Document:

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                                                                    EXHIBIT 10.3

                            SHAREHOLDERS AGREEMENT

     AGREEMENT, made as of the 19th day of March, 1997, by and among Logical
Design Solutions, Inc., a New Jersey corporation (the "Company"), Mary Kay
Brooks, Darren Bryden (individually, a "Management Shareholder" and
collectively, the "Management Shareholders"), and Summit Ventures IV, L.P.
"Summit Investors III, L.P. and Paul F. Lozier (individually an "Investor" and
collectively, the "Investors" and, together with the Management Shareholders,
the "Shareholders").

     WHEREAS, the Investors are acquiring 9% Senior Subordinated Debentures and
Warrants (the "Warrants") to purchase an aggregate of 215,000 shares of common
stock, no par value per share, of the Company (the "Common Stock"), pursuant to
the terms of a 9% Senior Subordinated Debenture and Warrant Purchase Agreement
dated as of the date hereof among the Company, the Investors and certain
shareholders of the Company (the "Purchase Agreement");

     WHEREAS, it is a condition to the obligations of the parties under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof.

     NOW, THEREFORE, in consideration of the foregoing, the agreements set forth
below, and the parties' desire to provide for continuity of ownership of the
Company to further the interests of the Company and its present and future
shareholders, the parties hereby agree with each other as follows:

     1. Definition of Shares. As used in this Agreement, "Shares" shall mean and
        --------------------
include all shares of the Common Stock and other equity securities of the
Company now owned or hereafter acquired by a Shareholder, including, without
limitation, the shares of Common Stock issuable upon exercise of the Warrants.
Other terms used as defined terms herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.

     2. Prohibited Transfers. No Management Shareholder shall sell, assign,
        --------------------
transfer, pledge, hypothecate, mortgage, encumber or dispose of all or any of
his or her Shares except in compliance with the terms of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, (a) a
Management Shareholder may transfer without the necessity of prior approval all
or any of his or her Shares by way of gift to his or her spouse, to any of his
or her lineal descendants or ancestors, or to any trust for the benefit of any
one or more of the Shareholder, his or her spouse, or his or her lineal
descendants or ancestors, and (b) a Shareholder may transfer all or any of his
or her Shares by will or the laws of descent and distribution; provided that any
such transferee under clause (a) or (b) of this Section 2 (referred to herein as
"Permitted Transferees") shall agree in writing with the Company and the other
Shareholders, as a condition to such transfer, to be bound by all of the
provisions of this Agreement to the same extent as if such transferee were the
Management Shareholder transferring such Shares.
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     3.  Right of First Refusal on Dispositions.
         --------------------------------------
          (a) If at any time a Management Shareholder (a "Selling Management
Shareholder") desires to sell or otherwise transfer all or any part of his or
her Shares pursuant to a bona fide offer from a third party (the "Proposed
Transferee"), the Selling Management Shareholder shall submit a written offer
(the "Offer") by delivering the Offer to the Company and the non-selling
Shareholders (the "Other Shareholders") to sell such Shares (the "Offered
Shares") to the Company and the Other Shareholders on terms and conditions,
including price, not less favorable than those on which the Selling Management
Shareholder proposes to sell such Offered Shares to the Proposed Transferee. The
Offer shall disclose the identity of the Proposed Transferee, the number of
Offered Shares proposed to be sold, the total number of Shares owned by the
Selling Management Shareholder, the terms and conditions, including price, of
the proposed sale, and any other material facts relating to the proposed sale.
The Offer shall further state (i) that the Company and the Other Shareholders
may acquire, in accordance with the provisions of this Agreement, any of the
Offered Shares for the price and upon the other terms and conditions set forth
therein and (ii), if all such Offered Shares are not purchased by the Company
and the Other Shareholders, the Other Shareholders who have not purchased any
such Offered Shares pursuant to this Section 3 may exercise their rights
provided pursuant to Section 4 hereof.

          (b) The Company shall have the first right to purchase the Offered
Shares. If the Company desires to purchase all or any part of the Offered
Shares, it shall communicate in writing its election to purchase any of the
Offered Shares to the Selling Management Shareholder and the Other Shareholders,
which communication shall state the number of Offered Shares that the Company
desires to purchase and the number of Offered Shares, if any, remaining for
purchase by the Other Shareholders pursuant to Section (c) below, and shall be
given within 20 days of the date the Offer was made.

          (c) If the Company does not elect to purchase all of the Offered
Shares within the time period specified above, each Other Shareholder shall have
the right to purchase that number of remaining Offered Shares as shall be equal
to the number of such remaining Offered Shares multiplied by a percentage equal
to two times the percentage of Shares (calculated on a fully diluted basis)
owned by such Other Shareholder (or issuable to such Other Shareholder upon
exercise of Warrants owned by such Other Shareholder). The percentage of Shares
owned on a fully diluted basis by any Other Shareholder shall be calculated as
if all options and Warrants which are then exercisable have been exercised in
full. The amount of such Offered Shares that each Other Shareholder is entitled
to purchase under this Section 3(c) shall be referred to as its "Pro Rata
Fraction."

