Meyer & Partners (“PM&P”), reports directly to the Compensation Committee and any new projects undertaken by PM&P on behalf of Noven must be approved by the Chairman of the Compensation Committee.

     Noven’s CEO and Vice President—Human Resources work closely with the Compensation Committee on compensation matters and, as discussed in this section, Noven’s CEO recommends executive compensation amounts to the Compensation Committee. The Compensation Committee meets with the CEO to discuss his performance, but ultimately decisions regarding his compensation are made solely based upon the Compensation Committee’s deliberations. The Compensation Committee has final approval of all compensation amounts or formulas applicable to benefit plans in which executive officers participate.

Base Salary

     The Compensation Committee approves each executive officer’s base salary by considering the individual’s responsibility, the individual’s performance and the market data discussed below. Salary levels are typically determined annually at the regularly-scheduled meeting of the Compensation Committee each November, as well as upon a promotion or other change in job responsibility.

     Noven targets base salaries for its officers, including the named executive officers, based generally on the median base salary of peer companies. Since 2001, the Compensation Committee has retained a compensation consultant on a biennial basis to assist in the benchmarking process. The most recent benchmarking study was conducted in 2005 by PM&P, which worked with the Compensation Committee to identify peer companies for benchmarking purposes. Based on this review, the following 20 companies were selected as Noven’s peer companies (the “Peer Companies”):

aaiPharma		Digene		Savient Pharmaceuticals
Able Laboratories		Gene Logic		Sciele Pharma
Albany Molecular Research		Lannett		Serologicals
ArQule		Ligand Pharmaceutical		Stratagene
Bradley Pharmaceuticals		Martek Biosciences		Techne
CNS		Nabi Biopharmaceuticals		Vertex Pharmaceuticals
Connetics		Orchid Biosciences

     These companies, which are primarily drug companies, were chosen primarily on the basis of revenues. The list of Peer Companies is periodically reviewed and updated and companies for which compensation information is no longer available are removed.

     The results of the 2005 benchmarking study indicated that the base salaries of three of the named executive officers closely matched the median base salary of the Peer Companies; one officer’s base salary fell below the Peer Company median and one officer’s base salary was above the Peer Company median. The Compensation Committee reviewed the base salaries of the two executives who were above and below the median and determined they were appropriately compensated at those levels.

     In determining 2007 base salaries for the named executive officers, the Compensation Committee reviewed the results of five salary budget surveys conducted by third-party compensation sources which indicated that the surveyed companies on average expected to increase executive salaries by 3.8% to 4% in 2007. The Compensation Committee also reviewed an assessment by the CEO of the performance of each of the named executive officers (other than the CEO) during 2006. Each named executive officer’s merit rating in these assessments exceeded four (very good) on a scale from one (unsatisfactory) to five (outstanding). Based on the foregoing, the Compensation Committee approved the following 2007 base salaries:

Executive		2007 Base Salary						Increase from 2006
Robert C. Strauss			$	611,251					4	%
Jeffrey F. Eisenberg			$	314,811					4	%
W. Neil Jones			$	253,335					4	%
Juan Mantelle			$	278,718					4	%
Diane M. Barrett			$	273,000					4	%

     As with base salary, benefits are established based upon an assessment of competitive market factors and, to a lesser extent, a determination of what is needed to attract and retain talent. As detailed in the Summary Compensation Table, Noven covers the cost of an airline club membership, and some costs related to financial planning services, executive physical examinations and communication equipment and monthly usage fees for the named executive officers. In addition, named executive officers may participate in Noven’s 401(k) savings plan (which includes a 3% matching contribution) as well as Noven’s health, dental, vision, disability and life insurance plans.

     Beginning in 2006, Noven’s officers, including the named executive officers, became eligible to participate in a deferred compensation plan that allows officers to defer receipt of a portion of their base salary and any annual cash bonus into cash accounts that mirror the gains and/or losses of selected investment funds. Participants have an unsecured contractual commitment by Noven to pay the amounts due under the plan from Noven’s general assets. Deferred amounts are placed in a “rabbi trust”, which is intended to protect the participant if Noven is unwilling to pay plan benefits for any reason other than insolvency or bankruptcy. The deferred compensation plan also allows Noven’s directors the ability to defer restricted stock awards and/or cash fees received for service as a Noven director. The Compensation Committee implemented the deferred compensation plan in 2006 primarily as a means for directors to avoid the necessity of liquidating all or a portion of their restricted stock grant upon vesting, which otherwise could be necessary in order to generate cash proceeds to pay the federal income tax that becomes due upon the vesting of restricted stock. The Compensation Committee extended participation in the deferred compensation plan to officers as the incremental cost of their participation is minimal compared to the tax-planning benefits the plan offers the participating officers.

