EX-10.29






Exhibit 10.29




Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

Master Plan Document
 






Effective January 1, 2006




As Amended and Restated November 18, 2008




 









 






Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	ARTICLE 1
	 	Definitions	 	1
	 
	 	 	 	 
	ARTICLE 2
	 	Selection, Enrollment, Eligibility	 	10
	 
	 	 	 	 
	2.1
	 	Selection by Committee	 	10
	2.2
	 	Enrollment and Eligibility Requirements; Commencement of Participation	 	10
	 
	 	 	 	 
	ARTICLE 3
	 	Deferral Commitments/Company Contribution Amounts/Company Restoration	 	 
	 
	 	Matching Amounts/Restricted Stock Amounts /Vesting/Crediting/Taxes	 	11
	 
	 	 	 	 
	3.1
	 	[Intentionally Omitted]	 	11
	3.2
	 	Maximum Deferral	 	11
	3.3
	 	Election to Defer; Effect of Election Form	 	12
	3.4
	 	Withholding and Crediting of Annual Deferral Amounts	 	13
	3.5
	 	Company Contribution Amount	 	14
	3.6
	 	Company Restoration Matching Amount	 	14
	3.7
	 	Restricted Stock Amount	 	14
	3.8
	 	Crediting of Amounts after Benefit Distribution	 	15
	3.9
	 	Vesting	 	15
	3.10
	 	Crediting/Debiting of Account Balances	 	16
	3.11
	 	FICA and Other Taxes	 	18
	 
	 	 	 	 
	ARTICLE 4
	 	Scheduled Distribution; Unforeseeable Emergencies	 	19
	 
	 	 	 	 
	4.1
	 	Scheduled Distribution	 	19
	4.2
	 	Postponing Scheduled Distributions	 	19
	4.3
	 	Other Benefits Take Precedence Over Scheduled Distributions	 	20
	4.4
	 	Unforeseeable Emergencies	 	20
	 
	 	 	 	 
	ARTICLE 5
	 	Change In Control Benefit	 	21
	 
	 	 	 	 
	5.1
	 	Change in Control Benefit	 	21
	5.2
	 	Payment of Change in Control Benefit	 	21
	 
	 	 	 	 
	ARTICLE 6
	 	Retirement Benefit	 	22
	 
	 	 	 	 
	6.1
	 	Retirement Benefit	 	22
	6.2
	 	Payment of Retirement Benefit	 	22
	 
	 	 	 	 
	ARTICLE 7
	 	Termination Benefit	 	23
	 
	 	 	 	 
	7.1
	 	Termination Benefit	 	23
	7.2
	 	Payment of Termination Benefit	 	23






-i-









 






Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 





	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	ARTICLE 8
	 	Disability Benefit	 	24
	 
	 	 	 	 
	8.1
	 	Disability Benefit	 	24
	8.2
	 	Payment of Disability Benefit	 	24
	 
	 	 	 	 
	ARTICLE 9
	 	Death Benefit	 	24
	 
	 	 	 	 
	9.1
	 	Death Benefit	 	24
	9.2
	 	Payment of Death Benefit	 	24
	 
	 	 	 	 
	ARTICLE 10
	 	Beneficiary Designation	 	24
	 
	 	 	 	 
	10.1
	 	Beneficiary	 	24
	10.2
	 	Beneficiary Designation; Change; Spousal Consent	 	25
	10.3
	 	Acknowledgement	 	25
	10.4
	 	No Beneficiary Designation	 	25
	10.5
	 	Doubt as to Beneficiary	 	25
	10.6
	 	Discharge of Obligations	 	25
	 
	 	 	 	 
	ARTICLE 11
	 	Leave of Absence	 	26
	 
	 	 	 	 
	11.1
	 	Paid Leave of Absence	 	26
	11.2
	 	Unpaid Leave of Absence	 	26
	11.3
	 	Leaves Resulting in Separation from Service	 	26
	 
	 	 	 	 
	ARTICLE 12
	 	Termination of Plan, Amendment or Modification	 	26
	 
	 	 	 	 
	12.1
	 	Termination of Plan	 	26
	12.2
	 	Amendment	 	27
	12.3
	 	Plan Agreement	 	27
	12.4
	 	Effect of Payment	 	27
	 
	 	 	 	 
	ARTICLE 13
	 	Administration	 	28
	 
	 	 	 	 
	13.1
	 	Committee Duties	 	28
	13.2
	 	Administration Upon Change In Control	 	28
	13.3
	 	Agents	 	28
	13.4
	 	Binding Effect of Decisions	 	28
	13.5
	 	Indemnity of Committee	 	28
	13.6
	 	Employer Information	 	28
	 
	 	 	 	 
	ARTICLE 14
	 	Other Benefits and Agreements	 	29
	 
	 	 	 	 
	14.1
	 	Coordination with Other Benefits	 	29
	 
	 	 	 	 






-ii-









 






Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 





	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	ARTICLE 15
	 	Claims Procedures	 	29
	 
	 	 	 	 
	15.1
	 	Presentation of Claim	 	29
	15.2
	 	Notification of Decision	 	29
	15.3
	 	Review of a Denied Claim	 	30
	15.4
	 	Decision on Review	 	30
	15.5
	 	Legal Action	 	31
	 
	 	 	 	 
	ARTICLE 16
	 	Trust	 	31
	 
	 	 	 	 
	16.1
	 	Establishment of the Trust	 	31
	16.2
	 	Interrelationship of the Plan and the Trust	 	31
	16.3
	 	Distributions From the Trust	 	31
	 
	 	 	 	 
	ARTICLE 17
	 	Miscellaneous	 	31
	 
	 	 	 	 
	17.1
	 	Status of Plan	 	31
	17.2
	 	Unsecured General Creditor	 	31
	17.3
	 	Employer’s Liability	 	32
	17.4
	 	Nonassignability	 	32
	17.5
	 	Not a Contract of Employment	 	32
	17.6
	 	Furnishing Information	 	32
	17.7
	 	Terms	 	32
	17.8
	 	Captions	 	32
	17.9
	 	Governing Law	 	32
	17.10
	 	Notice	 	32
	17.11
	 	Successors	 	33
	17.12
	 	Spouse’s Interest	 	33
	17.13
	 	Validity	 	33
	17.14
	 	Incompetent	 	33
	17.15
	 	Domestic Relations Orders	 	33
	17.16
	 	Distribution in the Event of Income Inclusion Under Code Section 409A	 	33
	17.17
	 	Deduction Limitation on Benefit Payments	 	34
	17.18
	 	Insurance	 	34







-iii-











 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 





NOVEN PHARMACEUTICALS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

Effective January 1, 2006

Amended and Restated September 15, 2006

Amended and Restated November 18, 2008




Purpose




     The purpose of this Plan is to provide specified benefits to Directors and a select group of
management or highly compensated Employees who contribute materially to the continued growth,
development and future business success of Noven Pharmaceuticals, Inc., a Delaware corporation, and
its subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and
for purposes of Title I of ERISA.



     The Plan is intended to comply with all applicable law, including Code Section 409A and
related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with
this intention. This Plan was adopted effective January 1, 2006 and has been amended and restated
as of September 15, 2006 and again as of November 18, 2008 to reflect certain changes necessitated by
Treasury Regulations promulgated pursuant to Code Section 409A.



ARTICLE 1

Definitions




     For the purposes of this Plan, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated meanings:




	1.1	 	“Account Balance” shall mean, with respect to a Participant, an entry on the records of the
Employer equal to the sum of (i) the Deferral Account balance, (ii) the Company Contribution
Account balance, (iii) the Company Restoration Matching Account balance, and (iv) the
Restricted Stock Account balance. The Account Balance shall be a bookkeeping entry only and
shall be utilized solely as a device for the measurement and determination of the amounts to
be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
	 
	 	 	      If a Participant is both an Employee and a Director and participates in the Plan in
each capacity, then separate Account Balances shall be established for such Participant as a
device for the measurement and determination of the (a) amounts deferred under the Plan that
are attributable to the Participant’s status as an Employee, and (b) amounts deferred under
the Plan that are attributable to the Participant’s status as a Director.
	 
	1.2	 	“Annual Deferral Amount” shall mean that portion of a Participant’s Base Salary, Bonus,
Director Fees and LTIP Amounts that a Participant defers in accordance with Article 3 for any
one Plan Year, without regard to whether such amounts are withheld and credited




-1-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	during such Plan Year. In the event of a Participant’s Retirement, Disability, death or Termination of
Employment prior to the end of a Plan Year, such year’s Annual Deferral Amount shall be the
actual amount withheld prior to such event.
	 
	1.3	 	“Annual Installment Method” shall be an annual installment payment over the number of years
selected by the Participant in accordance with this Plan, calculated as follows: (i) for the
first annual installment, the Participant’s vested Account Balance shall be calculated as of
the close of business on or around the Participant’s Benefit Distribution Date, as determined
by the Committee in its sole discretion, and (ii) for remaining annual installments, the
Participant’s vested Account Balance shall be calculated on every anniversary of such
calculation date, as applicable. Each annual installment shall be calculated by multiplying
this balance by a fraction, the numerator of which is one and the denominator of which is the
remaining number of annual payments due the Participant. By way of example, if the
Participant elects a ten (10) year Annual Installment Method for the Retirement Benefit, the
first payment shall be 1/10 of the vested Account Balance, calculated as described in this
definition. The following year, the payment shall be 1/9 of the vested Account Balance,
calculated as described in this definition. Shares of Stock that shall be distributable from
the Restricted Stock Account shall be distributable in shares of actual Stock in the same
manner previously described. However, the Committee may, in its sole discretion, adjust the
annual installments in order to distribute whole shares of actual Stock.
	 
	1.4	 	“Base Salary” shall mean the annual cash compensation relating to services performed during
any calendar year, excluding distributions from nonqualified deferred compensation plans,
bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive
payments, non-monetary awards, director fees and other fees, and automobile and other
allowances paid to a Participant for employment services rendered (whether or not such
allowances are included in the Employee’s gross income). Base Salary shall be calculated
before reduction for compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to
include amounts not otherwise included in the Participant’s gross income under Code Sections
125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided,
however, that all such amounts will be included in compensation only to the extent that had
there been no such plan, the amount would have been payable in cash to the Employee.
	 
	1.5	 	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated
in accordance with Article 10, that are entitled to receive benefits under this Plan upon the
death of a Participant.
	 
