Document:

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                                                                    EXHIBIT 10.1

                              DEVELOPMENT AGREEMENT

                                     between

                               NOVARTIS PHARMA AG

                                       and

                           NOVEN PHARMACEUTICALS, INC.

                                  JUNE 1, 2001

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                              DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (this "AGREEMENT"), dated as of June 1, 2001, is by
and between NOVARTIS PHARMA AG, a corporation organized under the laws of
Switzerland with its principal office at Lichtstrasse 35, CH-4002 Basel,
Switzerland ("NOVARTIS"), and NOVEN PHARMACEUTICALS, INC., a Delaware
corporation with its principal office at 11960 S.W. 144th Street, Miami, Florida
33186 ("NOVEN") (Novartis and Noven are collectively referred to herein as the
"PARTIES").

                                    RECITALS

         WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. and Noven are
parties to an Amended and Restated License Agreement dated as of September 30,
1999, as amended by Amendment No. 2 thereto effective as of March 28, 2001
(collectively, the "NOVEN LICENSE AGREEMENT"), pursuant to which Noven granted
Rhone-Poulenc Rorer Pharmaceuticals, Inc. an exclusive right and license under
Noven's Patent Rights and Noven's Technology (each as defined in the Noven
License Agreement) to develop, use, sell or otherwise dispose of Licensed
Products (as defined in the Noven License Agreement);

         WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. assigned the Noven
License Agreement to RORER PHARMACEUTICAL PRODUCTS, INC, a Delaware corporation
(hereinafter referred to as "AVENTIS") pursuant to an Assignment and Assumption
Agreement dated September 30, 1999;

         WHEREAS, Novartis and Aventis have previously entered into a Sublicense
Agreement (the "EXISTING NOVARTIS PHARMA SUBLICENSE AGREEMENT") dated as of
September 30, 1999, pursuant to which Aventis granted to Novartis certain of its
rights related to "licensed product" in the "territory" (each as defined in the
Existing Novartis Pharma Sublicense Agreement); and

         WHEREAS, Novartis, Noven, Aventis and several of Aventis' affiliates
have entered into a Sublicense Agreement (the "IMPROVEMENTS SUBLICENSE
AGREEMENT") dated as of March 29, 2001, pursuant to which Aventis granted to
Novartis a sublicense to all rights and benefits of Aventis and its Affiliates
arising out of or under the Noven License Agreement in the Territory (as defined
in the Noven License Agreement), including the right to develop Licensed
Products; and

         WHEREAS, Novartis and Noven desire to develop Licensed Products and
wish to establish the terms under which such development activity will be
pursued, all on the terms and conditions contained in this Agreement;

         WHEREAS, if the development is successful and Novartis decides to
market the products resulting therefrom, Novartis shall purchase and Noven shall
supply at Novartis' request all of its, its Affiliates' and sublicencees'
worldwide requirements of the Development Products (as defined hereinafter) from
Noven under a supply agreement to be negotiated.

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         NOW, THEREFORE, in consideration of the mutual covenants and
considerations set forth herein, the Parties hereto, intending to be legally
bound, hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1. DEFINITIONS. As used herein, the following capitalized terms shall
have the following meanings:

         "AFFECTED PARTY" has the meaning set forth in Section 7.3 hereof.

         "AFFILIATE" means, when used with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
the subject Person. For purposes of this Agreement, "control" means the direct
or indirect ownership of over 50% of the outstanding voting securities of a
Person, or to control the management decisions of such Person.

         "AUTHORIZED REPRESENTATIVE" means, with respect to Noven, any Vice
President, and with respect to Novartis, a Novartis representative responsible
for product development co-signing with another Novartis representative.

          "CLAIMS" has the meaning set forth in Section 6.1(a) hereof.

         "COMBIPATCH PRODUCT" means the transdermal estrogen/progestin product
which has been developed by Noven, solely or jointly with Aventis or its
Affiliates, and is marketed and sold by Vivelle under the trademark
CombiPatch(TM) in the United States.

          "CONFIDENTIAL INFORMATION" means all proprietary data, know-how and
related information, including all regulatory approvals and related filings,
applications and data, the content of any unpublished patent applications,
operating methods and procedures, marketing, distribution and sales methods and
systems, sales figures and other business information.

         "DEVELOPMENT PLAN" shall mean a program described in Exhibit B attached
hereto, or as subsequently amended or modified by mutual agreement between
Novartis and Noven, and any subsequent extension of any such program.

         "DEVELOPMENT PRODUCT" shall mean a Licensed Product described in
Exhibit A attached hereto, which Exhibit A shall be amended or supplemented from
time to time by mutual agreement between Novartis and Noven, as additional
Licensed Products are added to this Agreement.

         "DEVELOPMENT TEAM" has the meaning set forth in Section 3.1 hereof.

         "DISCLOSING PARTY" has the meaning set forth in Section 5.1(a) hereof.

         "ESTALIS PRODUCT" means the product which is the Licensed Product as
defined in the Existing Novartis Pharma Sublicense Agreement.

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         "FDA ACT" means the United States Federal Food, Drug and Cosmetic Act,
as amended, and the regulations promulgated thereunder, as amended from time to
time.

         "GLP" means the Current Good Laboratory Practices as that term is
defined by the FDA which are in force or hereafter adopted by the FDA in its
applicable regulations promulgated or issued under the FDA Act, as amended from
time to time.

         "GMP" means the Current Good Manufacturing Practices as that term is
defined by the FDA which are in force or hereafter adopted by the FDA in its
applicable regulations promulgated or issued under the FDA Act, as amended from
time to time.

          "IND" means an Investigational New Drug Application as defined in the
FDA Act, or an equivalent application in another country or group of countries.

         "LICENSED PRODUCT" means any Combination Product (as defined in the
Noven License Agreement) to which Novartis has any rights in the Territory under
the Noven License Agreement as amended other than the Estalis Product,
including, without limitation, any improvements or modifications, or proposed
improvements or modifications, to the CombiPatch Product or the Estalis Product.

         "LOSSES" has the meaning set forth in Section 6.1(a) hereof.

         "NDA" means a New Drug Application as defined in the FDA Act, or an
equivalent application for Regulatory Approval in another country or group of
countries.

         "NOVARTIS INDEMNITEES" has the meaning set forth in Section 6.1(b)
hereof.

         "NOVEN INDEMNITEES" has the meaning set forth in Section 6.1(c) hereof.

         "NOVEN'S COSTS" shall mean the fully allocated costs including but not
limited to the fully allocated cost of goods and services and manufacturing
overhead directly related to the applicable Licensed Product, and an allocation
of all administrative and general expenses of Noven directly related to the
applicable Licensed Product. Noven's Costs shall be determined by generally
accepted accounting principles, applied on a consistent basis.

          "PERSON" means any corporation, partnership, joint venture, other
entity or natural person.

         "RECEIVING PARTY" has the meaning set forth in Section 5.1(a) hereof.