Annual Incentive Plan

     Noven’s annual incentive plan (“AIP”) is intended to motivate executives by recognizing and rewarding corporate and individual performance. The Compensation Committee believes that performance-based annual incentives, in the form of cash incentives, should represent a meaningful component of Noven’s executive compensation program. For 2006, the AIP award at target levels represented approximately 20% of the total compensation of the named executive officers.

     While the basic framework of the AIP has been similar for the past several years, the Compensation Committee annually reevaluates the parameters of the program based on Noven’s then-current circumstances, as well as the performance and/or goals that the Compensation Committee deems critical for the success of the Company.

     In designing the AIP for 2006, the Compensation Committee bifurcated the AIP into two separate incentive plans. The first of the two plans was a formula-based plan, which represented 75% of an individual’s total target incentive for 2006. The second plan, which represented the remaining 25% of an individual’s total target incentive for 2006, was a discretionary plan based solely on the Compensation Committee’s assessment of Noven’s performance in 2006 with respect to the launch of Daytrana^™, Noven’s new methylphenidate patch for the treatment of Attention Deficit Hyperactivity Disorder*.

     All Noven employees were eligible to participate in both of the 2006 annual incentive plans. The Compensation Committee fixed percentages of base salary as target incentive bonus awards for the named executive officers. The 2006 target AIP awards were set at 60% of base salary for the CEO and at 45% of base salary for each of the other named executive officers. In determining the target AIP awards for the named executive officers, the Compensation Committee considered market data, including the 2005 benchmarking study, which indicated that these target awards approximated the median of similarly-situated companies for which such information is available. Target incentive pay information was not available for the Peer Companies.

2006 Formula-Based AIP

     The 2006 formula-based plan was designed primarily to reward employees in accordance with Noven’s financial performance. The financial measures selected by the Compensation Committee for the 2006 formula-based plan were:

•

Revenues—total combined revenues of Noven and Novogyne (Noven’s joint venture with Novartis) adjusted to exclude:

	•		revenues and expenses from Noven’s Daytrana™ patch, and
	•		Noven’s revenues from Novogyne with respect to products sold first by Noven to Novogyne and then sold by Novogyne to trade customers.

•

Pre-Tax Income—Noven’s pre-tax income adjusted to exclude Daytrana™ and clinical expenses.

For the revenue measure, the Compensation Committee added Novogyne revenues to the calculation since Noven is responsible for the sales and marketing function of the joint venture. For the pre-tax income measure, the Compensation Committee excluded clinical expenses from the calculation given the uncertainties in forecasting these expenses. Each measure is weighted equally for the purposes of calculating AIP outcomes.

     Under the formula-based plan, the reported revenue and pre-tax income for 2006 (as adjusted in the manner discussed above) were compared relative to the budget approved by the Board at the beginning of the year. To the extent that actual revenues and pre-tax income were equal to, greater than or less than the company performance targets, an executive’s incentive award could be equal to, greater than or less than his or her target award (determined on a liner interpolation basis) in accordance with a performance matrix established by the Compensation Committee at the beginning of the year. The performance matrix for the 2006 formula-based plan is summarized as follows:

Pre-Tax Income						Revenue
Performance		Award				Performance				Award
Achieved		(% of Target)				Achieved				(% of Target)
<80%			0	%			<85	%			0	%
80%			50	%			85	%			50	%
90%			75	%			92	%			75	%
100%			100	%			100	%			100	%
120%			120	%			120	%			182	%
140%			180	%			141	%			265	%

     The Compensation Committee established the performance matrix for the 2006 formula-based plan based on its assessment of the expected difficulty of Noven achieving the performance targets in 2006. There was no limit on the maximum percentage payout for either the pre-tax income or revenue measures.

     Noven’s reported financial performance for 2006 resulted in an award equal to 92.7% of an individual’s target award under the formula-based plan, as follows:

Pre-Tax Income				Revenue
Performance		Award		Performance		Award
Achieved		(% of Target)		Achieved		(% of Target)
97.4%		93.5%		97.6%		91.9%

     Consistent with prior years, the 2006 formula-based plan gave the Compensation Committee the discretion to increase or decrease performance goals and target awards to reflect changed circumstances. In 2006, the Compensation Committee did not exercise this discretion in determining the awards for the named executive officers.

     The amount paid to each of the named executive officers under the 2006 formula-based plan is set forth in the column titled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 26.

2006 Daytrana^™ AIP

     The second incentive plan for 2006 was a discretionary plan based on Noven’s performance in 2006 with respect to Noven’s Daytrana^™ patch, as determined by the Compensation Committee. The 2006 Daytrana^™ plan was designed by the Compensation Committee in late 2005 at a time when FDA approval of Noven’s Daytrana^™ patch was uncertain. The uncertainties surrounding this product, including the date of any FDA approval and subsequent product launch, made it difficult to establish any meaningful forecast for 2006 Daytrana^™ revenues and income for inclusion in a formula-based plan. Given the importance of Daytrana^™ marketing approval and product launch to Noven, the Compensation Committee created a separate plan based solely on the Compensation Committee’s assessment of Noven’s performance related to the approval, launch, supply and manufacture of Daytrana^™ in 2006.