	1.6	 	“Beneficiary Designation Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to designate one or
more Beneficiaries.
	 
	1.7	 	“Benefit Distribution Date” shall mean the date that triggers distribution of a Participant’s
vested Account Balance. A Participant’s Benefit Distribution Date shall be determined upon
the occurrence of any one of the following:




-2-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	(a)	 	If the Participant Retires, his or her Benefit Distribution Date shall be






	 	(i)	 	the last day of the six-month period immediately following the
date on which the Participant Retires if the Participant is a Key Employee, and
	 
	 	(ii)	 	for all other Participants, the date on which the Participant
Retires;
	 
	 	(iii)	 	provided, however, in the event the Participant changes
his or her Retirement
Benefit election in accordance with Section 6.2(b), his or her Benefit
Distribution Date shall be postponed in accordance with Section 6.2(b); or






	 	(b)	 	If the Participant experiences a Termination of Employment, his or her Benefit
Distribution Date shall be






	 	(i)	 	the last day of the six-month period immediately following the
date on which the Participant experiences a Termination of Employment if the
Participant is a Key Employee, and
	 
	 	(ii)	 	for all other Participants, the date on which the Participant
experiences a Termination of Employment;
	 
	 	(iii)	 	provided, however, in the event the Participant changes
his or her Termination Benefit election in accordance with Section 7.2(b), his
or her Benefit Distribution Date shall be postponed in accordance with Section
7.2(b); or






	 	(c)	 	The date on which the Committee is provided with proof that is satisfactory to
the Committee of the Participant’s death, if the Participant dies prior to the complete
distribution of his or her vested Account Balance; or
	 
	 	(d)	 	The date on which the Participant becomes Disabled; or
	 
	 	(e)	 	The date on which the Company experiences a Change in Control, as determined by
the Committee in its sole discretion, if (i) the Participant has elected to receive a
Change in Control Benefit, as set forth in Section 5.1 below, and (ii) if a Change in
Control occurs prior to the Participant’s Termination of Employment, Retirement, death
or Disability.






	1.8	 	“Board” shall mean the board of directors of the Company.
	 
	1.9	 	“Bonus” shall mean any compensation, in addition to Base Salary and LTIP Amounts, earned by a
Participant for services rendered during a Plan Year, under any Employer’s annual bonus and
cash incentive plans, or other arrangement designated by the Committee, as further specified
on an Election Form.
	 
	1.10	 	“Change in Control” shall mean any “change in control event” as defined in accordance with
Code Section 409A and related Treasury guidance and Regulations; provided that for purposes of
Treas. Reg. §1.409A-3(i)(5)(vi)(A)(1), a 40 percent threshold shall be used.




-3-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	1.11	 	“Change in Control Benefit” shall have the meaning set forth in Article 5.
	 
	1.12	 	“Claimant” shall have the meaning set forth in Section 15.1.
	 
	1.13	 	“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.
	 
	1.14	 	“Committee” shall mean the committee described in Article 13.
	 
	1.15	 	“Company” shall mean Noven Pharmaceuticals, Inc., a Delaware corporation, and any successor
to all or substantially all of the Company’s assets or business.
	 
	1.16	 	“Company Contribution Account” shall mean (i) the sum of the Participant’s Company
Contribution Amounts, plus (ii) amounts credited or debited to the Participant’s Company
Contribution Account in accordance with this Plan, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s
Company Contribution Account.
	 
	1.17	 	“Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in
accordance with Section 3.5.
	 
	1.18	 	“Company Restoration Matching Account” shall mean (i) the sum of all of a Participant’s
Company Restoration Matching Amounts, plus (ii) amounts credited or debited to the
Participant’s Company Restoration Matching Account in accordance with this Plan, less (iii)
all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that
relate to the Participant’s Company Restoration Matching Account.
	 
	1.19	 	“Company Restoration Matching Amount” shall mean, for any one Plan Year, the amount
determined in accordance with Section 3.6.
	 
	1.20	 	“Death Benefit” shall mean the benefit set forth in Article 9.
	 
	1.21	 	“Deferral Account” shall mean (i) the sum of all of a Participant’s Annual Deferral Amounts,
plus (ii) amounts credited or debited to the Participant’s Deferral Account in accordance with
this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to his or her Deferral Account.
	 
	1.22	 	“Director” shall mean any elected or appointed member of the board of directors of any
Employer.
	 
	1.23	 	“Director Fees” shall mean the annual fees payable in cash that are earned by a Director from
any Employer, including retainer fees and meetings fees, as compensation for serving on the
board of directors.
	 
	1.24	 	“Disability” or “Disabled” shall mean that a Participant is (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a





-4-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	continuous period of not less than 12 months, or (ii) by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income replacement benefits
for a period of not less than 3 months under an accident or health plan covering employees of
the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled
if determined to be totally disabled by the Social Security Administration, or if determined
to be disabled in accordance with the applicable disability insurance program of such
Participant’s Employer, provided that the definition of “disability” applied under such
disability insurance program complies with the requirements in the preceding sentence.
	 
	1.25	 	“Disability Benefit” shall mean the benefit set forth in Article 8.
	 
	1.26	 	“Election Form” shall mean the form, which may be in electronic format, established from time
to time by the Committee that a Participant completes, signs and returns to the Committee to
make an election under the Plan.
	 
	1.27	 	“Employee” shall mean a person who is an employee of any Employer.
	 
	1.28	 	“Employer(s)” shall be defined as follows:






	 	(a)	 	Except as otherwise provided in part (b) of this Section, the term “Employer”
shall mean the Company and/or any of its subsidiaries (now in existence or hereafter
formed or acquired) that have been selected by the Board to participate in the Plan and
have adopted the Plan as a sponsor.
	 
	 	(b)	 	For purposes of determining whether a Participant has experienced a Separation
from Service, the term “Employer” shall mean:






	 	(i)	 	The entity for which the Participant performs services and with
respect to which the legally binding right to compensation deferred or
contributed under this Plan arises; and
	 
	 	(ii)	 	All other entities with which the entity described above would be
aggregated and treated as a single employer under Code Section 414(b)(controlled
group of corporations) and Code Section 414(c)(a group of trades or businesses,
whether or not incorporated, under common control), as applicable. In order to
identify the group of entities described in the preceding sentence, the
Committee shall use an ownership threshold of at least 50% as a substitute of
the 80% minimum ownership threshold that appears in, and otherwise must be used
when applying, the applicable provisions of (A) Code Section 1563 for
determining a controlled group of corporations under Code Section 414(b), and
Treas. Reg. §1.414(c)-2 for determining the trades or businesses that are under
common control under Code Section 414(c).





-5-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 










	1.29	 	“ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as it may be amended from time to time.
	 
	1.30	 	“401(k) Plan” shall mean, with respect to an Employer, a plan qualified under Code Section
401(a) that contains a cash or deferral arrangement described in Code Section 401(k), adopted
by the Employer, as it may be amended from time to time, or any successor thereto.
	 
	1.31	 	“Key Employee” shall mean any Participant who is a “key employee” (as defined in Code Section
416(i) without regard to paragraph (5) thereof) of an Employer whose stock is publicly traded
on an established securities market or otherwise, as determined by the Committee based upon
the 12-month period ending on each December 31st (such 12-month period is referred
to below as the “identification period”). In applying the applicable provisions of Code
Section 416(i) to identify such individuals, “compensation” shall be determined in accordance
with Treas. Reg. §1.415(c)-2(a) without regard to (i) any safe harbor provided in Treas. Reg.
§1.415(c)-2(d), (ii) any of the special timing rules provided in Treas. Reg. §1.415(c)-2(e),
and (iii) any of the special rules provided in Treas. Reg. §1.415(c)-2(g). All Participants
who are determined to be key employees under Code Section 416(i) (without regard to paragraph
(5) thereof) during the identification period shall be treated as Key Employees for purposes
of the Plan during the 12-month period that begins on the first day of the 4th
month following the close of such identification period.
	 
	1.32	 	“LTIP Amounts” shall mean any portion of the cash compensation attributable to a Plan Year
that is earned by a Participant as an Employee under any Employer’s long-term incentive plan
or any other long-term incentive arrangement designated by the Committee.
	 
	1.33	 	“Participant” shall mean any Employee or Director (i) who is selected to participate in the
Plan, (ii) who submits an executed Plan Agreement, Election Form and Beneficiary Designation
Form, which are accepted by the Committee, and (iii) whose Plan Agreement has not terminated.
	 
	1.34	 	“Performance-Based Compensation” shall mean compensation the entitlement to or amount of
which is contingent on the satisfaction of pre-established organizational or individual
performance criteria relating to a performance period of at least 12 consecutive months, as
determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).
	 
	1.35	 	“Plan” shall mean the Noven Pharmaceuticals, Inc. Nonqualified Deferred Compensation Plan,
which shall be evidenced by this instrument and any Plan Agreement, as they may be amended
from time to time, and by any other documents that together with this instrument define a
Participant’s rights to amounts credited to his or her Account Balance.
	 
	1.36	 	“Plan Agreement” shall mean a written agreement, as may be amended from time to time, which
is entered into by and between an Employer and a Participant. Each Plan Agreement executed by
a Participant and the Participant’s Employer shall provide for the entire benefit to which
such Participant is entitled under the Plan; should there be more than one Plan Agreement, the
Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all
previous Plan Agreements in their entirety and shall govern such entitlement. The terms of
any Plan Agreement may be different for any Participant, and any Plan Agreement may provide
additional





-6-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	benefits not set forth in the Plan or limit the benefits otherwise provided under
the Plan; provided, however, that any such additional benefits or benefit limitations must be
agreed to by both the Employer and the Participant.
	 
	1.37	 	“Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing
through December 31 of such calendar year.
	 
	1.38	 	“Restricted Stock” shall mean rights to receive unvested shares of restricted stock selected
by the Committee in its sole discretion and awarded to the Participant under any Noven
Pharmaceuticals, Inc. stock incentive plan or director compensation program.
	 
	1.39	 	“Restricted Stock Account” shall mean the aggregate value, measured on any given date, of (i)
the number of shares of Restricted Stock deferred by a Participant as a result of all
Restricted Stock Amounts, plus (ii) the number of additional shares credited to a
Participant’s Restricted Stock Account as a result of the deemed reinvestment of dividends in
accordance with this Plan, less (iii) the number of shares of Restricted Stock previously
distributed to the Participant or his or her Beneficiary pursuant to this Plan, subject in
each case to any adjustments to the number of such shares determined by the Committee with
respect to the Noven Pharmaceuticals, Inc. Stock Unit Fund pursuant to Section 3.10. This
portion of the Participant’s Account Balance shall only be distributable in actual shares of
Stock.
	 
