VIALOG CORP, S-1, 1998-05-22

VIALOG CORP
S-1, 1998-05-22
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1998.
FILE NO.
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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------

VIALOG CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

----------------

MASSACHUSETTS 4813 04-3305282
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) DENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)

----------------

10 NEW ENGLAND BUSINESS CENTER, SUITE 302 ANDOVER, MASSACHUSETTS 01810 (978)
975-3700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

----------------

GLENN D. BOLDUC PRESIDENT AND CHIEF EXECUTIVE OFFICER VIALOG CORPORATION 10
NEW ENGLAND BUSINESS CENTER, SUITE 302 ANDOVER, MASSACHUSETTS 01810 (978) 975-
3700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

----------------

COPIES TO:
DAVID L. LOUGEE, ESQ. JEFFREY L. LAWRENCE A. LAROSE, ESQ. ALAN J. RICE,
DONALDSON, ESQ. MIRICK, O'CONNELL, ESQ.CADWALADER, WICKERSHAM & TAFT100
DEMALLIE & LOUGEE, LLP 1700 BANKBOSTON MAIDEN LANENEW YORK, NEW YORK
TOWER 100 FRONT STREET WORCESTER, 10038(212) 504-6000
MASSACHUSETTS 01608-1477 (508) 791-
8500

----------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE REGISTRATION FEE
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<S> <C> <C>
Common Stock, $.01 par value............... $57,500,000 $16,962.50
</TABLE>
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- -------------------------------------------------------------------------------

----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--DATED , 1998
PROSPECTUS
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[LOGO OF VIALOG APPEARS HERE]

Common Stock

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All of the shares of common stock, $.01 par value per share (the "Common
Stock"), offered hereby (the "Offering") are being sold by VIALOG Corporation
(the "Company").

Prior to the Offering, there has been no public market for the Common Stock. It
is currently anticipated that the initial public offering price will be between
$ and $ per share. See "Underwriting" for a discussion of the factors to
be considered in determining the initial public offering price. The Company has
applied to include the Common Stock for quotation in The Nasdaq Stock Market's
National Market (the "Nasdaq National Market") under the symbol "VLOG."

SEE "RISK FACTORS" ON PAGES TO FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
COMMON STOCK OFFERED HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
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<S> <C> <C> <C>
Per Share.................................. $ $ $
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Total(3)................................... $ $ $
</TABLE>
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(1) The Company and its Operating Centers (defined below) have jointly and
severally agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $ .
(3) The Company has granted the Underwriters a 30-day over-allotment option to
purchase up to additional shares of Common Stock on the same terms and
conditions as set forth above. If all such additional shares are purchased
by the Underwriters, the total Price to Public will be $ , the total
Underwriting Discounts and Commissions will be $ and the total Proceeds
to Company will be $ . See "Underwriting."

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The shares of Common Stock are being offered by the several Underwriters,
subject to delivery by the Company and acceptance by the Underwriters, to prior
sale and to withdrawal, cancellation or modification of the offer without
notice. Delivery of the shares to the Underwriters is expected to be made
through the facilities of The Depository Trust Company, New York, New York, on
or about , 1998.

PRUDENTIAL SECURITIES INCORPORATED JEFFERIES & COMPANY, INC.

, 1998
<PAGE>

[LOGO OF VIALOG APPEARS HERE]

[PHOTO DESCRIPTION: THREE OPERATORS]

GROUP COMMUNICATIONS DEFINED.

[PHOTO DESCRIPTION: SEVERAL PERSONS SEATED AROUND CONFERENCE TABLE]

[PHOTO DESCRIPTION: PERSON AT WORKSTATION]

THE BUSINESS MEETING REDEFINED.

[PHOTO DESCRIPTION: PERSON AT
WORKSTATION; MONITOR DISPLAY SPLIT
SCREEN WITH THREE PERSONS]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE,
PURCHASES OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE
COMMON STOCK MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
related notes appearing elsewhere in this Prospectus. Unless otherwise
indicated, (i) all references to "VIALOG Corporation" mean VIALOG Corporation
as a stand alone entity, (ii) all references to "VIALOG" or the "Company" refer
to VIALOG Corporation and include its consolidated subsidiaries and (iii) the
information in this Prospectus assumes that the Underwriters' over-allotment
option will not be exercised.

THE COMPANY

VIALOG is a leading independent provider of teleconferencing and other group
communications services, consisting primarily of operator-attended and
operator-on-demand audio teleconferencing, as well as video and data
conferencing services. The Company believes it is the largest company focused
solely on teleconferencing and other group communications services, with six
operating centers, approximately 7,065 ports of teleconferencing capability
(one "port" is required for each participating telephone line), state-of-the-
art digital conferencing technology and a national sales force that is
currently in the final stages of deployment. The Company believes it
differentiates itself from its competitors by providing superior customer
service and an extensive range of enhanced and customized communication
solutions. The Company has capitalized on the growth in the teleconferencing
services market to build a large, stable client base ranging from Fortune 500
companies to small institutions. Customers also include certain major long
distance telecommunications providers which have outsourced their
teleconferencing services to the Company. The Company provided services to more
than 5,000 customers representing over 30,000 accounts during the twelve months
ended March 31, 1998.

Operator-attended audio teleconferencing is the cornerstone of VIALOG's
business, and the Company believes it to be the principal service which builds
customer loyalty. The Company also offers operator-on-demand audio
teleconferencing as well as enhanced services such as digital replay, broadcast
fax and follow-up mailings. VIALOG also offers customized communications
solutions, which include teleconference event planning and coaching, as well as
customized formats, which include auctions, investor relations and automated
testing programs. The Company has designed its service delivery infrastructure
to be flexible so that comprehensive, custom solutions for each customer may be
easily designed and implemented.

The industry in which the Company operates has been experiencing significant
growth. According to 1998 industry studies published by Frost & Sullivan, total
teleconferencing services revenues in North America increased from $437 million
in 1994 to an estimated $780 million in 1997, representing a compound annual
growth rate of 21%, and are projected to continue to grow at a compound annual
growth rate of 24% through 2003. The Company believes it will continue to
benefit from this strong industry growth, as it deploys a coordinated national
marketing, branding and sales program.

In addition to internal growth generated by strong industry fundamentals and
the Company's enhanced marketing capabilities, the Company intends to continue
to increase its wholesale, or outsourcing, business. Management believes that
the broad trend among the inter-exchange carriers ("IXCs"), local exchange
carriers ("LECs") and the Regional Bell Operating Companies ("RBOCs") to
outsource labor-intensive activities such as teleconferencing will lead to new
outsourcing contracts, particularly as RBOCs and LECs become approved to
provide long distance service. Further, the Company intends to augment its
internal growth through selective acquisitions in the teleconferencing industry
to leverage the inherent economies of scale and build upon the Company's
position as the largest company in the industry focused solely on
teleconferencing and other group communications services.

3
<PAGE>

OPERATING STRATEGY

The Company provides a full array of group communications services through
its six operating centers, all of which were acquired by the Company in
November 1997. The basic goals of the Company's operating strategy consist of
the following:

Focus exclusively on teleconferencing and other group communications
services. VIALOG believes that it is the largest and most geographically
diverse company focused solely on teleconferencing and other group
communications services. The Company's largest competitors are long distance
service providers for which teleconferencing represents only a small fraction
of their total revenues. The Company believes that its dedicated focus on
teleconferencing enables it to respond to the needs of its customers better
than competitors which do not focus on teleconferencing as a core business
activity.

Deliver a broad range of services. VIALOG believes that it offers the most
comprehensive selection of audio, video and data conferencing services among
the independent teleconferencing service providers, providing the Company with
significant marketing advantages. The Company believes that it can leverage the
diverse service capabilities and industry expertise of individual operating
centers to provide the features and pricing options to meet a wide variety of
customer needs. The Company intends to remain at the forefront of the group
communications industry by continuing to augment its existing service offerings
through the development and introduction of additional enhanced services and
customized communications solutions.

Maximize operational synergies. VIALOG is capitalizing on the benefits of
increased size, product range and diverse customer base afforded to it by the
acquisition of the six operating centers. Since November 1997, VIALOG has
centralized several of its operations, including sales, marketing, most human
resources and benefits administration and cash management. The combination of
the operating centers has enabled the Company to improve operations by (i)
allowing it to handle calls involving a larger number of participants than any
of its operating centers had been able to handle individually and (ii)
increasing network efficiency by allocating port capacity among the operating
centers according to need, time of day, personnel, type of service and other
factors. The Company plans to centralize additional support activities,
including reservations, billing, purchasing, management information systems and
accounting, within the next 6 to 12 months in order to standardize its
services, improve customer service and reduce operating expenses. Furthermore,
the Company believes that its increased size has resulted in stronger
bargaining power in areas such as long distance telecommunications, equipment,
employee benefits and marketing.

Retain customers and stimulate usage. Through the implementation of new
focused selling strategies and cross-selling programs, the Company intends to
expand sales to its diverse base of customers, which numbered more than 5,000
during the twelve months ended March 31, 1998. The Company believes that
customer loyalty for its services is fostered by its emphasis on customer
service and ability to design custom solutions. In addition, VIALOG is
developing a comprehensive marketing database to monitor account behavior and,
based on changes in behavior, trigger appropriate marketing and sales responses
to increase customer satisfaction, increase customer usage and maintain
customer relationships.

GROWTH STRATEGY

The Company's objective is to build upon its position as a leading
independent provider of teleconferencing and other group communications
services. The Company intends to achieve this goal through a strategy focused
on the following:

4
<PAGE>

operating centers created significant opportunities to enhance internal growth
by enabling VIALOG to develop a national brand identity, pursue cross-selling
opportunities, expand the Company's service offerings and leverage the
Company's increased capacity to handle larger contracts. In addition, the
Company has undertaken several marketing and sales initiatives, including
deployment of a national sales force to access new geographic areas and
national accounts, establishment of a coordinated calling effort and
implementation of database marketing programs.

Pursue outsourced services opportunities. The Company has deployed a
wholesale sales organization which intends to capitalize on what the Company
believes to be significant opportunities to provide outsourced services to
IXCs, LECs and RBOCs as these providers continue to reduce their dependence
upon labor-intensive activities. VIALOG currently has contracts to provide
outsourced services to a number of facilities-based and non-facilities-based
telecommunications service providers. As RBOCs and LECs obtain regulatory
approval to provide long distance service, the Company believes that some will
desire to enter the market quickly with complete packages of high quality
telecommunications services, including teleconferencing. As a result, some
RBOCs and LECs may seek to outsource their group communications requirements in
order to speed up their time to market. The Company believes that it is well-
positioned to compete for outsourced teleconferencing business from the IXCs,
LECs and RBOCs, because it (i) does not compete with IXCs, LECs or RBOCs in
their core businesses, (ii) has the capacity and resources to handle
significant teleconferencing volume and (iii) has experience in providing
services on an outsourced basis.

Expand through acquisitions. The Company intends to augment its internal
growth through selective acquisitions of complementary businesses in order to
capitalize on the significant potential economies of scale and synergies
available in its business. The Company's strategy is to target acquisitions
that will allow it to increase market share, broaden geographic coverage and
augment existing service offerings with new capabilities and industry-specific
experience, while maintaining the Company's high standards for customer
service. The Company believes its experience in acquiring and integrating the
operating centers and knowledge of the industry will be instrumental in
successfully identifying and negotiating additional acquisitions. The Company
further believes that its position (following the completion of this Offering)
as the largest publicly-traded company focused solely on the teleconferencing
market will make it attractive to potential acquisition candidates.

THE OPERATING CENTERS

On November 12, 1997, VIALOG Corporation acquired, in separate transactions
(the "Acquisitions"), six private conference service bureaus (each, an
"Operating Center," and collectively, the "Operating Centers") in exchange for
cash and shares of its Common Stock. Each Operating Center is a wholly-owned
subsidiary of the Company. All of the Company's operations are presently
conducted through the Operating Centers, which are located in Virginia,
Georgia, Alabama, Massachusetts, New Jersey and Connecticut. By June 1998, all
primary operating functions will be conducted in at least two different
Operating Centers in order to mitigate the impact of events that could impair
operations. The Company intends to build upon the unique competencies in each
Operating Center, enabling it to deliver a full range of high quality services
to its customers. As of March 31, 1998, the Operating Centers employed a total
of 363 persons and had a combined capacity of approximately 7,065 ports.

5
<PAGE>

VIALOG AND ITS OPERATING CENTERS

VIALOG Corporation is a Massachusetts corporation founded on January 1, 1996.
The Company's executive offices are located at 10 New England Business Center,
Suite 302, Andover, Massachusetts 01810, and its telephone number is (978) 975-
3700.

RESTON, VIRGINIA

Teleconferencing Ports: 1,800 The Reston center specializes in
Employees: 120 providing services to financial
1997 Revenues (in institutions, government agencies,
millions): $12.6 trade associations and
professional services firms. In
addition, it serves as the primary
center for delivering video, fax
and custom interactive voice
response applications.
ATLANTA, GEORGIA

Teleconferencing Ports: 1,440 The Atlanta center is the primary
Employees: 53 center that provides wholesale and
1997 Revenues (in private label teleconferencing
millions): $6.4 services to telecommunications
providers.
MONTGOMERY, ALABAMA

Teleconferencing Ports: 2,549 The Montgomery center specializes
Employees: 84 in providing teleconferencing
1997 Revenues (in services to the retail and
millions): $8.5 services industries. It is also
the primary engineering center
responsible for the development
and deployment of advanced bridge
technology.
CAMBRIDGE, MASSACHUSETTS

Teleconferencing Ports: 528 The Cambridge center provides a
Employees: 33 wide range of high value-added
1997 Revenues (in applications for general business.
millions): $4.1 It is also responsible for the
design and deployment of data
conferencing services that allow
participants to review and modify
documents simultaneously.
ORADELL, NEW JERSEY

Teleconferencing Ports: 456 The Oradell center specializes in
Employees: 48 providing advanced technology
1997 Revenues (in applications, including automated
millions): $2.2 audio teleconferencing, video and
data conferencing, to a general
business clientele.
DANBURY, CONNECTICUT

Teleconferencing Ports: 292 The Danbury center specializes in
Employees: 25 delivery of a wide range of
1997 Revenues (in teleconferencing and customized
millions): $2.1 group communications solutions to
the pharmaceutical industry.

6
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered Hereby.................. shares
Common Stock to be Outstanding After the shares(1)
Offering....................................
Use of Proceeds.............................. For working capital and general
corporate purposes, which may
include future acquisitions. See
"Use of Proceeds."
Proposed Nasdaq National Market Symbol....... VLOG
</TABLE>
- --------
(1) Does not include (a) shares subject to options outstanding under the
Company's 1996 Stock Plan, (b) additional shares reserved for issuance
under the Company's 1996 Stock Plan, (c) 153,378 shares issuable upon
exercise of warrants issued by the Company in connection with a bridge
financing, and (d) 1,059,303 shares issuable upon exercise of warrants
issued by the Company in connection with a private placement of notes. See
"Management--1996 Stock Plan" and "Description of Capital Stock--Warrants."

RISK FACTORS

Investors should consider the risk factors involved in connection with an
investment in the Common Stock and the impact to investors from various events
which could adversely affect the Company's business. See "Risk Factors."

7
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The summary consolidated financial data presented below for the years ended
December 31, 1996 and 1997 are derived from the consolidated financial
statements of VIALOG Corporation, which financial statements have been audited
by KPMG Peat Marwick LLP, independent certified public accountants. The summary
consolidated financial data presented below for the three months ended March
31, 1997 and 1998 and as of March 31, 1998 are derived from the unaudited
consolidated financial statements of VIALOG Corporation. In the opinion of
management, the unaudited consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and include
all adjustments (consisting of only normal recurring adjustments) necessary for
a fair presentation of the financial position and results of operations for
such periods. The summary consolidated financial data for the three month
period ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998.

In addition, the following summary unaudited pro forma consolidated financial
data presents certain data for the Company for the year ended December 31, 1997
to give effect to (i) the Acquisitions on an historical basis, (ii) certain pro
forma adjustments to the historical financial statements and (iii) the
consummation of the Unit Offering (defined below). The following summary
consolidated financial data should be read in conjunction with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and the notes thereto
included elsewhere in this Prospectus. See also the Unaudited Pro Forma
Consolidated Statement of Operations and the notes thereto included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
---------------------- ----------------------
PRO FORMA
CONSOLIDATED
YEAR ENDED
DECEMBER 31,
1996 1997 1997(1) 1997 1998
---------- ---------- ------------ ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net revenues............ $ -- $ 4,816 $ 35,917 $ -- $ 11,290
Gross profit(2)......... -- 2,122 17,073 -- 4,664
Selling, general and
administrative
expenses(3)............ 1,308 7,249 15,621 871 3,585
Amortization of goodwill
and intangible
assets(4).............. -- 306 2,495 -- 628
Write-off of purchased
in-process research and
development............ -- 8,000 -- -- --
Operating income
(loss)................. (1,308) (13,433) (1,043) (871) 451
Interest expense, net... 1 (1,866) (12,759) (3) (3,045)
Loss before income
taxes.................. (1,307) (15,299) (13,802) (874) (2,594)
Net loss................ $ (785) $ (15,821) $ (14,324) $ (874) $ (2,594)
Net loss per share...... $ (0.38) $ (5.48) $ (4.26) $ (0.32) $ (0.73)
Weighted average shares
outstanding............ 2,088,146 2,889,005 3,362,284 2,747,300 3,542,668
OTHER FINANCIAL DATA:
EBITDA(5)............... $ (1,308) $ (4,854) $ 4,006 $ (871) $ 1,663
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------
AS
ACTUAL ADJUSTED(7)
---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 8,015 $ 53,015
Working capital....................................... 5,002 50,002
Total assets.......................................... 74,870 119,870
Total debt, including current portion(6).............. 72,104 72,104
Stockholders' equity (deficit)........................ (7,451) 37,549
</TABLE>

8
<PAGE>

- --------
(1) Computed on the basis described in Note 2 to the Unaudited Pro Forma
Consolidated Statement of Operations and does not include a non-recurring
charge of $8.0 million for purchased in-process research and development.
Pro forma consolidated results for the year ended December 31, 1997
reflects a reduction of approximately $1.4 million in long distance
telephone charges as a result of contracts recently entered into by certain
of the Operating Centers as if such contracts had been in effect as of
January 1, 1997, and reflects certain reductions of approximately $1.0
million in compensation and benefits for the owners and certain key
employees and consultants of the Operating Centers to specified amounts
that the individuals agreed to accept subsequent to the Acquisitions and
royalties under agreements that were terminated.
(2) The Company recently entered into two new contracts for long distance
telephone charges, affecting two of the Operating Centers, which were not
in effect during the three months ended March 31, 1998. Had these contracts
been in effect as of January 1, 1998, gross profit for the three months
ended March 31, 1998 would have increased by approximately $340,000.
(3) The pro forma consolidated results for the year ended December 31, 1997
include certain one-time charges, including (i) approximately $2.2 million
related to an offering of common stock which was terminated in early 1997,
(ii) a $958,000 non-cash charge related to the modification of certain
stock options and (iii) a $481,000 charge related to consulting fees and
the write-off of a consulting agreement and an agreement not to compete.
(4) Reflects amortization of goodwill and intangible assets recorded as a
result of the Acquisitions over periods ranging from 6 to 20 years.
(5) EBITDA represents income from continuing operations before income taxes,
depreciation and amortization. EBITDA is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. EBITDA is not a measurement presented in accordance
with generally accepted accounting principles and should not be considered
as an alternative to net income as a measure of operating results or as an
alternative to cash flows as a better measure of liquidity.
(6) Net of unamortized original issue discount of $3.9 million.
(7) Adjusted to give effect to the application of the estimated net proceeds of
this Offering as described under "Use of Proceeds."

9
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to the other information contained in this
Prospectus, in connection with an investment in the shares of Common Stock
offered hereby.

When used in this Prospectus, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements regarding
among other things: (i) trends affecting the Company's financial condition or
results of operations; (ii) the Company's business, operating and growth
strategies; (iii) the use of the net proceeds to the Company from this
Offering; (iv) trends in the teleconferencing and group communications
industry; (v) government regulations; and (vi) the Company's financial plans.
Prospective investors are cautioned that any forward-looking statements are
not assurances or guarantees of future performance and are subject to risks
and uncertainties and that actual results may differ materially from those
included within the forward-looking statements as a result of various factors.
Factors that could cause or contribute to such differences include, but are
not limited to, those described below, under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
elsewhere in this Prospectus.

ABSENCE OF CONSOLIDATED OPERATING HISTORY; DIFFICULTY OF INTEGRATING THE
OPERATING CENTERS; PRETAX LOSSES. VIALOG Corporation was founded on January 1,
1996 and has only conducted operations and generated revenues since November
12, 1997, the effective date of the Acquisitions. Prior to that time the
Operating Centers each operated as separate, independent businesses. In
addition, the Company used the purchase method of accounting to record the
Acquisitions and consequently the pro forma and consolidated financial
information contained in this Prospectus may not be indicative of the
Company's future operating results and financial condition. The successful and
timely integration of the Operating Centers is critical to the Company's
future financial performance. Prior to the Acquisitions, the Operating Centers
used different operating practices and procedures and management information
systems. Until the Company establishes centralized accounting and other
administration systems, it will rely on the separate systems of the Operating
Centers. The Company was only able to begin to establish systems and controls
at the parent company level after closing the Acquisitions.

The integration of the Operating Centers will require the Company, among
other things, to retain key employees, assimilate diverse corporate cultures
and manage geographically dispersed operations, each of which could pose
significant challenges to the Company and its management. The Company's senior
management team has been in place for a relatively short period of time. The
Company's success will depend on the ability of its executive officers to
establish and integrate themselves into the Company's daily operations as well
as to gain the confidence of the employees of the Operating Centers. Prior to
the Acquisitions, the Operating Centers had a variety of sales strategies and
methods. The Company is presently in the process of deploying a nationwide
sales organization, which will be more costly and may prove to be ineffective
at increasing net revenues. There can be no assurance that the Company will be
successful in integrating any of the operations of the Operating Centers or,
if integrated, that such combined operations will demonstrate significant
operating efficiencies. The failure of the Company to integrate the Operating
Centers successfully could have a material adverse effect on the Company's
business, financial condition, results of operations and prospects. See
"Business--Operating Strategy" and "Business--Billing and Management
Information Systems."

The Acquisition agreements pursuant to which the Operating Centers were
acquired limit through 1999 the Company's ability to change the location of an
Operating Center's facilities, physically merge the Operating Center's
operations with another operation, change the position of those employees who
received employment agreements pursuant to the applicable Acquisition
agreement, reduce the workforce or terminate employees (except as related to
employee performance, the contemplated reorganization of the combined sales
and marketing staff and the consolidation of certain accounting functions)
without the approval of a majority in interest of the former stockholders of
the affected Operating Center. Such limitations could restrict the Company's
ability to integrate the operations of the Operating Centers successfully and
could limit the Company's ability to respond to competitive pressures on its
labor costs and materially adversely affect the Company's growth plans. See
"Certain Transactions--Organization of the Company."

10
<PAGE>

The Oradell Operating Center incurred a pretax loss in 1997 of approximately
$423,000 ($330,000 for the period from January 1, 1997 to the date of the
Acquisition and $93,000 from the date of the Acquisition to December 31,
1997), excluding the non-recurring charge related to the fair value of
purchased in-process research and development. Three of the Operating
Centers--Montgomery, Oradell and Danbury--incurred pretax losses in 1996 of
approximately $311,000, $73,000 and $72,000, respectively. Montgomery and
Danbury incurred pretax losses in 1995 of approximately $371,000 and $28,000,
respectively. There can be no assurance that such Operating Centers will
achieve profitability in 1998 or thereafter. The failure of such Operating
Centers to achieve profitability will have a material adverse effect on the
Company's business, financial condition, results of operations and prospects.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT. The Company is highly
leveraged, with substantial debt service in addition to operating expenses and
planned capital expenditures. At March 31, 1998, the total indebtedness of the
Company was approximately $72.1 million, net of unamortized original issue
discount of $3.9 million. The Company is currently exploring opportunities to
obtain a senior credit facility for a principal amount of up to $15.0 million
(the "Senior Credit Facility").

On November 12, 1997, the Company sold $75.0 million in principal amount of
its 12 3/4% Senior Notes due 2001, Series A (the "Old Notes") to Jefferies &
Company, Inc. (the "Initial Purchaser") in a private placement (the "Unit
Offering") of the Old Notes and warrants (the "Warrants") to purchase an
aggregate of 756,645 shares of Common Stock. The Company also issued Warrants
to purchase an aggregate of 302,658 shares to the Initial Purchaser in
connection with the Unit Offering. The Old Notes were thereupon offered and
sold by the Initial Purchaser to certain qualified buyers with the Company
receiving an aggregate of $72.0 million. On March 26, 1998, holders of the Old
Notes exchanged all the Old Notes for $75.0 million in principal amount of the
Company's 12 3/4% Senior Notes due 2001, Series B (the "Exchange Notes")
pursuant to a Registration Statement on Form S-4 filed with the Securities and
Exchange Commission (the "Commission") on January 9, 1998 (the "Exchange
Offer"). The Old Notes and the Exchange Notes (collectively, the "Senior
Notes") were issued pursuant to the indenture (the "Indenture") dated as of
November 12, 1997 by and among VIALOG Corporation, the Operating Centers (as
subsidiary guarantors) and State Street Bank and Trust Company, as Trustee.

The Company's level of indebtedness will have several important effects on
its future operations, including, without limitation, (i) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of interest and principal on its indebtedness, (ii) covenants
contained in the Indenture require, and covenants in any Senior Credit
Facility may require, the Company to meet certain financial tests, and other
restrictions contained in the Indenture limit its ability to borrow additional
funds or to dispose of assets, and may affect the Company's flexibility in
planning for, and reacting to, changes in its business, including possible
acquisition activities, (iii) the Company's leveraged position has
substantially increased its vulnerability to adverse changes in general
economic, industry and competitive conditions and (iv) the Company's ability
to obtain additional financing for working capital, capital expenditures,
acquisitions, general corporate and other purposes may be limited. The
Company's ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which
will be subject to general economic, industry and competitive conditions.
There can be no assurance that the Company's business will continue to
generate cash flow at or above current levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its
debt, it may be required, among other things, to seek additional financing in
the debt or equity markets, to refinance or restructure all or a portion of
its indebtedness, to sell selected assets, or to reduce or delay planned
capital expenditures. There can be no assurance that any such measures would
be sufficient to enable the Company to service its debt, or that any of these
measures could be effected on satisfactory terms, if at all.

RESTRICTIONS IMPOSED BY LENDERS. The Indenture contains, and any Senior
Credit Facility may contain, a number of covenants that restrict the ability
of the Company to dispose of assets, merge or consolidate with another entity,
incur additional indebtedness, create liens, make capital expenditures or
other investments or acquisitions and otherwise restrict corporate activities.
The ability of the Company to comply with such provisions may be affected by
events that are beyond the Company's control. The breach of any of these

11
<PAGE>

covenants could result in a default under the Indenture or any such Senior
Credit Facility, which would permit the holders of the Senior Notes and/or the
lender under such Senior Credit Facility to declare all amounts borrowed
thereunder to be due and payable, together with accrued and unpaid interest.
If the Company were unable to repay its indebtedness to the lender under a
Senior Credit Facility, such lender could likely proceed against any and all
collateral securing such indebtedness. In addition, as a result of these
covenants, the ability of the Company to respond to changing business and
economic conditions and to secure additional financing, if needed, may be
significantly restricted, and the Company may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company. See
"Substantial Leverage and Ability to Service Debt."

COMPETITION. The teleconferencing services industry is highly competitive
and subject to rapid change. The Company currently competes with the following
categories of companies: (i) IXCs, such as AT&T Corporation ("AT&T"), MCI
Communications Corporation ("MCI"), Sprint Corporation ("Sprint"), Frontier
Corporation ("Frontier") and Cable & Wireless, Inc. ("Cable & Wireless"), (ii)
independent LECs, such as GTE Corporation ("GTE") and Cincinnati Bell Inc.
("Cincinnati Bell"), and (iii) other private conference service bureaus
("PCSBs"). According to estimates from industry sources, the IXCs served
approximately 78% of the audio teleconferencing market in 1996. Under the
Telecommunications Act of 1996, the RBOCs will also be allowed to provide long
distance services upon the satisfaction of certain conditions, which the
Company believes will lead to their entry into the teleconferencing market. If
the Company is able to expand its video and data conferencing service
offerings, it will encounter additional competition, not only from existing
providers of audio teleconferencing, but also from competitors dedicated to
video and/or data conferencing.

Many of the Company's current and potential competitors have substantially
greater financial, sales, marketing, managerial, operational and other
resources, as well as greater name recognition, than the Company. As a result,
competitors may be able to respond more effectively than the Company to new or
emerging technologies and changes in customer requirements, to initiate or
withstand significant price decreases or to devote substantially greater
resources than the Company in order to develop and promote new services.
Because Multipoint Control Units ("MCUs"), the equipment commonly used to
provide teleconferencing services, are not prohibitively expensive to purchase
or maintain, companies previously not involved in teleconferencing could
choose to enter the marketplace and compete with the Company. There can be no
assurance that new competitors will not enter the Company's markets or that
consolidations or alliances among current competitors will not create
significant new competition. In order to remain competitive, the Company will
be required to provide superior customer service and to respond effectively to
the introduction of new and improved services offered by its competitors. Any
failure of the Company to accomplish these tasks or otherwise to respond to
competitive threats could have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.

The Company derived approximately 14% of its 1997 combined net revenues from
IXCs and LECs which outsource teleconferencing services provided to their
respective customers. These telecommunications companies have the financial
capability and expertise to deliver such services internally. There can be no
assurance that the Company's current IXC and LEC customers will not begin to
provide the teleconferencing services currently provided by the Company and
pursue such market actively and in direct competition with the Company.
Moreover, the Company expects to derive a portion of its future revenues from
RBOCs that enter the long distance market and outsource their teleconferencing
services. There can be no assurance that the RBOCs will be able to enter the
long distance market on a timely basis, if at all; that any RBOC entering the
long distance market will offer teleconferencing services; or that any IXC,
LEC or RBOC offering such services will outsource services or choose the
Company as the provider of such outsourced teleconferencing services. The
failure of any such event to occur could have a material adverse effect on the
Company's business, financial condition, results of operations and prospects.

12
<PAGE>

contract with the Company through at least August 1999, there can be no
assurance that such customer will continue to use the Company's services going
forward. The Company believes that the second customer, representing
approximately 4% of the Company's 1997 combined net revenues, will move its
teleconferencing business to a teleconferencing company it has recently
acquired.

Many of the Company's current and prospective customers have sufficient
resources to purchase the equipment and hire the personnel necessary to
establish and maintain teleconferencing capabilities sufficient to meet their
own respective teleconferencing needs. Moreover, technological improvements
will further enhance the ability of these customers to establish internal
teleconferencing facilities. There can be no assurance that any of the
Company's customers will not establish internal teleconferencing facilities or
expand existing facilities, then cease to use the Company's services. The loss
of any one or more of such customers could cause a significant and immediate
decline in net revenues, which could have a material adverse effect on the
Company's business, financial condition, results of operations and prospects.
See "Business--Customers" and "Business--Competition."