         "REGULATORY APPROVAL" means filing for and receipt of all governmental
and regulatory registrations and approvals (including, but not limited to,
approvals of all final labeling and pricing approvals of any Licensed Product)
required for the marketing and sale of any Licensed Product in the Territory.

         "REGULATORY AUTHORITY" means the U.S. Food and Drug Administration, and
any equivalent regulatory agency in any country in the Territory.

         "RELATED AGREEMENTS" means the Improvements Sublicense Agreement, the
Noven License Agreement and the Purchaser Improvements Letter Agreement.

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         "TERRITORY" means the world, except Japan.

         "UNITED STATES" means the United States, its territories and
possessions.

         "VIVELLE" means Vivelle Ventures LLC, a Delaware limited liability
company and joint venture owned by Noven and Novartis Pharmaceuticals
Corporation.

         1.2. All capitalized terms used herein and not defined herein shall
have the meanings given to such terms in the Improvements Sublicense Agreement.

                                   ARTICLE II

                                   DEVELOPMENT

         2.1. MASTER AGREEMENT.

                  (a) This Agreement shall serve as the master agreement under
which Novartis and Noven will develop Development Products under Development
Plans. Licensed Products to be developed hereunder shall be included in this
Agreement by mutual agreement of the Parties, evidenced by the addition of such
Development Products and Development Plans to Exhibits A and B hereto. No
Development Product or Development Plan shall be deemed to be effective or
accepted by either Party unless it has been signed by an Authorized
Representative of each Party.

                  (b) Subject to the terms and conditions of this Agreement,
Novartis hereby requests that Noven develop, and Noven agrees to develop, the
Development Products for chemical, toxicological, analytical, preclinical and
clinical testing by Novartis, which shall, for each Development Product, meet
the specifications described on Exhibit A attached hereto and made a part
hereof.

         2.2. NOVEN OBLIGATIONS.

                  (a) Noven shall use commercially reasonable efforts, to
perform the activities designated as Noven activities in each Development Plan
within the time period set forth in such Development Plan.

                  (b) Noven shall supply Novartis in a timely manner with all
information in Noven's possession that is reasonably required by Novartis to
complete and file an IND with any Regulatory Authority and to complete and file
an NDA with any Regulatory Authority with respect to any Development Product.

                  (c) Noven shall comply with all applicable federal, state and
local laws, rules and regulations, including GLPs and GMPs, relating to Noven's
activities to be performed hereunder.

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         2.3. NOVARTIS OBLIGATIONS.

                  (a) Novartis shall use commercially reasonable efforts to
perform such activities designated as Novartis activities in each Development
Plan within the time periods, specifically set forth therefor in such
Development Plan.

                  (b) Novartis shall supply Noven in a timely manner with all
information in Novartis' possession that is reasonably required by Noven to
perform its obligations hereunder with respect to any Development Product.

                  (c) Novartis shall comply with all applicable federal, state
and local laws, rules and regulations, including GLPs and GMPs, relating to
Novartis' activities to be performed hereunder.

         2.4. MODIFICATION AND TERMINATION OF DEVELOPMENT PLAN. The parties
understand that product development is a dynamic process that may require
modifications from time to time. Since it is the desire and intention of the
Parties to review development plans and goals, the parties may, by mutual
agreement and acting through the Development Team, from time to time modify or
amend the specifications for a Development Product or a Development Plan,
described in Exhibits A and B, respectively, as circumstances and developments
warrant. Novartis may also at any time terminate individual Development Plans
without cause upon thirty (30) days prior written notice to Noven.

         2.5. INITIAL REVIEW. At such time that Noven has developed a
Development Product for initial review which Noven reasonably believes meets the
requirements described in Exhibit A, Noven shall so notify Novartis and provide
Novartis with access to data, raw data and a supply of the Development Product
as set forth in Exhibit B for Novartis to perform, at its own expense, such
confirming tests that Novartis may desire to perform. Novartis shall notify
Noven as soon as reasonably practicable whether the Development Product meets
the requirements described in Exhibit A. In the event that such tests fail to
confirm that the Development Product meets the requirements described in Exhibit
A, then the Development Team shall convene a meeting to discuss the applicable
Development Plan, any required modifications to the Development Plan and any
additional costs that may be incurred by Noven in continuing to develop the
Development Product.

         2.6. NO WARRANTY OF SUCCESS. Noven expressly disclaims any warranty
that any Development Product will be developed successfully or that any
Development Plan will be completed successfully. Novartis expressly acknowledges
that product development is inherently risky and that, notwithstanding Noven's
commercially reasonable efforts to develop any Development Product to meet
Novartis' specifications, such development may not be successful. Novartis
further acknowledges and agrees that its sole remedy in the event a Development
Product is not developed successfully by Noven in accordance with Article 2.2 is
to terminate the Development Plan with respect to such Development Product.

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                                   ARTICLE III

                                DEVELOPMENT TEAM

         3.1. ESTABLISHMENT AND PURPOSE. Each party will designate a number of
employees who will collectively constitute the "Development Team" for each
Development Product. The Development Team will work together in good faith to
agree on a Development Plan for each Development Product that will permit
Novartis to complete development of each Development Product pursuant to the
terms of this Agreement and secure Regulatory Approval for each Development
Product. Each Development Plan will set forth a proposed schedule for the
completion of the various aspects of the technical development work required for
each Development Product and for the filing of regulatory approval applications.

         3.2. MEETINGS OF THE DEVELOPMENT TEAM. Unless otherwise agreed by the
Parties, the Development Team shall hold meetings at least twice each year with
the meeting site alternating between Novartis' headquarters and Noven's
headquarters. Meetings can be held by tele- or videoconference. Meetings shall
be co-chaired by the chief representatives of the Parties. At and between
meetings of the Development Team, each Party shall keep the other fully and
regularly informed as to its progress with its respective obligations. The
Development Team shall also monitor the progress of the Development Plan against
agreed milestones and shall report on delays in the conduct of the Development
Plan which would materially affect Noven's ability to achieve such milestones
and/or to timely and/or successfully complete the Development Plan within the
agreed time schedules, and shall recommend whether corrective action is
required.

         3.3. DISPUTE RESOLUTION. In the event of any dispute between the
parties as to any matter involving a Development Plan, the Parties shall first
refer such dispute to the full Development Team for resolution. In the event the
Development Team is unable to resolve the dispute after diligent effort within
thirty (30) days, the matter shall then be resolved pursuant to the dispute
resolution procedure set forth in Article 9.1.

         3.4 QUARTERLY REPORTING. Noven shall provide quarterly reports to
Novartis on the progress of the Development Plan. Wherever practicable such
quarterly reports shall be submitted before a meeting of the Development Team
takes place. Noven shall promptly notify the Novartis chief representative of
the Development Team in the event Noven recognises stability or other problems
arising out of the Development Plan that it considers will have a material
effect on the progress and/or likelihood of success of the Development Plan.