	1.40	 	“Restricted Stock Amount” shall mean, with respect to a Participant for any one Plan Year,
the amount of Restricted Stock deferred in accordance with Section 3.7 of this Plan,
calculated using the closing price of Stock at the end of the business day closest to the date
such Restricted Stock would otherwise vest (and/or all restrictions on such Restricted Stock would have lapsed),
but for the election to defer. In the event of a Participant’s Retirement, Termination of
Employment, Disability, or death prior to the end of a Plan Year, such year’s Restricted
Stock Amount shall be the actual amount withheld prior to such event.
	 
	1.41	 	“Retirement”, “Retire(s)” or “Retired” shall mean, with respect to a Participant who is an
Employee, a Separation from Service on or after the earlier of the attainment of (a) age
sixty-five (65) or (b) age fifty-five (55) with five (5) Years of Service; and shall mean with
respect to a Participant who is a Director, a Separation from Service. If a Participant is
both an Employee and a Director and participates in the Plan in each capacity, (a) the
determination of whether the Participant qualifies for Retirement as an Employee shall be made
when the Employee experiences a Separation from Service as an Employee and such determination
shall only apply to the applicable Account Balance established in accordance with Section 1.1
for amounts deferred under the Plan as an Employee, and (b) the determination of whether the
Participant qualifies for Retirement as a Director shall be made at the time the Participant
experiences a Separation from Service as a Director and such determination shall apply only to
the applicable Account Balance established in accordance with Section 1.1. for amounts
deferred under the Plan as a Director.
	 
	1.42	 	“Retirement Benefit” shall mean the benefit set forth in Article 6.





-7-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	1.43	 	“Separation from Service” shall mean a termination of services provided by a Participant to
his or her Employer, whether voluntary or involuntary, other than by reason of death or
Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In
determining whether a Participant has experienced a Separation from Service the following
provisions shall apply:






	 	(a)	 	For a Participant who provides services to an Employer as an Employee, except
as otherwise provides in part (c) of this Section, a Separation from Service shall
occur when such Participant has experienced a termination of employment with such
Employer, A Participant shall be considered to have experienced a termination of
employment when the facts and circumstances indicate that the Participant and his or
her Employer reasonably anticipate that either (i) no further services will be
performed for the Employer after a certain date, or (ii) that the level of bona fide
services the Participant will perform for the Employer after such date (whether as an
Employee or as an independent contractor) will permanently decrease to no more than 20%
of the average level of bona fide services performed by such Participant (whether as an
Employee or an independent contractor) over the immediately preceding 36-month period
(or the full period of services to the Employer if the Participant has been providing
services to the Employer less than 36 months).
	 
	 	 	 	      If a Participant is on military leave, sick leave, or other bona fide leave of
absence, the employment relationship between the Participant and the Employer shall
be treated as continuing in tact, provided that the period of such leave does not
exceed 6 months, or if longer, so long as the Participant retains a right to
reemployment with the Employer under an applicable statute or contract. If the period
of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months
and the Participant does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship shall be considered to be
terminated for purposes of this Plan as of the first day immediately following the
end of such 6-month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence
only if there is a reasonable expectation that the Participant will return to perform
services for the Employer.
	 
	 	(b)	 	For a Participant who provides services to an Employer as an independent
contractor, except as otherwise provided in part (c) of this Section, a Separation from
Service shall occur upon the expiration of the contract (or in the case of more than
one contract, all contracts) under which services are performed for such Employer,
provided that the expiration of such contract(s) is determined by the Committee to
constitute a good-faith and complete termination of the contractual relationship
between the Participant and such employer.
	 
	 	(c)	 	For a Participant who provides services to an Employer as both an Employee and
an independent contractor, a Separation from Service generally shall not occur until
the Participant has ceased providing services for such Employer as both an Employee and






-8-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	 	an independent contractor, as determined in accordance with the provisions set forth in
parts (a) and (b) of this section, respectively. Similarly, if a Participant either
(i) ceases providing services for an Employer as an independent contractor and begins
providing services for such Employer as an Employee, or (ii) ceases providing services
for an Employer as an Employee and begins providing services for such Employer as an
independent contractor, the Participant will not be considered to have experienced a
Separation from Service until the Participant has ceased providing services for such
Employer in both capacities, as determined in accordance with the applicable provisions
set forth in parts (a) and (b) of this Section.
	 
	 	 	 	      Notwithstanding the foregoing provisions in this part (c), if a Participant
provides services for an Employer as both an Employee and as a Director, to the
extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such
Participant as a Director shall not be taken into account in determining whether the
Participant has experienced a Separation from Service as an Employee, and the
services provided by such Participant as an Employee shall not be taken into account
in determining whether the Participant has experienced a Separation from Service as a
Director.






	1.44	 	“Scheduled Distribution” shall mean the distribution set forth in Section 4.1.
	 
	1.45	 	“Stock” shall mean Noven Pharmaceuticals, Inc. common stock, $0.0001 par value, or any other
equity securities of the Company designated by the Committee.
	 
	1.46	 	“Terminate the Plan”, “Termination of the Plan” shall mean a determination by an Employer’s
board of directors that (i) all of its Participants shall no longer be eligible to
participate in the Plan, (ii) no new deferral elections for such Participants shall be
permitted, and (iii) such Participants shall no longer be eligible to receive company
contributions under this Plan.
	 
	1.47	 	“Termination Benefit” shall mean the benefit set forth in Article 7.
	 
	1.48	 	“Termination of Employment” shall mean the separation from service with all Employers,
voluntarily or involuntarily, for any reason other than Retirement, Disability or death, as
determined in accordance with Code Section 409A and related Treasury guidance and Regulations.
If a Participant is both an Employee and a Director, a Termination of Employment
shall occur only upon the termination of the last position held. A Participant will not have
a Termination of Employment unless the Participant is not employed by the Company, a
Subsidiary, or any other member of the Controlled Group of Corporations as defined under
Code Section 414(b) (dealing with controlled groups of corporations) and Code Section
414(c), regardless of the reason for the termination of employment.
	 
	1.49	 	“Trust” shall mean one or more trusts established by the Company in accordance with Article
16.
	 
	1.50	 	“Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting
from (i) an illness or accident of the Participant, the Participant’s spouse, the
Participant’s Beneficiary or the Participant’s dependent (as defined in Code Section 152(a)





-9-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (ii) a loss of the
Participant’s property due to casualty, or (iii) such other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the
Participant, all as determined by the Committee based on the relevant facts and circumstances.
	 
	1.51	 	“Years of Service” shall mean the total number of full years in which a Participant has been
employed by one or more Employers. For purposes of this definition, a year of employment
shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first
year of employment, commences on the Employee’s date of hiring and that, for any subsequent
year, commences on an anniversary of that hiring date. The Committee shall make a
determination as to whether any partial year of employment shall be counted as a Year of
Service.





ARTICLE 2

Selection, Enrollment, Eligibility





	2.1	 	Selection by Committee. Participation in the Plan shall be limited to Directors and,
as determined by the Committee in its sole discretion, a select group of management or highly
compensated Employees. From that group, the Committee shall select, in its sole discretion,
those individuals who may actually participate in this Plan.
	 
	2.2	 	Enrollment and Eligibility Requirements; Commencement of Participation.






	 	(a)	 	As a condition to participation, each Director or selected Employee who is
eligible to participate in the Plan effective as of the first day of a Plan Year shall
complete, execute and return to the Committee a Plan Agreement, an Election Form and a
Beneficiary Designation Form, prior to the first day of such Plan Year, or such other
earlier deadline as may be established by the Committee in its sole discretion. In
addition, the Committee shall establish from time to time such other enrollment
requirements as it determines, in its sole discretion, are necessary.
	 
	 	(b)	 	A Director or selected Employee who first becomes eligible to participate in
this Plan after the first day of a Plan Year must complete, execute and return to the
Committee a Plan Agreement, an Election Form, and a Beneficiary Designation Form within
thirty (30) days after he or she first becomes eligible to participate in the Plan, or
within such other earlier deadline as may be established by the Committee, in its sole
discretion, in order to participate for that Plan Year. In such event, such person’s
participation in this Plan shall
not commence earlier than the date determined by the Committee pursuant to Section
2.2(c) and such person shall not be permitted to defer under this Plan any portion of
his or her Base Salary, Bonus, LTIP Amounts, Restricted Stock Amounts and/or Director
Fees that are paid with respect to services performed prior to his or her
participation commencement date, except to the extent permissible under Code Section
409A and related Treasury guidance or Regulations.




-10-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 










	 	(c)	 	Each Director or selected Employee who is eligible to participate in the Plan
shall commence participation in the Plan on the date that the Committee determines, in
its sole discretion, that the Director or Employee has met all enrollment requirements
set forth in this Plan and required by the Committee, including returning all required
documents to the Committee within the specified time period. Notwithstanding the
foregoing, the Committee shall process such Participant’s deferral election as soon as
administratively practicable after such deferral election is submitted to and accepted
by the Committee.
	 
	 	(d)	 	If a Director or an Employee fails to meet all requirements contained in this
Section 2.2 within the period required, that Director or Employee shall not be eligible
to participate in the Plan during such Plan Year.





ARTICLE 3

Deferral Commitments/Company Contribution Amounts/

Company Restoration Matching Amounts/Restricted Stock Amounts/
 Vesting/Crediting/Taxes





	3.1	 	[Intentionally Omitted]
	 
	3.2	 	Maximum Deferral.






	 	(a)	 	Annual Deferral Amount. For each Plan Year, a Participant may elect to
defer, as his or her Annual Deferral Amount, Base Salary, Bonus, LTIP Amounts and/or
Director Fees up to the following maximum percentages for each deferral elected:





	 	 	 	 	 
	Deferral	 	Maximum Percentage	 
	Base Salary
	 	 	75	%
	Bonus
	 	 	100	%
	LTIP Amounts
	 	 	100	%
	Director Fees
	 	 	100	%







	 	(b)	 	Restricted Stock Amount. For each grant of Restricted Stock, a
Participant may elect to defer, as his or her Restricted Stock Amount, Restricted Stock
in the following maximum percentage:





	 	 	 	 	 
	Deferral	 	Maximum Percentage	 
	Restricted Stock
	 	 	100	%







	 	(c)	 	Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, the maximum Annual Deferral
Amount shall be limited to the amount of compensation not yet earned by the Participant
as of the date the Participant submits a Plan Agreement and Election Form to the
Committee for acceptance, except to the extent permissible





-11-









 










Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	 	under Code Section 409A and
related Treasury guidance or Regulations. For compensation that is earned based upon a
specified performance period, the Participant’s deferral election will apply to the
portion of such compensation that is equal to (i) the total amount of compensation for
the performance period, multiplied by (ii) a fraction, the numerator of which is the
number of days remaining in the service period after the Participant’s deferral
election is made, and the denominator of which is the total number of days in the
performance period.