POTENTIAL ACQUISITIONS. One element of the Company's business strategy is to
acquire additional group communications service businesses. However, the
Company is aware of only a limited number of potential acquisition candidates.
Certain of the Company's principal competitors have each acquired a PCSB,
which may increase competition for the remaining acquisition opportunities in
the teleconferencing industry. Continued consolidation in the industry, and
the potential entry of RBOCs into the teleconferencing industry, may intensify
such competition and increase the price which the Company would have to pay in
connection with any future acquisitions. The Company currently has no binding
agreements to effect any acquisitions. Although the Company is in discussions
with several acquisition candidates, there can be no assurance that the
Company will complete any additional acquisitions. The identification,
evaluation, negotiation and integration of any such acquisition may divert the
time, attention and resources of the Company, particularly its management.
There can be no assurance that the Company will be able to identify, acquire
or manage additional businesses profitably or successfully integrate acquired
businesses, if any, into the Company without substantial costs, delays or
other operational or financial problems. The inability of the Company to
implement its acquisition strategy successfully or the failure to integrate
new businesses or operations into its current operations could have a material
adverse effect on the Company's business, financial condition, results of
operations and prospects. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources," and "Business--Growth Strategy."

RECENT ENTRANCE INTO VIDEO AND DATA CONFERENCING MARKETS. The Company
introduced its video conferencing services in 1996, and to date only one of
the Operating Centers has invested in video conferencing MCUs or servers. The
Company's combined net revenues for video conferencing were approximately
$13,000 in 1996 and $282,000 in 1997. Only one of the Operating Centers
offered data conferencing services in 1997, and to date no revenues have been
generated from data conferencing services, as these services have only been
offered on a developmental, non-commercial basis. The Company has limited
capacity and experience to handle video and data conferencing. Furthermore,
few sales people, reservationists, operators and technical support people are
trained in video and data conferencing. There can be no assurance that the
Company will be able to obtain significant business from video and data
conferencing services or, if obtained, that the Company has the ability to
service such business. See "Business--The Company's Group Communications
Services."

TECHNOLOGICAL CONSIDERATIONS. The Company currently derives a substantial
portion of its net revenues from the sale of audio teleconferencing services.
If the manufacturers of private branch exchanges ("PBXs"), the equipment used
by most businesses and institutions to handle their internal telephone
requirements, develop improved, cost-effective PBX capabilities for handling
teleconferences with the quality and functionality of existing MCUs used in
the teleconferencing business, the Company's customers could choose to
purchase such equipment and hire the personnel necessary to service their
teleconferencing needs through internal telephone systems. The loss of such
customers could have a material adverse effect on the Company's business,
financial condition, results of operations and prospects. Additionally, if
Internet technology can be modified to accommodate multipoint voice
transmission with audio quality comparable to that of MCUs used in the

13
<PAGE>

teleconferencing business, the availability of such technology could have a
material adverse effect on the Company's business, financial condition,
results of operations and prospects. See "Business--Competition."

LONG DISTANCE SERVICES CONTRACTS. A significant portion of the Company's
direct costs are attributable to the purchase of local and long distance
telephone services. It has been management's experience that the costs of long
distance services have been decreasing over the past several years. If,
however, the costs of long distance services increase over time, the Company's
current purchasing strategy, which calls for shorter-term contracts, may place
it at a competitive disadvantage with respect to competitors that have entered
into longer-term contracts for long distance services. There can be no
assurance that competition in the long distance services market will continue
to increase, that any increased competition will reduce the cost of long
distance services or that the Company's purchasing strategy will result in
cost savings. In addition, if the Company experiences a shortfall in projected
volume, it may be required to pay a penalty under one or more of its
contracts. There can be no assurance that the Company's analysis of the future
costs of long distance services will be accurate, and the failure to predict
future cost trends accurately could have a material adverse effect on the
Company's business, financial condition, results of operations and prospects.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business--Suppliers."

YEAR 2000. The Company recognizes the need to ensure that its operations
will not be adversely impacted by Year 2000 software failures. Software
failures due to processing errors potentially arising from calculations using
the Year 2000 date are a known risk. The Company has performed a preliminary
review of its existing computer programs to address the Year 2000 issue. Based
on the preliminary review, the Company believes that the Year 2000 issue will
not have a significant impact on the operations or the financial results of
the Company. The internally developed computer programs used in the operations
of the Company that are expected to be used beyond the year 1999 are Year 2000
compliant. However, many of the Company's suppliers and customers may be
impacted by Year 2000 complications. The failure of the Company or its
suppliers and customers to ensure that their systems are Year 2000 compliant
could have a material adverse effect on the Company's business, financial
condition, results of operations and prospects. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

REGULATION. In general, the telecommunications industry is subject to
extensive regulation by federal, state and local governments. Although there
is little or no direct regulation in the United States of the core group
communications services offered by the Company, various government agencies,
such as the Federal Communications Commission (the "FCC"), have jurisdiction
over some of the Company's current and potential suppliers of
telecommunications services, and government regulation of those services may
have a direct impact on the cost of the Company's group communications
services. The Telecommunications Act of 1996 is being contested both
administratively and in the courts, and opinions vary widely as to the effects
and timing of various aspects of the law. There can be no assurances at this
time that the Telecommunications Act of 1996 will create any opportunities for
the Company, that local access services will be provided by the IXCs, or that
the RBOCs will be able to offer long distance services including
teleconferencing. The Telecommunications Act of 1996 has effected significant
changes in the telecommunications industry and the Company is unable to
predict the extent to which such changes or the implementation of the
Telecommunications Act of 1996 by the FCC may ultimately affect its business.
There can be no assurance that the FCC or other government agencies will not
seek in the future to regulate the prices, conditions or other aspects of the
group communications services offered by the Company, that the FCC will not
impose registration, certification or other requirements on the provision of
those services, or that the Company would be able to comply with any such
requirements. In addition, the Company is subject to laws and regulations that
affect its ability to provide certain of its enhanced services, such as those
relating to privacy and the recording of telephone calls. Changes in the
current federal, state or local legislation or regulation could have a
material adverse effect on the Company's business, financial condition,
results of operations and prospects. Moreover, government regulations in
countries other than the United States vary widely and may restrict the
Company's ability to offer its services in those countries. See "Business--
Regulation."

CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS. Upon completion of this
Offering, the Company's executive officers and directors will own (i)
shares of Common Stock, representing approximately

14
<PAGE>

% ( % if the Underwriters' over-allotment option is exercised in full) of
the outstanding shares of Common Stock, (ii) an aggregate of vested
options to purchase shares of Common Stock and (iii) an aggregate of
unvested options to purchase shares of Common Stock, based upon beneficial
ownership determined as of , 1998. Accordingly, these individuals, as a
group, will have the ability to influence significantly and may be able to
control all matters requiring stockholder approval, including the election of
the Directors and any amendments to the Company's Articles of Organization and
By-Laws, and to control the business of the Company. This concentration of
ownership may enable such persons to cause or prevent a change in control of
the Company without the approval of the other stockholders of the Company,
including purchasers of Common Stock in this Offering. There can be no
assurance that this concentration of ownership will not have a material
adverse effect on the market price of the Common Stock. See "Principal
Stockholders" and "Description of Capital Stock."

CHANGE OF CONTROL. In the event of a Change of Control (as defined in the
Indenture and which includes the appointment, selection or election of John J.
Hassett, a principal stockholder of the Company, as a director or officer of
the Company), the Company may be required to repurchase all of the outstanding
Senior Notes at 101% of the principal amount, as the case may be, of the
Senior Notes plus any accrued and unpaid interest thereon, and Additional
Interest (as defined in the Indenture), if any, to the date of repurchase. The
exercise by the holders of the Senior Notes of their rights to require the
Company to offer to purchase Senior Notes upon a Change of Control could also
cause a default under other indebtedness of the Company, even if the Change of
Control itself does not, because of the financial effect of such repurchase on
the Company. There can be no assurance that in the event of a Change of
Control, the Company will have, or will have access to, sufficient funds, or
will be contractually permitted under the terms of outstanding indebtedness,
to pay the required purchase price for any Senior Notes.

POTENTIAL FLUCTUATION IN QUARTERLY RESULTS. Quarterly net revenues are
difficult to forecast because the market for the Company's services is
competitive and subject to variation. In addition, the consolidation of the
Operating Centers may result in unanticipated operational difficulties. The
Company's expenses are based, in part, on its expectations as to future net
revenues. If net revenues are below expectations, the Company may be unable or
unwilling to reduce expenses, and the failure to do so may have a material
adverse effect on the Company's business, financial condition, results of
operations and prospects. As a result, the Company believes that period-to-
period comparisons of its results of operations are not necessarily meaningful
and should not be relied upon as indications of future performance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS. The initial public
offering price is substantially higher than the net tangible book value per
share of the Common Stock. Investors purchasing shares of Common Stock in this
Offering will therefore incur immediate and substantial net tangible book
value dilution, in the amount of $ per share (based upon an assumed initial
public offering price of $ per share). To the extent that outstanding
options to purchase shares of Common Stock are exercised, there will be
further dilution. See "Dilution."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to this
Offering, there has been no public market for the Common Stock. Therefore, the
initial public offering price of the Common Stock offered hereby will be
determined by negotiations between the Company and the representatives of the
Underwriters and may bear no relationship to the price at which the Common
Stock will trade after the Offering. The market price of the Common Stock
could be subject to wide fluctuations in response to the announcement of
operating results below those of financial analysts' projections, changes in
such projections, quarterly variations in operating results, the emergence of
new competitors, announcements of technological innovations or new services by
the Company or its competitors, trends or changes in the group communications
industry, and other events or factors. In addition, the stock market has
experienced extreme price and volume fluctuations that have particularly
affected the market prices of many communications companies. This market
volatility has had a substantial effect on the market prices of securities
issued by companies for reasons unrelated to the operating performance of such
companies. These broad market fluctuations may have a material adverse effect
on the market price of the Common Stock. See "Underwriting."

15
<PAGE>

POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF
COMMON STOCK. Upon completion of this Offering, there will be shares of
Common Stock outstanding (assuming no exercise of options or warrants after
, 1998), of which the shares being sold in this Offering will be
freely tradable in the United States without restriction under the Securities
Act unless acquired by "affiliates" of the Company (as defined in Rule 144
under the Securities Act). The remaining shares of Common Stock
outstanding are "restricted securities" (as defined in Rule 144 and Rule 701
under the Securities Act) (the "Restricted Shares") and may not be sold unless
registered under the Securities Act or sold pursuant to an exemption from
registration thereunder, such as the exemption provided by Rule 144. The
holders of an aggregate of Restricted Shares are subject to lock-up
agreements, pursuant to which they have severally agreed not to, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock, or any other
securities convertible into or exercisable or exchangeable for any shares of
Common Stock or other similar securities of the Company, for a period of 180
days after the date of this Prospectus without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters. Prudential
Securities Incorporated may, in its sole discretion, at any time and without
notice, release all or a portion of the Restricted Shares from the
restrictions imposed by such agreements. As of 180 days after the date of this
Prospectus, of the Restricted Shares will be eligible for sale in the
public market pursuant to Rule 144 and Rule 701. The holders of shares
issued in connection with the Acquisitions and the principal holders of other
Restricted Shares, including the officers and Directors of the Company, have
certain demand registration rights with respect to such shares, as well as
certain piggyback registration rights with respect to such shares. The holders
of the Warrants issued as a part of the Unit Offering have certain
registration rights with respect to an aggregate of 1,059,303 shares issuable
upon exercise of the Warrants. In addition, the Company intends to file one or
more registration statements on Form S-8 with respect to 3,250,000 shares of
Common Stock issued or issuable under its stock option plan. Shares covered by
any such registration statement will be eligible for sale in the public market
upon the effectiveness of such registration statement. The market price of the
Common Stock and the Company's ability to raise capital through sales of
equity securities may be adversely affected by the sale, or availability for
sale, of substantial amounts of Common Stock in the public market following
this Offering. See "Management--1996 Stock Plan," "Description of Capital
Stock--Warrants," "Description of Capital Stock--Certain Registration Rights"
and "Shares Eligible for Future Sale."

EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND ANTI-TAKEOVER
PROVISIONS; POSSIBLE ISSUANCES OF PREFERRED STOCK. The Company's Articles of
Organization, its By-Laws and certain Massachusetts laws contain provisions
that may discourage acquisition bids for the Company and that may reduce
temporary fluctuations in the trading price of the Company's Common Stock
which may be caused by accumulations of stock, thereby depriving stockholders
of certain opportunities to sell their stock at temporarily higher prices. The
Company's Articles of Organization provide for a classified Board of
Directors, and that Directors may be removed by the stockholders only for
cause. The Company's Articles of Organization also permit the issuance of
10,000,000 shares of Preferred Stock without stockholder approval and upon
such terms as the Board of Directors may determine. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the
rights of the holders of any Preferred Stock that may be issued in the future.
The issuance of Preferred Stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of the outstanding stock
of the Company. The Company has no present plans to issue any shares of
Preferred Stock. See "Description of Capital Stock--Preferred Stock" and
"Description of Capital Stock--Provisions of Massachusetts Law and the
Company's Articles of Organization and By-Laws."

ABSENCE OF DIVIDENDS. The Company intends to retain future earnings, if any,
for use in the development of its business and does not anticipate declaring
or paying any cash dividends on the Common Stock in the foreseeable future. In
addition, the Company is restricted from paying dividends except in certain
limited circumstances pursuant to the terms of the Indenture, and the Company
may be restricted from paying dividends pursuant to the terms of any Senior
Credit Facility the Company may obtain. See "Dividend Policy."

16
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common
Stock offered hereby, after deducting underwriting discounts and commissions
and estimated offering expenses, are estimated to be approximately $45.0
million ($52.0 million if the Underwriters' over-allotment option is exercised
in full). The net proceeds will be used for working capital and for general
corporate purposes, which may include future acquisitions. Pending such uses,
the net proceeds will be invested in short-term, interest-bearing, investment
grade securities or direct or guaranteed obligations of the U.S. government.

The Company currently has no binding agreements to effect any acquisitions,
although the Company is in discussions with several acquisition candidates.

DIVIDEND POLICY

The Company intends to retain all of its earnings, if any, to finance its
business and for general corporate purposes, including possible future
acquisitions, and has no intention of declaring or paying any cash dividends
on its Common Stock for the foreseeable future. Any declaration or payment of
future dividends will be at the discretion of the Board of Directors and will
depend upon, among other factors, the Company's earnings, financial condition,
capital requirements, level of indebtedness, contractual restrictions with
respect to the payment of dividends and other considerations that the
Company's Board of Directors deems relevant. Pursuant to the terms of the
Indenture, the Company is prohibited from declaring or paying any dividends or
distributions other than dividends or distributions payable solely in certain
qualified capital stock of the Company. The Company may be restricted from
paying dividends pursuant to the terms of any Senior Credit Facility which the
Company may obtain.

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<PAGE>

CAPITALIZATION

The following table sets forth the cash, current maturities of long-term
obligations and capitalization of the Company at March 31, 1998 and as
adjusted to give effect to this Offering and the application of the estimated
net proceeds therefrom. See "Use of Proceeds." This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements of the Company and the
related notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
ACTUAL AS ADJUSTED
----------- -------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents........................... $ 8,015 $ 53,015
=========== ===========
Current maturities of long-term debt (1)............ $ 381 $ 381
=========== ===========
Long-term debt:
Senior Notes due 2001 (2)......................... $ 71,069 $ 71,069
Other indebtedness (1)............................ 654 654
----------- -----------
Total long term debt............................ 71,723 71,723
----------- -----------
Stockholders' equity (deficit):
Common stock...................................... 36
Additional paid-in capital........................ 11,713
Accumulated deficit............................... (19,200) (19,200)
----------- -----------
Total stockholders' equity (deficit)............ (7,451) 37,549
----------- -----------
Total capitalization............................ $ 64,272 $ 109,272
=========== ===========
</TABLE>
- --------
(1) Primarily represents capitalized lease obligations with varying terms and
conditions.
(2) Net of unamortized original issue discount of $3.9 million.

18
<PAGE>

DILUTION

Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution in the net tangible book value of the Common Stock
from the initial public offering price. The deficit in net tangible book value
of the Company as of March 31, 1998 was approximately $58.1 million or
approximately $16.25 per share of Common Stock. The deficit in net tangible
book value per share represents the amount by which the Company's total
liabilities exceed the Company's net tangible assets divided by the number of
outstanding shares of Common Stock. After giving effect to the sale of the
shares of Common Stock offered hereby at an assumed initial public offering
price of $ per share, and after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company, the
Company's deficit in net tangible book value at March 31, 1998 would have been
approximately $13.1 million or approximately $ per share. This represents
an immediate increase in net tangible book value of approximately $ per
share to existing stockholders and an immediate dilution of approximately $
per share to new investors purchasing the shares in this Offering. The
following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price........................ $
Deficit in net tangible book value before the Offering..... $(16.25)
Increase in net tangible book value attributable to new
investors................................................. $
Deficit in net tangible book value after the Offering........ $
Dilution to new investors.................................... $
</TABLE>

The following table sets forth as of March 31, 1998 the number of shares of
Common Stock purchased from the Company, the total consideration paid and the
average price per share paid by existing stockholders and the new investors
purchasing shares of Common Stock from the Company in this Offering (before
deducting underwriting discounts and commissions and estimated offering
expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.....
New investors.............
Total.....................
</TABLE>

19
<PAGE>

SELECTED FINANCIAL DATA

The selected financial data presented below as of December 31, 1996 and 1997
and for the years then ended are derived from the consolidated financial
statements of VIALOG Corporation, which financial statements have been audited
by KPMG Peat Marwick LLP, independent certified public accountants. The
selected financial data presented below for the three months ended March 31,
1997 and 1998 and as of March 31, 1998 are derived from the unaudited
consolidated financial statements of VIALOG Corporation. In the opinion of
management, the unaudited consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and include
all adjustments (consisting of only normal recurring adjustments) necessary
for a fair presentation of the financial position and results of operations
for such periods. The selected financial data for the three month period ended
March 31, 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998.

In addition, the following selected unaudited pro forma financial data
presents certain data for the Company for the year ended December 31, 1997 to
give effect to (i) the Acquisitions on an historical basis, (ii) certain pro
forma adjustments to the historical financial statements and (iii) the
consummation of the Unit Offering. The following selected financial data
should be read in conjunction with the "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and the notes thereto included elsewhere in this
Prospectus. See also the Unaudited Pro Forma Consolidated Statement of
Operations and the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
---------------------- ----------------------
PRO FORMA
CONSOLIDATED
YEAR ENDED
DECEMBER 31,
1996 1997 1997(1) 1997 1998
---------- ---------- ------------ ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net revenues............ $ -- $ 4,816 $ 35,917 $ -- $ 11,290
Cost of revenues........ -- 2,694 18,844 -- 6,626
---------- ---------- ---------- ---------- ----------
Gross profit(2)......... -- 2,122 17,073 -- 4,664
Selling, general and
administrative
expenses(3)............ 1,308 7,249 15,621 871 3,585
Amortization of goodwill
and intangible
assets(4).............. -- 306 2,495 -- 628
Write-off of purchased
in-process research and
development............ -- 8,000 -- -- --
---------- ---------- ---------- ---------- ----------
Operating income
(loss)................. (1,308) (13,433) (1,043) (871) 451
Interest expense, net... 1 (1,866) (12,759) (3) (3,045)
---------- ---------- ---------- ---------- ----------
Loss before income
taxes.................. (1,307) (15,299) (13,802) (874) (2,594)
Income tax expense
(benefit).............. (522) 522 522 -- --
---------- ---------- ---------- ---------- ----------
Net loss................ $ (785) $ (15,821) $ (14,324) $ (874) $ (2,594)
========== ========== ========== ========== ==========
Net loss per share...... $ (0.38) $ (5.48) $ (4.26) $ (0.32) $ (0.73)
========== ========== ========== ========== ==========
Weighted average shares
outstanding............ 2,088,146 2,889,005 3,362,284 2,747,300 3,542,668
========== ========== ========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA(5)............... $ (1,308) $ (4,854) $ 4,006 $ (871) $ 1,663
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1998
------------- --------------------
AS
1996 1997 ACTUAL ADJUSTED(7)
----- ------ ------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 337 $9,567 $ 8,015 $ 53,015
Working capital (deficit) ................. (249) 7,259 5,002 50,002
Total assets............................... 1,263 75,083 74,870 119,870
Total debt, including current portion(6)... -- 71,936 72,104 72,104
Stockholders' equity (deficit)............. 287 (4,882) (7,451) 37,549
</TABLE>

20
<PAGE>

- --------
(1) Computed on the basis described in Note 2 to the Unaudited Pro Forma
Consolidated Statement of Operations and does not include a non-recurring
charge of $8.0 million for purchased in-process research and development.
Pro forma consolidated results for the year ended December 31, 1997
reflects a reduction of approximately $1.4 million in long distance
telephone charges as a result of contracts recently entered into by
certain of the Operating Centers as if such contracts had been in effect
as of January 1, 1997 and reflects certain reductions of approximately
$1.0 million in compensation and benefits for the owners and certain key
employees and consultants of the Operating Centers to specified amounts
that the individuals agreed to accept subsequent to the Acquisitions and
royalties under agreements that were terminated.
(2) The Company recently entered into two new contracts for long distance
telephone charges, affecting two of the Operating Centers, which were not
in effect during the three months ended March 31, 1998. Had these
contracts been in effect as of January 1, 1998, gross profit for the three
months ended March 31, 1998 would have increased by approximately
$340,000.
(3) The pro forma consolidated results for the year ended December 31, 1997
include certain one-time charges, including (i) approximately $2.2 million
related to an offering of common stock which was terminated in early 1997,
(ii) a $958,000 non-cash charge related to the modification of certain
stock options and (iii) a $481,000 charge related to consulting fees and
the write-off of a consulting agreement and an agreement not to compete.
(4) Reflects amortization of goodwill and intangible assets recorded as a
result of the Acquisitions over periods ranging from 6 to 20 years.
(5) EBITDA represents income from continuing operations before income taxes,
depreciation and amortization. EBITDA is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. EBITDA is not a measurement presented in accordance
with generally accepted accounting principles and should not be considered
as an alternative to net income as a measure of operating results or as an
alternative to cash flows as a better measure of liquidity.
(6) Net of unamortized original issue discount of $4.2 million and $3.9
million at December 31, 1997 and March 31, 1998, respectively.
(7) Adjusted to give effect to the application of the estimated net proceeds
of this Offering as described under "Use of Proceeds."

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF
OPERATIONS

This Prospectus contains forward-looking statements. The words "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "will," "could,"
"may" and similar expressions are intended to identify forward-looking
statements. These statements include information regarding future net cash
flows. Such statements reflect the Company's current views with respect to
future events and financial performance and involves certain risks and
uncertainties, including without limitation the risks described in "Risk
Factors." Should one or more of these risks or uncertainties occur, or should
underlying assumptions prove incorrect, actual results may vary materially and
adversely from those anticipated, believed, estimated or otherwise indicated.

VIALOG Corporation was founded on January 1, 1996. On November 12, 1997,
VIALOG Corporation consummated the Acquisitions, and the Operating Centers
became wholly-owned subsidiaries of VIALOG Corporation. Contemporaneously with
the closing of the Acquisitions, VIALOG Corporation closed the Unit Offering.
The following discussion should be read in conjunction with the consolidated
financial statements and related notes thereto for the years ended December
31, 1996 and 1997, the financial statements and related notes thereto of the
Operating Centers prior to the Acquisitions for the years ended December 31,
1994, 1995 and 1996 and "Selected Financial Data" appearing elsewhere in this
Prospectus.

INTRODUCTION

The Company's net revenues are derived primarily from fees charged to
customers for audio teleconferencing services. Cost of revenues consists
primarily of long distance telephone charges, salaries and benefits for
operators, and depreciation and maintenance of telephone bridging equipment.
Selling, general and administrative expenses consist primarily of compensation
and benefits to executive officers and certain employees, marketing expenses,
occupancy costs and professional fees.

Prior to the Acquisitions, the Operating Centers were managed as independent
private companies, and as such, their results of operations reflect different
tax structures (S corporations and C corporations) which have influenced,
among other things, their levels of historical compensation. Certain officers
and employees of the Operating Centers agreed to reductions in their
compensation and benefits in connection with the Acquisitions. The difference
between the historical compensation and benefits of such individuals and the
compensation and benefits they agreed to accept subsequent to the Acquisitions
is referred to as "Compensation Differential." This Compensation Differential
and the related income tax effect have been reflected as pro forma adjustments
in the Company's Unaudited Pro Forma Consolidated Statement of Operations.

The Company, which has only conducted operations since November 12, 1997
(other than in connection with certain financing transactions, the issuance of
the Senior Notes and the Acquisitions), has commenced integrating, and intends
to continue to integrate certain operations and administrative functions of
the Operating Centers over a period of time. This integration process is
expected to present opportunities to reduce costs through the elimination of
duplicative functions and through economies of scale, particularly from
expected reductions in long distance telephone charges as existing agreements
entered into by the Operating Centers lapse and are replaced with new
contracts negotiated by the Company. The Company is currently unable to
quantify these savings. It is anticipated that these savings will be partially
offset by the costs related to the Company's new management. In addition, it
is anticipated that increased marketing costs will initially be required to
establish the Company's brand name in the marketplace. As a result of these
various costs and possible cost-savings, comparisons of historical operating
results may not be meaningful, and such results may not be indicative of
future performance.

22
<PAGE>

VIALOG CORPORATION

RESULTS OF OPERATIONS

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997

VIALOG Corporation was incorporated on January 1, 1996. Prior to the
Acquisitions of the Operating Centers, VIALOG Corporation did not conduct any
operations, and all activities conducted by it were related to the
Acquisitions and the completion of financing transactions to fund the
Acquisitions.

Net revenues and gross profit. As VIALOG Corporation did not conduct any
operations prior to November 12, 1997, there were no revenues and gross profit
for the three months ended March 31, 1997. Net revenues and gross profit for
the three months ended March 31, 1998 represent the consolidated results of
the Company, including the Operating Centers.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $2.7 million, or 312%, from $871,000 to $3.6
million for the three months ended March 31, 1997 and 1998, respectively. The
increase was primarily due to the fact that selling, general and
administrative expenses for the three months ended March 31, 1997 represented
only general and administrative expenses related to the organization of VIALOG
Corporation and the consummation of business combination agreements with the
Operating Centers, while the expenses for the three months ended March 31,
1998 represent consolidated selling, general and administrative expenses of
the Company, including the Operating Centers.

Interest expense, net. Interest expense, net increased $3.0 million for the
three months ended March 31, 1998 compared to the three months ended March 31,
1997. The increase was primarily due to (i) approximately $2.4 million of
accrued interest expense on the $75.0 million of Senior Notes and (ii)
approximately $746,000 of non-cash interest expense related to the
amortization of deferred debt issuance costs and original issue discount on
the Senior Notes, both of which were partially offset by increased interest
income of approximately $100,000 due to increased cash balances.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

VIALOG Corporation incurred a net loss of $785,000 and $15.8 million for the
years ended December 31, 1996 and 1997, respectively. The 1996 net loss
represented general and administrative expenses, which consisted primarily of
legal, travel, salaries and consulting fees related to the organization of
VIALOG Corporation and the consummation of business combination agreements
with the Operating Centers. The 1997 net loss included expenses incurred prior
to the Acquisitions, as well as consolidated net revenues and expenses of the
Operating Centers from the date of the Acquisitions through December 31, 1997.
Of the $15.8 million net loss, $4.1 million represented selling, general and
administrative expenses incurred prior to the Acquisitions, which included
approximately $2.0 million related to an offering of common stock which was
terminated in early 1997. The remaining $11.7 million loss represented the
consolidated results of operations from the date of Acquisitions through
December 31, 1997, and included $2.1 million of gross profit, $3.6 million of
selling, general and administrative expenses (including a $958,000 non-cash
charge relating to the modification of certain stock options and $306,000 of
amortization of goodwill and intangibles), an $8.0 million non-recurring
charge relating to the write-off of purchased in-process research and
development, $1.7 million of interest expense relating to the Senior Notes and
$522,000 of income tax expense.

LIQUIDITY AND CAPITAL RESOURCES

VIALOG Corporation generated negative cash flows from operating activities
of $178,000 and $4.1 million for the years ended December 31, 1996 and 1997,
respectively, and positive cash flows from operating activities of $127,000
for the three months ended March 31, 1998. Cash flows used in investing
activities of $7,000, $53.8 million and $1.6 million for the years ended
December 31, 1996 and 1997 and the three months ended March 31, 1998,
respectively, represent cash paid in connection with the Acquisitions of $0,
$53.3 million and $0, respectively, as well as purchases of property and
equipment of $7,000, $454,000 and $1.6 million, respectively.

23
<PAGE>

Cash provided by financing activities of $522,000 and $67.1 million for the
years ended December 31, 1996 and 1997, respectively, represents issuance of
long-term debt and common stock, offset by payments of previously issued debt
and payments of indebtedness of the Operating Centers. Cash used in financing
activities of $79,000 for the three months ended March 31, 1998, represents
payments of indebtedness of the Operating Centers offset by proceeds from the
exercise of stock options.

The Company anticipates that its cash flows from operations and existing
cash balances will meet or exceed its 1998 working capital needs, debt service
requirements and planned capital expenditures for property and equipment. The
Company expects to meet its liquidity requirements beyond 1998, including
repayment of the Senior Notes, through a combination of working capital, cash
flow from operations, borrowings, proceeds from this Offering, and future
issuances of debt and/or equity securities. However, no assurances can be
given that such funds will be available when required or on terms favorable to
the Company.

The Company intends to continue pursuing attractive acquisition
opportunities. The timing, size or success of any acquisition and the
associated potential capital commitments are unpredictable. The Company plans
to fund future acquisitions primarily through a combination of working
capital, cash flow from operations and borrowings, as well as issuances of
debt and/or equity securities. However, no assurances can be given that such
funds will be available when required or on terms favorable to the Company.

The Company is highly leveraged and had a stockholders' deficit at March 31,
1998. This indebtedness requires the Company to dedicate a significant portion
of its cash flow from operations to service its indebtedness and makes the
Company more vulnerable to unfavorable changes in general economic conditions.

The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium (Year 2000) approaches. The "Year
2000" problem is pervasive and complex as virtually every computer operation
will be affected in some way by the rollover of the two digit year value to
00. The issue is whether computer systems will properly recognize date
sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or fail.

The Company is using both internal and external resources to identify,
correct or reprogram, and test its systems for Year 2000 compliance. The
Company has performed a preliminary review of its existing computer programs
to address the Year 2000 issue. Based on the preliminary review, the Company
believes that the Year 2000 issue will not have a significant impact on the
operations or the financial results of the Company. The internally developed
computer programs used in the operations of the Company that are expected to
be used beyond the year 1999 are Year 2000 compliant. Additionally, as part of
the integration of the Operating Centers, the Company will be implementing
common systems in both the operations and financial management areas of the
Company within the next two years. The systems implemented or upgraded will
all be Year 2000 compliant, one of the criteria of the systems integration
plan. The Company will continue to assess the impact of the Year 2000 issue as
a part of the systems integration plan. The Company is in the process of
contacting all of its software and hardware suppliers with regard to their
respective Year 2000 compliant programs.

COMBINED OPERATING CENTERS AND VIALOG CORPORATION

The combined Operating Centers' and VIALOG Corporation's Statements of
Operations data for the years ended December 31, 1995, 1996 and 1997 and the
three months ended March 31, 1997 do not purport to present the financial
results or the financial condition of the combined Operating Centers and
VIALOG Corporation in accordance with generally accepted accounting
principles. Such data represents merely a summation of the net revenues and
cost of revenues of the individual Operating Centers and VIALOG Corporation on
an historical basis, and excludes the effects of pro forma adjustments. This
combined data prior to the Acquisitions will not be comparable to and may not
be indicative of the Company's post-combination results of operations because
the Operating Centers were not under common control or management. In
contrast, the data set forth below for the three months ended March 31, 1998
represents consolidated revenues and cost of revenues of the Company.