         3.5 ISSUANCE OF FINAL REPORT. Within thirty (30) days after the
completion of a Development Plan, Noven shall submit to Novartis a draft final
report setting forth the results of the Development Plan. Novartis shall have
sixty (60) days within which to submit a written request for reasonable changes
to be made to the draft report or require the Development Plan to be amended to
allow for additional and reasonable development work to be conducted by the
Parties. Within thirty (30) days of receiving Novartis' request for changes or
after such additional development work has been conducted Noven shall prepare
and deliver to Novartis a final report which shall take into account the changes
requested by Novartis.

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                                   ARTICLE IV

                                  COMPENSATION

         4.1 COST FOR DEVELOPMENT. For each Development Product, Novartis shall
pay to Noven the amounts set forth in the applicable Development Plan, such
amounts to be payable at the times set forth in such Development Plan. To the
extent any change is made in a Development Plan or in the specifications for a
Development Product requested by Novartis, the Parties shall mutually agree to
the amount of any incremental fees to be payable to Noven for such additional
work, and Noven shall not be required to commence any additional work until such
fee is agreed upon. Such agreement shall be reflected in an amendment to the
applicable Development Plan. All amounts payable by Novartis under a Development
Plan shall be non-refundable.

                                    ARTICLE V

                    OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS

         5.1 For the avoidance of doubt, the Parties acknowledge that, unless
otherwise expressly and specifically set forth herein, any Noven Patent Rights
and/or Noven Technology (as each such term is defined in the Noven License
Agreement) arising out of this Development Agreement are part of the Sublicensed
Noven Intellectual Property (as defined in the Improvements Sublicense
Agreement) and as such are governed by the Improvements Sublicense Agreement and
are included in the sublicense grant to Novartis thereunder.

                                   ARTICLE VI

                                 CONFIDENTIALITY

         6.1 CONFIDENTIALITY; PRESS RELEASES.

                  (a) Pursuant to the terms hereof, from time to time during the
term of this Agreement, each of Novartis and Noven and/or their respective
Affiliates and sublicensees (in such capacity, the "Disclosing Party") have
disclosed and will be disclosing to the other Party and/or its Affiliates (in
such capacity, the "Receiving Party") certain Confidential Information of the
Disclosing Party. The Receiving Party shall make no use of such Confidential
Information except in the exercise of its rights and performance of its
obligations set forth in this Agreement and the Related Agreements. The
Receiving Party shall use the same efforts to keep secret, and prevent the
disclosure to third parties of, Confidential Information of the Disclosing Party
as it would use with respect to its own Confidential Information. Confidential
Information disclosed by the Disclosing Party shall remain the sole and absolute
property of the Disclosing Party, subject to the rights granted in this
Agreement and the transactions contemplated herein. The above restrictions on
the use and disclosure of Confidential Information shall not apply to any
information which: (i) is already known to the Receiving Party at the time of
disclosure by the Disclosing Party, as demonstrated by competent proof; (ii) is

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or becomes generally available to the public other than through any act or
omission of the Receiving Party in breach of this Agreement; (iii) is acquired
by the Receiving Party from a third party who is not, directly or indirectly,
under an obligation of confidentiality to the Disclosing Party with respect to
same; or (iv) is developed independently by the Receiving Party without use,
direct or indirect, of information that is required to be held confidential
hereunder.

                  In the event the Receiving Party is required: (i) by law, rule
or regulation to disclose Confidential Information of the Disclosing Party to
regulatory authorities to obtain and maintain regulatory approval for any
Licensed Product; (ii) to disclose Confidential Information of the Disclosing
Party to respond to a regulatory or governmental inquiry concerning any Licensed
Product; or (iii) to disclose Confidential Information of the Disclosing Party
in a judicial, administrative or arbitration proceeding to enforce such Party's
rights under this Agreement, it may do so only if it: (A) provides the
Disclosing Party with as much advance written notice as possible of the required
disclosure; (B) cooperates with the Disclosing Party in any attempt to prevent
or limit the disclosure; and (C) limits disclosure, if any, to the specific
purpose at issue.

                  (b) Notwithstanding the provisions of this Section 6.1,
Novartis, its Affiliates and sublicensees, shall be permitted to disclose to
their respective distributors, wholesalers and other direct customers such
Confidential Information relating to Development Products as Novartis, its
Affiliates and sublicensees, shall reasonably determine to be necessary or
useful in order to effectively market and distribute any Development Product;
provided that such entities undertake substantially the same confidentiality
obligation as Novartis has with respect to Noven's Confidential Information.

                  (c) Except as may be required by applicable laws, rules or
regulations, including stock exchange rules, no Party will originate any
publicity, press or news release, or other public announcement, written or oral,
whether to the public press or otherwise, relating to this Agreement or the
Related Agreements, the transactions contemplated hereby or thereby, without the
prior written approval of the other Party. In the event disclosure of this
Agreement or any of the Related Agreements, any of the terms and conditions of
this Agreement or such Related Agreements, or any of the transactions
contemplated by this Agreement or such Related Agreements, is required by
applicable law, rules or regulations, then the Party required to so disclose
such information shall, to the extent possible, provide to the other Party for
its prior approval (such approval not to be unreasonably withheld or delayed) a
written copy of such public announcement. When practicable, the disclosing Party
will provide such copy to the other Party at least five (5) business days prior
to disclosure.

                  (d) Neither Party shall use the name of the other for
marketing, advertising or promotional claims without the prior written consent
of the other Party.

         6.2. INJUNCTIVE RELIEF. Each of Noven and Novartis specifically
recognizes that any breach by it of Section 5.1 may cause irreparable injury to
the other Party, its Affiliates and sublicensees and that actual damages may be
difficult to ascertain, and, in any event, may be inadequate. Accordingly (and
without limiting the availability of legal or equitable, including injunctive,
remedies under any other provisions of this Agreement), each of Noven and
Novartis agrees that in the event of any such breach, notwithstanding the
provisions of Section 8.1, the other Party shall be entitled to seek, by way of
private litigation in the first instance, injunctive relief and such other legal
and equitable remedies as may be available.

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                                   ARTICLE VII

                                 INDEMNIFICATION

         7.1. INDEMNIFICATION. In order to distribute among themselves the
responsibility for claims arising out of this Agreement, and except as otherwise
specifically provided for herein, the Parties agree as follows:

                  (a) Novartis shall defend, indemnify and hold Noven, its
Affiliates, and each of their respective officers, directors, agents, employees
and shareholders (collectively, "NOVEN INDEMNITEES") harmless, from and against,
any and all losses, obligations, liabilities, penalties and damages (including
but not limited to compensatory damages), costs and expenses (including
reasonable attorneys' fees) (collectively, "LOSSES"), which the Noven
Indemnitees may incur or suffer, and all deficiencies, actions (including,
without limitation, any proceedings to establish insurance coverage), claims,
suits, legal, administrative, arbitration, governmental or other proceedings or
investigations, and judgments (collectively, "CLAIMS"), with which any of them
may be faced arising out of: (i) any material inaccuracy in or material breach
of any representation and warranty made by Novartis in this Agreement; (ii) any
material breach by Novartis or any of its Affiliates or sublicensees, or
material failure by any of them to comply with, any covenants or obligations of
Novartis pursuant to this Agreement; (iii) the enforcement by the Noven
Indemnitees of their rights under this Section 6.1(a); (iv) any gross negligence
or willful misconduct by Novartis or its Affiliates in Novartis' performance
pursuant to this Agreement; and (v) Novartis' material violation of any
applicable law or regulation; provided, however, that Novartis shall not be
liable hereunder to the extent such Losses arise from willful misconduct or
gross negligence of the Noven Indemnitees.