	3.3	 	Election to Defer; Effect of Election Form.






	 	 	 	     (a) General Timing Rule for Deferral Elections. Except as otherwise
provided in this Section 3.3, in order for a Participant to make a valid election to
defer Base Salary, Bonus, Commissions, Director Fees and/or LTIP Amounts, the
Participant must submit an Election Form on or before the deadline established by the
Committee, which in no event shall be later than the December 31st
preceding the Plan Year in which such compensation will be earned.
	 
	 	 	 	      Any deferral election made in accordance with this Section 3.3 shall be
irrevocable; provided, however, that if the Committee permits or requires
Participants to make a deferral election by the deadline described above for an
amount that qualifies as Performance-Based Compensation, the Committee may permit a
Participant to subsequently change his or her deferral election for such compensation
by submitting a new Election Form in accordance with Section 3.3(d) below.
	 
	 	 	 	(b)Timing of Deferral Elections for Newly Eligible Plan Participants. A
Director or selected Employee who first becomes eligible to participate in the Plan
on or after the beginning of a Plan Year, as determined in accordance with Treas.
Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg.
§1.409A-1(c)(2), may be permitted to make an election to defer the portion of Base
Salary, Bonus, Commissions, Director Fees and/or LTIP Amounts attributable to
services to be performed after such election, provided that the Participant submits
an Election Form on or before the deadline established by the Committee, which in no
event shall be later than 30 days after the Participant first becomes eligible to
participate in the Plan.
	 
	 	 	 	      If a deferral election made in accordance with this Section 3.3(b) relates to
compensation earned based upon a specified performance period, the amount eligible
for deferral shall be equal to (i) the total amount of compensation for the
performance period, multiplied by (ii) a fraction, the numerator of which is the
number of days remaining in the service period after the Participant’s deferral
election is made, and the denominator of which is the total number of days in the
performance period.
	 
	 	 	 	     Any deferral election made in accordance with this Section 3.3(b) shall become
irrevocable no later than the 30th day after the date the Director or
selected Employee becomes eligible to participate in the Plan.




-12-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	 	 	(c) Restricted Stock Deferral. For an election to defer Restricted Stock to
be valid, an Election Form must be completed and signed by the Participant with
respect to such Restricted Stock. Such Election Form must be timely delivered to the
Committee and accepted by the Committee no later than (i) the end of the calendar
year preceding the Plan Year during which such Restricted Stock may be initially
granted to the Participant under the terms of the applicable Noven Pharmaceuticals,
Inc. stock incentive plan or director compensation program, or (ii) such other
deadline established by the Committee in accordance with the requirements of Code
Section 409A and related Treasury guidance or Regulations, including, without
limitation, such deadline as may be applicable under Section 3.3(d) or Section 3.3(e)
below.
	 
	 	 	 	(d) Performance-Based Compensation. Subject to the limitations described
below, the Committee may determine that an irrevocable deferral election for an
amount that qualifies as Performance-Based Compensation may be made by submitting an
Election Form on or before the deadline established by the Committee, which in no
event shall be later than 6 months before the end of the performance period. In
order for a Participant to be eligible to make a deferral election for
Performance-Based Compensation in accordance with the deadline established pursuant
to this Section 3.3(d), the Participant must have performed services continuously
from the later of (i) the beginning of the performance period for such compensation,
or (ii) the date upon which the performance criteria for such compensation are
established, through the date upon which the Participant makes the deferral election
for such compensation. In no event shall a deferral election submitted under this
Section 3.3(d) be permitted to apply to any amount of Performance-Based Compensation
that has become readily ascertainable..
	 
	 	 	 	(e) Compensation Subject to Risk of Forfeiture. With respect to compensation
(i) to which a Participant has a legally binding right to payment in a subsequent
year, and (ii) that is subject to a forfeiture condition requiring the Participant’s
continued services for a period of at least twelve (12) months from the date the
Participant obtains the legally binding right, the Committee may, in its sole
discretion, determine that an irrevocable deferral election for such compensation may
be made by timely delivering an Election Form to the Committee in accordance with its
rules and procedures, no later than the 30th day after the Participant obtains the
legally binding right to the compensation, provided that the election is made at
least twelve (12) months in advance of the earliest date at which the forfeiture
condition could lapse.






	3.4	 	Withholding and Crediting of Annual Deferral Amounts. For each Plan Year, the Base
Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled
Base Salary payroll in equal amounts, as adjusted from time to time for increases and
decreases in Base Salary. The Bonus, LTIP Amounts and/or Director Fees portion of the Annual
Deferral Amount shall be withheld at the time the Bonus, LTIP Amounts or Director Fees are or
otherwise would be paid to the Participant, whether or not this occurs during the Plan Year
itself. Annual Deferral Amounts shall be credited to a Participant’s Deferral Account at the
time such amounts would otherwise have been paid to the Participant.






-13-











 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 






	3.5	 	Company Contribution Amount.






	 	(a)	 	For each Plan Year, an Employer may be required to credit amounts to a
Participant’s Company Contribution Account in accordance with employment or other
agreements entered into between the Participant and the Employer. Such amounts shall
be credited on the date or dates prescribed by such agreements.
	 
	 	(b)	 	For each Plan Year, an Employer, in its sole discretion, may, but is not
required to, credit any amount it desires to any Participant’s Company Contribution
Account under this Plan, which amount shall be for that Participant the Company
Contribution Amount for that Plan Year. The amount so credited to a Participant may be
smaller or larger than the amount credited to any other Participant, and the amount
credited to any Participant for a Plan Year may be zero, even though one or more other
Participants receive a Company Contribution Amount for that Plan Year. The Company
Contribution Amount described in this Section 3.5(b), if any, shall be credited on a
date or dates to be determined by the Committee, in its sole discretion.
	 
	 	(c)	 	If not otherwise specified in the Participant’s employment or other agreement
entered into between the Participant and the Employer, the amount (or the method or
formula for determining the amount) of a Participant’s Company Contribution Amount
shall be set forth in writing in one or more documents, which shall be deemed to be
incorporated into this Plan in accordance with Section 1.35, no later than the date on
which such Company Contribution Amount is credited to the applicable Annual Account of
the Participant.






	3.6	 	Company Restoration Matching Amount. A Participant’s Company Restoration Matching
Amount for any Plan Year shall be an amount determined by the Committee, in its sole
discretion, to make up for certain limits applicable to the 401(k) Plan or other qualified
plan for such Plan Year, as identified by the Committee, or for such other purposes as
determined by the Committee in its sole discretion. The amount so credited to a Participant
under this Plan for any Plan Year (i) may be smaller or larger than the amount credited to any
other Participant, and (ii) may differ from the amount credited to such Participant in the
preceding Plan Year. The Participant’s Company Restoration Matching Amount, if any, shall be
credited on a date or dates to be determined by the Committee, in its sole discretion. The
amount (or the method or formula for determining the amount) of a Participant’s Company
Restoration Matching Amount shall be set forth in writing in one or more documents, which
shall be deemed to be incorporated into this Plan in accordance with this Section 1.35, no
later than the date on which such Company Restoration Matching Amount is credited to the
applicable Annual Account of the Participant
	 
	3.7	 	Restricted Stock Amounts. Subject to any terms and conditions imposed by the
Committee, a Participant may elect to defer Restricted Stock under the Plan, which amount
shall be for that Participant the Restricted Stock Amount for that Plan Year. The portion of
any Restricted Stock deferred shall, at the time the Restricted Stock would
otherwise vest (and/or all restrictions on such Restricted Stock would have lapsed) under
the terms of the applicable Noven Pharmaceuticals, Inc. stock incentive plan or director
compensation program, but for the election to defer, be reflected on the books of the
Company as an unfunded, unsecured promise to deliver to the Participant a specific number of
actual shares of Stock in the future.









-14-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 







	3.8	 	Crediting of Amounts after Benefit Distribution. Notwithstanding any provision in
this Plan to the contrary, should the complete distribution of a Participant’s vested Account
Balance occur prior to the date on which any portion of (i) the Annual Deferral Amount that a
Participant has elected to defer in accordance with Section 3.3, (ii) the Company Contribution
Amount, (iii) the Company Restoration Matching Amount, or (iv) the Restricted Stock Amount,
would otherwise be credited to the Participant’s Account Balance, such amounts shall not be
credited to the Participant’s Account Balance, but shall be paid to the Participant in a
manner determined by the Committee, in its sole discretion.






	3.9	 	Vesting.






	 	(a)	 	A Participant shall at all times be 100% vested in his or her Deferral Account
and Restricted Stock Account.
	 
	 	(b)	 	A Participant shall be vested in his or her Company Contribution Account in
accordance with the vesting schedule(s) set forth in his or her Plan Agreement,
employment agreement or any other agreement entered into between the Participant and
his or her Employer. If not addressed in such agreements, a Participant shall vest in
his or her Company Contribution Account in accordance with a vesting schedule declared
by the Committee in its sole discretion.
	 
	 	(c)	 	A Participant shall be vested in his or her Company Restoration Matching
Account only to the extent that the Participant would be vested in such amounts under
the provisions of the 401(k) Plan, as determined by the Committee in its sole
discretion.
	 
	 	(d)	 	Notwithstanding anything to the contrary contained in this Section 3.9, in the
event of a Change in Control, or upon a Participant’s Retirement, death while employed
by an Employer, or Disability, a Participant’s Company Contribution Account and Company
Restoration Matching Account shall immediately become 100% vested (if it is not already
vested in accordance with the above vesting schedules).
	 