     Target performance under the 2006 Daytrana^™ plan was 25% of an individual’s total target incentive. Based on its review of Noven’s performance in 2006, the Compensation Committee, in February 2007, approved an award to each of the named executive officers under the Daytrana^™ plan equal to 18.75 % of their individual total target incentive. The Compensation Committee’s decision to award 18.75% compared to the 25% target incentive primarily reflected an assessment of, among other things, Noven’s performance with respect to obtaining product approval and meeting launch timelines under expedited circumstances, balanced against, among other things, the fact that Noven’s gross margin on Daytrana^™ production in 2006 was significantly below internal forecasts.

     One-half of the incentive awards for the named executive officers (other than Mr. Strauss, as discussed below) under the 2006 formula-based plan and the 2006 Daytrana^™ plan were subject to meeting pre-established individual performance objectives. The Compensation Committee assessed each named executive officer’s performance in meeting his or her individual performance objectives based on a combination of objective standards and subjective assessments of performance. Noven’s executive officers received ratings between 85% and 97% in achieving their respective individual performance objectives and one-half of their incentive awards under the 2006 formula-based plan and 2006 Daytrana^™ plan were reduced by a like percentage.

     The amount paid to each of the named executive officers under the 2006 Daytrana^™ plan is set forth in the column titled “bonus” in the Summary Compensation Table on page 26.

2007 Annual Incentive Plan

     The Compensation Committee has approved a single formula-based incentive plan for 2007. The financial measures selected by the Compensation Committee for the 2007 annual incentive plan are:

	•		Revenues—total combined revenues of Noven and Novogyne adjusted to exclude Noven’s revenues from Novogyne with respect to products sold first by Noven to Novogyne and then sold by Novogyne to trade customers.
	•		Pre-Tax Income—Noven’s pre-tax income adjusted to exclude clinical expenses.

     These revenue and pre-tax income financial targets are based on the 2007 budget approved by the Board. For this and other competitive reasons, Noven has not disclosed the specific dollar values of the financial targets under the 2006 or 2007 annual incentive plan. The performance matrix for the 2007 annual incentive plan is the same as discussed above for the 2006 formula-based plan. Although no assurance can be given, the Compensation Committee believes that it is reasonably likely (though, in no way, assured or certain) that Noven will meet the minimum level of performance to trigger some incentive plan payment (i.e., at levels greater than 50% but less than 100% of target) under the 2007 incentive plan. The Compensation Committee further believes that achievement of the incentive plan’s financial target performance criteria is substantially uncertain and represents an appropriate challenge for Noven and its executive management team.

     The 2007 individual targets for cash incentives as a percentage of base salary for the named executive officers are unchanged from the 2006 levels discussed above. For 2007, 70% of the CEO’s award will be determined based on Noven’s financial performance, with the remaining 30% determined based on the Compensation Committee’s assessment of the CEO’s achievement of individual performance objectives selected by the Compensation Committee, which closely follow the management team objectives discussed below. In 2006 and prior years, the Compensation Committee assigned 100% of the CEO’s incentive opportunity to Noven’s financial performance. The Compensation Committee has allocated 30% of his 2007 incentive award to individual performance objectives as a means to incentivize the CEO to achieve the non-financial strategic objectives selected by the Compensation Committee.

     For the other named executive officers, 50% of the award will be determined based on Noven’s financial performance, 30% will be determined based on the Compensation Committee’s assessment of the executive officer’s performance in achieving his or her individual performance objectives, and the remaining 20% will be determined based on two management team objectives, which relate to the achievement of selected strategic initiatives. The Compensation Committee allocated 20% of the management team’s 2007 incentive award to the management team objectives as a means to incentivize the management team, as a group, to achieve the strategic objectives selected by the Compensation Committee.

Long-Term Incentive Pay

     Long-term incentive pay in the form of equity grants is intended to relate a significant portion of compensation for the named executive officers to long-term price appreciation realized by Noven’s stockholders.

     Starting in 2006, the Compensation Committee began granting stock-settled stock appreciation rights (“SSARs”) in lieu of stock options. A SSAR entitles the holder to receive upon exercise shares of common stock equal in value to the amount by which the underlying stock has appreciated since the right was granted. While SSARs offer participants the same economic benefit as stock options, the Compensation Committee believes SSARs provide considerable additional benefits to Noven, including reduced share dilution and need for share reserves as compared to stock options.

     It is Noven’s practice to make equity awards to selected employees on an annual basis at the November meeting of the Compensation Committee. The date of the November Compensation Committee meeting is established by the Board each year in advance. Under the 1999 Plan, the exercise price of SSARs (and stock options) may not be less than the closing price of Noven’s common stock on the date of grant.

