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Agreement and Plan of Merger and Reorganization - VTEL Corp. and Compression Labs Inc.

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                 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

                                  BY AND AMONG

                                VTEL CORPORATION,

                                 VTEL-SUB, INC.

                                       AND

                         COMPRESSION LABS, INCORPORATED




                           DATED AS OF JANUARY 6, 1997


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                                TABLE OF CONTENTS

                                                                            Page
ARTICLE I  -- THE MERGER.......................................................2
         Section 1.01.     The Merger..........................................2
         Section 1.02.     The Closing.........................................2
         Section 1.03.     Effective Time......................................2
         Section 1.04.     Effect of the Merger................................2
         Section 1.05.     Certificate of Incorporation........................2
         Section 1.06.     Bylaws..............................................2
         Section 1.07.     Directors and Officers..............................2
         Section 1.08.     Tax Consequences....................................3
         Section 1.09.     Accounting Treatment................................3

ARTICLE II -- CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES...............3
         Section 2.01.     Merger Consideration: Conversion and
                              Cancellation of Securities.......................3
         Section 2.02.     Exchange Agency; Surrender of Certificates..........4
         Section 2.03.     Stock Transfer Books................................7
         Section 2.04.     Dissenters' Rights..................................7

ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................8
         Section 3.01.     Organization and Qualification: Subsidiaries........8
         Section 3.02.     Certificate of Incorporation and Bylaws.............9
         Section 3.03.     Capitalization......................................9
         Section 3.04.     Authority..........................................11
         Section 3.05.     No Conflict: Required Filings and Consents.........11
         Section 3.06.     Permits: Compliance................................12
         Section 3.07.     Reports; Financial Statements;
                              Undisclosed Liabilities.........................13
         Section 3.08.     Absence of Certain Changes or Events...............14
         Section 3.09.     Absence of Litigation..............................14
         Section 3.10.     Employee Benefit Plans; Labor Matters..............15
         Section 3.11.     Taxes..............................................16
         Section 3.12.     Affiliates.  ......................................17
         Section 3.13.     Properties.  ......................................18
         Section 3.14.     Intellectual Rights................................18
         Section 3.15.     Real Property. ....................................19
         Section 3.16.     Insider Interests; Transactions with Management....19
         Section 3.17.     Contracts and Agreements...........................20
         Section 3.18.     Vote Required......................................20
         Section 3.19.     Brokers............................................20
         Section 3.20.     Opinion of Financial Advisor.......................20
         Section 3.21.     Board Recommendations.  ...........................20
         Section 3.22.     Distributors, Customers, or Suppliers..............21

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         Section 3.23.     Pooling of Interests...............................21
         Section 3.24.     Rights Plan........................................21
         Section 3.25.     Disclosure.........................................21

ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE VTEL COMPANIES............21
         Section 4.01.     Organization and Qualification; Subsidiaries.......21
         Section 4.02.     Certificate of Incorporation and Bylaws............22
         Section 4.03.     Capitalization.....................................22
         Section 4.04.     Authority..........................................24
         Section 4.05.     No Conflict: Required Filings and Consents.........24
         Section 4.06.     Permits; Compliance................................25
         Section 4.07.     Reports: Financial Statements......................25
         Section 4.08.     Absence of Certain Changes or Events...............26
         Section 4.09.     Absence of Litigation..............................27
         Section 4.10.     Intellectual Rights................................27
         Section 4.11.     Transactions with Management.......................28
         Section 4.12.     Vote Required......................................28
         Section 4.13.     Brokers............................................28
         Section 4.14.     Opinion of Financial Advisor.......................29
         Section 4.15.     Board Recommendations..............................29
         Section 4.16.     Distributors, Customers, or Suppliers..............29
         Section 4.17.     Pooling of Interests...............................29
         Section 4.18.     Disclosure.........................................29

ARTICLE V -- COVENANTS........................................................29
         Section 5.01.     Affirmative Covenants of the Company...............29
         Section 5.02.     Affirmative Covenants of VTEL......................30
         Section 5.03.     Negative Covenants of the Company.  ...............31
         Section 5.04.     Negative Covenants of VTEL.........................35
         Section 5.05.     Access and Information.............................36

ARTICLE VI -- ADDITIONAL AGREEMENTS...........................................37
         Section 6.01.     Presentation to Stockholders.......................37
         Section 6.02.     Registration Statement; Proxy Statement/Prospectus.38
         Section 6.03.     Appropriate Action: Consents; Filings..............39
         Section 6.04.     Affiliates; Tax Treatment..........................40
         Section 6.05.     Public Announcements...............................41
         Section 6.06.     NASDAQ Listing.....................................41
         Section 6.07.     State Takeover Statutes............................41
         Section 6.08.     Charter Amendment..................................42
         Section 6.09.     Board Seats........................................42
         Section 6.10.     Options............................................42
         Section 6.11.     Series C Preferred Stock Warrants. ................43

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         Section 6.12.     Termination of Convertible Preferred
                              Stock Purchase Agreement........................43
         Section 6.13.     Merger Sub.........................................43
         Section 6.14.     Indemnification....................................43
         Section 6.15.     Employment Contracts...............................45
         Section 6.16.     Comfort Letters....................................46
         Section 6.17.     Sales Under Rule 145 if Applicable.................46

ARTICLE VII -- CLOSING CONDITIONS.............................................47
         Section 7.01.     Conditions to Obligations of Each Party
                              Under This Agreement............................47
         Section 7.02.     Additional Conditions to Obligations
                              of the VTEL Companies...........................48
         Section 7.03.     Additional Conditions to Obligations
                              of the Company..................................49

ARTICLE VIII -- TERMINATION, AMENDMENT AND WAIVER.............................50
         Section 8.01.     Termination........................................50
         Section 8.02.     Effect of Termination.  ...........................52
         Section 8.03.     Amendment..........................................53
         Section 8.04.     Waiver.  ..........................................53
         Section 8.05.     Fees, Expenses and Other Payments..................53

ARTICLE IX -- GENERAL PROVISIONS..............................................54
         Section 9.01.     Effectiveness of Representations,
                              Warranties and Agreements.......................54
         Section 9.02.     Notices............................................55
         Section 9.03.     Certain Definitions................................56
         Section 9.04.     Headings...........................................57
         Section 9.05.     Severability.......................................57
         Section 9.06.     Entire Agreement...................................57
         Section 9.07.     Assignment.........................................57
         Section 9.08.     Parties in Interest................................57
         Section 9.09.     Failure or Indulgence Not Waiver;
                              Remedies Cumulative.............................58
         Section 9.10.     Governing Law......................................58
         Section 9.11.     Counterparts.......................................58
         Section 9.12.     Specific Performance...............................58


EXHIBIT A         -        Stock Option Agreement
EXHIBIT B         -        Company Affiliate Letter
EXHIBIT C         -        Acquiror Affiliate Letter



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                 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION


         THIS  AGREEMENT  AND PLAN OF  MERGER  AND  REORGANIZATION,  dated as of
January 6, 1997 (this "Agreement"), is by and among VTEL CORPORATION, a Delaware
corporation ("VTEL"),  VTEL-SUB,  INC., a Delaware corporation and direct wholly
owned subsidiary of VTEL ("Merger Sub"), and COMPRESSION LABS,  INCORPORATED,  a
Delaware  corporation  (the  "Company").  VTEL  and  Merger  Sub  are  sometimes
collectively referred to herein as the "VTEL Companies."

         WHEREAS,  Merger Sub,  upon the terms and subject to the  conditions of
this Agreement and in accordance  with the General  Corporation Law of the State
of Delaware ("DGCL"), will merge with and into the Company (the "Merger");

         WHEREAS,  the Board of Directors of the Company has determined that the
Merger is advisable  and is fair to, and in the best  interests  of, the Company
and  its  stockholders,   has  approved  and  adopted  this  Agreement  and  the
transactions  contemplated  hereby, and has recommended approval and adoption of
this Agreement by the stockholders of the Company;

         WHEREAS,  the Board of Directors of VTEL has determined that the Merger
is  advisable  and is fair  to,  and in the  best  interests  of,  VTEL  and its
stockholders,  has  approved  and adopted this  Agreement  and the  transactions
contemplated hereby, and its sole stockholder,  VTEL, has approved the Merger by
unanimous written consent;

         WHEREAS,  the Board of Directors of Merger Sub has approved and adopted
this Agreement and the  transactions  contemplated  hereby,  and has recommended
approval and adoption of this Agreement by its stockholder;

         WHEREAS,  it is the intent of the respective Boards of Directors of the
Company  and VTEL  that the  Merger be  structured  as a  strategic  combination
involving a "merger of equals" of the  Company  and VTEL and that the  Surviving
Corporation (as defined herein) be governed and operated on that basis;

         WHEREAS,  for federal  income tax  purposes,  it is  intended  that the
Merger will qualify as a  reorganization  under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");

         WHEREAS, the parties intend to cause the Merger to be accounted for as
a pooling of interests pursuant to APB Opinion No. 16, Staff Accounting Series
Release 130, 135 and 146 and Staff Accounting Bulletins Topic Two;

         WHEREAS,  in furtherance of, and as a requirement of the VTEL Companies
to enter into this  Agreement  providing  for, the Merger,  the Company and VTEL
have entered into a Stock

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Option Agreement, dated of even date herewith, in the form attached as Exhibit A
(the "Stock Option Agreement"); and

         NOW,  THEREFORE,  in  consideration of the foregoing and the respective
representations,   warranties,  covenants  and  agreements  set  forth  in  this
Agreement, the parties hereto agree as follows:

                                    ARTICLE I
                                   THE MERGER

         Section 1.01. The Merger.  Upon the terms and subject to the conditions
set forth in this  Agreement,  and in accordance with the DGCL, at the Effective
Time (as defined in Section 1.03 of this Agreement),  Merger Sub shall be merged
with and into the Company.  As a result of the Merger,  the  separate  corporate
existence  of Merger  Sub shall  cease and the  Company  shall  continue  as the
surviving corporation of the Merger (the "Surviving  Corporation").  The name of
the  Surviving  Corporation  shall  continue  after  the  Effective  Time  to be
"Compression Labs, Incorporated."

         Section 1.02. The Closing.  Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of Jenkens & Gilchrist,  a Professional  Corporation,  1445 Ross Avenue,
Suite 3200,  Dallas,  Texas  75202-2799,  at 9:00 am., local time, on the second
business day immediately  following the day on which the last to be fulfilled or
waived of the  conditions  set forth in Article VII shall be fulfilled or waived
in  accordance  herewith  (other  than  conditions  with  respect to actions the
respective parties hereto will take at the Closing),  or (b) at such other time,
date or place as VTEL and the Company  may agree.  The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."

         Section  1.03.  Effective  Time. As promptly as  practicable  after the
satisfaction  or, if permissible,  waiver of the conditions set forth in Article
VII of  this  Agreement,  the  parties  hereto  shall  cause  the  Merger  to be
consummated by filing a Certificate of Merger with the Secretary of State of the
State of Delaware,  in such form as is required  by, and executed in  accordance
with the relevant  provisions  of, the DGCL (the date and time of the completion
of such filing being the "Effective Time").

         Section 1.04.  Effect of the Merger.  At the Effective Time, the effect
of the Merger shall be as provided in Section 259 of the DGCL.  Without limiting
the generality of the foregoing,  and subject thereto, at the Effective Time all
the property,  rights,  privileges,  powers and franchises of Merger Sub and the
Company shall vest in the  Surviving  Corporation,  and all debts,  obligations,
liabilities  and duties of each of Merger Sub and the Company  shall  become the
debts, obligations, liabilities and duties of the Surviving Corporation.


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         Section 1.05.     Certificate of Incorporation.  At the Effective Time,
the Certificate of Incorporation of the Company shall be the Certificate of
Incorporation of Merger Sub as in effect immediately prior to the Effective
Time.

         Section 1.06.     Bylaws.  At the Effective Time and without further
action on the part of the Company or VTEL, the Bylaws of the Surviving
Corporation shall be the Bylaws of Merger Sub in effect as of the Effective
Time.

         Section  1.07.  Directors  and  Officers.  The  directors of Merger Sub
immediately  prior to the Effective Time shall be the directors of the Surviving
Corporation,  each  to  hold  office  in  accordance  with  the  Certificate  of
Incorporation and Bylaws of the Surviving  Corporation,  and the officers of the
Company  immediately  prior to the  Effective  Time shall be the officers of the
Surviving  Corporation,  in each case until their respective successors are duly
elected or appointed and qualified.

         Section 1.08.  Tax  Consequences.  It is intended that the Merger shall
constitute a  reorganization  within the meaning of Section  368(a) of the Code,
and that this  Agreement  shall  constitute a "plan of  reorganization"  for the
purposes of Section 368 of the Code.

         Section 1.09.     Accounting Treatment.  It is intended that the Merger
shall be treated as a pooling-of-interests for accounting purposes by VTEL and
the Company.


                                   ARTICLE II
               CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

         Section 2.01.     Merger Consideration: Conversion and Cancellation of
Securities.  At the Effective Time, by virtue of the Merger and without any
action on the part of the VTEL Companies, the Company or the holders of any of
the Company's securities:

                  (a) Subject to the other  provisions  of this Article II, each
         share of common  stock,  par  value  $.001 per  share,  of the  Company
         ("Company  Common Stock") issued and outstanding  immediately  prior to
         the Effective Time  (excluding  any Company  Common Stock  described in
         Section 2.01(e) of this Agreement) shall be converted into the right to
         receive .46 of one fully paid and nonassessable  share of common stock,
         par value $.0l per share,  of VTEL ("VTEL  Common  Stock") (the "Common
         Stock Conversion Ratio").

                  (b) Subject to the other  provisions  of this Article II, each
         share of Series C Preferred  Stock,  par value $.001 per share,  of the
         Company ("Series C Preferred Stock") issued and outstanding immediately
         prior to the Effective  Time  (excluding  any Series C Preferred  Stock
         described  in Section  2.01(e)  of this  Agreement  and any  Dissenting
         Shares, as herein defined) shall be converted into the right to receive
         3.15 fully paid and

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         nonassessable share of VTEL Common Stock (the "Series C Preferred Stock
         Conversion Ratio").

                  (c) Notwithstanding the foregoing, if between the date of this
         Agreement and the Effective Time the outstanding  shares of VTEL Common
         Stock or Company  Common Stock shall have been changed into a different
         number of shares or a different class, by reason of any stock dividend,
         subdivision, reclassification,  recapitalization, split, combination or
         exchange of shares,  the Common Stock Conversion Ratio and the Series C
         Preferred Stock Conversion Ratio shall be  correspondingly  adjusted to
         reflect   such   stock   dividend,    subdivision,    reclassification,
         recapitalization, split, combination or exchange of shares.

                  (d) As a  result  of  their  conversion  pursuant  to  Section
         2.01(a) and Section  2.01(b),  all shares of Company  Common  Stock and
         Series C  Preferred  Stock  shall  cease to be  outstanding  and  shall
         automatically  be canceled and  retired.  Each  certificate  previously
         evidencing  Company Common Stock  outstanding  immediately prior to the
         Effective  Time (other than Company  Common Stock  described in Section
         2.01(e) of this Agreement) ("Converted Common Shares") shall thereafter
         represent,  subject to Section 2.02(d) of this Agreement,  the right to
         receive  that  number of shares of VTEL  Common  Stock  into  which the
         shares of Company  Common Stock  represented by such  certificate  have
         been  converted  pursuant  to  subsection  (a)  of  this  Section  2.01
         determined  pursuant  to the Common  Stock  Conversion  Ratio  and,  if
         applicable,  the right to receive cash  pursuant to Section  2.02(d) of
         this Agreement ("Common Stock Merger Consideration").  Each certificate
         previously evidencing Series C Preferred Stock outstanding  immediately
         prior to the  Effective  Time  (other  than  Series C  Preferred  Stock
         described  in Section  2.01(e)  of this  Agreement  and any  Dissenting
         Shares) (the "Converted  Series C Preferred  Shares" and, together with
         the Converted Common Shares,  the "Converted  Shares") shall thereafter
         represent,  subject to Section 2.02(d) of this Agreement,  the right to
         receive  that  number of shares of VTEL  Common  Stock  into  which the
         shares of Series C Preferred Stock represented by such certificate have
         been  converted  pursuant  to  subsection  (b)  of  this  Section  2.01
         determined  pursuant to the Series C Preferred Stock  Conversion  Ratio
         and,  if  applicable,  the right to receive  cash  pursuant  to Section
         2.02(d) of this Agreement (the "Series C Preferred Stock Consideration"
         and, with the Common Stock Consideration,  the "Merger Consideration").
         The holders of  certificates  previously  evidencing  Converted  Shares
         shall cease to have any rights with  respect to such  Converted  Shares
         except the right to receive the Merger Consideration applicable thereto
         and  as  otherwise   provided  herein  or  by  law.  Such  certificates
         previously   evidencing   Converted   Shares  shall  be  exchanged  for
         certificates  evidencing  whole  shares of VTEL Common  Stock issued in
         consideration  therefor  upon the  surrender  of such  certificates  in
         accordance  with the provisions of Section 2.02 of this  Agreement.  No
         fractional  shares of VTEL  Common  Stock  shall be issued and, in lieu
         thereof,  a cash payment shall be made  pursuant to Section  2.02(d) of
         this Agreement.


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                  (e)  Notwithstanding  any  provision of this  Agreement to the
         contrary,  each share of  Company  Common  Stock or Series C  Preferred
         Stock held in the  treasury  of the  Company  and each share of Company
         Common  Stock  owned by VTEL or any  direct or  indirect  wholly  owned
         subsidiary of VTEL or of the Company immediately prior to the Effective
         Time shall be canceled and extinguished  without any conversion thereof
         and no payment shall be made with respect thereto.

                  (f) Each share of common stock,  par value $.0l per share,  of
         Merger Sub issued and  outstanding  immediately  prior to the Effective
         Time shall be converted  into and  exchanged  for one newly and validly
         issued,  fully  paid and  nonassessable  share of  common  stock of the
         Surviving Corporation.

         Section 2.02.     Exchange Agency; Surrender of Certificates.

                  (a) Exchange  Fund.  At or prior to the Effective  Time,  VTEL
         shall deposit,  or cause to be deposited,  with a bank or trust company
         designated  by VTEL (the  "Exchange  Agent"),  for the  benefit  of the
         holders of  Converted  Shares,  for  exchange in  accordance  with this
         Article II,  through the Exchange Agent (i)  certificates  evidencing a
         number of shares  of VTEL  Common  Stock  equal to the  product  of the
         Common Stock  Conversion  Ratio  multiplied  by the number of Converted
         Common Shares issued and outstanding immediately prior to the Effective
         Time,  (ii)  certificates  evidencing a number of shares of VTEL Common
         Stock equal to the product of the Series C Preferred  Stock  Conversion
         Ratio  multiplied  by the number of shares of Series C Preferred  Stock
         issued and  outstanding  immediately  prior to the Effective  Time, and
         (iii) cash in an amount  sufficient  to provide for the  payments to be
         made in lieu of issuing any  fractional  shares of VTEL Common Stock as
         provided in Section 2.02(d) of this Agreement. Additionally, subject to
         the provisions of subsection (e) of this Section 2.02,  VTEL shall,  if
         and when a payment  date has  occurred  with  respect to a dividend  or
         distribution  that has been declared  subsequent to the Effective Time,
         deposit with the Exchange  Agent an amount in cash (or property of like
         kind to that which is the  subject of such  dividend  or  distribution)
         equal to the  dividend or  distribution  per share of VTEL Common Stock
         times  the  number  of  shares  of  VTEL  Common  Stock   evidenced  by
         certificates  theretofore  representing  Converted Shares that have not
         theretofore  been  surrendered  for  exchange in  accordance  with this
         Section  2.02.  The  certificates  and  cash  (and  property,  if  any)
         deposited  with the  Exchange  Agent in  accordance  with this  Section
         2.02(a)  are  hereinafter  referred  to as  the  "Exchange  Fund."  The
         Exchange  Agent shall,  pursuant to irrevocable  instructions,  deliver
         VTEL Common Stock (and any dividends or distribution  related  thereto)
         and/or  cash,  as  described   above,   in  exchange  for   surrendered
         certificates  pursuant  to  the  terms  of  this  Agreement  out of the
         Exchange Fund.

                  (b)      Exchange Procedures.  As soon as practicable after
         the Effective Time, VTEL shall cause the Exchange Agent to send to each
         record holder of Company Common Stock and Series C Preferred Stock at
         the Effective Time (i) a letter of transmittal (which

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         shall  specify that  delivery  shall be effected,  and risk of loss and
         title to the certificates theretofore representing Company Common Stock
         or Series C Preferred Stock (the "Certificates")  shall pass, only upon
         delivery of the Certificates to the Exchange Agent and shall be in such
         form and contain such other  provisions  as VTEL and the Company  shall
         reasonably  determine),  and (ii) instructions for use in effecting the
         surrender of the Certificates in exchange for certificates representing
         shares of VTEL Common Stock and any cash in lieu of fractional  shares,
         into  which the shares of Company  Common  Stock or Series C  Preferred
         Stock  represented by such Certificate or Certificates  shall have been
         converted  pursuant to this Agreement.  Upon surrender of a Certificate
         for  cancellation to the Exchange  Agent,  together with such letter of
         transmittal,  duly executed,  the holder of such  Certificate  shall be
         entitled to receive in exchange  therefor,  a certificate  representing
         that number of whole  shares of VTEL Common Stock which such holder has
         the right to receive  pursuant to the provisions of this Article II and
         cash in the amount  such  holder has the right to receive  pursuant  to
         such provisions,  and the Certificate so surrendered shall forthwith be
         canceled.  In the event of a transfer of  ownership  of Company  Common
         Stock or  Series C  Preferred  Stock  which  is not  registered  in the
         transfer  records of the Company,  a certificate  evidencing the proper
         number of shares of VTEL Common  Stock may be issued to the  transferee
         if the  Certificate  evidencing  the Company  Common  Stock or Series C
         Preferred Stock shall be surrendered to the Exchange Agent, accompanied
         by all  documents  required to evidence and effect such transfer and by
         evidence that any applicable stock transfer taxes have been paid. Until
         surrendered  for exchange in accordance  with the provisions of Section
         2.02 of  this  Agreement,  each  Certificate  theretofore  representing
         Converted  Shares (other than shares of Company Common Stock and Series
         C Preferred  Stock to be canceled  pursuant to Section  2.01(e) of this
         Agreement and any Dissenting Shares) shall from and after the Effective
         Time  represent  for  all  purposes  only  the  right  to  receive  the
         applicable Merger Consideration as set forth in this Agreement.  If any
         holder of Converted  Shares shall be unable to surrender  such holder's
         Certificates  because such  Certificates  have been lost or  destroyed,
         such holder may deliver in lieu thereof an affidavit and indemnity bond
         in form and substance and with surety reasonably  satisfactory to VTEL.
         No interest shall be paid on any Merger Consideration payable to former
         holders of Converted Shares.

                  (c)  Distributions  with  Respect  to VTEL  Common  Stock.  No
         dividends or other  distributions  declared or made after the Effective
         Time with  respect to VTEL  Common  Stock with a record  date after the
         Effective  Time  shall  be  paid  to the  holder  of any  unsurrendered
         Certificate theretofore  representing shares of Company Common Stock or
         Series C  Preferred  Stock with  respect  to any shares of VTEL  Common
         Stock evidenced thereby,  and no Merger  Consideration shall be paid to
         any such holders until the holder of such  Certificate  shall surrender
         such  Certificate  theretofore  representing  shares of Company  Common
         Stock or shares of Series C  Preferred  Stock . Subject  to  applicable
         laws, following surrender of any such Certificate,  there shall be paid
         to the  holder  of the  certificates  evidencing  whole  shares of VTEL
         Common  Stock  issued  in  exchange  therefor,  without  interest,  (i)
         promptly following the surrender of such Certificate and in addition

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         to the amount of any cash payable with respect to a fractional share of
         VTEL Common Stock to which such holder is entitled  pursuant to Section
         2.02(d)  of  this   Agreement,   the  amount  of   dividends  or  other
         distributions  with a record date after the Effective Time  theretofore
         paid with respect to such whole shares of VTEL Common Stock and (ii) at
         the  appropriate  payment  date,  the  amount  of  dividends  or  other
         distributions  with a record date after the Effective Time but prior to
         surrender and a payment date  occurring  after  surrender  payable with
         respect to such whole shares of VTEL Common Stock.

                  (d) No Fractional  Shares. No certificates or scrip evidencing
         fractional  shares  of VTEL  Common  Stock  shall  be  issued  upon the
         surrender  for  exchange of  Certificates,  and such  fractional  share
         interests  shall not  entitle  the  owner  thereof  to any  rights of a
         stockholder of VTEL. In lieu of any such  fractional  shares,  (i) each
         holder of a Certificate  previously  evidencing Company Common Stock or
         Series C  Preferred  Stock,  upon  surrender  of such  Certificate  for
         exchange  pursuant to this  Article II, shall be paid an amount in cash
         (without  interest),   rounded  to  the  nearest  cent,  determined  by
         multiplying  (A)  the  Average  Closing  Price  by (B)  the  fractional
         interest to which such holder would otherwise be entitled (after taking
         into  account all shares of Company  Common Stock or Series C Preferred
         Stock held of record by such holder at the  Effective  Time).  "Average
         Closing Price" means the average closing sales price of the VTEL Common
         Stock on The NASDAQ  Stock  Market (or such other  quotation  system or
         securities  exchange on which the VTEL  Common  Stock is then quoted or
         listed) as reported by the Wall Street  Journal for the 20  consecutive
         trading days  beginning 22 trading days prior to the scheduled  Closing
         Date as provided in Section 1.02 hereof.

                  (e)  Termination of Exchange Fund. Any portion of the Exchange
         Fund that remains  unclaimed by the former holders of Converted  Shares
         on the first  anniversary  of the Closing  Date shall be  delivered  to
         VTEL, upon demand,  and any former holders of Converted Shares who have
         not  theretofore  complied with this Article II shall  thereafter  look
         only  to  VTEL  for  the  Merger   Consideration   and   dividends   or
         distributions to which they are entitled, without any interest thereon.
         Neither  VTEL nor the Company  shall be liable to any former  holder of
         Converted  Shares  for  any  Merger   Consideration  (or  dividends  or
         distributions  with  respect  thereto)  or cash  delivered  to a public
         official  pursuant to any  applicable  abandoned  property,  escheat or
         similar law.

                  (f)  Withholding.  VTEL (or any  affiliate  thereof)  shall be
         entitled  to  deduct  and  withhold  from the  consideration  otherwise
         payable  pursuant to this  Agreement to any former  holder of Converted
         Shares such amounts as VTEL (or any  affiliate  thereof) is required to
         deduct and withhold  with  respect to the making of such payment  under
         the Code or any other provision of federal, state, local or foreign tax
         law and VTEL  agrees  to  remit to the  proper  taxing  authority  such
         amounts so  withheld.  To the extent  that  amounts  are so withheld by
         VTEL,  such withheld  amounts shall be treated for all purposes of this
         Agreement  as having  been paid to the former  holder of the  Converted
         Shares in respect of which such deduction and  withholding  was made by
         VTEL.

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<PAGE>




         Section 2.03.  Stock Transfer  Books.  At the Effective Time, the stock
transfer  books of the  Company  shall be closed  and there  shall be no further
registration  of  transfers  of  shares  of  Company  Common  Stock or  Series C
Preferred  thereafter  on the records of the Company.  If,  after the  Effective
Time,  Certificates  are presented to the Surviving  Corporation,  they shall be
canceled and  exchanged  for the Merger  Consideration,  deliverable  in respect
thereof  pursuant to this Agreement in accordance  with the procedures set forth
in  this  Article  II.  Certificates  surrendered  for  exchange  by any  person
constituting an "affiliate" of the Company for purposes of Rule 145(c) under the
Securities  Act of  1933,  as  amended  (the  "Securities  Act"),  shall  not be
exchanged  until  VTEL has  received  a written  agreement  from such  person as
provided in Section 6.04.

         Section 2.04.     Dissenters' Rights.