	 	(e)	 	Notwithstanding subsection 3.9(d) above, the vesting schedule for a
Participant’s Company Contribution Account and Company Restoration Matching Account
shall not be accelerated upon a Change in Control to the extent that the Committee
determines that such acceleration would cause the deduction limitations of Section 280G
of the Code to become effective. In the event that all of a Participant’s Company
Contribution Account and/or Company Restoration Matching Account is not vested pursuant
to such a determination, the Participant may request independent verification of the
Committee’s calculations with respect to the application of Section 280G. In such
case, the Committee must provide to the Participant within ninety (90) days of such a
request an opinion from a nationally recognized accounting firm selected by the
Participant (the “Accounting Firm”). The opinion shall state the Accounting Firm’s
opinion that any limitation in the vested
percentage hereunder is necessary to avoid the limits of
Section 280G and contain supporting calculations. The cost of such opinion shall be paid for by the Company.




-15-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 







	 	(f)	 	Section 3.9(e) shall not prevent the acceleration of the vesting schedule
applicable to a Participant’s Company Contribution Account and/or Company Restoration
Matching Account if such Participant is entitled to a “gross-up” payment, to eliminate
the effect of the Code section 4999 excise tax, pursuant to his or her employment
agreement or other agreement entered into between such Participant and the Employer.






	3.10	 	Crediting/Debiting of Account Balances. In accordance with, and subject to, the
rules and procedures that are established from time to time by the Committee, in its sole
discretion, amounts shall be credited or debited to a Participant’s Account Balance in
accordance with the following rules:






	 	(a)	 	Measurement Funds. Subject to the restrictions found in Section
3.10(c) below, the Participant may elect one or more of the measurement funds selected
by the Committee, in its sole discretion, which are based on certain mutual funds (the
“Measurement Funds”), for the purpose of crediting or debiting additional amounts to
his or her Account Balance. As necessary, the Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund. Each such action will take effect
as of the first day of the first calendar quarter that begins at least thirty (30) days
after the day on which the Committee gives Participants advance written notice of such
change.
	 
	 	(b)	 	Election of Measurement Funds. Subject to the restrictions found in
Section 3.10(c) below, a Participant in connection with his or her initial deferral
election in accordance with Section 3.3(a) above, shall elect, on the Election Form,
one or more Measurement Fund(s) (as described in Section 3.10(a) above) to be used as a
guide for the Committee to determine the amounts to be credited or debited to his or
her Account Balance. If a Participant does not elect any of the Measurement Funds
described in the previous sentence, the Participant’s Account Balance shall be credited
or debited using the lowest-risk Measurement Fund, as determined by the Committee, in
its sole discretion. Subject to the restrictions found in Section 3.10(c) below, the
Participant may (but is not required to) elect, by submitting an Election Form to the
Committee that is accepted by the Committee, to add or delete one or more Measurement
Fund(s) to be used to determine the amounts to be credited or debited to his or her
Account Balance, or to change the portion of his or her Account Balance that is tied to
each previously or newly elected Measurement Fund. If an election is made in
accordance with the previous sentence, it shall apply as of the first business day
deemed reasonably practicable by the Committee, in its sole discretion, and shall
continue thereafter for each subsequent day in which the Participant participates in
the Plan, unless changed in accordance with the previous sentence. Notwithstanding the
foregoing, the Committee, in its sole discretion, may impose limitations on the
frequency with which one or more of the Measurement Funds elected in accordance with
this Section may be added or deleted by such Participant; furthermore, the Committee in
its sole discretion, may impose





-16-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 







	 	 	 	limitations on the frequency with which the Participant
may change the portion of his or her Account Balance tied to each previously or newly
elected Measurement Fund. In accordance with Section 3.10(f), no amounts from a
Participant’s Account balance are invested in the Measurement Fund selected by a
Participant, but merely used as a guide for the Committee to debit or credit
earnings for each Participant’s Account Balance.






	 	(c)	 	Noven Pharmaceuticals, Inc. Stock Unit Fund.






	 	(i)	 	A Participant’s Restricted Stock Account will be automatically
and irrevocably allocated to the Noven Pharmaceuticals, Inc. Stock Unit Fund
Measurement Fund. Participants may not select any other Measurement Fund to be
used to determine the amounts to be credited or debited to their Restricted
Stock Account. Furthermore, no other portion of the Participant’s Account
Balance can be either initially allocated or re-allocated to the Noven
Pharmaceuticals, Inc. Stock Unit Fund. Amounts allocated to the Noven
Pharmaceuticals, Inc. Stock Unit Fund shall only be distributable in actual
 shares of Stock.
	 
	 	(ii)	 	Any stock dividends, cash dividends or other non-cash dividends
that would have been payable on the Stock credited to a Participant’s Account
Balance shall be credited to the Participant’s Account Balance in the form of
additional shares of Stock and shall automatically and irrevocably be deemed to
be re-invested in the Noven Pharmaceuticals, Inc. Stock Unit Fund until such
amounts are distributed to the Participant. The number of shares credited to
the Participant for a particular stock dividend shall be equal to (a) the number
of shares of Stock credited to the Participant’s Account Balance as of the
payment date for such dividend in respect of each share of Stock, multiplied by
(b) the number of additional or fractional shares of Stock actually paid as a
dividend in respect of each share of Stock. The number of shares credited to
the Participant for a particular cash dividend or other non-cash dividend shall
be equal to (a) the number of shares of Stock credited to the Participant’s
Account Balance as of the payment date for such dividend in respect of each
share of Stock, multiplied by (b) the fair market value of the dividend, divided
by (c) the “fair market value” of the Stock on the payment date for such
dividend.
	 
	 	(iii)	 	The number of shares of Stock credited to the Participant’s
Account Balance may be adjusted by the Committee, in its sole discretion, to
prevent dilution or enlargement of Participants’ rights with respect to the
portion of his or her Account Balance allocated to the Noven Pharmaceuticals,
Inc. Stock Unit Fund in the event of any reorganization, reclassification, stock
split, or other unusual corporate transaction or event which affects the value
of the Stock, provided that any such adjustment shall be made taking into
account any crediting of shares of Stock to the Participant under Section 3.10.
	 
	 	(iv)	 	For purposes of this Section 3.10(c), the fair market value of
the Stock shall be, in the event the Stock is traded on a recognized securities
exchange or quoted by the National Association of Securities Dealers Automated
Quotations on




-17-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 






	 	 	 	National Market Issues, an amount equal to the closing price of
the Stock on such exchange or such quotation on the date set for valuation or,
if no sales of Stock were made on said exchange or so quoted on that date, the
closing price of the Stock on the next preceding day on which sales were made on
such exchange or quotations; or, if the Stock is not so traded or quoted, that
value determined, in its sole discretion, by the Committee in compliance with
Section 409A.






	 	(d)	 	Proportionate Allocation. In making any election described in Section
3.10(b) above, the Participant shall specify on the Election Form, in increments of one
percent (1%), the percentage of his or her Account Balance or Measurement Fund, as
applicable, to be allocated/reallocated.
	 
	 	(e)	 	Crediting or Debiting Method. The performance of each Measurement Fund
(either positive or negative) will be determined on a daily basis based on the manner
in which such Participant’s Account Balance has been hypothetically allocated among the
Measurement Funds by the Participant.
	 
	 	(f)	 	No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant’s election of any such Measurement Fund,
the allocation of his or her Account Balance thereto, the calculation of additional
amounts and the crediting or debiting of such amounts to a Participant’s Account
Balance shall not be considered or construed in any manner as an actual
investment of his or her Account Balance in any such Measurement Fund. In the event
that the Company or the Trustee (as that term is defined in the Trust), in its own
discretion, decides to invest funds in any or all of the investments on which the
Measurement Funds are based, no Participant shall have any rights in or to such
investments themselves. Without limiting the foregoing, a Participant’s Account
Balance shall at all times be a bookkeeping entry only and shall not represent any
investment made on his or her behalf by the Company or the Trust; the Participant shall
at all times remain an unsecured creditor of the Company.






	3.11	 	FICA and Other Taxes.






	 	(a)	 	Annual Deferral Amounts. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the Participant’s Employer(s)
shall withhold from that portion of the Participant’s Base Salary, Bonus and/or LTIP
Amounts that is not being deferred, in a manner determined by the Employer(s), the
Participant’s share of FICA and other employment taxes on such Annual Deferral Amount.
If necessary, the Committee may reduce the Annual Deferral Amount in order to comply
with this Section 3.11.
	 
	 	(b)	 	Company Restoration Matching Account and Company Contribution Account.
When a Participant becomes vested in a portion of his or her Company Restoration
Matching Account and/or Company Contribution Account, the Participant’s Employer(s)
shall withhold from that portion of the Participant’s Base Salary, Bonus and/or LTIP
Amounts that is not deferred, in a manner





-18-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 






	 	 	 	determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Company Restoration
Matching Amount and/or Company Contribution Amount. If necessary, the Committee may
reduce the vested portion of the Participant’s Company Restoration Matching Account or
Company Contribution Account, as applicable, in order to comply with this Section 3.11.






	 	(c)	 	Restricted Stock Amounts. For each Plan Year in which a Restricted
Stock Amount is being first withheld from an Employee Participant, the Participant’s
Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus,
LTIP Amounts and/or Restricted Stock that are not being deferred, in a manner
determined by the Employer(s), the Participant’s share of FICA and other employment
taxes on such Restricted Stock
Amount. If necessary, the Committee may reduce the Restricted Stock Amount in order
to comply with this Section 3.11.
	 
	 	(d)	 	Distributions. The Participant’s Employer(s), or the trustee of the
Trust, shall withhold from any payments made to a Participant under this Plan all
federal, state and local income, employment and other taxes required to be withheld by
the Employer(s), or the trustee of the Trust, in connection with such payments, in
amounts and in a manner to be determined in the sole discretion of the Employer(s) and
the trustee of the Trust.





ARTICLE 4

 Scheduled Distribution; Unforeseeable Emergencies 





	4.1	 	Scheduled Distribution. In connection with each election to defer an Annual Deferral
Amount, a Participant may irrevocably elect to receive a Scheduled Distribution, in the form
of a lump sum payment, from the Plan with respect to all or a portion of the Annual Deferral
Amount. The Scheduled Distribution shall be a lump sum payment in an amount that is equal to
the portion of the Annual Deferral Amount the Participant elected to have distributed as a
Scheduled Distribution, plus amounts credited or debited in the manner provided in Section
3.10 above on that amount, calculated as of the close of business on or around the date on
which the Scheduled Distribution becomes payable, as determined by the Committee in its sole
discretion. Subject to the other terms and conditions of this Plan, each Scheduled
Distribution elected shall be paid out during a sixty (60) day period commencing immediately
after the first day of any Plan Year designated by the Participant (the “Scheduled
Distribution Date”). The Plan Year designated by the Participant must be at least two (2)
Plan Years after the end of the Plan Year to which the Participant’s deferral election
described in Section 3.3 relates, unless otherwise provided on an Election Form approved by
the Committee in its sole discretion. By way of example, if a Scheduled Distribution is
elected for Annual Deferral Amounts that are earned in the Plan Year commencing January 1,
2006, the earliest Scheduled Distribution Date that may be designated by a Participant would
be January 1, 2009, and the Scheduled Distribution would become payable during the sixty (60)
day period commencing immediately after such Scheduled Distribution Date.