                  (b) Noven shall defend, indemnify and hold Novartis, its
Affiliates and sublicensees, and each of their respective officers, directors,
agents, employees and shareholders (collectively, "NOVARTIS INDEMNITEES")
harmless, from and against, any and all Losses, which the Novartis Indemnitees
may incur or suffer, and all Claims with which any of them may be faced arising
out of (i) any material inaccuracy in or material breach of any representation
and warranty made by Noven in this Agreement; (ii) any material breach by Noven
of, or material failure by Noven to comply with, any of its covenants or
obligations pursuant to this Agreement; (iii) the enforcement by the Novartis
Indemnitees of their rights under this Section 6.1(b); (iv) any gross negligence
or willful misconduct by Noven or any of its Affiliates or sublicensees in their
performance pursuant to this Agreement; and (v) Noven's material violation of
any law or regulation; PROVIDED, HOWEVER, that Noven shall not be liable
hereunder to the extent such Losses arise from willful misconduct or gross
negligence of the Novartis Indemnitees.

                  (c) If any Claim arises as to which a right of indemnification
provided in this Article VI applies, the Person seeking indemnification (the
"indemnified party"), shall promptly notify the Party obligated under this
Article VI to indemnify the indemnified party (the "indemnifying party") thereof
in writing, and allow the indemnifying party and its insurers the opportunity to
assume direction and control of the defense against such Claim, at its sole
expense, including, without limitation, the settlement thereof at the sole
option of the indemnifying party or its insurers; PROVIDED, HOWEVER, that the
indemnifying party may not enter into any compromise or settlement without the
prior written consent of the indemnified party unless such compromise or
settlement includes as an unconditional term thereof the giving by each
plaintiff or claimant to the indemnified party of a release from all liability
in respect of such claim and only if such compromise or settlement does not
include any admission of legal wrongdoing on the part of the indemnified party.
The indemnified party shall fully cooperate with the indemnifying party and its

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insurer in the disposition of any such matter and the indemnified party will
have the right and option to participate in (but not control) the defense of any
Claim as to which this Article VI applies, with separate counsel at its election
and cost. If the indemnifying party fails or declines to assume the defense of
any such Claim within thirty (30) days after notice thereof, the indemnified
party may assume the defense thereof for the account and at the risk of the
indemnifying party. The indemnifying party shall pay promptly to the indemnified
party any Losses to which the indemnity under this Article VI applies, as
incurred.

                                  ARTICLE VIII

                         TERM AND TERMINATION; REMEDIES

         8.1. TERM. The term of this Agreement shall commence on the date hereof
and shall expire, unless sooner terminated as set forth herein, upon the
expiration or termination of the licenses sublicensed by Novartis under the
Improvements Sublicense Agreement.

         8.2. TERMINATION FOR BANKRUPTCY. Either of Noven or Novartis may
terminate this Agreement with immediate effect in the event that any proceeding
under a bankruptcy, liquidation or similar statute, or any insolvency,
receivership or dissolution proceeding is filed against the other Party, and
such proceeding is not dismissed within sixty (60) days after the filing
thereof.

         8.3. TERMINATION FOR BREACH. If either of Novartis or Noven commits a
material breach of this Agreement, or materially defaults in the performance or
observance of any provision of this Agreement, and (i) such Party fails, within
sixty (60) days after receipt of notice of the material breach from the Party
affected by the breach or default (the "AFFECTED PARTY"), to remedy such breach
or default or to have agreed to a plan for remedy of such breach or default and
(ii) the Parties shall have exhausted the dispute resolution procedures provided
in Article 8.1 without resolving their dispute regarding the material breach;
PROVIDED that the time periods contemplated by the foregoing clauses (i) and
(ii) may run concurrently and need not be sequential, the Affected Party may
terminate this Agreement.

         8.4. EFFECT OF TERMINATION. Rights and obligations set forth in
Sections 5.1 (Confidentiality; Press Releases), 6.1 (Indemnification) and
Article VIII (Miscellaneous) shall survive the termination of this Agreement,
and otherwise, except as set forth in this Section 7.4, this Agreement shall
become void and have no effect.

         8.5. FORCE MAJEURE. The obligations of the Parties under this Agreement
shall be subject to any delays or non-performance caused by: acts of God,
earthquakes, fires or floods; explosions, sabotage, riots or accidents;
regulatory, governmental or military action or inaction; strikes, lockouts or
labor trouble; perils of the sea; failure or delay in performance by third
parties, including suppliers and service providers; or any other cause beyond
the reasonable control of either Party. The Party which is not performing its
obligations under this Agreement as a result of any such event of force majeure
will promptly notify the other Party thereof and shall use commercially
reasonable efforts to resume compliance with this Agreement as soon as possible.

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                                   ARTICLE IX

                                  MISCELLANEOUS

         9.1. DISPUTES. In the event of any controversy or claim arising out of,
relating to or in connection with any provision of this Agreement, the
Improvements Sublicense Agreement or the Noven License Agreement, or the rights
or obligations of the Parties hereunder or thereunder, the Parties shall try to
settle their differences amicably between themselves. Either Party may initiate
such informal dispute resolution by sending written notice of the dispute to the
other Party, and within ten (10) days after such notice appropriate
representatives of the Parties shall meet for attempted resolution by good faith
negotiations. If such representatives are unable to resolve promptly such
disputed matter, it shall be referred to the Head of Development of Novartis
Pharma AG and the Chief Executive Officer of Noven, as the case may be, or their
respective designees, for discussion and resolution. If such personnel are
unable to resolve such dispute within thirty (30) days of initiating such
negotiations, the Parties agree first to try in good faith to settle the dispute
by mediation in New York under the Commercial Mediation Rules of the American
Arbitration Association, before resorting to litigation.

         9.2. INDEPENDENT CONTRACTORS. In making and performing this Agreement,
the Parties are acting and shall act as independent contractors. Nothing in this
Agreement shall be deemed to create an agency, joint venture or partnership
relationship between the Parties hereto. Neither Party shall have the authority
to obligate the other Party in any respect, and neither Party shall hold itself
out as having any such authority. All personnel of Noven shall be solely
employees of Noven, as applicable and shall not represent themselves as
employees of Novartis. All personnel of Novartis shall be solely employees of
Novartis, as applicable and shall not represent themselves as employees of
Noven.