                  (a) The holders of shares of Company Common Stock shall not be
         entitled  to  appraisal  rights.   Notwithstanding   anything  in  this
         Agreement  to the  contrary,  each  share of Series C  Preferred  Stock
         issued and outstanding immediately prior to the Effective Time and held
         by  stockholders  who have not voted such shares in favor of the Merger
         or  consented  thereto in writing and qualify  under and have  complied
         with all of the  provisions  of  Section  262 of the DGCL  ("Dissenting
         Shares")  shall not, by virtue of the  Merger,  be  converted  into the
         right to receive the Series C Preferred  Stock  Consideration  but such
         stockholder shall be entitled to receive payment of the appraised value
         of such shares of Series C Preferred  Stock held by them in  accordance
         with the provisions of Section 262 of the DGCL; provided, however, that
         if any holder of Dissenting Shares (i) subsequently  delivers a written
         withdrawal of his demand for appraisal rights (with the written consent
         of VTEL if such written withdrawal is not made within 60 days after the
         Effective  Time),  or (ii)  fails  to  perfect  dissenter's  rights  as
         provided in Section 262 of the DGCL,  or (iii) if neither any holder of
         Dissenting  Shares nor the Surviving  Corporation  has filed a petition
         demanding a determination of the value of Dissenting  Shares within the
         time provided in Section 262 of the DGCL, the Dissenting Shares held by
         such holder or holders (as the case may be) shall  thereupon  be deemed
         to have been converted into and to have become  exchangeable for, as of
         the Effective  Time, the right to receive the Series C Preferred  Stock
         Consideration,  as provided  in this  Agreement  without  any  interest
         thereon.

                  (b) The  Company  shall  give  VTEL (i)  prompt  notice of any
         written demands for appraisal,  withdrawal of demands for appraisal and
         any other  instruments  served  pursuant to Section 262 of the DGCL and
         (ii) the opportunity to direct all  negotiations  and proceedings  with
         respect to demands for  appraisal  under  Section 262 of the DGCL.  The
         Company agrees that prior to the Effective  Time, it will not,  without
         the prior written  consent of VTEL,  voluntarily  make or agree to make
         any payment  with  respect  to, or settle or offer to settle,  any such
         demands.


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<PAGE>



                  (c) Each holder of  Dissenting  Shares who  becomes  entitled,
         pursuant to the  provisions  of Section 262 of the DGCL,  to payment of
         his or its Dissenting  Shares shall receive payment  therefor after the
         Effective  Time from the  Surviving  Corporation  (but  only  after the
         amount  thereof  shall  have been  agreed  upon or  finally  determined
         pursuant to such provisions) and such shares shall be canceled.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby represents and warrants to the VTEL Companies that:

         Section 3.01. Organization and Qualification: Subsidiaries. The Company
is a  corporation,  and each of the  Company's  subsidiaries  (as  such  term in
defined in Section 9.03 herein) is a corporation or partnership, duly organized,
validly  existing and in good standing under the laws of the jurisdiction of its
incorporation or organization,  and each of the Company and its subsidiaries has
all requisite  power and authority to own,  lease and operate its properties and
to conduct its  business as it is now being  conducted  and is  qualified  to do
business and is in good standing in each jurisdiction in which the nature of the
business  conducted by it or the  ownership or leasing of its  properties  makes
such  qualification  necessary,  other than where the failure to be so qualified
and in good standing could not reasonably be expected to have a Company Material
Adverse  Effect.  The term  "Company  Material  Adverse  Effect" as used in this
Agreement  shall mean any change or effect that would be  materially  adverse to
the financial condition,  results of operations,  business,  or prospects of the
Company and its  subsidiaries,  taken as a whole,  at the time of such change or
effect; provided, however, no Company Material Adverse Effect shall be deemed to
have occurred hereunder (i) as a result of customers of the Company deferring or
delaying  orders  as a  result  of the  announcement  of the  execution  of this
Agreement,  (ii) if the  financial  condition  or results of  operations  of the
Company's  business  are not  materially  and  adversely  different  from  those
announced  with respect to the Company's  quarter  ended  September 30, 1996, or
(iii) as a result of the Company  employee  departures after the announcement of
the  execution  of  this  Agreement.  Section  3.01 of the  Disclosure  Schedule
delivered by the Company to the VTEL Companies  concurrently  with the execution
of this Agreement (the "Company Disclosure Schedule") sets forth, as of the date
of this  Agreement,  a true and complete list of all the  Company's  directly or
indirectly   owned   subsidiaries,   together  with  (a)  the   jurisdiction  of
incorporation or organization of each such subsidiary and the percentage of each
such subsidiary's  outstanding  capital stock or other equity interests owned by
the  Company or another  subsidiary  of the  Company  and (b) an  indication  of
whether each such subsidiary is a "Significant Subsidiary" as defined in Section
9.03 of this Agreement.

         Section 3.02.     Certificate of Incorporation and Bylaws.  The Company
has  heretofore  furnished or made available to VTEL complete and correct copies
of  the  Certificate  of   Incorporation   and  the  Bylaws  or  the  equivalent
organizational  documents,  in each  case as  amended  or  restated  to the date
hereof, of the Company and each of its Significant Subsidiaries. Neither

CORPDAL:59869.4 22768-00022
                                                         9

<PAGE>



the Company nor any of its subsidiaries is in violation of any of the provisions
of its  Certificate of  Incorporation  or Bylaws (or  equivalent  organizational
documents).

         Section 3.03.     Capitalization.

                  (a) The  authorized  capital stock of the Company  consists of
         25,153,658  shares of Company Common Stock,  par value $.001 per share,
         and 4,000,000  shares of preferred stock, par value $.001 per share. At
         the date hereof,  15,865,178 shares of Company Common Stock were issued
         and  outstanding,  no shares of Company  Common  Stock were held by the
         Company in its treasury or by the Company's  subsidiaries and 8,635,185
         shares of Company  Common Stock were  reserved for issuance as follows:
         (i) 2,589,866  shares were reserved for issuance upon exercise of stock
         options  heretofore  granted or  available  for grant  pursuant  to the
         Company's 1980 Stock Option Plan;  (ii) 2,506,833  shares were reserved
         for  issuance  upon  exercise of stock  options  heretofore  granted or
         available for grant pursuant to the Company's 1984  Supplemental  Stock
         Option Plan;  (iii) 176,244  shares were reserved for issuance upon the
         purchase of shares under the  Company's  1984 Employee  Stock  Purchase
         Plan;  (iv) 168,000  shares were reserved for issuance upon exercise of
         stock options heretofore granted or available for grant pursuant to the
         Company's  1992  Non-Employee  Directors'  Stock Option Plan (the plans
         referred to in clauses (i) through  (iv) of this  section  being herein
         collectively  called the "Company  Option  Plans");  (v) 580,000 shares
         were  reserved  for issuance  upon the  exercise of the  warrants  (the
         "Common Stock Warrants") listed and described in Section 3.03(a) of the
         Company  Disclosure  Schedule;  (vi) 2,424,242 shares were reserved for
         issuance upon conversion of the Company's Series C Preferred Stock; and
         (vii) 3,120,500  shares were reserved for issuance upon exercise of the
         Stock Option Agreement.  At the date hereof, 350,000 shares of Series C
         Preferred  Stock  were  issued  and  outstanding,  no other  shares  of
         preferred stock was issued and outstanding,  and no shares of preferred
         stock were held by the  Company  in its  treasury  or by the  Company's
         subsidiaries.  Except as  described  in this Section 3.03 or in Section
         3.03(a) of the Company Disclosure Schedule,  no shares of capital stock
         of the Company are issued and  outstanding or reserved for issuance for
         any other  purpose.  Each of the issued shares of capital stock of each
         of the Company and its subsidiaries is duly authorized,  validly issued
         and fully paid and nonassessable,  and has not been issued in violation
         of (nor are any of the authorized  shares of capital stock of, or other
         equity interests in, the Company or any of its subsidiaries subject to)
         any preemptive or similar rights created by statute, the Certificate of
         Incorporation or Bylaws (or the equivalent organizational documents) of
         the Company or any of its  subsidiaries,  or any agreement to which the
         Company or any of its  subsidiaries  is a party or is bound.  Except as
         set forth in Section 3.03(a) of the Company  Disclosure  Schedule,  all
         issued  shares or other  equity  interests in the  subsidiaries  of the
         Company  owned by the Company or a subsidiary  of the Company are owned
         free and  clear of all  security  interests,  liens,  claims,  pledges,
         agreements,  limitations on the Company's or such subsidiaries'  voting
         rights, charges or other encumbrances of any nature whatsoever.


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<PAGE>



                  (b) No bonds,  debentures,  notes or other indebtedness of the
         Company or its  subsidiaries  having the right to vote (or  convertible
         into or exchangeable or exercisable for securities  having the right to
         vote) on any matters on which  stockholders  may vote ("Company  Voting
         Debt") are issued or  outstanding.  All shares of Company  Common Stock
         which may be issued upon exercise of stock options granted  pursuant to
         the Company  Option  Plans or Common  Stock  Warrants and all shares of
         Company Common Stock which may be issued upon  conversion of the Series
         C Preferred  Stock will,  when issued in  accordance  with the terms of
         such stock  options,  warrants,  designations  and the related  Company
         Option Plans, be validly issued,  fully paid and  nonassessable and not
         subject to preemptive rights.

                  (c) Except as set forth in Section 3.03(a) above or in Section
         3.03(c)  of the  Company  Disclosure  Schedule,  there are no  options,
         warrants or other rights (including  registration rights),  agreements,
         arrangements  or  commitments  of any character to which the Company or
         any of its  subsidiaries  is a party relating to the issued or unissued
         capital stock of the Company or any of its  subsidiaries  or obligating
         the  Company  or any of its  subsidiaries  to grant,  issue or sell any
         shares of capital stock,  Company Voting Debt or other equity interests
         of the  Company  or any of its  subsidiaries.  Except  as set  forth in
         Section  3.03(c)  of the  Company  Disclosure  Schedule,  there  are no
         obligations,  contingent  or  otherwise,  of the  Company or any of its
         subsidiaries (i) to repurchase,  redeem or otherwise acquire any shares
         of Company  Common Stock or other  capital  stock of the Company or the
         capital  stock of any  subsidiary  of the  Company  or (ii)  other than
         advances  to  wholly  owned  subsidiaries  in the  ordinary  course  of
         business,  to provide  funds to, or to make any  investment  in (in the
         form of a loan, capital  contribution or otherwise),  or to provide any
         guarantee  with respect to the  obligations  of, any  subsidiary of the
         Company or any other person. Except (i) as set forth in Section 3.03(c)
         of the Company Disclosure  Schedule or (ii) for the subsidiaries of the
         Company set forth in Section 3.01 of the Company  Disclosure  Schedule,
         neither  the  Company  nor  any of its  subsidiaries  (x)  directly  or
         indirectly owns, (y) has agreed to purchase or otherwise acquire or (z)
         holds any interest  convertible into or exchangeable or exercisable for
         the capital stock or other equity interests  representing  five percent
         (5%) or more of the  capital  stock or other  equity  interests  of any
         corporation,  partnership,  joint venture or other business association
         or  entity.  Except  as set forth in  Section  3.03(c)  of the  Company
         Disclosure Schedule or for any agreements,  arrangements or commitments
         between the Company and its wholly owned  subsidiaries  or between such
         wholly owned  subsidiaries,  there are no agreements,  arrangements  or
         commitments  of any character  (contingent  or  otherwise)  pursuant to
         which any person is or may be entitled to receive any payment based on,
         or  calculated  in  accordance  with,  the  revenues or earnings of the
         Company  or any of its  subsidiaries.  Except as set  forth in  Section
         3.03(c) of the Company Disclosure Schedule, there are no voting trusts,
         proxies or other agreements or  understandings  to which the Company or
         any of its  subsidiaries  is a party or by which the  Company or any of
         its  subsidiaries  is bound with respect to the voting of any shares of
         capital  stock or other  equity  interests of the Company or any of its
         subsidiaries.

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                                                        11

<PAGE>




                  (d) Section  3.03(d) of the Company  Disclosure  Schedule sets
         forth a  complete  and  correct  list as of the date  hereof of (i) the
         number of options to purchase Company Common Stock  outstanding and the
         number of shares of Company Common Stock issuable thereunder,  (ii) the
         number of Common Stock Warrants outstanding and the number of shares of
         Company Common Stock issuable  thereunder,  (iii) the exercise price of
         each such  outstanding  stock  option and  warrant,  (iv) the number of
         stock options then exercisable, and (v) the number of shares of Company
         Common Stock issuable upon  conversion of the Series C Preferred  Stock
         if such  Series C Preferred  Stock was  converted  on the date  hereof.
         Complete and correct copies of the Company  Option Plans,  all forms of
         stock options issued pursuant to the Company Option Plans or otherwise,
         and all  forms of  Common  Stock  Warrants,  including  all  amendments
         thereto, have been made available to VTEL.

         Section 3.04. Authority.  The Company has all requisite corporate power
and  authority  to execute  and  deliver  this  Agreement  and the Stock  Option
Agreement, to perform its obligations hereunder and thereunder and to consummate
the  transactions  contemplated  hereby and thereby (subject to, with respect to
the Merger,  the approval and adoption of this Agreement by the  stockholders of
the Company as described in Section 6.01 of this  Agreement).  The execution and
delivery of this Agreement and the Stock Option Agreement by the Company and the
consummation by the Company of the transactions  contemplated hereby and thereby
have  been  duly  authorized  by all  necessary  corporate  action  and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement  and the Stock Option  Agreement  or to  consummate  the  transactions
contemplated  hereby and thereby  (subject to, with  respect to the Merger,  the
approval and adoption of this  Agreement by the  stockholders  of the Company as
described  in Section  6.01 of this  Agreement).  This  Agreement  and the Stock
Option  Agreement have each been duly executed and delivered by the Company and,
assuming  the due  authorization,  execution  and  delivery  hereof  by the VTEL
Companies,  constitute the legal,  valid and binding  obligation of the Company,
enforceable against the Company in accordance with their terms.

         Section 3.05.     No Conflict: Required Filings and Consents.

                  (a)  Except as  disclosed  in Section  3.05(a) of the  Company
         Disclosure  Schedule,  the execution and delivery of this Agreement and
         the Stock Option  Agreement by the Company do not, and the  performance
         by the Company of its obligations  hereunder and thereunder,  including
         consummation of the transactions  contemplated hereby and thereby, will
         not (i) conflict with or violate the  Certificate of  Incorporation  or
         Bylaws,  or the equivalent  organizational  documents,  in each case as
         amended  or  restated,  of  the  Company  or  any  of  its  Significant
         Subsidiaries, (ii) conflict with or violate any federal, state, foreign
         or local law,  statute,  ordinance,  rule or regulation  (collectively,
         "Laws")  in effect as of the date of this  Agreement  or any  judgment,
         order or decree to which the  Company or any of its  subsidiaries  is a
         party or by or to which any of their respective properties are bound or
         subject or (iii) result in any breach of or constitute a default (or an
         event that with

CORPDAL:59869.4 22768-00022
                                                        12

<PAGE>



         notice  or lapse of time or both  would  become a  default)  under,  or
         impair any of the Company's or any of its Subsidiaries' rights or alter
         the rights or obligations  of any third party under,  or give to others
         any rights of termination,  amendment, acceleration or cancellation of,
         or  require  payment  under,  or  result in the  creation  of a lien or
         encumbrance on any of the properties or assets of the Company or any of
         its  subsidiaries  pursuant to, any note,  bond,  mortgage,  indenture,
         contract,   agreement,  lease,  license,  permit,  franchise  or  other
         instrument   or   obligation  to  which  the  Company  or  any  of  its
         subsidiaries  is a party or by or to which  the  Company  or any of its
         subsidiaries or any of their respective properties are bound or subject
         (including,  but not  limited to, any  license  agreement,  contract or
         other arrangement of any nature relating to the Company's  Intellectual
         Property Rights or Third Party  Intellectual  Property Rights (as those
         terms are hereinafter  defined)),  excluding from the foregoing clauses
         (ii) and  (iii) any such  conflicts,  violations,  breaches,  defaults,
         events, rights of termination, amendment, acceleration or cancellation,
         payment  obligations or liens or encumbrances  that  individually or in
         the  aggregate  could  not  reasonably  be  expected  to have a Company
         Material  Adverse  Effect.  The Board of  Directors  of the Company has
         approved the Merger, this Agreement and the Stock Option Agreement, and
         the  transactions  contemplated  by this Agreement and the Stock Option
         Agreement and such  approval is sufficient to render the  provisions of
         Section 203 of the DGCL inapplicable to the Merger,  this Agreement and
         the Stock Option Agreement,  and the transactions  contemplated  hereby
         and thereby.  To the best of the  Company's  knowledge,  no other state
         takeover  statute or similar statute or regulation  applies or purports
         to apply to the Merger,  this Agreement and the Stock Option Agreement,
         or any of the  transactions  contemplated  by this  Agreement or by the
         Stock Option Agreement.

                  (b) The execution and delivery of this Agreement and the Stock
         Option  Agreement by the Company does not, and the  performance  by the
         Company  of  its  obligations   hereunder  and  thereunder,   including
         consummation of the transactions  contemplated hereby and thereby, will
         not,  require  the  Company to obtain  any  consent,  license,  permit,
         waiver, approval, authorization or order of, or to make any filing with
         or notification to, any governmental or regulatory authority,  federal,
         state, local or foreign (collectively, "Governmental Entities"), except
         (i) for (A) applicable requirements, if any, of the Securities Act, the
         Securities  Exchange Act of 1934, as amended (the "Exchange  Act"), and
         state  securities  or blue  sky  laws  ("Blue  Sky  Laws")  and (B) the
         pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
         Improvements  Act of 1976, as amended (the "HSR Act"),  (ii) the filing
         and  recordation  of  appropriate  merger  documents as required by the
         DGCL,  and (iii) where the failure to obtain such  consents,  licenses,
         permits, waivers, approvals,  authorizations or orders, or to make such
         filings or  notifications  could not,  individually or in the aggregate
         reasonably be expected to cause a Company Material Adverse Effect or to
         materially  impair or delay the  ability of the  Company to perform its
         obligations  under this Agreement and the Stock Option  Agreement or to
         consummate the transactions contemplated hereby and thereby.


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<PAGE>



         Section 3.06. Permits: Compliance.  Except as disclosed in Section 3.06
of the Company Disclosure Schedule,  each of the Company and its subsidiaries is
in possession of all  franchises,  grants,  authorizations,  licenses,  permits,
easements, variances,  exemptions,  consents,  certificates,  identification and
registration  numbers,  approvals  and  orders  (collectively,   the  "Permits")
necessary  to own,  lease and  operate  their  properties  and to carry on their
businesses as they are now being conducted,  except where the failure to possess
such Permits could not reasonably be expected to have a Company Material Adverse
Effect.  Section 3.06 of the Company  Disclosure  Schedule sets forth, as of the
date of this Agreement, all actions, proceedings, or investigations, pending or,
to the  knowledge of the Company,  threatened  against the Company or any of its
subsidiaries   that  could  reasonably  be  expected  to  result  in  the  loss,
revocation,  suspension  or  cancellation  of a Permit  held by the Company or a
subsidiary of the Company,  except for any  suspension,  loss or revocation that
could not  reasonably  be expected to have a Company  Material  Adverse  Effect.
Except as set forth in Section 3.06 of the Company Disclosure Schedule,  neither
the Company nor any of its subsidiaries is in conflict with, in default under or
in  violation  of,  nor has it  received,  since  December  31,  1993,  from any
Governmental  Entity any written notice with respect to possible conflicts with,
defaults  under or violations of (a) any Law applicable to the Company or any of
its subsidiaries or by or to which any of their respective  properties are bound
or subject,  (b) any judgment,  order or decree applicable to the Company or any
of  its  subsidiaries,  or (c)  any of the  Permits  held  by the  Company  or a
subsidiary of the Company, except for any such conflicts, defaults or violations
that individually or in the aggregate could not reasonably be expected to have a
Company Material Adverse Effect.

         Section 3.07.   Reports; Financial Statements; Undisclosed Liabilities.

                  (a) Since  December 31,  1993,  except as disclosed in Section
         3.07 of the  Company  Disclosure  Schedule,  the  Company has filed all
         forms,  reports,  statements and other  documents  required to be filed
         with the Securities  and Exchange  Commission  (the "SEC"),  including,
         without  limitation,  (i) all Annual  Reports  on Form  10-K,  (ii) all
         Quarterly Reports on Form 10-Q, (iii) all proxy statements  relating to
         meetings of stockholders (whether annual or special),  (iv) all Current
         Reports on Form 8-K and (v) all other reports, schedules,  registration
         statements or other documents (collectively referred to as the "Company
         SEC Reports").  As of their  respective  dates, the Company SEC Reports
         complied in all material  respects with the  requirements of applicable
         Laws (including the Securities Act or the Exchange Act, as the case may
         be, and the rules and  regulations of the SEC thereunder  applicable to
         such  Company SEC  Reports)  and the Company  SEC  Reports,  including,
         without  limitation,  any financial  statements  or schedules  included
         therein,  did not at the  time  they  were  filed  contain  any  untrue
         statement of a material  fact or omit to state a material fact required
         to be  stated  therein  or  necessary  in order to make the  statements
         therein,  in the light of the circumstances under which they were made,
         not misleading.

                  (b)      The Company has heretofore delivered to VTEL
         (i) consolidated balance sheets of the Company and its subsidiaries as
         of December 31, 1993, December 31, 1994

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                                                        14

<PAGE>



         and  December  31,  1995 and (ii)  consolidated  statements  of income,
         stockholders'  equity and cash  flows for each of the three  years then
         ended, certified by KPMG Peat Marwick LLP, reports thereon are included
         therewith.  The Company  has also  delivered  to VTEL (i) an  unaudited
         consolidated  balance sheet of the Company and its  subsidiaries  as of
         September  30, 1996,  and (ii)  unaudited  consolidated  statements  of
         income,  stockholders'  equity and cash flows for the nine  months then
         ended. Such audited and unaudited  consolidated  financial  statements,
         including any such financial  statements and schedules contained in the
         Company SEC reports (or  incorporated by reference  therein) (i) are in
         accordance   with  the  books  and  records  of  the  Company  and  its
         subsidiaries  in all material  respects and were prepared in accordance
         with the  published  rules  and  regulations  of the SEC and  generally
         accepted accounting principles applied on a consistent basis throughout
         the periods  involved  (except (A) to the extent  disclosed  therein or
         required by changes in generally accepted  accounting  principles,  (B)
         with respect to Company SEC  Reports,  as may be indicated in the notes
         thereto and (C) in the case of the unaudited financial  statements,  as
         permitted  by the rules  and  regulations  of the SEC) and (ii)  fairly
         present in all material respects the consolidated financial position of
         the Company and its subsidiaries as of the respective dates thereof and
         the  consolidated  results of operations and cash flows for the periods
         indicated  (except,  in the case of  unaudited  consolidated  financial
         statements  for  interim  periods,  for the  absence of  footnotes  and
         subject to adjustments,  consisting only of normal, recurring accruals,
         necessary to present fairly such results of operations and cash flows).

                  (c) Except as and to the extent set forth on the  consolidated
         balance  sheet of the Company and its  subsidiaries  as of December 31,
         1995, including the notes thereto, or in the Company's Quarterly Report
         on Form 10-Q for the quarter  ended  September  30, 1996,  or other SEC
         Report  filed prior to the date  hereof,  neither the Company or any of
         its  subsidiaries  has any  liabilities or obligations  material to the
         Company and its  subsidiaries  which are not referenced on such balance
         sheet or in such  Quarterly  Report on Form  10-Q or in such  other SEC
         Report filed prior to the date  hereof.  Except as set forth in Section
         3.07  of  the  Company  Disclosure  Schedule  or as  set  forth  in the
         Company's  Current Report on Form 8-K filed with the SEC on October 24,
         1996,  since the date of the Company's  most recently  filed  Quarterly
         Report on Form 10-Q,  neither the  Company nor any of its  subsidiaries
         has incurred any liabilities  except for (i) liabilities or obligations
         incurred in the ordinary  course of business and  consistent  with past
         practice,  (ii) liabilities  incurred in connection with or as a result
         of the Merger and (iii)  liabilities or obligations which do not have a
         Company Material Adverse Effect.

         Section 3.08. Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports  filed prior to the date of this  Agreement or as set
forth in Section 3.08 of the Company  Disclosure  Schedule,  since September 30,
1996,  the  Company  and  its  subsidiaries   have  conducted  their  respective
businesses  only in the  ordinary  course and in a manner  consistent  with past
practice and there has not been (a) any damage, destruction or loss with respect
to any assets of the  Company or any of its  subsidiaries  that,  whether or not
covered by insurance, would

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<PAGE>



constitute a Company Material  Adverse Effect,  (b) any change by the Company or
its  subsidiaries  in their  significant  accounting  policies,  (c)  except for
dividends by a subsidiary of the Company to the Company or another  wholly owned
subsidiary  of the Company,  any  declaration,  setting  aside or payment of any
dividends or  distributions  in respect of shares of Company Common Stock or the
shares of stock of, or other equity  interests in, any subsidiary of the Company
or any  redemption,  purchase  or  other  acquisition  of  any of the  Company's
securities or any of the  securities of any  subsidiary of the Company,  (d) any
material  increase in the benefits under, or the  establishment or amendment of,
any bonus, insurance,  severance,  deferred compensation,  pension,  retirement,
profit sharing, performance awards (including,  without limitation, the granting
of stock  appreciation  rights or restricted  stock  awards),  stock purchase or
other employee benefit plan, or any increase in the  compensation  payable or to
become  payable  to any of the  directors  or  officers  of the  Company  or the
employees  of the  Company  or its  subsidiaries  as a  group,  except  for  (i)
increases  in salaries  or wages  payable or to become  payable in the  ordinary
course of business  and  consistent  with past  practice or (ii) the granting of
stock options in the ordinary  course of business to employees of the Company or
its subsidiaries who are not directors or executive officers of the Company,  or
(e) any Company Material Adverse Effect.

         Section  3.09.  Absence of  Litigation.  Except as set forth in Section
3.09 of the  Company  Disclosure  Schedule,  there is no  claim,  action,  suit,
litigation,  proceeding,  arbitration  or,  to the  knowledge  of  the  Company,
investigation of any kind, at law or in equity (including actions or proceedings
seeking  injunctive  relief),  pending  or,  to the  knowledge  of the  Company,
threatened  against the Company or any of its  subsidiaries or any properties or
rights of the  Company or any of its  subsidiaries,  and neither the Company nor
any of its  subsidiaries is subject to any continuing  order of, consent decree,
settlement  agreement  or other  similar  written  agreement  with,  or,  to the
knowledge of the Company,  continuing investigation by, any Governmental Entity,
or any judgment,  order, writ,  injunction,  decree or award of any Governmental
Entity or arbitrator,  including, without limitation,  cease-and-desist or other
orders.

         Section 3.10.     Employee Benefit Plans; Labor Matters.

                  (a) With  respect  to each  employee  benefit  plan,  program,
         arrangement,  contract,  employment  agreement,  stock  option,  bonus,
         incentive or similar plan (including, without limitation, any "employee
         benefit  plan" as defined in Section  3(3) of the  Employee  Retirement
         Income  Security  Act of 1974,  as amended  ("ERISA")),  maintained  or
         contributed  to by the  Company  or any of its  subsidiaries,  or  with
         respect  to  which  the  Company  or  any  of  its  subsidiaries  could
         reasonably  be expected to incur  liability  under ERISA (the  "Company
         Benefit Plans"),  the Company has delivered or made available to VTEL a
         true and correct copy of (i) such Company Benefit Plan, (ii) each trust
         agreement,  if any,  relating to such Company  Benefit Plan,  (iii) the
         most recent summary plan  description of each Company  Benefit Plan for
         which a summary plan description is required,  and (iv) the most recent
         determination  letter  issued by the IRS with  respect  to any  Company
         Benefit Plan that is intended to be qualified  under Section 401 of the
         Code.

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<PAGE>



         Section  3.10 of the Company  Disclosure  Schedule  contains a complete
         list of all Company Benefit Plans.