-19-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 








	4.2	 	Postponing Scheduled Distributions. A
Participant may elect to postpone a Scheduled
Distribution described in Section 4.1 above, and have such amount paid out during a sixty (60)
day period commencing immediately after an allowable alternative distribution date designated
by the Participant in accordance with this Section 4.2. In order to make this election, the
Participant must submit a new Scheduled Distribution Election Form to the Committee in
accordance with the following criteria:






	 	(a)	 	Such Scheduled Distribution Election Form must be submitted to and accepted by
the Committee in its sole discretion at least twelve (12) months prior to the
Participant’s previously designated Scheduled Distribution Date;
	 
	 	(b)	 	The new Scheduled Distribution Date selected by the Participant must be the
first day of a Plan Year, and must be at least five years after the previously
designated Scheduled Distribution Date; and
	 
	 	(c)	 	The election of the new Scheduled Distribution Date shall have no effect until
at least
twelve (12) months after the date on which the election is made.






	 	 	           For purposes of applying the provisions of this Section 4.2, a Participant’s election
to postpone a Scheduled Distribution shall not be considered to be made until the date on
which the election becomes irrevocable. Such an election shall become irrevocable no later
than the date that is 12 months prior to the Participant’s previously designated Benefit
Distribution Date for such Scheduled Distribution.






	4.3	 	Other Benefits Take Precedence Over Scheduled Distributions. Should a Benefit
Distribution Date occur that triggers a benefit under Articles 5, 6, 7, 8, or 9, any Annual
Deferral Amount that is subject to a Scheduled Distribution election under Section 4.1 shall
not be paid in accordance with Section 4.1, but shall be paid in accordance with the other
applicable Article. Notwithstanding the foregoing, the Committee shall interpret this Section
4.3 in a manner that is consistent with Code Section 409A and other applicable tax law,
including but not limited to Treasury guidance and Regulations issued after the effective date
of this Plan.
	 
	4.4	 	Unforeseeable Emergencies.






	 	(a)	 	If the Participant experiences an Unforeseeable Emergency, the Participant may
petition the Committee to receive a partial or full payout from the Plan, subject to
the provisions set forth below.
	 
	 	(b)	 	The payout, if any, from the Plan shall not exceed the lesser of (i) the
Participant’s vested Account Balance, excluding the portion of the Account Balance
attributable to the Restricted Stock Account, calculated as of the close of business on
or around the date on which the amount becomes payable, as determined by the Committee
in its sole discretion, or (ii) the amount necessary to satisfy the Unforeseeable
Emergency, plus amounts necessary to pay Federal, state, or local income taxes or
penalties reasonably anticipated as a result of the distribution. Notwithstanding the
foregoing, a Participant may not receive a payout from the Plan





-20-









 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document
 




	 	 	 	to the extent that the
Unforeseeable Emergency is or may be relieved (A) through reimbursement or compensation
by insurance or otherwise, (B) by liquidation of the Participant’s assets, to the
extent the liquidation of such assets would not itself cause severe financial hardship
or (C) by cessation of deferrals under this Plan.
	 
	 	(c)	 	If the Committee, in its sole discretion, approves a Participant’s petition for
payout from the Plan, the Participant shall receive a payout from the Plan within sixty
(60) days of the date of such approval, and the Participant’s deferrals under the Plan
shall be terminated as of the date of such approval.
	 
	 	(d)	 	In addition, a Participant’s deferral elections under this Plan shall be
terminated to the extent the Committee determines, in its sole discretion, that
termination of such Participant’s deferral elections is required pursuant to Treas.
Reg. §1.401(k)-1(d)(3) for the Participant to obtain a hardship distribution from an
Employer’s 401(k) Plan. If the Committee determines, in its sole discretion, that a
termination of the Participant’s deferrals is required in accordance with the preceding
sentence, the Participant’s deferrals shall be terminated as soon as administratively
practicable following the date on which such determination is made.
	 
	 	(e)	 	Notwithstanding the foregoing, the Committee shall interpret all provisions
relating to a payout and/or termination of deferrals under this Section 4.4 in a manner
that is consistent with Code Section 409A and related Treasury guidance and
Regulations.





ARTICLE 5

Change in Control Benefit 





	5.1	 	Change in Control Benefit. A Participant, in connection with his or her commencement
of participation in the Plan, shall irrevocably elect on an Election Form whether to (i)
receive a Change in Control Benefit upon the occurrence of a Change in Control, which shall be
equal to the Participant’s vested Account Balance, calculated as of the close of business on
or around the Participant’s Benefit Distribution Date, as determined by the Committee in its
sole discretion, or (ii) to have his or her Account Balance remain in the Plan upon the
occurrence of a Change in Control and to have his or her Account Balance remain subject to the
terms and conditions of the Plan. If a Participant does not make any election with respect to
the payment of the Change in Control Benefit, then such Participant’s Account Balance shall
remain in the Plan upon a Change in Control and shall be subject to the terms and conditions
of the Plan.
	 
	5.2	 	Payment of Change in Control Benefit. The Change in Control Benefit, if any, shall
be paid to the Participant in a lump sum no later than sixty (60) days after the Participant’s
Benefit Distribution Date. Notwithstanding the foregoing, the Committee shall interpret all
provisions in this Plan relating to a Change in Control Benefit in a manner that is consistent
with Code Section 409A and related Treasury guidance and Regulations.






-21-











 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 





ARTICLE 6

Retirement Benefit





	6.1	 	Retirement Benefit. If a Participant experiences a Separation from Service that
qualifies as a Retirement, the Participant shall be eligible to receive his or her vested
Account Balance in either a lump sum or annual installment payments, as elected by the
Participant in accordance with Section 6.2(a) (the “Retirement Benefit”). A Participant’s
Retirement Benefit shall be calculated as of the close of business on or around the applicable
Benefit Distribution Date for such benefit, which shall be (i) the first day after the end of
the 6-month period immediately following the date on which the Participant experiences such
Separation from Service if the Participant is a Key Employee, and (ii) for all other
Participants, the date on which the Participant experiences a Separation from Service;
provided, however, if a Participant changes the form of distribution for the Retirement
Benefit in accordance with Section 6.2(b), the Benefit Distribution Date for the Retirement
Benefit shall be determined in accordance with Section 6.2(b).
	 
	6.2	 	Payment of Retirement Benefit.






	 	(a)	 	A Participant, in connection with his or her commencement of participation in
the Plan, shall elect on an Election Form to receive the Retirement Benefit in a lump
sum or pursuant to an Annual Installment Method of up to ten (10) years. If a
Participant does not make any election with respect to the payment of the Retirement
Benefit, then such Participant shall be deemed to have elected to receive the
Retirement Benefit in a lump sum.
	 
	 	(b)	 	A Participant may change the form of payment of the Retirement Benefit by
submitting an Election Form to the Committee in accordance with the following criteria:






	 	(i)	 	The election to modify the Retirement Benefit shall have no
effect until at least twelve (12) months after the date on which the election is
made; and
	 
	 	(ii)	 	The first Retirement Benefit payment shall be delayed at least
five (5) years from the Participant’s originally scheduled Benefit Distribution
Date described in Section 1.7(a).






     For purposes of applying the requirements above, the right to receive the
Retirement Benefit in installment payments shall be treated as the entitlement to a
single payment. The Committee shall interpret all provisions relating to changing
the Retirement Benefit election under this Section 6.2 in a manner that is consistent
with Code Section 409A and related Treasury guidance or Regulations.




     The Election Form most recently accepted by the Committee that has become
effective shall govern the payout of the Retirement Benefit.



-22-









 






Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 









	 	(c)	 	The lump sum payment shall be made, or installment payments shall commence, no
later than sixty (60) days after the Participant’s Benefit Distribution Date.
Remaining installments, if any, shall be paid no later than sixty (60) days after each
anniversary of the Participant’s Benefit Distribution Date.





ARTICLE 7

Termination Benefit





	7.1	 	Termination Benefit. If a Participant experiences a Separation from Service that
does not qualify as a Retirement, the Participant shall receive his or her vested Account
Balance in either a lump sum or annual installment payments, as elected by the Participant in
accordance with Section 7.2 (the “Termination Benefit”). A Participant’s Termination Benefit
shall be calculated as of the close of business on or around the Benefit Distribution Date for
such benefit, which shall be (i) the first day after the end of the 6-month period immediately
following the date on which the Participant experiences such Separation from Service if the
Participant is a Key Employee, and (ii) for all other Participants, the date on which the
Participant experiences a Separation from Service.
	 
	7.2	 	Payment of Termination Benefit.






	 	(a)	 	A Participant, in connection with his or her commencement of participation in
the Plan, shall elect on an Election Form to receive the Termination Benefit in a lump
sum or pursuant to an Annual Installment Method of up to three (3) years. If a
Participant does not make any election with respect to the payment of the Termination
Benefit, then such Participant shall be deemed to have elected to receive the
Termination Benefit in a lump sum.
	 
	 	(b)	 	A Participant may change the form of payment of the Termination Benefit by
submitting an Election Form to the Committee in accordance with the following criteria:






	 	(i)	 	The election to modify the Termination Benefit shall have no
effect until at least twelve (12) months after the date on which the election is
made; and
	 
	 	(ii)	 	The first Termination Benefit payment is delayed at least five
(5) years from the Participant’s originally scheduled Benefit Distribution Date
described in Section 1.7(b) .






     For purposes of applying the requirements above, the right to receive the
Termination Benefit in installment payments shall be treated as the entitlement to a
single payment. The Committee shall interpret all provisions relating to changing
the Termination Benefit election under this Section 7.2 in a manner that is
consistent with Code Section 409A and related Treasury guidance or Regulations.