         9.3. ASSIGNMENT. Neither Noven nor Novartis shall have a right to
assign this Agreement without the prior written consent of the other (which
consent shall not be unreasonably withheld or delayed); PROVIDED, HOWEVER, that
each of Noven and Novartis may assign this Agreement to any of its Affiliates
without the prior written consent of the other; PROVIDED, FURTHER, that no such
assignment of this Agreement shall relieve the assignor of any of its
obligations or liabilities under this Agreement. Notwithstanding the foregoing,
each of Noven and Novartis may assign this Agreement without the other's prior
written consent in connection with the transfer or sale of all or substantially
all of its assets or business or its merger or consolidation with another
Person.

         9.4. BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit
of and be binding upon the Parties hereto, and their respective successors and
permitted assigns. Nothing contained herein shall give to any other Person,
other than Noven, any benefit or any legal or equitable right, remedy or claim.

         9.5. AMENDMENT. This Agreement may only be modified, amended or
supplemented by an instrument in writing executed by Noven and Novartis.

                                       11
<PAGE>   13

         9.6. NO WAIVER. No term or provision hereof will be considered waived
by any Party, and no breach excused by any Party, unless such waiver or consent
is in writing signed on behalf of the Party against whom the waiver is asserted.
No consent by any Party to, or waiver of, a breach by any Party, whether express
or implied, will constitute a consent to, waiver of, or excuse of any other,
different or subsequent breach by any other Party.

         9.7. NOTICES. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be delivered
personally or sent by facsimile transmission, air courier, or registered or
certified mail, return receipt requested, addressed as follows:

If to Novartis:

Novartis Pharma AG
Lichtstrasse 35
CH-4002 Basel, Switzerland
Fax:  ++41 61 324 6859
Attn: General Counsel

With copies to:

Novartis Pharma AG
Lichtstrasse 35
CH-4002 Basel, Switzerland
Fax:  ++41 61 324 2100
Attn:  Head BD & L

If to Noven:

Noven Pharmaceuticals, Inc.
11960 S.W. 144th Street
Miami, Florida  33186
Fax:  (305) 232-1836
Attn:    Chief Executive Officer
cc:      General Counsel

or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith. Any such
communication shall be deemed to have been delivered (a) when delivered, if
delivered personally, (b) when sent (with written confirmation received), if
sent by facsimile transmission on a business day, (c) on the first business day
after dispatch (with written confirmation received), if sent by facsimile
transmission on a day other than a business day, (d) on the second business day
after dispatch, if sent by air courier, and (e) on the fifth business day after
mailing, if sent by mail.

         9.8. COUNTERPARTS. This Agreement shall become binding when any one or
more counterparts hereof, individually or taken together, shall bear the
signatures of each of the Parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original as against the
Person whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument. Each Party may execute this

                                       12
<PAGE>   14

Agreement on a facsimile of the Agreement. In addition, facsimile signatures of
authorized signatories of any Party shall be valid and binding and delivery of a
facsimile signature by any Party shall constitute due execution and delivery of
this Agreement.

         9.9. INTERPRETATION. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement is the product of
negotiations between the Parties. In construing the terms hereof, no presumption
shall operate in any Party's favor as a result of its counsel's role in drafting
the terms or provisions hereof.

         9.10. GOVERNING LAW. This Agreement and any claims, disputes or causes
of action relating to or arising out of this Agreement shall be construed in
accordance with and governed by the substantive laws of the State of New York,
U.S.A. without giving effect to the conflict of laws principles thereof.

         9.11. SEVERABILITY. If any provisions of this Agreement are determined
to be invalid or unenforceable in any jurisdiction, such provisions shall be
ineffective to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof or affecting the validity or enforceability of any of such
provisions of this Agreement in any other jurisdiction. The Parties will use
their best efforts to substitute the invalid or unenforceable provision with a
valid and enforceable one which conforms, as nearly as possible, with the
original intent of the Parties.

         9.12. ENTIRE AGREEMENT. This Agreement, including all exhibits and
schedules and the Related Agreements, the Existing Novartis Pharma Sublicense
Agreement and the Purchaser Sublicense Letter Agreement, embody the entire
agreement and understanding between the Parties hereto with respect to the
subject matter hereof and supersede all prior agreements, commitments,
arrangements, negotiations or understandings, whether oral or written, between
the Parties hereto and their respective Affiliates with respect thereto. There
are no agreements, covenants or undertakings with respect to the subject matter
of this Agreement and the Related Agreements other than those expressly set
forth or referred to herein or in such other agreements, and no representations
or warranties of any kind or nature whatsoever, express or implied, are made or
shall be deemed to be made herein by the Parties hereto except those expressly
made in this Agreement and the Related Agreements.

         9.13 FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
reasonably necessary or appropriate in order to carry out the purposes and
intent of this Agreement.

         9.14 INCONSISTENCY. In the event of any inconsistency between the terms
of this Agreement and the Improvements Sublicense Agreement, the terms of this
Agreement shall prevail.

                                       13
<PAGE>   15

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

                            NOVARTIS PHARMA AG

                           By:      /s/ J. Brokatzky-Geiger
                                   ---------------------------------------------
                                  Name:  J. Brokatzky-Geiger
                                  Title: Head of Worldwide Technical R&D

                           By:      /s/ J. Reinhardt
                                   ---------------------------------------------
                                  Name:  Joerg Reinhardt
                                  Title: Global Head Pharma Development

                            NOVEN PHARMACEUTICALS, INC.

                           By:      /s/ James B. Messiry
                                   ---------------------------------------------
                                  Name:  James B. Messiry
                                  Title: Vice President and Chief
                                            Financial Officer

                                       14<PAGE>   1

                                                                     EXHIBIT 4.1

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of July 27, 2001, among VERSO TECHNOLOGIES, INC., a Minnesota
corporation (the "Company"), and TELEMATE.NET SOFTWARE, INC., a Georgia
corporation (the "Purchaser").

                                   WITNESSETH:

         WHEREAS, the Company and the Purchaser have entered into that certain
Series B Preferred Stock Purchase Agreement dated as of May 4, 2001, as amended
by the First Amendment thereto dated as of June 1, 2001 and as further amended
by the Second Amendment thereto dated as of July 27, 2001 (as so amended, the
"Purchase Agreement;" capitalized terms used but not specifically defined herein
shall have the meanings ascribed to such terms in the Purchase Agreement),
providing, among other things, for the issuance of 750,000 shares of the
Company's Series B Preferred Stock, par value $20 per share (the "Series B
Preferred Stock");

         WHEREAS, the Company desires to grant to the Purchaser registration
rights with respect to the shares of Series B Preferred Stock, and the Purchaser
desires to receive such registration rights, all in accordance with the terms of
this Agreement; and

         WHEREAS, this Agreement is the Registration Rights Agreement referred
to in the Purchase Agreement, and the execution and delivery of this Agreement
by the Company and the Purchaser is a condition to the closing of the
transactions contemplated by the Purchase Agreement;

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

         1.       REGISTRABLE STOCK. For purposes of this Agreement, the term
"Registrable Stock" means (a) all Series B Preferred Stock now or hereafter
owned and held by the Purchaser, (b) all shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), issued or issuable pursuant to
the conversion of the Series B Preferred Stock now or hereafter owned and held
by the Purchaser or any successor or permitted assign of the Purchaser, and (c)
any security issued by the Company with respect to the Series B Preferred Stock
or such Common Stock upon any stock dividend, split or similar event, until, in
the case of such Registrable Stock, (x) it is effectively registered under the
Securities Act of 1933, as amended (the "Securities Act"), and disposed of in
accordance with the registration statement covering it; (y) it is salable by the
Purchaser pursuant to Rule 144(k) promulgated under the Securities Act; or (z)
it is sold to the public pursuant to Rule 144 promulgated under the Securities
Act.