24
<PAGE>

RESULTS OF OPERATIONS--COMBINED OPERATING CENTERS AND VIALOG CORPORATION

The following table sets forth (in thousands) certain unaudited combined
data for the years ended December 31, 1995, 1996 and 1997 and for the three
months ended March 31, 1997 and certain unaudited consolidated data for the
three months ended March 31, 1998 of the Operating Centers and VIALOG
Corporation on an historical basis and such data as a percentage of net
revenues, excluding the effects of pro forma adjustments for the periods
presented:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-------------------------------------------- ------------------------------------
1995 1996 1997 1997 1998
-------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $21,855 100.0% $29,005 100.0% $35,917 100.0% $8,347 100.0% $11,290 100.0%
Cost of revenues........ 13,143 60.1% 16,302 56.2% 20,272 56.4% 4,535 54.3% 6,626 58.7%
------- ------ ------- ------ ------- ------ ------ ------ ------- ------
Gross profit............ $ 8,712 39.9% $12,703 43.8% $15,645 43.6% $3,812 $45.7% 4,664 41.3%
======= ====== ======= ====== ======= ====== ====== ====== ======= ======
</TABLE>

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997

Net revenues. All Operating Centers reflected an increase in net revenues
for the three months ended March 31, 1998 compared to the three months ended
March 31, 1997. Net revenues increased $2.9 million, or 35.3%, from combined
net revenues of $8.3 million in 1997 to consolidated net revenues of $11.3
million in 1998. The major components of this increase were (i) an increase in
the Reston Center's net revenues of $1.3 million, or 44.7%, which was
primarily attributable to increased audio and video conferencing services to
existing customers and new customers, as well as increased video equipment
sales, (ii) an increase in the Cambridge Center's net revenues of $497,000, or
55.7%, which was primarily attributable to increased audio teleconferencing
services to existing customers and new customers, and (iii) an increase in the
Atlanta Center's net revenues of $497,000, or 32.6%, which was primarily
attributable to increased audio teleconferencing services to existing
customers and new customers.

Cost of revenues. Consolidated cost of revenues for the three months ended
March 31, 1998 increased $2.1 million, or 46.1%, from combined cost of
revenues for the three months ended March 31, 1997, and increased as a
percentage of revenue from 54.3% to 58.7% for the three months ended March 31,
1997 and 1998, respectively. The dollar increase was primarily attributable to
(i) an increase in the Reston Center's cost of revenues of $875,000, or 61.6%,
resulting from increased telecommunications costs associated with increased
call volumes, and increased equipment costs related to increased video
equipment sales (which generate a lower gross margin than teleconferencing
services), (ii) an increase in the Atlanta Center's cost of revenues of
$324,000, or 50.1%, resulting from increased telecommunications costs
associated with increased call volumes as well as increased operating costs
due to current and projected revenue growth, (iii) an increase in the
Cambridge Center's cost of revenues of $293,000, or 67.7%, resulting from
increased telecommunications costs associated with increased call volumes as
well as increased operating costs due to current and projected revenue growth
and (iv) an increase in the Oradell Center's cost of revenues of $215,000, or
70.3%, resulting from increased operating costs due to current and projected
revenue growth. The increase as a percentage of revenues was primarily
attributable to (i) a reclassification of expenses from selling, general and
administrative expenses for the three months ended March 31, 1997 to cost of
revenue for the three months ended March 31, 1998 related to expenses
associated with video conferencing, (ii) additional labor and related expenses
associated with the integration of the Operating Centers and temporary
accelerated hiring and training due to anticipated increase in call volumes,
(iii) a modest decrease in the overall average price per conferencing minute
and (iv) additional long distance charges associated with new Federal
Communications Commission fees.

The Company recently entered into two new contracts for long distance
telephone charges, affecting two of the Operating Centers, which were not in
effect during the three months ended March 31, 1998. Had these contracts been
in effect as of January 1, 1998, gross profit for the three months ended March
31, 1998 would have increased by approximately $340,000.

25
<PAGE>

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Net revenues. All Operating Centers reflected an increase in net revenues
during the year ended December 31, 1997 compared to the year ended December
31, 1996. Combined net revenues increased $6.9 million, or 23.8%, from $29.0
million in 1996 to $35.9 million in 1997. The major components of this
increase were (i) an increase in the Reston's Center's net revenues of $3.5
million, or 38.5%, from $9.1 million in 1996 to $12.6 million in 1997, which
was primarily attributable to sales of teleconferencing services to existing
customers and new customers, (ii) an increase in the Montgomery Center's net
revenues of $1.0 million, or 12.9%, from $7.5 million in 1996 to $8.5 million
in 1997, which was primarily attributable to sales of teleconferencing
services to existing customers and new customers and (iii) an increase in the
Cambridge Center's net revenues of $725,000, or 21%, from $3.4 million in 1996
to $4.1 million in 1997, which was primarily attributable to sales to existing
customers and new customers. This growth was achieved despite the fact that
the Cambridge Center's net revenues for 1996 included $707,000 of net revenues
from a portion of the Cambridge Center's business that was divested in
December 1996.

Cost of revenues. Combined cost of revenues increased $4.0 million, or
24.4%, from $16.3 million in 1996 to $20.3 million in 1997 and increased
slightly as a percentage of net revenues from 56.2% in 1996 to 56.4% in 1997.
The dollar increase was primarily attributable to (i) an increase in the
Reston Center's cost of revenues of $2.1 million, or 51.1%, from $4.1 million
in 1996 to $6.2 million in 1997 related to the substantial investment made in
personnel and related costs associated with video conferencing and increased
telecommunications and personnel expense associated with the growth in
revenues, (ii) an increase in the Oradell Center's cost of revenues of
$623,000, or 71.7%, from $869,000 in 1996 to $1.5 million in 1997 primarily
due to telecommunications costs and personnel expenses to support the current
and expected call volume and (iii) an increase in the Montgomery Center's cost
of revenues of $659,000, or 11.1%, from $5.9 million in 1996 to $6.6 million
in 1997, which was primarily attributable to increased telecommunications
costs and personnel expenses to support the increased call volume.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Net revenues. All Operating Centers reflected an increase in net revenues
during 1996. Combined net revenues increased by $7.1 million, or 32.7%, from
$21.9 million in 1995 to $29.0 million in 1996. The major components of this
increase were (i) an increase in the Reston Center's net revenues of $2.6
million, or 39.4%, from $6.5 million in 1995 to $9.1 million in 1996 resulting
from additional sales of audio teleconferencing services to existing customers
and new customers, (ii) an increase in the Atlanta Center's revenues of $2.1
million, or 54.1%, from $3.8 million in 1995 to $5.9 million in 1996 resulting
from a $2.2 million increase in net revenues from two significant customers
and (iii) an increase in the Cambridge Center's net revenues of $1.1 million,
or 45.8%, from $2.3 million in 1995 to $3.4 million in 1996 resulting from
additional sales of audio teleconferencing services to existing customers and
new customers.

Cost of revenues. Cost of revenues increased by $3.2 million, or 24.0%, from
$13.1 million in 1995 to $16.3 million in 1996 and decreased as a percentage
of net revenues from 60.1% in 1995 to 56.2% in 1996. The dollar increase in
cost of revenues was primarily attributable to (i) an increase in the Atlanta
Center's cost of revenues of $906,000, or 48.3%, from $1.9 million in 1995 to
$2.8 million in 1996 resulting from increased telecommunications costs
associated with increased call volumes and costs associated with the addition
of nine operators, (ii) an increase in the Reston Center's cost of revenues of
$652,000, or 19.1%, from $3.4 million in 1995 to $4.1 million in 1996
resulting from increased telecommunications and occupancy costs associated
with increased call volumes and (iii) an increase in the Cambridge Center's
cost of revenues of $684,000, or 60.6%, from $1.1 million in 1995 to $1.8
million in 1996 resulting from increased telecommunications and personnel
costs associated with increased call volumes.

NEW ACCOUNTING PRONOUNCEMENTS

In 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." SFAS 128 establishes a different
method of computing net income (loss) per share than

26
<PAGE>

was required under the provisions of Accounting Principles Board Opinion No.
15. Under SFAS 128, the Company presents both basic net income (loss) per
share and diluted net income (loss) per share. The impact on diluted net
income (loss) per share was not material. Prior periods presented have been
restated to comply with the provisions of SFAS 128.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards for reporting
and display of comprehensive income and its components in a full set of
general-purpose financial statements. Under this concept, all revenues,
expenses, gains and losses recognized during the period are included in
income, regardless of whether they are considered to be the results of
operations of the period. SFAS 130, which becomes effective for the Company in
its year ending December 31, 1998, is not expected to have a material impact
on the Company's consolidated financial statements.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the way that public business enterprises report
selected information about operating segments in annual financial statements
and requires that those enterprises report selected information about
operating segments in interim financial reports to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. SFAS 131, which becomes effective for
the Company in its year ending December 31, 1998, is currently not expected to
have a material impact on the Company's consolidated financial statements and
disclosures, as the Company does not have multiple reportable operating
segments.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for
internal use, and is effective for fiscal years beginning after December 31,
1998, with earlier application encouraged. The adoption of SOP 98-1 is not
expected to have a material effect on the Company's financial statements.

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INDUSTRY OVERVIEW

SERVICES

The teleconferencing industry, which includes audio, video and data
conferencing, provides a range of services to facilitate multiparty
communications with participants in different locations. Through
teleconferencing services, customers conduct routine meetings, run training
sessions and share information where face-to-face meetings would be too
costly, impractical or inconvenient. Industry studies published by Frost &
Sullivan estimate that total teleconferencing services revenues in North
America increased from $437 million in 1994 to an estimated $780 million in
1997, representing a compound annual growth rate of 21%. Frost & Sullivan
estimates that the teleconferencing services sector will grow at a compound
annual rate of approximately 24% between 1998 and 2003.

Audio teleconferencing.

Audio teleconferencing connects multiple parties on a single telephone call
through specialized telephone equipment known as a "bridge." Multipoint
Control Units ("MCUs") offer the most advanced bridge technology, although
calls involving a small number of parties can be established through a PBX or
on the network switch of an IXC. Using MCU technology, the maximum number of
participants is only limited by the number of conference "ports" available to
the teleconferencing service provider. Calls may be established manually by an
operator who places the calls to or receives calls from conference
participants, with each access line occupying a single port. Advances in MCU
technology have not only eliminated many of the problems associated with early
audio teleconferencing, such as "clipping" (the loss of initial or ending
syllables of words) and loss of quality as lines were added, but also have
increased the number of available enhanced features. The Company believes that
these technological advances, combined with the greater overall awareness and
acceptance of audio teleconferencing as a business tool, have contributed to
the increased usage of teleconferencing over the last five years.

The Company believes that the demand for audio teleconferencing services has
increased as a result of a wide range of trends, including globalization of
operations, increased workforce training requirements, the advent of
geographically dispersed work teams, shared decision-making and the growing
role of strategic partnerships. Users of audio teleconferencing are able to
replace travel to existing meetings, with attendant savings of actual and
opportunity cost, and increase communication with parties with whom they would
otherwise not meet, thereby yielding greater organizational productivity. The
Company believes that the facilities, network and labor costs associated with
audio teleconferencing services, combined with a lack of expertise and a
desire to focus on their core businesses, have caused most organizations to
outsource audio teleconferencing. Industry sources project compound annual
growth in audio teleconferencing services revenues of 23% between 1998 and
2003, from $723 million to $2 billion.

Video Conferencing.

Video conferencing is similar to audio teleconferencing except that one or
more callers may be viewed on a video monitor by the other participants. The
Company believes that the broad adoption of video conferencing as a meeting
tool has historically been constrained by several factors, including limited
access to video sites, expensive and proprietary equipment, limited and costly
network facilities, incompatibility of systems and poor video quality. Video
conferencing was also generally limited to small or broadcast meetings at
fixed locations, except when implemented using expensive two-way satellite
technology.

The adoption of industry standards, technological advances (which have
brought down the cost of equipment and required bandwidth) and increased
processing speed (which has improved quality) have all contributed to the
development of desktop video conferencing applications. Interactive multipoint
video conferencing also became feasible in 1995 with the introduction of more
cost-effective video MCU technology and low-cost, PC-based video cameras and
sound cards. The rapid deployment of compatible hardware, reductions in cost,
increases in available bandwidth and improvements in quality are all expected
to accelerate

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the growth of the market for multipoint video conferencing. Industry sources
estimate that video conferencing services revenues will grow at a compound
rate of 27% between 1998 and 2003, from $240 million to $779 million.

Data conferencing.

Data conferencing, which enables multiple users to collaborate using data
and voice over a single, high bandwidth line, is the most recent advance in
teleconferencing. The adoption of industry standards for multimedia
conferencing and new Internet "groupware" services and software are expected
to facilitate greater adoption of data conferencing. Such standards allow data
to travel over data networks on an interactive basis so that multiple remote
computers can manipulate the same program, and enable participants to share
computer data during a conference call. For instance, Intel's ProShare and
Microsoft's NetMeeting allow remotely located personal computers and/or work
stations to share video and data interactively over the Internet. The Company
believes that the Internet data conferencing programs will likely be used in
conjunction with audio teleconferencing to allow simultaneous group
discussions during editing and display of documents. In addition, several
manufacturers have introduced specialized application servers that provide
mixed media conferencing. Industry sources estimate that revenues from data
conferencing services will grow at a compound annual rate of 82% between 1998
and 2003, from $3 million to $59 million.

SERVICE PROVIDERS

There are three categories of service providers in the North American group
communications industry: (i) IXCs, such as AT&T, MCI, Sprint, Frontier and
Cable & Wireless, (ii) PCSBs, a group of over 25 companies (excluding the
Company), and (iii) independent LECs, such as GTE and Cincinnati Bell. In
addition, under the terms of the Telecommunications Act of 1996, the RBOCs may
be allowed to provide long distance services, which the Company believes may
lead to their entry into the teleconferencing market. See "Business--
Regulation."

According to industry sources, the IXCs are currently the largest providers
of teleconferencing services, constituting approximately 78% of the audio
teleconferencing services revenue in 1996. The Company believes that the IXCs
generate most of their business through their position as the customer's long
distance carrier. The IXCs generally do not market teleconferencing services
separately, but rather offer such services as part of a "bundled"
telecommunications offering. The Company believes that the IXCs have generally
not emphasized enhanced services and customized communications solutions to
meet individual customer needs, preferring instead to implement automated
systems and technology as a substitute for traditional operator-intensive
services in order to reduce labor costs.

The second category of providers of group communications services are the
PCSBs. There are approximately 25 PCSBs, excluding the Company. PCSBs emerged
in the teleconferencing market in the mid-1980s when businesses were beginning
to find applications for teleconferencing due to significant technological
improvements in teleconferencing equipment. The number of PCSBs increased in
the late 1980s, taking advantage of a niche opportunity to provide customized,
high quality service and specialized applications. As a result of their scale
and limited access to capital, PCSBs tended to develop as regional or
industry-specific businesses. Due to technological changes facing the
teleconferencing industry, such as the introduction of video and data
conferencing services, the Company believes that the ability to secure
necessary capital has become more critical for PCSBs. Additionally, the
Company believes that many PCSBs do not currently have the marketing expertise
or teleconferencing capacity to reach the critical mass which will allow them
to develop a national brand name and compete for and service large, national
accounts.

The third category of providers of teleconferencing services are the
independent LECs. Similar to the IXCs, the Company believes the LECs have
generally not included teleconferencing, enhanced services or customized
communications solutions in their core service offerings.

A potential new category of providers is the RBOCs. As a result of the
Consent Decree entered into by AT&T and the United States Department of
Justice in 1982, the RBOCs could not offer long distance services,

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which drastically limited their teleconferencing potential. Under the
Telecommunications Act of 1996, the RBOCs may be allowed to provide in-region
long distance services upon the satisfaction of certain conditions. The
Company believes that the ability of an RBOC to gain immediate and significant
teleconferencing market share upon entrance into the long distance market
could be enhanced by such RBOC's status as the incumbent provider of local
services to its customers. While each RBOC will determine whether to create a
separate teleconferencing business unit or to outsource this service, the
Company believes that some of the potential new entrants will elect to
outsource teleconferencing services and focus on entering the long distance
market.

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BUSINESS

GENERAL

VIALOG is a leading independent provider of teleconferencing and other group
communications services, consisting primarily of operator-attended and
operator-on-demand audio teleconferencing, as well as video and data
conferencing services. The Company believes it is the largest company focused
solely on teleconferencing and other group communications services, with six
Operating Centers, approximately 7,065 ports of teleconferencing capability
(one "port" is required for each participating telephone line), state-of-the-
art digital conferencing technology and a national sales force that is
currently in the final stages of deployment. The Company believes it
differentiates itself from its competitors by providing superior customer
service and an extensive range of enhanced and customized communication
solutions. The Company has capitalized on the growth in the teleconferencing
services market to build a large, stable client base ranging from Fortune 500
companies to small institutions. Customers also include certain major long
distance telecommunications providers which have outsourced their
teleconferencing services to the Company. The Company provided services to
more than 5,000 customers representing over 30,000 accounts during the twelve
months ended March 31, 1998.

Operator-attended audio teleconferencing is the cornerstone of VIALOG's
business, and the Company believes it to be the principal service which builds
customer loyalty. The Company also offers operator-on-demand audio
teleconferencing as well as enhanced services such as digital replay,
broadcast fax and follow-up mailings. VIALOG also offers customized
communications solutions, which include teleconference event planning and
coaching, as well as customized formats, which include auctions, investor
relations and automated testing programs. The Company has designed its service
delivery infrastructure to be flexible so that comprehensive, custom solutions
for each customer may be easily designed and implemented.

The industry in which the Company operates has been experiencing significant
growth. See "Industry Overview." The Company intends to capitalize on this
strong industry growth, as it deploys a coordinated national marketing,
branding and sales program. In addition to internal growth generated by strong
industry fundamentals and the Company's enhanced marketing capabilities, the
Company intends to continue to increase its wholesale, or outsourcing,
business. Management believes that the broad trend among the IXCs, LECs and
RBOCs to outsource labor-intensive activities such as teleconferencing will
lead to new outsourcing contracts, particularly as RBOCs and LECs become
approved to provide long distance service. Further, the Company intends to
augment its internal growth through selective acquisitions in the
teleconferencing industry to leverage the inherent economies of scale and
build upon the Company's position as the largest company in the industry
focused solely on teleconferencing and other group communications services.

OPERATING STRATEGY

The Company provides a full array of group communications services through
its six Operating Centers, all of which were acquired by the Company in
November 1997. The basic goals of the Company's operating strategy consist of
the following:

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service capabilities and industry expertise of individual operating centers to
provide the features and pricing options to meet a wide variety of customer
needs. The Company intends to remain at the forefront of the group
communications industry by continuing to augment its existing service
offerings through the development and introduction of additional enhanced
services and customized communications solutions.

Maximize operational synergies. VIALOG is capitalizing on the benefits of
increased size, product range and diverse customer base afforded to it by the
acquisition of the six Operating Centers. Since November 1997, VIALOG has
centralized several of its operations, including sales, marketing, most human
resources and benefits administration and cash management. The combination of
the Operating Centers has enabled the Company to improve operations by (i)
allowing it to handle calls involving a larger number of participants than any
of its Operating Centers had been able to handle individually and (ii)
increasing network efficiency by allocating port capacity among the Operating
Centers according to need, time of day, personnel, type of service and other
factors. The Company plans to centralize additional support activities,
including reservations, billing, purchasing, management information systems
and accounting, within the next 6 to 12 months in order to standardize its
services, improve customer service and reduce operating expenses. Furthermore,
the Company believes that its increased size has resulted in stronger
bargaining power in areas such as long distance telecommunications, equipment,
employee benefits and marketing.

Retain customers and stimulate usage. Through the implementation of new
focused selling strategies and cross-selling programs, the Company intends to
expand sales to its diverse base of customers, which numbered more than 5,000
during the twelve months ended March 31, 1998. The Company believes that
customer loyalty for its services is fostered by its emphasis on customer
service and ability to design custom solutions. In addition, VIALOG is
developing a comprehensive marketing database to monitor account behavior and,
based on changes in behavior, trigger appropriate marketing and sales
responses to increase customer satisfaction, increase customer usage and
maintain customer relationships.

GROWTH STRATEGY

Maintain strong internal growth. The Company intends to capitalize on the
strong growth in the teleconferencing services industry. Industry sources
project that the teleconferencing services revenues will grow at a compound
annual growth rate of 24% through 2003. The Company believes that the
acquisition of the Operating Centers created significant opportunities to
enhance internal growth by enabling it to develop a national brand identity,
pursue cross-selling opportunities, expand the Company's service offerings and
leverage the Company's increased capacity to handle larger contracts. In
addition, the Company has undertaken several marketing and sales initiatives,
including deployment of a national sales force to access new geographic areas
and national accounts, establishment of a coordinated calling effort and
implementation of database marketing programs.

Pursue outsourced services opportunities. The Company has deployed a
wholesale sales organization which intends to capitalize on what the Company
believes to be significant opportunities to provide outsourced services to
IXCs, LECs and RBOCs as these providers continue to reduce their dependence
upon labor-intensive activities. VIALOG currently has contracts to provide
outsourced services to a number of facilities-based and non-facilities-based
telecommunications service providers. As RBOCs and LECs obtain regulatory
approval to provide long distance service, the Company believes that some will
desire to enter the market quickly with complete packages of high quality
telecommunications services, including teleconferencing. As a result, some
RBOCs and LECs may seek to outsource their group communications requirements
in order to speed up their time to market. The Company believes that it is
well-positioned to compete for outsourced teleconferencing

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business from the IXCs, LECs and RBOCs, because it (i) does not compete with
IXCs, LECs or RBOCs in their core businesses, (ii) has the capacity and
resources to handle significant teleconferencing volume and (iii) has
experience in providing services on an outsourced basis.

Expand through acquisitions. The Company intends to augment its internal
growth through selective acquisitions of complementary businesses in order to
capitalize on the significant potential economies of scale and synergies
available in its business. The Company's strategy is to target acquisitions
that will allow it to increase market share, broaden geographic coverage and
augment existing service offerings with new capabilities and industry-specific
experience, while maintaining the Company's high standards for customer
service. The Company believes its experience in acquiring and integrating the
Operating Centers and knowledge of the industry will be instrumental in
successfully identifying and negotiating additional acquisitions. The Company
further believes that its position (following the completion of this Offering)
as the largest publicly-traded company focused solely on the teleconferencing
market will make it attractive to potential acquisition candidates.

THE COMPANY'S GROUP COMMUNICATIONS SERVICES

Audio teleconferencing. The Company offers a broad range of audio
teleconferencing services and related services, primarily to businesses in the
financial, retail, professional services and pharmaceutical industries, as
well as to government agencies and trade associations. The Company generates
revenues from these services by charging on a per-line, per-minute basis,
similar to standard telephone pricing practices. The Company's audio
teleconferencing services are divided into two major service categories:
operator-attended and operator-on-demand. Each category offers standard
services such as dialing out to late participants and conducting a roll call
at no additional cost as well as enhanced services at additional cost.

There are three different types of operator-attended service: Meet-Me, Dial
Out and a combination of the two. Meet-Me audio teleconferences allow
participants to join a teleconference either by dialing a toll free number
provided by the Company or by using their own local or long distance service
providers. Dial Out audio teleconferences consist of having the Company's
operators call participants and join them together in a teleconference. A
combination of the two service types is also available.

Participants may join an operator-on-demand teleconference either by dialing
a toll free number provided by the Company or by using their own local or long
distance service providers, then entering a passcode on their touchtone
keypad. For additional security and to verify attendance, participants may be
required to enter a Personal Identification Number (PIN) after they enter the
conference passcode. While Company operators are not necessary for an
operator-on-demand audio teleconference, they can be reached for assistance by
pressing "*0."

In addition to the many standard services offered by the Company, the
following enhanced services are offered for an extra charge to increase the
productivity of an audio teleconference.

. Communication line. During a teleconference, the Company can keep a
separate line open with the teleconference host to verify participant
attendance, provide updates on the number of participants which have
joined, and have other discussions relative to the teleconference that
may be inappropriate to conduct in the teleconference.

. Digital replay. The Company can digitally record a teleconference and
make it available for playback over the telephone or otherwise by parties
who were unable to attend the teleconference.

. Electronic Q&A. Participants can join a queue to ask questions or speak
with the moderator by pressing codes on their touchtone keypads.

. Participant list. The Company can send a list of participants via fax or
email, either during or at the conclusion of the teleconference.

. Participant notification. The Company can call or fax reminders to
participants in advance of the teleconference.

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. Polling/voting. Participants can respond to questions by pressing codes
on their touchtone keypads. Tabulations and results are available
immediately or at the conclusion of the teleconference.

. Recording. The Company can record the teleconference on audiocassette
tape or compact disc, and send recordings via regular, overnight or
second-day mail.

. Transcription. The teleconference can be transcribed in its entirety and
provided in written format, on a 3 1/2p diskette, via e-mail, or all
three.

Video conferencing. In 1996, the Company began to offer video conferencing
services, which enable remote sites equipped with industry standard compliant
video equipment to conduct interactive multipoint sharing of video images and
audio among three or more sites. Similar to audio teleconferencing, this
service is charged on a per-line, per-minute basis, with enhanced services
charged on a fee basis. Video conferencing requires the use of a video MCU and
telecommunications facilities of greater bandwidth than that required for a
standard audio teleconference. The Company has three MCUs dedicated to video
conferencing. Video conferencing services accounted for approximately $13,000
and $282,000 of the Company's combined net revenues in 1996 and 1997,
respectively, and approximately $190,000 of the Company's consolidated net
revenues for the three months ended March 31, 1998.

Video conferences can be assembled in two ways: Meet-Me and Dial Out. Meet-
Me video conferences are those in which participating sites dial in to the
Company's video MCU at a scheduled date and time, using an assigned telephone
number. Each site may be greeted by an operator or be connected directly,
without the operator's presence. Dial Out video conferences are those in which
a Company operator dials out to participating sites prior to a video
conference and connects them to the conference. The Company tests the
standards of all participating sites to assure quality standards.

The Company offers "continuous presence" service, which allows participating
sites to view each other simultaneously. Continuous presence has two display
options. The first divides each participant's monitor into quadrants that
display up to four selected sites throughout the entire conference. The second
is broadcast mode, in which the speaker or lecturer can view up to four other
sites, but all of the sites view only the speaker.

The Company also offers "voice activated switching" which allows the
Company's MCU to automatically select the site whose video image is broadcast
at any given point in the video conference, based on audio level. When one
person speaks, all other sites in the video conference see that site until
another site replies and replaces the picture with its own. Whoever is
currently speaking will continue to see the site whose participant spoke last.

The Company believes that the use of multipoint video conferencing services
will grow in relationship to the installed base of compatible video equipment.
The Company estimates that over 230,000 video conferencing units had been sold
by the end of 1996, and that over 262,500 units had been sold by the end of
1997.

Data conferencing. In 1997, the Company began to offer data conferencing
services to its customers on a developmental, non-commercial basis. In the
second quarter of 1998, the Company expects to launch commercial data
conferencing services. Data conferences connect multiple computer users
through a data conferencing MCU or over the Internet, enabling them to
present, discuss and/or modify documents in real-time. The Company believes
that the Internet-based data conferencing programs will likely be used in
conjunction with audio teleconferencing to enable simultaneous group
discussions during editing and display of documents.

Other teleservices. To complement its audio, video and data conferencing
services, the Company offers other teleservices, such as Interactive Voice
Solutions (an interactive voice response "IVR" service), broadcast fax and fax
on demand. Interactive Voice Solutions incorporates IVR technology and digital
replay, enabling parties to phone in and retrieve or deposit information. This
service can also be used for testing, interview screening, registering and
survey-taking. With its broadcast fax service, the Company can send faxes to
multiple recipients simultaneously. The Company's fax on demand service
includes toll free reply mailboxes and document faxing, which allow parties to
request that information be sent directly to their fax machine.

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Client education services. The Company offers client education services to
help clients run a successful teleconference. Coaching sessions are conducted
via audio teleconference or video conference, giving moderators and speakers
the ability to practice in the same environment in which the teleconference
will take place. After the teleconference, the Company can provide a detailed
evaluation of conference effectiveness and the speaker's performance.

SALES AND MARKETING

VIALOG believes it is the first independent teleconferencing company to
employ a comprehensive marketing program to establish a national brand for
teleconferencing services. The Company's retail national sales organization
offers a full range of audio teleconferencing and other group communications
services to its customers. The Company's wholesale account executives offer
these same services to facilities-based carriers and non-facilities-based
telecommunications service providers who desire to offer outsourced
teleconferencing services to their customers under their own brands.

Establishing a national brand. The Company's marketing and sales strategy
centers on establishing VIALOG as the brand identified with high value, expert
delivery of teleconferencing services. The Company is implementing a corporate
marketing program focused on customers who have the potential for high use.
This marketing program will employ targeted database marketing techniques
based on the combined customer data of the Operating Centers, emerging trends
and other market segment information.

Retail sales. The Company is implementing a national retail sales strategy
utilizing both an outside and inside sales group. This new strategy will
consolidate the Company's existing sales force and at the same time provide
new national accounts coverage and presence in additional geographic markets.
The sales force intends to leverage VIALOG's increased network capacity by
cross-selling existing accounts with new and enhanced services, expanding the
Company's penetration of key industries (for example, pharmaceutical
companies) and targeting untapped industries and accounts. An outside sales
group of approximately 35 professionals will operate from six regional
offices, and will be primarily responsible for origination of new business. An
inside sales group of approximately 25 professionals will respond to inbound
requests, assist customers in implementing VIALOG's service offerings and
support the outside sales force.

Wholesale sales. The Company has deployed a wholesale sales organization
which intends to capitalize on what the Company believes to be significant
opportunities for revenue growth by providing outsourced services to IXCs,
LECs, and RBOCs. The Company currently has contracts to provide outsourced
services to a number of facilities-based and non-facilities-based
telecommunications service providers. An important element of the Company's
marketing strategy will be to secure additional outsourcing contracts and to
expand net revenues from its existing customer base. In order to capitalize on
this market the Company has hired a vice president of wholesale sales and
three senior telecom sales professionals who have extensive experience in the
industry. The Company believes its wholesale sales initiative is justified by
an increasing trend among telecommunications companies to outsource non-core,
labor intensive services. The Company believes that this trend has been
evidenced by existing outsourcing of services, such as billing and
telemarketing and downsizing of personnel as these companies move away from
labor-intensive activities. In addition, potential opportunities exist as a
result of the Telecommunications Act of 1996 to provide services in new
markets.

CUSTOMER SERVICE

The Company believes that it has successfully obtained and retained
customers due to quality customer service provided by a highly skilled staff.
Reservationists and operators become the Company's primary contacts with its
customers after the initial sales effort, thereby providing opportunities to
support the sales effort with personalized service. The Company uses a team
approach, whereby a customer can work with the same small group of customer
service personnel. In some cases, customers have become accustomed to working
with a particular reservationist or operator and insist upon continued
assistance from these specific individuals.

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Reservationists assist the Company's customers in scheduling their
teleconferences. Reservationists access the conferencing system to determine
time and ports available and to confirm the teleconferences. Operators monitor
calls and provide the services requested in the reservation. Operators are
also trained to provide assistance to the moderator (usually the person
initiating the teleconference) to ensure a successful teleconference.
Supervisors are available to assist in the setup and execution of a
teleconference. The Company's staff is trained to facilitate effective
teleconferences through a combination of classroom, mentoring, teaming, and
on-the-job supervision.

CUSTOMERS

The Company provided services to over 5,000 customers during the twelve
months ended March 31, 1998. The customers ranged in size from major
multinational corporations and Fortune 500 companies to small businesses,
professional organizations, public institutions and individuals. A breakdown
of the Company's top 20 customers, including both wholesale and retail
customers, by industry is as follows: health and pharmaceutical (two),
financial services (five), retail (five), telecommunications (four),
industrial (three) and high technology (one). No single customer represented
more than 10% of the Company's combined net revenues in 1997. The top 10
customers of the Company represented approximately 23% of the Company's
combined net revenues in 1997.