          (d) Those Other Shareholders who desire to purchase all or any part of
the remaining Offered Shares shall communicate in writing their election to
purchase to the Selling Management Shareholder, which communication shall state
the number of remaining Offered Shares said Other Shareholders desire to
purchase and shall be provided to the Selling Management Shareholder within 30
days of the date the Offer was made. Such communication, together with the
communication of the Company specified above, shall, when taken in conjunction
with the Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares. Sales of such
Offered Shares to be

                                      -2-
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sold to the Company, the Other Shareholders pursuant to this Section 3 shall be
made at the offices of the Company within 60 days following the date the Offer
was made.

          (e) To the extent the Company and the Other Shareholders do not
purchase all the Offered Shares, then all, but not fewer than all, of the
remaining Offered Shares may be sold by the Selling Management Shareholder at
any time within 120 days after the date the Offer was made, subject to the
provisions of Section 4. Any such sale shall be to the Proposed Transferee, at
not less than the price and upon other terms and conditions, if any, not more
favorable to the Proposed Transferee than those specified in the Offer. If the
Offered Shares are not sold within such 120-day period, they shall continue to
be subject to the requirements of a prior offer pursuant to this Section 3, and
may not be transferred except in compliance with the provisions of this Section
3. If Offered Shares are sold pursuant to this Section 3 to any purchaser who is
not a party to this Agreement, the purchaser of such Offered Shares shall
execute a counterpart of this Agreement as a precondition of the purchase of
such Offered Shares and any Offered Shares sold to such purchaser shall continue
to be subject to the provisions of this Agreement.

          (f) In the event a Management Shareholder is required to transfer
Shares pursuant to a court order, decree or judgment, or pursuant to a
settlement of a court proceeding such transfer shall be deemed to be a sale for
purposes of this Section 3, and shall entitle the Company and the Other
Shareholders to exercise their right of first refusal with respect to such
transfer. In any event, the Management Shareholder who is required to make such
transfer shall provide an Offer as herein provided. The price at which the
Shares may be purchased pursuant to such Offer shall be the price as set by the
court which issued such order, decree or judgment, or the price as set by the
parties to such settlement. If a price is not determined by such court, or by
the parties to such settlement, then the price shall be determined pursuant to
an appraisal conducted in accordance with the provisions of Section 2 of the
Redemption Agreement, with one appraiser chosen by the Management Shareholder
who is making such transfer, and the other appraiser chosen by the Company.

   4.  Right of Participation in Sales.
       -------------------------------
          (a) If at any time following compliance with the provisions of Section
3 (if applicable), any Selling Management Shareholder desires to transfer all or
any part of the Shares owned by him or it to any third party (not including the
Company), then each Other Shareholder (other than those who have elected to
purchase Shares pursuant to Section 3) shall have the right to sell to the third
party, as a condition to such sale by the Selling Management Shareholder, at the
same price per share and on the same terms and conditions as involved in such
sale by the Selling Management Shareholder, a pro rata portion of the amount of
                                              --- ----
Shares proposed to be sold to the third party; provided, however, that such
                                               --------  -------
right shall not apply to any sale or transfer by a Management Shareholder to the
Company. The "pro rata portion" of Shares which the Other Shareholder shall be
              --- ----
entitled to sell to the third party shall be that number of Shares as shall
equal the number of Shares proposed to be sold to the third party multiplied by
a fraction, the numerator of which is the aggregate of all shares of Common
Stock which are then held by the Other Shareholder wishing to participate in the
sale or issuable upon exercise of Warrants held by such Other Shareholder, and
the denominator of which is the aggregate of all shares of Common Stock which
are then held by all Other Shareholders wishing to participate in any sale

                                      -3-
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under this Section 4 or issuable upon exercise of Warrants held by such Other
Shareholders, including the Selling Management Shareholder.

          (b) If the Selling Management Shareholder wishes to make a sale to a
third party which is subject to this Section 4, the Selling Management
Shareholder shall, after complying with the provisions of Section 3, give to
each Other Shareholder notice of such proposed sale, and stating that all Shares
were not purchased pursuant to the Offer as discussed in Section 3. Such notice
shall be given at least 20 days prior to the date of the proposed sale to the
third party. Each Other Shareholder wishing to so participate in any sale under
this Section 4 shall notify the selling Management Shareholder in writing of
such intention within 15 days after such Other Shareholder's receipt of the
notice described in the preceding sentence.

          (c) The Selling Management Shareholder and each participating Other
Shareholder shall sell to the third party all, or at the option of the third
party, any part of the Shares proposed to be sold by them at not less than the
price and upon other terms and conditions, if any, not more favorable to the
third party than those in the notice provided by the Selling Management
Shareholder under subparagraph (b) above; provided, however, that any purchase
                                          --------  -------
of less than all of such Shares by the third party shall be made from the
Selling Management Shareholder and each participating Other Shareholder pro rata
                                                                        --- ----
based upon the relative number of the Shares that the Selling Management
Shareholder and each participating Other Shareholder is otherwise entitled to
sell pursuant to Section 4(a).

          (d) If any Shares are sold pursuant to this Section 4 to any purchaser
who is not a party to this Agreement, the purchaser of such Shares shall execute
a counterpart of this Agreement as a precondition to the purchase of such Shares
and such Shares shall continue to be subject to the provisions of this Agreement
 .