<PAGE>   2

         2.       DEMAND AND FORM S-3 REGISTRATIONS.

                  2A.      REQUEST FOR REGISTRATION.

                           (i)      At any time and from time to time after
December 31, 2001, the Purchaser may request an underwritten registration under
the Securities Act of 1933, as amended (the "Securities Act"), of all or part
(but not less than 250,000 shares) of its Registrable Stock (a "Demand
Registration"), subject to the terms and conditions of this Agreement. Any
request (a "Registration Request") for a Demand Registration shall specify the
approximate number of shares of Registrable Stock requested to be registered.

                           (ii)     Subject to subsection (i) above and
paragraph 2F hereof, the Purchaser will be entitled to request two (2) Demand
Registrations that will be paid for by the Company and an unlimited number of
Demand Registrations that will be paid for by the Purchaser.

                           (iii)    Unless the Company is obligated pursuant to
the terms of any registration rights heretofore granted by the Company (or one
of its subsidiaries), the Company will not include in any Demand Registration
any securities other than shares of Registrable Stock, shares of other capital
stock of the Company upon which registration rights have been granted by the
Company (hereinafter referred to as "Other Registrable Securities") and
securities to be registered for offering and sale on behalf of the Company
without the prior written consent of the Purchaser. If the managing
underwriter(s) of the offering to be effected pursuant to the Demand
Registration advise the Company in writing that in their opinion the number of
shares of Registrable Stock, Other Registrable Securities and other securities
in such offering exceeds the number of shares of Registrable Stock, Other
Registrable Securities and other securities, if any, which can be sold in an
orderly manner in such offering within a price range acceptable to the
Purchaser, the Company will include in such registration, prior to the inclusion
of any securities which are not shares of Registrable Stock and Other
Registrable Securities, the number of shares of Registrable Stock and Other
Registrable Securities requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, pro rata among the holders of such Registrable Stock and such Other
Registrable Securities on the basis of the number of shares owned by each such
holder.

                  2B.      REGISTRATIONS ON FORM S-3. The Company shall use
commercially reasonable efforts to maintain its eligibility to register for
resale its securities on Form S-3 or any comparable or successor form or forms
("Form S-3"). If the Company is so eligible, then in addition to the rights set
forth in paragraph 2A hereof, at any time and from time to time after December
31, 2001 (but subject to the proviso in paragraph 2B(i) hereof), the Purchaser
may make a Registration Request for registration of not less than 250,000 shares
of the Registrable Stock on Form S-3 (an "S-3 Registration"). Such Registration
Request shall be in writing and shall state the number of shares of Registrable
Stock proposed to be disposed of and the intended method of distribution of such
shares by the Purchaser.

                           (i)      The Purchaser will be entitled to require
the Company to file an unlimited number of registration statements on Form S-3;
provided, however, that the Purchaser

                                       2
<PAGE>   3

may not require the Company to file a registration statement on Form S-3 more
than once during any calendar year.

                           (iii)    Unless the Company is obligated pursuant to
the terms of any registration rights heretofore granted by the Company (or one
of its subsidiaries), the Company will not include in any S-3 Registration any
securities other than shares of Registrable Stock, Other Registrable Securities
and securities to be registered for offering and sale on behalf of the Company
without the prior written consent of the Purchaser. If the managing
underwriter(s) of the offering to be effected pursuant to the S-3 Registration
advise the Company in writing that in their opinion the number of shares of
Registrable Stock, Other Registrable Securities and other securities in such
offering exceeds the number of shares of Registrable Stock, Other Registrable
Securities and other securities, if any, which can be sold in an orderly manner
in such offering within a price range acceptable to the Purchaser, the Company
will include in such registration, prior to the inclusion of any securities
which are not shares of Registrable Stock and Other Registrable Securities, the
number of shares of Registrable Stock and Other Registrable Securities requested
to be included which in the opinion of such underwriters can be sold in an
orderly manner within the price range of such offering, pro rata among the
holders of such Registrable Stock and such Other Registrable Securities on the
basis of the number of shares owned by each such holder.

                  2C.      SELECTION OF UNDERWRITER. The Purchaser will have the
right to select the managing underwriter or underwriters to manage the offering,
subject to the Company's approval, which will not be unreasonably withheld,
provided that the managing underwriter or underwriters shall be the firm or
firms that managed the Company's most recently completed underwritten public
offering of its common stock unless the Purchaser objects to such firm or firms
for reasons related to the ability of such firm or firms to effectively manage
the offering, and the Company may consent to the selection of such other
managing underwriter or underwriters in such event.

                  2D.      DELAYED REGISTRATIONS. Notwithstanding anything in
this Section 2 to the contrary, the Company may delay any Demand Registration or
S-3 Registration for a period of not more than sixty (60) days from the date a
Registration Request is made upon certification by an executive officer of the
Company that such registration might (i) materially interfere with or affect the
negotiation or completion of any transaction that is being contemplated by the
Company (whether or not a final decision has been made to undertake such
transaction) at the time the right to delay is exercised, or (ii) involve
initial or continuing disclosure obligations that would not be in the best
interests of the Company and its shareholders.

                  2F.      TERMINATION OF REGISTRATION RIGHTS. The Purchaser's
right to request a Demand Registration, S-3 Registration or Piggyback
Registration (as hereinafter defined) shall terminate at such time as the
Purchaser has sold the Registrable Stock or would be permitted to sell all of
the Registrable Stock in accordance with Rule 144(k) under the Securities Act.

                                       3
<PAGE>   4

         3.       PIGGYBACK REGISTRATIONS.

                  3A.      RIGHT TO PIGGYBACK. If the Company proposes to
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration, an S-3 Registration, a registration on Form S-4, a
registration solely in connection with an employee benefit or stock ownership
plan or a shelf registration filed under Rule 415(a)(1)(viii) promulgated under
the Securities Act) and the registration form to be used may be used for the
registration of Registrable Stock, then the Company will give prompt written
notice to the Purchaser of its intention to effect such a registration (the
"Piggyback Registration"). Subject to paragraphs 3B, 3C and 3D below and subject
to and in accordance with the Company's obligations to the holders of Other
Registrable Securities pursuant to the terms of any registration rights
heretofore granted by the Company or its subsidiaries, the Company will include
in such registration all shares of Registrable Stock which the Purchaser
requests the Company to include in such registration by written notice given to
the Company within fifteen (15) days after the date of the sending of the
Company's notice, subject to the terms and provisions of this Section 3.