BILLING AND MANAGEMENT INFORMATION SYSTEMS

The Operating Centers presently perform the entire billing and collection
process for their respective customer bases. The data needed to develop an
invoice is captured by and stored on each MCU and entered into the billing
system automatically or by the staff. This data includes the account number,
which identifies the entity paying for the call and the moderator number,
which identifies the person who organized the call. The MCU software creates a
call detail record which is augmented by the operator to capture any
additional services. Billing is on a one minute increment basis for the
duration of each connected line. A billing database is maintained by each of
the Operating Centers, and can be used to customize billing formats to respond
to individual customer preferences. The frequency with which invoices are
delivered to the customer for payment varies by Operating Center and by
customer.

Each of the Operating Centers validates its invoices against its telephone
bills to verify billing accuracy. In addition, each Operating Center generates
reports and files which provide detailed customer activity including usage and
rate profiles, payments, adjustments, accounts receivable aging, credit status
and commission summaries. All of these files will be input into a centralized
database being implemented by the Company that will provide management with
the ability to monitor customer value and to make informed marketing, sales,
financial and operational decisions.

The Company believes that the flexibility and capabilities of its billing
systems represent a significant competitive advantage by allowing the Company
to customize invoices according to a number of variables such as detail level,
frequency of billing and class of service. The Company has spent several years
developing and refining the proprietary software used in the billing services
provided to long distance service carriers that outsource their
teleconferencing function to the Company.

The Company intends to consolidate its billing function over the next 6 to
12 months by using the most advanced of the Operating Center billing systems
as a platform for centralization. The Company believes that centralization of
the billing system will enable the Company to deliver additional customized
pricing, billing and reporting features to satisfy both customer and internal
requests. Each of the Operating Centers will continue to process invoices with
its existing system until the new centralized system has been implemented and
management has verified that the centralized system is performing at designed
proficiency. See "Risk Factors--Absence of Consolidated Operating History;
Difficulty of Integrating the Operating Centers."

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COMPETITION

The teleconferencing service industry is highly competitive and subject to
rapid change. The Company currently competes, or expects to compete in the
near future, with the following categories of companies: (i) IXCs, such as
AT&T, MCI, Sprint, Frontier and Cable & Wireless, (ii) independent LECs, such
as GTE and Cincinnati Bell, and (iii) other PCSBs. According to estimates from
industry sources, the IXCs served approximately 78% of the audio
teleconferencing market in 1996. The IXCs generally do not market
teleconferencing services separately, but rather offer such services as part
of a "bundled" telecommunications offering. The IXCs have not emphasized
enhanced services or customized communications solutions to meet customer
needs. However, there can be no assurance that these competitors will not
alter their current strategies and begin to focus on services-specific
selling, customized solutions and operator-attended services, the occurrence
of any of which could increase competition. Under the Telecommunications Act
of 1996, the RBOCs may also be allowed to provide long distance services
within the regions in which they also provide local exchange services ("in-
region long distance services") upon the satisfaction of certain conditions,
including the specific approval of the FCC, the introduction of or a defined
potential for facilities-based local competition, the offering of local
services for resale, and compliance with access and interconnection
requirements for facilities-based competitors. Upon entrance into the long
distance market, the ability of an RBOC to gain immediate and significant
teleconferencing market share could be enhanced by its status as the incumbent
primary provider of local services to its customers.

Management expects that there will be additional competition in video and
data conferencing from existing providers of audio teleconferencing services,
as well as new competitors dedicated to video and/or data conferencing. The
Company believes that the principal competitive factors influencing the market
for its services are brand identity, quality of customer service, breadth of
service offerings, price and vendor reputation. There can be no assurance that
the Company will be able to compete successfully with respect to any of these
factors. Competition may result in significant price reductions, decreased
gross margins, loss of market share and reduced acceptance of the Company's
services.

The Company derived approximately 14% of its 1997 combined net revenues from
IXCs and LECs which outsource teleconferencing services provided to their
respective customers. These telecommunications companies have the financial
capability and expertise to deliver such services internally. There can be no
assurance that the Company's current IXC and LEC customers will not begin to
provide the teleconferencing services now being provided by the Company and
pursue such market actively and in direct competition with the Company, which
could have a material adverse effect on the Company's business, financial
condition, results of operations and prospects. Moreover, the Company believes
that part of the Company's growth will occur from RBOCs which may enter the
long distance market and outsource their teleconferencing services. There can
be no assurance that any telecommunications company able to offer
teleconferencing services legally, now or in the future, will choose to do so
or that those choosing to do so will outsource their teleconferencing services
or choose the Company as their provider in case they do outsource
teleconferencing.

Two of the Company's largest outsourcing customers have recently agreed to
acquire or merge with competitors of the Company. Collectively, these
customers accounted for approximately 13% of the Company's 1997 combined net
revenues. Although one of these customers, representing approximately 9% of
the Company's 1997 combined net revenues, has verbally informed the Company
that it will honor its outsourcing contract with the Company through at least
August 1999, there can be no assurance that such customer will continue to use
the Company's services going forward. The Company believes that the second
customer, representing approximately 4% of the Company's 1997 combined net
revenues, will move its teleconferencing business to a teleconferencing
company it has recently acquired.

The Company also believes that many of its current and prospective customers
have sufficient resources to purchase the equipment and hire the personnel
necessary to establish and maintain teleconferencing capabilities sufficient
to meet their own respective teleconferencing needs. If the manufacturers of
PBXs develop improved, cost-effective PBX capabilities for handling
teleconferences with the quality of existing MCUs used in the

37
<PAGE>

teleconferencing business, the Company's customers could choose to purchase
such equipment and hire the personnel necessary to service their
teleconferencing needs through internal telephone systems. The loss of such
customers could have a material adverse effect on the Company's business,
financial condition, results of operations and prospects. Additionally, if
Internet technology can be modified to accommodate multipoint voice
transmission comparable to existing MCUs used in the teleconferencing
business, there could be a material adverse effect on the Company's business,
financial condition, results of operations and prospects.

Many of the Company's current and potential competitors have substantially
greater financial, sales, marketing, managerial, operational and other
resources, as well as greater name recognition, than the Company and may be
able to respond more effectively than the Company to new or emerging
technologies and changes in customer requirements. In addition, such
competitors may be capable of initiating or withstanding significant price
decreases or devoting substantially greater resources than the Company to the
development, promotion and sale of new services. Because MCUs are not
prohibitively expensive to purchase or maintain, companies previously not
involved in teleconferencing could choose to enter the marketplace and compete
with the Company. There can be no assurance that new competitors will not
enter the Company's markets or that consolidations or alliances among current
competitors will not create significant new competition. In order to remain
competitive, the Company will be required to provide superior customer service
and to respond effectively to the introduction of new and improved services
offered by its competitors. Any failure of the Company to accomplish these
tasks or otherwise to respond to competitive threats may have a material
adverse effect on the Company's business, financial condition, results of
operations and prospects.

SUPPLIERS

The Company's services require two material components which it purchases
from outside suppliers:

Telecommunications Services. A significant portion of the Company's direct
costs are attributable to the purchase of local and long distance telephone
services. The Operating Centers have purchased telecommunications services
from a number of vendors, including AT&T, Sprint, MCI and Cable & Wireless.
The Company believes that multiple suppliers will continue to compete for the
Company's telecommunications contracts. Since the minutes of use generated by
the Company will be substantially higher than the largest of the Operating
Centers, the Company's experience subsequent to the Acquisitions is that it
has been able to negotiate telecommunications contracts with lower prices and
improved service guarantees. The Company anticipates that new
telecommunications contracts will be phased in over time as the existing
contracts at the Operating Centers expire. In light of what the Company
believes to be increased competition among long distance service providers,
the Company has been entering into shorter-term contracts for long distance
services in order to obtain the benefit of anticipated reduced costs over
time. However, there can be no assurance that competition in the long distance
services market will continue to increase, that any increased competition will
reduce the cost of long distance services or that the Company's purchasing
strategy will result in cost savings. If the costs of long distance services
increase over time, the Company's current purchasing strategy (which calls for
shorter-term contracts) may place it at a competitive disadvantage with
respect to competitors that have entered into longer-term contracts for long
distance services. There can be no assurance that the Company's analysis of
the future costs of long distance services will be accurate, and the failure
to predict future cost trends accurately could have a material adverse effect
on the Company's business, financial condition, results of operations and
prospects.

Bridging Hardware and Software Support Systems. The Company uses MCU
equipment produced by four outside manufacturers. At present, the MCU
equipment being utilized is not functionally identical, but is compatible with
substantially all network standards. Approximately 44% of the Operating
Centers' port capacity was manufactured by one vendor, MultiLink, Inc.
("MultiLink"), which was acquired by PictureTel Corporation in 1997. However,
a number of other vendors offer similar MCU equipment. The Company intends to
use its position as a substantial purchaser of MCU equipment to attempt to
negotiate a volume purchase contract with each selected manufacturer. In
addition, one of the Operating Centers has MCU design and manufacturing
resources that are utilized to build equipment for internal use. The Company
intends to develop its internal MCU

38
<PAGE>

capabilities further to provide advanced feature functionality to address
specific client applications, remote operations (network or client based) and
improved integration of the MCU into existing management information systems.

FACILITIES

The Company's corporate headquarters are currently located in approximately
2,600 square feet of office space in Andover, Massachusetts under a lease
expiring May 31, 1999. However, the Company has recently entered into a new
six year lease agreement with its current landlord pursuant to which the
Company will terminate its current lease and will move its corporate offices
into an approximately 11,900 square foot space at a nearby office building in
Andover, Massachusetts. The Company anticipates that its move will be
completed by mid-June 1998.

The Operating Centers are located in leased locations in Virginia, Georgia,
Alabama, Massachusetts, New Jersey and Connecticut. The Company believes all
of its locations are fully utilized except for its approximately 41,000 square
foot facility in Reston, Virginia and its approximately 12,000 square foot
facility in Oradell, New Jersey, each of which is approximately 80% utilized.
The Company occupies the Operating Centers and other facilities under leases
which provide for a total of approximately 88,500 square feet at rates ranging
from $5.00 to $23.00 per square foot with expiration dates, excluding month-
to-month leases, ranging from May 1999 to May 2008. The Company's total lease
expense related to its facilities was approximately $908,000 and $961,000 for
the years ended December 31, 1996 and 1997, respectively. The Company believes
its properties are adequate for its needs. The Company's facilities are
located either within one mile of central telephone switching locations or on
a sonet fiberoptic loop in metropolitan locations. Each facility has dual
sources of power or back-up generating capabilities. While the Company's
telephone and power requirements may preclude it from locating in some areas,
the Company believes alternative locations are available for its facilities at
competitive prices.

EMPLOYEES

As of March 31, 1998, the Company had 421 employees, 237 of whom were
employed full time or part time as operators or reservationists. None of the
Company's employees are represented by unions. The Company has experienced no
work stoppages and believes its relationships with its employees are good.

REGULATION

In general, the telecommunications industry is subject to extensive
regulation by federal, state and local governments. Although there is little
or no direct regulation in the United States of the core group communications
services offered by the Company, various government agencies, such as the FCC,
have jurisdiction over some of the Company's current and potential suppliers
of telecommunications services, and government regulation of those services
has a direct impact on the cost of the Company's group communications
services.

A central element of the Company's business strategy is to capitalize on
outsourcing opportunities. With the passage of the Telecommunications Act of
1996, the Company believes that the RBOCs will seek to enter the market for
long distance services and that competition in the markets for both local and
long distance telephone services will increase. In order to compete
successfully in those markets, the Company believes that the IXCs, LECs and
RBOCs will seek to provide teleconferencing and other group communications
services, but will outsource such services. Because the Company's outsourcing
strategy in part depends on the entrance of the RBOCs into the long distance
market, any factor that delays or prevents the entrance of the RBOCs into that
market could impact the Company's strategy. For example, the
Telecommunications Act of 1996 imposes strict pre-conditions to the provision
of in-region long distance services by the RBOCs, including the specific
approval of the FCC, the introduction of facilities-based local competition,
the offering of local services for resale, compliance with access and
interconnection requirements for facilities-based competitors, and the
establishment of a separate operating subsidiary with separate financing,
management, employees, and books and records. There can be no assurance that
the RBOCs will be able to meet all of the requirements of the
Telecommunications Act of 1996 on a timely basis, if at all. Even if one or
more RBOCs meets these

39
<PAGE>

requirements, there can be no assurance that the entrance of such RBOCs into
the long distance market will cause any IXCs, LECs or RBOCs to seek to
outsource their audio teleconferencing services or that a significant number
of IXCs, LECs or RBOCs will not continue to provide audio teleconferencing
services in direct competition with the Company. Finally, there can be no
assurance that any IXCs, LECs or RBOCs seeking to outsource audio
teleconferencing services will obtain such services from the Company. The
failure of IXCs, LECs and RBOCs to outsource audio teleconferencing services
to the Company could have a material adverse effect on the Company's growth
strategy and business, financial condition, results of operations and
prospects.

The Telecommunications Act of 1996 is being contested both administratively
and in the courts, and opinions vary widely as to the effects and timing of
various aspects of the law. There can be no assurances at this time that the
Telecommunications Act of 1996 will create any opportunities for the Company,
that local access services will be provided by the IXCs, or that the RBOCs
will be able to offer long distance services, including teleconferencing. The
Telecommunications Act of 1996 has caused changes in the telecommunications
industry, and the Company is unable to predict the extent to which such
changes may ultimately affect its business. There can be no assurance that the
FCC or other government agencies will not seek in the future to regulate the
prices, conditions or other aspects of the group communications services
offered by the Company, that the FCC will not impose registration,
certification or other requirements on the provision of those services, or
that the Company would be able to comply with any such requirements.

The Company is subject to laws and regulations that affect its ability to
provide certain of its enhanced services, such as those relating to the
recording of telephone calls. Changes in the current federal, state or local
legislation or regulation could have a material adverse effect on the
Company's business, financial condition, results of operations and prospects.
Moreover, government regulations in countries other than the United States
vary widely and may restrict the Company's ability to offer its services in
those countries. The Company believes that it is currently in material
compliance with applicable communications laws and regulations.

LEGAL PROCEEDINGS

Other than as described below, there are no material pending legal
proceedings to which the Company is a party or to which any of its properties
are subject.

In connection with the acquisition of the assets of the Montgomery Center
from Call Points, Inc. ("Call Points"), the Company agreed to assume all
disclosed liabilities with the exception of any liabilities arising out of
Equal Employment Opportunity Commission ("EEOC") claims and litigation filed
against Call Points and Ropir Industries, Inc. ("Ropir"), the sole stockholder
and parent corporation of Call Points, by certain former and current
employees. On or about October 30, 1997, 11 employees or former employees of
Call Points filed claims in federal district court against Call Points, Ropir
and certain other parties named therein. Complainants in these cases could
seek to name the Company as a defendant in such pending litigation and could
seek to hold the Company liable for damages resulting from the litigation as a
successor in interest to Call Points. In addition to equitable relief, the
complainants are seeking back pay, compensatory and punitive damages and
attorneys fees based on allegations of discrimination, retaliation and
racially harassing atmosphere. Although the Company believes it has defenses
to any such claim, there can be no assurance that any such defense would be
successful. The principal stockholder of Call Points agreed to indemnify the
Company from any liability relating to such claims and placed $250,000 of the
proceeds from the sale of the assets of Call Points in escrow with a third
party to secure such indemnification obligations. In light of such
indemnification, the Company does not believe that such claims, if successful,
would have a material adverse effect on the Company.

A former employee of Conference Source International, Inc. ("CSI"), the
Atlanta Center, has claimed in writing that he may be entitled to up to five
percent of the stock of CSI, based on an unsigned paper outlining possible
employment terms. CSI's position is that the only agreements with such
employee were set forth in two successive executed employment agreements, each
of which had a specific provision that such agreement was inclusive as to the
terms of employment. The Company and the former stockholders of CSI believe
that such claim is without merit.

40
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with regard to the
Directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Glenn D. Bolduc(1)...... 45 Chief Executive Officer, President, Treasurer and Director
John J. Dion............ 39 Vice President--Finance
Robert F. Moore......... 43 Vice President--Marketing and Business Development
Gary G. Vilardi......... 43 Vice President--Sales
John R. Williams........ 37 Vice President--Operations
Michael D. Shepherd..... 34 Vice President--Wholesale Sales
C. Raymond Marvin....... 59 Vice President
Joanna M. 38 Director
Jacobson(1)(2).........
David L. Lougee(1)(2)... 58 Director
David L. Lipsky......... 52 Director and President--Oradell (NJ) Center
Patti R. Bisbano........ 53 Director and President--Danbury (CT) Center
William P. Pucci........ 52 President--Reston (VA) Center
Judy B. Crawford........ 45 President--Atlanta (GA) Center
Courtney P. Snyder...... 48 President--Cambridge (MA) Center
Olen E. Crawford........ 45 President--Montgomery (AL) Center
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

GLENN D. BOLDUC has served as Chief Executive Officer, President and a
Director of the Company since October 1, 1996 and as Treasurer since July 9,
1997. From July 1989 to September 1996, Mr. Bolduc served as Chief Financial
Officer of MultiLink, an independent supplier of audio conferencing bridges.

JOHN J. DION has served as Vice President--Finance for the Company since
November 1996, and served as a Director from July 9, 1997 to November 12,
1997. On February 23, 1998, Mr. Dion was also appointed Vice President-Finance
of each of the Operating Centers. From October 1995 to October 1996, Mr. Dion
provided financial consultative services to a medical device manufacturer and
publishing company. From August 1985 to August 1995, Mr. Dion served in
various financial positions for DSC Communications Corporation, a manufacturer
of telecommunications hardware and software. Mr. Dion's final position with
DSC was Director of Accounting.

ROBERT F. MOORE joined the Company on November 1, 1997 as Vice President--
Marketing and Business Development. Mr. Moore served as Vice President--Sales
and Marketing for Citizens Communication Corporation, a division of Citizens
Utilities, Inc. from March 1997 to October 31, 1997. From January 1994 to
February 1997, Mr. Moore was with Hill Holliday Connors Cosmopulos, Inc.
Advertising. For the 17 years prior to that, Mr. Moore served in various sales
and marketing positions with Southern New England Telephone ("SNET"), the last
four years of which he served as President of SNET Mobility, Inc., the
cellular communications subsidiary of SNET.

GARY G. VILARDI has served as Vice President--Sales of the Company since
April 1, 1997. He has spent 17 years in sales and sales management and has
focused on audio, video, and document conferencing sales during the last eight
years. From October 1995 to December 1996 Mr. Vilardi was Vice President--
Sales with Video-On, Inc., a GE Capital Company specializing in video
conferencing. From June 1995 to October 1995 he served as Eastern Regional
Vice President for Network MCI teleconferencing, and from March 1990 to June
1995 he was Vice President of U.S. Sales for Darome Teleconferencing.

41
<PAGE>

JOHN R. WILLIAMS joined the Company on November 1, 1997 as Vice President--
Operations. Mr. Williams served as General Manager of the Sprint Conference
Line, Sprint's audio teleconferencing service bureau business, from July 1995
to October 1997. Mr. Williams held positions in product development,
marketing, and strategic planning in the Sprint Long Distance Division from
November 1989 to July 1995. From June 1984 to November 1989 he was a National
Account Manager at IBM.

MICHAEL D. SHEPHERD joined the Company on February 2, 1998 as Vice
President--Wholesale Sales. Mr. Shepherd served as Vice President of Carrier
Sales at Citizens Communications Corporation, a division of Citizens Utilities
Companies, Inc. from November 1997 to February 1998. From April 1997 to
November of 1997, Mr. Shepherd served as Director--Major Accounts (Western
Region) with Citizens Communications Corporation where he was responsible for
managing the business relationships with AT&T Communications, Inc., U.S. West
Communications, Inc., Pacific Telesis, and several national wireless
companies. From April 1986 to February 1995, Mr. Shepherd held various sales
positions with WorldCom and MCI.

C. RAYMOND MARVIN has served as a Vice President of the Company since
December 31, 1997. He founded Telephone Business Meetings, Inc. ("Access"),
the Reston Center, in 1987 and served as President and Chief Executive Officer
of Access from its inception to December 31, 1997 and as a director of the
Reston Center from its inception to November 12, 1997.

JOANNA M. JACOBSON served as a consultant to VIALOG Corporation prior to,
and became a Director of the Company on November 12, 1997. Since April 1996,
Ms. Jacobson has been President of Keds, a distributor of athletic footwear
and a division of Stride-Rite Corporation. From February 1995 to March 1996,
she was a partner in Core Strategy Group, a strategic marketing consulting
firm. From December 1991 to September 1994, Ms. Jacobson was a Senior Vice
President of Marketing and Product Development for Converse, Inc., a
distributor of athletic footwear.

DAVID L. LOUGEE became a Director of the Company on November 12, 1997. Mr.
Lougee has been a partner of the law firm of Mirick, O'Connell, DeMallie &
Lougee, LLP since 1972. Mr. Lougee is also a director of Meridian Medical
Technology, Inc., a public company in the medical devices and drug delivery
business. Mirick, O'Connell, DeMallie & Lougee, LLP serves as outside general
counsel to the Company.

DAVID L. LIPSKY has served as President of the Oradell Center since November
12, 1997. He founded American Conferencing Company, Inc. ("Americo"), which
merged into a wholly-owned subsidiary of the Company on November 12, 1997, in
August 1987 and served as President, Chief Executive Officer and as a director
of Americo from its inception to November 12, 1997. From 1983 until 1996, Mr.
Lipsky also served as President and Chief Executive Officer of Resource
Objectives, Inc., a seller of communications equipment that merged into
Americo in 1996. Mr. Lipsky became a Director of the Company on November 12,
1997. The Company and Mr. Lipsky are currently negotiating an agreement
whereby Mr. Lipsky will resign as President of the Oradell Center and as a
Director of the Company and will receive certain severance consideration.

PATTI R. BISBANO has served as President of the Danbury Center since
November 12, 1997. She co-founded Communication Development Corporation
("CDC") in April 1990 and served as President, Treasurer and as a director of
CDC from its inception to November 12, 1997. Ms. Bisbano became a Director of
the Company on November 12, 1997.

WILLIAM P. PUCCI has served as President of the Reston Center since December
31, 1997 and served as Vice President--Operations for the Company from May
1996 to December 1997. Prior to joining the Company, Mr. Pucci spent 28 years
in the telecommunications industry with New England Telephone, AT&T, and
NYNEX.

JUDY B. CRAWFORD has served as President of the Atlanta Center since
November 12, 1997. She co-founded Conference Source International, Inc.
("CSI") in February 1992 and served as President, Chief Executive Officer and
as a director of the Atlanta Center from its inception to November 12, 1997.

42
<PAGE>

COURTNEY P. SNYDER has served as President of the Cambridge Center since
November 12, 1997. He founded Kendall Square Teleconferencing ("TCC") in 1987
and served as President, Chief Executive Officer and as a director of TCC from
its inception until the Acquisition of TCC by VIALOG Corporation.

OLEN E. CRAWFORD co-founded CSI in February 1992 and served as Executive
Vice President until his appointment as President of the Montgomery Center in
November 1997. From March 1988 until January 1992, Mr. Crawford was a
principal in Crawford and Associates, a telecommunications consulting firm.
During 1990 and 1991, Mr. Crawford served as Executive Vice President and
General Manager of Call Points, Inc. Between 1972 and 1988, Mr. Crawford held
positions at South Central Bell Telephone Company and other telecommunications
related entities.

The Company's Board of Directors is divided into three classes, with one
class of directors elected each year at the annual meeting of stockholders for
a three-year term of office. All directors of one class hold their positions
until the annual meeting of stockholders at which the terms of the directors
in such class expire and until their respective successors are elected and
qualified. Mr. Lipsky serves in the class whose terms expire in 1998, Ms.
Jacobson and Ms. Bisbano serve in the class whose terms expire in 1999, and
Mr. Bolduc and Mr. Lougee serve in the class whose terms expire in 2000.
Executive officers of the Company are elected annually by the Board of
Directors and serve at the discretion of the Board of Directors or until their
successors are duly elected and qualified. The Company and Mr. Lipsky are
currently negotiating an agreement whereby Mr. Lipsky will resign as President
of the Oradell Center and as a Director of the Company and will receive
certain severance consideration.

On January 6, 1998, the Board of Directors established an Audit Committee
and a Compensation Committee. The Audit Committee will review the scope and
results of the annual audit of the Company's consolidated financial statements
conducted by the Company's independent accountants, proposed changes in the
Company's financial and accounting standards and principles, and the Company's
policies and procedures with respect to its internal accounting, auditing and
financial controls, and will make recommendations to the Board of Directors on
the engagement of the independent accountants, as well as other matters which
may come before it or as directed by the Board of Directors. The Compensation
Committee will administer the Company's compensation programs, including the
1996 Stock Plan, and will perform such other duties as may from time to time
be determined by the Board of Directors.

DIRECTOR COMPENSATION

Directors who are also employees of the Company or one of its subsidiaries
do not receive additional compensation for serving as Directors. Each Director
who is not an employee of the Company or one of its subsidiaries received upon
his or her election as a Director an option to purchase 12,000 shares of
Common Stock at its then fair market value, and will receive a fee of $500 for
attendance at each Board of Directors meeting and $250 for each committee
meeting (unless held on the same day as a Board of Directors meeting).
Directors are also reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or committees thereof or otherwise incurred
in their capacity as Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

On January 6, 1998, the Company's Board of Directors established a
Compensation Committee, consisting of Mr. Bolduc, Ms. Jacobson and Mr. Lougee.
Mr. Bolduc also serves as the Chief Executive Officer, President, Treasurer
and a Director of the Company. Mr. Lougee also serves as a Director of the
Company and is a partner of Mirick, O'Connell, DeMallie & Lougee, llp, the
Company's legal counsel. Prior to the establishment of the Compensation
Committee, decisions as to executive compensation were made by the Board of
Directors. From January 1, 1997 until February 21, 1997, the Board of
Directors consisted of John J. Hassett, Mr. Bolduc and Thomas M. Carroll. Mr.
Carroll is the brother-in-law of Mr. Hassett. On February 21, 1997, Mr.
Carroll resigned as Director and was replaced by Bruce T. Guzowski. On July 9,
1997, Mr. Guzowski resigned and was replaced by John J. Dion. On November 12,
1997, Mr. Dion and Mr. Hassett resigned as Directors, and Mr. Lougee,
Ms. Bisbano, Ms. Jacobson and Mr. Lipsky were appointed Directors. The Company
and Mr. Lipsky are currently negotiating an agreement whereby Mr. Lipsky will
resign as President of the Oradell Center and as a Director of the Company and
will receive certain secerance consideration.

43
<PAGE>

There are no compensation committee interlocks.

EXECUTIVE COMPENSATION

The following table sets forth the compensation earned by the individual who
served as the Company's President during the year ended December 31, 1997 and
the Company's five most highly-compensated executive officers other than the
President who were serving as executive officers on December 31, 1997 (the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE
FISCAL YEAR 1997

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ------------------------
AWARDS PAYOUTS
------------- ----------
SECURITIES
UNDERLYING ALL
OTHER ANNUAL RESTRICTED OPTIONS/ OTHER
SALARY BONUS COMPENSATION STOCKAWARD(S) SARS COMPENSATION
NAME AND PRINCIPAL POSITION ($) ($) ($) ($)(3) (#) ($)
- --------------------------- ------- ------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Glenn D. Bolduc.......... 33,000 270,000(1) (2) 0 75,000 0
President and CEO
C. Raymond Marvin........ 242,000 121,000 (2) 0 0 0
Vice President
David L. Lipsky.......... 238,000 94,000 (2) 0 75,000 $5,218(5)
Director, President--
Oradell Center
Courtney P. Snyder....... 145,000 0 (2) 0 75,000 $9,460(6)
President--Cambridge
Center
Judy B. Crawford......... 118,000 0 20,000(4) 0 0 $ 505(7)
President--Atlanta
Center
Patti R. Bisbano......... 76,000 40,000 (2) 0 62,500 0
President-Danbury Center
</TABLE>
- --------
(1) Pursuant to an employment agreement executed by the Company and Mr. Bolduc
in 1996, Mr. Bolduc began to earn an annual salary of $250,000 and a
monthly automobile allowance of $1,000 effective November 12, 1997, the
date of closing of the Unit Offering. In January 1998, the Company paid
Mr. Bolduc a one-time bonus equal to 1/365th of his annualized salary and
automobile allowance multiplied by the number of days from the date of his
employment by VIALOG Corporation to the closing of the Unit Offering.

(2) The aggregate amount of the Named Executive Officer's Compensation
reportable under this category falls below the reporting threshold under
Item 402(b)(2)(iii)(C)(1) of Regulation S-K.

(3) None of the Named Executive Officers received compensation for their
services in the form of restricted stock awards during the fiscal year
ended December 31, 1997. However, as of December 31, 1997, each of the
Named Executive Officers held restricted shares of the Company's Common
Stock as follows:

<TABLE>
<CAPTION>
VALUE($)
NAMED EXECUTIVE OFFICERS RESTRICTED SHARES(#) ($5.75/SHARE)
------------------------ -------------------- -------------
<S> <C> <C>
Glenn D. Bolduc......................... 32,500 186,875
C. Raymond Marvin....................... 0 0
David L. Lipsky......................... 267,826 1,539,999
Courtney P. Snyder...................... 48,780 280,485
Judy B. Crawford........................ 0 0
Patti R. Bisbano........................ 52,174 300,000
</TABLE>

The Company has no current plans to pay dividends on the above-referenced
restricted shares.

(4) Consists of an aggregate auto allowance of approximately $17,000 and
aggregate country club dues of approximately $3,000.

44
<PAGE>

(5) Americo paid an aggregate of $2,545 in premiums on a split-dollar term
life insurance policy on the life of Mr. Lipsky, the proceeds of which are
to be divided equally between Americo and Mr. Lipsky's spouse. Americo
also paid an aggregate of $2,673 in premiums on a term life insurance
policy on the life of Mr. Lipsky's spouse, the proceeds of which are
payable to Mr. Lipsky. The Company and Mr. Lipsky are currently
negotiating an agreement whereby Mr. Lipsky will resign as President of
the Oradell Center and as a Director of the Company and will receive
certain severance consideration.

(6) TCC paid an aggregate of $9,460 in premiums on a whole life insurance
policy on the life of Mr. Snyder, the proceeds of which are payable to a
beneficiary designated by Mr. Snyder. The policy's cash surrender value,
which was $27,114 as of March 30, 1998, is payable to Mr. Snyder.

(7) CSI paid an aggregate of $505 in premiums on a term life insurance policy
on the life of Ms. Crawford, the proceeds of which are payable to a
beneficiary designated by Ms. Crawford.

EMPLOYMENT AND NONCOMPETITION AGREEMENTS

The following table sets forth a summary of the terms of the employment
agreements that were entered into with the Named Executive Officers.

<TABLE>
<CAPTION>
NAME POSITION SALARY EXPIRES
---- --------------------------- -------- -------------
<S> <C> <C> <C>
Glenn D. Bolduc(1)........... President and CEO--VIALOG $250,000 18 months
C. Raymond Marvin(2)......... Vice President--VIALOG $242,000 November 1999
David L. Lipsky(3)........... President--Oradell Center $225,000 November 2000
Courtney P. Snyder(4)........ President--Cambridge Center $160,000 November 2000
Judy B. Crawford(5).......... President--Atlanta Center $255,000 November 1998
Patti R. Bisbano(6).......... President-Danbury Center $140,000 November 2000
</TABLE>
- --------
(1) Pursuant to an employment agreement executed by the Company and Mr. Bolduc
in 1996, Mr. Bolduc began to earn an annual salary of $250,000 and a
monthly automobile allowance of $1,000 upon the closing of the Unit
Offering. In January, 1998, the Company paid Mr. Bolduc a one-time bonus
equal to 1/365th of his annualized salary and automobile allowance
multiplied by the number of days from the date of his employment by VIALOG
Corporation to the closing of the Unit Offering. Mr. Bolduc's employment
agreement also provides for a severance payment of 18 months' then current
salary and the continuation of all fringe benefits for 18 months at the
Company's expense after the termination of his employment.