   5.  Election of Directors.
        ---------------------
          (a) During the term of this Agreement, at each annual meeting of the
shareholders of the Company, and at each special meeting of the shareholders of
the Company called for the purpose of electing directors of the Company, and at
any time at which shareholders of the Company shall have the right to, or shall,
vote for directors of the Company, then, and in each event, the Shareholders
shall vote all Shares owned by them for the election of a Board of Directors
consisting of not more than seven directors, designated in the manner designated
below (subject to adjustment in accordance with the provisions of subparagraph
(b) of this Section 5):

                (i)   two directors shall be designated by Summit Ventures IV,
L.P. (so long as it and its affiliates shall own or have the right to acquire at
least 33 1/3% of the Shares which it owns or has the right to acquire on the
date hereof), one of which designees shall initially be Kevin P. Mohan, with the
second such designee to be named by Summit Ventures IV, L.P. at such time as it
deems appropriate;

                (ii)  one director shall be Mary Kay Brooks, (so long as she and
her permitted transferees described in Section 2 shall continue to hold at least
33 1/3% of the shares of Common Stock owned by her on the date hereof), who
shall serve as chair; and

                                      -4-
<PAGE>

                (iii) four directors shall be designated by holders of a
majority of the shares of Common Stock outstanding on a fully diluted basis.

          (b) Notwithstanding the provisions of subparagraph (a) of this Section
5, if there shall occur an Event of Default under the Purchase Agreement, then
upon the date of occurrence of such Event of Default, and upon the first day of
each successive two fiscal quarter period following the occurrence of such Event
of Default (commencing with the first day of the second full fiscal quarter
after such Event of Default), the number of Directors designated by Summit
Ventures IV, L.P., designated pursuant to Section 5(a)(i) shall be increased by
one additional Director, and the total number of Directors set forth in Section
5(a) shall be increased accordingly. Once the number of Directors designated
pursuant to Section 5(a)(i) and the size of the Board of Directors have been
increased pursuant to this Section 5(b), they shall not thereafter be reduced
upon waiver of such Event of Default; provided, however, that with respect to
any Event of Default resulting from a breach of Section 4.10 of the Purchase
Agreement, if subsequent to such Event of Default the Company achieves
Consolidated Net Income Before Taxes of at least $ 1.00 during any twelve (12
month) period commencing with the last day of the second fiscal quarter ending
subsequent to the occurrence of such Event of Default, then on one occasion such
Event of Default shall be considered cured and the number of Directors which can
be designated by Summit Ventures IV, L.P. shall be reduced (and such additional
designated Director or Directors shall resign) to the original number set forth
in Section 5(a) hereof.

   6. Insurance. The Company shall at all times maintain for the benefit of its
      ---------
officers and directors liability insurance in scope and amount, and from an
insurer, reasonably acceptable to the Investors; provided, however, that the
Company shall not be obligated to maintain such insurance if in the good faith
judgment of its Board of Directors such insurance is not available at a
reasonable cost.

   7. Compensation Committee. There shall be established at all times during the
      ----------------------
term of this Agreement a Compensation Committee of the Board of Directors (the
"Compensation Committee"), one member of which shall be such one of the
directors designated pursuant to Section 5(a)(i) as shall be specified by Summit
Ventures IV, L.P.  The Compensation Committee will determine the compensation of
all senior employees and consultants of the Company (including salary, bonus,
equity participation and benefits) consistent with compensation of companies
similar to the Company; provided that no member of the Compensation Committee
may vote on his or her own compensation.  The compensation of senior employees
and consultants shall be reviewed by the Compensation Committee on an annual
basis, and the decision by a majority of the members of the Compensation
Committee will control the Committee's actions.  Within thirty (30) days after
the date hereof the Compensation Committee shall adopt a statement of policy
concerning compensation of senior employees, which statement shall be reasonably
acceptable to a majority of the committee members, including the director
designated pursuant to Section 5(a)(i).  Any decision of the Committee involving
the grant of options (including the pricing and other terms thereof, and prior
to the adoption of the statement of policy referenced in the preceding sentence,
any increase in compensation paid to a member of senior management, such
majority must include a director designated pursuant to Section 5(a)(i);

                                      -5-
<PAGE>

   8. Term. This Agreement shall terminate on the earlier to occur of (a)
      ----
immediately prior to consummation of the first Qualified Public Offering, (b)
the tenth anniversary of the date of this Agreement or (c) all Warrants have
been redeemed by the Company pursuant to Paragraph 1 of the Redemption
Agreement.