     Noven’s equity grant policies have been impacted by the implementation of new accounting rules that Noven adopted on January 1, 2006. Under these new rules, Noven is required to recognize an expense associated with stock options and SSARs as a non-cash charge on Noven’s Statement of Operations. Beginning in 2005, the Compensation Committee significantly reduced the total value of the annual equity grants to employees in order to reduce the compensation expense associated with these awards. This reduction was accomplished by granting equity awards to fewer employees and by generally reducing the number and value of the individual stock option grants. In 2004, for example, Noven granted equity awards to 300 employees compared to 44 employees in 2006. The following table shows the dollar value (using the Black-Scholes pricing model) of the equity awards granted to the named executive officers as well as for all Noven employees in connection with the annual November grant in 2006 and, for comparison purposes, in 2004.

Executive		2004				2006
Robert C. Strauss		$	1,364,000			$	900,000
Jeffrey F. Eisenberg			682,000				260,000
W. Neil Jones			682,000				260,000
Juan Mantelle			682,000				260,000
Diane M. Barrett			682,000				260,000
Total Annual Grant to Employees		$	10,797,000			$	4,131,400

     The determination of equity grants to the named executive officers in 2005 and 2006 was made with reference to ranges established based on competitive information obtained as part of the 2005 executive compensation study conducted by PM&P as well as the executive’s level of responsibility and the recommendation of the CEO. The Committee targeted long-term incentive grants at the market 75^th percentile based on the Company’s philosophy of having significant incentives in place that provide value based on increases in shareholder values. The combination of market median cash compensation (salary and annual incentive opportunities) and 75^th percentile equity opportunities provides total compensation between the median and market 75^th percentiles.

     The Compensation Committee has indicated that going forward it expects to tie annual equity grants more closely to the individual performance assessments of each of the named executive officers. While the Compensation Committee reviews amounts realized and realizable for past equity awards, these amounts generally do not affect the Compensation Committee’s determination of annual equity awards because the Compensation Committee believes that Noven’s annual equity awards continue to serve their intended purposes to align the interests of Noven’s key personnel with those of its stockholders.

     The Compensation Committee’s determination of equity grants to the CEO is, in addition to the Compensation Committee’s assessment of the CEO’s performance, based on a multiple of the value of the award granted to the other named executive officers. Noven’s benchmarking of peer companies indicates that annual equity awards to CEOs at peer companies average approximately six times those granted to other named executive officers. In 2005 and 2006, the Compensation Committee approved equity awards to Noven’s CEO which were approximately three to four times greater in value than those granted to the other named executive officers.

     The Compensation Committee has delegated limited authority to the CEO and Vice President—Human Resources to grant SSARs to newly-hired employees. This authority, however, does not extend to new hires deemed to be “executive officers” for purposes of Section 16 of the Securities Exchange Act of 1934. For such executive officers, the new hire grant of a SSAR must be approved by the Compensation Committee at a meeting of the Compensation Committee.

     Noven’s insider trading policy forbids hedging or monetization transactions, such as zero-cost collars and forward sale contracts. Noven’s policies do not include share-retention or equity ownership requirements for its executive officers. Noven’s Board plans to consider, in 2007, implementing share-retention and equity ownership guidelines for executive officers.

     Noven’s current form of equity award agreements contain a forfeiture or clawback provision. Under these provisions, executives who violate any non-competition, confidentiality or other obligation owed to Noven will forfeit any outstanding award as of the date of the violation and will have to return any gains realized in the twelve months prior to such violation. These provisions serve to protect Noven’s intellectual property and human capital and help ensure that executives act in the best interests of Noven and its stockholders.

Change of Control and Post-Termination Arrangements

     Noven has entered into an employment agreement with Mr. Strauss as Noven’s President and CEO. This agreement expires on December 31, 2007 and will continue for consecutive one-year terms unless it is terminated by either party under certain conditions. Under this agreement, Mr. Strauss is entitled to a lump sum payment of up to 2.75 times his then “annual base salary” and “highest annual bonus” upon termination “without cause” or for “good reason”. Mr. Strauss’ employment agreement, including its definition of “change of control” and other key terms, is more fully described on pages 27 and 32 of this Proxy Statement

     Noven has separately entered into change of control employment agreements with 11 of its officers, including the named executive officers (other than Mr. Strauss). These agreements, which are more fully described beginning on page 35 of this Proxy Statement, become effective if a change of control occurs during the three-year period that commences on the execution of the agreement. The change of control employment agreements are intended to further the interests of Noven’s stockholders by providing for continuity of management in the event of a change of control of Noven. In 2005, the Compensation Committee engaged PM&P to review the terms of the change of control employment agreements and, based on recommendations from PM&P, made a number of changes to the agreements that generally made the agreement more favorable to Noven. In 2006, the Compensation Committee renewed these agreements for each of the 11 officers, which had the effect of extending the three-year term of the agreements to November 2009.

     In the event that any payments made in connection with a change of control under Mr. Strauss’ employment agreement or the change of control employment agreements for the other named executive officers would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), Noven will “gross-up” the officer’s compensation for all federal, state and local income and excise taxes and any penalties and interest thereon.