(2) Mr. Marvin's employment agreement provides that if Mr. Marvin's employment
terminates during the term of his employment other than for cause, death
or disability, he will be entitled to receive his base compensation and
group insurance benefits during a period equal to the greater of (i) one
year or (ii) the remainder of the term of his employment contract.

(3) Mr. Lipsky's employment agreement provides that if Mr. Lipsky's employment
is terminated by the Oradell Center other than for cause, disability or
death, he will be entitled to receive his base compensation and group
insurance benefits during a period equal to the greater of (i) one year or
(ii) the remainder of the term of his employment agreement. Mr. Lipsky is
entitled to a monthly automobile allowance of $750. The Company and Mr.
Lipsky are currently negotiating an agreement whereby Mr. Lipsky will
resign as President of Americo and as Director of the Company and will
receive certain severance consideration.

(4) Mr. Snyder's employment agreement provides that if Mr. Snyder's employment
is terminated by the Cambridge Center other than for cause, disability or
death, he will be entitled to receive his base compensation and group
insurance benefits during a period equal to the greater of (i) one year or
(ii) the remainder of the term of the employment agreement. The Cambridge
Center also maintains a life insurance policy on the life of Mr. Snyder in
the face amount of $750,000, the proceeds of which are payable to a
beneficiary to be designated by him. He is also entitled to a monthly
automobile allowance of $400.

(5) Ms. Crawford's employment agreement provides that if Ms. Crawford's
employment is terminated by the Atlanta Center other than for cause,
disability or death, she will be entitled to receive her base compensation
and group insurance benefits during a period equal to the remainder of the
term of her employment

45
<PAGE>

agreement. The Atlanta Center also maintains a life insurance policy on the
life of Ms. Crawford in the face amount of $1.0 million, the proceeds of
which are payable to a beneficiary to be designated by her. She is also
entitled to a monthly automobile allowance of $1,440.

(6) Ms. Bisbano's employment agreement provides that if Ms. Bisbano's
employment is terminated by the Danbury Center other than for cause,
disability or death, she will be entitled to receive her base compensation
and group insurance benefits during a period equal to the remainder of the
term of her employment agreement. Ms. Bisbano is entitled to a monthly
automobile allowance of $400.

1996 STOCK PLAN

On February 14, 1996, the Board of Directors and the Company's stockholders
approved the Company's 1996 Stock Plan (the "Plan"). The purpose of the Plan
is to provide directors, officers, key employees, consultants and other
service providers with additional incentives by increasing their ownership
interests in the Company. Individual awards under the Plan may take the form
of one or more of (i) incentive stock options ("ISOs"), (ii) non-qualified
stock options ("NQSOs"), (iii) stock appreciation rights ("SARs") and (iv)
restricted stock.

The Compensation Committee administers the Plan and generally selects the
individuals who will receive awards and the terms and conditions of those
awards. The maximum number of shares of Common Stock that may be issued or
issuable under the Plan, determined immediately after the grant of any award,
may not exceed 3,250,000 shares. Shares of Common Stock subject to awards
which have expired, terminated or been canceled or forfeited are available for
issuance or use in connection with future awards.

The Plan will remain in effect until February 14, 2006 unless terminated
earlier by the Board of Directors. The Plan may be amended by the Board of
Directors without the consent of the stockholders of the Company, except that
any amendment, although effective when made, will be subject to stockholder
approval if required by any Federal or state law or regulation or by the rules
of any stock exchange or automated quotation system on which the Common Stock
may then be listed or quoted.

The following table sets forth all options granted to the Named Executive
Officers in 1997:

OPTION GRANTS IN 1997

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED (#) YEAR (%) ($/SHARE)(1) DATE 5%($) 10%($)
---- ----------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Glenn D. Bolduc......... 75,000 14.7(4) 2.00 (2) 94,334 239,061
C. Raymond Marvin....... 0 0 0 (2) -- --
David L. Lipsky......... 75,000 14.7(5) 5.75 (2) 271,211 687,301
Courtney P. Snyder...... 75,000 14.7(5) 5.75 (2) 271,211 687,301
Judy B. Crawford........ 0 0 0 (2) -- --
Patti R. Bisbano........ 62,500 12.3 5.75 (2) 226,009 572,751
</TABLE>
- --------
(1) All options were granted at fair market value as determined by the Board
of Directors of the Company on the date of grant. The Board of Directors
determined the market value of the Common Stock based on various factors,
including the illiquid nature of an investment in the Company's Common
Stock, the absence of any operating history and the Company's future
prospects.

(2) All options granted to the Named Executive Officers terminate on the
earlier of (i) the date of termination of employment if the Named
Executive Officer ceases to be employed by the Company or (ii) 10 years
from date of grant.

46
<PAGE>

(3) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming the specified compounded rates of appreciation of
the Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Commission and do not
represent the Company's estimate of future stock price growth. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on timing of such exercise and future performance of the
Company's Common Stock. There can be no assurance that the rates of
appreciation assumed in this table can be achieved or that the amounts
reflected will be received by the Named Executive Officers. This table
does not take into account any appreciation in the price of the Common
Stock from the date of grant to current date. The values shown are net of
the option exercise price, but do not include deductions for taxes or
other expenses associated with the exercise.

(4) This option vests over a three year period vesting as to 25,000 shares on
the first anniversary of the grant date and as to 6,250 shares on the last
day of each quarter thereafter until the option has vested in full.

(5) This option vests over a three year period vesting as to 5,700 shares on
December 31, 1997 and as to 6,300 shares on the last day of each quarter
thereafter until the option has vested in full.

(6) This option vests over a three year period vesting as to 5,212 shares on
December 31, 1997 and as to 5,208 shares on the last day of each quarter
thereafter until the option has vested in full.

The following table sets forth the value of all unexercised options held by
the Named Executive Officers at the end of 1997:

1997 FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR END (#) YEAR END ($)(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Glenn D. Bolduc............. 66,690 168,310 $381,601 $815,170
C. Raymond Marvin........... 0 0 0 0
David L. Lipsky............. 5,700 69,300 0 0
Courtney P. Snyder.......... 5,700 69,300 0 0
Judy B. Crawford............ 0 0 0 0
Patti R. Bisbano............ 5,212 57,288 0 0
</TABLE>
- --------
(1) There was no public trading market for the Common Stock on December 31,
1997. Accordingly, solely for the purposes of this table, the values in
this column have been calculated on the basis of a determination of the
fair market value of the Common Stock on December 31, 1997 ($5.75 per
share), less the aggregate exercise price of the options.

47
<PAGE>

CERTAIN TRANSACTIONS

ORGANIZATION OF THE COMPANY

On November 12, 1997, VIALOG Corporation acquired (i) by merger, all of the
issued and outstanding stock of five PCSBs, and (ii) by purchase, the assets
of one PCSB, and each PCSB became a wholly-owned subsidiary of VIALOG
Corporation. The aggregate consideration paid by VIALOG Corporation for the
Acquisitions was 559,330 shares of Common Stock valued at $5.75 per share,
approximately $53.0 million in cash, approximately $782,000 in cash related to
tax reimbursements and approximately $448,000 of Acquisition costs. The
consideration paid was determined through arm's length negotiations among
VIALOG Corporation and the stockholders of each PCSB, and was based upon a
multiple of each PCSB's historical net revenue as well as each PCSB's customer
base, current operating results, geographic market, type and condition of its
equipment and facilities, and potential cost savings resulting from the
Acquisitions. The following table sets forth the approximate consideration
paid for each of the PCSBs.

<TABLE>
<CAPTION>
NAME CASH CONSIDERATION SHARES
---- ------------------ -------
<S> <C> <C>
Telephone Business Meetings, Inc. ("Access")........ $19,000,000(1) --
Conference Source International, Inc. ("CSI")....... 18,675,000(2) --
Call Points, Inc. ("Call Points")................... 8,000,000(3) 21,000
Kendall Square Teleconferencing, Inc. ("TCC")....... 3,645,000 166,156
American Conferencing Company, Inc. ("Americo")..... 1,260,000 267,826
Communication Development Corporation ("CDC")....... 2,400,000 104,348
----------- -------
Total Acquisition Consideration................... $52,980,000 559,330
=========== =======
</TABLE>
- --------
(1) VIALOG Corporation and Access agreed to make an election under Section
338(h)(10) of the Code to treat the purchase and sale of the capital stock
of Access as a purchase and sale of assets. VIALOG Corporation agreed to
reimburse the stockholders of Access an amount, estimated to be $700,000,
equal to the difference between the taxes incurred by such stockholders as
a result of the Section 338(h)(10) election and the taxes which would have
been incurred by such stockholders had no Section 338(h)(10) election been
made, together with the costs incurred in connection with making such
calculations. Such reimbursements have not been included in the Total
Acquisition Consideration shown above.
(2) VIALOG Corporation and CSI agreed to make an election under Section
338(h)(10) of the Code to treat the purchase and sale of the capital stock
of CSI as a purchase and sale of assets. VIALOG Corporation has reimbursed
the stockholders of CSI $225,000, an amount estimated to equal the
difference between the taxes incurred by such stockholders as a result of
the Section 338(h)(10) election and the taxes which would have been
incurred by such stockholders had no Section 338(h)(10) election been
made, together with the costs incurred in connection with making such
calculations. Such reimbursements have not been included in the Total
Acquisition Consideration shown above.
(3) Ropir Industries, Inc., the principal stockholder of Call Points, received
$1.0 million of the cash consideration of $8.0 million as compensation for
entering into a noncompetition agreement with VIALOG Corporation.

From June 30, 1997 through the consummation of the Acquisitions, certain of
the PCSBs made S corporation distributions of $1,687,000. In addition, during
the course of operations, certain of the PCSBs incurred indebtedness or
entered into capital leases which were guaranteed by their principal
stockholders. At September 30, 1997, the aggregate amount of indebtedness and
capital leases of the PCSBs that was subject to such personal guarantees was
approximately $3.5 million. The Company repaid approximately $2.2 million of
such indebtedness upon the closing of the Acquisitions, and the Company agreed
to use its best efforts to cause all such guarantees to be released. If the
Company cannot obtain such releases, it has agreed to arrange for the
discharge of such indebtedness. At March 31, 1998, the remaining aggregate
amount of such indebtedness and capital leases was $1.0 million.

48
<PAGE>

The following is a discussion of the material information regarding the
PCSBs and their principal stockholders:

VIALOG Corporation (i) caused a subsidiary of VIALOG Corporation to merge
with Access, whereby Access became a wholly owned subsidiary of VIALOG
Corporation and (ii) delivered to the stockholders of Access approximately
$19.0 million in cash in exchange for their shares of Access. VIALOG
Corporation granted options for 142,850 shares of Common Stock exercisable at
$5.75 per share to certain key employees of Access. If the Company completes
an initial public offering of its shares or is acquired or otherwise merges
with another entity and the consideration for such transaction is less than
$13.75 per share, such option holders will receive additional options
exercisable at $5.75 per share on a pro rata basis such that the total
aggregate value of such options equals $1.0 million. If an employee's
employment is terminated, other than by reason of death or disability, the
option must be exercised within 90 days thereafter or it will expire. Such
terminated employees will be entitled to cash bonuses equal to the
consideration required to be paid upon exercise of an option if such option is
exercised. Stockholders' equity of Access was approximately $2.1 million on
the date of the Acquisition. The Company repaid approximately $1.4 million of
indebtedness of Access, of which C. Raymond Marvin was the guarantor. Such
indebtedness was to mature through 2000 and bore interest at rates ranging
from 9.25% to 9.5% per annum. The Company agreed to arrange for the release of
such guarantees or to arrange for the discharge of indebtedness underlying
such guarantees. From June 30, 1997 through the consummation of the
Acquisition, Access made S corporation tax distributions of $652,000. Mr.
Marvin entered into a two-year employment agreement with Access which included
a covenant not to compete expiring no earlier than the latter of the third
anniversary of the merger or one year after the expiration of his severance
period under such agreement.

VIALOG Corporation (i) caused a subsidiary of VIALOG Corporation to merge
with CSI, whereby CSI became a wholly owned subsidiary of VIALOG Corporation
and (ii) delivered to the stockholders of CSI approximately $18.7 million in
cash in exchange for their shares of CSI. Stockholders' equity of CSI was
approximately $260,000 on the date of the Acquisition. Judy B. Crawford
remained as President of CSI following the closing of this Offering and
received approximately $9.3 million in cash. The Company repaid approximately
$500,000 of indebtedness of CSI, of which Ms. Crawford was the guarantor. Such
indebtedness was to mature in 2000 and bore interest at 9.5% per annum. In
addition, Ms. Crawford had guaranteed all of CSI's capital leases, which had
remaining lease payments of approximately $774,000 as of the date of the
Acquisition. The Company agreed to arrange for the release of such guarantees
or to arrange for the discharge of indebtedness underlying such guarantees.
From June 30, 1997 through the consummation of the Acquisition, CSI made S
corporation profit and tax distributions of $880,000. Ms. Crawford entered
into a one-year employment agreement with CSI which included a covenant not to
compete expiring no earlier than the third anniversary of the merger.

VIALOG Corporation (i) caused a subsidiary of VIALOG Corporation to acquire
substantially all of the assets of, and assumed specified liabilities of, Call
Points, (ii) delivered to Call Points $7.0 million in cash and 21,000 shares
of Common Stock in exchange for such assets and (iii) delivered to the
principal stockholder of Call Points $1.0 million in cash in exchange for a
noncompetition agreement. The net value of the assets acquired from Call
Points was approximately $2.4 million on the date of the Acquisition. VIALOG
Corporation obtained noncompetition agreements with a two-year noncompetition
period from the principal stockholder and a key employee of Call Points.

VIALOG Corporation (i) caused a subsidiary of VIALOG Corporation to merge
with TCC, whereby TCC became a wholly owned subsidiary of VIALOG Corporation
and (ii) delivered to the stockholders of TCC 166,156 shares of Common Stock
and approximately $3.6 million in cash in exchange for their shares of TCC.
Stockholders' equity of TCC was approximately $629,000 on the date of the
Acquisition. In 1996, TCC distributed certain technology and hardware with a
net book value of approximately $12,000 to certain stockholders of TCC.
Courtney P. Snyder remained as President of TCC and received 48,780 shares of
Common Stock and approximately $841,000 in cash. VIALOG Corporation granted to
Mr. Snyder options for 75,000 shares of Common Stock exercisable at the fair
market value as of the closing of the Acquisition as determined

49
<PAGE>

by the VIALOG Corporation Board of Directors. Such options are exercisable for
5,700 shares on December 31, 1997 and an additional 6,300 shares on the last
day of each of the 11 calendar quarters thereafter. The options will expire on
the third anniversary of the Acquisition. John J. Hassett, a principal
stockholder of VIALOG Corporation and of TCC, received 44,512 shares of Common
Stock and approximately $768,000 in cash. See "Principal Stockholders." The
Company repaid approximately $66,000 of indebtedness of TCC, of which Mr.
Snyder and Mr. Hassett were guarantors. Such indebtedness was to mature
through 1999 and bore interest at rates ranging from 9.5% to 11% per annum. In
addition, Mr. Snyder and Mr. Hassett were guarantors of certain of TCC's
capital leases, which had remaining lease payments of approximately $324,000
as of the date of the Acquisition. The Company agreed to arrange for the
release of such guarantees or to arrange for the discharge of indebtedness
underlying such guarantees. From June 30, 1997 through the consummation of the
Acquisition, TCC made S corporation tax distributions of $156,000. Mr. Snyder
entered into a three-year employment agreement with TCC which included a
covenant not to compete expiring no earlier than the third anniversary of the
merger or one year from the expiration of his severance period under such
agreement, whichever is the later to occur. VIALOG Corporation has also
obtained noncompetition agreements with a two-year noncompetition period from
certain other principal stockholders and/or employees of TCC.

VIALOG Corporation (i) caused Americo to merge with and into a wholly owned
subsidiary of VIALOG Corporation and (ii) delivered to David L. Lipsky, the
sole stockholder of Americo, 267,826 shares of Common Stock and approximately
$1.3 million in cash in exchange for his shares of Americo. Stockholders'
deficit of Americo was approximately $273,000 on the date of the Acquisition.
Mr. Lipsky remained as President of Americo. VIALOG Corporation granted to Mr.
Lipsky options for 75,000 shares of Common Stock, exercisable at the fair
market value as of the closing of the Acquisition as determined by the VIALOG
Corporation Board of Directors. Such options are exercisable for 5,700 shares
on December 31, 1997 and an additional 6,300 shares on the last day of each of
the 11 calendar quarters thereafter. The options will expire on the third
anniversary of the closing of the Acquisition. The Company repaid
approximately $185,000 of indebtedness of Americo, of which Mr. Lipsky was a
guarantor. Such indebtedness was to mature at various times through June 2001
and bore interest at 10% per annum. Mr. Lipsky entered into a three-year
employment agreement with Americo which included a covenant not to compete
expiring no earlier than the latter of the third anniversary of the merger or
one year from the expiration of his severance period under such agreement. The
Company and Mr. Lipsky are currently negotiating an agreement whereby Mr.
Lipsky will resign as President of Americo and as Director of the Company and
will receive certain severance consideration.

VIALOG Corporation (i) caused a subsidiary of VIALOG Corporation to merge
with CDC, whereby CDC became a wholly owned subsidiary of VIALOG Corporation
and (ii) delivered to the stockholders of CDC 104,348 shares of Common Stock
and approximately $2.4 million in cash in exchange for their shares of CDC.
Stockholders' equity of CDC was approximately $418,000 on the date of the
Acquisition. Patti R. Bisbano remained as President of CDC and received 52,174
shares of Common Stock and approximately $1.2 million in cash. Maurya Suda, a
principal stockholder of CDC, received 52,174 shares of Common Stock and
approximately $1.2 million in cash. VIALOG Corporation granted to Ms. Bisbano
and Ms. Suda options for an aggregate of 75,000 shares of Common Stock
exercisable at the fair market value as of the closing of the Acquisition as
determined by the VIALOG Corporation Board of Directors. Ms. Bisbano received
options for 62,500 shares which are exercisable for 5,212 shares on December
31, 1997 and an additional 5,208 shares on the last day of each of the 11
calendar quarters thereafter. Ms. Suda received options for 12,500 shares,
which are exercisable for 3,125 shares on December 31, 1997 and an additional
3,125 shares in the last day of each of the 3 calendar quarters thereafter.
The options will expire on the third anniversary of the closing of the
Acquisition. The Company repaid indebtedness of CDC, of which Ms. Bisbano was
a guarantor, of approximately $43,000. Such indebtedness was to mature in 2000
and bore interest at 9.5% per annum. Ms. Bisbano entered into a three-year
employment agreement with CDC which included a covenant not to compete
expiring on the later of one year from the expiration of her employment
agreement or two years from the expiration of her severance period under such
agreement. Ms. Suda entered into a one-year employment agreement with CDC
which included a covenant not to compete expiring on the latter of one year
from the expiration of her employment agreement or two years from the
expiration of her severance period under such agreement.

50
<PAGE>

The Company agreed with all of the PCSBs, except Call Points, that until
November 1999 there would be no (i) change in the location of an Operating
Center's facilities, (ii) physical merging of any Operating Center's
operations with another operation, (iii) change in the position of certain
persons receiving employment agreements authorized by the Acquisition
agreements, or (iv) reduction in work force or termination of employment
except as related to employee performance or the contemplated reorganization
of the combined sales/marketing staff or the accounting function, without the
approval of a majority in interest of the respective Operating Center's former
stockholders. In the case of Call Points, similar restrictions apply except
that there are no restrictions with respect to a change in the location of
Call Points' facilities.

Additionally, VIALOG Corporation agreed to maintain the Operating Centers'
respective employee incentive compensation, fringe benefits and severance
programs, or their substantial equivalent, through December 31, 1997.

OTHER TRANSACTIONS

Glenn D. Bolduc, President and Chief Executive Officer of the Company, owned
approximately five percent of the issued and outstanding common stock of
MultiLink, a principal supplier of MCUs to the Company, prior to the
acquisition of MultiLink by PictureTel Corporation in 1997. In 1995, 1996 and
1997, aggregate purchases of MCUs and ancillary services from MultiLink by the
Operating Centers were approximately $889,000, $811,000 and $878,000,
respectively. Currently, Mr. Bolduc owns less than 1% of the equity of
PictureTel Corporation.

David L. Lougee, one of the Company's Directors, is a partner of Mirick,
O'Connell, DeMallie & Lougee, LLP, the law firm currently retained as the
Company's legal counsel. In 1997, the Company paid Mirick, O'Connell, DeMallie
& Lougee, LLP an aggregate of approximately $1.8 million in legal fees and
expenses for legal services provided to VIALOG during 1997 and a part of 1996.

TCC provides teleconferencing services to customers of a company owned by
Susan C. Hassett, spouse of John J. Hassett, for which TCC recorded revenues
of $86,000, $175,000 and $230,000 in 1995, 1996 and 1997, respectively.

On November 6, 1997, John J. Hassett entered into a stockholder agreement
with the Company that provides, among other things, that while any Senior
Notes remain outstanding or any obligation of the Company or the Operating
Centers (as subsidiary guarantors) with respect thereto remains unpaid finally
and in full, (i) with respect to all matters submitted to a vote of the
stockholders of the Company regarding the appointment, election or removal of
directors or officers of the Company, Mr. Hassett will vote any shares of
voting stock of the Company over which he has direct or indirect voting power
in the same proportion as the votes cast in favor of and against the
particular matter voted upon, by all of the other stockholders of the Company,
and (ii) Mr. Hassett will not serve as a director or officer of the Company or
any subsidiary. Between December 1997 and February 1998, John J. Hassett
provided consulting services to the Company for a monthly fee of $10,000.

COMPANY POLICY

The Company has implemented a policy whereby neither the Company nor any
subsidiary (which includes the Operating Centers) will enter into contracts or
business arrangements with persons or entities owned in whole or in part by
officers or directors of the Company or any subsidiary except on an arms-
length basis and with the approval of the Company's Board of Directors. The
Company's By-Laws require that any approval must be by a majority of the
independent Directors then in office who have no interest in such contract or
transaction.

51
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of May 15, 1998 by (i) each
person known to the Company to beneficially own more than five percent of the
outstanding shares of Common Stock, (ii) each of the Company's Directors,
(iii) each Named Executive Officer, and (iv) all executive officers and
Directors as a group. All persons listed have an address in care of the
Company's principal executive office and have sole voting and investment power
with respect to their shares unless otherwise indicated. As of May 15, 1998,
the Company had outstanding 3,648,472 shares of Common Stock.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS PERCENT OF CLASS
NAME BENEFICIALLY OWNED(1) BEFORE OFFERING AFTER OFFERING
---- --------------------- ---------------- ----------------
<S> <C> <C> <C>
John J. Hassett......... 937,762(2) 26.6
J. Michael Powell....... 327,800(3) 9.0
Jefferies & Company,
Inc.................... 308,761(4) 7.8
David L. Lipsky......... 286,125(5) 7.8
Reynolds E. Moulton..... 187,500 5.1
Glenn D. Bolduc......... 155,850(6) 4.1
David L. Lougee......... 70,340(7) 1.9
Patti R. Bisbano........ 67,802 1.8
Courtney P. Snyder...... 67,080(9) 1.8
Judy B. Crawford........ 18,300(10) *
Joanna M. Jacobson...... 7,000(11) *
C. Raymond Marvin....... 0 *
All executive officers
and directors as a
group (15 persons)..... 838,648 22.4
</TABLE>
- --------
* Less than 1%.
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage
owned by such person, but not deemed outstanding for the purpose of
calculating the percentage owned by each other person listed.
(2) Includes 837,762 shares held by Mr. Hassett and 100,000 shares held by
Susan C. Hassett, the spouse of Mr. Hassett. Does not include 60,000
shares held by J. Michael Powell as Trustee for Mr. Hassett's two minor
children, as to which Mr. Hassett disclaims beneficial ownership.
(3) Includes 267,800 shares held by Mr. Powell individually and 60,000 shares
held by Mr. Powell as Trustee.
(4) Includes 302,658 shares with respect to which Warrants issued to
Jefferies & Company, Inc. in connection with the Unit Offering may be
exercised and 6,103 shares with respect to which Warrants acquired by
Jefferies & Company, Inc. in its capacity as a market-maker may be
exercised.
(5) Includes 267,826 shares issued to Mr. Lipsky in connection with the
Acquisition and 18,300 shares with respect to which options granted to
Mr. Lipsky may be exercised as of August 1, 1998.
(6) Includes 32,500 shares held by Mr. Bolduc, 93,350 shares with respect to
which options held by Mr. Bolduc may be exercised as of August 1, 1998
and 30,000 shares held by Grace K. Bolduc, the spouse of Mr. Bolduc, as
Trustee for their three minor children.
(7) Includes 65,000 shares held by Mr. Lougee and 5,340 shares with respect
to which options held by Mr. Lougee may be exercised as of August 1,
1998.
(8) Includes 52,174 shares issued to Ms. Bisbano in connection with the
Acquisition and 15,628 with respect to which options granted to Ms.
Bisbano may be exercised as of August 1, 1998.
(9) Includes 48,780 shares issued to Mr. Snyder in connection with the
Acquisition and 18,300 shares with respect to which options granted to
Mr. Snyder may be exercised as of August 1, 1998.
(10) Includes 18,300 shares with respect to which options granted to Ms.
Crawford on January 1, 1998 may be exercised as of August 1, 1998.
(11) Includes 7,000 shares with respect to which options held by Ms. Jacobson
may be exercised as of August 1, 1998.

52
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock as of May 15, 1998 consisted of
30,000,000 shares of Common Stock and 10,000,000 shares of preferred stock,
$.01 par value (the "Preferred Stock"). As of May 15, 1998, the Company had
outstanding 3,648,472 shares of Common Stock and no shares of Preferred Stock.
The Company has reserved 3,250,000 shares of Common Stock for issuance
pursuant to the Plan. See "Management--1996 Stock Plan." After giving effect
to the issuance of the shares of Common Stock offered hereby, the Company will
have outstanding shares of Common Stock and no shares of Preferred Stock.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders of the Company.
When a quorum is present at a meeting, the holders of a majority of the Common
Stock present or represented and voting on a matter will decide any matter to
be voted on by the stockholders except where a larger vote is required by law.
Any election by stockholders shall be determined by a plurality of the votes
cast by stockholders entitled to vote at the election. Subject to the rights
of any then outstanding shares of Preferred Stock, holders of Common Stock are
entitled to receive dividends when and as declared in the discretion of the
Board of Directors out of funds legally available therefor. Dividends are non-
cumulative. Holders of Common Stock are entitled to share ratably in the net
assets of the Company upon liquidation after payment or provision for all
liabilities of the Company and any preferential liquidation rights of any
Preferred Stock then outstanding. The holders of Common Stock have no
preemptive rights to purchase any securities of the Company. Shares of Common
Stock are not subject to any redemption provisions and are not convertible
into any other securities of the Company. All outstanding shares of Common
Stock are, and the shares of Common Stock issued pursuant to this Prospectus
will, upon payment therefor, be fully paid and non-assessable. The rights,
preferences and privileges of holders of Common Stock are subject to and may
be adversely affected by, the rights of holders of Preferred Stock which the
Company may designate and issue in the future. As of May 15, 1998, there were
3,648,472 outstanding shares of Common Stock held by an aggregate of 89
Stockholders and an aggregate of shares of Common Stock underlying vested
and non-vested outstanding stock options. Prior to the Offering, there was no
established public trading market for the Common Stock.

PREFERRED STOCK

The Preferred Stock may be issued from time to time by the Board of
Directors in one or more classes or series. Subject to the provisions of the
Company's Articles of Organization and limitations prescribed by law, the
Board of Directors is expressly authorized to adopt resolutions to issue
shares of Preferred Stock, to fix or change the number of shares of Preferred
Stock to be included in any series and to provide for or change the voting
powers, designations, preferences and relative, participating, optional or
other special rights, qualifications, limitations or restrictions thereof,
including dividend rights (including whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption prices, conversation rights and liquidation preferences of the
shares constituting any series of the Preferred Stock, in each case without
any further action or vote by the stockholders. The Company has no current
plans to issue any shares of Preferred Stock.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby to protect the continuity of the Company's
management. The issuance of shares of the Preferred Stock pursuant to the
Board of Directors' authority described above may adversely affect the rights
of the holders of Common Stock. For example, Preferred Stock issued by the
Company may rank prior to the Common Stock as to dividend rights, liquidation
preferences or both, may have full or limited voting rights and may be
convertible into shares of Common Stock. Accordingly, the issuance of shares
of Preferred Stock may discourage bids for the Common Stock or may otherwise
adversely affect the market price of the Common Stock.

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<PAGE>

WARRANTS

On February 24, 1997, the Company issued promissory notes in the aggregate
principal amount of $500,000 bearing interest at 8.0% per annum and payable
upon the earlier of ten days following the closing of the initial public
offering of the Company's Common Stock or one year from their date of
issuance, together with warrants to purchase an aggregate of 111,118 shares of
Common Stock at an exercise price of $4.50 per share. The notes were paid in
November 1997. The warrants expire on February 28, 1999 and contain
antidilution provisions. As of the date of this Prospectus, such warrants
entitle the holders thereof to purchase an aggregate of 42,260 additional
shares of Common Stock as a result of adjustments required by the antidilution
provisions of the warrants. The antidilution provisions of the warrants will
not be triggered by the issuance of Common Stock in this Offering.

On November 12, 1997, the Company issued warrants ("Warrants") and the Old
Notes in the Unit Offering. Each Warrant, when exercised, entitles the holder
thereof to receive 10.0886 shares of Common Stock of the Company (each, a
"Warrant Share") at an exercise price of $.01 per share (the "Exercise
Price"). A total of 75,000 Warrants, representing 756,645 Warrant Shares, were
issued in connection with the Old Notes. In addition, the Company issued
warrants to purchase 302,658 shares of Common Stock at an exercise price of
$.01 per share to the Initial Purchaser. The Exercise Price and the number of
Warrant Shares issuable on exercise of a Warrant are both subject to
adjustment in certain cases. See "Adjustments" below. The Warrants are
exercisable at any time. Unless exercised, the Warrants will automatically
expire on November 12, 2001. Following is a description of the terms of the
Warrants:

Adjustments. The number of Warrant Shares purchasable upon the exercise of
the Warrants and the Exercise Price are each subject to adjustment in certain
events including stock dividends, reclassifications and distributions.
Furthermore, if the Company issues Common Stock (or securities convertible
into Common Stock) at or below the market price, the Company shall offer to
sell to each holder of Warrants, at the same price and on the same terms
offered to all other prospective buyers. The antidilution provisions of the
Warrants will not be triggered by the issuance of Common Stock in this
Offering. In case of certain consolidations or mergers of the Company, or the
sale of all or substantially all of the assets of the Company to another
corporation, each Warrant will thereafter be exercisable for the right to
receive the kind and amount of shares of stock or other securities or property
to which such holder would have been entitled as a result of such
consolidation, merger or sale had the Warrants been exercised immediately
prior thereto.

Registration Rights. The Company has granted demand and piggy back
registration rights to holders of the Warrants pursuant to a Securityholders'
and Registration Rights Agreement (the "Securityholders' Agreement"). From
time to time after 180 days following the completion by the Company of a this
Offering, holders of Warrant shares owning, individually or in the aggregate,
not less than 25% of the Warrant shares held in the aggregate by all holders
of the Warrant shares may make a written request for registration under the
Securities Act of their warrant shares. Subject to certain conditions, within
120 days of the receipt of such written request for such a demand
registration, the Company shall file with the Commission and use its best
efforts to cause to become effective under the Securities Act a registration
statement with respect to such securities. This summary of the
Securityholders' Agreement does not purport to be complete and is qualified in
its entirety by reference to the terms and provisions of the Securityholders'
Agreement.