   9. Preemptive Rights.  (a) The Company hereby grants to each Investor so long
      -----------------
as it shall own, of record or beneficially, or have the right to acquire from
the Company, any shares of Common Stock, the right to purchase all or part of
its pro rata share of New Securities (as defined in subparagraph (b)) which the
Company, from time to time, proposes to sell and issue.  A Shareholder's pro
rata share, for purposes of this preemptive right, is the ratio of the number of
shares of Common Stock which such Shareholder owns or has the right to acquire
from the Company to the total number of shares of Common Stock then outstanding
(giving effect to the exercise of all Warrants then outstanding).  The
Shareholders shall have a right of over-allotment pursuant to this Section 9
such that to the extent a Shareholder does not exercise its preemptive right in
full hereunder, such additional shares of New Securities which such Shareholder
did not purchase may be purchased by the other Shareholders in proportion to the
total number of shares of Common Stock which each such other Shareholder owns or
has the right to acquire from the Company compared to the total number of shares
of Common Stock which all such other Investors own or have the right to acquire
from the Company.

          (b) "New Securities" shall mean any capital stock of the Company,
whether now authorized or not, and rights, options or warrants to purchase
capital stock, and securities of any type whatsoever that are, or may become,
convertible into or exchangeable for capital stock, issued on or after the date
hereof; provided that the term "New Securities" does not include (i) Common
        --------
Stock issued as a stock dividend to holders of Common Stock or upon any stock
split, subdivision or combination of shares of Common Stock, (ii) the aggregate
number of shares of Common Stock issuable upon exercise of options permitted
under the Purchase Agreement, (iii) the Warrant Shares, (iv) Common Stock issued
in connection with a Qualified Public Offering, and (v) Common Stock issued in
connection with an acquisition, merger or other transaction which has been
approved by vote of the Board of Directors, including the affirmative vote of
any director designated pursuant to Section 5(a)(i) and (vi) capital stock and
rights, options or warrants to purchase and securities of any type whatsoever
which are convertible into or exchangeable for capital stock which are
outstanding on the date hereof.

          (c) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Shareholder written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same. Each Shareholder shall have 10 business days
from the date of receipt of any such notice to agree to purchase up to the
Shareholder's pro rata share of such New Securities (any over-allotment amount
pursuant to the operation of subparagraph (a) hereof) for the price and upon the
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.

          (d) In the event any Shareholder fails to exercise in full its
preemptive right (after giving effect to the over-allotment provision of
subparagraph (a) hereof), the Company shall have 90 days thereafter to sell the
New Securities with respect to which the Shareholder's option was not exercised,
at a price and upon terms no more favorable to the purchasers thereof

                                      -6-
<PAGE>

than specified in the Company's notice. To the extent the Company does not sell
all the New Securities without first again offering such securities to the
Shareholders in the manner provided above.

          (e) The rights granted to the Shareholders under this Section 9 shall
expire immediately prior to, and shall not apply in connection with, the
consummation of the first Qualified Public Offering.

   10. Specific Enforcement. Each Shareholder expressly agrees that the Other
       --------------------
Shareholders and the Company may be irreparably damaged if this Agreement is not
specifically enforced.  Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by any Shareholder, the Other
Shareholders and the Company shall, in addition to all other remedies, each be
entitled to apply for a temporary or permanent injunction, and/or a decree for
specific performance, in accordance with the provisions hereof.

   11. Legend. Each certificate evidencing any of the Shares now owned or
       ------
hereafter acquired by the Shareholders shall bear in addition to any other
legends required by other agreements or by law a legend substantially as
follows:

   "Any sale, assignment, transfer or other disposition of the shares
   represented by this certificate is restricted by, and subject to, the terms
   and provisions of a certain Shareholders' Agreement dated as of March 19,
   1997. A copy of said Agreement is on file with the Secretary of the
   Corporation."

   12. Notices. Notices given hereunder shall be deemed to have been duly given
       -------
on the date of personal delivery or on the date of postmark if mailed by
certified or registered mail, return receipt requested, to the party being
notified at his or its address specified on Schedule I hereto or such other
address as the addressee may subsequently notify the other parties of in
writing.

   13. Entire Agreement and Amendments. This Agreement constitutes the entire
       -------------------------------
agreement of the parties with respect to the subject matter hereof and neither
this Agreement nor any provision hereof may be waived, modified, amended or
terminated except by a written agreement signed by the parties hereto; provided,
                                                                       --------
however, that Investors owning at least a majority of the Shares owned by all
-------
Investors may effect any such waiver, modification, amendment or termination on
behalf of all of the Investors and Management Shareholders owning at least a
majority of the Shares owned by all Management Shareholders may effect any such
waiver, modification, amendment or termination on behalf of all of the
Management Shareholders.  Each of the Shareholders represents that he or it is
not a party to any other agreement which would prevent him or it from performing
his or its obligations hereunder.  No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.

   14. Governing Law; Successors and Assigns. This Agreement shall be governed
       -------------------------------------
by the internal laws of the State of New Jersey without giving effect to the
conflicts of laws principles

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<PAGE>

thereof and, except as otherwise provided herein, shall be binding upon the
heirs, personal representatives, executors, administrators, successors and
assigns of the parties. Notwithstanding the foregoing, in the event an Investor
transfers Shares to an unaffiliated Person, such transferee shall have no rights
under this Agreement, other than those granted under Section 9 of this
Agreement, and shall not be bound by any of the provisions of this Agreement.

   15. Severability. If any provision of this Agreement shall be held to be
       ------------
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.