                  (b) Each of the  Company  Benefit  Plans  that are  subject to
         ERISA is in compliance  with ERISA,  and except as set forth in Section
         3.10 of the Company Disclosure Schedule, no Company Benefit Plan has an
         accumulated or waived funding  deficiency within the meaning of Section
         412 of the Code.  Except as set forth in  Section  3.10 of the  Company
         Disclosure   Schedule,   none  of  the  Company   Benefit  Plans  is  a
         "multiemployer plan," as defined in Section 3(37) of ERISA. Neither the
         Company nor any trade or business which together with the Company would
         be deemed a "single  employer"  within the  meaning of ERISA (an "ERISA
         Affiliate")  has  incurred,   directly  or  indirectly,   any  material
         liability  (including  any  material  contingent  liability)  to  or on
         account  of a Company  Benefit  Plan  pursuant  to Title IV of ERISA to
         which the Company or an ERISA  Affiliate made, or was required to make,
         contributions during the five (5) years ending on December 31, 1995. As
         of the date of this Agreement,  no condition is known by the Company to
         exist  that  presents  a  material  risk  to the  Company  or an  ERISA
         Affiliate of incurring such a material  liability.  No proceedings have
         been  instituted to terminate any Company  Benefit Plan that is subject
         to Title IV of ERISA and no "reportable event," as such term in defined
         in Section  4043(b) of ERISA, is known to have occurred with respect to
         any Company Benefit Plan which has not been reported.

                  (c)  Except  as set  forth  in  Section  3.10  of the  Company
         Disclosure  Schedule,  the  current  value of the assets of each of the
         Company Benefit Plans that are subject to Title IV of ERISA, based upon
         reasonable actuarial  assumptions,  equals or exceeds the present value
         of the accrued  benefits  under each such Company  Benefit Plan and all
         contributions  or other amounts  payable by the Company and each of its
         subsidiaries as of the date of this Agreement with respect to each Plan
         in respect of  current  or prior  plan  years has been  either  paid or
         accrued on the latest  balance  sheet  included in the  Company's  most
         recent SEC Report on Form 10-Q or accrued  since  September  30,  1996.
         There are no pending, or, to the best knowledge of the Company and each
         of its  subsidiaries,  threatened  or  anticipated  claims  (other than
         routine  claims for  benefits)  by, on behalf of or against  any of the
         Company Benefit Plans or any trusts related thereto.

                  (d) There are no  collective  bargaining  or other labor union
         contracts  to which the Company or its  subsidiaries  is a party and no
         collective  bargaining  agreement is being negotiated by the Company or
         any of its  subsidiaries.  There is no pending or, to the  knowledge of
         the Company,  threatened labor dispute, strike or work stoppage against
         the Company or any of its subsidiaries.

                  (e) No  Company  Benefit  Plan  provides  retiree  medical  or
         retiree life insurance  benefits and neither the Company nor any of its
         subsidiaries is  contractually  or otherwise  obligated to provide life
         insurance  and medical  benefits  upon  retirement  or  termination  of
         employment of employees.

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<PAGE>




                  (f)  Neither   the   Company  nor  any  of  its   subsidiaries
         contributes to or has an obligation to contribute to, or has within six
         years  prior to the  date of this  Agreement  contributed  to or had an
         obligation  to contribute  to, an employee  benefit plan that is or was
         subject to Title IV of ERISA or Section 412 of the Code.

         Section 3.11.     Taxes.  Except as set forth in Section 3.11 of the
         Company Disclosure Schedule:

                  (a) (i) all  returns and reports  ("Tax  Returns")  of or with
         respect  to any  material  Tax  (as  defined  in  Section  9.03 of this
         Agreement)  which are required to be filed on or before the date hereof
         by or with respect to the Company or any of its subsidiaries  have been
         duly and timely filed, (ii) all items of income,  gain, loss, deduction
         and credit or other  items  required  to be  included  in each such Tax
         Return have been so included and all information  provided in each such
         Tax Return is true,  correct  and  complete in all  material  respects,
         (iii) all  material  Taxes  which have  become due with  respect to the
         period covered by each such Tax Return have been or will be timely paid
         in full,  (iv) all  withholding  Tax  requirements  imposed  on or with
         respect to the Company or any of its  subsidiaries  have been satisfied
         in all  material  respects,  and (v) no material  penalty,  interest or
         other  charge is due with  respect  to the late  filing of any such Tax
         Return or late payment of any such Tax .

                  (b) Section 3.11 of the Company Disclosure  Schedule lists all
         federal  and other  material  Tax  Returns  filed  with  respect to the
         Company  and any of its  subsidiaries  for taxable  years  ending on or
         after  December 31, 1992. The Company has delivered to VTEL correct and
         complete copies of all such Tax Returns.

                  (c) There is no material  claim  against the Company or any of
         its subsidiaries for any amount of Taxes, no assessment,  deficiency or
         adjustment has been asserted or proposed with respect to any Tax Return
         of or with  respect to the Company or any of its  subsidiaries,  and no
         material  Tax Return of or with  respect  to the  Company or any of its
         subsidiaries  has been,  or is being,  audited by the Internal  Revenue
         Service or any state,  local or other taxing authority other than those
         disclosed  (and to which are attached  true and complete  copies of all
         audit or similar  reports) in Section  3.11 of the  Company  Disclosure
         Schedule.

                  (d) The total  amounts set up as  liabilities  for current and
         deferred Taxes in the financial  statements referred to in Section 3.07
         of this  Agreement  are  sufficient  to cover the payment of all Taxes,
         whether or not assessed or disputed,  which are, or are hereafter found
         to be, or to have been,  due by or with  respect to the Company and any
         of its subsidiaries up to and through the periods covered thereby.


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<PAGE>



                  (e) Except for  statutory  liens for current Taxes not yet due
         and for Taxes being  contested in good faith which have been  disclosed
         in  Section  3.11 of the  Company  Disclosure  Schedule  and for  which
         adequate provisions have been made in the financial statements referred
         to in Section 3.07,  no material  liens for Taxes exist upon the assets
         of any of the Company or any of its subsidiaries.

                  (f) Neither the Company nor any of its subsidiaries has waived
         any statute of  limitations  in respect of material  Taxes or agreed to
         any  extension  of time with respect to a material  Tax  assessment  or
         deficiency.

                  (g) Neither the Company nor any of its  subsidiaries  has made
         an election  under Section  341(f) of the Code.  Except as disclosed in
         Section 3.11 of the Company  Disclosure  Schedule,  neither the Company
         nor any of its subsidiaries has made any payments, is obligated to make
         any  payments,   or  is  a  party  to  any  agreement  that  under  the
         circumstances  could  obligate it to make any payments that will not be
         deductible under Sections 162(m) or 280G of the Code.

                  (h) Neither the Company nor any of its  subsidiaries has taken
         or agreed  to take any  action  that  would  prevent  the  Merger  from
         constituting  a  reorganization  qualifying  under  the  provisions  of
         Section 368(a) of the Code.

                  (i) Neither the  Company nor any of its  subsidiaries  (i) has
         ever been a member of an  Affiliated  Group (as defined in Section 1504
         of the  Code)  other  than a group the  common  parent of which was the
         Company or (ii) has any  liability  for the Taxes of any person  (other
         than the Company or any of its  subsidiaries)  under  Treas.  Reg.  ss.
         1.1502-6 (or any similar provision under state, local, or foreign law),
         as a transferee or successor, by contract, or otherwise.

                  (j)  Except  for the  Merger,  there  has  been no  "ownership
         change" (as defined in Section  382(g) of the Code) with respect to the
         Company  during the "testing  period" (as defined in Section  382(i) of
         the Code) that ends on the day on which the "owner  shift" (as  defined
         in Section 382(g) of the Code) occurs as a result of the Merger.

         Section  3.12.  Affiliates.  Section  3.12  of the  Company  Disclosure
Schedule  identifies  all persons who, to the  knowledge of the Company,  may be
deemed to be affiliates  of the Company  within the meaning of that term as used
in Rule 145  promulgated  pursuant to the  Securities  Act,  including,  without
limitation, all directors and executive officers of the Company.

         Section  3.13.  Properties.  Except as set forth in Section 3.13 of the
Company  Disclosure  Schedule  or  specifically  described  in the  Company  SEC
Reports,  the Company and its subsidiaries  have good and marketable title, free
and clear of all liens, to all their  properties and assets whether  tangible or
intangible,  real,  personal or mixed,  reflected in the Company's  consolidated
financial  statements  contained in the Company's most recent SEC Report on Form
10-Q as being owned

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<PAGE>



by the Company and its  subsidiaries as of the date thereof,  other than (a) any
properties  or  assets  that  have been  sold or  otherwise  disposed  of in the
ordinary  course of business  since the date of such financial  statements,  (b)
liens disclosed in the notes to such financial  statements and (c) liens arising
in the ordinary course of business after the date of such financial statements.

         Section 3.14.     Intellectual Rights.

                  (a) The Company  owns,  or is licensed or otherwise  possesses
         legally sufficient rights to use, all patents, trademarks, trade names,
         service marks,  copyrights,  maskworks and any  applications  therefor,
         technology,  know-how, video and audio compression algorithms, computer
         software  programs or applications (in both source code and object code
         form) and tangible or intangible  proprietary  information  or material
         that are used or proposed to be used in the  business of the Company as
         currently  conducted.  Section 3.14 of the Company Disclosure  Schedule
         lists  all  current  patents,   registered  and  material  unregistered
         copyrights,  maskworks, trade names and any applications therefor owned
         by the Company (the "Intellectual  Property Rights"), and specifies the
         jurisdictions in which each such  Intellectual  Property Right has been
         issued or registered or in which an  application  for such issuance and
         registration has been filed,  including the respective  registration or
         application  numbers and the names of all  registered  owners.  Section
         3.14 of the  Company  Disclosure  Schedule  includes  and  specifically
         identifies all material  third-party  patents,  trademarks,  copyrights
         (including  software)  and  maskworks  (the "Third  Party  Intellectual
         Property  Rights"),  to  the  knowledge  of  the  Company,   which  are
         incorporated in, are, or form a part of, any Company product, excluding
         any such intellectual property rights that are available on a commodity
         basis (such as "shrink  wrap"  licenses)  and which are  non-exclusive,
         terminable and available at a standard fee. Section 3.14 of the Company
         Disclosure  Schedule lists (i) all material  licenses,  sublicenses and
         other  agreements  as to which the  Company is a party and  pursuant to
         which any person is authorized to use any of the Company's Intellectual
         Property Rights,  or any trade secret material to the Company or any of
         its subsidiaries; and (ii) all material licenses, sublicenses and other
         agreements as to which the Company is a party and pursuant to which the
         Company is  authorized  to use any Third  Party  Intellectual  Property
         Rights,  or other trade  secret of a third party in or as any  product,
         and includes the identity of all parties thereto,  a description of the
         nature and subject matter thereof and the term thereof.

                  (b) The  Company  is not,  nor will it be as a  result  of the
         execution  and  delivery of this  Agreement or the  performance  of its
         obligations  hereunder,  in  violation of any  license,  sublicense  or
         agreement  described  in  Section  3.14(a)  of the  Company  Disclosure
         Schedule. No claims with respect to the Company's Intellectual Property
         Rights,  any trade  secret  material  to the  Company,  or Third  Party
         Intellectual  Property  Rights to the  extent  arising  out of any use,
         reproduction or distribution of such Third Party Intellectual  Property
         Rights by or through  the  Company,  are  currently  pending or, to the
         knowledge of the Company,  are  threatened by any person,  nor does the
         Company  know of any valid  grounds for any bona fide claims (i) to the
         effect that the manufacture, sale, licensing or

CORPDAL:59869.4 22768-00022
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<PAGE>



         use of any product as now used,  sold or licensed or proposed  for use,
         sale or license by the Company  infringes on any  copyright,  maskwork,
         patent,  trademark,  service mark or trade secret; (ii) against the use
         by  the  Company  of  any  trademarks,   trade  names,  trade  secrets,
         copyrights,  maskworks, patents, technology,  know-how, video and audio
         compression algorithms,  or computer software programs and applications
         used in the Company's business as currently conducted or as proposed to
         be conducted by the Company; (iii) challenging the ownership,  validity
         or effectiveness of any of the Company's  Intellectual  Property Rights
         or other trade secret material to the Company;  or (iv) challenging the
         Company's  license  or  legally  enforceable  right to use of the Third
         Party  Intellectual  Rights. To the Company's  knowledge,  all material
         patents,  registered  trademarks,  maskworks and copyrights held by the
         Company are valid and subsisting. To the Company's knowledge,  there is
         no material  unauthorized use,  infringement or misappropriation of any
         of the Company's  Intellectual  Property by any third party,  including
         any  employee  or  former  employee  of the  Company  or any of the its
         subsidiaries.  Except as set forth in Section  3.14(b)  of the  Company
         Disclosure  Schedule,  neither the Company nor any of its  subsidiaries
         (i) has been sued or charged in  writing as a  defendant  in any claim,
         suit,  action or proceeding  which involves a claim or  infringement of
         trade secrets,  any patents,  trademarks,  service marks,  maskworks or
         copyrights and which has not been finally  terminated prior to the date
         hereof or been informed or notified by any third party that the Company
         may be  engaged  in such  infringement  or (ii)  has  knowledge  of any
         infringement liability with respect to, or infringement by, the Company
         or any of its  subsidiaries  of any trade  secret,  patent,  trademark,
         service mark, maskwork or copyright of another.

                  (c)   Each   employee   of  the   Company   has   executed   a
         confidentiality,  invention and copyright agreement with the Company in
         the forms previously delivered to VTEL.

         Section 3.15.     Real Property.  Section 3.15 of the Company
Disclosure Schedule lists all real property that is owned or leased by the
Company (other than sales offices and shared distribution space).

         Section 3.16. Insider Interests;  Transactions with Management.  Except
as set forth in Section 3.16 of the Company Disclosure  Schedule,  no officer or
director  of the  Company  or holder of more than five  percent  of the  Company
Common Stock currently  outstanding  has any interest in any material  property,
real or personal,  tangible or intangible,  including,  without limitation,  any
computer software or Company Intellectual Property Assets, used in or pertaining
to the business of the Company or any subsidiary of the Company,  except for the
ordinary  rights of a stockholder  or employee  stock option  holder.  Except as
disclosed  in the  Company  SEC  Reports,  no  executive  officer,  director  or
stockholder  of the Company or any of its  subsidiaries  has, since December 31,
1994,  engaged  in  any  business  dealings  with  the  Company  or  any  of its
subsidiaries,  other than such business  dealings as would not be required to be
disclosed in such  documents or reports  pursuant to the  Securities Act and the
rules and regulations promulgated  thereunder.  No executive officer or director
of the Company or any of its subsidiaries (except in

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<PAGE>



his  capacity as such) has any direct or indirect  material  interest in (a) any
competitor,   customer,  supplier  or  agent  of  the  Company  or  any  of  its
subsidiaries,  or (b) any person  which is a party to any  contract or agreement
which is material to the Company or any of its subsidiaries.

         Section 3.17.  Contracts and  Agreements.  The contracts and agreements
listed in Section 3.17 of the Company  Disclosure  Schedule or filed as exhibits
to any of the  Company SEC Reports  constitute  all of the written and  material
oral contracts,  commitments,  leases, and other agreements (including,  without
limitation,   promissory  notes,   loan  agreements,   and  other  evidences  of
indebtedness)  to which the Company or any of its  subsidiaries is a party or by
which any of their properties are bound with respect to which the obligations of
or the  benefits  to be  received  by the  Company  or any of its  subsidiaries,
individually or in the aggregate,  could  reasonably be expected to have a value
(i) in the case of liabilities,  in excess of $250,000,  and (ii) in the case of
benefits,  $1,000,000,  in any  consecutive  12-month  period  (each a "Material
Contract").  Except  as set  forth in  Section  3.17 of the  Company  Disclosure
Schedule,  neither the Company nor any of its  subsidiaries are and, to the best
knowledge of the Company, no other party thereto is in default (and no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a default) under any Material  Contract,  and neither the Company nor
any of its  subsidiaries  have  waived any  material  right  under any  Material
Contract.  Neither the Company nor any of its  subsidiaries  have  received  any
notice  of  default  or  termination  (other  than,  in the case of  notices  of
termination,  such  termination  arising out of the  expiration  of any Material
Contract by lapse of time or completion of  performance  in accordance  with the
terms  thereof)  under any Material  Contract and neither the Company nor any of
its  subsidiaries  has  assigned or otherwise  transferred  any rights under any
Material Contract.

         Section 3.18. Vote Required. The only votes of the holders of any class
or series of Company  capital  stock  necessary  to approve  the Merger and this
Agreement are the affirmative votes of the holders of at least a majority of the
outstanding  shares of the Company Common Stock. The provisions of Article Sixth
of the Company's  Certificate of  Incorporation do not impose any super majority
voting requirement on the transactions contemplated hereby.

         Section 3.19.  Brokers.  No broker,  finder or investment banker (other
than PaineWebber  Incorporated) is entitled to any brokerage,  finder's or other
fee or commission  in  connection  with the  transactions  contemplated  by this
Agreement based upon arrangements made by or on behalf of the Company.  Prior to
the date of this  Agreement,  the Company has made  available to VTEL a complete
and  correct  copy  of  all  agreements  between  the  Company  and  PaineWebber
Incorporated  pursuant  to which  such  firm  will be  entitled  to any  payment
relating to the transactions contemplated by this Agreement.

         Section 3.20. Opinion of Financial  Advisor.  The Board of Directors of
the Company has received the written opinion of PaineWebber  Incorporated to the
effect that, as of the date of this Agreement,  the Merger  Consideration  to be
paid to the holders of the Company Common Stock is fair,  from a financial point
of view,  to such  holders.  The Company  will  promptly  deliver a copy of such
opinion to VTEL.

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<PAGE>




         Section  3.21.  Board  Recommendations.  By a  unanimous  vote  of  the
directors  present  at a meeting  of the  Company's  Board of  Directors  (which
meeting  was duly  called  and held and at  which a quorum  was  present  at all
times),  the Board of  Directors  of the Company (a)  approved  and adopted this
Agreement,  including  the Merger and the Stock Option  Agreement  and the other
transactions  contemplated herein and therein, and determined that the Merger is
fair to the stockholders of the Company,  and (b) resolved to recommend approval
and adoption of this Agreement,  including the Merger and the other transactions
contemplated herein, by the stockholders of the Company.

         Section 3.22. Distributors, Customers, or Suppliers. The Company is not
aware that any major  distributor,  customer or supplier to or of the Company or
its  subsidiaries  intends to cease doing business,  or to alter  materially the
amount  of  business  done,  with the  Company  or its  subsidiaries  after  the
Effective Time, due to consummation of the transactions  contemplated  hereunder
or any other reason, that would result in a Company Material Adverse Effect.

         Section 3.23.     Pooling of Interests.  As of the date of this
Agreement, the Company has no reason to believe that the Merger will not qualify
as a "pooling of interests" for accounting purposes.

         Section 3.24.  Rights Plan. The Company has taken all action (including
amending the  Company's  Rights Plan, as defined in Section  5.01(h)  hereof) so
that the entering of this Agreement and the Stock Option Agreement and the other
transactions  contemplated  hereby and thereby do not and will not result in the
grant of any rights to any person under the  Company's  Rights Plan or enable or
require any rights thereunder to be exercised, distributed or triggered.

         Section 3.25.     Disclosure.  No representation or warranty hereunder
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained therein or herein not
misleading.

                                   ARTICLE IV
         REPRESENTATIONS AND WARRANTIES OF THE VTEL COMPANIES

         The VTEL Companies hereby, jointly and severally, represent and warrant
to the Company that:

         Section 4.01. Organization and Qualification; Subsidiaries. Each of the
VTEL  Companies is a  corporation,  and each of VTEL's other  subsidiaries  is a
corporation,  duly  organized,  validly  existing and in good standing under the
laws of its  jurisdiction  of  incorporation  and each of the VTEL Companies and
each of VTEL's other  subsidiaries has all requisite power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted  and is duly  qualified  and in good  standing  to do business in each
jurisdiction  in  which  the  nature  of  the  business  conducted  by it or the
ownership or leasing of its properties makes such qualification

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<PAGE>



necessary,  other than where the  failure  to be so duly  qualified  and in good
standing  could not  reasonably  be  expected  to have a VTEL  Material  Adverse
Effect.  The term "VTEL Material Adverse Effect" as used in this Agreement shall
mean any change or effect  that  would be  materially  adverse to the  financial
condition,  results  of  operations,  business,  or  prospects  of VTEL  and its
subsidiaries,  taken as a whole, at the time of such change or effect; provided,
however,  no VTEL  Material  Adverse  Effect  shall be deemed  to have  occurred
hereunder (i) as a result of customers of VTEL deferring or delaying orders as a
result of the  announcement  of the  execution  of this  Agreement,  (ii) if the
financial  condition  or  results  of  operations  of  VTEL's  business  are not
materially and adversely  different from those  announced with respect to VTEL's
quarter  ended  October 31, 1996,  or (iii) as a result of the Company  employee
departures  after the  announcement of the execution of this Agreement.  Section
4.01 of the Disclosure  Schedule  delivered by VTEL to the Company  concurrently
with the  execution of this  Agreement  (the "VTEL  Disclosure  Schedule")  sets
forth,  as of the date of this  Agreement,  a true and  complete  list of all of
VTEL's  directly  or  indirectly  owned  subsidiaries,  together  with  (a)  the
jurisdiction  of  incorporation  or organization of each such subsidiary and the
percentage of each such subsidiary's  outstanding  capital stock or other equity
interests  owned by VTEL or another  subsidiary of VTEL and (b) an indication of
whether each such subsidiary is a "Significant Subsidiary" as defined in Section
9.03 of this Agreement.

         Section  4.02.  Certificate  of  Incorporation  and  Bylaws.  VTEL  has
heretofore  furnished  or made  available  to the Company  complete  and correct
copies of the Certificate of Incorporation  and Bylaws,  in each case as amended
or restated to the date hereof,  of VTEL and Merger Sub. Neither VTEL nor any of
its  subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws (or equivalent organizational documents).

         Section 4.03.     Capitalization.

                  (a)  The   authorized   capital  stock  of  VTEL  consists  of
         25,000,000 shares of VTEL Common Stock, par value $.01 per share ("VTEL
         Common Stock"),  and 10,000,000  shares of preferred  stock,  par value
         $.01 per share  ("VTEL  Preferred  Stock").  As of  December  1,  1996,
         13,940,567  shares of VTEL Common  Stock were  issued and  outstanding,
         407,848  shares of VTEL Common Stock were held by VTEL in its treasury,
         and 2,951,915 shares of VTEL Common Stock were reserved for issuance as
         follows:  (i) 1,973,471 shares were reserved for issuance upon exercise
         of stock options  heretofore granted or available for grant pursuant to
         VTEL's 1989 Stock Option Plan;  (ii) 700,000  shares were  reserved for
         issuance upon exercise of stock options heretofore granted or available
         for grant  pursuant to VTEL's 1996 Stock  Option  Plan;  (iii)  195,276
         shares were reserved for issuance upon the purchase of shares under the
         VTEL Employee Stock Purchase Plan; and (iv) 83,168 shares were reserved
         for  issuance  upon  exercise of stock  options  heretofore  granted or
         available for grant  pursuant to the VTEL 1992 Director Plan (the stock
         option  plans  referenced  in clauses (i) through  (iv) of this section
         being herein collectively called the "VTEL Option Plans"). No shares of
         VTEL Preferred Stock are issued or outstanding.  Except as described in
         this Section 4.03 or in Section 4.03(a) of

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<PAGE>



         the VTEL  Disclosure  Schedule,  no shares of capital stock of VTEL are
         reserved for issuance for any other purpose.  Each of the issued shares
         of capital stock of, or other equity interests in, each of VTEL and its
         subsidiaries  is duly  authorized,  validly  issued and, in the case of
         shares of capital  stock,  fully paid and  nonassessable,  and have not
         been issued in  violation of (nor are any of the  authorized  shares of
         capital  stock  of, or other  equity  interests  in,  VTEL or an of its
         subsidiaries  subject to) any  preemptive or similar  rights created by
         statute,  the Certificate of Incorporation or Bylaws (or the equivalent
         organizational  documents) of VTEL or any of its  subsidiaries,  or any
         agreement  to which  VTEL or any of its  subsidiaries  is a party or is
         bound,  and,  except  as set  forth  in  Section  4.03(a)  of the  VTEL
         Disclosure Schedule, all issued shares or other equity interests in the
         subsidiaries  of VTEL owned by VTEL or a  subsidiary  of VTEL are owned
         free and  clear of all  security  interests,  liens,  claims,  pledges,
         agreements,  limitations on VTEL's or such subsidiary's  voting rights,
         charges or other encumbrances of any nature whatsoever.

                  (b) No bonds, debentures,  notes or other indebtedness of VTEL
         having  the  right  to vote (or  convertible  into or  exchangeable  or
         exercisable for securities  having the right to vote) on any matters on
         which  stockholders  may  vote  ("VTEL  Voting  Debt")  are  issued  or
         outstanding.  All shares of VTEL Common  Stock which may be issued upon
         exercise of stock  options  granted  pursuant to the VTEL Option  Plans
         will,  when issued in  accordance  with the terms of such stock options
         and the related VTEL Option Plans,  be validly  issued,  fully paid and
         nonassessable and not subject to preemptive rights

                  (c) Except as set forth in Section 4.03(a) above or in Section
         4.03(c) of the VTEL Disclosure Schedule, there are no options, warrants
         or  other   rights   (including   registration   rights),   agreements,
         arrangements  or  commitments  of any character to which VTEL or any of
         its  subsidiaries is a party relating to the issued or unissued capital
         stock of VTEL or any of its  subsidiaries  or obligating VTEL or any of
         its  subsidiaries to grant,  issue or sell any shares of capital stock,
         VTEL  Voting  Debt  or  other  equity  interests  of VTEL or any of its
         subsidiaries.  Except  as set  forth  in  Section  4.03(c)  of the VTEL
         Disclosure Schedule, there are no obligations, contingent or otherwise,
         of  VTEL  or any of its  subsidiaries  (i)  to  repurchase,  redeem  or
         otherwise  acquire  any shares of VTEL  Common  Stock or other  capital
         stock of VTEL or the capital  stock of any  subsidiary  of VTEL or (ii)
         other than advances to wholly owned subsidiaries in the ordinary course
         of business,  to provide funds to, or to make any investment in (in the
         form of a loan, capital  contribution or otherwise),  or to provide any
         guarantee with respect to the obligations of, any subsidiary of VTEL or
         any other  person.  Except as set forth in Section  4.03(c) of the VTEL
         Disclosure  Schedule,  neither  VTEL  nor any of its  subsidiaries  (x)
         directly or  indirectly  owns,  (y) has agreed to purchase or otherwise
         acquire or (z) holds any interest  convertible  into or exchangeable or
         exercisable   for  the  capital   stock  or  other   equity   interests
         representing 5% or more of the capital stock in equity interests of any
         corporation,  partnership,  joint venture or other business association
         or  entity.  Except  as set  forth  in  Section  4.03(c)  of  the  VTEL
         Disclosure Schedule or for any agreements,

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<PAGE>



         arrangements   or  commitments   between  VTEL  and  its  wholly  owned
         subsidiaries  or between such wholly owned  subsidiaries,  there are no
         agreements, arrangements or commitments of any character (contingent or
         otherwise)  pursuant  to which  any  person  is or may be  entitled  to
         receive any payment based on, or calculated  in  accordance  with,  the
         revenues or earnings of VTEL or any of its subsidiaries.  Except as set
         forth in Section 4.03(c) of the VTEL Disclosure Schedule,  there are no
         voting trusts,  proxies or other agreements or  understandings to which
         VTEL or any of its  subsidiaries  is a party or by which VTEL or any of
         its  subsidiaries  is bound with respect to the voting of any shares of
         capital  stock  or  other  equity  interests  of  VTEL  or  any  of its
         subsidiaries.

                  (d) The  authorized  capital  stock of Merger Sub  consists of
         1,000  shares of common  stock,  par value $.0l per share  ("Merger Sub
         Common Stock"). An aggregate of 1,000 shares of Merger Sub Common Stock
         are  issued  and  outstanding  and held by VTEL,  all of which are duly
         authorized,  validly  issued,  fully  paid  and  nonassessable  and not
         subject  to  preemptive   rights  created  by  statute,   Merger  Sub's
         Certificate of Incorporation or Bylaws or any agreement to which Merger
         Sub is a party or is bound.

                  (e) The shares of VTEL Common  Stock to be issued  pursuant to
         the Merger  will be duly  authorized,  validly  issued,  fully paid and
         nonassessable  and not subject to preemptive rights created by statute,
         VTEL's Certificate of Incorporation or Bylaws or any agreement to which
         VTEL is a party or is bound.