                  3B.      PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration relates to an underwritten public offering of equity securities by
the Company and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the Company, then the Company will
include in such registration (i) first, the securities proposed to be sold by
the Company, (ii) second, any Registrable Stock and any Other Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Stock and such Other Registrable Securities on the
basis of the number of shares owned by each such holder, and (iii) third, other
securities requested to be included in such registration.

                  3C.      PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration relates to an underwritten public offering of equity securities by
holders of the Company's securities and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in an
orderly manner in such offering within a price range acceptable to the holders
initially requesting such registration, the Company will include in such
registration (i) first, the Registrable Stock and any Other Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Stock and such Other Registrable Securities on the
basis of the number of shares owned by each such holder; and (ii) second,
securities other than Registrable Stock and Other Registrable Securities.

                  3D.      EXCEPTION TO PIGGYBACK REGISTRATION RIGHT.
Notwithstanding the terms of this Section 3 to the contrary, the Purchaser's
right to include its Registrable Stock in a Piggyback Registration hereunder
shall not apply to any registration of Other Registrable Securities for which
the Company has granted registration rights pursuant to that certain
Registration Rights Agreement dated as of January 30, 2001 among the Company,
Strong River Investments, Inc. and Bay Harbor Investments, Inc., a copy of which
is attached to the Schedule of Exceptions to the Purchase Agreement, unless the
Company obtains the prior written consent

                                       4
<PAGE>   5

of the parties thereto to the inclusion of the Purchaser's Registrable Stock in
such registration. The Company shall use its reasonable best efforts to obtain
such consents and, subject to the terms of this Agreement, to include the
Purchaser's Registrable Stock in such registration.

         4.       REGISTRATION PROCEDURES. Whenever the Purchaser has requested
that any Registrable Stock be registered pursuant to this Agreement, subject to
the limitations set forth herein, the Company will use its best efforts to
effect the registration and the sale of such Registrable Stock in accordance
with the intended method of distribution thereof and will, as expeditiously as
possible (subject to the terms hereof):

                  (i)      prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Stock and
use its best efforts to cause such registration statement to become effective,
provided that before filing a registration statement or prospectus or any
amendments or supplements thereto in connection with a Demand Registration or
S-3 Registration, as the case may be, the Company will furnish to the counsel
selected by the Purchaser copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel;

                  (ii)     prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than the reasonable
time necessary to permit the Purchaser to complete the distribution described in
such registration statement, and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of distribution by the sellers thereof set forth in such registration
statement;

                  (iii)    furnish to the Purchaser such number of copies of
such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as the Purchaser may reasonably request in
order to facilitate the disposition of the Registrable Stock owned by the
Purchaser;

                  (iv)     use its best efforts to register or qualify such
Registrable Stock under the securities or blue sky laws of such jurisdictions as
the Purchaser reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable the Purchaser to consummate
the disposition in such jurisdictions of the Registrable Stock owned by the
Purchaser, provided that the Company will not be required (i) to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) to subject itself to
taxation in any such jurisdiction or (iii) to consent to general service of
process in any such jurisdiction;

                  (v)      notify the Purchaser, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at

                                       5
<PAGE>   6

the request of any the Purchaser, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the Purchaser,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading;
provided, however, the Company shall not be obligated to prepare and furnish any
such prospectus supplements or amendments relating to any material nonpublic
information at any such time as the Board of Directors of the Company has
determined that, for good business reasons, the disclosure of such material
nonpublic information at that time would be materially detrimental to the
Company in the circumstances and is not otherwise required under applicable law
(including applicable securities laws) provided the Company may only delay its
obligations pursuant to the aforementioned proviso for a period of 60 days in
any 180-day period;

                  (vi)     use its best efforts to cause all such Registrable
Stock to be listed on each securities exchange on which similar securities
issued by the Company are then listed and to be qualified for trading on each
system on which similar securities issued by the Company are from time to time
qualified;

                  (vii)    provide a transfer agent and registrar for all such
Registrable Stock not later than the effective date of such registration
statement and thereafter maintain such a transfer agent and registrar;

                  (viii)   enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Purchaser reasonably requests in order to expedite or facilitate the
disposition of such Registrable Stock;

                  (ix)     make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such registration
statement;

                  (x)      otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months beginning
with the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;

                  (xi)     in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Registrable Stock included in such registration statement
for sale in any jurisdiction, the Company will use its reasonable best efforts
promptly to obtain the withdrawal of such order; and

                                       6
<PAGE>   7

                  (xii)    at the request of the Purchaser in connection with an
underwritten offering, furnish to the Purchaser a copy, or upon request, a
signed counterpart, addressed to the Purchaser (and the underwriters, if any) of
(a) an opinion of counsel for the Company, dated the effective date of such
registration statement (or, if such registration includes an underwritten public
offering, dated the date of closing under the underwriting agreement), and (b) a
"comfort" letter, dated the effective date of such registration statement (or,
if such registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), signed by the independent public
accountants who have audited the Company's financial statements included in such
registration statement, covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of the accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants letters delivered to the underwriters in underwritten
public offerings of securities and such other matters as the underwriter may
reasonably request.

         5.       REGISTRATION EXPENSES.

                  5A.      DEFINITION. The term "Registration Expenses" means
all expenses incident to the Company's performance of or compliance with this
Agreement, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities and blue sky laws, printing,
messenger and delivery expenses, and fees and expenses of counsel for the
Company and all independent certified public accountants, underwriters
(excluding underwriting discounts and commissions, which shall be paid by the
selling stockholders out of the proceeds of the offering) and other individuals,
corporations, partnerships, limited liability companies or other similar
entities ("Persons") retained by the Company.

                  5B.      PAYMENT. The Company shall pay the Registration
Expenses in connection with two (2) Demand Registrations and any and all S-3
Registrations and Piggyback Registrations. In connection with two (2) Demand
Registrations and each S-3 Registration and Piggyback Registration, the Company
will reimburse the Purchaser for the reasonable fees and disbursements of one
counsel chosen by the Purchaser.

         6.       INDEMNIFICATION.

                  6A.      INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the extent permitted by law, the Purchaser, its officers and
directors and each Person who controls the Purchaser (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by the
Purchaser expressly for use therein or by the Purchaser's or an underwriter's
failure to deliver a copy of the registration statement or prospectus or any
amendments or

                                       7
<PAGE>   8

supplements thereto after the Company has furnished the Purchaser or underwriter
with a sufficient number of copies of the same, provided that the obligations of
the Company hereunder shall not apply to amounts paid in settlement of any such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld). In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Purchaser unless otherwise provided in the underwriting
agreement.