   16. Captions. Captions are for convenience only and are not deemed to be part
       --------
of this Agreement.

   17. Counterparts. This Agreement may be executed in two or more counterparts,
       ------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

                                      -8-
<PAGE>

     IN WITNESS WHEREOF, this Agreement has been executed as an instrument under
SEAL as of the date and year first above written.

MANAGEMENT SHAREHOLDERS:                       COMPANY:

/s/ Mary Kay Brooks                            LOGICAL DESIGN SOLUTIONS, INC.
---------------------------
Mary Kay Brooks                                By: /s/ Mary kay Brooks
                                                   -----------------------
                                                   Name: Mary Kay Brooks
                                                   Title:   President
/s/ Darren Bryden
---------------------------
Darren Bryden                                  INVESTORS:

                                               SUMMIT VENTURES IV, L.P.

                                               By: Summit Partners IV, L.P.,
                                                   its General Partner

                                               By: Stamps Woodsum & Co. IV,
                                                   its General Partner

                                               By: /s/ Kevin Mohan
                                                   -----------------------
                                                   General Partner

                                               SUMMIT INVESTORS III, L.P.

                                               By: /s/ Paul Lozier
                                                   -----------------------
                                                   Authorized Signatory

                                                   /s/ Paul F. Lozier
                                                   -----------------------
                                                   Paul F. Lozier

                                      -9-
<PAGE>

                                  SCHEDULE 1
                                  ----------

Company
-------

Logical Design Solutions, Inc.
465 South Street
Morristown, New Jersey 07960
Attn: President

Management Shareholders
-----------------------

Mary Kay Brooks
c/o Logical Design Solutions, Inc.
465 South Street
Morristown, New Jersey 07960

Darren Bryden
c/o Logical Design Solutions, Inc.
465 South Street
Morristown, New Jersey 07960

Investors
---------

Summit Investors III, L.P.
600 Atlantic Avenue, Suite 2800
Boston, MA 02210-2227
Attn: Kevin P. Mohan

Summit Ventures IV, L.P.
600 Atlantic Avenue, Suite 2800
Boston, MA 02210-2227
Attn: Kevin P. Mohan

Paul F. Lozier
40 Dellwood Drive
Madison, NJ 07940<PAGE>

                                                                  EXHIBIT 10.4

                         REGISTRATION RIGHTS AGREEMENT

     AGREEMENT, made as of the 19th day of March, 1997, by and among LOGICAL
DESIGN SOLUTIONS, INC., a New Jersey corporation (the "Company"), and those
persons set forth on Schedule I as Investors (each an "Investor" and
                     ----------
collectively the "Investors").

     WHEREAS, the Investors are acquiring warrants ("Warrants") to acquire an
aggregate of 215,000 Shares of Common Stock, no par value per share, of the
Company (the "Common Stock"), pursuant to the terms of a 9% Senior Subordinated
Debenture and Warrant Purchase Agreement dated as of the date hereof among the
Company, the Investors and certain shareholders of the Company (the "Purchase
Agreement"); and

     WHEREAS, it is a condition to the obligations of the Investors under the
Purchase Agreement that this Agreement be executed by the parties hereto in
order to provide the Investors with certain registration rights with respect to
the shares of Common Stock issuable upon exercise of the Warrants being acquired
by the Investors under the Purchase Agreement or otherwise acquired by the
Investors, and the parties are willing to execute this Agreement and to be bound
by the provisions hereof,

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:

     1.   Certain Definitions. As used in this Agreement, the following terms
          -------------------
shall have the following respective meanings:

     "Act" means the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

     "Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Act.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

     "Holder" means the person who is then the record owner of Registrable
Securities which have not been sold to the public.

     "Initiating Holders" means any Investors and their assignees who in the
aggregate are holders of at least twenty-five percent (25%) of the outstanding
Registrable Securities held by the Investors and their assignees.

     "Registrable Securities" means all shares of Common Stock now owned or
hereafter acquired by any Investor.
<PAGE>

     The term "register" means to register under the Act and applicable state
securities laws for the purpose of effecting a public sale of securities.

     "Registration Expenses" means all expenses incurred by the Company in
compliance with Sections 2, 3 or 5 hereof, including, without limitation, all
registration and filing fees, printing expenses, transfer taxes, fees and
disbursements of counsel for the Company, blue-sky fees and expenses, fees of
transfer agents and registrars, reasonable fees and disbursements of one counsel
for all the selling Holders, and the expense of any special audits incident to
or required by any such registration.

     "Selling Expenses" means all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities.