     Awards (including SSARs and stock options) granted under the 1999 Plan vest immediately upon a “change of control”. The definition of a “change of control” under these awards is substantially the same as the definition “change of control” described on page 35 with respect to the change of control employment agreements.

Internal Revenue Code Limits on Deductibility of Compensation

     Section 162(m) of the Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s chief executive officer and four other most highly compensated executive officers as of the end of any fiscal year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.

     The Compensation Committee believes that it is generally in Noven’s best interest to attempt to structure performance-based compensation, including stock option grants or performance-based restricted stock or restricted stock unit awards and annual bonuses, to executive officers who may be subject to Section 162(m) in a manner that satisfies the statute’s requirements. However, the Compensation Committee recognizes the need to retain flexibility to make compensation decisions that may not meet Section 162(m) standards when necessary to enable the Company to meet its overall objectives, even if the Company may not deduct all of the compensation. Accordingly, the Compensation Committee may approve compensation arrangements for certain officers that are not fully deductible. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding Noven’s efforts, that compensation intended by the Compensation Committee to satisfy the requirements for deductibility under Section 162(m) does in fact do so. Noven’s executive compensation in 2006 was deductible under Section 162(m).

     The agenda for the 2007 annual meeting of stockholders includes a proposal to approve the general performance goals for incentive and other awards intended to qualify as performance-based compensation under Section 162(m). If this proposal is approved at Noven’s 2007 annual meeting of stockholders, it is expected that annual cash incentive paid to the CEO and the other named executives will be eligible to qualify as performance-based compensation under Section 162(m) beginning with the 2008 annual incentive plan.

Compensation Committee Report

     The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee
John G. Clarkson, M.D., Chairperson
Pedro P. Granadillo
Robert G. Savage

Summary Compensation Table

     The table below discloses compensation received by Noven’s CEO and Chief Financial Officer and its three other most highly paid executive officers for the fiscal year ended December 31, 2006. Noven does not have employment agreements with any of the named executive officers, except for the CEO.

																										Change in
																										Pension
																										Value and
																						Non-Equity				Non-Qualified
																						Incentive Plan				Deferred				All Other
Name and Principal										Bonus								Option Awards				Compensation				Compensation				Compensation
Position		Year				Salary				(1)				Stock Awards				(2) (3)				(4)				Earnings				(5)				Total
Robert C. Strauss			2006			$	587,741			$	66,121			$	0			$	554,231			$	245,129			$	0			$	21,857			$	1,475,079
President, Chief Executive Officer & Chairman (6)
Diane M. Barrett			2006				262,500				21,041				0				223,116				78,005				0				19,394				604,056
Vice President & Chief Financial Officer
Jeffrey F. Eisenberg			2006				302,702				24,902				0				223,116				92,319				0				20,758				663,797
Senior Vice President — Strategic Alliances
W. Neil Jones			2006				243,591				20,142				0				210,144				74,672				0				20,345				568,894
Vice President — Marketing & Sales
Juan A. Mantelle			2006				267,998				20,917				0				210,144				77,543				0				18,407				595,009
Vice President & Chief Technical Officer

		401(k) Matching												Other
Name		Contributions				Auto Allowance				Life Insurance				Perquisites				Total
R. Strauss		$	6,600			$	10,200			$	1,224			$	3,833			$	21,857
D. Barrett			6,600				7,200				757				4,837				19,394
J. Eisenberg			6,600				7,200				873				6,085				20,758
N. Jones			6,600				7,200				703				5,842				20,345
J. Mantelle			6,600				7,200				772				3,835				18,407

		These items include matching contributions made by Noven under its 401(k) Employee Savings Plan (a plan providing for broad-based employee participation), a non-accountable auto allowance, insurance premiums paid by Noven for life insurance for the benefit of the named executive officers, and the following additional perquisites: airline club membership, financial planning services, physical examinations, and communication equipment and related usage fees. The value of these perquisites is calculated based on their incremental cost to Noven, which is determined based on the actual cost of providing these perquisites.
(6)		In November 2003, Noven entered into an amended and restated employment agreement with Robert C. Strauss as President and CEO. The current term of this agreement expires on December 31, 2007 and will continue for consecutive one-year terms unless it is terminated by either party under certain conditions. Mr. Strauss’s initial base salary under this agreement was $522,500 per annum, subject to further increases and incentive compensation at the sole discretion of the Board. Once increased, the base salary may not be decreased. Under his agreement, Mr. Strauss receives a non-accountable auto allowance of $850 per month, up to $2,500 of annual financial and tax planning services and an annual physical examination. He is also entitled to participate in all incentive, savings and retirement plans, as well as welfare benefit plans that are available to executive officers of Noven. The agreement also contains termination and change-in-control provisions, which are more fully described beginning on page 32 below, under “Change of Control and Termination Payments.”