     The Election Form most recently accepted by the Committee that has become
effective shall govern the payout of the Termination Benefit.



-23-









 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	 	(c)	 	Notwithstanding the foregoing, in the event a Participant’s vested Account
Balance at the time of his or her Benefit Distribution Date is less than $100,000, the
Participant’s entire vested Account Balance shall be paid to the Participant in a lump
sum.
	 
	 	(d)	 	The lump sum payment shall be made, or installment payments shall commence, no
later than sixty (60) days after the Participant’s Benefit Distribution Date.
Remaining installments, if any, shall be paid no later than sixty (60) days after each
anniversary of the Participant’s Benefit Distribution Date.





ARTICLE 8

Disability Benefit





	8.1	 	Disability Benefit. Upon a Participant’s Disability, the Participant shall receive a
Disability Benefit, which shall be equal to the Participant’s vested Account Balance,
calculated as of the close of business on or around the Participant’s Benefit Distribution
Date, as selected by the Committee in its sole discretion.
	 
	8.2	 	Payment of Disability Benefit. The Disability Benefit shall be paid to the
Participant in a lump sum payment no later than sixty (60) days after the Participant’s
Benefit Distribution Date.





ARTICLE 9

Death Benefit





	9.1	 	Death Benefit. The Participant’s Beneficiary(ies) shall receive a Death Benefit upon
the Participant’s death which will be equal to the Participant’s vested Account Balance,
calculated as of the close of business on or around the Participant’s Benefit Distribution
Date, as selected by the Committee in its sole discretion.
	 
	9.2	 	Payment of Death Benefit. The Death Benefit shall be paid to the Participant’s
Beneficiary(ies) in a lump sum payment no later than sixty (60) days after the Participant’s
Benefit Distribution Date.





ARTICLE 10

Beneficiary Designation





	10.1	 	Beneficiary. Each Participant shall have the right, at any time, to designate his or
her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable
under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary designation under any
other plan of an Employer in which the Participant participates.




-24-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 






	10.2	 	Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his
or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning
it to the Committee or its designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary
Designation Form and the Committee’s rules and procedures, as in effect from time to time. If
the Participant names someone other than his or her spouse as a Beneficiary, the Committee
may, in its sole discretion, determine that spousal consent is required to be provided in a
form designated by the Committee, executed by such Participant’s spouse and returned to the
Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Committee shall be entitled
to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the
Committee prior to his or her death.
	 
	10.3	 	Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received and acknowledged in writing by the Committee or its designated agent.
	 
	10.4	 	No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided in Sections 10.1, 10.2 and 10.3 above or, if all designated Beneficiaries predecease
the Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s designated Beneficiary shall be deemed to be his or her surviving spouse. If
the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of the Participant’s
estate.
	 
	10.5	 	Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary
to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in
its discretion, to cause the Participant’s Employer to withhold such payments until this
matter is resolved to the Committee’s satisfaction.
	 
	10.6	 	Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary
shall fully and completely discharge all Employers and the Committee from all further
obligations under this Plan with respect to the Participant, and that Participant’s Plan
Agreement shall terminate upon such full payment of benefits.




-25-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 





ARTICLE 11

Leave of Absence





	11.1	 	Paid Leave of Absence. If a Participant is authorized by the Participant’s Employer
to take a paid leave of absence from the employment of the Employer, and such leave of absence
does not constitute a separation from service, as determined by the Committee in accordance
with Code Section 409A and related Treasury guidance and Regulations, (i) the Participant
shall continue to be considered eligible for the benefits provided in Articles 4, 5, 6, 7, 8,
or 9 in accordance with the provisions of those Articles, and (ii) the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in accordance with Section
3.3.
	 
	11.2	 	Unpaid Leave of Absence. If a Participant is authorized by the Participant’s
Employer to take an unpaid leave of absence from the employment of the Employer for any
reason, and such leave of absence does not constitute a separation from service, as determined
by the Committee in accordance with Code Section 409A and related Treasury guidance and
Regulations, such Participant shall continue to be eligible for the benefits provided in
Articles 4, 5, 6, 7, 8, or 9 in accordance with the provisions of those Articles. However, the
Participant shall be excused from fulfilling his or her Annual Deferral Amount commitment that
would otherwise have been withheld during the remainder of the Plan Year in which the unpaid
leave of absence is taken. During the unpaid leave of absence, the Participant shall not be
allowed to make any additional deferral elections. However, if the Participant returns to
employment, the Participant may elect to defer an Annual Deferral Amount for the Plan Year
following his or her return to employment and for every Plan Year thereafter while a
Participant in the Plan, provided such deferral elections are otherwise allowed and an
Election Form is delivered to and accepted by the Committee for each such election in
accordance with Section 3.3 above.
	 
	11.3	 	Leaves Resulting in Separation from Service. In the event that a Participant’s
leave of absence from his or her Employer constitutes a separation from service, as determined
by the Committee in accordance with Code Section 409A and related Treasury guidance and
Regulations, the Participant’s vested Account Balance shall be distributed to the Participant
in accordance with Article 6 or 7 of this Plan, as applicable.





ARTICLE 12

Termination of Plan, Amendment or Modification





	12.1	 	Termination of Plan. Although each Employer anticipates that it will continue the
Plan for an indefinite period of time, there is no guarantee that any Employer will continue
the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer
reserves the right to terminate the Plan with respect to all of its Participants. In the
event of a Plan termination no new deferral elections shall be permitted for the affected
Participants and such Participants shall no longer be eligible to receive new company
contributions. However, after the Plan termination the Account Balances of such Participants
shall continue to be credited with Annual Deferral Amounts attributable to a deferral election
that was in effect prior to the Plan termination to the extent deemed necessary to comply





-26-









 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document 










	 	 	with
Code Section 409A and related Treasury Regulations, and additional amounts shall continue to
credited or debited to such Participants’ Account Balances pursuant to Section 3.10. The
Measurement Funds available to Participants following the termination of the Plan shall be
comparable in number and type to those Measurement Funds available to Participants in the Plan
Year preceding the Plan Year in which the Plan termination is effective. In addition,
following a Plan termination, Participant Account Balances shall remain in the Plan and shall
not be distributed until such amounts become eligible for distribution in accordance with the
other applicable provisions of the Plan. Notwithstanding the preceding sentence, to the
extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix), the Employer may provide that upon
termination of the Plan, all Account Balances of the Participants shall be distributed,
subject to and in accordance with any rules established by such Employer deemed necessary to
comply with the applicable requirements and limitations of Treas. Reg. §1.409A-3(j)(4)(ix).






	12.2	 	Amendment.






	 	(a)	 	Any Employer may, at any time, amend or modify the Plan in whole or in part
with respect to that Employer. Notwithstanding the foregoing, (i) no amendment or
modification shall be effective to decrease the value of a Participant’s vested Account
Balance in existence at the time the amendment or modification is made, and (ii) no
amendment or modification of this Section 12.2 or Section 13.2 of the Plan shall be
effective.
	 
	 	(b)	 	Notwithstanding any provision of the Plan to the contrary, in the event that
the Company determines that any provision of the Plan may cause amounts deferred under
the Plan to become immediately taxable to any Participant under Code Section 409A, and
related Treasury guidance or Regulations, the Company may (i) adopt such amendments to
the Plan and appropriate policies and procedures, including amendments and policies
with retroactive effect, that the Company determines necessary or appropriate to
preserve the intended tax treatment of the Plan benefits provided by the Plan and/or
(ii) take such other actions as the Company determines necessary or appropriate to
comply with the requirements of Code Section 409A, and related Treasury guidance or
Regulations.






	12.3	 	Plan Agreement. Despite the provisions of Sections 12.1 and 12.2 above, if a
Participant’s Plan Agreement contains benefits or limitations that are not in this Plan
document, the Employer may only amend or terminate such provisions with the written consent of
the Participant.
	 
	12.4	 	Effect of Payment. The full payment of the Participant’s vested Account Balance
under Articles 4, 5, 6, 7, 8, or 9 of the Plan shall completely discharge all obligations to a
Participant and his or her designated Beneficiaries under this Plan, and the Participant’s Plan Agreement shall
terminate.






-27-












 





Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 





ARTICLE 13

Administration





	13.1	 	Committee Duties. Except as otherwise provided in this Article 13, this Plan shall
be administered by a Committee, which shall consist of the Employee Benefits Committee of the
Company, as designated by the Compensation Committee of the Board, or such other committee as
the Board shall appoint. Members of the Committee may be Participants under this Plan. The
Committee shall also have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of this Plan, and (ii)
decide or resolve any and all questions, including benefit entitlement determinations and
interpretations of this Plan, as may arise in connection with the Plan. Any individual
serving on the Committee who is a Participant shall not vote or act on any matter relating
solely to himself or herself. When making a determination or calculation, the Committee shall
be entitled to rely on information furnished by a Participant or the Company.
	 
	13.2	 	Administration Upon Change In Control. Within one hundred and twenty (120) days
following a Change in Control, the individuals who comprised the Committee immediately prior
to the Change in Control (whether or not such individuals are members of the Committee
following the Change in Control) may, by written consent of the majority of such individuals,
appoint an independent third party administrator (the “Administrator”) to perform any or all
of the Committee’s duties described in Section 13.1 above, including without limitation, the
power to determine any questions arising in connection with the administration or
interpretation of the Plan, and the power to make benefit entitlement determinations. Upon
and after the effective date of such appointment, (i) the Company must pay all reasonable
administrative expenses and fees of the Administrator, and (ii) the Administrator may only be
terminated with the written consent of the majority of Participants with an Account Balance in
the Plan as of the date of such proposed termination.
	 
	13.3	 	Agents. In the administration of this Plan, the Committee or the Administrator, as
applicable, may, from time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed representative) and may from
time to time consult with counsel.
	 
	13.4	 	Binding Effect of Decisions. The decision or action of the Committee or
Administrator, as applicable, with respect to any question arising out of or in connection
with the administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.
	 
	13.5	 	Indemnity of Committee. All Employers shall indemnify and hold harmless the members
of the Committee, any Employee to whom the duties of the Committee may be delegated, and the
Administrator against any and all claims, losses, damages, expenses or liabilities arising
from any action or failure to act with respect to this Plan, except in the case of willful
misconduct by the Committee, any of its members, any such Employee or the Administrator.




-28-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 








	13.6	 	Employer Information. To enable the Committee
and/or Administrator to perform its functions, the Company and each Employer shall supply full and timely information to the Committee
and/or Administrator, as the case may be, on all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the Participants, the
compensation of its Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of its Participants, and such other pertinent information
as the Committee or Administrator may reasonably require.