         Section 4.04.  Authority.  Each of the VTEL Companies has all requisite
corporate  power and  authority  to execute and deliver this  Agreement  and the
Stock  Option  Agreement  to which it is a party and to perform its  obligations
hereunder and thereunder and to consummate the transactions  contemplated hereby
and thereby.  The execution and delivery of this  Agreement and the Stock Option
Agreement by each of the VTEL Companies and the  performance by each of the VTEL
Companies  of  its   obligations   hereunder  and   thereunder,   including  the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action and no other corporate  proceedings
on the part of either of the VTEL  Companies  are  necessary to  authorize  this
Agreement  and the Stock Option  Agreement  or to  consummate  the  transactions
contemplated  hereby and thereby  (subject to, with  respect to the Merger,  the
approval and adoption of this Agreement by the stockholders of VTEL as set forth
in  Section  6.01 of this  Agreement).  This  Agreement  and  the  Stock  Option
Agreement  have been duly executed and  delivered by each of the VTEL  Companies
and,  assuming  the due  authorization,  execution  and  delivery  hereof by the
Company,  constitute the legal, valid and binding obligation of each of the VTEL
Companies,  enforceable  against each of the VTEL  Companies in accordance  with
their terms.

         Section 4.05.     No Conflict: Required Filings and Consents.

                  (a)      Except as otherwise disclosed in Section 4.05(a) of
         the VTEL Disclosure Schedule, the execution and delivery of this
         Agreement and the Stock Option Agreement

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<PAGE>



         by each of the VTEL  Companies  which are parties  thereto do not,  and
         performance  by  each  of  them  of  their  obligations  hereunder  and
         thereunder, including the consummation of the transactions contemplated
         hereby  and  thereby,  will  not  (i)  conflict  with  or  violate  the
         Certificate   of   Incorporation   or   Bylaws,   or   the   equivalent
         organizational  documents, in each case as amended or restated, of VTEL
         or any of  VTEL's  Significant  Subsidiaries,  (ii)  conflict  with  or
         violate  any Laws in  effect  as of the date of this  Agreement  or any
         judgment,  order or decree to which VTEL or any of VTEL's  subsidiaries
         is a party  or by or to  which  any of their  properties  are  bound or
         subject or (iii) result in any breach of or constitute a default (or an
         event that with or without notice or lapse of time or both would become
         a default) under,  or impair any of VTEL's or any of its  Subsidiaries'
         rights or alter the rights or obligations of any third party under,  or
         give to others any rights of  termination,  amendment,  acceleration or
         cancellation of, or require payment under, or result in the creation of
         a lien or encumbrance on any of the properties or assets of VTEL or any
         of  VTEL's  subsidiaries   pursuant  to,  any  note,  bond,   mortgage,
         indenture,  contract agreement,  lease, license,  permit,  franchise or
         other  instrument  or  obligation  to  which  VTEL  or  any  of  VTEL's
         subsidiaries  is a  party  or by or to  which  VTEL  or any  of  VTEL's
         subsidiaries or any of their respective  properties is bound or subject
         (including,  but not  limited to, any  license  agreement,  contract or
         other arrangement of any nature relating to VTEL Intellectual  Property
         Rights or VTEL Third Party Intellectual Property Rights (as these terms
         are hereinafter defined), excluding from the foregoing clauses (ii) and
         (iii)  any such  conflicts,  violations,  breaches,  defaults,  events,
         rights of termination, amendment, acceleration or cancellation, payment
         obligations  or liens or  encumbrances  that  could not  reasonably  be
         expected to have a VTEL Material Adverse Effect.

                  (b) The execution and delivery of this Agreement and the Stock
         Option  Agreement  by each of the  VTEL  Companies  which  are  parties
         thereto does not, and the  performance by each of the VTEL Companies of
         its  respective   obligations   hereunder  and  thereunder,   including
         consummation of the transactions  contemplated hereby and thereby, will
         not,  require  either  of the VTEL  Companies  to  obtain  any  consent
         license,  permit,  waiver,  approval,  authorization or order of, or to
         make any  filing  with or  notification  to, any  Governmental  Entity,
         except (i) for (A) applicable  requirements,  if any, of the Securities
         Act,  the  Exchange  Act,  and Blue Sky  Laws,  and (B) the  pre-merger
         notification   requirements  of  the  HSR  Act,  (ii)  the  filing  and
         recordation  of appropriate  merger  documents as required by the DGCL,
         and (iii) where the failure to obtain such consents, licenses, permits,
         waivers,  approvals,  authorizations or orders, or to make such filings
         or notifications could not individually or in the aggregate  reasonably
         be expected to cause a VTEL  Material  Adverse  Effect or to materially
         impair  or delay the  ability  of  either  of the VTEL  Companies  from
         performing  their respective  obligations  under this Agreement and the
         Stock Option Agreement.

         Section 4.06.     Permits; Compliance.  Except as disclosed in Section
         4.06 of the VTEL Disclosure Schedule, each of VTEL and its subsidiaries
         is in possession of all Permits necessary to own, lease and operate
         their properties and to carry on their businesses as they are now being

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<PAGE>



conducted  except where the failure to possess such Permits could not reasonably
be expected to have a VTEL  Material  Adverse  Effect.  Except as  disclosed  in
Section 4.06 of the VTEL Disclosure Schedule,  as of the date of this Agreement,
there  are  no  actions,  proceedings,  or  investigations  pending  or,  to the
knowledge of VTEL, threatened against VTEL or any of its subsidiaries that could
reasonably  be  expected  to  result  in the  loss,  revocation,  suspension  or
cancellation  of a Permit held by VTEL or a subsidiary  of VTEL,  except for any
suspension,  loss or revocation  that could not reasonably be expected to have a
VTEL Material  Adverse  Effect.  Except as disclosed in Section 4.06 of the VTEL
Disclosure  Schedule,  neither VTEL nor any of its  subsidiaries  is in conflict
with, or in default under or violation of, nor has it received,  since  December
31,  1993,  from any  Governmental  Entity any written  notice  with  respect to
possible conflicts with,  defaults under or violations of (a) any Law applicable
to VTEL or any of its  subsidiaries  or by or to which  any of their  respective
properties are bound or subject, (b) any judgment, order or decree applicable to
VTEL or any of its  subsidiaries or (c) any Permits held by VTEL or a subsidiary
of VTEL, except for any such conflicts, defaults or violations that individually
or in the  aggregate  could not  reasonably  be expected to have a VTEL Material
Adverse Effect.

         Section 4.07.     Reports: Financial Statements.

                  (a) Since December 31, 1993,  VTEL and its  subsidiaries  have
         filed all forms, reports, statements and other documents required to be
         filed  with the SEC,  including,  without  limitation,  (i) all  Annual
         Reports on Form 10-K,  (ii) all Quarterly  Reports on Form 10-Q,  (iii)
         all proxy  statements  relating to meetings  of  stockholders  (whether
         annual or  special),  (iv) all Current  Reports on Form 8-K and (v) all
         other reports,  schedules,  registration  statements or other documents
         (collectively  referred  to as the  "VTEL  SEC  Reports").  As of their
         respective  dates,  the  VTEL  SEC  Reports  complied  in all  material
         respects  with  the  requirements  of  applicable  Law  (including  the
         Securities  Act or the Exchange  Act, as the case may be, and the rules
         and  regulations  of the SEC  thereunder  applicable  to the  VTEL  SEC
         Reports) and the VTEL SEC Reports,  including,  without limitation, any
         financial statements or schedules included therein, did not at the time
         they were filed contain any untrue statement of a material fact or omit
         to state a material fact required to be stated  therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were made, not misleading.

                  (b)  VTEL  has   heretofore   delivered  to  the  Company  (i)
         consolidated balance sheets of VTEL and its subsidiaries as of December
         31,  1993,  December  31, 1994 and December 31, 1995 and as of July 31,
         1996 and (ii) consolidated  statements of income,  stockholders' equity
         and cash flows for each of the three years and seven  months then ended
         certified  by  Price  Waterhouse  LLP,  reports  thereon  are  included
         therewith.  VTEL has also  delivered  to the Company  (i) an  unaudited
         consolidated  balance sheet of VTEL and its  subsidiaries as of October
         31,  1996,  and  (ii)  unaudited  consolidated  statements  of  income,
         stockholders'  equity and cash flows for the three  months  then ended.
         Such audited and unaudited consolidated financial statements, including
         any such financial

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<PAGE>



         statements  and  schedules  contained  in  the  VTEL  SEC  reports  (or
         incorporated by reference therein) (i) are in accordance with the books
         and records of VTEL and its  subsidiaries in all material  respects and
         have  been  prepared  in  accordance   with  the  published  rules  and
         regulations  of the SEC and generally  accepted  accounting  principles
         applied on a consistent  basis  throughout the periods involved (except
         (A) to the extent disclosed therein or required by changes in generally
         accepted  accounting  principles,  (B)  with  respect  to the  VTEL SEC
         Reports filed prior to the date of this Agreement,  as may be indicated
         in the notes  thereto  and (C) in the case of the  unaudited  financial
         statements,  as permitted by the rules and  regulations of the SEC) and
         (ii) fairly present in all material respects the consolidated financial
         position  of  VTEL  and its  subsidiaries  as of the  respective  dates
         thereof and the  consolidated  results of operations and cash flows for
         the periods indicated  (except,  in the case of unaudited  consolidated
         financial  statements for interim periods, for the absence of footnotes
         and  subject  to  adjustments,  consisting  only of  normal,  recurring
         accruals,  necessary to present  fairly such results of operations  and
         cash flows).

                  (c) Except as and to the extent set forth on the  consolidated
         balance sheet of the VTEL and its subsidiaries as of December 31, 1995,
         including the notes  thereto,  or in the  Company's  Annual Report Form
         10-K for the  transition  period  ended  July 31,  1996,  or in  VTEL's
         Quarterly  Report on Form 10-Q for the quarter  ended October 31, 1996,
         neither  VTEL  or  any of  its  subsidiaries  has  any  liabilities  or
         obligations  material  to  VTEL  and  its  subsidiaries  which  are not
         referenced on such balance sheet or in such Annual Report on Form 10-K.
         Except as set forth in  Section  4.07 of the VTEL  Disclosure  Schedule
         since  the date of the  VTEL's  Transition  Report on Form 10-K for the
         seven month transition period ended July 31, 1996, neither VTEL nor its
         subsidiaries has incurred any liabilities except for (i) liabilities or
         obligations  incurred in the ordinary course of business and consistent
         with past practice,  (ii) liabilities incurred in connection with or as
         a result of the Merger and (iii)  liabilities or  obligations  which do
         not have a VTEL Material Adverse Effect.

         Section 4.08. Absence of Certain Changes or Events. Except as disclosed
in the VTEL SEC  Reports  filed  prior to the date of this  Agreement  or as set
forth in Section 4.08 of the VTEL Disclosure Schedule,  since December 31, 1995,
VTEL and its subsidiaries have conducted their respective businesses only in the
ordinary course and in a manner  consistent with past practice and there has not
been (a) any damage,  destruction  or loss with respect to any assets of VTEL or
any of its  subsidiaries  that,  whether  or not  covered  by  insurance,  would
constitute  a VTEL  Material  Adverse  Effect,  (b)  any  change  by VTEL or its
subsidiaries in their significant  accounting  policies or (c) any VTEL Material
Adverse Effect.

         Section  4.09.  Absence of  Litigation.  Except as set forth in Section
4.09  of  the  VTEL  Disclosure  Schedule,  there  is no  claim,  action,  suit,
litigation,  proceeding, arbitration or, to the knowledge of VTEL, investigation
of any kind,  at law or in equity  (including  actions  or  proceedings  seeking
injunctive  relief),  pending or, to the knowledge of VTEL,  threatened  against
VTEL or any of its  subsidiaries  or any  properties or rights of VTEL or any of
its subsidiaries, and

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<PAGE>



neither VTEL nor any of its  subsidiaries is subject to any continuing order of,
consent decree,  settlement  agreement or other similar written  agreement with,
or, to the  knowledge of VTEL,  continuing  investigation  by, any  Governmental
Entity,  or any  judgment,  order,  writ,  injunction,  decree  or  award of any
Governmental    Entity   or   arbitrator,    including,    without   limitation,
ceaseand-desist or other orders.

         Section 4.10.     Intellectual Rights.

                  (a) VTEL owns, or is licensed or otherwise  possesses  legally
         sufficient rights to use, all patents, trademarks, trade names, service
         marks, copyrights, maskworks and any applications therefor, technology,
         know-how,  video and audio  compression  algorithms,  computer software
         programs or applications (in both source code and object code form) and
         tangible or  intangible  proprietary  information  or material that are
         used  or  proposed  to be  used in the  business  of VTEL as  currently
         conducted.  Section  4.10 of the VTEL  Disclosure  Schedule  lists  all
         current  patents,  registered  and  material  unregistered  copyrights,
         maskworks, trade names and any applications therefor owned by VTEL (the
         "VTEL Intellectual  Property Rights"),  and specifies the jurisdictions
         in which  each such  Intellectual  Property  Right  has been  issued or
         registered   or  in  which  an   application   for  such  issuance  and
         registration has been filed,  including the respective  registration or
         application  numbers and the names of all  registered  owners.  Section
         4.10 of VTEL's Disclosure Schedule includes and specifically identifies
         all material third-party  patents,  trademarks,  copyrights  (including
         software) and maskworks  (the "VTEL Third Party  Intellectual  Property
         Rights"),  to the knowledge of VTEL, which are incorporated in, are, or
         form a part  of,  any VTEL  product,  excluding  any such  intellectual
         property  rights  that are  available  on a  commodity  basis  (such as
         "shrink wrap"  licenses) and which are  non-exclusive,  terminable  and
         available  for a  standard  fee.  Section  4.10 of the VTEL  Disclosure
         Schedule  lists  (i)  all  material  licenses,  sublicenses  and  other
         agreements as to which VTEL is a party and pursuant to which any person
         is  authorized to use any VTEL  Intellectual  Property  Rights,  or any
         trade secret material to VTEL or any of its subsidiaries;  and (ii) all
         material licenses, sublicenses and other agreements as to which VTEL is
         a party and pursuant to which VTEL is  authorized to use any VTEL Third
         Party  Intellectual  Property Rights,  or other trade secret of a third
         party in or as any  product,  and  includes the identity of all parties
         thereto, a description of the nature and subject matter thereof and the
         term thereof.

                  (b) VTEL is not,  nor will it be as a result of the  execution
         and delivery of this Agreement or the  performance  of its  obligations
         hereunder,  in  violation  of  any  license,  sublicense  or  agreement
         described in Section 4.10(a) of the VTEL Disclosure Schedule. No claims
         with respect to VTEL  Intellectual  Property  Rights,  any trade secret
         material to VTEL, or VTEL Third Party  Intellectual  Property Rights to
         the extent arising out of any use, reproduction or distribution of such
         VTEL Third Party  Intellectual  Property Rights by or through VTEL, are
         currently  pending or, to the knowledge of VTEL,  are threatened by any
         person,  nor does  VTEL  know of any  valid  grounds  for any bona fide
         claims (i) to

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<PAGE>



         the effect that the manufacture,  sale, licensing or use of any product
         as now used,  sold or licensed or proposed for use,  sale or license by
         VTEL infringes on any copyright,  maskwork, patent, trademark,  service
         mark or trade secret;  (ii) against the use by VTEL of any  trademarks,
         trade names, trade secrets, copyrights, maskworks, patents, technology,
         know-how, video and audio compression algorithms,  or computer software
         programs  and  applications   used  in  VTEL's  business  as  currently
         conducted or as proposed to be conducted by VTEL; (iii) challenging the
         ownership,  validity or effectiveness of any VTEL Intellectual Property
         Rights or other  trade  secret  material to VTEL;  or (iv)  challenging
         VTEL's  license or legally  enforceable  right to use of the VTEL Third
         Party Intellectual  Rights. To VTEL's knowledge,  all material patents,
         registered trademarks,  maskworks and copyrights held by VTEL are valid
         and subsisting. To VTEL's knowledge,  there is no material unauthorized
         use, infringement or misappropriation of any VTEL Intellectual Property
         by any third party,  including any employee or former  employee of VTEL
         or any of the its subsidiaries.  Except as set forth in Section 4.10(b)
         of  the  VTEL  Disclosure  Schedule,   neither  VTEL  nor  any  of  its
         subsidiaries  (i) has been sued or charged in writing as a defendant in
         any  claim,  suit,  action  or  proceeding  which  involves  a claim or
         infringement of trade secrets, any patents, trademarks,  service marks,
         maskworks or copyrights and which has not been finally terminated prior
         to the date hereof or been informed or notified by any third party that
         VTEL may be engaged in such  infringement  or (ii) has knowledge of any
         infringement liability with respect to, or infringement by, VTEL or any
         of its  subsidiaries of any trade secret,  patent,  trademark,  service
         mark, maskwork or copyright of another.

                  (c) Each  employee  of VTEL has  executed  a  confidentiality,
         invention and  copyright  agreement  with VTEL in the forms  previously
         made available to the Company.

         Section 4.11. Transactions with Management.  Except as disclosed in the
VTEL SEC Reports,  no executive officer,  director or stockholder of VTEL or any
of its  subsidiaries  has,  since  December  31,  1994,  engaged in any business
dealings with the Company or any of its  subsidiaries,  other than such business
dealings as would not be required to be disclosed  in such  documents or reports
pursuant  to the  Securities  Act  and the  rules  and  regulations  promulgated
thereunder.

         Section 4.12. Vote Required. The only votes of the holders of any class
or series of VTEL  capital  stock  necessary  to  approve  the  Merger  and this
Agreement are the  affirmative  votes of the holders of not less than a majority
of the outstanding shares of VTEL Common Stock.

         Section 4.13.     Brokers.   No broker, finder or investment banker
(other than Bear, Stearns & Co. Inc.) is entitled to any brokerage,  finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of VTEL.

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<PAGE>



         Section 4.14.     Opinion of Financial Advisor.  VTEL has received the
written  opinion of Bear,  Stearns & Co. Inc. to the effect that, as of the date
of this Agreement,  the Merger  Consideration to be paid by VTEL is fair, from a
financial point of view, to the holders of VTEL Common Stock. VTEL will promptly
deliver a copy of such opinion to the Company.

         Section  4.15.  Board  Recommendations.  By a  unanimous  vote  of  the
directors  present at a meeting of VTEL's Board of Directors  (which meeting was
duly called and held and at which a quorum was present at all times),  the Board
of  Directors of VTEL (a)  approved  and adopted  this  Agreement  and the other
transactions  contemplated herein, and determined that the Merger is fair to the
stockholders  of VTEL,  and (b) resolved to  recommend  approval and adoption of
this  Agreement,  including the Merger and the other  transactions  contemplated
herein, by the stockholders of VTEL.

         Section 4.16. Distributors,  Customers, or Suppliers. VTEL is not aware
that  any  major  distributor,  customer  or  supplier  to or  of  VTEL  or  its
subsidiaries intends to cease doing business,  or to alter materially the amount
of business done, with VTEL or its subsidiaries after the Effective Time, due to
consummation  of the  transactions  contemplated  hereunder or any other reason,
that would result in a VTEL Material Adverse Effect.

         Section 4.17.   Pooling of Interests. As of the date of this Agreement,
VTEL has no reason to believe  that the Merger will not qualify as a "pooling of
interests" for accounting purposes.

         Section 4.18.     Disclosure.    No representation or warranty
hereunder  contains any untrue  statement  of material  fact or omits to state a
material fact  necessary in order to make the  statements  contained  therein or
herein not misleading.

                                    ARTICLE V
                                    COVENANTS

         Section 5.01.  Affirmative Covenants of the Company. The Company hereby
covenants  and  agrees  that,  prior to the  Effective  Time,  unless  otherwise
expressly contemplated by this Agreement or consented to in writing by VTEL, the
Company will and will cause each of its subsidiaries to:

                  (a)      operate its business in the usual and ordinary course
         consistent with past practices;

                  (b) use its best  efforts  to  preserve  intact  its  business
         organization,  maintain its rights and franchises,  retain the services
         of  its  respective   officers  and  key  employees  and  maintain  its
         relationships with its respective customers and suppliers;


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<PAGE>



                  (c) maintain and keep its  properties  and assets in as good a
         repair and condition as at present,  ordinary  wear and tear  excepted,
         and use its best  efforts  to  maintain  supplies  and  inventories  in
         quantities consistent with its customary business practices;

                  (d)      use its best efforts to keep in full force and effect
         insurance and bonds comparable in amount and scope of coverage to that
         currently maintained;

                  (e) promptly notify VTEL of (i) any material adverse change in
         the condition (financial or otherwise),  business,  properties, assets,
         liabilities or prospects of the Company and its  subsidiaries or in the
         operation  of the  business  or the  properties  of the Company and its
         subsidiaries,  (ii) any material  litigation  or material  governmental
         complaints,  investigations or hearings (or  communications  indicating
         that the same may be contemplated)  involving the Company or any of its
         subsidiaries,  (iii) the occurrence,  or failure to occur, of any event
         which   occurrence   or  failure  to  occur  would   likely  cause  any
         representation  or warranty  contained  in this  Agreement or the Stock
         Option  Agreement to be untrue or  inaccurate  in any material  respect
         when  made or at any  time  from  the  date of  this  Agreement  to the
         Effective  Time;  (iv) any  failure  of the  Company  to  comply in any
         material  respect with or satisfy any covenant,  condition or agreement
         to be complied  with or  satisfied  by it under this  Agreement  or the
         Stock Option Agreement; or (v) any other event that could reasonably be
         expected  to result in a Company  Material  Adverse  Effect;  provided,
         however, that no such notification shall affect the representations and
         warranties of the Company or the  conditions to the  obligations of the
         parties hereunder;

                  (f)   immediately   cease  and  cause  to  be  terminated  any
         solicitation,   initiating,  encouragement,  activity,  discussions  or
         negotiations with any parties conducted  heretofore with respect to any
         Alternative  Transaction  (as defined in Section  5.03(g)) and take the
         necessary steps to inform such parties of the obligations undertaken in
         Section 5.03(g);

                  (g) (i) file all Tax Returns required to be filed on or before
         the  Closing  Date  by or with  respect  to the  Company  or any of its
         subsidiaries, (ii) include in each such Tax Return all items of income,
         gain, loss, deduction and credit or other items required to be included
         in each such Tax Return,  (iii) timely pay in full all  material  Taxes
         which  become due  pursuant to such Tax  Returns,  and (iv) satisfy all
         withholding requirements imposed on or with respect to the Company; and

                  (h) take all actions  necessary  to (i) ensure that the rights
         issued  pursuant to the Company's  Preferred Share Purchase Rights Plan
         (the "Rights  Plan") shall not have,  and will not, be granted,  become
         nonredeemable,  exercisable,  distributed or triggered  pursuant to the
         terms of the  Rights  Plan by virtue  of the  Company's  execution  and
         delivery  of  this  Agreement  or the  Stock  Option  Agreement  or the
         Company's  performance  of  the  transactions  contemplated  hereby  or
         thereby and (ii)  terminate  the Rights Plan  immediately  prior to the
         Effective  Date  (but  not any  sooner  than  immediately  prior to the
         Effective Time).

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<PAGE>




         Section 5.02.  Affirmative Covenants of VTEL. VTEL hereby covenants and
agrees  that,  prior  to  the  Effective  Time,   unless   otherwise   expressly
contemplated  by this Agreement or consented to in writing by the Company,  VTEL
will and will cause each of its subsidiaries to:

                  (a)      operate its business in the usual and ordinary course
consistent with past practices except as contemplated by this Agreement; and

                  (b) use its best  efforts  to  preserve  intact  its  business
         organization,  maintain its rights and franchises,  retain the services
         of  its  respective   officers  and  key  employees  and  maintain  its
         relationships with its respective customers and suppliers.

         Section 5.03.  Negative  Covenants of the Company.  Except as expressly
contemplated by this Agreement or otherwise consented to in writing by VTEL from
the date of this Agreement  until the Effective  Time, the Company shall not do,
and shall not permit any of its subsidiaries to do, any of the following:

                  (a) (i)  increase  the  compensation  payable  to or to become
         payable to any director;  (ii) increase the compensation payable or pay
         bonuses  to  officers  or  employees  of  the  Company  or  any  of its
         subsidiaries  other  than  in  the  ordinary  course  of  business  and
         consistent   with  past   practices;   (iii)  grant  any  severance  or
         termination  pay (other than pursuant to agreements or  arrangements in
         effect on the date hereof and set forth in Section  5.03 of the Company
         Disclosure  Schedule)  to, or enter into any  employment  or  severance
         agreement  with,  any director,  officer or employee;  (iv)  establish,
         adopt or enter into any employee benefit plan or arrangement;  (v) make
         any loans to any stockholders, officers, directors or employees or make
         any change in its borrowing  arrangements;  or (vi) amend,  or take any
         other  actions   (including,   without   limitation,   the  waiving  of
         performance  criteria or the  adjustment of awards or any other actions
         permitted  upon a "change in  control"  (as  defined in the  respective
         plans) of the Company or a filing under  Section  13(d) or 14(d) of the
         Exchange Act with  respect to the  Company)  with respect to any of the
         Company  Benefit  Plans  or  any of the  plans,  programs,  agreements,
         policies or other  arrangements  described  in Section  3.10(a) of this
         Agreement;

                  (b)  declare  or pay  any  dividend  on,  or  make  any  other
         distribution  in respect  of,  outstanding  shares of capital  stock or
         other equity  interests,  except dividends by a wholly owned subsidiary
         of the Company to the Company or another wholly owned subsidiary of the
         Company;

                  (c) (i) except  pursuant to the  redemption  of rights  issued
         under the Rights Plan, redeem, purchase or otherwise acquire any shares
         of its or any of its  subsidiaries'  capital stock or any securities or
         obligations  convertible  into or exchangeable for any shares of its or
         its  subsidiaries'  capital  stock  (other  than any  such  acquisition
         directly  from any wholly owned  subsidiary  of the Company in exchange
         for capital contributions or loans

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<PAGE>



         to such  subsidiary),  or any options,  warrants or conversion or other
         rights to acquire any shares of its or its subsidiaries'  capital stock
         or any such securities or obligations,  (ii) effect any  reorganization
         or recapitalization of the Company or any of its subsidiaries, or (iii)
         split,  combine or reclassify any of its or its  subsidiaries'  capital
         stock or issue or  authorize  or  propose  the  issuance  of any  other
         securities in respect of, in lieu of or in substitution  for, shares of
         its or its subsidiaries' capital stock;

                  (d)  (i)  issue   (whether  upon  original  issue  or  out  of
         treasury),  sell, grant,  award,  deliver or limit the voting rights of
         any shares of any class of its or its subsidiaries'  capital stock, any
         securities convertible into or exercisable or exchangeable for any such
         shares,  or any rights,  warrants or options to acquire any such shares
         (except for the  issuance of shares  upon the  exercise of  outstanding
         stock  options or warrants in  accordance  with their terms and for the
         issuance of shares upon the conversion of outstanding  shares of Series
         C Preferred  Stock in accordance  with the terms of the  certificate of
         designation, in the form now existing, governing such preferred stock),
         or (ii)  amend or  otherwise  modify  the  terms  of any  such  rights,
         warrants  or options or terms of the Series C Preferred  Stock  (except
         for such  amendments  and  modifications  relating  to the terms of the
         Series C Preferred Stock expressly contemplated by this Agreement or by
         the Company  Affiliate  Letter in the form attached hereto as Exhibit B
         executed and delivered  concurrently with the execution and delivery of
         this Agreement);

                  (e)  acquire  or  agree  to  acquire  (whether  pursuant  to a
         definitive agreement, a non-binding letter of intent or otherwise),  by
         merging or consolidating with, by purchasing an equity interest in or a
         portion of the assets of, or by any other  manner,  any business or any
         corporation, partnership, association or other business organization or
         division  thereof,  or otherwise acquire or agree to acquire any assets
         of any other Person  (other than the purchase of assets from  suppliers
         or vendors in the ordinary  course of business and consistent with past
         practice);