Grants of Plan-Based Awards in 2006

																														All Other
																														Option/SSAR				Exercise				Grant Date
																														Awards:				or Base				Fair Value
																														Number of				Price of				of Stock and
																														Securities				Option/				Option/
																														Underlying				SSAR				SSAR
																														Options/				Awards				Awards
						Estimated Possible Payouts Under												Estimated Future Payouts Under												SSARs (2)				(3)				(4)
						Non-Equity Incentive Plan Awards (1)												Equity Incentive Plan Awards												(#)				($/Sh)				($)
		Grant				Threshold				Target				Maximum				Threshold				Target				Maximum
Name		Date				($)				($)				($)				(#)				(#)				(#)
Robert C. Strauss			11/14/06			$	132,242			$	264,483				N/A				0				0				0				81,441			$	22.83			$	900,000
Diane M. Barrett			11/14/06				44,297				88,594				N/A				0				0				0				23,527			$	22.83			$	260,000
Jeffrey F. Eisenberg			11/14/06				51,081				102,162				N/A				0				0				0				23,527			$	22.83			$	260,000
W. Neil Jones			11/14/06				41,106				82,212				N/A				0				0				0				23,527			$	22.83			$	260,000
Juan A. Mantelle			11/14/06				45,225				90,449				N/A				0				0				0				23,527			$	22.83			$	260,000

Outstanding Equity Awards at 2006 Year-End

		Option/SSAR Awards
										Equity Incentive
		Number Of				Number of				Plan Awards: Number
		Securities				Securities				of Securities
		Underlying				Underlying				Underlying
		Unexercised				Unexercised				Unexercised
		Options/SSARs (#)				Options/SSARs (#)				Unearned				Option/SSAR
		Exercisable				Unexercisable				Options/SSARs				Exercise Price				Option/SSAR
Name		(1)				(1)				(#)				($)				Expiration Date
Robert C. Strauss			0				81,441	(2)			0			$	22.83				11/13/2013
			26,851				80,556	(3)			0			$	13.68				11/14/2012
			100,000				0	(4)			0			$	22.60				11/10/2011
			60,000				40,000	(5)			0			$	10.45				11/04/2010
			96,000				24,000	(5)			0			$	13.11				09/04/2009
			90,000				0	(4)			0			$	15.13				11/05/2008
			120,000				0	(4)			0			$	33.75				11/13/2007
Diane M. Barrett			0				23,527	(2)			0			$	22.83				11/13/2013
			7,716				23,148	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			0				24,000	(5)			0			$	10.45				11/04/2010
			20,000				10,000	(5)			0			$	13.11				09/04/2009
			50,000				0	(4)			0			$	15.13				11/05/2008
			20,000				0	(4)			0			$	33.75				11/13/2007
			20,000				0	(4)			0			$	32.0625				08/20/2007
Jeffrey F. Eisenberg			0				23,527	(2)			0			$	22.83				11/13/2013
			7,716				23,148	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			0				24,000	(5)			0			$	10.45				11/04/2010
			10,000				10,000	(5)			0			$	13.11				09/04/2009
			50,000				0	(4)			0			$	15.13				11/05/2008
			35,000				0	(4)			0			$	33.75				11/13/2007
W. Neil Jones			0				23,527	(2)			0			$	22.83				11/13/2013
			7,716				23,148	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			10,000				20,000	(5)			0			$	10.45				11/04/2010
			0				10,000	(5)			0			$	13.11				09/04/2009
			8,000				0	(4)			0			$	15.13				11/05/2008
			35,000				0	(4)			0			$	33.75				11/13/2007
Juan A. Mantelle			0				23,527	(2)			0			$	22.83				11/13/2013
			7,716				23,148	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			1				20,000	(5)			0			$	10.45				11/04/2010
			0				10,000	(5)			0			$	13.11				09/04/2009
			40,000				0	(4)			0			$	15.13				11/05/2008
			20,001				0	(4)			0			$	33.75				11/13/2007

Option Exercises and Stock Vested in 2006

		Option Awards								Stock Awards
		Number of								Number of
		Shares								Shares
		Acquired				Value Realized				Acquired				Value Realized
		on Exercise				on Exercise (1)				on Vesting				on Vesting
Name		(#)				($)				(#)				($)
Robert C. Strauss			102,500			$	987,021				0				0
Diane M. Barrett			56,000			$	757,957				0				0
Jeffrey F. Eisenberg			98,600			$	1,187,631				0				0
W. Neil Jones			79,252			$	951,123				0				0
Juan A. Mantelle			75,404			$	818,857				0				0

Non-qualified Deferred Compensation in 2006

     Effective January 1, 2006, Noven established a non-qualified deferred compensation plan available to members of its Board of Directors and a group of Noven’s officers selected by Noven’s Employee Benefits Committee. The plan permits participants to defer receipt of part of their current compensation to a later date as part of their personal retirement or financial planning. Participants may elect to defer, as applicable, portions of their director fees, base salary, bonus, long-term incentive plan awards, and/or restricted stock grants. Deferral elections are made annually and expire at the end of each plan year. Deferral elections are irrevocable once made. Benefit security for the plan is provided by a rabbi trust.