     2.   Requested Registrations
          -----------------------

          (a)  If at any time after December 31, 1997 the Company shall receive
from one or more Initiating Holders a written request that the Company effect
the registration of Registrable Securities representing at least twenty-five
percent (25%) of the Registrable Securities held by or issuable to all the
Investors (or any lesser percentage if the reasonably anticipated aggregate
price to the public of the Registrable Securities to be included in such
registration would exceed $ 10,000,000), in connection with a firm commitment
underwriting, the Company will:

          (i)  promptly give written notice of the proposed registration to all
   other Holders; and

          (ii) as soon as practicable, use all commercially reasonable efforts
   to effect such registration as may be so requested and as would permit or
   facilitate the sale and distribution of such portion of such Registrable
   Securities as are specified in such request, together with such portion of
   the Registrable Securities of any Holder or Holders joining in such request
   as are specified in a written request given within thirty days after receipt
   of such written notice from the Company. If the underwriter managing the
   offering advises the Holders who have requested inclusion of their
   Registrable Securities in such registration that marketing considerations
   require a limitation on the number of shares offered, such limitation shall
   be imposed, subject to the immediately following sentence, pro rata among
   such Holders who requested inclusion of Registrable Securities in such
   registration according to the number of Registrable Securities then held by
   such Holders. Neither the Company nor any other shareholder may include
   shares in a registration effected under this Section 2(a) without the consent
   of the Initiating Holders holding a majority of the Registrable Securities
   sought to be included in such registration by the Initiating Holders if the
   inclusion of shares by the Company or the other shareholders would limit the
   number of Registrable Securities sought to be included by the Initiating
   Holders or reduce the offering price thereof. The Investors may initiate two
   registrations pursuant to this Section 2(a). No registration initiated by the
   Initiating Holders hereunder shall count as a registration under this Section
   2(a) unless and until it shall have been

                                       2
<PAGE>

   declared effective (an "Effective Registration") and the Initiating Holders
   shall have sold all of the Registrable Securities included in such
   registration.

        (b)  The underwriter of any underwriting requested under this Section 2
shall be selected by the Company; provided that such underwriter must be
reasonably acceptable to the Holders of a majority of the Registrable Securities
included therein.

   3.   "Piggy Back" Registrations.
         -------------------------

        (a)  If the Company shall determine to register any of its securities,
either for its own account or the account of a security holder or holders
exercising their registration rights (subject to the provisions of Section 2),
other than a registration relating solely to employee benefit plans or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable Securities
or pursuant to Form S-4, the Company will:

        (i)  Promptly give to each Holder of Registrable Securities written
   notice thereof (which shall include the number of shares the Company or other
   security holder proposes to register and, if known, the name of the proposed
   underwriter); and

        (ii)  Use its best efforts to include in such registration all the
   Registrable Securities specified in a written request or requests, made by
   any Holder within twenty (20) days after the date of delivery of the written
   notice from the Company described in clause (i) above. If the underwriter
   advises the Company that marketing considerations require a limitation on the
   number of shares offered pursuant to any registration statement, then the
   Company may offer all of the securities it proposes to register for its own
   account and such limitation on any remaining securities that may, in the
   opinion of the underwriter, be sold will be imposed: (a) first, so as to
   exclude all Registrable Securities of Holders other than the Investors and
   their assignees; and (b) thereafter, pro rata among the Holders who requested
                                        --- ----
   inclusion of Registrable Securities in such registration according to the
   number of Registrable Securities then held by such Holders.

        (b)  The Company shall select the underwriter for an offering made
   pursuant to this Section 3, but shall not be required to register under the
   Exchange Act prior to such date.

   4.   Expenses of Registration. All Registration Expenses incurred in
        ------------------------
connection with any registration, qualification or compliance pursuant to
Section 2, 3 or 5 shall be paid by the Company. All Selling Expenses incurred in
connection with any such registration, qualification or compliance shall be
borne by the holders of the securities registered, pro rata on the basis of the
number of their shares so registered.

   5.   Registration on Form S-3.  The Company shall use its best efforts to
        ------------------------
qualify for registration on Form S-3 or any comparable or successor form; and to
that end the Company shall register (whether or not required by law to do so)
the Common Stock under the Exchange

                                       3
<PAGE>

Act in accordance with the provisions of the Exchange Act following the
effective date of the first registration of any securities of the Company on
Form S- I or any comparable or successor form, but shall not be required to
register under the Exchange Act prior to such date. After the Company has
qualified for the use of Form S-3, in addition to the rights contained in the
foregoing provisions of this Agreement, the Holders of Registrable Securities
shall have the right to request registrations on Form S-3 (such requests shall
be in writing and shall state the number of shares of Registrable Securities to
be disposed of and the intended methods of disposition of such shares by such
Holder or Holders); provided that the Company shall not be obligated to effect
any such registration pursuant to this Section 5 more than once in any twelve
month period, and in no event shall the Company be required to register shares
with an aggregate market value of less than $5,000,000.

  6. Registration Procedures.  In the case of each registration effected by the
     -----------------------
Company pursuant to this Agreement, the Company will keep each Holder of
Registrable Securities included in such registration advised in writing as to
the initiation of each registration and as to the completion thereof. At its
expense, the Company will do the following for the benefit of such Holders:

     (a)  Keep such registration effective for a period of 120 days or until the
Holder or Holders have completed the distribution described in the registration
statement relating thereto, whichever first occurs, and amend or supplement such
registration statement and the prospectus contained therein from time to time to
the extent necessary to comply with the Act and applicable state securities
laws;

     (b)  Use its best efforts to register or qualify the Registrable Securities
covered by such registration under the applicable securities or "blue sky" laws
of such jurisdictions as the selling shareholders may reasonably request;
provided, that the Company shall not be obligated to qualify to do business in
any jurisdiction where it is not then so qualified or otherwise required to be
so qualified or to take any action which would subject it to the service of
process in suits other than those arising out of such registration;