                  (f) sell,  lease,  exchange,  mortgage,  pledge,  transfer  or
         otherwise dispose of ("transfer"),  or agree to sell, lease,  exchange,
         mortgage,  pledge,  transfer or otherwise dispose of, any of its assets
         or any  assets of any of its  subsidiaries,  except  for  transfers  of
         assets in the  ordinary  course of business  and  consistent  with past
         practice;

                  (g)  initiate,  solicit  or  encourage  (including  by  way of
         furnishing  information  or  assistance),  or take any other  action to
         facilitate,  directly or indirectly, any inquiries or the making of any
         proposal or offer  relating to, or that may  reasonably  be expected to
         lead to, any Alternative  Transaction (as defined below), or enter into
         discussions  or negotiate  with any Person or entity in  furtherance of
         such inquiries or to obtain an Alternative Transaction, or disclose any
         nonpublic   information   relating   to  the  Company  or  any  of  its
         subsidiaries  to, or afford access to the properties,  books or records
         of the Company or any of its subsidiaries, or agree to, or endorse, any
         Alternative  Transaction,  or authorize or permit any of the  officers,
         directors, employees or agents of the Company or any of its

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<PAGE>



         subsidiaries or any investment  banker,  financial  advisor,  attorney,
         accountant  or other  representative  retained by the Company or any of
         the Company's  subsidiaries  (the  "Representatives")  to take any such
         action, and the Company shall notify VTEL within 24 hours of receipt by
         the  Company  or  any  of  its   subsidiaries,   or  by  any  of  their
         Representatives,  of all  relevant  terms  of  any  such  inquiries  or
         proposals or requests for information relating to the Company or any of
         its  subsidiaries  or access to its  properties,  books or  records  so
         received by any of them relating to any Alternative  Transaction and if
         such  inquiry or proposal or request is in writing,  the Company  shall
         within 24 hours of receipt by the  Company or any of its  subsidiaries,
         or by any of their Representatives, deliver or cause to be delivered to
         VTEL a copy of such  inquiry  or  proposal  or  request  (or a complete
         summary  thereof if it is not in writing)  and the  Company  shall keep
         VTEL fully  informed  of the status  and  details of any such  inquiry,
         proposal or request or any  correspondence  or  communications  related
         thereto and shall  provide VTEL with five days'  advance  notice of any
         agreement  to be entered  into with any Person  making such  inquiry or
         proposal or request;  provided,  however, that at any time prior to the
         time that the Company's  stockholders  shall have voted to approve this
         Agreement,  the Board of Directors of the Company may cause the Company
         to  furnish  information  to, and may  participate  in  discussions  or
         negotiations   with,   any  Person  who  (without   any   solicitation,
         initiation,  encouragement,  discussion  or  negotiation,  directly  or
         indirectly,  with  the  Company  or any of its  subsidiaries  or  their
         respective  Representatives)  has submitted a written  proposal to such
         Board of  Directors  relating  to an  Alternative  Transaction  that is
         financially   superior  to  the   transactions   contemplated  by  this
         Agreement,  if, and only to the extent that, (i) the Company's Board of
         Directors  shall  have  concluded  in  good  faith,  after  considering
         applicable  provisions of state law, on the basis of a written  opinion
         of independent  outside  counsel of nationally  recognized  reputation,
         that  such  action is  necessary  to  prevent  the  Company's  Board of
         Directors  from  violating  its  fiduciary   duties  to  the  Company's
         stockholders under applicable law, (ii) if such Alternative Transaction
         is an all  cash or  substantially  all  cash  offer,  such  Alternative
         Transaction shall not be subject to any financing contingency (and such
         Person shall have cash or unrestricted securities on its latest balance
         sheet prior to submitting  such written  proposal equal to at least two
         times the  amount of such all cash or  substantially  all cash offer or
         legally  binding  commitments  for the  financing  of such  Alternative
         Transaction,  subject to no  conditions  to funding),  and the Board of
         Directors of the Company shall have  determined  (based upon the advice
         of the Company's  independent  financial advisors or investment bankers
         of  nationally  recognized  reputation)  in the proper  exercise of its
         fiduciary  duties to the  Company's  stockholders  that such  Person is
         capable  of  consummating  such  Alternative  Transaction  on the terms
         proposed, (iii) the Board of Directors of the Company determines (based
         upon the advice of the  Company's  independent  financial  advisors  or
         investment bankers of nationally  recognized  reputation) in the proper
         exercise of its  fiduciary  duties to the Company's  stockholders  that
         such Alternative Transaction provides greater value to the stockholders
         of the Company  than the  Merger,  (iv) the  agreement  relating to the
         Alternative  Transaction  be on terms and subject to conditions no less
         restrictive  than the  provisions  contained  herein,  (v) such  Person
         enters into a Confidentiality and Standstill

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<PAGE>



         Agreement on terms substantially  similar to and no less restrictive to
         such Person than the Confidentiality  and Standstill  Agreement entered
         into  between  the  Company  and VTEL  referred  to in Section  5.05(d)
         hereof,  and (vi) the Company may not furnish any  information  to such
         Person if it has not prior to the date thereof notified VTEL in writing
         of its intent to furnish  information  to such person  (specifying  the
         nature and identity of the information to be so furnished) and provided
         the  same  information  concurrently  to  VTEL.  For  purposes  of this
         Agreement,  "Alternative  Transaction"  shall mean any of the following
         (other than the transactions  contemplated by this Agreement) involving
         the  Company  or any of its  subsidiaries:  (i)  any  purchase,  lease,
         exchange,  transfer  or other  acquisition  or  assumption  of all or a
         material  portion of the assets of the  Company  and its  subsidiaries,
         taken  as a whole;  (ii) any  merger,  consolidation,  share  exchange,
         business  combination or similar  transaction  involving the Company or
         any of its  subsidiaries;  or (iii) a  purchase  or  other  acquisition
         (including  by  way  of  merger,   consolidation,   share  exchange  or
         otherwise) of securities  representing  20% or more of the  outstanding
         voting of the Company;

                  (h)  release any third  party from its  obligations  under any
         standstill   agreement  or  arrangement   relating  to  an  Alternative
         Transaction  or otherwise  under any  confidentiality  or other similar
         agreement relating to information material to the Company or any of its
         subsidiaries,  unless  the  Company's  Board of  Directors  shall  have
         concluded in good faith,  after  considering  applicable  provisions of
         state law,  on the basis of a written  opinion of  independent  outside
         counsel  of  nationally  recognized  reputation  that  such  action  is
         necessary to prevent the Company's  Board of Directors  from  violating
         its  fiduciary  duties  to  its  stockholders   under  applicable  law;
         provided, however, notwithstanding the foregoing, the Company shall not
         release  any third  party  from its  obligations  under any  standstill
         agreement or  arrangement  relating to an  Alternative  Transaction  or
         otherwise under any such  confidentiality  or similar  agreement unless
         the Company shall simultaneously  release VTEL from its obligations and
         restrictions  under  the  Confidentiality   and  Standstill   Agreement
         referred to in Section  5.05(d)  hereof;  and further,  provided,  upon
         receipt by the Company of any  unsolicited  proposal for an Alternative
         Transaction,   the  Company  shall  promptly   release  VTEL  from  its
         standstill  obligations contained in the Confidentiality and Standstill
         Agreement referred to in Section 5.05(d) hereof;

                  (i)  unless   otherwise   ordered  by  a  court  of  competent
         jurisdiction,  take or permit any action to (w) cause any Person, other
         than VTEL, Merger Sub or any of VTEL's  subsidiaries,  to not be deemed
         an  "Acquiring  Person"  pursuant  to the  Rights  Plan;  (x) except as
         contemplated by Section 5.01(h) hereof,  to terminate,  amend or modify
         the Rights Plan; (y) redeem any rights issued under the Rights Plan; or
         (z) cause the rights  issuable  under the Rights Plan to be redeemed or
         to become redeemable,  nonexercisable,  nondistributed or not triggered
         or triggerable  pursuant to the terms of the Rights Plan, other than as
         required by this Agreement;

                  (j)      adopt or propose to adopt any amendments to its
         Certificate of Incorporation or its Bylaws;

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<PAGE>




                  (k) (i) change any of its significant  accounting  policies or
         (ii) make or rescind any express or deemed election  relating to Taxes,
         settle or compromise any claim, action, suit,  litigation,  proceeding,
         arbitration,  investigation, audit or controversy relating to Taxes, or
         change any of its methods of reporting income or deductions for federal
         income tax  purposes  from those  employed  in the  preparation  of the
         federal income tax returns for the taxable year ended December 31, 1995
         except, in the case of clause (i) or clause (ii), as may be required by
         Law or generally accepted accounting principles;

                  (l) incur any  obligation for borrowed money or purchase money
         indebtedness,  whether or not evidenced by a note,  bond,  debenture or
         similar instrument or under any financing lease,  whether pursuant to a
         sale-and-leaseback transaction or otherwise or guarantee or endorse the
         obligations of any Person;

                  (m) aside from any  actions  contemplated  by this  Agreement,
         take  or  permit  any  action  which  could  prevent  the  Merger  from
         qualifying for pooling-of-interests  accounting treatment in accordance
         with   generally   accepted   accounting   principles  and  all  rules,
         regulations  and policies of the SEC, and the Company will use its best
         efforts to prevent  any of its  officers  or  directors  from taking or
         permitting such action;

                  (n) take or permit any action  which could  prevent the Merger
         from qualifying as a tax-free  reorganization  under Section 368 of the
         Code,  and the Company  will use its best efforts to prevent any of its
         officers or directors from taking or permitting any such action;

                  (o) take or permit any action which could adversely  affect or
         delay the ability of either the Company or VTEL to obtain any necessary
         approvals of any  Governmental  Entities  required for the transactions
         contemplated  hereby or to perform its covenants and  agreements  under
         this Agreement or the Stock Option Agreement;

                  (p)      take any action which would make any representation
         or warranty contained in Article III of this Agreement untrue or
         incorrect in any material respect;  or

                  (q)      agree in writing or otherwise to do any of the
         foregoing.

         Section  5.04.   Negative   Covenants  of  VTEL.  Except  as  expressly
contemplated  by this  Agreement  or  otherwise  consented  to in writing by the
Company,  from the date of this Agreement  until the Effective  Time, VTEL shall
not  do,  and  shall  not  permit  any of  its  subsidiaries  to do,  any of the
following:

                  (a)      take any action that would result in a failure to
         maintain the eligibility of the VTEL Common Stock for quotation on the
         NASDAQ National Market;


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<PAGE>



                  (b)  propose to adopt any  amendments  to its  Certificate  of
         Incorporation  or its Bylaws that could reasonably be expected to delay
         or have an  adverse  effect  on the  consummation  of the  transactions
         contemplated  by this Agreement or would  otherwise be  inconsistent in
         any material respect with the terms and conditions of this Agreement or
         the other  agreements  or  transactions  contemplated  hereby (it being
         understood  that this  clause  (b) shall not in any  respect  limit the
         right and power of VTEL to amend its  Certificate of  Incorporation  to
         increase the authorized  number of shares of any class of capital stock
         of VTEL);

                  (c)      change any of its significant accounting policies
         except as may be required by Law or generally accepted accounting
         principles;

                  (d)  declare  or pay  any  dividend  on,  or  make  any  other
         distribution  in  respect  of,   outstanding   shares  of  its  or  its
         subsidiaries capital stock or other equity interests,  except dividends
         by a wholly owned  subsidiary  of VTEL to VTEL or another  wholly owned
         subsidiary of VTEL;

                  (e) take or permit any action which would adversely  affect or
         delay the ability of either the Company or VTEL to obtain any necessary
         approvals of any  Governmental  Entities  required for the transactions
         contemplated  hereby or to perform its covenants and  agreements  under
         this Agreement;

                  (f) aside from any  actions  contemplated  by this  Agreement,
         take  or  permit  any  action  which  could  prevent  the  Merger  from
         qualifying for pooling-of-interests  accounting treatment in accordance
         with   generally   accepted   accounting   principles  and  all  rules,
         regulations and policies of the SEC, and VTEL will use its best efforts
         to prevent any of its officers or directors  from taking or  permitting
         any such actions;

                  (g) take or permit any action  which could  prevent the Merger
         from  qualifying  as a tax-free  organization  under Section 368 of the
         Code, and VTEL will use its best efforts to prevent any of its officers
         or directors from taking or permitting any such action;

                  (h) except as  contemplated  by this Agreement or as set forth
         on the VTEL Disclosure Schedule,  issue (whether upon original issue or
         out of  treasury),  sell,  grant,  award,  deliver  or limit the voting
         rights of any shares of any class of its or its  subsidiaries'  capital
         stock,  any securities  convertible into or exercisable or exchangeable
         for any such shares, or any rights,  warrants or options to acquire any
         such shares (except for issuances, grants and awards pursuant to VTEL's
         employee stock purchase plans and its stock option plans and except for
         the issuance of shares upon the exercise of outstanding  awards,  stock
         options or  warrants  in  accordance  with  their  terms and except for
         issuance,  if any,  necessary  to enable  the Merger to be treated as a
         "pooling of interests" for accounting purposes),  or amend or otherwise
         modify in any material  respect the terms of such rights,  warrants and
         options;

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<PAGE>




                  (i)  acquire  or  agree  to  acquire  (whether  pursuant  to a
         definitive agreement,  a nonbinding letter of intent or otherwise),  by
         merging or consolidating with, by purchasing an equity interest in or a
         portion of the  assets  of, or by any other  manner,  any  business  or
         corporation, partnership, association or other business organization or
         division  thereof,  or otherwise acquire or agree to acquire the assets
         of any  other  Person  (other  than (i) the  purchase  of  assets  from
         suppliers or vendors in the ordinary  course of business and consistent
         with past  practice,  or (ii) such purchase  involving the payment of a
         purchase price by VTEL not exceeding $25 million);

                  (j)      take any action which would make any representation
         or warranty contained in Article IV of this Agreement untrue or
         incorrect in any material respect; or

                  (k)      agree in writing or otherwise to do any of the
         foregoing.

         Section 5.05.     Access and Information.

                  (a) The Company shall,  and shall cause its  subsidiaries  to,
         (i)  afford  to  VTEL  and  VTEL's  officers,   directors,   employees,
         accountants,    consultants,    legal   counsel,   agents   and   other
         representatives  (collectively,   the  "VTEL  Representatives")  access
         during  ordinary  business hours and at other  reasonable  times,  upon
         reasonable  prior  notice,  to the  officers,  employees,  accountants,
         agents, properties, offices and other facilities of the Company and its
         subsidiaries  and to the books and  records  thereof  and (ii)  furnish
         promptly  to  VTEL  and  the  VTEL   Representatives  such  information
         concerning  the business,  properties,  Intellectual  Property  Assets,
         contracts,  records and  personnel of the Company and its  subsidiaries
         (including, without limitation, financial, operating and other data and
         information)  as may be  reasonably  requested,  from time to time,  by
         VTEL.

                  (b) VTEL  shall,  and shall  cause its  subsidiaries  to,  (i)
         afford to the Company and the Company's officers, directors, employees,
         accountants,    consultants,    legal   counsel,   agents   and   other
         representatives  (collectively,  the "Company  Representatives") access
         during  ordinary  business hours and at other  reasonable  times,  upon
         reasonable  prior  notice,  to the  officers,  employees,  accountants,
         agents,  properties,  offices  and  other  facilities  of VTEL  and its
         subsidiaries  and to the books and  records  thereof  and (ii)  furnish
         promptly  to  the  Company   and  the  Company   Representatives   such
         information concerning the business, properties,  intellectual property
         assets,  contracts,  records and personnel of VTEL and its subsidiaries
         (including, without limitation, financial, operating and other data and
         information) as may be reasonably requested,  from time to time, by the
         Company.

                  (c) No  investigation by the parties hereto made heretofore or
         hereafter  shall  affect  the  representations  and  warranties  of the
         parties  that are  contained  herein and each such  representation  and
         warranty shall survive such investigation.


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<PAGE>



                  (d) All  information  received  by any party  pursuant to this
         Section  5.05  shall  be  subject  to the  provisions  of that  certain
         Confidentiality  and  Standstill  Agreement,  dated as of September 12,
         1996 between VTEL and the Company.

                                   ARTICLE VI
                              ADDITIONAL AGREEMENTS

         Section 6.01. Presentation to Stockholders. The Company shall, promptly
after the date of this Agreement,  take all actions necessary in accordance with
the DGCL and its Certificate of  Incorporation  and Bylaws to present the Merger
and this Agreement to the holders of the Company Common Stock (and, if required,
holders of the Series C Preferred Stock) for their consideration and approval by
the vote  thereof at a meeting of the  Company's  stockholders  duly  called and
convened to act on the Merger and this  Agreement  (the  "Company  Stockholders'
Meeting").  In  like  manner,  VTEL  shall,  promptly  after  the  date  of this
Agreement,  take all  actions  necessary  in  accordance  with the DGCL,  VTEL's
Certificate of Incorporation and Bylaws and the rules of The NASDAQ Stock Market
to present the Merger and this Agreement to the holders of VTEL Common Stock for
their  consideration  and  approval  by the vote  thereof at a meeting of VTEL's
stockholders  duly called and  convened to act on the Merger and this  Agreement
(the "VTEL Stockholders' Meeting"). The Company and VTEL shall consult with each
other in  connection  with such  meetings and each shall use its best efforts to
cause such  meetings  to occur on the same date.  The Company and VTEL shall use
their  reasonable  best  efforts to solicit from their  respective  stockholders
proxies in favor of the approval and  adoption of this  Agreement  and to secure
the vote of stockholders required by the DGCL and their respective  Certificates
of  Incorporation  and  Bylaws and by the rules of The  NASDAQ  Stock  Market to
approve and adopt the Merger and this Agreement.  The Board of Directors of VTEL
and the Board of Directors of the Company shall recommend that their  respective
stockholders  approve and adopt this  Agreement  and the Merger on the terms and
conditions  set forth in this  Agreement.  The Company  shall cause its Board of
Directors (a) not to withdraw,  modify or change their  recommendations  of this
Agreement  or the Merger and (b) to  continue  to  recommend  to the  respective
stockholders  of the Company the approval and adoption of this Agreement and the
Merger on the terms and conditions set forth in this Agreement.  Notwithstanding
any other  provision  hereof,  no party shall be restricted  from complying with
Rule 14e-2  promulgated  under the Exchange Act with regard to a tender offer or
exchange  offer;  provided,  further,  that the Company shall not, and shall not
permit  any of its  officers,  directors,  employees  (acting  on  behalf of the
Company)  or other  representatives  to agree to or  endorse  or  recommend  any
Alternative  Transaction  unless the Company  shall have first  terminated  this
Agreement  pursuant to Section 8.01(i) and paid VTEL all amounts payable to VTEL
pursuant to Sections  8.01(i) and 8.05 hereof and, if VTEL shall have as of such
time exercised any of its rights under the Stock Option  Agreement,  the Company
shall  have  complied  with  all of  its  obligations  under  the  Stock  Option
Agreement.


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<PAGE>



         Section 6.02.     Registration Statement; Proxy Statement/Prospectus.

                  (a) As promptly as  practicable  after the  execution  of this
         Agreement,  VTEL  shall  prepare  and file with the SEC a  Registration
         Statement  containing  a joint Proxy  Statement/Prospectus  (the "Proxy
         Statement/Prospectus")  for  stockholders  of the  Company  and VTEL in
         connection  with (i) the  registration  under the Securities Act of the
         offer,  sale and  delivery  of VTEL  Common  Stock to be  issued in the
         Merger  and  (ii)  the  vote  of  the   requisite   percentage  of  the
         stockholders  of the  Company  and VTEL with  respect to the Merger and
         this  Agreement.  VTEL and the  Company  shall each use all  reasonable
         efforts to cause the  Registration  Statement  to become  effective  as
         promptly as practicable, and shall take any action required to be taken
         in order to comply with any applicable federal or state securities laws
         in  connection  with the issuance of shares of VTEL Common Stock in the
         Merger.  VTEL  and the  Company  shall  each  furnish  all  information
         concerning  itself,  its  subsidiaries  and the  holders of its capital
         stock as the other  may  reasonably  request  in  connection  with such
         actions.  As promptly as practicable  after the Registration  Statement
         shall  have  become  effective,  the  Company  and VTEL shall mail (the
         "Mailing  Date")  the  Proxy  Statement/Prospectus  to the  holders  of
         Company  Common  Stock or VTEL  Common  Stock,  as the case may be,  of
         record at least 20  calendar  days prior to the  Company  Stockholders'
         Meeting and the VTEL Stockholders'  Meeting. It shall be a condition to
         the mailing of the Proxy Statement/Prospectus that VTEL and the Company
         shall have  received the comfort  letters  described in Section 6.16 of
         this Agreement,  if VTEL shall have requested such letters as described
         in Section 6.16 hereof.  The Proxy  Statement/Prospectus  shall include
         the recommendation of the Board of Directors of the Company and VTEL in
         favor of the Merger.

                  (b) None of the information  supplied or to be supplied by the
         Company  for  inclusion  or  incorporation  by  reference  in  (i)  the
         Registration  Statement will, at the time the Registration Statement is
         filed  with  the SEC and at the time it  becomes  effective  under  the
         Securities Act, contain any untrue statement of a material fact or omit
         to state any material fact  required to be stated  therein or necessary
         to make the  statements  made therein not misleading and (ii) the Proxy
         Statement/Prospectus  will,  at the Mailing Date and at the time of the
         Company  Stockholders'  Meeting  and the  VTEL  Stockholders'  Meeting,
         contain any untrue  statement  of a material  fact or omit to state any
         material  fact  required to be stated  therein or necessary to make the
         statements made therein,  in light of the  circumstances  in which they
         were  made,  not  misleading.  If at any  time  prior  to  the  Company
         Stockholders'  Meeting or the VTEL  Stockholders'  Meeting any event or
         circumstance  relating to the Company or any of its affiliates,  or its
         or their respective officers or directors,  should be discovered by the
         Company that should be set forth in an  amendment  to the  Registration
         Statement  or a  supplement  to  the  Proxy  Statement/Prospectus,  the
         Company shall  promptly  inform VTEL. All documents that the Company is
         responsible for filing with any Governmental  Entity in connection with
         the transactions  contemplated hereby,  including,  without limitation,
         the  Proxy  Statement/Prospectus  to the  extent  that the  information
         contained therein relates to the

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<PAGE>



         Company and its subsidiaries or the transactions  contemplated  hereby,
         will comply as to form in all material  respects with the provisions of
         applicable law, including applicable  provisions of the Securities Act,
         the Exchange  Act and the rules and  regulations  thereunder,  and each
         such document  required to be filed with any Governmental  Entity other
         than the SEC will comply with the  provisions of  applicable  Law as to
         the information required to be contained therein.

                  (c) None of the information supplied or to be supplied by VTEL
         for  inclusion or  incorporation  by reference in (i) the  Registration
         Statement  will, at the time the  Registration  Statement is filed with
         the SEC and at the time it becomes  effective under the Securities Act,
         contain any untrue  statement  of a material  fact or omit to state any
         material  fact  required to be stated  therein or necessary to make the
         statements    therein    not    misleading    and   (ii)   the    Proxy
         Statement/Prospectus  will,  at the Mailing Date and at the time of the
         Company  Stockholders'  Meeting  and the  VTEL  Stockholders'  Meeting,
         contain any untrue  statement  of a material  fact or omit to state any
         material  fact  required to be stated  therein or necessary to make the
         statements  contained  therein,  in light of the circumstances in which
         they were made,  not  misleading.  If at any time prior to the  Company
         Stockholders'  Meeting or the VTEL  Stockholders'  Meeting any event or
         circumstance relating to VTEL or any of its affiliates, or its or their
         respective  officers or  directors,  should be  discovered by VTEL that
         should be set forth in an amendment to the Registration  Statement or a
         supplement  to the  Proxy  Statement/Prospectus,  VTEL  shall  promptly
         inform the Company.  All documents that VTEL is responsible  for filing
         with any  Governmental  Entity  in  connection  with  the  transactions
         contemplated hereby,  including,  without limitation,  the Registration
         Statement to the extent that the information  contained therein relates
         to VTEL and its subsidiaries or the transactions  contemplated  hereby,
         will comply as to form in all material  respects with the provisions of
         applicable law, including applicable  provisions of the Securities Act,
         the Exchange  Act and the rules and  regulations  thereunder,  and each
         such document  required to be filed with any Governmental  Entity other
         than the SEC will comply with the  provisions of  applicable  Law as to
         the information required to be contained therein.

         Section 6.03.     Appropriate Action: Consents; Filings.

                  (a) The Company and VTEL shall each use,  and shall cause each
         of  their  respective  subsidiaries  to  use,  all  reasonable  efforts
         promptly (i) to take, or cause to be taken, all appropriate action, and
         do, or cause to be done,  all  things  necessary,  proper or  advisable
         under  applicable Law or otherwise to consummate and make effective the
         transactions  contemplated by this  Agreement,  (ii) to obtain from any
         Governmental  Entities  any  consents,   licenses,   permits,  waivers,
         approvals,  authorizations  or orders  required  to be  obtained by the
         Company or VTEL, respectively,  or any of their respective subsidiaries
         in  connection  with  the   authorization,   execution,   delivery  and
         performance of this Agreement and the  consummation of the transactions
         contemplated  hereby,  including,  without limitation,  the Merger, and
         (iii) to make all necessary filings, and thereafter make

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<PAGE>



         any other required submissions,  with respect to this Agreement and the
         Merger  required  under (A) the Securities Act and the Exchange Act and
         the rules and regulations thereunder,  and any other applicable federal
         or state securities laws, (B) the HSR Act, and (C) any other applicable
         Law;  and VTEL and the  Company  shall  cooperate  with  each  other in
         connection  with the making of all such  filings,  including  providing
         copies of all such  documents to the  nonfiling  party and its advisors
         prior  to  filing  and,  if  requested,  shall  accept  all  reasonable
         additions,  deletions or changes suggested in connection therewith. The
         Company  and  VTEL  shall  furnish  all  information  required  for any
         application  or other  filing  to be made  pursuant  to the  rules  and
         regulations of any applicable Law in connection  with the  transactions
         contemplated by this Agreement.

                  (b) VTEL and the Company agree,  and shall cause each of their
         respective subsidiaries, to cooperate and to use all reasonable efforts
         to contest and resist any action, including legislative, administrative
         or judicial action, and to have vacated, lifted, reversed or overturned
         any decree,  judgment,  injunction or other order  (whether  temporary,
         preliminary  or  permanent)  (an  "Order")  that is in effect  and that
         restricts,  prevents or prohibits the consummation of the Merger or any
         other transactions contemplated by this Agreement,  including,  without
         limitation,   by   vigorously   pursuing  all   available   avenues  of
         administrative  and  judicial  appeal  and  all  available  legislative
         action.

                  (c) The  Company and VTEL shall each  promptly  give (or shall
         cause their respective  subsidiaries to give) any notices regarding the
         Merger,   this   Agreement  or  the  Stock  Option   Agreement  or  the
         transactions  contemplated  hereby or thereby to third parties required
         by Law or by any material  contract,  license,  lease or other material
         agreement to which it is a party or by which it is bound,  and use, and
         cause its  subsidiaries  to use, all  reasonable  efforts to obtain any
         third party consents (i)  necessary,  proper or advisable to consummate
         the  transactions  contemplated  by this  Agreement or the Stock Option
         Agreement,  (ii)  otherwise  required  under any  contracts,  licenses,
         leases or other  agreements in connection with the  consummation of the
         transactions  contemplated  by  this  Agreement  or  the  Stock  Option
         Agreement,  or (iii)  required  to prevent a Company  Material  Adverse
         Effect or a VTEL Material Adverse Effect, respectively, from occurring;
         provided,  however,  that  this  Section  6.03  shall  not  impose  any
         obligations  on or confer  any rights  upon any person or entity  other
         than the parties to this Agreement or the Stock Option Agreement.

                  (d) If any party shall fail to obtain any third party  consent
         described in subsection (c) above,  such party shall use all reasonable
         efforts,  and shall take any such actions  reasonably  requested by the
         other  parties,  to limit the adverse effect upon the Company and VTEL,
         their  respective   subsidiaries,   and  their  respective   businesses
         resulting,  or which  could  reasonably  be expected to result from the
         failure to obtain such consent.


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<PAGE>



         Section 6.04.     Affiliates; Tax Treatment.