                  6B.      INDEMNIFICATION BY THE PURCHASER. In connection with
any registration statement in which the Purchaser is participating, the
Purchaser will furnish to the Company in writing such information and affidavits
as the Company reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law, will
indemnify the Company, its directors and officers and each Person who controls
the Company (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by the Purchaser and stated to
be specifically for use therein, provided that (i) the obligation to indemnify
will be limited to the net amount of proceeds received by the Purchaser from the
sale of Registrable Stock pursuant to such registration statement and (ii) the
obligations of the Purchaser hereunder shall not apply to amounts paid in
settlement of any such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) if such settlement is effected without the consent
of the Purchaser (which consent shall not be unreasonably withheld).

                  6C.      NOTICE; DEFENSE OF CLAIMS. Any Person entitled to
indemnification hereunder will give prompt written notice to the indemnifying
party of any claim with respect to which it seeks indemnification, and such
indemnifying party will, upon request of the indemnified party, assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be subject to
any liability for any settlement made by the indemnified party without its
consent (but such consent will not be unreasonably withheld). An indemnifying
party who assumes the defense of a claim will not be obligated to pay the fees
and expenses of separate counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the written opinion of
counsel to the indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which case the indemnified party may retain its own counsel (which
counsel will be reasonably satisfactory to the indemnifying party) and the fees
and expenses of such counsel will be paid by the indemnifying party.

                  6D.      CONTRIBUTION. If the indemnification provided for in
this Section 6 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any

                                       8
<PAGE>   9

loss, liability, claim, damage or expense referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party, on the
one hand, and of the indemnified party, on the other, in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission. The obligation to contribute
will be limited to the amount by which the net amount of proceeds received by
the Purchaser from the sale of Registrable Stock exceeds the amount of losses,
liabilities, damages, and expenses which the Purchaser has otherwise been
required to pay by reason of such statements or omissions.

                  6E.      SURVIVAL. The indemnification and contribution
provided for under this Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party or
any officer, director or controlling Person of such indemnified party and will
survive the transfer of securities.

         7.       PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Purchaser may
not participate in any registration hereunder which is underwritten unless the
Purchaser (i) agrees to sell its Registrable Stock on the basis provided in any
underwriting arrangements approved by the Purchaser, and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements, provided that the Purchaser shall not be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding the Purchaser as are required by the
underwriters.

         8.       MISCELLANEOUS.

                  8A.      NO INCONSISTENT AGREEMENTS. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the holders of Registrable
Stock in this Agreement.

                  8B.      NOTICES. All notices, requests and other
communications required or permitted under this Agreement (collectively,
"notices") shall be in writing and, sent or delivered in one of the manners
expressly contemplated in this Section 8B. If mailed, notices must be sent by
prepaid first-class mail, certified, return receipt requested, and shall be
deemed to have been received on the earlier of the date shown on the receipt or
three (3) Business Days after the post-mark date thereof. In addition, notices
hereunder may be delivered by hand in which event the notice shall be deemed
effective when delivered or by a nationally recognized overnight courier, in
which event the notice shall be deemed delivered the first Business Day

                                       9
<PAGE>   10

after it is accepted by the courier for next day delivery. All such notices
shall be given to the parties hereto at the following addresses:

                    (a)  If to the Company:

                    Verso Technologies, Inc.
                    400 Galleria Parkway
                    Suite 300
                    Atlanta, Georgia  30339
                    Attention: Chief Financial Officer
                    Telecopier No.: (678) 589-3750

                    with a required copy to:

                    Rogers & Hardin LLP
                    229 Peachtree Street, N.E.
                    2700 International Tower
                    Atlanta, Georgia  30303
                    Attention:  Steven E. Fox, Esq.
                    Telecopier No.: (404) 525-2224

                    (b)  If to the Purchaser:

                    Telemate.Net Software, Inc.
                    4250 Perimeter Park South
                    Suite 200
                    Atlanta, Georgia 30341-1201
                    Attention:  Chief Financial Officer
                    Telecopier No.: (770) 936-3710

                    with a required copy to:

                    Morris, Manning & Martin, LLP
                    1600 Atlanta Financial Center
                    3343 Peachtree Road
                    Atlanta, GA 30326
                    Attention: John C. Yates, Esq.
                    Telecopier No.: (404) 365-9532

                  Any party hereto may change the address to which notices shall
be directed under this Section by giving written notice of such change to the
other parties.

                  8C.      REMEDIES. Each party hereto will be entitled to
enforce any rights it may have under any provision of this Agreement
specifically, to recover damages caused by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law.

                                       10
<PAGE>   11

The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.

                  8D.      AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, no waiver, amendment, modification, termination or cancellation of this
Agreement, or of any of the terms or conditions hereof, shall be effective
unless made in writing signed by the Company and the Purchaser.

                  8E.      SUCCESSORS AND ASSIGNS. This Agreement, and the
rights and obligations of the Purchaser hereunder, may not be assigned by the
Purchaser without the consent of the Company.

                  8F.      SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

                  8G.      ENTIRE AGREEMENT. This Agreement, the Transaction
Documents and the Purchase Agreement embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.

                  8H.      HEADINGS. The headings of this Agreement are for
convenience only and do not constitute a part of this Agreement.

                  8I.      GOVERNING LAW. The construction, validity and
interpretation of this Agreement will be governed by the internal laws of the
State of Georgia, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Georgia or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Georgia.

                  8J.      FURTHER ASSURANCES. Each party to this Agreement
hereby covenants and agrees, without the necessity of any further consideration,
to execute and deliver any and all such further documents and take any and all
such other actions as may be necessary to appropriate to carry out the intent
and purposes of this Agreement and to consummate the transactions contemplated
hereby.

                  8K.      COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which shall be one and the same document. Copies (whether photostatic,
facsimile or otherwise) of signatures hereto shall be deemed to be originals and
may be relied on to the same extent as the originals.

                  8L.      LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the

                                       11
<PAGE>   12

Purchaser, enter into any agreement with any holder or prospective holder of any
securities of the Company giving such holder or prospective holder any
registration rights the terms of which are, in the aggregate, substantially the
same as or more favorable than the rights granted hereunder, except if such
registration rights are being granted by the Company in connection with a
transaction, the proceeds from which are intended to fund any portion of the
purchase price for or the acquisition of the stock or assets of the entity
described in the Subsidiary Purchase Agreement (as defined in the Purchase
Agreement), in which case, the Company may grant such registration rights
without the prior written consent of the Purchaser provided they are also
granted to the Purchaser in respect of the Registrable Stock.

                             [Signatures Next Page]

                                       12
<PAGE>   13

         IN WITNESS WHEREOF, this Registration Rights Agreement has been
executed and delivered by the duly authorized officers of the parties hereto as
of the date set forth above.

                            VERSO TECHNOLOGIES, INC.

                            By:          /s/ Juliet M. Reising
                               ------------------------------------------------
                                Its:  Executive Vice President and Chief
                                      Financial Officer
                                      -----------------------------------------

                            TELEMATE.NET SOFTWARE, INC.

                            By:          /s/ Janet Van Pelt
                               ------------------------------------------------
                                Its:     Chief Financial Officer
                                    -------------------------------------------

                                       13

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