General. The holders of the warrants issued by the Company have no right to
vote on matters submitted to the stockholders of the Company and have no right
to receive cash dividends. The holders of these warrants are not entitled to
share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs.

PROVISIONS OF MASSACHUSETTS LAW AND THE COMPANY'S ARTICLES OF ORGANIZATION AND
BY-LAWS

Certain Anti-takeover Provisions. After the closing of this Offering, the
Company will be subject to the provisions of Chapter 110F of the Massachusetts
General Laws, an anti-takeover law. In general, this statute

54
<PAGE>

prohibits a Massachusetts corporation with more than 200 stockholders of
record from engaging in a "business combination" with "interested
stockholders" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless (i) prior to such
date, the board of directors approves either the business combination or the
transaction which results in the stockholder becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates
of the corporation) at the time the stockholder becomes an interested
stockholder, or (iii) the business combination is approved by both the board
of directors and holders of two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder). A "business
combination" includes a merger, consolidation, certain stock or asset sales,
and certain other specified transactions involving the corporation or any
direct or indirect majority-owned subsidiary of the corporation resulting in a
financial benefit to the interested stockholder. Generally, an "interested
stockholder" is (i) a person who, alone or together with affiliates and
associates, owns five percent or more of the corporation's voting stock, (ii)
an affiliate or associate of the corporation who at any time within the three
year period preceding the date of the transaction owned five percent or more
of the corporation's voting stock, or (iii) the affiliates and associates of
any such affiliate or associate of the corporation. A person is not an
"interested stockholder" if its ownership of shares in excess of the five
percent limitation is the result of action taken solely by the Company,
provided, however, that such a person will become an "interested stockholder"
if the person thereafter acquires additional shares of voting stock, except as
a result of further corporate action not caused, directly or indirectly, by
such person. The Company may at any time elect not to be governed by Chapter
110F by amending its Articles of Organization and By-Laws by a vote of a
majority of the stockholders entitled to vote, but such an amendment would not
be effective for 12 months and would not apply to a business combination with
any person who became an interested stockholder prior to the adoption of the
amendment.

In addition, Massachusetts General Laws Chapter 110D, entitled "Regulation
of Control Share Acquisitions," provides, in general, that any stockholder of
a Massachusetts corporation with more than 200 stockholders of record who
acquires voting stock of such corporation in a "control share acquisition" may
not vote the shares so acquired (or shares acquired within 90 days before or
after the "control share acquisition") unless a majority of the other
stockholders of such corporation entitled to vote so authorize. In general, a
"control share acquisition" includes the acquisition by any person of
beneficial ownership of shares which, when added to all other shares of such
corporation beneficially owned by such person, would entitle such person to
vote (i) between 20% and 33 1/3%, (ii) between 33 1/3% and 50%, or (iii) more
than 50% of the outstanding voting stock of such corporation. A "control share
acquisition" generally does not include, among other transactions, the
acquisition of shares directly from the issuing corporation. The Company has
amended its By-Laws to opt out of the provisions of Chapter 110D.

Massachusetts General Laws Chapter 156B, Section 50A, requires that publicly
held Massachusetts corporations that have not "opted out" of Section 50A have
a classified board of directors consisting of three classes as nearly equal in
size as possible. Section 50A also provides that directors who are so
classified shall be subject to removal by the stockholders only for cause. The
Company's Articles of Organization reflect the requirements of Section 50A.

The Company's Articles of Organization authorize the issuance of 10,000,000
shares of undesigned Preferred Stock, the terms of which may be fixed from
time to time by the Board of Directors without further stockholder approval.

The Company's By-Laws provide that after the Company has a class of voting
stock registered under the Exchange Act, a special meeting of stockholders may
be called by the President, the Board of Directors or by the holders of 35% or
more of the outstanding voting stock of the Company. Certain other provisions
of the Company's By-Laws, its Articles of Organization and Massachusetts law
may also make more difficult or discourage a proxy contest or the acquisition
of control by a holder of a substantial block of the Company's Common Stock or
the removal of the incumbent Board of Directors and could also have the effect
of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its stockholders. In addition, because such

55
<PAGE>

provisions also have the effect of discouraging accumulations of large blocks
of Common Stock by purchasers whose objective is to have such Common Stock
repurchased by the Company at a premium, such provisions could tend to reduce
the temporary fluctuations in the market price of the Company's Common Stock
that are caused by such accumulations. Accordingly, stockholders could be
deprived of certain opportunities to sell their Common Stock at a temporarily
higher market price.

Reference is made to the full text of the foregoing statutes, the Company's
Articles of Organization and its By-Laws for their entire terms. The partial
summary contained in this Prospectus is not intended to be complete. See "Risk
Factors--Effect of Certain Charter and By-Law Provisions and Anti-Takeover
Provisions; Possible Issuances of Preferred Stock."

Elimination of Monetary Liability for Officers and Directors. The Company's
Articles of Organization also incorporate certain provisions permitted under
the Massachusetts General Laws relating to the liability of directors. The
provisions eliminate to the maximum extent permitted by Chapter 156B of the
Massachusetts General Laws a director's personal liability to the Company for
monetary damages arising out of a breach of the director's fiduciary duty as a
director of the Company, except in circumstances involving certain wrongful
acts, such as the breach of a director's duty of loyalty or acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law or authorization of distributions in violation of the
Articles of Organization or in violation of Chapter 156B or of loans to
officers or directors of the Company or any transaction from which the
director derived an improper personal benefit. These provisions do not prevent
recourse against directors through equitable remedies such as injunctive
relief.

Indemnification of Officers and Directors. The Company's By-Laws contain
provisions to indemnify each of the directors and officers of the Company (as
well as the former directors and officers) to the fullest extent permitted by
Massachusetts law against any and all claims and liabilities to which he or
she may be or become subject by reason of his or her being or having been an
officer or director of the Company, or by reason of his or her alleged acts or
omissions as an officer or director of the Company, except in relation to such
matters as to which such officer or director shall have been guilty of willful
malfeasance, bad faith, gross negligence or reckless disregard of his or her
duties in the conduct of his or her office. The By-Laws further provide that
the Company shall indemnify and reimburse each such officer and director
against and for any and all legal and other expenses reasonably incurred by
him or her in connection with any such claims and liabilities, actual or
threatened, whether or not, at or prior to the time when so indemnified, held
harmless and reimbursed, he or she had ceased being an officer or director of
the Company, except in relation to such matters as to which such officer or
director shall have been guilty of willful malfeasance, bad faith, gross
negligence or reckless disregard of his or her duties in the conduct of his or
her office; provided that the Company prior to such final adjudication may
compromise and settle any such claims and liabilities and pay such expenses,
if such settlement or payment or both appears, in the judgment of a majority
of the Board of Directors, to be for the best interest of the Company,
evidenced by a resolution to that effect after receipt by the Company of a
written opinion of counsel for the Company that such officer or director has
not been guilty of willful malfeasance, bad faith, gross negligence or
reckless disregard of his or her duties in the conduct of his office in
connection with the matters involved in such compromise, settlement and
payment.

REGISTRATION RIGHTS

In addition to the registration rights granted to the holders of the
Warrants, the Company entered into a registration rights agreement with the
principal stockholders of VIALOG Corporation (the "VIALOG Stockholders") and
the principal stockholders of each of the Operating Centers who received
shares of Common Stock in connection with their respective Acquisitions (the
"Operating Center Stockholders"). The registration rights agreement granted
demand and piggy-back registration rights with respect to their shares and
provided for a "lock-up" of their shares following the effective date of a
registration statement of the Company filed under the Securities Act.

The VIALOG Stockholders and the Operating Center Stockholders may demand, on
two occasions only, that the Company will register their shares of Common
Stock under the Securities Act by written request

56
<PAGE>

delivered at least one year after the effective date of the Acquisitions. Any
such demand must be made by the holders of not less than 20% in interest of
the persons having such registration rights. The Company is obligated to keep
such registration effective for a period of four months. The Company may
defer, not more than once during any twelve-month period, the filing of such
registration statement for up to 180 days, if it is determined in good faith
by the Company's Board of Directors that such registration would be
detrimental to the Company or its stockholders. The Company may include in any
such filing securities of the Company for its own account, or other securities
of the Company which are held by officers or directors of the Company or held
by other persons who, by virtue of agreements with the Company are entitled to
include their securities in any such registration.

If the Company determines to register any of its shares, other than under a
filing relating to transactions such as mergers, consolidations,
reclassifications, asset sales or similar transactions described in Rule 145
promulgated under the Securities Act or on a form which does not permit
secondary sales or does not include substantially the same information as
would be required to be included in a registration statement, then the VIALOG
Stockholders and the Operating Center Stockholders may request that shares of
their Common Stock be included in such registration. If the registration is an
underwritten offering, the lead underwriter may limit the number of shares
requested to be registered pursuant to such piggy-back rights to 25% of the
securities covered by such underwritten offering. Any shares offered by
officers and directors will be the first to be excluded from such offering.

The Company is obligated to use its best efforts to file all reports
necessary to qualify for registration of its securities on Form S-3 or a
comparable or successor form. After qualifying for such use, the Company is
obligated upon request to register the stock of any qualifying VIALOG
Stockholder on Form S-3, unless (i) the aggregate offering price is less than
$1 million or (ii) the Company has effected a registration on Form S-3 in the
last twelve months. Additionally, the Company may defer such registration for
a period of 120 days if the Company has plans to make, within 90 days, a
registered public offering or is engaged in any prior activity which, if
determined in good faith by the Company's Board of Directors, would be
adversely affected by the requested registration.

The VIALOG Stockholders and the Operating Center Stockholders have agreed to
enter into a 180-day "lock-up" following the effective date of a Company
registration statement if requested to do so by the Company or the underwriter
of said offering and provided that all of the principal stockholders, officers
and Directors of the Company enter into similar agreements. Such agreement may
prohibit the sale, transfer or disposition of the shares of registerable
Common Stock held by the VIALOG Stockholders or Operating Center Stockholders.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is .

57
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, there will be shares of Common Stock
outstanding (assuming no exercise of options or warrants after May 15, 1998),
of which the shares being sold in this Offering will be freely tradable in
the United States without restriction under the Securities Act of 1933, as
amended (the "Securities Act") unless acquired by "affiliates" of the Company
(as defined in Rule 144 under the Securities Act). The remaining shares of
Common Stock outstanding are "restricted securities" (as defined in Rule 144
and Rule 701 under the Securities Act) (the "Restricted Shares") and may not
be sold unless registered under the Securities Act or sold pursuant to an
exemption from registration, such as the exemption provided by Rule 144.

In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of the acquisition of restricted shares of Common
Stock from either the Company or any affiliate of the Company, the acquirer or
subsequent holder thereof may sell, within any three-month period commencing
90 days after the date of this Prospectus, a number of shares that does not
exceed the greater of one percent of the then outstanding shares of the Common
Stock (approximately shares immediately after this Offering), or the
average weekly trading volume of the Common Stock on the Nasdaq National
Market during the four calendar weeks preceding the date on which notice of
the proposed sale is filed with the Commission. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. If two years
have elapsed since the later of the date of the acquisition of restricted
shares of Common Stock from the Company or any affiliate of the Company, a
person who is not deemed to have been an affiliate of the Company at any time
for 90 days preceding a sale would be entitled to sell such shares under Rule
144 without regard to the volume limitations, manner of sale provisions or
notice requirements. In meeting the one-year and two-year holding periods
described above, a holder of restricted shares may in some circumstances
include the holding period of a prior owner. The one-year and two-year holding
periods described above do not begin until the full purchase price or other
consideration is paid by the person acquiring the restricted shares from the
Company or an affiliate of the Company.

The Company, its officers, Directors and certain stockholders holding
shares of Common Stock in the aggregate have agreed not to, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any Common Stock of the Company, or any
securities convertible into or exercisable or exchangeable for any shares of
Common Stock (other than pursuant to the 1996 Stock Plan), for a period of 180
days from the completion of this Offering, without the prior written consent
of Prudential Securities Incorporated, on behalf of the Underwriters.
Prudential Securities Incorporated may, in its sole discretion, at any time
and without notice, release all or any portion of the Common Stock subject to
such lock-up agreements.

Prior to this Offering, there has been no public market for the Common
Stock. Trading of the Common Stock on the Nasdaq National Market is expected
to commence immediately following completion of this Offering. No prediction
can be made as to the effect, if any, that future sales of Common Stock or the
availability of Common Stock for future sale, will have on the market price
prevailing from time to time. Sales of substantial amounts of Common Stock
(including Common Stock issued upon the exercise of options or warrants), or
the perception that such sales could occur, could adversely affect prevailing
market prices of the Common Stock. See "Risk Factors--No Prior Public Market;
Possible Volatility of Stock Price" and "--Potential Adverse Effect of Shares
Eligible for Future Sale on Price of Common Stock."

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<PAGE>

UNDERWRITING

The underwriters named below (the "Underwriters"), for whom Prudential
Securities Incorporated and Jefferies & Company, Inc. are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions contained in the underwriting agreement (the
"Underwriting Agreement"), to purchase from the Company the number of shares
of Common Stock set forth below opposite their respective names:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Prudential Securities Incorporated...............................
Jefferies & Company, Inc. .......................................
---
Total............................................................
===
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the Company is
obligated to sell, and the Underwriters are obligated to purchase, all the
shares of Common Stock offered hereby if any are purchased.

The Underwriters, through their Representatives, have advised the Company
that they propose to offer the Common Stock initially at the public offering
price set forth on the cover page of this Prospectus; that the Underwriters
may allow to selected dealers a concession of $ per share; and that such
dealers may reallow a concession of $ per share to certain other dealers.
After the Offering, the initial public offering price and the concessions may
be changed by the Representatives.

The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to additional shares of
Common Stock at the initial public offering price, less underwriting discounts
and commissions, as set forth on the cover page of this Prospectus. The
Underwriters may exercise such option solely for the purpose of covering over-
allotments incurred in the sale of the shares of Common Stock offered hereby.
To the extent such option is exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number set forth next to such
Underwriter's name in the preceding table bears to the total number of shares
listed in such table.

The Company, its officers and Directors and certain stockholders of the
Company, who in the aggregate beneficially own approximately shares of
Common Stock, and the Company have agreed not to, directly or indirectly,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, pledge, grant of any option to purchase or other sale
or disposition) of any shares of Common Stock or other capital stock or any
securities convertible into, or exercisable or exchangeable for, any shares of
Common Stock or other capital stock of the Company or any right to purchase or
acquire Common Stock or other capital stock of the Company, for a period of
180 days after the date of this Prospectus without the prior written consent
of Prudential Securities Incorporated, on behalf of the Underwriters, other
than stock issued by the Company in connection with acquisitions and the
exercise of currently outstanding stock options and except for bona fide gifts
or transfers effected by such stockholders other than on any securities
exchange or in the over-the-counter market to donees or transferees that agree
to execute and be bound by such agreements. Prudential Securities Incorporated
may, in its sole discretion, at any time and without prior notice, release all
or any portion of the shares of Common Stock subject to such lock-up
agreements.

VIALOG Corporation and the Operating Centers have jointly and severally
agreed to indemnify the several Underwriters and contribute to losses arising
out of certain liabilities, including liabilities under the Securities Act.

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<PAGE>

Prior to the Offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price for the Common
Stock was determined through negotiations between the Company and the
Representatives of the Underwriters. Among the factors considered in making
such determination were the prevailing market conditions, the results of
operations of the Company in recent periods relevant to its prospects and the
prospects for its industry in general, the management of the Company and the
market prices of securities for companies in businesses similar to that of the
Company.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

In connection with the Offering, certain Underwriters (and selling group
members, if any) and their respective affiliates may engage in transactions
that stabilize, maintain or otherwise affect the market price of the Common
Stock. Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M under the Securities Exchange Act of
1934, pursuant to which such persons may bid for or purchase Common Stock for
the purpose of stabilizing its market price. The Underwriters may also create
a short position for the account of the Underwriters by selling more Common
Stock in connection with the Offering than they are committed to purchase from
the Company and in such case may purchase Common Stock in the open market
following completion of the Offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such position,
up to shares of Common Stock, by exercising the Underwriters' over-
allotment option referred to above. In addition, Prudential Securities
Incorporated, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or any selling group member) for the account of the other
Underwriters, the selling concession with respect to Common Stock that is
distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph are required, and, if they are
undertaken, they may be discontinued at any time.

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<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the sale of the shares of Common
Stock offered hereby will be passed upon for the Company by Mirick, O'Connell,
DeMallie & Lougee, llp, Worcester, Massachusetts. David L. Lougee, a partner
in such firm, is a director of the Company. Partners and associates of Mirick,
O'Connell, DeMallie & Lougee, llp own an aggregate of 69,000 shares of the
Company's Common Stock and hold options to acquire an additional 12,000
shares, 4,674 of which may be exercised as of June 1, 1998. Certain legal
matters related to this Offering will be passed upon for the Underwriters by
Cadwalader, Wickersham & Taft, New York, New York.

EXPERTS

The historical financial statements as indicated in the index on pages F-1
and F-2 of this Prospectus have been included herein and in the Registration
Statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere in this Prospectus, and upon
the authority of said firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (which term shall encompass any amendment thereto) under the Securities
Act for the registration of the shares of the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain items of which are contained in the financial statement schedules and
exhibits to the Registration Statement as permitted by the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement, including the financial statement schedules and
exhibits filed as a part thereof. Statements made in this Prospectus
concerning the contents of any document referred to herein are not necessarily
complete. With respect to each such document filed with the Commission as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved and each such statement shall
be deemed qualified in its entirety by such reference. The Company is subject
to the informational requirements of the Securities Exchange Act of 1934 and
in accordance therewith, files reports and other information with the
Commission. Such reports and other information filed by the Company with the
Commission, as well as the Registration Statement and the exhibits thereto
filed by the Company with the Commission, may be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois, 60661-2511. Copies of such materials can be obtained by mail from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition the
Commission maintains a site on the World Wide Web that contains reports, proxy
and information statements and other information filed electronically by the
Company with the Commission which can be accessed over the Internet at
http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by independent certified public
accountants and will make available quarterly reports containing unaudited
summary financial information for each of the first three quarters of each
fiscal year.

VIALOG Group Communications is a service mark of the Company. ProShare is a
registered trademark of Intel Corporation. NetMeeting is a registered
trademark of Microsoft Corporation. All other trademarks or trade names
referred to in this Prospectus are the property of their respective owners.

61
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Basis of Presentation.................................................... 3
Pro Forma Consolidated Statement of Operations for the Year Ended
December 31, 1997....................................................... 4
Notes to Unaudited Pro Forma Consolidated Statement of Operations........ 5
HISTORICAL FINANCIAL STATEMENTS
VIALOG Corporation
Report of Management................................................... 6
Independent Auditors' Report........................................... 7
Consolidated Balance Sheets............................................ 8
Consolidated Statements of Operations.................................. 9
Consolidated Statements of Stockholders' Equity (Deficit).............. 10
Consolidated Statements of Cash Flows.................................. 11
Notes to Consolidated Financial Statements............................. 12
Telephone Business Meetings, Inc. ("Access")--The Reston Center
Independent Auditors' Report........................................... 24
Balance Sheets......................................................... 25
Statements of Operations............................................... 26
Statements of Stockholders' Equity..................................... 27
Statements of Cash Flows............................................... 28
Notes to Financial Statements.......................................... 29
Conference Source International, Inc. ("CSI")--The Atlanta Center
Independent Auditors' Report........................................... 35
Balance Sheets......................................................... 36
Statements of Operations............................................... 37
Statements of Stockholders' Equity..................................... 38
Statements of Cash Flows............................................... 39
Notes to Financial Statements.......................................... 40
Call Points, Inc. ("Call Points")--The Montgomery Center
Independent Auditors' Report........................................... 45
Balance Sheets......................................................... 46
Statements of Operations............................................... 47
Statements of Stockholders' Equity..................................... 48
Statements of Cash Flows............................................... 49
Notes to Financial Statements.......................................... 50
Kendall Square Teleconferencing, Inc. ("TCC")--The Cambridge Center
Independent Auditors' Report........................................... 56
Balance Sheets......................................................... 57
Statements of Operations............................................... 58
Statements of Stockholders' Equity..................................... 59
Statements of Cash Flows............................................... 60
Notes to Financial Statements.......................................... 61
</TABLE>

F-1
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
American Conferencing Company, Inc. and Resource Objectives, Inc.
("Americo")--The Oradell Center
Independent Auditors' Report........................................... 67
Combined Balance Sheets................................................ 68
Combined Statements of Operations...................................... 69
Combined Statements of Stockholders' Equity (Deficit).................. 70
Combined Statements of Cash Flows...................................... 71
Notes to Combined Financial Statements................................. 72
Communication Development Corporation ("CDC")--The Danbury Center
Independent Auditors' Report........................................... 78
Balance Sheets......................................................... 79
Statements of Operations............................................... 80
Statements of Stockholders' Equity..................................... 81
Statements of Cash Flows............................................... 82
Notes to Financial Statements.......................................... 83
</TABLE>

F-2
<PAGE>

VIALOG CORPORATION AND ACQUIRED COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
BASIS OF PRESENTATION

The following unaudited pro forma consolidated statement of operations gives
effect to (i) the acquisitions by VIALOG Corporation of all of the stock of
(a) Telephone Business Meetings, Inc. ("Access"), (b) Conference Source
International, Inc. ("CSI"), (c) Kendall Square Teleconferencing, Inc.
("TCC"), (d) American Conferencing Company, Inc. ("Americo"), and (e)
Communication Development Corporation ("CDC"), and substantially all the net
assets of Call Points, Inc. ("Call Points") (together, the "Acquired
Companies"), and (ii) the closing of a private placement of notes and warrants
on November 12, 1997 (the "Unit Offering"). The unaudited pro forma
consolidated statement of operations gives effect to the Acquisitions and Unit
Offering as if they had occurred on January 1, 1997. This statement is based
on the historical financial statements of VIALOG Corporation and the Acquired
Companies and the estimates and assumptions set forth below and in the notes
to the unaudited pro forma consolidated statement of operations.

The pro forma adjustments are based upon estimates, currently available
information and certain assumptions that management deems appropriate. The
unaudited pro forma consolidated statement of operations presented herein is
not necessarily indicative of the results the Company would have obtained had
such events occurred on January 1, 1997, as assumed, or the future results of
the Company. The unaudited pro forma consolidated statement of operations
should be read in conjunction with the other financial statements and notes
thereto included elsewhere in this Prospectus.

F-3
<PAGE>

VIALOG CORPORATION AND ACQUIRED COMPANIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
ACQUIRED COMPANIES
PERIOD FROM JANUARY 1, 1997
TO NOVEMBER 12, 1997 PRO FORMA
VIALOG CORP. ------------------------------------------------ -----------------------------
YEAR ENDED CALL
DECEMBER 31, 1997 ACCESS CSI POINTS TCC AMERICO CDC ADJUSTMENTS(1) CONSOLIDATED
----------------- ------- ------ ------- ------ ------- ------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $ 4,816 $10,945 $5,579 $7,335 $3,554 $1,892 $1,796 $ -- $ 35,917
Cost of revenues........ 2,694 5,391 2,398 5,662 1,947 1,271 909 (1,428) (a) 18,844
--------- ------- ------ ------ ------ ------ ------ ------- ---------
Gross profit.......... 2,122 5,554 3,181 1,673 1,607 621 887 1,428 17,073
Selling, general and
administrative
expenses............... 7,249 4,347 841 1,390 1,290 931 602 (151) (b) 15,621
(878) (c)
Amortization of goodwill
and intangibles........ 306 -- -- -- -- -- -- 2,189 (d) 2,495
Write-off of purchased
research
and development........ 8,000 -- -- -- -- -- -- (8,000) (e) --
--------- ------- ------ ------ ------ ------ ------ ------- ---------
Operating income
(loss)................. (13,433) 1,207 2,340 283 317 (310) 285 8,268 (1,043)
Interest income
(expense), net......... (1,866) (132) (120) 9 (39) (20) (4) (10,587) (f) (12,759)
--------- ------- ------ ------ ------ ------ ------ ------- ---------
Income (loss) before
income taxes........... (15,299) 1,075 2,220 292 278 (330) 281 (2,319) (13,802)
Income tax expense
(benefit).............. 522 (25) 107 (82) (g) 522
--------- ------- ------ ------ ------ ------ ------ ------- ---------
Net income (loss)....... $ (15,821) $ 1,075 $2,220 $ 292 $ 278 $ (305) $ 174 $(2,237) $(14,324)
========= ======= ====== ====== ====== ====== ====== ======= =========
Net loss per share...... $ (5.48) $ (4.26) (h)
========= =========
Weighted average shares
outstanding............ 2,889,005 3,362,284 (h)
========= =========
</TABLE>
- --------
(1) See Note 2 to Unaudited Pro Forma Consolidated Statement of Operations.

F-4
<PAGE>

VIALOG CORPORATION AND ACQUIRED COMPANIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(1) VIALOG CORPORATION BACKGROUND

VIALOG Corporation was formed on January 1, 1996 to create a national
independent provider of group communications services, consisting primarily of
operator-assisted and operator-on-demand audio teleconferencing, as well as
video and data conferencing services. VIALOG Corporation conducted no
operations through November 12, 1997 and on that date consummated agreements
to acquire the six acquired companies simultaneously with the consummation of
the Unit Offering.

(2) UNAUDITED PRO FORMA ADJUSTMENTS

(a) Adjustment reflects the reduction in long distance telephone charges as
a result of contracts recently negotiated by certain of the Acquired
Companies.

(b) Adjustment reflects certain related party royalties under agreements
that were terminated on November 12, 1997.

(c) Adjustment reflects the difference between the historical compensation
and benefits of officers, employees and consultants of the Acquired Companies
and the compensation and benefits they agreed to accept subsequent to the
Acquisitions.

(d) Adjustment reflects the amortization of goodwill and intangible assets,
which are amortized over periods ranging from 6 to 20 years.

(e) Adjustment reflects the elimination of the write-off of purchased in-
process research and development.

(f) Adjustment reflects the retirement of certain debt outstanding and the
consummation of the Unit Offering. Does not include an adjustment for interest
income earned on excess cash balances.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
(IN THOUSANDS)
<S> <C>
Assumed interest expense on the Senior Notes(1).......... $12,546
Assumed interest expense on capitalized lease
obligations............................................. 213
-------
Pro forma annual interest expense........................ 12,759
Less: interest expense recorded.......................... (2,172)
-------
Net Adjustment to interest expense....................... $10,587
=======
</TABLE>
- --------
(1) Includes $1.9 million of annual amortization of bond issuance costs and
$1.1 million of amortization of original issue discount.

(g) The pro forma income tax provision has been calculated as if each of the
Acquired Companies had been included in the Company's consolidated income tax
return and, therefore, was subject to corporate income taxation.

(h) The pro forma loss per share is computed by dividing the net loss by the
weighted average number of shares outstanding. The calculation of the weighted
average number of shares outstanding assumes that the 559,330 shares of the
Company's Common Stock issued in connection with the Acquisition were
outstanding for the entire period.

F-5
<PAGE>

REPORT OF MANAGEMENT

The accompanying consolidated financial statements and related information
of VIALOG Corporation and Subsidiaries (the "Company") have been prepared by
management, which is responsible for their integrity and objectivity. The
statements have been prepared in conformity with generally accepted accounting
principles and necessarily include some amounts based on management's best
estimates and judgments.

Management is also responsible for maintaining a system of internal controls
as a fundamental requirement for the operational and financial integrity of
results. The Company has established and maintains a system of internal
controls designed to provide reasonable assurance that the books and records
reflect the transactions of the Company and that its established policies and
procedures are carefully followed. The Company's internal control system is
based upon standard procedures, policies and guidelines and organizational
structures that provide an appropriate division of responsibility and the
careful selection and training of qualified personnel.

The Company's accompanying consolidated financial statements have been
audited by KPMG Peat Marwick LLP, independent certified public accountants,
whose audit was made in accordance with generally accepted auditing standards.
Management has made available to KPMG Peat Marwick LLP all of the Company's
financial records and related data, as well as the minutes of stockholders'
and directors' meetings. Furthermore, management believes that all
representations made to KPMG Peat Marwick LLP during its audit were valid and
appropriate. The Independent Auditors' Report appears below.