                  (a) The  Company  shall  obtain and deliver to VTEL (i) on the
         date that this  Agreement is executed by VTEL,  an executed  agreement,
         substantially  in the  form  of  Exhibit  B  hereto  from  each  person
         identified  as an  affiliate  of the  Company  in  Section  3.12 of the
         Company  Disclosure  Schedule,  and (ii) by the Closing Date,  from any
         other person who is an affiliate of the Company on the Closing Date.

                  (b) VTEL shall  obtain and  deliver to the  Company (i) on the
         date that this  Agreement  is  executed  by the  Company,  an  executed
         agreement,  substantially  in the form of  Exhibit  C hereto  from each
         person  identified  as an affiliate of VTEL in Section 6.04 of the VTEL
         Disclosure  Schedule,  and (ii) by the  Closing  Date,  from any  other
         person who is an affiliate of VTEL on the Closing Date.

                  (c) VTEL shall be entitled to place  legends as  specified  in
         such agreements on the certificates evidencing any VTEL Common Stock to
         be received by such affiliates of the Company  pursuant to the terms of
         this Agreement,  and to issue appropriate stop transfer instructions to
         the transfer agent of the VTEL Common Stock,  consistent with the terms
         of such letter agreements.

                  (d) Neither  the Company nor VTEL nor any of their  respective
         subsidiaries or other affiliates shall (i) take any action,  or fail to
         take any action, that would jeopardize qualification of the Merger as a
         reorganization within the meaning of Section 368(a) of the Code or (ii)
         enter into any  contract,  agreement,  commitment or  arrangement  with
         respect to the foregoing.

                  (e) At or before the Closing,  VTEL shall provide an officer's
         certificate,  in form and substance  reasonably  acceptable to VTEL, to
         Shearman & Sterling to assist  such  counsel in  rendering  the written
         opinion  provided  for in  Section  7.01(e) of this  Agreement  and the
         Company shall provide an officer's  certificate,  in form and substance
         reasonably  satisfactory  to the  Company,  to Jenkens &  Gilchrist,  a
         Professional  Corporation,  to assist  such  counsel in  rendering  the
         written opinion provided for in Section 7.01(d) of this Agreement.

         Section 6.05.  Public  Announcements.  Except as otherwise  required by
applicable law or the rules of The NASDAQ Stock Market,  neither the Company nor
VTEL  shall,  or shall  permit any of its  subsidiaries  to,  issue or cause the
publication of any press release or other public  announcement  with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement or the Stock Option Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.


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<PAGE>



         Section 6.06. NASDAQ Listing.  VTEL shall use all reasonable efforts to
cause the shares of VTEL Common  Stock to be issued in the Merger to be approved
for quotation on The NASDAQ Stock Market prior to the Effective Time.

         Section 6.07. State Takeover Statutes.  The Company will take all steps
necessary to exempt the  transactions  contemplated  by this  Agreement  and the
Stock Option  Agreement  from,  and if necessary  challenge the validity of, any
applicable state takeover law, including, without limitation, Section 203 of the
DGCL.  The Company shall take all actions  necessary  under the DGCL,  including
approving the  transactions  contemplated by this Agreement and the Stock Option
Agreement, to ensure that the prohibitions on business combinations set forth in
Section  203 of the  DGCL  do  not,  or  will  not,  apply  to the  transactions
contemplated by this Agreement.

         Section 6.08. Charter  Amendment.  Consistent with applicable law, VTEL
shall cause to be presented to its stockholders and shall cause to be voted upon
at the VTEL  Stockholders'  Meeting  referred to in Section 6.01, in addition to
the  consideration  and action upon this  Agreement  and the Merger,  a proposed
amendment to the Certificate of  Incorporation of VTEL increasing the authorized
shares of VTEL Common Stock to 40 million.  VTEL shall use its  reasonable  best
efforts to solicit from its stockholders proxies in favor of the approval of the
amendment to its Certificate of Incorporation and to secure the vote required by
the DGCL and its Certificate of Incorporation to approve such amendment.

         Section 6.09.  Board Seats.  Promptly  following  the  Effective  Time,
consistent  with  applicable law and its Bylaws,  the Board of Directors of VTEL
shall  increase  the number of members  of its Board of  Directors  from five to
seven,  and shall  elect T.  Gary  Trimm and  Arthur  G.  Anderson  to fill such
vacancies,  to serve as such until the next annual meeting of VTEL  stockholders
or such time as their  respective  successors  shall  have been duly  elected or
appointed and qualified.

         Section 6.10.     Options.

                  (a) At the Effective  Time, each option granted by the Company
         to purchase  shares of Company  Common Stock which is  outstanding  and
         unexercised  immediately prior thereto shall cease to represent a right
         to  acquire  shares of  Company  Common  Stock  and shall be  converted
         automatically into an option to purchase shares of VTEL Common Stock in
         an amount and at an exercise  price  determined as provided  below (and
         otherwise subject to the terms of the Company benefit plans under which
         they were issued and the agreements evidencing grants thereunder).

                         (i) The  number of shares  of VTEL  Common  Stock to be
                  subject to the new option shall be equal to the product of the
                  number  of shares  of  Company  Common  Stock  subject  to the
                  original  option  and  the  Common  Stock  Conversion   Ratio,
                  provided  that any  fractional  shares  of VTEL  Common  Stock
                  resulting  from such  multiplication  shall be  rounded to the
                  nearest whole share; and

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<PAGE>



                        (ii) The  exercise  price per share of VTEL Common Stock
                  under the new option shall be equal to the exercise  price per
                  share of  Company  Common  Stock  under  the  original  option
                  divided by the Common Stock  Conversion  Ratio,  provided that
                  such exercise price shall be rounded down to the nearest whole
                  cent.

                  (b) The adjustment provided herein with respect to any options
         which are  "incentive  options" (as defined in Section 422 of the Code)
         shall  be and is  intended  to be  effectuated  in a  manner  which  is
         consistent  with  Section  424(a) of the Code.  The  duration and other
         terms of the new option shall be the same as the original option except
         that all references to the Company or any of its subsidiaries  shall be
         deemed to be references to VTEL and its subsidiaries.

                  (c) If and to the  extent  required  by the terms of the plans
         governing  the  original  options  or  pursuant  to  the  terms  of any
         agreements  evidencing  grants  thereunder,  the Company  shall use its
         reasonable  efforts to obtain the consent of each holder of outstanding
         options to the treatment  provided in subparagraph  (a) of this Section
         6.10.

                  (d)  With  respect  to  the  Assumed   Options,   as  soon  as
         practicable  following  the  Effective  Time,  VTEL  shall use its best
         efforts to file one or more  registration  statements  on Form S-8 with
         the SEC with respect to the VTEL Common  Stock  subject to such Assumed
         Options.

         Section 6.11.  Series C Preferred Stock  Warrants.  As of the Effective
Time, each warrant to purchase  Common Stock Warrant issued in conjunction  with
the  issuance of the Series C Preferred  Stock (the  "Series C  Warrants")  then
outstanding shall remain  outstanding and, pursuant to the terms of Section 7(c)
of the  Series C  Warrants,  shall  thereafter  be  exercisable  into the Merger
Consideration  that the shares of Company  Common Stock into which such Series C
Warrants could have been exercised immediately prior to the Effective Time would
have been entitled.

         Section 6.12.  Termination  of  Convertible  Preferred  Stock  Purchase
Agreement.  The Company,  acting through its Board of Directors,  shall prior to
the Effective Time terminate that certain  Convertible  Preferred Stock Purchase
Agreement,  dated October 24, 1996, between the Company and Infinity  Investors,
Ltd. and Seacrest  Capital,  Ltd. in accordance  with the  provisions of Section
5.2(b) and (c) thereof,  in a manner  sufficient to extinguish any obligation of
the  Company to issue any Series D Preferred  Stock or Series E Preferred  Stock
pursuant to that Agreement.

         Section 6.13. Merger Sub. Prior to the Effective Time, Merger Sub shall
not conduct  any  business or make any  investments  other than as  specifically
contemplated  by this  Agreement  and will not have any assets  (other  than the
minimum amount of cash paid to Merger Sub for the issuance of its stock to VTEL)
or liabilities.


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<PAGE>



         Section 6.14.     Indemnification.

                  (a) The Company  shall  indemnify  and hold  harmless,  to the
         fullest extent  permitted under applicable law, and after the Effective
         Time  VTEL  and the  Surviving  Corporation  shall  indemnify  and hold
         harmless,  to the fullest extent  permitted under  applicable law, each
         present  and former  director  and officer of the Company or any of its
         subsidiaries,  and each person who is or was then serving as a director
         of  the  Company  or  any  of  its   subsidiaries   (individually,   an
         "Indemnified  Party"  and  collectively,   the  "Indemnified  Parties")
         against any expenses,  including  reasonable  attorneys'  fees,  fines,
         losses, claims, damages, liabilities, costs, judgments and amounts paid
         in settlement in connection with any  threatened,  pending or completed
         claim,  action,  suit,  proceeding  or  investigation  (whether  civil,
         criminal or administrative)  arising out of or pertaining to any action
         or omission  occurring prior to the Effective Time (including,  without
         limitation,  any which  arise out of or  relate to the  Merger  and the
         transactions  contemplate  by this  Agreement)  which are  asserted  or
         commenced  prior to or within six years  following the Effective  Time,
         and the Company, VTEL or the Surviving Corporation, as the case may be,
         will advance  expenses to each such  Indemnified  Party  (provided  the
         person to whom expenses are advanced  provides an  undertaking to repay
         such  advances if it is ultimately  determined  that such person is not
         entitled to indemnification),  provided the Indemnified Party asserting
         the right to  indemnification  hereunder shall have acted in good faith
         and in a manner such person reasonably believed to be in or not opposed
         to the best  interests of the Company and, with respect to any criminal
         action or  proceeding,  had no reasonable  cause to believe his conduct
         was  unlawful.  The  termination  of any action,  suit or proceeding by
         judgment,  order,  settlement,  conviction,  or  upon  a plea  of  nolo
         contendere  or  its  equivalent,   shall  not,  of  itself,   create  a
         presumption  that the  person did not act in good faith and in a manner
         which such  person  reasonably  believed to be in or not opposed to the
         best interests of the Company, and, with respect to any criminal action
         or proceeding,  that such person and  reasonable  cause to believe that
         his conduct was unlawful. In the event of any such claim, action, suit,
         proceeding or  investigation  (whether  asserted or commenced before or
         after  the  Effective  Time),  the  Company,   VTEL  or  the  Surviving
         Corporation,  as the case may be, will be entitled  to  participate  in
         and,  to the extent that it may wish,  to assume the  defense  thereof;
         provided,   however,  that  if  any  Indemnified  Party  (or  group  of
         Indemnified  Parties) reasonably believes that it is advisable for such
         Indemnified  Parties to be represented by separate  counsel as a result
         of a conflict,  on any  significant  issue between the positions of the
         Indemnified  Party (or group of  Indemnified  Parties) and the Company,
         VTEL or the  Surviving  Corporation,  as the case may be, as determined
         under applicable  standards of professional  conduct or if the Company,
         VTEL  or the  Surviving  Corporation  shall  promptly  fail  to  assume
         responsibility  for such defense,  such Indemnified  Party (or group of
         Indemnified   Parties)  may  retain   counsel   satisfactory   to  such
         Indemnified Party (or group of Indemnified Parties), who will represent
         such  Indemnified  Party (or group of  Indemnified  Parities),  and the
         Company, VTEL or the Surviving  Corporation,  as the case may be, shall
         pay all  reasonable  fees and  expenses  of such  counsel  promptly  as
         statements therefor are received; provided, that the

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<PAGE>



         Indemnified Parties and the Company, VTEL or the Surviving Corporation,
         as the case may be, will use their respective best efforts to assist in
         the  vigorous  defense  of any such  matter;  provided,  further,  that
         neither the Company, VTEL nor the Surviving Corporation shall be liable
         for any  settlement  effected  without  their  written  consent,  which
         consent,  if the Company,  VTEL or the Surviving  Corporation  fails to
         assume  the  defense  of any such  matter,  shall  not be  unreasonably
         withheld and in no event shall be withheld in bad faith;  and provided,
         further,  that neither the Company,  VTEL nor the Surviving Corporation
         shall have any obligation  hereunder to any Indemnified  Party when and
         if a court of competent jurisdiction shall ultimately determine,  after
         exhaustion of all avenues of appeal, that such Indemnified Party is not
         entitled to indemnification  hereunder (at which point such Indemnified
         Party shall promptly  refund,  without  interest,  to the  indemnifying
         party all amounts previously paid by the indemnifying party hereunder).
         Any  Indemnified  Party  wishing  to claim  indemnification  under this
         Section 6.14, upon learning of any such claim, action, suit, proceeding
         or investigation, shall promptly notify the indemnifying party thereof.
         In the event the Indemnified  Parties are entitled to separate  counsel
         pursuant to this paragraph (a), the Indemnified  Parties may as a group
         retain  only one such law firm to  represent  them with  respect to any
         such matter unless there is, under applicable standards of professional
         conduct,  a conflict on any significant  issue between the positions of
         any two or more  Indemnified  Parties  in which  case  the  Indemnified
         Parties  may  retain,  at the  expense  of  the  Company,  VTEL  or the
         Surviving Corporation, as the case may be, two additional law firms.

                  (b) For six years  after the  Effective  Time,  the  Surviving
         Corporation   shall   keep  in  effect  a   provision   in  its  bylaws
         substantially the same as the provision  contained in Article XI of the
         Company's bylaws as in effect on the date hereof.

                  (c)  The  Company  and the  Surviving  Corporation  and  their
         subsidiaries will perform and discharge all indemnification  agreements
         to which the  Company  or any of its  subsidiaries  is a party and that
         have been  disclosed  in  Section  6.14(c)  of the  Company  Disclosure
         Schedule.

                  (d) This Section shall survive the closing of the transactions
         contemplated  hereby,  is intended to benefit the  Company,  VTEL,  the
         Surviving Corporation and each of the Indemnified Parties (each of whom
         shall be entitled to enforce  this  Section  against the Company or the
         Surviving Corporation,  as the case may be) and shall be binding on all
         successors  and assigns of the Surviving  Corporation.  The exercise by
         any person of such person's  rights under any of paragraphs (a), (b) or
         (c) of this Section  shall not  preclude the exercise of such  person's
         rights under any such other  paragraph of this  section,  provided that
         such party shall not be entitled to multiple recoveries thereunder.

                  (e) For six years from the  Effective  Time,  VTEL shall cause
         the Surviving Corporation to provide to the Company's current directors
         and officers liability insurance  protection of the same kind and scope
         as that provided by the Company's directors' and

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<PAGE>



         officers'  liability insurance policies (copies of which have been made
         available  to VTEL) in effect on the date  hereof;  provided,  however,
         that in no event shall the Surviving  Corporation be required to expend
         in any one year an  amount in  excess  of 150% of the  annual  premiums
         currently  paid by the  Company  for  such  insurance;  and,  provided,
         further, that if the annual premiums of such insurance coverage exceeds
         such amount,  the Surviving  Corporation shall be obligated to obtain a
         policy with the greatest  coverage  available  for a cost not exceeding
         such amount.

                  (f) In the event  the  Surviving  Corporation,  VTEL or any of
         their respective  successors or assigns (i) consolidates with or merges
         into any other  person  and shall not be the  continuing  or  surviving
         corporation  or  entity  of  such  consolidation  or  merger,  or  (ii)
         transfers all or substantially  all of its properties and assets to any
         person,  then, and in each such case, proper provision shall be made so
         that the successors  and assigns of the Surviving  Corporation or VTEL,
         as the case may be,  assume the  obligations  set forth in this Section
         6.14.

         Section 6.15. Employment Contracts.  The Company represents that it has
previously  delivered  or made  available  to VTEL all  employment,  retirement,
termination, severance or similar agreements with officers or other employees of
the Company and its subsidiaries which are currently in effect, all of which are
listed  in the  Company  Disclosure  Schedule.  Subsection  6.15 of the  Company
Disclosure Schedule lists all such agreements and plans that provide for payment
of amounts or awards upon  consummation of a "change of control" of the Company,
including all those  providing for payments or awards upon  consummation  of the
Merger. The Company has made available to VTEL true, correct and complete copies
of all such  agreements  and  plans.  The  Company  will not enter into any such
agreements after the date hereof without VTEL's prior written consent.

         Section 6.16.     Comfort Letters.

                  (a) If  requested by VTEL,  the Company  shall cause KPMG Peat
         Marwick  LLP to  deliver  a  letter,  dated as of the date of the Proxy
         Statement/Prospectus, and addressed to VTEL and its Board of Directors,
         in form and substance reasonably  satisfactory to VTEL and customary in
         scope and substance  for agreed upon  procedures  letters  delivered by
         independent   public   accountants  in  connection  with   registration
         statements    and    proxy    statements    similar    to   the   Proxy
         Statement/Prospectus.

                  (b) If VTEL  should  make the request for the Company to cause
         KPMG Peat Marwick LLP to deliver the letter referred to in subparagraph
         (a) of this Section 6.16, VTEL shall then cause Price Waterhouse LLP to
         deliver   a   letter    dated   as   of   the   date   of   the   Proxy
         Statement/Prospectus,  and  addressed to VTEL and the Company and their
         respective  Boards  of  Directors,  in form  and  substance  reasonably
         satisfactory  to the Company and  customary in scope and  substance for
         agreed upon procedures letters delivered by independent public

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<PAGE>



         accountants  in  connection  with  registration  statements  and  proxy
         statements similar to the Proxy Statement/Prospectus.

         Section 6.17.     Sales Under Rule 145 if Applicable.

                  (a)  VTEL  will  use its  best  efforts  to  comply  with  the
         reporting requirements of the Exchange Act after the Effective Time.

                  (b) Upon being  informed  in writing by any person who, at the
         Effective  Time,  was an  officer,  director  or a  shareholder  of the
         Company that may be deemed to be an  affiliate  of the Company  (within
         the meaning of the Exchange Act) (the "Affiliated  Shareholder"),  that
         such person intends to sell any shares of VTEL Common Stock acquired in
         the Merger under Rule 145 under the Exchange  Act, VTEL will certify in
         writing  to such  person  that it has  been  subject  to the  reporting
         requirements  of the Exchange Act for at least 90 days and it has filed
         all of the reports required to be filed by it under the Exchange Act to
         enable such person to sell such person's VTEL Common Stock  acquired in
         the Merger  under Rule 145 (or will inform such person in writing  that
         it has not filed such  reports).  VTEL will further  supply such person
         with any information in its possession which he may reasonably  request
         in connection with any such proposed sale.

                  (c) If any of the  certificates  representing  any VTEL Common
         Stock acquired in the Merger is presented to VTEL's  transfer agent for
         registration of transfer in connection with any sale  theretofore  made
         under  paragraph  (d) of Rule 145,  provided such  certificate  is duly
         endorsed for transfer or accompanied by a duly executed stock power and
         is accompanied by an opinion of counsel  satisfactory to VTEL that such
         transfer  has complied  with the  requirements  of Rule 145,  VTEL will
         promptly  instruct its transfer  agent to register such transfer and to
         issue one or more new  certificates  free of any stop transfer order or
         restrictive legend.

         Section 6.18. Stockholder  Litigation.  The Company shall give VTEL the
opportunity  to  participate  in the defense or  settlement  of any  stockholder
litigation  against  the  Company  and  its  directors  relating  to  any of the
transactions  contemplated  by this  Agreement  or the Stock  Option  Agreement;
provided,  no such settlement  shall be agreed to without VTEL's consent,  which
consent  shall not be  unreasonably  withheld;  and  further  provided,  that no
settlement  requiring a payment by a director of the Company  shall be agreed to
without such director's consent.

                                   ARTICLE VII
                               CLOSING CONDITIONS

         Section 7.01.     Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other transactions  contemplated  hereby shall be subject to the satisfaction at
or prior to the Effective Time of the following conditions

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<PAGE>



(any or all of which may be waived by the parties hereto in writing, in whole or
in part, to the extent permitted by applicable Law):

                  (a)   Effectiveness   of  the  Registration   Statement.   The
         Registration  Statement  shall have been declared  effective by the SEC
         under the Securities Act. No stop order suspending the effectiveness of
         the  Registration  Statement  shall have been  issued by the SEC and no
         proceedings for that purpose shall have been initiated by the SEC.

                  (b) Stockholder Approval.  The Merger and this Agreement shall
         have  been  approved  and  adopted  by  the   requisite   vote  of  the
         stockholders of the Company and of VTEL in accordance with the DGCL and
         the respective Certificates of Incorporation of the Company and VTEL.

                  (c) HSR Act. The Company and VTEL shall have made all required
         filings under the HSR Act and the  applicable  waiting period under the
         HSR Act with respect to the transactions contemplated by this Agreement
         shall have expired or been terminated.

                  (d) VTEL Tax Opinion.  VTEL shall have received from Jenkens &
         Gilchrist, a Professional  Corporation,  a written opinion, dated as of
         the  Mailing  Date,  to the effect that the  Merger,  when  effected in
         accordance with this Agreement,  will qualify as a reorganization under
         Section  368(a) of the Code and VTEL,  Merger Sub and the Company  will
         constitute parties to such  reorganization,  and a copy of such opinion
         shall have been delivered to the Company.

                  (e) Company Tax Opinion.  The Company shall have received from
         Shearman & Sterling a written opinion, dated as of the Mailing Date, to
         the effect  that the Merger,  when  effected  in  accordance  with this
         Agreement, will qualify as a reorganization under Section 368(a) of the
         Code and VTEL,  Merger Sub and the Company will  constitute  parties to
         such  reorganization,  and a copy  of  such  opinion  shall  have  been
         delivered to VTEL.

                  (f) NASDAQ  Approval.  The shares of VTEL  Common  Stock to be
         issued in the Merger  shall have been  approved  for  quotation  on The
         NASDAQ Stock Market, but subject to official notice of issuance.

                  (g) Pooling Letter. VTEL and the Company shall have received a
         letter  from Price  Waterhouse  LLP, in form and  substance  reasonably
         satisfactory to VTEL, to the effect that the transactions  contemplated
         by this  Agreement  will be  accounted  for by  VTEL as a  "pooling  of
         interests"  under  generally  accepted  accounting  principles  and the
         rules, regulations and policies of the SEC.

                  (h)      Charter Amendment.  The amendment to the Certificate
         of Incorporation of VTEL referred to in Section 6.08 shall have been
         duly approved and adopted by the stockholders of VTEL at the VTEL
         Stockholders' Meeting in accordance with the DGCL,

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<PAGE>



         and such charter amendment shall have been duly filed with the Delaware
         Secretary of State and shall have become effective.

                  (i)      Rights Plan.  The rights issued pursuant to the
         Rights Plan shall not have become nonredeemable, exercisable,
         distributed or triggered pursuant to the terms of the Rights Plan.

         Section  7.02.   Additional  Conditions  to  Obligations  of  the  VTEL
Companies.  The  obligations  of the VTEL Companies to effect the Merger and the
other  transactions  contemplated  by this  Agreement  are also  subject  to the
following conditions (any or all of which may be waived by the VTEL Companies in
writing, in whole or in part):

                  (a)    Representations    and   Warranties.    Each   of   the
         representations  and  warranties  of  the  Company  contained  in  this
         Agreement shall have been true and correct in all material  respects at
         and as of the date made and,  except as  contemplated  or  permitted by
         this Agreement, at and as of the Effective Time as if made at and as of
         such time. The VTEL Companies  shall have received a certificate of the
         President  and the  Chief  Executive  Officer  of the  Company,  in his
         capacity as such,  dated the Closing  Date,  to the effect that each of
         the  representations  and  warranties of the Company  contained in this
         Agreement were true and correct in all material respects as of the date
         made and, except as contemplated or permitted by this Agreement, at and
         as of the Effective Time as if made at and as of such time.

                  (b) Agreements and Covenants. The Company shall have performed
         or complied in all material  respects with all agreements and covenants
         required by this Agreement to be performed or complied with by it at or
         prior to the Effective  Time. The VTEL Companies  shall have received a
         certificate  of the  President and the Chief  Executive  Officer of the
         Company,  in his  capacity  as such,  dated the Closing  Date,  to such
         effect.

                  (c)  Consents.  All  consents,   authorizations,   orders  and
         approvals of, or filings or registrations with, any Governmental Entity
         required in connection with the execution,  delivery and performance of
         this  Agreement  shall have been  obtained or made,  except for filings
         required  under the DGCL in connection  with the Merger and the Company
         shall have obtained all consents, authorizations, waivers and approvals
         required from third parties  required  under all Material  Contracts by
         reason  of  the  Merger  and  the   consummation  of  the  transactions
         contemplated hereby, except for such consents, authorizations,  waivers
         and approvals  where the failure to obtain such could not reasonably be
         expected to result in a Company Material Adverse Effect.

                  (d) No Governmental Proceedings or Litigation. There shall not
         be pending or threatened any action, proceeding,  claim or counterclaim
         by any  Governmental  Entity or by any third  party  which  seeks to or
         would (i) prohibit or restrict  the  consummation  of the Merger,  (ii)
         require the disposition of or the holding  separate of any of the stock
         or  assets  of the  Company  or its  subsidiaries  or  impose  material
         limitations on the ability of VTEL to

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<PAGE>



         control in any material  respect the business,  assets or operations of
         either VTEL or the Company,  or (iii) have a material adverse effect on
         VTEL's  business  or  materially  impair the  ability of the Company or
         Merger Sub to perform their obligations  hereunder.  There shall not be
         in effect any order, decree or injunction (whether  preliminary,  final
         or  appealable)  of a United States Federal or state court of competent
         jurisdiction,  and no  statute,  rule or  regulation  shall  have  been
         enacted or promulgated by any Governmental Entity , which (i) prohibits
         or   restricts   consummation   of  the  Merger  or  the   transactions
         contemplated  hereby, (ii) requires VTEL to hold separate or dispose of
         any of the  stock or  assets  of the  Company  or its  subsidiaries  or
         imposes  material  limitations on the ability of VTEL to control in any
         material  respect the business,  assets or operations of either VTEL or
         the Company,  or (iii) has a material adverse effect on the business of
         VTEL and its  subsidiaries  or on the Company and its  subsidiaries  or
         materially  impairs the ability of VTEL or Merger Sub to perform  their
         obligations hereunder.

                  (e)      Affiliate Agreements.  The Company shall have
         delivered to VTEL the letter agreements called for by Section 6.04.

         Section 7.03.  Additional Conditions to Obligations of the Company. The
obligations  of the  Company to effect  the  Merger  and the other  transactions
contemplated hereby are also subject to the following  conditions (any or all of
which may be waived by the Company in writing, in whole or in part):

                  (a)    Representations    and   Warranties.    Each   of   the
         representations  and warranties of the VTEL Companies contained in this
         Agreement shall have been true and correct in all material  respects at
         and as of the date made and,  except as  contemplated  or  permitted by
         this Agreement, at and as of the Effective Time as if made at and as of
         such time.  The  Company  shall  have  received  a  certificate  of the
         President  and  the  Chief  Executive  Officer  of  each  of  the  VTEL
         Companies, in their capacities as such, dated as of the Effective Time,
         to the effect that each of the  representations  and  warranties of the
         VTEL Companies contained in this Agreement were true and correct in all
         material  respects as of the date made and,  except as  contemplated by
         this Agreement, at and as of the Effective Time as if made at and as of
         such time.

                  (b) Agreements and  Covenants.  The VTEL Companies  shall have
         performed or complied in all material  respects with all agreements and
         covenants  required by this  Agreement to be performed or complied with
         by them at or prior to the  Effective  Time.  The  Company  shall  have
         received a certificate of the Chairman and Chief  Executive  Officer of
         each of the VTEL  Companies,  in their  capacities  as such,  dated the
         Closing Date, to that effect.

                  (c)  Consents.  All  consents,   authorizations,   orders  and
         approvals of, or filings or registrations with, any Governmental Entity
         required in connection with the execution,  delivery and performance of
         this Agreement shall have been obtained or made, except for

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<PAGE>



         filings required under the DGCL in connection with the Merger,  and the
         VTEL  Companies  shall  have  obtained  all  consents,  authorizations,
         waivers and approvals  required from third parties  required  under all
         material  agreements  and  instruments  by reason of the Merger and the
         consummation of the transactions  contemplated hereby,  except for such
         consents,  authorizations,  waivers and approvals  where the failure to
         obtain  such  could  not  reasonably  be  expected  to result in a VTEL
         Material Adverse Effect.