     Deferrals are subject to minimum and maximum amount requirements, as defined in the plan. An employee participant that elects to participate in the plan in a given plan year must defer at least an aggregate amount of $4,000 from his or her base salary, bonus and/or long-term incentive plan awards; a director participant must defer at least $4,000 of his or her director fees. No minimum deferral is required for restricted stock grants, and a restricted stock recipient may defer up to 100% of a restricted stock grant. Deferring a grant of restricted stock does not alter the timetable for vesting of that grant. An employee participant may defer up to 75% of his or her salary and up to 100% of his or her bonus and/or long-term incentive plan awards; director participants may defer up to 100% of their director fees.

     Participants are at all times 100% vested in their deferral accounts. For cash deferrals, participants may elect one or more measurement funds selected by the Employee Benefits Committee (which are based on certain mutual funds) for the purpose of crediting or debiting additional amounts to a participant’s deferral account balance. Restricted stock deferrals are automatically allocated to a Noven stock unit measurement fund.

     Amounts deferred may be paid out to participants in scheduled distributions, which may not be any sooner than two full plan years after the year to which the deferral election relates. A participant may also elect to receive a distribution if such participant experiences an unforeseeable financial emergency (as defined in the plan) or in the event of a change in control of Noven. Distributions may also be made upon a participant’s retirement, termination, disability or death.

     Noven may terminate the plan at any time; however, upon termination, benefits would be paid as defined in the plan.

     The following table sets forth the amounts deferred in 2006 under the non-qualified deferred compensation plan by the named executive officers.

		Executive				Registrant				Aggregate				Aggregate				Aggregate
		Contributions in				Contributions in				Earnings				Withdrawals/				Balance at
Name		2006 (1) (2) ($)				2006 ($)				in 2006 (3) ($)				Distributions ($)				12/31/06 (4) ($)
Robert C. Strauss		$	0			$	0			$	0			$	0			$	0
Diane M. Barrett		$	0			$	0			$	0			$	0			$	0
Jeffrey F. Eisenberg		$	30,000			$	0			$	468			$	0			$	30,468
W. Neil Jones		$	0			$	0			$	0			$	0			$	0
Juan A. Mantelle		$	15,877			$	0			$	1,094			$	0			$	16,971

Change of Control and Termination Payments

     The tables below disclose the amounts payable to each of the named executive officers upon different termination scenarios. The amounts shown assume that such termination was effective as of December 31, 2006, and are estimates of the amounts which would have been paid out to the executives upon their termination at such date. The actual amounts to be paid out can only be determined at the time of such executive’s actual separation from Noven.

     The amounts shown in these tables do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment such as accrued salary and vacation pay, and disability benefits (if applicable). The amounts shown in these tables also do not include distributions of plan balances under Noven’s non-qualified deferred compensation plan. These amounts are shown in the table on page 31.

     Noven’s 1999 Long-Term Incentive Plan provides for the acceleration of vesting of unvested equity awards upon a change of control. These tables include in the applicable columns the value of the gain realized if the named executive officer were to exercise all unvested equity awards on the date of termination, based on the price of Noven’s common stock on December 31, 2006 ($25.45).

Chief Executive Officer, President and Chairman — Robert Strauss

						Termination Prior				Termination After
						to Change in				Change in Control
Benefits and Payments Upon						Control (other than				(other than for
Termination		Retirement				for cause)				cause)				Death				Disability
Cash Payments			N/A			$	2,330,542			$	3,204,496			$	293,871				N/A
Post-Employment Medical Benefits		$	205,197				205,197				205,197				N/A			$	205,197
Acceleration of Equity Awards			N/A				N/A				2,057,680				N/A				N/A
Excise Tax and Gross-Ups			N/A				N/A				0				N/A				N/A
Total		$	205,197			$	2,535,739			$	5,467,373			$	293,871			$	205,197

     Robert Strauss, Noven’s CEO, President and Chairman, is the only employee at Noven with an employment agreement. Mr. Strauss’s employment agreement provides that, upon termination without “cause” or for “good reason” (as defined in the agreement), including, termination after a “change of control”, Mr. Strauss would be entitled to a lump sum payment of up to either 2 times (after a termination without “cause” or by Mr. Strauss for “good reason”) or 2.75 times (after a change of control) his then “annual base salary” and “highest annual bonus” (as defined in the agreement). “Change of control”, as defined in the agreement, would occur upon:

	•		the acquisition of 30% or more of the then issued and outstanding shares of common stock of Noven by any person, entity or group (within the meaning of Section 13(d)(3) or 14(d) of the Securities Exchange Act of 1934);
	•		the reconstitution of the Board whereby the existing members cease to constitute at least a majority of the Board (other than a reconstitution approved by the incumbent Board);

	•		the approval of a reorganization or consolidation, where stockholders of Noven do not, immediately thereafter, own more than 51% of the combined voting power of the reorganized, merged or consolidated corporation;
	•		a liquidation or dissolution of Noven; or
	•		a sale or distribution of all or substantially all the assets of Noven.