     (c)  Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;

     (d)  In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and is entered into by the Holder and provided
further that, if the underwriter so requests, the underwriting agreement will
contain customary contribution provisions on the part of the Company;

     (e) To the extent then permitted under applicable professional guidelines
and standards, use its best efforts to obtain a comfort letter from the
Company's independent public accountants in customary form and covering

                                       4
<PAGE>

such matters of the type customarily covered by comfort letters and an opinion
from the Company's counsel in customary form and covering such matters of the
type customarily covered in a public issuance of securities, in each case
addressed to the Holders, and provide copies thereof to the Holders; and

     (f) Permit the counsel to the selling shareholders whose expenses are being
paid pursuant to Section 4 hereof to inspect and copy such corporate documents
as he may reasonably request.

  7. Indemnification.
     ---------------

     (a) The Company will, and hereby does, indemnify each Holder, each of its
officers, directors and partners, and each person controlling such Holder within
the meaning of the Act, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls such underwriter within the meaning of the
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any final prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any material violation by the Company of the Act or
the Exchange Act or securities act of any state or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, whether or not resulting in any
liability, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement (or alleged untrue statement) or omission (or
alleged omission) based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein.

     (b) Each Holder will, if Registrable Securities held by him are included in
the securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors and officers and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Act and the rules and regulations thereunder, each
other such Holder and each of their officers, directors and partners, and each
person controlling such Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, each person controlling the Company,
each underwriter and each person who controls any such

                                       5
<PAGE>

underwriter, each Holder and each person controlling such Holder, and their
respective directors, officers, partners, persons, underwriters and control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, whether or not resulting in liability, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each Holder hereunder shall be limited to an amount equal to the
net proceeds received by such Holder upon sale of his securities.

     (c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations under this Section 7 (except and to the
extent the Indemnifying Party has been prejudiced as a consequence thereof). The
Indemnifying Party will be entitled to participate in, and to the extent that it
may elect by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, at its expense to
assume, the defense of any such claim or any litigation resulting therefrom,
with counsel reasonably satisfactory to such Indemnified Party, provided that
the Indemnified Party may participate in such defense at its expense,
notwithstanding the assumption of such defense by the Indemnifying Party, and
provided, further, that if the defendants in any such action shall include both
the Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party, the Indemnified Party or Parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Party or Parties and the fees and expenses of such counsel shall be
paid by the Indemnifying Party. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall (i) furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom and
(ii) shall reasonably assist the Indemnifying Party in any such defense,
provided that the Indemnified Party shall not be required to expend its funds in
connection with such assistance.

     (d) No Holder shall be required to participate in a registration pursuant
to which it would be required to execute an underwriting agreement in connection
with a registration effected under Section 2 or 3 which imposes indemnification
or contribution obligations on such Holder more onerous than those imposed
hereunder; provided, however, that

                                       6
<PAGE>

the Company shall not be deemed to breach the provisions of Section 2 or 3 if a
Holder is not permitted to participate in a registration on account of his
refusal to execute an underwriting agreement on the basis of this subsection
(d).

     8.   Information by Holder Each Holder of Registrable Securities included
          ---------------------
in any registration shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Agreement
or otherwise required by applicable state or federal securities laws.

     9.    Limitations on Registration Rights.  From and after the date of this
           ----------------------------------
Agreement, the Company shall not, without the prior written consent of the
Investors, enter into any agreement with any holder or prospective holder of any
securities of the Company which would give any such holder or prospective holder
the right to require the Company, upon any registration of any of its
securities, to include, among the securities which the Company is then
registering, securities owned by such holder, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of its securities will
not limit the number of Registrable Securities sought to be included by the
Holders of Registrable Securities.

     10.   Exception to Registration. The Company shall not be required to
           -------------------------
effect a registration under this Agreement if (i) in the written opinion of
counsel for the Company, which counsel and the opinion so rendered shall be
reasonably acceptable to the Holders of Registrable Securities, such Holders may
sell without registration under the Act all Registrable Securities for which
they requested registration under the provisions of the Act and in the manner
and in the quantity in which the Registrable Securities were proposed to be
sold, or (ii) the Company shall have obtained from the Commission a "no-action"
letter to that effect; provided that this Section 10 shall not apply to sales
made under Rule 144(k) or any successor rule promulgated by the Commission until
after the effective date of the Company's initial registration of shares under
the Act or (iii) if the Company determines in its good faith judgment that the
use of any prospectus would require the disclosure of material information that
the Company has a bona fide business purpose for preserving as confidential or
the disclosure of which would impede the Company's ability to consummate a
transaction, and that the Company is not otherwise required by applicable
securities laws or regulations to disclose, upon written notice of such
determination by the Company, the rights of the Holders to offer, sell or
distribute any Registrable Securities or to require the Company to take action
with respect to the registration or sale of any Registrable Securities pursuant
to this Agreement shall be suspended until the date upon which the Company
notifies the Holders in writing (the "Suspension Termination Notice") that
suspension of such rights for the grounds set forth in this paragraph is no
longer necessary, and the Company agrees to give such notice as promptly as
practicable following the date that such suspension of rights is no longer
necessary (but in any event any such suspension shall be effective for a period
not in excess of 60 consecutive days and for no more than 180 days in any
calendar year). If the Company shall give any such notice, the time periods set
forth in Section 2 above shall be extended by the number of days during which
the period from and including the date of the

                                       7
<PAGE>

giving of such notice of suspension to and including the date the Company
delivers the Suspension Termination Notice. Notwithstanding the foregoing, in no
event shall the provisions of this Section 10 be construed to preclude a Holder
of Registrable Securities from exercising rights under Section 3 for a period of
three years after the effective date of the Company's initial registration of
shares under the Act.