Glenn D. Bolduc John J. Dion
Chief Executive Officer, Vice President--Finance
President and Treasurer

F-6
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors VIALOG Corporation:

We have audited the accompanying consolidated balance sheets of VIALOG
Corporation and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the years in the two-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of VIALOG
Corporation and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the two-year
period ended December 31, 1997 in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Boston, Massachusetts
February 20, 1998

F-7
<PAGE>

VIALOG CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1996 1997 1998
------------ ------------ ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 337 $ 9,567 $ 8,015
Accounts receivable, net of allowance
for doubtful accounts of $0, $32 and
$86, respectively..................... -- 5,686 6,962
Prepaid expenses....................... -- 156 270
Deferred offering costs................ 377 -- --
Other current assets................... 13 101 159
------ -------- --------
Total current assets................. 727 15,510 15,406
Property and equipment, net.............. 7 7,544 8,560
Deferred debt issuance costs............. -- 7,324 6,851
Goodwill and intangible assets, net...... -- 44,391 43,762
Deferred income taxes.................... 522 -- --
Other assets............................. 7 314 291
------ -------- --------
Total assets......................... $1,263 $ 75,083 $ 74,870
====== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Current portion of long-term debt...... $ -- $ 397 $ 381
Accounts payable....................... 313 2,129 2,495
Accrued expenses....................... 663 5,725 7,528
------ -------- --------
Total current liabilities............ 976 8,251 10,404
Long-term debt, less current portion..... -- 71,539 71,723
Other long-term liabilities.............. -- 175 194
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $0.01 par value;
10,000,000 shares authorized; none
issued and outstanding................ -- -- --
Common stock, $0.01 par value,
30,000,000 shares authorized;
2,695,300, 3,486,380 and 3,576,440
shares, respectively, issued and
outstanding........................... 28 35 36
Additional paid-in capital............. 1,044 11,689 11,713
Retained deficit....................... (785) (16,606) (19,200)
------ -------- --------
Total stockholders' equity
(deficit)........................... 287 (4,882) (7,451)
------ -------- --------
Total liabilities and stockholders'
equity (deficit).................... $1,263 $ 75,083 $ 74,870
====== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-8
<PAGE>

VIALOG CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ --------------------
1996 1997 1997 1998
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues.................. $ -- $ 4,816 $ -- $ 11,290
Cost of revenues.............. -- 2,694 -- 6,626
----------- ----------- --------- ---------
Gross profit................ -- 2,122 -- 4,664
Selling, general and
administrative expenses...... 1,308 7,249 871 3,585
Amortization of goodwill and
intangibles.................. -- 306 -- 628
Write-off of purchased in-
process research
and development.............. -- 8,000 -- --
----------- ----------- --------- ---------
Operating income (loss)..... (1,308) (13,433) (871) 451
Interest income (expense),
net.......................... 1 (1,866) (3) (3,045)
----------- ----------- --------- ---------
Loss before income taxes.... (1,307) (15,299) (874) (2,594)
Income tax benefit (expense).. 522 (522) -- --
----------- ----------- --------- ---------
Net loss.................... $ (785) $ (15,821) $ (874) $ (2,594)
=========== =========== ========= =========
Net loss per share............ $ (0.38) $ (5.48) $ (0.32) $ (0.73)
=========== =========== ========= =========
Weighted average shares
outstanding.................. 2,088,146 2,889,005 2,747,300 3,542,668
=========== =========== ========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-9
<PAGE>

VIALOG CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES PAR VALUE CAPITAL DEFICIT EQUITY (DEFICIT)
--------- --------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Initial investment at
incorporation on
January 1, 1996........ 1,332,800 $ 14 $ (7) $ -- $ 7
Additional shares
issued in connection
with initial
capitalization........ 360,000 4 21 -- 25
Issuance of common
stock:
Contribution of common
stock to capital..... (250,000) (2) 2 -- --
Outsiders by private
offering dated
May 8, 1996.......... 378,000 4 101 -- 105
Outsiders by private
offering dated
October 22, 1996..... 380,000 4 756 -- 760
Employees in lieu of
payment
for services......... 242,500 2 91 -- 93
Consultants in lieu of
payment
for services......... 177,000 2 28 -- 30
Options exercised..... 75,000 -- 2 -- 2
Options granted to
consultants.......... -- -- 50 -- 50
Net loss............... -- -- -- (785) (785)
--------- ---- ------- -------- --------
Balance at December 31,
1996................... 2,695,300 28 1,044 (785) 287
Options exercised...... 104,000 -- 2 -- 2
Conversion of 10%
Subordinated
Convertible
Notes Payable......... 127,750 1 254 -- 255
Issuance of common
stock in connection
with acquisitions..... 559,330 6 3,211 -- 3,217
Warrants related to 8%
Notes Payable dated
February 24, 1997..... -- -- 129 -- 129
Warrants related to 12
3/4% Senior Notes
Payable dated November
12, 1997.............. -- -- 6,091 -- 6,091
Options granted to
consultants........... -- -- 180 -- 180
Options granted to
employees............. -- -- 778 -- 778
Net loss............... -- -- -- (15,821) (15,821)
--------- ---- ------- -------- --------
Balance at December 31,
1997................... 3,486,380 35 11,689 (16,606) (4,882)
Options exercised
(unaudited)........... 90,060 1 24 -- 25
Net loss (unaudited)... -- -- -- (2,594) (2,594)
--------- ---- ------- -------- --------
Balance at March 31,
1998 (unaudited)....... 3,576,440 $ 36 $11,713 $(19,200) $ (7,451)
========= ==== ======= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-10
<PAGE>

VIALOG CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
--------------- --------------
1996 1997 1997 1998
----- -------- ----- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..................................... $(785) $(15,821) $(874) $(2,594)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ -- 273 1 584
Amortization of goodwill and intangibles..... -- 306 -- 628
Amortization of debt issuance costs and debt
discount.................................... -- 545 -- 748
Provision for doubtful accounts.............. -- 32 -- 55
Deferred income taxes........................ (522) 522 -- --
Write-off of deferred offering costs......... -- 377 -- --
Compensation expense for issuance of common
stock and options........................... 173 958 24 --
Write-off of purchased in-process research
and development............................. -- 8,000 -- --
Changes in operating assets and liabilities,
net of effects from acquisitions of
businesses:
Accounts receivable.......................... -- (576) -- (1,330)
Prepaid expenses and other current assets.... (13) (68) 3 (172)
Other assets................................. (7) (64) (40) 20
Accounts payable............................. 313 (351) 453 366
Accrued expenses............................. 663 1,716 427 1,803
Other long-term liabilities.................. -- 3 -- 19
----- -------- ----- -------
Cash flows used in operating activities..... (178) (4,148) (6) 127
----- -------- ----- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of businesses, net of cash
acquired.................................... -- (53,308) -- --
Additions to property and equipment.......... (7) (454) (21) (1,600)
----- -------- ----- -------
Cash flows used in investing activities..... (7) (53,762) (21) (1,600)
----- -------- ----- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt and
warrants.................................... -- 75,755 500 --
Payments of long-term debt of businesses
acquired.................................... -- (2,239) -- --
Payments of long-term debt................... -- (533) -- (104)
Proceeds from issuance of common stock....... 899 2 2 25
Deferred offering costs...................... (377) -- (650) --
Deferred debt issuance costs................. -- (5,845) -- --
----- -------- ----- -------
Cash flows provided by financing
activities................................. 522 67,140 (148) (79)
----- -------- ----- -------
Net increase in cash and cash equivalents..... 337 9,230 (175) (1,552)
Cash and cash equivalents at beginning of
period....................................... -- 337 337 9,567
----- -------- ----- -------
Cash and cash equivalents at end of period.... $ 337 $ 9,567 $ 162 $ 8,015
===== ======== ===== =======
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest..................................... $ -- $ 72 $ -- $ 36
===== ======== ===== =======
Taxes........................................ $ -- $ 1 $ -- $ --
===== ======== ===== =======
Non-cash investing and financing transactions:
Conversion of 10% Subordinated Convertible
Notes Payable............................... $ -- $ 256 $ -- $ --
===== ======== ===== =======
Issuance of common stock in connection with
acquisitions................................ $ -- $ 3,217 $ -- $ --
===== ======== ===== =======
Issuance of warrants to the initial purchaser
of the Senior Notes and included in deferred
debt issuance costs......................... $ -- $ 1,740 $ -- $ --
===== ======== ===== =======
Acquisition of businesses:
Assets acquired.............................. $ -- $ 66,523 $ -- $ --
Liabilities assumed and issued............... -- (9,096) -- --
Common stock issued.......................... -- (3,217) -- --
----- -------- ----- -------
Cash paid.................................... -- 54,210 -- --
Less cash acquired........................... -- (902) -- --
----- -------- ----- -------
Net cash paid for acquisitions of business.. $ -- $ 53,308 $ -- $ --
===== ======== ===== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-11
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

VIALOG Corporation was incorporated in Massachusetts on January 1, 1996 as
Interplay Corporation. In January 1997, the Company changed its name to VIALOG
Corporation. For the purposes of these Notes to Consolidated Financial
Statements, "VIALOG" means VIALOG Corporation on a stand alone basis prior to
November 12, 1997 and VIALOG Corporation and its consolidated subsidiaries on
and after November 12, 1997. VIALOG was formed to create a national provider
of group communications services, consisting primarily of operator-attended
and operator-on-demand audio teleconferencing, as well as video and data
conference services. On November 12, 1997, VIALOG closed a private placement
of $75.0 million in Senior Notes due 2001 (the "Private Placement").
Contemporaneously with the closing of the Private Placement, VIALOG acquired
six private conference service bureaus located in the United States (See Note
2 "Acquisitions").

Prior to November 12, 1997, VIALOG did not conduct any operations, and all
activities conducted by it related to the Acquisitions and the completion of
financing transactions to fund the acquisitions.

(b) Principles of Consolidation and Interim Financial Statements

The consolidated financial statements include the accounts of VIALOG and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

The financial statements of VIALOG as of March 31, 1998 and for the three
months ended March 31, 1997 and 1998 are unaudited. All adjustments and
accruals (consisting only of normal recurring adjustments) have been recorded
that, in the opinion of management, are necessary for a fair presentation.
Results of operations for the interim periods are not necessarily indicative
of the results for the full year.

Management of VIALOG has made a number of estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates.

(d) Revenue Recognition

Revenue from conference calls is recognized upon completion of the call.
Revenue from services is recognized upon performance of the service.

(e) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand and short-term investments
with original maturities of three months or less.

(f) Property and Equipment

Property and equipment are recorded at cost. Depreciation of property and
equipment is provided on a straight-line basis over the estimated useful lives
of the respective assets. The estimated useful lives are as follows: three to
ten years for office furniture, fixtures and equipment, five to ten years for
conferencing equipment, and three to seven years for computer equipment.
Capitalized lease equipment and leasehold improvements are amortized over the
lives of the leases, ranging from three to ten years.

(g) Goodwill and Intangible Assets

Goodwill and intangible assets, including assembled workforce and developed
technology, result from the excess of the purchase price over the net assets
of businesses acquired. Goodwill and intangibles are being amortized on a
straight-line basis over periods ranging from six to twenty years, which
represent their estimated useful lives.

F-12
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(h) Research and Development

VIALOG maintains technical support and engineering departments that, in
part, develop features and products for group communications. In accordance
with SFAS No. 2, Accounting for Research and Development Costs, VIALOG charges
to expense (included in cost of revenues) that portion of the department costs
which relate to research and development activities. Prior to the acquisition
of the businesses described in Note 2 "Acquisitions," VIALOG did not conduct
any research and development activities. Research and development costs for
the period ended December 31, 1997 reflect the activities of the acquired
businesses from November 12, 1997 through December 31, 1997 and were not
significant. For the three months ended March 31, 1998, research and
development costs were approximately $295,000.

(i) Stock-Based Compensation

Effective January 1, 1996, VIALOG adopted the provisions of Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-
Based Compensation." VIALOG has elected to continue to account for stock
options at intrinsic value under Accounting Principles Board Opinion No. 25
with disclosure of the effects of fair value accounting on net income on a pro
forma basis (See Note 11 "Employee Benefit Plans").

(j) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(k) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

VIALOG adopted the provisions of SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, during 1996.
Adoption of this Statement did not have a material impact on VIALOG's
financial position, results of operations, or liquidity.

(l) Loss Per Share

In 1997, VIALOG adopted the provisions of Statement of Financial Accounting
Standards No. 128 ("SFAS 128"), "Earnings per Share." SFAS 128 requires the
presentation of basic earnings per share and diluted earnings per share for
all periods presented. For the years ended December 31, 1996 and 1997, the
loss per share was calculated based on weighted average common shares
outstanding. Common stock equivalents were excluded from the diluted loss per
share calculation as they would be antidilutive. As a result, diluted loss per
share is the same as basic loss per share, and has not been presented
separately.

(2) ACQUISITIONS

On November 12, 1997, VIALOG acquired all of the issued and outstanding
stock of Telephone Business Meetings, Inc. ("Access"), Conference Source
International, Inc. ("CSI"), Kendall Square Teleconferencing, Inc. ("TCC"),
American Conferencing Company, Inc. ("Americo") and Communication Development
Corporation ("CDC"), and substantially all of the net assets of Call Points,
Inc. ("Call Points") (together, the "Acquired Companies"). These acquisitions
occurred contemporaneously with the closing of the Private Placement of a
total of $75.0 million in Senior Notes due 2001 (See Note 6 "Long-Term Debt").
The acquisitions were accounted for using the purchase method. The total
purchase price of the Acquired Companies

F-13
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

consisted of $53.0 million in cash paid to the stockholders of the Acquired
Companies (the "Sellers"), $448,000 of acquisition costs, the issuance of
559,330 shares of common stock to the Sellers and approximately $782,000 in
cash related to tax reimbursements. The purchase price exceeded the fair value
of the net assets acquired by $52.7 million. The excess was allocated to
goodwill and other intangibles which are being amortized over periods from 6
to 20 years. In addition, at the time of the acquisitions, VIALOG repaid $2.2
million of long-term debt of the Acquired Companies.

In connection with the acquisitions, VIALOG recorded a non-recurring charge
of $8.0 million related to the fair value of purchased in-process research and
development. The in-process research and development had not yet reached
technological feasibility and had no alternative future use. The impact of
this non-recurring charge was a reduction of goodwill and related amortization
expense.

The operating results of the Acquired Companies have been included in the
Consolidated Statement of Operations from the date of acquisition. The
unaudited pro forma consolidated historical results for the years ended
December 31, 1996 and 1997 below assume the acquisitions occurred at the
beginning of fiscal 1996:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)
Net revenues...................................... $ 28,298 $ 35,917
Cost of revenues.................................. 16,302 20,272
----------- -----------
Gross profit.................................... 11,996 16,645
Selling, general and administrative expenses...... 10,558 16,650
Amortization of goodwill and intangibles.......... 2,495 2,495
----------- -----------
Operating income (loss)......................... (1,057) (3,500)
Interest expense, net............................. (12,637) (12,759)
----------- -----------
Loss before income taxes........................ (13,694) (16,259)
Income tax expense (benefit)...................... (540) 522
----------- -----------
Net loss........................................ $ (13,154) $ (16,781)
=========== ===========
Net loss per share................................ $ (4.97) $ (4.99)
=========== ===========
Pro forma weighted average shares outstanding..... 2,647,476 3,362,284
=========== ===========
</TABLE>

The pro forma results include amortization of the goodwill and intangible
assets described above and interest expense on debt assumed issued to finance
the acquisitions. The pro forma results do not include the write-off of in-
process research and development expenses at the date of acquisition. The pro
forma results are not necessarily indicative of the results that would have
been obtained had these events actually occurred at the beginning of the
periods presented, nor are they necessarily indicative of future consolidated
results.

(3) CASH AND CASH EQUIVALENTS

VIALOG classifies all investments with an original maturity of less than
ninety days as cash equivalents and values them at cost which approximates
market. VIALOG's policy is to invest cash primarily in income producing short-
term instruments and to keep uninvested cash balances at minimum levels.

F-14
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Prior to the acquisitions discussed in Note 2 "Acquisitions," VIALOG had no
accounts receivable. At acquisition, the accounts receivable of the Acquired
Companies were recorded at fair market value. The allowance for doubtful
accounts at December 31, 1997 represents the provision charged to operations
for the period November 12, 1997 through December 31, 1997.

<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING OF CHARGED TO NET DEDUCTIONS AT END OF
PERIOD OPERATIONS FROM ALLOWANCE PERIOD
------------ ---------- -------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Three Months Ended March
31, 1998 (unaudited).... $ 32 $ 55 $ (1) $ 86
Year Ended December 31,
1997.................... $ -- $ 32 $ -- $ 32
Year Ended December 31,
1996.................... $ -- $ -- $ -- $ --
</TABLE>

(5) PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------ MARCH 31,
1996 1997 1998
----- ------ -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Office furniture and equipment.................... $ 7 $ 869 $ 900
Conferencing equipment............................ -- 5,163 6,306
Computer equipment................................ -- 697 1,199
Equipment under capital lease..................... -- 898 818
Leasehold improvements............................ -- 190 194
----- ------ ------
7 7,817 9,417
Less: accumulated depreciation and amortization... -- (273) (857)
----- ------ ------
$ 7 $7,544 $8,560
===== ====== ======
</TABLE>

(6) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------- MARCH 31,
1996 1997 1998
----- ------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
12 3/4% Senior Notes payable, due 2001, net of
unamortized discount of $0, $4,203, and $3,931
respectively.................................... $ -- $70,797 $71,069
Capitalized lease obligations.................... -- 1,044 945
Other long-term debt............................. -- 95 90
----- ------- -------
Total long-term debt........................... -- 71,936 72,104
Less current portion........................... -- 397 381
----- ------- -------
Total long-term debt, less current portion..... $ -- $71,539 $71,723
===== ======= =======
</TABLE>

F-15
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Notes Payable

On February 24, 1997, VIALOG issued $500,000 of 8% promissory notes due on
the earlier of (a) ten days following the closing of an initial public
offering or (b) one year from their issue date. Warrants to purchase 111,118
common shares at an exercise price of $4.50 were issued in conjunction with
the promissory notes. The warrants may be exercised between November 1997 and
February 1999. In November 1997, the promissory notes were repaid, including
accrued interest, from the proceeds of the Private Placement, which was
completed on November 12, 1997. In conjunction with the Private Placement, the
warrants issued to the note holders were increased to a total of 153,378 in
accordance with anti-dilution provisions contained in the promissory notes.

Convertible Bridge Facility

In October 1997, VIALOG completed a private placement to certain of its
existing investors of $255,500 of 10% subordinated convertible promissory
notes due on the earlier of (a) five days after the closing of a sale of
VIALOG's equity securities or debt securities for an aggregate price of $50.0
million or more, or (b) January 1, 1998. The notes were convertible at the
option of the holders at any time prior to and including the due date into
such number of shares of VIALOG's common stock as determined by dividing the
aggregate unpaid principal amount of the notes by the conversion price of
$2.00 per share, subject to adjustment pursuant to the terms of the notes. In
November 1997, the notes were converted into 127,750 shares of VIALOG's common
stock.

Senior Notes Payable

On November 12, 1997, VIALOG completed a Private Placement of $75.0 million
of Senior Notes, Series A. The Senior Notes bear interest at 12 3/4% per
annum, payable semi-annually on May 15 and November 15 of each year,
commencing May 15, 1998. The Senior Notes are guaranteed by the Acquired
Companies and mature on November 15, 2001 and are redeemable in whole or in
part at the option of VIALOG on or after November 15, 1999 at 110% of the
principal amount thereof, and on or after November 15, 2000 at 105% of the
principal amount thereof, in each case together with accrued interest to the
date of redemption. In addition, there are certain other early redemption
options available to VIALOG at any time on or prior to November 15, 1999, as
specified in the indenture pursuant to which the Senior Notes were issued. In
the event of a change in control, as defined in the Senior Notes, the Company
may be required to repurchase all of the outstanding Senior Notes at 101% of
the principal amount plus accrued interest and additional interest, if any. In
addition, one of VIALOG's stockholders will be appointed as a director or
officer of VIALOG. Warrants to purchase 1,059,303 common shares at an exercise
price of $.01 per share were issued in conjunction with the Senior Notes. Of
the total issued, 756,645 warrants were attached to the Senior Notes and
302,658 were issued to the initial purchaser of the Senior Notes. The value of
the warrants attached to the Senior Notes was $4.4 million and was recorded as
debt discount and additional paid-in capital. The value of the warrants issued
to the initial purchaser of the Senior Notes was $1.7 million and was recorded
as deferred debt issuance costs. The warrants may be exercised between
November 1997 and November 2001. The proceeds from the Senior Notes were used
to complete the acquisitions (see Note 2 "Acquisitions"), repay outstanding
indebtedness and fund working capital requirements. On February 12, 1998,
VIALOG offered to exchange Senior Notes, Series B for Senior Notes, Series A
(see Note 15 "Subsequent Event").

Interest Income (Expense), Net

Interest income (expense), net consists of the following:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
------------ -------------
1996 1997 1997 1998
---- ------- ---- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest income................................ $ 1 $ 56 $-- $ 118
Interest expense............................... -- (1,922) (3) (3,163)
---- ------- ---- -------
Interest income (expense), net............... $ 1 $(1,866) $ (3) $(3,045)
==== ======= ==== =======
</TABLE>

F-16
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(7) ACCRUED EXPENSES

Accrued expenses consist primarily of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------ MARCH 31,
1996 1997 1998
----- ------ -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Accrued interest................................... $ -- $1,310 $3,685
Accrued payroll and related costs.................. 257 1,119 992
Accrued acquisition and financing related costs.... 406 1,550 1,359
Accrued other...................................... -- 1,746 1,492
----- ------ ------
$ 663 $5,725 $7,528
===== ====== ======
</TABLE>

(8) COMMITMENTS AND CONTINGENCIES

VIALOG conducts its operations primarily in leased facilities under
operating lease arrangements expiring on various dates through May 2008.
Certain long-term capital leases have been included in Property and Equipment
and Long-Term Debt in the accompanying consolidated balance sheets.

Future minimum lease payments under capital and operating leases with
initial terms of one year or more are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, CAPITAL LEASES OPERATING LEASES
------------------------ -------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1998....................................... $ 485 $1,035
1999....................................... 434 980
2000....................................... 232 938
2001....................................... 90 809
2002....................................... 1 750
Thereafter................................. -- 2,241
------ ------
Total minimum lease payments............... 1,242 $6,753
======
Less: Amount representing interest on
capital leases............................ 198
------
Present value of minimum lease payments at
December 31, 1997......................... $1,044
======
</TABLE>

Total operating lease rental expense for VIALOG for the years ended December
31, 1996 and 1997 were $0 and $198,000, respectively.

F-17
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(9) PROVISION FOR INCOME TAXES

Income tax (expense) benefit for the years ended December 31, 1996 and 1997
consists of the following:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
December 31, 1996:
Federal............................................ $ -- $ 398 $ 398
State.............................................. -- 124 124
----- ----- -----
$ -- $ 522 $ 522
===== ===== =====
December 31, 1997:
Federal............................................ $ -- $(398) $(398)
State.............................................. -- (124) (124)
----- ----- -----
$ -- $(522) $(522)
===== ===== =====
</TABLE>

Income tax benefit differed from the amounts computed by applying the U.S.
statutory federal income tax rate of 34% as a result of the following:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1996 1997
------ --------
(DOLLARS
IN THOUSANDS)
<S> <C> <C>
Computed "expected" tax benefit........................... $ 445 $ 5,202
State and local income taxes, net of federal tax benefit.. 82 918
Non deductible amounts and other differences.............. (5) (167)
Change in valuation allowance for deferred taxes allocated
to income tax expense.................................... -- (6,469)
Other..................................................... -- (6)
----- --------
Tax benefit............................................. $ 522 $ (522)
===== ========
</TABLE>

The tax effects of temporary differences that give rise to significant
portion of deferred tax assets and liabilities are presented below:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1997
--------------
(DOLLARS
IN THOUSANDS)
<S> <C> <C>
Deferred tax asset:
Organizational expenditures and start-up costs............ $ 522 $ 2,029
Accrual to cash accounting adjustment..................... -- (162)
Purchased intangibles..................................... -- 3,040
Net operating loss carryforwards.......................... -- 1,563
Capital loss and charitable contribution carry forwards... -- 2
Property and equipment.................................... -- (92)
Bad debts................................................. -- 24
Original issue discount amortization...................... -- 13
Other..................................................... -- 52
Valuation allowance....................................... -- (6,469)
----- --------
Net deferred tax assets................................. $ 522 $ --
===== ========
</TABLE>

F-18
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

VIALOG had net operating loss carryforwards of $0 and $3.9 million at
December 31, 1996 and 1997, respectively, which expire in 2012. Utilization of
the net operating losses may be subject to an annual limitation provided by
change in ownership provisions of Section 382 of the Internal Revenue Code of
1986 and similar state provisions.

In assessing the realizability of deferred tax assets, VIALOG considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Based on management's projections for future
taxable income over the periods in which the deferred tax assets are
deductible, a valuation allowance has been established for the deferred tax
assets.

(10) STOCKHOLDERS' EQUITY

(a) Sale of Common Stock

During 1996, VIALOG sold common stock through several private placements.
The proceeds of the sales were used primarily for expenses relating to the
business acquisition agreements and a proposed financing. A total of 758,000
shares of common stock were sold for aggregate net proceeds of $865,000.

(b) Common Stock Grants

Between February and November 1996, VIALOG issued a total of 419,500 shares
of common stock to consultants and employees as an inducement to them to
provide services to VIALOG. Compensation expense of $123,000 which represents
the estimated fair market value of the stock granted, was recorded in
connection with these transactions.

On October 16, 1997, the Board of Directors approved a 2-for-1 stock split
of VIALOG's common stock. All prior periods have been restated to reflect this
stock split effected as a recapitalization.

(d) Preferred Stock

On February 14, 1997, the stockholders voted to authorize 10,000,000 shares
of preferred stock. No shares of preferred stock are issued and outstanding.

(e) Warrants

During 1997, VIALOG issued warrants to purchase common stock in connection
with certain financing transactions (see Note 6 "Long-Term Debt").

(11) EMPLOYEE BENEFIT PLANS

(a) The 1996 Stock Plan

On February 14, 1996, the Board of Directors and VIALOG's stockholders
approved VIALOG's 1996 Stock Plan (the "Plan"). The purpose of the Plan is to
provide directors, officers, key employees, consultants and other service
providers with additional incentives by increasing their ownership interests
in VIALOG. Individual awards under the plan may take the form of one or more
of: (i) incentive stock options ("ISOs"); (ii) non-qualified stock options
("NQSOs"); (iii) stock appreciation rights ("SARs"); and (iv) restricted
stock.

The Compensation Committee administers the Plan and generally selects the
individuals who will receive awards and the terms and conditions of those
awards. The maximum number of shares of common stock that may be subject to
outstanding awards, determined immediately after the grant of any award, may
not exceed 3,000,000 and 3,250,000 shares as of December 31, 1996 and 1997,
respectively. Shares of common stock attributable to awards which have
expired, terminated or been canceled or forfeited are available for issuance
or use in connection with future awards.

F-19
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Plan will remain in effect until February 14, 2006 unless terminated
earlier by the Board of Directors. The Plan may be amended by the Board of
Directors without the consent of the stockholders of VIALOG, except that any
amendment, although effective when made, will be subject to stockholder
approval if required by any Federal or state law or regulation by the rules of
any stock exchange or automated quotation system on which the common stock may
then be listed or quoted.

The following is a summary of stock option activity:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Options outstanding at December 31, 1995......... -- $ --
Granted........................................ 1,746,132 0.29
Exercised...................................... (75,000) 0.03
Canceled....................................... (576,000) 0.03
--------- -----
Options outstanding at December 31, 1996......... 1,095,132 0.45
Granted........................................ 763,849 4.14
Exercised...................................... (104,000) 0.03
Canceled....................................... (400,110) 1.03
--------- -----
Options outstanding at December 31, 1997......... 1,354,871 $2.39
========= =====
</TABLE>

The options generally vest in equal quarterly installments over 3 years and
have a 10 year term. At December 31, 1996 and 1997, 75,000 and 467,771
options, respectively, were exercisable at weighted average exercise prices of
$.2775 and $1.03 per share, respectively. At December 31, 1997, there were
1,716,129 additional shares available for grant under the Plan.

The following is a summary of options outstanding and exercisable at
December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- --------------------------
RANGE OF WEIGHTED WEIGHTED AVERAGE WEIGHTED
EXERCISE NUMBER AVERAGE REMAINING NUMBER AVERAGE
PRICES OUTSTANDING EXERCISE PRICE CONTRACTUAL LIFE EXERCISABLE EXERCISE PRICE
-------- ----------- -------------- ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.025-
$0.278 547,552 $0.19 6.7 years 360,306 $0.21
$2.00 387,470 2.00 9.4 years 43,720 2.00
$4.50-
$5.75 419,849 5.63 9.0 years 63,745 4.97
--------- -------
1,354,871 2.39 467,771 1.03
========= =======
</TABLE>

In 1996, VIALOG granted a total of 111,112 options to consultants.
Compensation expense of $50,000 has been recorded in connection with these
transactions in 1996. During 1997, modifications were made to the vesting and
expiration periods of certain outstanding options. Compensation expense of
$958,000 has been recorded in 1997 in connection with these modifications.

F-20
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

VIALOG applies APB Opinion No. 25 accounting for stock issued to employees
in accounting for its Plan and, accordingly, compensation cost is only
recognized in the financial statements for stock options granted to employees
when the fair value on the grant date exceeds the exercise price. Had VIALOG
determined compensation cost based on the fair value at grant date for its
stock options under SFAS No. 123, its net loss would have been increased to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1997
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Net loss
As reported...................................... $ (785) $ (15,821)
Pro forma........................................ $ (800) $ (15,901)
Loss per share
As reported...................................... $ (0.38) $ (5.48)
Pro forma........................................ $ (0.38) $ (5.50)
</TABLE>

The per share weighted-average fair value of stock options granted during
1996 and 1997, respectively, were $.135 and $1.00 for ISOs and $.37 and $1.30
for NQSOs on the date of grant using the minimum value option-pricing model
with the following weighted-average assumptions used for grants in 1996 and
1997, respectively: no expected dividend yields for both periods, risk-free
interest rates of 6.1% and 5.88%, and expected lives of 5 years for both
periods.

(b) Retirement Plan

Access, one of the Acquired Companies, maintains a defined contribution
retirement plan (the "Plan") under Section 401(k) of the Internal Revenue Code
which covers all eligible employees. Employee contributions are voluntary and
vest with the employee immediately. The Plan provides for matching
contributions by Access of 50% of employee contributions, up to certain limits
as defined in the Plan. Access' matching contributions vest over the
employee's period of service. Access' matching contributions to the Plan for
the period ended December 31, 1997 was $1,000.

Effective December 31, 1997, all employees became fully vested in Access'
matching contributions. Effective January 1, 1998, Access' matching
contributions were discontinued.

Certain of the executive officers of VIALOG have entered into employment
agreements with VIALOG which provide for severance payments in the event their
employment is terminated prior to the expiration of their employment terms.
The severance terms range from six months to three years, depending on the
timing and circumstances of the termination.

(12) SIGNIFICANT CUSTOMERS

During the year ended December 31, 1997, VIALOG had one customer which
represented 8.4% of total net revenues.

F-21
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(13) RELATED PARTY TRANSACTIONS

The following summarizes the significant related party transactions:

(a) During 1997 VIALOG paid $1.8 million for legal fees and expenses to a
firm having a member who is also a director of VIALOG.

(b) From December 1997 to February 1998, one of VIALOG's stockholders
provided consulting services to the Company for a monthly fee of $10,000.

(c) VIALOG has implemented a policy whereby neither VIALOG nor any
subsidiary (which includes the Acquired Companies) will enter into
contracts or business arrangements with persons or entities owned in whole
or in part by officers or directors of VIALOG or any subsidiary except on
an arms-length basis and with the approval of VIALOG's Board of Directors.
VIALOG's bylaws require that any approval must be by a majority of the
independent directors then in office who have no interest in such contract
or transaction.

(14) LITIGATION

In connection with the acquisition of Call Points, one of the Acquired
Companies, VIALOG agreed to assume all disclosed liabilities with the
exception of any liabilities arising out of Equal Employment Opportunity
Commission ("EEOC") claims and litigation filed against Call Points and Ropir
Industries, Inc. ("Ropir"), the sole stockholder and parent corporation of
Call Points, by certain former and current employees. On or about October 30,
1997, 11 employees or former employees of Call Points filed claims in federal
district court against Call Points, Ropir and certain other parties named
therein. Complainants in these cases could seek to name VIALOG as a defendant
in such pending litigation and could seek to hold VIALOG liable for damages
resulting from the litigation as a successor in interest to Call Points. In
addition to equitable relief, the complainants are seeking back pay,
compensatory and punitive damages and attorneys fees based on allegations of
discrimination, retaliation and racially harassing atmosphere. Although VIALOG
believes it has defenses to any such claim, there can be no assurance that any
such defense would be successful. The principal stockholder of Call Points
agreed to indemnify VIALOG from any liability relating to such claims and
placed $250,000 of the proceeds from the sale of Call Points in escrow with a
third party to secure such indemnification obligations. In light of such
indemnification, VIALOG does not believe that such claims, if successful,
would have a material adverse effect on VIALOG.

A former employee of CSI, one of the Acquired Companies, has claimed in
writing that he may be entitled to up to five percent of the stock of CSI,
based on an unsigned paper outlining possible employment terms. CSI's position
is that the only agreements with such employee were set forth in two
successive executed employment agreements, each of which had a specific
provision that such agreement was inclusive as to the terms of employment.
VIALOG and the former stockholders of CSI believe that such claim is without
merit.

(15) SUBSEQUENT EVENT

On February 12, 1998, VIALOG offered to exchange (the "Exchange Offer")
$75.0 million of 12 3/4% Senior Notes, Series B (the "Exchange Notes") for the
existing $75.0 million of 12 3/4% Senior Notes, Series A (the "Old Notes"). In
connection with the Exchange Offer, VIALOG filed with the Securities and
Exchange Commission a Registration Statement on Form S-4 for the registration
of the Exchange Notes under the Securities Act of 1933. The form and terms of
the Exchange Notes are identical in all material respects to the form and
terms of the Old Notes except for certain transfer restrictions and
registration rights relating to the Old Notes. VIALOG did not receive any
proceeds from the Exchange Offer.

F-22
<PAGE>

VIALOG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(16) SUBSEQUENT EVENTS (UNAUDITED)

(a) Exchange Offer

On March 26, 1998, the Exchange Offer of 12 3/4% Senior Notes, Series B for
the existing 12 3/4% Senior Notes, Series A terminated, with all of the Old
Notes being surrendered for Exchange Notes.

(b) The 1996 Stock Plan

During the three months ended March 31, 1998, VIALOG granted to employees
under the 1996 Stock Plan, options to purchase 579,825 shares of common stock
at an exercise price of $5.75 per share.