                  (d) No Regulatory Action. No statute, rule or regulation shall
         have been enacted or promulgated by any Governmental Entity which seeks
         to or  would  (i)  prohibit  the  consummation  of  the  Merger  or the
         transactions  contemplated hereby or (ii) materially impair the ability
         of the Company to perform its  obligations  hereunder;  and there shall
         not be in effect any order, decree or injunction (whether  preliminary,
         final or appealable  injunction)  of a United  States  federal or state
         court of competent jurisdiction which (i) prohibits consummation of the
         Merger,  or (ii)  materially  impairs  the  ability  of the  Company to
         perform its obligations hereunder.


                                  ARTICLE VIII

                        TERMINATION, AMENDMENT AND WAIVER

         Section 8.01.     Termination.  This Agreement may be terminated and
the Merger  hereby  contemplated  may be abandoned  at any time  notwithstanding
approval of this Agreement by the  stockholders  of the Company and/or VTEL, but
prior to the Effective Time:

                  (a)      by mutual written consent duly authorized by the
         Boards of Directors of VTEL and the Company;

                  (b) by  VTEL,  if  there  has been a  material  breach  of the
         representations  and  warranties  of  the  Company  contained  in  this
         Agreement  or if the  Company  has  failed to  comply  in any  material
         respect  with any of its  covenants  or  agreements  set  forth in this
         Agreement or in the Stock Option  Agreement,  and the Company shall not
         have cured such breach or failure within ten days of receipt of written
         notice thereof from VTEL (or such shorter period as provided for in the
         Stock Option  Agreement (a  "Terminating  Company  Breach");  provided,
         however,  that the  failure of the  Company  to comply in any  material
         respect with any of its covenants or obligations  set forth in Sections
         5.01(f), 5.03(g), 5.03(h), 5.03(i), 6.01, 6.02 or 6.05 hereof, shall be
         a Terminating Company Breach immediately upon receipt of written notice
         thereof from VTEL; and further  provided,  if such breach or failure is
         incapable  of cure within  such ten day period,  such breach or failure
         shall constitute a Terminating  Company Breach immediately upon receipt
         of written notice thereof from VTEL;

                  (c)      by the Company, if there has been a material breach
         of the representations and warranties of the VTEL Companies contained
         in this Agreement or if either VTEL Company

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<PAGE>



         has  failed to comply in any  material  respect  with any  covenant  or
         agreement  on  the  part  of the  VTEL  Companies  set  forth  in  this
         Agreement,  and the VTEL Companies  shall not have cured such breach or
         failure  within ten days of receipt of written  notice thereof from the
         Company;  provided,  however, if such breach or failure is incapable of
         cure  within such ten day  period,  the ten day cure  period  shall not
         apply;

                  (d) by either VTEL or the  Company,  if any court of competent
         jurisdiction  in the United States or other United States  governmental
         body  shall have  issued an order,  decree or ruling or taken any other
         action  restraining,  enjoining  or  otherwise  prohibiting  any of the
         transactions  contemplated  hereby or by the Stock Option Agreement and
         such order, decree,  ruling or other action shall have become final and
         non-appealable preventing the consummation of the Merger;

                  (e) by either VTEL or the Company, if the Effective Time shall
         not have occurred on or before December 31, 1997; provided that neither
         the  Company nor VTEL shall be entitled  to  terminate  this  Agreement
         pursuant to this  paragraph  if such  party's  material  breach of this
         Agreement  or the  Stock  Option  Agreement  has been  the  cause of or
         resulted in the failure of the  Effective  Time to occur at or prior to
         such time;

                  (f) by either VTEL or the Company, if at the meetings of their
         respective  stockholders (including any adjournment thereof) called for
         by Section 6.01 hereof,  this Agreement and the Merger shall fail to be
         approved and adopted by the  affirmative  vote of the  stockholders  of
         VTEL and the  Company  required  under  the DGCL and  their  respective
         Certificates of Incorporation.

                  (g) by either  VTEL or the  Company  if there is in effect any
         order, decree or injunction of a United States federal court or a court
         of  competent  jurisdiction  which  shall  have  become  final with all
         opportunities  to appeal having been exhausted or expired and which (i)
         requires VTEL to hold separate or dispose of any of the stock or assets
         of the  Company or its  subsidiaries,  or of VTEL or its  subsidiaries,
         which are  material to the  financial  condition,  properties,  assets,
         liabilities,  business,  results of  operations  or prospects of either
         VTEL and its subsidiaries or the Company and its subsidiaries,  or (ii)
         imposes  material  limitations on the ability of VTEL to control in any
         material  respect  the  business,  assets or  operations  of either the
         Company or VTEL;

                  (h) by VTEL,  if (i) the  Board of  Directors  of the  Company
         withdraws,  modifies or changes its recommendation of this Agreement or
         the  Merger  in a  manner  adverse  to  VTEL  or to the  likelihood  of
         consummation  of the  Merger or shall  have  resolved  to do any of the
         foregoing,  or (ii) the Board of  Directors  of the Company  shall have
         approved,  endorsed or recommended to the  stockholders  of the Company
         any Alternative Transaction or resolved to do so;


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<PAGE>



                  (i) by the  Company,  upon  prior  payment to VTEL of a fee of
         $3,500,000,  (which,  when  paid,  shall  be in  lieu  of  any  further
         Termination  Fee due  under  Section  8.05(c),  anything  contained  in
         Section  8.05(d) to the contrary  notwithstanding)  and VTEL's Expenses
         (as defined in Section 8.05(b) hereof) if the Board of Directors of the
         Company  shall have  received an offer from a Person other than VTEL or
         an affiliate  of VTEL to effect an  Alternative  Transaction  which the
         Board  of  Directors  of  the  Company  shall  have  determined,  after
         considering advice from its financial  advisors,  is more beneficial to
         the  stockholders  of the  Company  than the  Merger  and the  Board of
         Directors  of the Company  shall have  concluded  in good faith,  after
         considering  applicable  provisions  of state  law,  on the  basis of a
         written  opinion of  independent  outside  legal  counsel of nationally
         recognized reputation that terminating this Agreement in order to enter
         into an  agreement  with  respect to or to  consummate  an  Alternative
         Transaction  is necessary to prevent the  Company's  Board of Directors
         from violating its fiduciary duties to the Company's stockholders under
         applicable law provided,  however, the Company shall not be entitled to
         terminate this Agreement pursuant to this subsection (i) if the Company
         shall  have  breached  or  failed  to  comply  with its  covenants  and
         agreements  contained  in  subsections  (g), (h) or (i) of Section 5.03
         hereof,  in Section  6.01 or in Section 6.05 hereof with respect to the
         offer in question;

                  (j) by VTEL,  if a tender  offer or exchange  offer for 20% or
         more of the  outstanding  shares of Company  Common  Stock is commenced
         (other  than by VTEL or an  affiliate  of VTEL),  and  within  ten (10)
         business  days of such  commencement  the  Board  of  Directors  of the
         Company shall not have recommended that the stockholders of the Company
         not tender their shares in such tender or exchange offer; or

                  (k) by VTEL, if the Stock Option  Agreement is determined by a
         court of competent  jurisdiction  to be invalid or  unenforceable,  and
         such  determination  shall have become final with all  opportunities to
         appeal having been exhausted or expired, but only if the Company or any
         of its  subsidiaries,  or any of its  officers,  directors,  employees,
         agents or other  representatives,  instigates or otherwise  voluntarily
         assists,  supports or cooperates  with any other party  instigating  or
         pursuing such a legal determination;  or if any of the parties thereto,
         other  than  VTEL,  shall be in  material  breach of the  Stock  Option
         Agreement.

         Section  8.02.  Effect of  Termination.  Except as  provided in Section
5.05(d),  Section  8.05 and Section 9.01 of this  Agreement  and in this Section
8.02,  in the event of the  termination  of this  Agreement  pursuant to Section
8.01, this Agreement shall forthwith become void, there shall be no liability on
the  part of the  VTEL  Companies  or the  Company  or any of  their  respective
officers or directors to the other and all rights and  obligations  of any party
hereto shall cease,  except that nothing herein shall relieve any party from its
obligations  with respect to any breach of this Agreement.  Notwithstanding  the
foregoing,  the Company's  obligations  under the Stock Option  Agreement  shall
survive  such  termination,  and shall  remain in full  force and effect and the
duties of the Company  thereunder  shall not be affected by the  termination  of
this Agreement,  and termination and abandonment of this Agreement shall have no
effect upon the Confidentiality and Standstill

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<PAGE>



Agreement  referred  to in Section  5.05(d)  (except as  otherwise  provided  in
Section 5.03(h) hereof) .

         Section 8.03.  Amendment.  This Agreement may be amended by the Company
and the VTEL  Companies  by action  taken by or on  behalf  of their  respective
Boards of Directors at any time prior to the Effective Time; provided,  however,
that after  approval  of the Merger by the  stockholders  of the  Company or the
stockholders  of VTEL, any such amendment  shall be subject to the provisions of
Section  251 of the  DGCL.  This  Agreement  may  not be  amended  except  by an
instrument in writing signed by the Company and the VTEL Companies.

         Section  8.04.  Waiver.  At any time prior to the Effective  Time,  any
party  hereto  may  (a)  extend  the  time  for  the  performance  of any of the
obligations  or other acts of the other party or parties  hereto,  (b) waive any
inaccuracies in the representations and warranties of the other party or parties
contained  herein or in any  document  delivered  pursuant  hereto and (c) waive
compliance  by the  other  party  or  parties  with  any of  the  agreements  or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.  For purposes of this Section 8.04, the VTEL Companies as a group shall
be deemed to be one party.

         Section 8.05.     Fees, Expenses and Other Payments.

                  (a)  Subject to Section  8.05(c)  and (d),  all  Expenses  (as
         defined in paragraph (b) of this Section 8.05)  incurred by the parties
         hereto  shall be borne  solely  and  entirely  by the  party  which has
         incurred  such  Expenses;  provided,  however,  that,  subject  to  the
         provisions of Sections  8.05(c) and (d) hereof,  the allocable share of
         each of VTEL and the  Company  for all  expenses  related to  printing,
         filing and mailing the  Registration  Statement and the Proxy Statement
         and all SEC and other  regulatory  filing fees  incurred in  connection
         with the Registration Statement and the Proxy Statement, and all filing
         fees incurred in connection with all regulatory  filings made under the
         HSR Act, shall be one-half.

                  (b)  "Expenses"  as used in this  Agreement  shall include all
         out-of-pocket  expenses  (including,  without limitation,  all fees and
         expenses  of  counsel,  accountants,  investment  bankers,  experts and
         consultants to a party hereto and its  affiliates)  incurred by a party
         or on its behalf in  connection  with or related to the  authorization,
         preparation,  negotiation, execution and performance of this Agreement,
         the  preparation,  printing,  filing and  mailing  of the  Registration
         Statement  and the  Proxy  Statement/Prospectus,  the  solicitation  of
         stockholder approvals and all other matters related to the consummation
         of the transactions contemplated hereby.

                  (c)      The Company agrees that:

                           (i)      The Company shall pay to VTEL in same day
                  funds the aggregate amount of all Expenses incurred by VTEL
                  and its affiliates in connection with this

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                                                        58

<PAGE>



                  Agreement and the Stock Option  Agreement and the transactions
                  contemplated hereby or thereby (including fees and expenses of
                  counsel, accountants, and financial advisors incurred by VTEL)
                  (the "Expense  Reimbursement")  if any of the following events
                  shall have  occurred and there shall be no material  breach of
                  this  Agreement by VTEL: (A) VTEL shall have  terminated  this
                  Agreement in accordance  with the terms of Section  8.01(b) or
                  Section 8.01(h) or Section  8.01(j);  or (B) the Company shall
                  have terminated this Agreement pursuant to Section 8.01(i).

                           (ii) The Company  shall pay to VTEL in same day funds
                  a fee of $3,500,000  (the  "Termination  Fee") upon demand and
                  with the Expense  Reimbursement,  if (A) this Agreement  shall
                  have been terminated; (B) there shall be no material breach of
                  this  Agreement  by  VTEL  continuing  at  the  time  of  such
                  termination;  and (C) any of the  following  events shall have
                  occurred:  (I) the Company shall have breached in any material
                  respect   the   representations   warranties,   covenants   or
                  conditions  contained  in this  Agreement  or the Stock Option
                  Agreement;  or (II) the Board of  Directors  of the Company or
                  any  committee  thereof  shall have  withdrawn  or modified or
                  changed its approval or  recommendation  of this  Agreement or
                  the Merger,  or  resolved to do so, or shall have  resolved to
                  accept, accepted or recommended a different proposal; or (III)
                  the Company shall have entered into an agreement  with respect
                  to an  Alternative  Transaction  on or prior to  December  31,
                  1997;  or (IV) the  stockholders  of the Company shall fail to
                  approve the Merger and  transactions  contemplated  hereby and
                  shall  approve  an  Alternative  Transaction  on or  prior  to
                  December  31,  1997;  or (V) on or prior to December 31, 1997,
                  the  Company's  stockholders  shall  receive a proposal for an
                  Alternative  Transaction  and such proposal  shall result in a
                  party  unaffiliated  with  VTEL  acquiring  securities  of the
                  Company  representing  in excess of a  majority  of the voting
                  power of the Company's then outstanding voting securities;  or
                  (VI) this  Agreement is terminated by VTEL pursuant to Section
                  8.01(j).

                           (iii) The acceptance by VTEL of a payment pursuant to
                  Section  8.05(c) shall not constitute a waiver of, or limit in
                  any way its  rights to  pursue  any and all  remedies  for the
                  Company's material breach of this Agreement.

                  (d) Any  payment  required  to be  made  pursuant  to  Section
         8.05(c) of this Agreement  shall be made as promptly as practicable but
         not later than 5 business days after  termination of this Agreement and
         shall be made by wire  transfer of  immediately  available  funds to an
         account  designated by VTEL. Such payment shall not relieve the Company
         of any obligation it may have if the agreement is terminated because of
         a Terminating Company Breach.


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<PAGE>



                                   ARTICLE IX
                               GENERAL PROVISIONS

         Section 9.01.     Effectiveness of Representations, Warranties and
Agreements.

                  (a) Except as set forth in Section  9.01(b) of this Agreement,
         the representations, warranties, covenants and agreements of each party
         hereto shall remain  operative and in full force and effect  regardless
         of any  investigation  made by or on behalf of any other party  hereto,
         any  person  controlling  any  such  party  or any of  their  officers,
         directors,  representatives  or  agents  whether  prior to or after the
         execution of this Agreement.

                  (b) The representations and warranties in this Agreement shall
         terminate at the Effective  Time.  This Section 9.01(b) shall not limit
         any  covenant  or  agreement  of the  parties  hereto that by its terms
         contemplates performance after the Effective Time.

         Section 9.02. Notices.  All notices and other  communications  given or
made  pursuant  hereto shall be in writing and shall be deemed to have been duly
given upon  receipt,  if delivered  personally,  sent by  nationally  recognized
overnight  courier  service,  mailed by  registered  or certified  mail (postage
prepaid,  return receipt requested) to the parties at the following  addresses (
or at such other  address for a party as shall be  specified  by like changes of
address) or sent by electronic  transmission to the telecopier  number specified
below:

                  (a)      If to either of the VTEL Companies, to:

                                    VTEL Corporation
                                    108 Wild Basin Road
                                    Austin, TX  78746
                                    Attention:       Chief Executive Officer
                                    Telecopier No.:  (512) 314-2542

                           with copies to:

                                    Jenkens & Gilchrist
                                    a Professional Corporation
                                    1445 Ross Avenue
                                    Suite 3200
                                    Dallas, TX  75202-2799
                                    Attention:       L. Steven Leshin
                                    Telecopier No.:  (214) 855-4300


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<PAGE>



                  (b)      If to the Company, to:

                                    Compression Labs, Incorporated
                                    350 East Plumeria Drive
                                    San Jose, CA 95134
                                    Attention:       President and Chief
                                                       Executive Officer
                                    Telecopier No.:  (408) 922-5574

                           with copies to:

                                    Shearman & Sterling
                                    555 California Street
                                    San Francisco, CA  94104
                                    Attention:       Michael J. Kennedy
                                    Telecopier No.:  (415) 616-1199


         Section 9.03.     Certain Definitions.  For the purposes of this
Agreement, the term:

                  (a)  "Affiliate"  means a person that directly or  indirectly,
         through one or more intermediaries,  controls,  is controlled by, or is
         under common control with, the first mentioned person;

                  (b)  "Business  day"  means any day other  than a day on which
         banks in the State of New  York,  State of  California  or the State of
         Texas are authorized or obligated to be closed;

                  (c) "Control"  (including the terms "controlled,"  "controlled
         by" and "under common control with") means the possession,  directly or
         indirectly  or as trustee or executor,  of the power to direct or cause
         the  direction  of the  management  or  policies  of a person,  whether
         through the  ownership of stock or as trustee or executor,  by contract
         or credit arrangement or otherwise;

                  (d)  "Knowledge"  or "known"  shall mean,  with respect to any
         matter in question, the actual knowledge of an executive officer of the
         Company or VTEL,  as the case may be, of such matter  after having made
         due and diligent inquiry with respect to such matter of all appropriate
         personnel of the party in question who would  reasonably be expected to
         be familiar with the matter involved;

                  (e) "Person"  means an individual,  corporation,  partnership,
         association, trust, unincorporated organization,  other entity or group
         (as defined in Section 13(d) of the Exchange Act);


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<PAGE>



                  (f)    "Proxy    Statement/Prospectus"    or   "Joint    Proxy
         Statement/Prospectus"  shall mean a joint proxy statement/prospectus or
         joint  information  statement/prospectus  included in the  Registration
         Statement at the time the Registration  Statement is declared effective
         under the Securities Act and meeting the  requirements  of Schedule 14A
         or Schedule  14C of the SEC's Proxy Rules  promulgated  pursuant to the
         Exchange Act;

                  (g)   "Registration   Statement"  shall  mean  a  registration
         statement  of VTEL on Form  S-4  filed  with  the SEC  pursuant  to the
         Securities Act for the purpose of  registering  thereunder the offering
         and sale of the VTEL Common Stock to be issued pursuant to the Merger;

                  (h)  "Significant  Subsidiary"  means  any  subsidiary  of the
         Company  or  VTEL,  as  the  case  may  be,  that  would  constitute  a
         Significant Subsidiary of such party within the meaning of Rule 1-02 of
         Regulation S-X of the SEC;

                  (i) "Subsidiary" or "subsidiaries"  of the Company,  VTEL, the
         Surviving  Corporation  or any other  person,  means  any  corporation,
         partnership,  joint venture or other legal entity of which the Company,
         VTEL, the Surviving  Corporation or any such other Person,  as the case
         may be (either alone or through or together with any other subsidiary),
         owns, directly or indirectly,  50% or more of the stock or other equity
         interests the holders of which are  generally  entitled to vote for the
         election  of the board of  directors  or other  governing  body of such
         corporation or other legal entity; and

                  (j) "Tax" or "Taxes"  shall  mean any and all taxes,  charges,
         fees,  levies,  assessments,  duties or other  amounts  payable  to any
         federal, state, local or foreign taxing authority or agency, including,
         without limitation,  (i) income,  franchise,  profits,  gross receipts,
         minimum,  alternative  minimum,  estimated,  ad valorem,  value  added,
         sales, use, service, real or personal property, capital stock, license,
         payroll, withholding,  disability, employment, social security, workers
         compensation,  unemployment compensation,  utility, severance,  excise,
         stamp,  windfall  profits,  transfer  and gains  taxes,  (ii)  customs,
         duties,  imposts,  charges,  levies or other similar assessments of any
         kind, and (iii)  interest,  penalties and additions to tax imposed with
         respect thereto.

         Section 9.04.     Headings.  The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         Section  9.05.  Severability.  If any term or other  provision  of this
Agreement is invalid,  illegal or incapable of being enforced by any rule of law
or public policy,  all other  conditions and provisions of this Agreement  shall
nevertheless  remain in full force and effect so long as the  economic  or legal
substance of the transactions  contemplated hereby is not affected in any manner
materially  adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to

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<PAGE>



effect  the  original  intent  of the  parties  as  closely  as  possible  in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.

         Section 9.06.  Entire  Agreement.  This  Agreement  (together  with the
Exhibits,  the Company  Disclosure  Schedule and the VTEL Disclosure  Schedule),
together with the Stock Option Agreement, constitute the entire agreement of the
parties,  and supersede all prior agreements and undertakings,  both written and
oral (other than the agreement  referred to in Section  5.05(d)  hereof) , among
the parties, with respect to the subject matter of this Agreement.

         Section 9.07.     Assignment.  This Agreement shall not be assigned by
operation of law or otherwise.

         Section 9.08. Parties in Interest. This Agreement shall be binding upon
and inure  solely to the benefit of each party hereto and the  beneficiaries  of
the provisions of Section 6.14 herein, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.

         Section 9.09. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party  hereto in the  exercise  of any right
hereunder  shall  impair  such  right  or be  construed  to be a waiver  of,  or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial  exercise  of any such right  preclude  other or
further exercise thereof or of any other right. All rights and remedies existing
under this  Agreement  are in addition to, and not  exclusive  of, any rights or
remedies otherwise available.

         Section 9.10.  Governing Law. This Agreement  shall be governed by, and
construed in accordance  with, the laws of the State of Delaware,  regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.

         Section 9.11. Counterparts.  This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed  shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

         Section 9.12. Specific Performance.  The parties hereby acknowledge and
agree that the failure of any party to this  Agreement to perform the provisions
in accordance with their specific terms or to otherwise  breach such provisions,
including  its failure to take all actions as are  necessary  on its part to the
consummation of the Merger,  will cause irreparable  injury to the other parties
to this Agreement for which damages, even if available,  will not be an adequate
remedy. Accordingly,  each of the parties hereto hereby consents to the issuance
of  injunctive  relief  by  any  court  of  competent   jurisdiction  to  compel
performance  of any party's  obligations,  including  an  injunction  to prevent
breaches,  and to the  granting  by any such  court of the  remedy  of  specific
performance of the terms and conditions hereof.



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<PAGE>






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<PAGE>


         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement to be executed as of the date first written above by their  respective
officers thereunto duly authorized.

                                                     VTEL CORPORATION


                                                  By:/s/F.H.(Dick)Moeller
                                                Name:F.H.(Dick)Moeller
                                               Title:Chairman and Chief
                                                       Executive Officer


                                                     VTEL-SUB, INC.


                                                  By:/s/F.H.(Dick)Moeller
                                                Name:F.H.(Dick)Moeller
                                               Title:Chairman and Chief
                                                       Executive Officer


                                                  COMPRESSION LABS, INCORPORATED


                                                  By:/s/Thomas Gary Trimm
                                                Name:Thomas Gary Trimm
                                               Title:President and Chief
                                                       Executive Officer

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                                                        65

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<DESCRIPTION>EXH. 99.2  -  STOCK OPTION AGREEMENT
<TEXT>


                                    EXHIBIT 99.2

                             STOCK OPTION AGREEMENT


                  THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
                   CERTAIN PROVISIONS CONTAINED HEREIN AND TO
                          RESALE RESTRICTIONS UNDER THE
                       SECURITIES ACT OF 1933, AS AMENDED


         STOCK OPTION  AGREEMENT,  dated  January 6, 1997,  between  Compression
Labs, Incorporated,  a Delaware corporation ("Issuer"),  and VTEL Corporation, a
Delaware corporation ("Grantee").

                              W I T N E S S E T H:

         WHEREAS,  Grantee and Issuer have entered into an Agreement and Plan of
Merger and Reorganization of even date herewith (the "Merger Agreement"),  which
agreement  has been  executed by the parties  hereto  immediately  prior to this
Stock Option Agreement (the "Agreement"); and

         WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
covenants  and  agreements  set forth  herein and in the Merger  Agreement,  the
parties hereto agree as follows:

         1. (a) Issuer  hereby grants to Grantee an  unconditional,  irrevocable
option (the "Option") to purchase,  subject to the terms hereof, up to 3,120,500
fully paid and  nonassessable  shares of Issuer's Common Stock,  par value $.001
per  share  ("Common  Stock"),  at a price of  $4.6575  per share  (the  "Option
Price");  provided,  however,  that in no event  shall  the  number of shares of
Common Stock for which this Option is  exercisable  exceed 19.9% of the Issuer's
issued and  outstanding  shares of Common  Stock  without  giving  effect to any
shares  subject to or issued  pursuant  to the  Option.  The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.

                  (b) In the event that any  additional  shares of Common  Stock
are either (i) issued or  otherwise  become  outstanding  after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise  cease to be  outstanding  after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased,  as  appropriate,  so that,  after such issuance,  such number equals
19.9% of the  number of  shares of Common  Stock  then  issued  and  outstanding
without  giving effect to any shares  subject or issued  pursuant to the Option.
Nothing contained in this Section l(b) or

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                                                         1

<PAGE>



elsewhere in this  Agreement  shall be deemed to authorize  Issuer or Grantee to
breach any provision of the Merger Agreement.

         2. (a) The Holder (as hereinafter  defined) may exercise the Option, in
whole  or part,  and  from  time to time,  if,  but  only  if,  both an  Initial
Triggering Event (as hereinafter defined) and a Subsequent  Triggering Event (as
hereinafter  defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined),  provided that the Holder shall have
sent the written  notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent  Triggering  Event.  Each of
the following shall be an Exercise Termination Event: (i) the Effective Time (as
defined in the Merger  Agreement) of the Merger;  (ii) termination of the Merger
Agreement in accordance  with the terms  thereof  prior to the  occurrence of an
Initial Triggering Event except a termination of the Merger Agreement by Grantee
pursuant to Section 8.01(b) of the Merger Agreement;  or (iii) the passage of 12
months after termination of the Merger Agreement if such termination follows the
occurrence  of an Initial  Triggering  Event or is a  termination  of the Merger
Agreement  by  Grantee  pursuant  to Section  8.01(b)  of the  Merger  Agreement
provided  that if an Initial  Triggering  Event  continues or occurs beyond such
termination  and prior to the  passage of such  12-month  period,  the  Exercise
Termination  Event shall be 12 months from the expiration of the Last Triggering
Event but in no event  more than 18 months  after  such  termination.  The "Last
Triggering  Event" shall mean the last Initial  Triggering Event to expire.  The
term "Holder" shall mean the holder or holders of the Option.

                  (b) The term "Initial  Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:

                           (i)      Issuer or any of its Subsidiaries (each an
"Issuer  Subsidiary"),  without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition Transaction (as
hereinafter  defined)  with any person (the term  "person"  for purposes of this
Agreement  having the meaning  assigned thereto in Sections 3(a)(9) and 13(d)(3)
of the  Securities  Exchange Act of 1934,  as amended (the "1934 Act"),  and the
rules and regulations  thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee  Subsidiary")  or the Board of  Directors  of Issuer shall have
recommended  that the  stockholders  of Issuer approve or accept any Acquisition
Transaction.  For purposes of this Agreement,  "Acquisition  Transaction"  shall
mean (w) a merger or consolidation, or any similar transaction, involving Issuer
or any  Significant  Subsidiary  (as  defined  in Rule  1-02 of  Regulation  S-X
promulgated by the Securities  and Exchange  Commission  (the "SEC")) of Issuer,
(x) a purchase, lease or other acquisition or assumption of all or a substantial
portion of the assets of Issuer or any Significant  Subsidiary of Issuer,  (y) a
purchase or other acquisition (including by way of merger, consolidation,  share
exchange or  otherwise)  of  securities  representing  10% or more of the voting
power of Issuer, or (z) any substantially similar transaction;

                           (ii)     Issuer or any Issuer Subsidiary, without
having  received  Grantee's  prior  written  consent,   shall  have  authorized,
recommended,   proposed  or  publicly  announced  its  intention  to  authorize,
recommend or propose,  to engage in an Acquisition  Transaction  with any person
other than Grantee or a Grantee Subsidiary,  or the Board of Directors of Issuer
shall have

CORPDAL:59868.4 22768-00022
                                                         2

<PAGE>



publicly  withdrawn or modified,  or publicly announced its interest to withdraw
or  modify,  in any manner  adverse  to  Grantee,  its  recommendation  that the
stockholders  of Issuer  approve  the  transactions  contemplated  by the Merger
Agreement;

                           (iii)    Any person other than Grantee or any Grantee
Subsidiary  shall have  acquired  beneficial  ownership  or the right to acquire
beneficial  ownership of 10% or more of the  outstanding  shares of Common Stock
(the term  "beneficial  ownership"  for  purposes of this  Agreement  having the
meaning  assigned  thereto in Section  13(d) of the 1934 Act,  and the rules and
regulations thereunder);

                           (iv)     Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer or its stockholders by
public  announcement or written  communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction; or

                           (v)      After an overture is made by a third party
to Issuer or its  stockholders to engage in an Acquisition  Transaction,  Issuer
shall have breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate the Merger  Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below).