     The agreement defines “cause” as:

	•		any material act of personal dishonesty taken by Mr. Strauss at the expense of Noven or which is likely to bring significant disrepute to Noven;
	•		any violation by Mr. Strauss of his material obligations under the agreement;
	•		Mr. Strauss’s conviction for any criminal act which is a felony or a misdemeanor involving moral turpitude; or
	•		a material breach of Mr. Strauss’s confidentiality agreement with Noven.

     “Good reason” is defined as:

	•		the assignment to Mr. Strauss of any duties inconsistent with his position, or which otherwise result in a significant diminution of his position;
	•		any failure by Noven to comply with certain provisions of the agreement relating to successors and assigns and Mr. Strauss’s pay and benefits;
	•		Noven requiring Mr. Strauss to be based at any office or location outside of South Florida; or
	•		any voluntary termination by Mr. Strauss during the six months following a change of control.

     In the event that any payments made in connection with a termination would be subjected to the excise tax imposed by Section 4999 of the Code, Noven will “gross-up” Mr. Strauss’s compensation for all excise taxes and any penalties and interest thereon. As noted in the table above, no excise tax would have been due for a termination of Mr. Strauss’ employment following a change of control as of December 31, 2006.

     Mr. Strauss is also entitled to receive post-termination medical benefits for himself and his wife for the remainder of his life upon his termination. The amount shown above for this benefit was estimated using the RP-2000 male mortality table and Mr. Strauss’s age on December 31, 2006. Noven does not have an official retirement policy; Mr. Strauss would not be entitled to receive any special termination benefits upon his retirement other than the post-termination medical benefits for the remainder of his life. In the event of the termination of his employment agreement due to Mr. Strauss’s death, his estate is entitled to receive six months of his base salary.

Other Executive Officers

Diane Barrett

Executive		Termination Prior								Voluntary by				Without Cause or by
Benefits and		to Change in								Executive not for				Executive for Good
Payments Upon		Control (other than				Additional Benefits				Good Reason (after				Reason (after				Death (after Change				Disability (after
Termination		for cause)				on Retirement				Change in Control)				Change in Control)				in Control)				Change in Control)
Cash Payments		$	361,546				N/A			$	139,615			$	943,845			$	139,615			$	139,615
Welfare Benefit Continuation			5,021				N/A				N/A				28,622				28,622			$	28,622
Outplacement Benefits			25,000				N/A				N/A				25,000				N/A				N/A
Acceleration of Equity Awards			N/A				N/A				817,508				817,508				817,508				817,508
Excise Tax and Gross-Ups			N/A				N/A				0				428,892				0				0
Total		$	391,567				N/A			$	957,123			$	2,243,867			$	985,745			$	985,745

Jeffrey Eisenberg

Executive		Termination Prior								Voluntary by				Without Cause or by
Benefits and		to Change in								Executive not for				Executive for Good
Payments Upon		Control (other than				Additional Benefits				Good Reason (after				Reason (after				Death (after Change				Disability (after
Termination		for cause)				on Retirement				Change in Control)				Change in Control)				in Control)				Change in Control)
Cash Payments		$	419,923				N/A			$	162,545			$	1,093,039			$	162,545			$	162,545
Welfare Benefit Continuation			14,258				N/A				N/A				48,348				48,348				48,348
Outplacement Benefits			25,000				N/A				N/A				25,000				N/A				N/A
Acceleration of Equity Awards			N/A				N/A				817,493				817,493				817,493				817,493
Excise Tax and Gross-Ups			N/A				N/A				0				462,416				0				0
Total		$	459,181				N/A			$	980,038			$	2,446,296			$	1,028,386			$	1,028,386

W. Neil Jones

Executive		Termination Prior								Voluntary by				Without Cause or by
Benefits and		to Change in								Executive not for				Executive for Good
Payments Upon		Control (other than				Additional Benefits				Good Reason (after				Reason (after				Death (after Change				Disability (after
Termination		for cause)				on Retirement				Change in Control)				Change in Control)				in Control)				Change in Control)
Cash Payments		$	342,005				N/A			$	128,695			$	873,266			$	128,695			$	128,695
Welfare Benefit Continuation			12,374				N/A				N/A				44,240				44,240				44,240
Outplacement Benefits			25,000				N/A				N/A				25,000				N/A				N/A
Acceleration of Equity Awards			N/A				N/A				757,493				757,493				757,493				757,493
Excise Tax and Gross-Ups			N/A				N/A				0				0				0				0
Total		$	379,379				N/A			$	886,188			$	1,699,999			$	930,428			$	930,428