ARTICLE 14

Other Benefits and Agreements





	14.1	 	Coordination with Other Benefits. The benefits provided for a Participant and
Participant’s Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Participant’s Employer.
The Plan shall supplement and shall not supersede, modify or amend any other such plan or
program except as may otherwise be expressly provided.





ARTICLE 15

Claims Procedures





	15.1	 	Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the
Committee a written claim for a determination with respect to the amounts distributable to
such Claimant from the Plan. If such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within sixty (60) days after such notice was received by
the Claimant. All other claims must be made within 180 days of the date on which the event
that caused the claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.
	 
	15.2	 	Notification of Decision. The Committee shall consider a Claimant’s claim within a
reasonable time, but no later than ninety (90) days after receiving the claim. If the
Committee determines that special circumstances require an extension of time for processing
the claim, written notice of the extension shall be furnished to the Claimant prior to the
termination of the initial ninety (90) day period. In no event shall such extension exceed a
period of ninety (90) days from the end of the initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination. The Committee shall notify the
Claimant in writing:






	 	(a)	 	that the Claimant’s requested determination has been made, and that the claim
has been allowed in full; or
	 
	 	(b)	 	that the Committee has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:




-29-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 






	 	(i)	 	the specific reason(s) for the denial of the claim, or any part
of it;
	 
	 	(ii)	 	specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
	 
	 	(iii)	 	a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of why such
material or information is necessary;
	 
	 	(iv)	 	an explanation of the claim review procedure set forth in Section
15.3 below; and
	 
	 	(v)	 	a statement of the Claimant’s right to bring a civil action under
ERISA Section 502(a) following an adverse benefit determination on review.






	15.3	 	Review of a Denied Claim. On or before sixty (60) days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s
duly authorized representative) may file with the Committee a written request for a review of
the denial of the claim. The Claimant (or the Claimant’s duly authorized representative):






	 	(a)	 	may, upon request and free of charge, have reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable ERISA
regulations) to the claim for benefits;
	 
	 	(b)	 	may submit written comments or other documents; and/or
	 
	 	(c)	 	may request a hearing, which the Committee, in its sole discretion, may grant.






	15.4	 	Decision on Review. The Committee shall render its decision on review promptly, and
no later than sixty (60) days after the Committee receives the Claimant’s written request for
a review of the denial of the claim. If the Committee determines that special circumstances
require an extension of time for processing the claim, written notice of the extension shall
be furnished to the Claimant prior to the termination of the initial sixty (60) day period.
In no event shall such extension exceed a period of sixty (60) days from the end of the
initial period. The extension notice shall indicate the special circumstances requiring an
extension of time and the date by which the Committee expects to render the benefit
determination. In rendering its decision, the Committee shall take into account all comments,
documents, records and other information submitted by the Claimant relating to the claim,
without regard to whether such information was submitted or considered in the initial benefit
determination. The decision must be written in a manner calculated to be understood by the
Claimant, and it must contain:






	 	(a)	 	specific reasons for the decision;
	 
	 	(b)	 	specific reference(s) to the pertinent Plan provisions upon which the decision
was based;




-30-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 











	 	(c)	 	a statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the Claimant’s
claim for benefits; and
	 
	 	(d)	 	a statement of the Claimant’s right to bring a civil action under ERISA Section
502(a).






	15.5	 	Legal Action. A Claimant’s compliance with the foregoing
provisions of this Article 15 is a mandatory prerequisite to a Claimant’s right to commence
any legal action with respect to any claim for benefits under this Plan.





ARTICLE 16

Trust





	16.1	 	Establishment of the Trust. In order to provide assets from which to fulfill its
obligations to the Participants and their beneficiaries under the Plan, the Company may
establish a trust by a trust agreement with a third party, the trustee, to which each Employer
may, in its discretion, contribute cash or other property, including securities issued by the
Company, to provide for the benefit payments under the Plan, (the “Trust”).
	 
	16.2	 	Interrelationship of the Plan and the Trust. The provisions of the Plan and the Plan
Agreement shall govern the rights of a Participant to receive distributions pursuant to the
Plan. The provisions of the Trust shall govern the rights of the Employers, Participants and
the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at
all times remain liable to carry out its obligations under the Plan.
	 
	16.3	 	Distributions From the Trust. Each Employer’s obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Employer’s obligations under this Plan.





ARTICLE 17

Miscellaneous





	17.1	 	Status of Plan. The Plan is intended to be a plan that is not qualified within the
meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group of management
or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted (i) in a manner consistent with
that intent, and (ii) in accordance with Code Section 409A and related Treasury guidance and
Regulations.
	 
	17.2	 	Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors
and assigns shall have no legal or equitable rights, interests or claims in any property or
assets of an Employer. For purposes of the payment of benefits under this Plan, any and all
of an Employer’s assets shall be, and remain, the general, unpledged unrestricted assets of
the Employer. An Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.





-31-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 






	 
	17.3	 	Employer’s Liability. An Employer’s liability for the payment of benefits shall be
defined only by the Plan and the Plan Agreement, as entered into between the Employer and a
Participant. An Employer shall have no obligation to a Participant under the Plan except as
expressly provided in the Plan and his or her Plan Agreement.
	 
	17.4	 	Nonassignability. Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are expressly declared to
be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or any other
person, be transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property
settlement or otherwise.
	 
	17.5	 	Not a Contract of Employment. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between any Employer and the Participant. Such
employment is hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment agreement. Nothing in this
Plan shall be deemed to give a Participant the right to be retained in the service of any
Employer, either as an Employee or a Director, or to interfere with the right of any Employer
to discipline or discharge the Participant at any time.
	 
	17.6	 	Furnishing Information. A Participant or his or her Beneficiary will cooperate with
the Committee by furnishing any and all information requested by the Committee and take such
other actions as may be requested in order to facilitate the administration of the Plan and
the payments of benefits hereunder, including but not limited to taking such physical
examinations as the Committee may deem necessary.
	 
	17.7	 	Terms. Whenever any words are used herein in the masculine, they shall be construed
as though they were in the feminine in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in all cases where they would so
apply.
	 
	17.8	 	Captions. The captions of the articles, sections and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of any of its
provisions.
	 
	17.9	 	Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and
interpreted according to the internal laws of the State of Florida without regard to its
conflicts of laws principles.




-32-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 









	17.10	 	Notice. Any notice or filing required or permitted to be given to the Committee
under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or
certified mail, to the address below:






Noven Pharmaceuticals, Inc.

Attn: Vice President, Human Resources

11960 SW 144th Street

Miami, Florida 33186




	 	 	Such notice shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.
	 
	 	 	Any notice or filing required or permitted to be given to a Participant under this Plan
shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known
address of the Participant.
	 
	17.11	 	Successors. The provisions of this Plan shall bind and inure to the benefit of the
Participant’s Employer and its successors and assigns and the Participant and the
Participant’s designated Beneficiaries.
	 
	17.12	 	Spouse’s Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass to the Participant
and shall not be transferable by such spouse in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate succession.
	 
	17.13	 	Validity. In case any provision of this Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts hereof, but this
Plan shall be construed and enforced as if such illegal or invalid provision had never been
inserted herein.
	 
	17.14	 	Incompetent. If the Committee determines in its discretion that a benefit under
this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of
handling the disposition of that person’s property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. The Committee may require proof of minority,
incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the Participant
and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of
any liability under the Plan for such payment amount.
	 
	17.15	 	Domestic Relations Orders. If necessary to comply with a domestic relations order,
as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a
spouse or former spouse of a Participant has an interest in the Participant’s benefits under
the Plan, the Committee shall have the right to immediately distribute the spouse’s or former
spouse’s interest in the Participant’s benefits under the Plan to such spouse or former
spouse.




-33-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 









	17.16	 	Distribution in the Event of Income Inclusion Under Code Section 409A. If any
portion of a Participant’s Account Balance under this Plan is required to be included in
income by the Participant prior to receipt due to a failure of this Plan to comply with the
requirements of Code Section 409A and related Treasury Regulations, the Committee may
determine that such Participant shall receive a distribution from the Plan in an amount equal
to the lesser of (i) the portion of his or her Account Balance required to be included in
income as a result of the failure of the Plan to comply with the requirements of Code Section
409A and related Treasury Regulations, or (ii) the unpaid vested Account Balance.
	 
	17.17	 	Deduction Limitation on Benefit Payments. If an Employer reasonably anticipates
that the Employer’s deduction with respect to any distribution from this Plan would be limited
or eliminated by application of Code Section 162(m), then to the extent permitted by Treas.
Reg. §1.409A-2(b)(7)(i), payment shall be delayed as deemed necessary to ensure that the
entire amount of any distribution from this Plan is deductible. Any amounts for which
distribution is delayed pursuant to this Section shall continue to be credited/debited with
additional amounts in accordance with Section 3.10. The delayed amounts (and any amounts
credited thereon) shall be distributed to the Participant (or his or her Beneficiary in the
event of the Participant’s death) at the earliest date the Employer reasonably anticipates
that the deduction of the payment of the amount will not be limited or eliminated by
application of Code Section 162(m). In the event that such date is determined to be after a
Participant’s Separation from Service and the Participant to whom the payment relates is
determined to be a Specified Employee, then to the extent deemed necessary to comply with
Treas. Reg. §1.409A-3(i)(2), the delayed payment shall not made before the end of the
six-month period following such Participant’s Separation from Service.
	 
	17.18	 	Insurance. The Employers, on their own behalf or on behalf of the trustee of the
Trust, and, in their sole discretion, may apply for and procure insurance on the life of the
Participant, in such amounts and in such forms as the Trust may choose. The Employers or the
trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such
insurance. The Participant shall have no interest whatsoever in any such policy or policies,
and at the request of the Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the insurance company or
companies to whom the Employers have applied for insurance.




-34-









 











Noven Pharmaceuticals, Inc.

Nonqualified Deferred Compensation Plan

          Master Plan Document

 





     IN WITNESS WHEREOF, the Company has amended and restated this Plan document as of November 18,
2008.



	 	 	 	 	 
	 	“Company”

Noven Pharmaceuticals, Inc.,

a Delaware corporation

 	 
	 	By:  	/s/ Jeff Mihm
 	 
	 	 	Title:  	Vice President and General Counsel 	 
	 




-35-