     The Initiating Investors each agree not to offer, sell, contract to sell or
otherwise dispose of any Registrable Securities, or any securities convertible
into or exchangeable or excisable for such securities during any period when,
and to the same extent that, any officers of the Company are restricted in
connection with an offering of securities by the Company. The Company shall give
reasonable advance notice to each such Initiating Investor of such offering.

     11.   Rule 144 Reporting.  With a view to making available the benefits of
           ------------------
certain rules and regulations of the Commission which may permit the sale of
restricted securities (as that term is used in Rule 144 under the Act) to the
public without registration, the Company agrees to:

            (a)  make and keep public information available as those terms are
understood and defined in Rule 144 under the Act, at all times from and after
ninety days following the effective date of the first registration under the Act
filed by the Company for an offering of its securities to the general public;

            (b)  use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the Act and
the Exchange Act at any time after it has become subject to such reporting
requirements; and

            (c)  so long as an Investor owns any restricted securities, furnish
to the Investor forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 (at any time from and
after ninety days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Act and Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as an Investor may reasonably request in availing itself of any
rule or regulation of the Commission allowing an Investor to sell any such
securities without registration.

     12.   Listing Application. If shares of any class of stock of the Company
           -------------------
shall be listed on a national securities exchange, the Company shall, at its
expense, include in its listing application all of the shares of the listed
class then owned by any Investor.

     13.   Damages. The Company recognizes and agrees that the Holder of
           -------
Registrable Securities shall not have an adequate remedy if the Company fails to
comply with the provisions of this Agreement, and that damages will not be
readily ascertainable, and the Company expressly agrees that in the event of
such failure any Holder of Registrable Securities shall be

                                       8
<PAGE>

entitled to seek specific performance of the Company's obligations hereunder and
that the Company will not oppose an application seeking such specific
performance.

     14.   Representations and Warranties of the Company. The Company represents
           ---------------------------------------------
and warrants to the Investors as follows:

           (a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government by which the Company or any of its properties or assets is bound, the
Articles of Incorporation or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which the Company or any or its
properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.

           (b)  This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.

     15.   Miscellaneous.
           -------------

           (a)  All covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including without
limitation transferees of any Registrable Securities), whether so expressed or
not.

           (b)  All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or telecopied or sent by other
facsimile method addressed as follows:

           If to the Company or any Investor, at the address of such party set
     forth on Schedule I hereto or the most recent address as is shown on the
     stock records of the Company; and

           If to any subsequent Holder of Registrable Securities, to it at such
     address as may have been furnished to the Company in writing by such
     Holder; or, in any case, at such other address or addresses as shall have
     been furnished in writing to the Company (in the case of a Holder of
     Registrable Securities) or to the Holders of Registrable Securities (in the
     case of the Company) in accordance with the provisions of this paragraph.

           (c)  This Agreement shall be governed by and construed in accordance
     with the laws of the Commonwealth of Massachusetts.

                                       9
<PAGE>

           (d)  This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company, the Investors
and the holders of at least a majority of the then outstanding Registrable
Securities.

           (e)  This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

           (f)  If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.

                           *  *  *  *  *  *  *  *  *

                                       10
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
excited as an instrument under SEAL as of the date for first above written.

                            LOGICAL DESIGN SOLUTIONS, INC.

                                /s/ Mary Kay Brooks
                            By:________________________________
                               Name: Mary Kay Brooks
                               Title: President

                            SUMMIT VENTURES IV, L.P.,

                            By: Summit Partners IV, L.P.,
                             its General Partner

                            By: Stamps, Woodsum & Co. IV,
                             Its General Partner

                                /s/ Kevin Mohan
                            By: _______________________
                            General Partner

                            SUMMIT INVESTORS, III, L.P.

                                /s/ Kevin Mohan
                            By:_________________________
                               Authorized Signatory

                            /s/ Paul F. Lozier
                            ____________________________
                            Paul F. Lozier
<PAGE>

                                   SCHEDULE I
                                   ----------

Company
-------

Logical Design Solutions, Inc.
465 South Street
Morristown, NJ 07960
Attn: President

Investors
---------

Name and Address
----------------

Summit Ventures IV, L.P.
600 Atlantic Avenue, Suite 2800
Boston, MA 02210-2227
Attn: Kevin P. Mohan

Summit Investors III, L.P.
600 Atlantic Avenue, Suite 2800
Boston, MA 02210-2227
Attn: Kevin P. Mohan

Paul F. Lozier
40 Dellwood Drive
Madison, NJ 07940

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