                  (c) The term "Subsequent  Triggering  Event" shall mean either
of the following events or transactions occurring after the date hereof:

                           (i)      The acquisition by any person of beneficial
ownership of 20% or more of the then outstanding Common Stock; or

                           (ii)     The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section 2, except
that the percentage  referred to in clause (y) shall be 20%.

                  (d) Issuer  shall  notify  Grantee  promptly in writing of the
occurrence of any Initial  Triggering  Event or Subsequent  Triggering  Event of
which it has notice (together,  a "Triggering  Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.

                  (e) In the  event  the  Holder is  entitled  to and  wishes to
exercise the Option, it shall send to Issuer a written notice (the date of which
being herein  referred to as the "Notice Date")  specifying (i) the total number
of shares it will  purchase  pursuant to such exercise and (ii) a place and date
not earlier than three  business  days nor later than 60 business  days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if prior  notification  to or approval of any  regulatory  agency is required in
connection  with such  purchase,  the Holder  shall  promptly  file the required
notice or application for approval and shall expeditiously  process the same and
the period of time that otherwise  would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired

CORPDAL:59868.4 22768-00022
                                                         3

<PAGE>



or been  terminated  or such  approvals  have been  obtained  and any  requisite
waiting period or periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.

                  (f) At the  closing  referred  to in  subsection  (e) of  this
Section 2, the Holder shall pay to Issuer the aggregate  purchase  price for the
shares of Common  Stock  purchased  pursuant  to the  exercise  of the Option in
immediately  available  funds by wire  transfer to a bank account  designated by
Issuer,  provided  that  failure or refusal of Issuer to  designate  such a bank
account shall not preclude the Holder from exercising the Option.

                  (g) At such  closing,  simultaneously  with  the  delivery  of
immediately  available  funds as provided in  subsection  (f) of this Section 2,
Issuer shall deliver to the Holder a certificate  or  certificates  representing
the number of shares of Common Stock  purchased by the Holder and, if the Option
should be  exercised  in part only,  a new Option  evidencing  the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder,  and
the  Holder  shall  deliver  to  Issuer  a copy of this  Agreement  and a letter
agreeing  that the Holder  will not offer to sell or  otherwise  dispose of such
shares in violation of applicable law or the provisions of this Agreement.

                  (h)  Certificates  for  Common  Stock  delivered  at a closing
hereunder  may  be  endorsed   with  a   restrictive   legend  that  shall  read
substantially as follows:

                  "The transfer of the shares represented by this certificate is
                  subject to certain  provisions  of an  agreement  between  the
                  registered holder hereof and Issuer and to resale restrictions
                  arising under the Securities  Act of 1933, as amended.  A copy
                  of such agreement is on file at the principal office of Issuer
                  and will be provided to the holder hereof  without charge upon
                  receipt by Issuer of a written request therefor."

It is understood and agreed that:  (i) the reference to the resale  restrictions
of the Securities Act of 1933, as amended (the "1933 Act"),  in the above legend
shall be removed by delivery of substitute  certificates) without such reference
if the Holder  shall have  delivered to Issuer a copy of a letter from the staff
of the  SEC,  or an  opinion  of  counsel,  in  form  and  substance  reasonably
satisfactory  to Issuer,  to the effect  that such  legend is not  required  for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above  legend shall be removed by delivery of  substitute  certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the  provisions  of this  Agreement  and  under  circumstances  that do not
require the retention of such  reference;  and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied.  In addition, such certificates shall bear any other legend as may be
required by law.

                  (i) Upon the  giving by the  Holder  to Issuer of the  written
notice of  exercise  of the Option  provided  for under  subsection  (e) of this
Section  2 and the  tender  of the  applicable  purchase  price  in  immediately
available funds, the Holder shall be deemed to be the holder of

CORPDAL:59868.4 22768-00022
                                                         4

<PAGE>



record  of  the   shares  of  Common   Stock   issuable   upon  such   exercise,
notwithstanding  that the stock transfer books of Issuer shall then be closed or
that  certificates  representing  such shares of Common  Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United  States  federal,  state and local  taxes and other  charges  that may be
payable  in  connection  with  the  preparation,  issue  and  delivery  of stock
certificates  under this  Section 2 in the name of the  Holder or its  assignee,
transferee or designee.

         3. Issuer agrees:  (i) that it shall at all times  maintain,  free from
preemptive  rights,  sufficient  authorized  but unissued or treasury  shares of
Common   Stock  so  that  the  Option  may  be  exercised   without   additional
authorization  of  Common  Stock  after  giving  effect  to all  other  options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger,  dissolution or sale of assets,  or by any other voluntary act, avoid or
seek  to  avoid  the   observance  or  performance  of  any  of  the  covenants,
stipulations  or  conditions  to be observed or  performed  hereunder by Issuer;
(iii)  promptly  to take  all  action  as may  from  time  to  time be  required
(including  complying  with all  premerger  notification,  reporting and waiting
period requirements  specified in 15 U.S.C.  ss.18a and regulations  promulgated
thereunder) in order to permit the Holder to exercise the Option and Issuer duly
and  effectively  to issue  shares of Common  Stock  pursuant  hereto;  and (iv)
promptly to take all action  provided herein to protect the rights of the Holder
against dilution.

         4. This  Agreement (and the Option  granted  hereby) are  exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock  purchasable  hereunder.
The terms  "Agreement"  and  "Option"  as used herein  include any Stock  Option
Agreements and related  Options for which this Agreement (and the Option granted
hereby)  may be  exchanged.  Upon  receipt  by  Issuer  of  evidence  reasonably
satisfactory  to it of the  loss,  theft,  destruction  or  mutilation  of  this
Agreement,  and (in the  case of  loss,  theft  or  destruction)  of  reasonably
satisfactory  indemnification,  and  upon  surrender  and  cancellation  of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement  executed and delivered shall  constitute
an additional  contractual  obligation on the part of Issuer, whether or not the
Agreement  so  lost,  stolen,  destroyed  or  mutilated  shall  at any  time  be
enforceable by anyone.

         5. In  addition  to the  adjustment  in the  number of shares of Common
Stock that are purchasable  upon exercise of the Option pursuant to Section 1 of
this  Agreement,  the  number of shares of  Common  Stock  purchasable  upon the
exercise of the Option and the Option Price shall be subject to adjustment  from
time to time as  provided  in this  Section 5. In the event of any change in, or
distributions  in respect  of, the  Common  Stock by reason of stock  dividends,
split-ups, mergers, recapitalizations,  combinations, subdivisions, conversions,
exchanges  of shares,  distributions  on or in respect of the Common  Stock that
would be prohibited  under the terms of the Merger  Agreement,  or the like, the
type and number of shares of Common Stock  purchasable  upon exercise hereof and
the Option Price shall be  appropriately  adjusted in such manner as shall fully
preserve the economic benefits provided  hereunder and proper provision shall be
made in

CORPDAL:59868.4 22768-00022
                                                         5

<PAGE>



any  agreement  governing  any such  transaction  to  provide  for  such  proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.

         6. Upon the  occurrence  of a Subsequent  Triggering  Event that occurs
prior to an Exercise  Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued  pursuant  hereto),  promptly  prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such  registration  statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option  ("Option  Shares") in  accordance  with any plan of  disposition
requested by Grantee.  Issuer will use its reasonable best efforts to cause such
registration  statement first to become  effective and then to remain  effective
for  such  period  not in  excess  of 180 days  from  the day such  registration
statement  first  becomes  effective or such  shorter time as may be  reasonably
necessary  to effect such sales or other  dispositions.  Grantee  shall have the
right to demand two such registrations.  The foregoing  notwithstanding,  if, at
the time of any  request by  Grantee  for  registration  of the Option or Option
Shares  as  provided  above,  Issuer  is  in  registration  with  respect  to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters,  or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would  interfere  with the  successful  marketing of the
shares of Common Stock offered by Issuer,  the number of Option Shares otherwise
to be covered in the registration  statement contemplated hereby may be reduced;
and  provided,  however,  that after any such  required  reduction the number of
Option  Shares to be  included  in such  offering  for the account of the Holder
shall  constitute  at least 25% of the total  number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further,  however, that if such
reduction  occurs,  then the Issuer shall file a registration  statement for the
balance as promptly as practical and no reduction shall thereafter  occur.  Each
such Holder shall  provide all  information  reasonably  requested by Issuer for
inclusion in any registration  statement to be filed hereunder.  If requested by
any such Holder in  connection  with such  registration,  Issuer  shall become a
party to any  underwriting  agreement  relating to the sale of such shares,  but
only  to  the  extent  of  obligating  itself  in  respect  of  representations,
warranties,  indemnities and other agreements  customarily included in secondary
offering  underwriting  agreements  for the Issuer.  Upon  receiving any request
under this  Section 6 from any Holder,  Issuer  agrees to send a copy thereof to
any other  person  known to Issuer to be entitled to  registration  rights under
this Section 6, in each case by promptly mailing the same,  postage prepaid,  to
the  address  of  record  of  the  persons  entitled  to  receive  such  copies.
Notwithstanding  anything to the contrary  contained  herein,  in no event shall
Issuer be  obligated  to effect  more than two  registrations  pursuant  to this
Section 6 by reason of the fact that there  shall be more than one  Grantee as a
result of any assignment or division of this Agreement.

         7. (a)  Immediately  prior to the occurrence of a Repurchase  Event (as
defined  below),  (i) following a request of the Holder,  delivered  prior to an
Exercise  Termination  Event (or such later  period as provided in Section  10),
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which

CORPDAL:59868.4 22768-00022
                                                         6

<PAGE>



(A) the  Market/Offer  Price (as defined  below)  exceeds (B) the Option  Price,
multiplied  by the number of shares for which this Option may then be  exercised
and (ii) at the  request  of the owner of Option  Shares  from time to time (the
"Owner"),  delivered  within 90 days of such occurrence (or such later period as
provided  in Section  10),  Issuer  shall  repurchase  such number of the Option
Shares from the Owner as the owner shall designate at a price (the "Option Share
Repurchase  Price") equal to the Market/Offer  Price multiplied by the number of
Option  Shares so  designated.  The term  "Market/Offer  Price"  shall  mean the
highest  of (i) the price per share of Common  Stock at which a tender  offer or
exchange offer therefor has been made,  (ii) the price per share of Common Stock
to be paid by any third party  pursuant to an agreement with Issuer entered into
subsequent  to the date hereof,  (iii) the highest  closing  price for shares of
Common Stock within the  six-month  period  immediately  preceding  the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required  repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or a substantial  portion of Issuer's assets,  the
sum of the price paid in such sale for such assets and the current  market value
of the  remaining  assets of Issuer as  determined  by a  nationally  recognized
investment  banking firm  mutually  selected by the Holder or the Owner,  as the
case may be, on the one hand,  and the  Issuer,  on the  other,  divided  by the
number of shares of Common Stock of Issuer outstanding at the time of such sale.
In determining the Market/Offer  Price,  the value of  consideration  other than
cash shall be  determined  by a nationally  recognized  investment  banking firm
mutually  selected by the Holder or Owner,  as the case may be, on the one hand,
and the Issuer, on the other.

                  (b) The Holder and the Owner, as the case may be, may exercise
its right to require  Issuer to  repurchase  the  Option  and any Option  Shares
pursuant to this Section 7 by  surrendering  for such purpose to Issuer,  at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable,  accompanied by a written notice or notices  stating that the Holder
or the Owner,  as the case may be, elects to require  Issuer to repurchase  this
Option  and/or the  Option  Shares in  accordance  with the  provisions  of this
Section  7.  Within  the  latter to occur of (x) five  business  days  after the
surrender of the Option and/or  certificates  representing Option Shares and the
receipt of such  notice or  notices  relating  thereto  and (y) the time that is
immediately prior to the occurrence of a Repurchase Event,  Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share  Repurchase  Price  therefor or the portion  thereof that
issuer  is not then  prohibited  under  applicable  law and  regulation  from so
delivering.

                  (c) To the extent that Issuer is prohibited  under  applicable
law or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall  immediately  so notify the Holder and/or the Owner and  thereafter
deliver or cause to be  delivered,  from time to time,  to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share  Repurchase  Price,  respectively,  that it is no longer  prohibited  from
delivering,  within  five  business  days  after the date on which  Issuer is no
longer so  prohibited;  provided,  however,  that if  Issuer  at any time  after
delivery of a notice of  repurchase  pursuant to paragraph (b) of this Section 7
is prohibited  under  applicable law or regulation from delivering to the Holder
and/or the Owner, as  appropriate,  the Option  Repurchase  Price and the Option
Share Repurchase Price,  respectively,  in full (and Issuer hereby undertakes to
use its best efforts to obtain all required  regulatory and legal  approvals and
to file any required notices as promptly as practicable

CORPDAL:59868.4 22768-00022
                                                         7

<PAGE>



in order to  accomplish  such  repurchase),  the  Holder or Owner may revoke its
notice of  repurchase  of the Option or the Option  Shares either in whole or to
the extent of the  prohibition,  whereupon,  in the latter  case,  Issuer  shall
promptly  (i)  deliver to the Holder  and/or the  Owner,  as  appropriate,  that
portion of the Option Repurchase Price or the Option Share Repurchase Price that
Issuer is not prohibited  from  delivering;  and (ii) deliver,  as  appropriate,
either (A) to the Holder, a new Stock Option  Agreement  evidencing the right of
the  Holder to  purchase  that  number of shares  of Common  Stock  obtained  by
multiplying the number of shares of Common Stock for which the surrendered Stock
Option  Agreement  was  exercisable  at the time of  delivery  of the  notice of
repurchase by a fraction,  the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option  Repurchase Price, or (B) to the Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.

                  (d) For purposes of this  Section 7, a Repurchase  Event shall
be  deemed  to  have  occurred  (i)  upon  the   consummation   of  any  merger,
consolidation or similar transaction involving Issuer or any purchase,  lease or
other  acquisition  of all or a  substantial  portion of the assets of Issuer or
(ii) upon the  acquisition by any person of beneficial  ownership of 50% or more
of the then  outstanding  shares of Common  Stock,  provided  that no such event
shall constitute a Repurchase  Event unless a Subsequent  Triggering Event shall
have occurred prior to an Exercise  Termination  Event. The parties hereto agree
that Issuer's  obligations  to repurchase the Option or Option Shares under this
Section 7 shall not terminate  upon the  occurrence  of an Exercise  Termination
Event unless no Subsequent  Triggering  Event shall have  occurred  prior to the
occurrence of an Exercise Termination Event.

         8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate  with or merge into any person,
other than Grantee or one of its  Subsidiaries,  and shall not be the continuing
or surviving  corporation of such  consolidation  or merger,  (ii) to permit any
person, other than Grantee or one of its Subsidiaries,  to merge into Issuer and
Issuer  shall be the  continuing  or  surviving  corporation,  but, in with such
merger,  the then outstanding shares of Common Stock shall into or exchanged for
stock or other  securities  of any other  person any other  property or the then
outstanding  shares of Common Stock shall after such merger  represent less than
50% of the outstanding  voting shares and voting share equivalents of the merged
company,  or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person,  other than Grantee or one of its Subsidiaries,  then, and
in each such case, the agreement  governing such  transaction  shall make proper
provision  so  that  the  Option  shall,  upon  the  consummation  of  any  such
transaction  and upon the terms and  conditions  set forth herein,  be converted
into, or exchanged for, an Option (the "Substitute  Option"), at the election of
the Holder, of either (x) the Acquiring  Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.

                  (b)      The following terms have the meanings indicated:

                           (1)      "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger

CORPDAL:59868.4 22768-00022
                                                         8

<PAGE>



in which Issuer is the continuing or surviving person,  and (iii) the transferee
of all or substantially all of Issuer's assets.

                           (2)      "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.

                           (3)      "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.

                           (4)      "Average Price" shall mean the average
closing  price  of a share  of the  Substitute  Common  Stock  for the one  year
immediately preceding the consolidation,  merger or sale in question,  but in no
event higher than the closing price of the shares of Substitute  Common Stock on
the day preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the  Substitute  Option,  the Average Price shall be computed with
respect to a share of common stock  issued by the person  merging into Issuer or
by any company which controls or is controlled by such person, as the Holder may
elect.

                  (c) The  Substitute  Option  shall  have the same terms as the
Option,  provided,  that if the terms of the Substitute Option cannot, for legal
reasons,  be the same as the Option,  such terms shall be as similar as possible
and in no event less  advantageous  to the Holder.  The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement,  which shall
be applicable to the Substitute Option.

                  (d) The Substitute Option shall be exercisable for such number
of  shares  of  Substitute  Common  Stock  as is  equal  to the  Assigned  Value
multiplied  by the number of shares of Common Stock for which the Option is then
exercisable,  divided by the Average Price. The exercise price of the Substitute
Option per share of  Substitute  Common  Stock shall then be equal to the Option
Price  multiplied  by a fraction,  the numerator of which shall be the number of
shares  of  Common  Stock for  which  the  Option  is then  exercisable  and the
denominator  of which shall be the number of shares of  Substitute  Common Stock
for which the Substitute Option is exercisable.

                  (e) In no event,  pursuant to any of the foregoing paragraphs,
shall the Substitute  Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute  Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute  Common Stock  outstanding prior to exercise but for
this clause (e), the issuer of the  Substitute  Option (the  "Substitute  Option
Issuer")  shall  make a cash  payment  to Holder  equal to the excess of (i) the
value of the  Substitute  Option without giving effect to the limitation in this
clause (e) over (ii) the value of the  Substitute  Option after giving effect to
the limitation in this clause (e). This  difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner,  as  the  case  may  be,  and  reasonably  acceptable  to  the  Acquiring
Corporation.


CORPDAL:59868.4 22768-00022
                                                         9

<PAGE>



                  (f) Issuer shall not enter into any  transaction  described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.

         9. (a) At the  request  of the  holder of the  Substitute  Option  (the
"Substitute  Option Holder"),  the Substitute Option Issuer shall repurchase the
Substitute  Option from the Substitute Option Holder at a price (the "Substitute
Option  Repurchase  Price")  equal to (x) the  amount by which  (i) the  Highest
Closing Price (as  hereinafter  defined)  exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for  which  the  Substitute  Option  may then be  exercised  plus (y)  Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed), and
at the  request  of the  owner  (the  "Substitute  Share  Owner")  of  shares of
Substitute Common Stock (the "Substitute Shares"),  the Substitute Option Issuer
shall  repurchase  the  Substitute  Shares  at a price  (the  "Substitute  Share
Repurchase  Price")  equal to (x) the Highest  Closing  Price  multiplied by the
number  of  Substitute  Shares  so  designated  plus  (y)  Grantee's  reasonable
out-of-pocket  expenses  (to the extent  not  previously  reimbursed).  The term
"Highest  Closing  Price"  shall mean the  highest  closing  price for shares of
Substitute  Common Stock within the six-month period  immediately  preceding the
date the Substitute Option Holder gives notice of the required repurchase of the
Substitute  Option or the  Substitute  Share Owner gives  notice of the required
repurchase of the Substitute Shares, as applicable.

                  (b) The  Substitute  Option  Holder and the  Substitute  Share
Owner,  as the case may be, may  exercise  its  respective  right to require the
Substitute  Option Issuer to repurchase the Substitute Option and the Substitute
Shares  pursuant  to this  Section 9 by  surrendering  for such  purpose  to the
Substitute  Option  Issuer,  at its  principal  office,  the  agreement for such
Substitute  Option  (or,  in the  absence of such an  agreement,  a copy of this
Agreement)  and  certificates  for  Substitute  Shares  accompanied by a written
notice or notices  stating that the  Substitute  Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute  Option Issuer
to repurchase the Substitute  Option and/or the Substitute  Shares in accordance
with the  provisions of this Section 9. As promptly as  practicable,  and in any
event within five  business days after the  surrender of the  Substitute  Option
and/or  certificates  representing  Substitute  Shares  and the  receipt of such
notice or notices relating  thereto,  the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute  Option Holder the Substitute  Option
Repurchase  Price  and/or to the  Substitute  Share Owner the  Substitute  Share
Repurchase  Price  therefor or, in either case,  the portion  thereof  which the
Substitute  Option  Issuer  is not  then  prohibited  under  applicable  law and
regulation from so delivering.

                  (c) To  the  extent  that  the  Substitute  Option  Issuer  is
prohibited under  applicable law or regulation from  repurchasing the Substitute
Option and/or the Substitute  Shares in part or in full,  the Substitute  Option
Issuer  following a request  for  repurchase  pursuant  to this  Section 9 shall
immediately so notify the Substitute  Option Holder and/or the Substitute  Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate,  the
portion of the Substitute Share Repurchase Price,  respectively,  which it is no
longer  prohibited from delivering,  within five business days after the date on
which  the  Substitute  Option  Issuer is no  longer  so  prohibited;  provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant

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to  subsection  (b)  of  this  Section  9  prohibited  under  applicable  law or
regulation from delivering to the Substitute Option Holder and/or the Substitute
Share Owner,  as appropriate,  the Substitute  Option  Repurchase  Price and the
Substitute Share  Repurchase  Price,  respectively,  in full (and the Substitute
Option Issuer shall use its best efforts to receive all required  regulatory and
legal  approvals  as  promptly  as  practicable  in  order  to  accomplish  such
repurchase),  the Substitute  Option Holder or Substitute Share Owner may revoke
its notice of  repurchase  of the  Substitute  Option or the  Substitute  Shares
either in whole or to the extent of the  prohibition,  whereupon,  in the latter
case, the Substitute  Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute  Share Owner,  as  appropriate,  that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the  Substitute  Option  Issuer  is not  prohibited  from  delivering;  and (ii)
deliver,  as  appropriate,  either (A) to the Substitute  Option  Holder,  a new
Substitute  Option  evidencing  the  right of the  Substitute  Option  Holder to
purchase  that  number of shares of the  Substitute  Common  Stock  obtained  by
multiplying  the number of shares of the  Substitute  Common Stock for which the
surrendered  Substitute  Option was  exercisable  at the time of delivery of the
notice of  repurchase by a fraction,  the  numerator of which is the  Substitute
Option  Repurchase Price less the portion thereof  theretofore  delivered to the
Substitute  Option Holder and the denominator of which is the Substitute  Option
Repurchase  Price,  or (B) to the Substitute  Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.

         10. The 90-day period for exercise of certain  rights under Sections 2,
6, 7, 9 and 13 shall be  extended:  (i) to the  extent  necessary  to obtain all
regulatory  approvals for the exercise of such rights, and for the expiration of
all  statutory  waiting  periods;  and  (ii) to the  extent  necessary  to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.

         11.      Issuer hereby represents and warrants to Grantee as follows:

                  (a) Issuer has full  corporate  power and authority to execute
and deliver this  Agreement  and to  consummate  the  transactions  contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions  contemplated  hereby have been duly and validly  authorized by the
Board of Directors of Issuer and no other  corporate  proceedings on the part of
Issuer  are  necessary  to  authorize   this  Agreement  or  to  consummate  the
transactions so contemplated.  This Agreement has been duly and validly executed
and  delivered  by  Issuer,  and  constitutes  a legal  and  binding  agreement,
enforceable against Issuer in accordance with its terms.

                  (b)  Issuer  has  taken  all  necessary  corporate  action  to
authorize and reserve and to permit it to issue,  and at all times from the date
hereof through the  termination  of this Agreement in accordance  with its terms
will have reserved for issuance upon the exercise of the Option,  that number of
shares of Common Stock equal to the maximum  number of shares of Common Stock at
any time and from time to time  issuable  hereunder,  and all such shares,  upon
issuance pursuant hereto, will be duly authorized,  validly issued,  fully paid,
nonassessable,  and will be  delivered  free and  clear  of all  claims,  liens,
encumbrance and security interests and not subject to any preemptive rights.

         12.      Grantee hereby represents and warrants to Issuer that:

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                  (a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents  referred to
herein, to consummate the transactions  contemplated  hereby.  The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary  corporate  action on the part
of Grantee.  This Agreement has been duly executed and delivered by Grantee, and
constitutes  a legal and  binding  agreement,  enforceable  against  Grantee  in
accordance with its terms.

                  (b) The Option is not being, and any shares of Common Stock or
other  securities  acquired by Grantee upon  exercise of the Option will not be,
acquired  with a  view  to the  public  distribution  thereof  and  will  not be
transferred  or  otherwise  disposed of except in a  transaction  registered  or
exempt from registration under the Securities Act.

         13.  Neither  of the  parties  hereto  may  assign any of its rights or
obligations  under this Option Agreement or the Option created  hereunder to any
other person,  without the express  written  consent of the other party,  except
that in the event a Subsequent  Triggering Event shall have occurred prior to an
Exercise Termination Event,  Grantee,  subject to the express provisions hereof,
may assign in whole or in part its rights and  obligations  hereunder  within 90
days  following  such  Subsequent  Triggering  Event  (or such  later  period as
provided in Section 10).

         14. Each of Grantee  and Issuer  will use its best  efforts to make all
filings  with,  and to obtain  consents of, all third  parties and  governmental
authorities  necessary to the consummation of the  transactions  contemplated by
this Agreement,  including  without  limitation  making  application to list the
shares of Common  Stock  issuable  hereunder  on the Nasdaq  Stock  Market  upon
official notice of issuance.

         15. The parties hereto  acknowledge that damages would be an inadequate
remedy  for a breach of this  Agreement  by  either  party  hereto  and that the
obligations  of the parties  hereto shall be  enforceable by either party hereto
through injunctive or other equitable relief.

         16. If any term,  provision,  covenant or restriction contained in this
Agreement  is held  by a court  or a  federal  or  state  regulatory  agency  of
competent  jurisdiction to be invalid,  void or unenforceable,  the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or  invalidated.  If for any reason such court or regulatory  agency  determines
that the Holder is not  permitted  to  acquire,  or Issuer is not  permitted  to
repurchase  pursuant  to  Section 7, the full  number of shares of Common  Stock
provided in Section  l(a)  hereof (as  adjusted  pursuant  to Section  l(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to  require  Issuer  to  repurchase  such  lesser  number  of  shares  as may be
permissible, without any amendment or modification hereof.

         17. All notices,  requests,  claims,  demands and other  communications
hereunder  shall be deemed to have been duly given when delivered in person,  by
cable, telegram,  telecopy or telex, or by registered or certified mail (postage
prepaid,  return receipt  requested) at the respective  addresses of the parties
set forth in the Merger Agreement.

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         18. This  Agreement  shall be governed by and  construed in  accordance
with the laws of the  State  of  Delaware,  regardless  of the laws  that  might
otherwise govern under applicable principles of conflicts of laws thereof.

         19.      This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.

         20. Except as otherwise  expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions  contemplated hereunder,  including fees and
expenses of its own financial consultants,  investment bankers,  accountants and
counsel.

         21.  Except as  otherwise  expressly  provided  herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the  transactions  contemplated  hereunder and  supersedes  all prior
arrangements or understandings with respect thereof,  written or oral. The terms
and  conditions of this  Agreement  shall inure to the benefit of and be binding
upon the parties hereto and their respective  successors and permitted  assigns.
Nothing in this Agreement,  expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective  successors except as
assigns, any rights, remedies,  obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.

         22.      Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.

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CORPDAL:59868.4 22768-00022
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         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized,  all as of the
date first above written.

                                           COMPRESSION LABS, INC.


                                   By:     /s/Thomas Gary Trimm
                                 Name:     Thomas Gary Trimm
                                Title:     President and Chief Executive Officer



                                           VTEL CORPORATION


                                   By:     /s/F.H.(Dick)Moeller
                                 Name:     F.H.(Dick)Moeller
                                Title:     Chairman and Chief Executive Officer

CORPDAL:59868.4 22768-00022
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