F-23
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Telephone Business Meetings, Inc.:

We have audited the accompanying balance sheets of Telephone Business
Meetings, Inc. ("Access") as of December 31, 1995 and 1996, and the related
statements of operations, stockholders' equity and cash flows for the year
ended December 31, 1994, the period January 1, 1995 to April 9, 1995, the
period April 10, 1995 to December 31, 1995, and the year ended December 31,
1996. These financial statements are the responsibility of Access' management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Telephone Business
Meetings, Inc. as of December 31, 1995 and 1996, and the results of its
operations and its cash flows for the year ended December 31, 1994, the period
January 1, 1995 to April 9, 1995, the period April 10, 1995 to December 31,
1995, and the year ended December 31, 1996, in conformity with generally
accepted accounting principles.

As discussed in note 4 to the financial statements, effective April 10,
1995, Access repurchased all of the common stock of one of Access' founding
stockholders, representing a 50% interest in Access. As a result of the change
in control, the financial information for the periods after the change in
control is presented on a different cost basis than that for the periods
before the change in control and, therefore, is not comparable.

KPMG Peat Marwick llp

January 24, 1997
Washington, D.C.

F-24
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (note 3)
Current assets:
Cash and cash equivalents....................... $ 390 $ 804 $ 970
Trade accounts receivable, less allowance for
doubtful accounts of $33, $206 and $292 at
December 31, 1995, December 31, 1996 and
September 30, 1997, respectively............... 802 1,103 1,376
Prepaid expenses and other current assets....... 108 161 204
------ ------ ------
Total current assets.......................... 1,300 2,068 2,550
------ ------ ------
Property and equipment, net (note 2).............. 2,032 2,201 3,116
Restricted cash................................... 105 110 --
Excess of purchase price over the fair value of
the interest in net assets of the former
stockholders, net of accumulated amortization of
$12, $28 and $40 at December 31, 1995, December
31, 1996 and September 30, 1997, respectively
(note 4)......................................... 231 215 203
Other assets...................................... 4 11 33
------ ------ ------
Total assets.................................. $3,672 $4,605 $5,902
====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note
3)............................................. $ 732 $ 654 $ 821
Current installments of note payable to former
stockholder (note 4)........................... 109 116 121
Current installments of obligations under
capital leases (note 7)........................ 28 32 29
Accounts payable................................ 4 141 336
Accrued expenses (note 6)....................... 276 366 679
Income taxes payable............................ 10 -- --
------ ------ ------
Total current liabilities..................... 1,159 1,309 1,986
------ ------ ------
Long-term debt, excluding current installments
(note 3)....................................... 1,029 880 667
Note payable to former stockholder, excluding
current installments
(note 4)....................................... 439 323 231
Obligations under capital leases, excluding
current installments (note 7).................. 79 47 27
Deferred rent................................... 94 128 150
------ ------ ------
Total liabilities............................. 2,800 2,687 3,061
------ ------ ------
Common stock issued to employees with redemption
option, 15.464 shares at liquidation value (note
5)............................................... -- 148 273
------ ------ ------
Stockholders' equity (notes 4 and 5):
Common stock, $.01 par value. Authorized and
issued 1,000 shares; 500 shares outstanding.... -- -- --
Additional paid-in capital...................... 660 660 660
Retained earnings............................... 212 1,110 1,908
------ ------ ------
Total stockholders' equity.................... 872 1,770 2,568
------ ------ ------
Commitments and contingencies (notes 7 and 8)
Total liabilities and stockholders' equity...... $3,672 $4,605 $5,902
====== ====== ======
</TABLE>

See accompanying notes to financial statements.

F-25
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD PERIOD NINE MONTHS
YEAR ENDED JANUARY 1, APRIL 10, TO YEAR ENDED ENDED SEPTEMBER 30,
DECEMBER 31, TO APRIL 9, DECEMBER 31, DECEMBER 31, -------------------
1994 1995 1995 1996 1996 1997
------------ ----------- ------------ ------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net revenues............ $5,114 $1,590 $4,918 $9,073 $ 6,606 $ 9,261
Cost of revenues........ 2,823 855 2,564 4,071 2,977 4,582
------ ------ ------ ------ --------- ---------
Gross profit.......... 2,291 735 2,354 5,002 3,629 4,679
Selling, general and
administrative
expenses............... 1,745 524 2,058 3,455 2,255 2,990
------ ------ ------ ------ --------- ---------
Income from
operations........... 546 211 296 1,547 1,374 1,689
Interest expense, net... 49 12 140 174 135 94
------ ------ ------ ------ --------- ---------
Income before income
tax expense
(benefit)............ 497 199 156 1,373 1,239 1,595
Income tax expense
(benefit).............. 52 8 (56) -- -- --
------ ------ ------ ------ --------- ---------
Net income............ $ 445 $ 191 $ 212 $1,373 $ 1,239 $ 1,595
====== ====== ====== ====== ========= =========
</TABLE>

See accompanying notes to financial statements.

F-26
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
------------------- TOTAL
NUMBER OF ADDITIONAL RETAINED STOCKHOLDERS'
SHARES PAR VALUE PAID IN CAPITAL EARNINGS EQUITY
--------- --------- --------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1993................... 1,000 $-- $ 4 $ 715 $ 719
Disbursements........... -- -- -- (39) (39)
Net income.............. -- -- -- 445 445
----- ---- ---- ------ ------
Balance at December 31,
1994................... 1,000 -- 4 1,121 1,125
Net income.............. -- -- -- 191 191
----- ---- ---- ------ ------
Balance at April 9,
1995................... 1,000 $-- $ 4 $1,312 $1,316
===== ==== ==== ====== ======
Balance subsequent to
repurchase of 50% in-
terest (note 4)........ 500 $-- $660 $ -- $ 660
Net income.............. -- -- -- 212 212
----- ---- ---- ------ ------
Balance at December 31,
1995................... 500 -- 660 212 872
Distributions........... -- -- -- (475) (475)
Net income.............. -- -- -- 1,373 1,373
----- ---- ---- ------ ------
Balance at December 31,
1996................... 500 -- 660 1,110 1,770
Distributions (unau-
dited)................. -- -- -- (797) (797)
Net income (unaudited).. -- -- -- 1,595 1,595
----- ---- ---- ------ ------
Balance at September 30,
1997 (unaudited)....... 500 $-- $660 $1,908 $2,568
===== ==== ==== ====== ======
</TABLE>

See accompanying notes to financial statements.

F-27
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
PERIOD PERIOD ENDED
YEAR ENDED JANUARY 1, APRIL 10, 1995 YEAR ENDED SEPTEMBER 30,
DECEMBER 31, TO APRIL 9, TO DECEMBER 31, DECEMBER 31, ---------------
1994 1995 1995 1996 1996 1997
------------ ----------- --------------- ------------ ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net income............. $ 445 $ 191 $ 212 $1,373 $1,239 $ 1,595
Adjustments to recon-
cile net income to net
cash
provided by operating
activities:
Depreciation and amor-
tization.............. 269 121 375 630 456 713
Deferred income tax-
es.................... 24 -- (62) -- -- --
Compensation expense
for issuance of com-
mon stock............. -- -- -- 148 -- 125
Changes in operating
assets and liabili-
ties:
Trade accounts re-
ceivable, net........ (71) (170) (108) (301) (270) (273)
Prepaid expenses and
other current as-
sets................. (58) 62 (5) (53) (51) (43)
Accounts payable and
accrued expenses..... (17) 90 22 227 292 508
Income taxes pay-
able................. -- -- -- (10) (10) --
Deferred rent......... -- -- 93 34 25 22
----- ------ ------- ------ ------ -------
Net cash provided by
operating activi-
ties................ 592 294 527 2,048 1,681 2,647
----- ------ ------- ------ ------ -------
Cash flows from invest-
ing activities:
Additions to property
and equipment......... (560) (123) (1,227) (783) (427) (1,616)
Restricted cash........ -- -- (105) (5) (4) 110
Other assets........... 3 (40) 63 (7) -- (22)
----- ------ ------- ------ ------ -------
Net cash used in in-
vesting activities.. (557) (163) (1,269) (795) (431) (1,528)
----- ------ ------- ------ ------ -------
Cash flows from financ-
ing activities:
Proceeds from long-term
debt.................. 484 2,149 -- 587 250 500
Principal repayments of
long-term debt........ (338) (626) (389) (814) (660) (546)
Principal repayments of
notes payable to
stockholders.......... (85) -- (51) (109) (81) (87)
Principal payments un-
der capital lease ob-
ligations............. -- -- (12) (28) (21) (23)
Cash portion of consid-
eration paid to former
stockholder........... -- -- (300) -- -- --
Dividends.............. (39) -- -- (475) (308) (797)
----- ------ ------- ------ ------ -------
Net cash provided by
(used in) financing
activities.......... 22 1,523 (752) (839) (820) (953)
----- ------ ------- ------ ------ -------
Net increase (decrease)
in cash and cash
equivalents........... 57 1,654 (1,494) 414 430 166
Cash and cash equiva-
lents at beginning of
period................ 173 230 1,884 390 390 804
----- ------ ------- ------ ------ -------
Cash and cash equiva-
lents at end of peri-
od.................... $ 230 $1,884 $ 390 $ 804 $ 820 $ 970
===== ====== ======= ====== ====== =======
Supplemental disclosures
of cash flow informa-
tion:
Cash paid during the
period for:
Interest............... $ 49 $ 18 $ 169 $ 191 $ 146 $ 131
===== ====== ======= ====== ====== =======
Income taxes........... $ 22 $ -- $ -- $ 10 $ 10 $ --
===== ====== ======= ====== ====== =======
Supplemental disclosure
of noncash investing
and
financing activities:
Capital lease obliga-
tions................. $ -- $ -- $ 120 $ -- $ -- $ --
===== ====== ======= ====== ====== =======
Issuance of note pay-
able in partial con-
sideration to
former stockholder.... $ -- $ -- $ 599 $ -- $ -- $ --
===== ====== ======= ====== ====== =======
</TABLE>

See accompanying notes to financial statements.

F-28
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Telephone Business Meetings, Inc. ("Access"), which operates under the names
ACCESS Conference Call Service and ACCESS Teleconferencing International,
provides telephone and video group communications services to a broad spectrum
of individuals and businesses throughout the United States. Access' operations
center is located in Reston, Virginia.

(b) Interim Financial Statements

The financial statements of Access as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 are unaudited. All adjustments and
accruals (consisting only of normal recurring adjustments) have been recorded
that, in the opinion of management, are necessary for a fair presentation.
Results of operations for the interim periods are not necessarily indicative
of the results for the full year.

Management of Access has made a number of estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates.

(d) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand and short-term investments
with original maturities of three months or less.

(e) Restricted Cash

Restricted cash consists of a certificate of deposit which is security for
Access' commitment under its office lease and is classified as long-term in
the accompanying balance sheets.

(f) Property and Equipment

Property and equipment are recorded at cost. Depreciation of property and
equipment is provided on the straight-line basis over the estimated useful
lives of the respective assets. The estimated useful lives are as follows:
five to seven years for office furniture and equipment; seven years for
conferencing equipment; and three to five years for computer equipment.
Capitalized lease equipment and leasehold improvements are amortized over the
lives of the leases, ranging from three to ten years.

(g) Intangible Assets

Access monitors its excess of purchase price over the fair value of interest
in net assets of the former stockholders (goodwill) to determine whether any
impairment of goodwill has occurred. In making such determination with respect
to goodwill, Access evaluates the performance, on an undiscounted basis, of
the underlying business which gave rise to such amount. Amortization of
goodwill is recorded on a straight-line basis over the estimated useful life
of 15 years.

(h) Research and Development

Access maintains a technical support and engineering department that, in
part, develops features and products for group communications. In accordance
with SFAS No. 2, Accounting for Research and Development

F-29
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Costs, Access changes to expense (included in cost of revenues) that portion
of this department's costs which are related to research and development
activities. Access' research and development expenses for the years ended
December 31, 1994, 1995 and 1996 were $128,000, $207,000 and $288,000,
respectively. Access' research and development expenses for the nine months
ended September 30, 1996 and 1997 were $177,000 and $196,000, respectively.

(i) Income Taxes

Access has elected to be taxed under the provisions of Subchapter S of the
Internal Revenue Code. Under those provisions, Access does not pay income
taxes on its taxable income. Instead, stockholders of Access are liable for
individual federal income taxes for their respective shares of Access' taxable
income. Notwithstanding the federal Subchapter S election, franchise income
taxes were payable through May of 1995 to the District of Columbia, which does
not recognize the Subchapter S election. As of June 1995, Access moved all of
its property and office facilities to the State of Virginia.

(j) Revenue Recognition

Revenue for conference calls is recognized upon completion of the call.
Revenue for services is recognized upon performance of the service.

(k) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Access adopted the provisions of SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, during 1996.
This Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this Statement did not have a material impact on
Access' financial position, results of operations, or liquidity.

(2) PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Office furniture and equipment............... $ 66 $ 88 $ 264
Conferencing equipment....................... 1,982 2,632 3,911
Computer equipment........................... 456 567 728
Capitalized lease equipment.................. 120 120 120
Leasehold improvements....................... 234 234 234
------ ------ ------
2,858 3,641 5,257
Less: accumulated depreciation and amortiza-
tion........................................ 826 1,440 2,141
------ ------ ------
Property and equipment, net................ $2,032 $2,201 $3,116
====== ====== ======
</TABLE>

F-30
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(3) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable to a bank, interest at the prime rate
plus 0.75% (9.25% at September 30, 1997), monthly
principal payments of 13,890 plus interest,
balance due in May 2000........................... $ -- $ -- $ 444
Note payable to a bank, interest only at 9.33%
payable monthly through October 1995 and then
monthly principal payments of $38,095 plus
interest until February 1999, with the balance due
in March 1999..................................... 1,486 1,029 686
Note payable to a bank, interest at the prime rate
plus 0.75% (9.25% at September 30, 1997), monthly
principal payments of $7,000 plus interest,
balance due in March 1999......................... -- 187 124
Note payable to a bank, interest at 9.5%, monthly
principal payments of $9,400 plus interest,
balance due in October 1999....................... -- 318 234
Note payable to a bank, interest at 9.33%, repaid
in full in September 1996......................... 275 -- --
------ ------ ------
Total long-term debt............................. 1,761 1,534 1,488
Less current installments........................ 732 654 821
------ ------ ------
Long-term debt, excluding current installments... $1,029 $ 880 $ 667
====== ====== ======
</TABLE>

All of Access' assets are collateral for the bank notes. In addition,
Access' majority stockholder is a guarantor of each of the bank notes. The
terms of each of the bank notes include certain financial and other covenants.
As of December 31, 1996, as a result of the stock awards discussed in note 5,
Access was not in compliance with a covenant which limits the amount of the
annual increase in executive compensation. Subsequent to December 31, 1996,
Access obtained a waiver of the noncompliance from the lender.

The aggregate maturities of all notes payable, including the note payable to
the former stockholder (see note 4), are as follows (in thousands):

<TABLE>
<S> <C>
October 1 to December 31, 1997.................................. $ 234
1998............................................................ 944
1999............................................................ 524
2000............................................................ 138
------
$1,840
======
</TABLE>

(4) RELATED PARTY TRANSACTIONS

On April 10, 1995, under a Share Purchase Agreement, as amended, all of the
common stock, 500 shares, of one of Access' founding stockholders
(representing a 50 percent interest in Access) was repurchased by Access for
total consideration of $899,000. The consideration consisted of $300,000 of
cash paid at closing and a note payable of $599,000 due May 2000, bearing
interest at 6%, with equal quarterly principal and interest payments. As of
the date of the repurchase, Access experienced a change in control and,
accordingly, the acquired 50% interest in the net assets of Access was
recognized at fair market value, which approximated book value. The excess
consideration paid over the fair market value of the interest in the net
assets of the former stockholder was approximately $240,000.

Concurrent with the repurchase of the shares, Access and the former
stockholder entered into an agreement for consulting services and an agreement
not to compete for a five-year period in exchange for total consideration

F-31
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

of $625,000 payable in equal quarterly payments by Access of $31,000
commencing with the first quarter subsequent to the closing and continuing
through April 2000.

As of December 31, 1995, December 31, 1996 and September 30, 1997, $548,000,
$439,000 and $352,000, respectively, were due under the note payable to the
former stockholder, of which $109,000, $116,000 and $121,000 respectively,
were current. During the period from April 10, 1995 to December 31, 1995, and
the year ended December 31, 1996, Access paid the former stockholder $62,000
and $125,000, respectively, under the agreements for consulting services and
not to compete. During the nine months ended September 30, 1996 and 1997,
Access paid the former stockholder $94,000 under the agreements for consulting
services and not to compete.

(5) EMPLOYEE BENEFITS

Stock Awards

During 1996, Access awarded 7.732 shares of common stock to each of two
executive officers of Access. The shares are fully vested but are restricted
as to transfer by each of the executive officers. In the event of termination
of the executive officers' employment with Access, Access has the right at its
sole option to require the executives to sell their shares back to Access and
the executives have the right to require Access to repurchase their shares,
all at the then determined fair market value. In the event of a public
offering of Access' shares or the sale of Access, all such restrictions,
rights, and options terminate.

As a result of the executive officers' right to require Access to repurchase
the shares upon termination of employment, the awards have been accounted for
using variable plan accounting, whereby compensation expense is recognized
each period for the increase, if any, in the estimated fair market value of
Access' common stock. During the year ended December 31, 1996, Access
recognized a total of $148,000 of compensation expense relating to the stock
awards. Compensation expense of $0 and $125,000 was recorded during the nine
months ended September 30, 1996 and 1997, respectively. Further, the
liquidation value of the shares has been reflected between total liabilities
and stockholders' equity in the accompanying balance sheets.

Retirement Plan

Access maintains a defined contribution retirement plan (the "Plan") under
Section 401(k) of the Internal Revenue Code which covers all eligible
employees. Employee contributions are voluntary and vest with the employee
immediately. The Plan provides for matching contributions by Access of 50
percent of employee contributions, up to certain limits as defined in the
Plan. Access' matching contributions vest over the employee's period of
service. Contributions by Access to the Plan were approximately $27,000,
$7,000, $20,000, and $42,000 for the year ended December 31, 1994, the period
January 1, 1995 to April 9, 1995, the period April 10, 1995 to December 31,
1995, and the year ended December 31, 1996, respectively. Access' matching
contributions to the Plan for the nine months ended September 30, 1996 and
1997 were $30,000 and $37,000, respectively.

(6) ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Accrued salaries, wages and benefits........... $ 86 $ 215 $586
Accrued fees and other expenses................ 190 151 93
------ ------ ----
$276 $ 366 $679
====== ====== ====
</TABLE>

F-32
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(7) COMMITMENTS AND CONTINGENCIES

Operating Lease

Access leases office space for its teleconferencing facility under a
noncancelable operating lease in Reston, Virginia. The lease is for a total of
ten years expiring May 31, 2005.

Future minimum payments under this lease are approximately as follows (in
thousands):

<TABLE>
<S> <C>
October 1, to December 31, 1997................................. $ 105
1998............................................................ 373
1999............................................................ 384
2000............................................................ 396
2001............................................................ 407
Thereafter...................................................... 1,485
------
$3,150
======
</TABLE>

Total rent expense was approximately $185,000, $51,000, $287,000 and
$396,000 for the year ended December 31, 1994, the period from January 1, 1995
to April 9, 1995, the period from April 10, 1995 to December 31, 1995, and the
year ended December 31, 1996, respectively, and $298,000 and $315,000 for the
nine months ended September 30, 1996 and 1997, respectively.

As of December 31, 1996, Access had an outstanding letter of credit in the
amount of $100,000 with a commercial bank which secures Access' obligations
under the office lease.

Capital Leases

Access has entered into noncancelable capital leases for various computer
equipment. The leases, which expire between June 1998 and June 2000, consist
of two 36 month leases and one 60 month lease. Interest rates range from 9.07%
to 10.31%.

Future minimum payments under the leases are as follows (in thousands):

<TABLE>
<S> <C>
October 1, to December 31, 1997.................................... $ 8
1998............................................................... 28
1999............................................................... 17
2000............................................................... 8
---
61
Less: imputed interest............................................. 5
---
Net present value of future lease obligations...................... 56
Less: current portion.............................................. 29
---
Obligations under capital leases, net of current portion........... $27
===
</TABLE>

F-33
<PAGE>

TELEPHONE BUSINESS MEETINGS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(8) SUBSEQUENT EVENTS (UNAUDITED)

On November 12, 1997, VIALOG Corporation ("VIALOG") acquired all of the
outstanding stock of Access for cash and Access became a wholly owned
subsidiary of VIALOG. The acquisition of Access will be accounted for by the
purchase method. Accordingly, all of the identified tangible and intangible
assets and liabilities will be recorded at their current fair market value and
the excess of the purchase price over the fair value of the net assets
acquired will be recorded as intangible assets, which will be amortized up to
20 years.

In conjunction with this merger, the tax status of Access was converted from
an S corporation to a C corporation, whereby Access will now be liable for
income taxes.

As stipulated in the business combination agreement between Access and
VIALOG, $662,000 of the purchase price was paid directly to the related party
referred to in note 4 to retire the note and to pay the remaining obligation
under the agreement for consulting services and an agreement not to compete.

In November 1997, all of the bank notes described in note 3 were repaid in
full.

F-34
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors Conference Source International, Inc.

We have audited the accompanying balance sheets of Conference Source
International, Inc. ("CSI") as of December 31, 1995 and 1996, and the related
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1996. These financial
statements are the responsibility of CSI's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Conference Source
International, Inc. as of December 31, 1995 and 1996 and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick llp

January 17, 1997
Boston, Massachusetts

F-35
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (NOTE 3)
Current assets:
Cash and cash equivalents........................ $ 375 $ 318 $ 12
Trade account receivables, less allowance for
doubtful accounts of $5, $10 and $10 at December
31, 1995, December 31, 1996 and September 30,
1997, respectively (note 6)..................... 692 801 955
Due from stockholder (note 4).................... 72 -- --
Prepaid expenses and other current assets........ -- 24 58
------ ------ ------
Total current assets........................... 1,139 1,143 1,025
------ ------ ------
Property and equipment, net (notes 2 and 5)........ 866 1,059 1,065
Other assets....................................... 32 91 67
------ ------ ------
Total assets................................... $2,037 $2,293 $2,157
====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 3).. $1,089 $ 111 $ 186
Current installments of obligations under capital
leases (note 5)................................. 141 375 268
Accounts payable................................. 201 121 151
Accrued expenses................................. 30 91 93
------ ------ ------
Total current liabilities...................... 1,461 698 698
------ ------ ------
Long-term debt, excluding current installments
(note 3).......................................... 43 219 338
Obligations under capital leases, excluding current
installments (note 5)............................. 173 700 506
------ ------ ------
Total liabilities.............................. 1,677 1,617 1,542
------ ------ ------
Stockholders' equity:
Common stock, $1.00 par value. Authorized 100,000
shares; issued and outstanding 1,000 shares..... 1 1 1
Additional paid-in capital....................... 349 349 349
Retained earnings................................ 10 326 265
------ ------ ------
Total stockholders' equity..................... 360 676 615
------ ------ ------
Commitments and contingencies (notes 5 and 7)
Total liabilities and stockholders' equity..... $2,037 $2,293 $2,157
====== ====== ======
</TABLE>

See accompanying notes to financial statements.

F-36
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------- -----------------
1994 1995 1996 1996 1997
------ ------ ------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues (note 6).................. $2,331 $3,808 $5,868 $ 4,483 $ 4,790
Cost of revenues....................... 1,463 1,874 2,780 2,027 2,010
------ ------ ------ -------- --------
Gross profit......................... 868 1,934 3,088 2,456 2,780
Selling, general and administrative ex-
penses................................ 735 940 1,049 888 686
------ ------ ------ -------- --------
Income from operations............... 133 994 2,039 1,568 2,094
Interest expense, net.................. 124 160 165 129 99
------ ------ ------ -------- --------
Net income........................... $ 9 $ 834 $1,874 $ 1,439 $ 1,995
====== ====== ====== ======== ========
</TABLE>

See accompanying notes to financial statements.

F-37
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL TOTAL
NUMBER OF PAID-IN RETAINED STOCKHOLDERS'
SHARES PAR VALUE CAPITAL EARNINGS EQUITY
--------- --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1993................... 1,000 $ 1 $349 $ (833) $ (483)
Net income............ -- -- -- 9 9
----- ---- ---- ------- -------
Balance at December 31,
1994................... 1,000 1 349 (824) (474)
Net income............ -- -- -- 834 834
----- ---- ---- ------- -------
Balance at December 31,
1995................... 1,000 1 349 10 360
Net income............ -- -- -- 1,874 1,874
Distributions......... -- -- -- (1,558) (1,558)
----- ---- ---- ------- -------
Balance at December 31,
1996................... 1,000 1 349 326 676
Net income (unau-
dited)............... -- -- -- 1,995 1,995
Distributions (unau-
dited)............... -- -- -- (2,056) (2,056)
----- ---- ---- ------- -------
Balance at September 30,
1997 (unaudited)....... 1,000 $ 1 $349 $ 265 $ 615
===== ==== ==== ======= =======
</TABLE>

See accompanying notes to financial statements.

F-38
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------- ------------------
1994 1995 1996 1996 1997
----- ----- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activi-
ties:
Net income......................... $ 9 $ 834 $ 1,874 $ 1,439 $ 1,995
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization..... 235 292 393 268 311
Changes in operating assets and
liabilities:
Trade accounts receivable, net... (205) (312) (109) (200) (154)
Due from stockholder............. (6) (66) 72 -- --
Prepaid expenses and other as-
sets............................ (35) 4 (83) (4) (10)
Accounts payable and accrued ex-
penses.......................... 55 (31) (19) (53) 32
----- ----- ------- -------- --------
Net cash provided by operating
activities..................... 53 721 2,128 1,450 2,174
----- ----- ------- -------- --------
Cash flows from investing activi-
ties:
Additions to property and equip-
ment.............................. (476) (225) (41) (31) (317)
----- ----- ------- -------- --------
Cash flows from financing activi-
ties:
Proceeds from borrowings on long-
term debt......................... 652 201 -- -- 573
Principal repayment of long-term
debt.............................. (100) (197) (438) (351) (379)
Proceeds from refinancing of obli-
gations under capital leases...... -- -- 142 142 --
Principal repayment of obligations
under capital leases.............. (126) (148) (290) (227) (301)
Distributions to stockholder....... -- -- (1,558) (1,277) (2,056)
----- ----- ------- -------- --------
Net cash provided by (used in)
financing activities........... 426 (144) (2,144) (1,713) (2,163)
----- ----- ------- -------- --------
Net increase (decrease) in cash and
cash equivalents................... 3 352 (57) (294) (306)
Cash and cash equivalents at begin-
ning of period..................... 20 23 375 375 318
----- ----- ------- -------- --------
Cash and cash equivalents at end of
period............................. $ 23 $ 375 $ 318 $ 81 $ 12
===== ===== ======= ======== ========
Supplemental disclosures of cash
flow information:
Cash paid during the period for:
Interest.......................... $ 119 $ 162 $ 169 $ 131 $ 112
===== ===== ======= ======== ========
Noncash transaction:
Equipment purchased under capital
lease obligations................ $ 296 $ -- $ 545 $ 545 $ --
===== ===== ======= ======== ========
</TABLE>

See accompanying notes to financial statements.

F-39
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Conference Source International, Inc. ("CSI") is a provider of group
communications to a variety of customers located primarily in the United
States. CSI was incorporated in February, 1992, and is headquartered in
Atlanta, Georgia.

(b) Interim Financial Statements

The financial statements of CSI as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 are unaudited. All adjustments and
accruals (consisting only of normal recurring adjustments) have been recorded
that, in the opinion of management, are necessary for a fair presentation.
Results of operations for the interim periods are not necessarily indicative
of the results for the full year.

Management of CSI has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates.

(d) Cash and Cash Equivalents

CSI considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. At December 31, 1995 and December
31, 1996, certain cash deposits with financial institutions are in excess of
the $100,000 Federal Depository Insurance Corporation (FDIC) guarantee.

(e) Property and Equipment

Property and equipment is stated at cost. Equipment under capital leases is
stated at the present value of minimum lease payments. Depreciation is
calculated using accelerated methods over the estimated useful lives of the
respective assets. Estimated useful lives are as follows: five years for
vehicles; five to seven years for office equipment; five to seven years for
bridge equipment; and five years for computer software. Equipment under
capital leases is amortized using accelerated methods over the shorter of the
lease term or the estimated useful life of the asset, ranging from five to
seven years.

(f) Income Taxes

CSI has elected by consent of its stockholders to be taxed under the
provisions of Subchapter S of the Internal Revenue Code. Under those
provisions, CSI does not pay corporate income taxes on its taxable income.
Instead, the stockholders are liable for individual income taxes on CSI's
taxable income. Accordingly, these financial statements do not contain a
provision for income taxes.

(g) Revenue Recognition

Revenue for conference calls is recognized upon completion of the call.
Revenue for services is recognized upon performance of the service.

(h) Research and Development

CSI maintains a technical support and engineering department that, in part,
develops features and products for group communications. In accordance with
SFAS No. 2, Accounting for Research and Development Costs,

F-40
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

CSI charges to expense (included in cost of revenues) that portion of this
department's costs which are related to research and development activities.
CSI's research and development expenses for the years ended December 31, 1994,
1995 and 1996 were $179,000, $209,000 and $218,000, respectively. CSI's
research and development expenses for the nine months ended September 30, 1996
and 1997 were $153,000 and $226,000, respectively.

(i) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

CSI adopted the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, during 1996.
This Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this Statement did not have a material impact on
CSI's financial position, results of operations, or liquidity.

(2) PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------ SEPTEMBER 30,
1995 1996 1997
----- ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Vehicles........................................ $ 27 $ 27 $ 27
Office equipment................................ 123 148 237
Bridge equipment................................ 1,313 1,874 2,102
Computer software............................... 62 62 62
----- ------ ------
1,525 2,111 2,428
Less: accumulated depreciation and amortiza-
tion......................................... 659 1,052 1,363
----- ------ ------
Property, and equipment, net................ $ 866 $1,059 $1,065
===== ====== ======
</TABLE>

F-41
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(3) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------SEPTEMBER 30,
1995 1996 1997
------ -------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable to bank in monthly installments of
$18,412, including interest at 9.5%, matures
May 2000; collateralized by equipment and cash
surrender value of life insurance and personal
guarantee of stockholder....................... $ -- $ -- $517
Note payable to bank in monthly installments of
$10,597, including interest at 10.25%, matures
August 1999; collateralized by accounts
receivable and cash surrender value of life
insurance and personal guarantee of
stockholders................................... 634 286 --
Note payable to bank in monthly installments of
$1,029, including interest at 10.5%, matures
October 1999; collateralized by equipment,
accounts receivable, and cash surrender value
of life insurance and personal guarantee of
stockholders................................... 39 30 --
Notes payable for bridge equipment purchases;
balances were converted to a capital lease
obligation during 1996......................... 437 -- --
Note payable to bank in monthly installments of
$846, including interest at 9.20%, matures May
1998; collateralized by vehicles............... 22 14 7
------ ----- ----
Total long-term debt............................ 1,132 330 524
Less: current installments...................... 1,089 111 186
------ ----- ----
Long-term debt, excluding current installments.. $ 43 $ 219 $338
====== ===== ====
</TABLE>

The aggregate maturities of long-term debt are as follows (in thousands):

<TABLE>
<S> <C>
October 1 to December 31, 1997....................................... $ 46
1998................................................................. 188
1999................................................................. 202
2000................................................................. 88
----
$524
====
</TABLE>

(4) RELATED PARTY TRANSACTIONS

(a) Advance to Stockholder

CSI loaned one of the stockholders a total of $72,000 during 1994 and 1995.
The note had no set repayment schedule and was interest free. The amount was
repaid in full during 1996.

(b) Lease Transactions

CSI paid monthly lease payments to a stockholder for use of certain
equipment. Total payments under these arrangements during the years ended
December 31, 1994, 1995 and 1996 were approximately $53,000 per year. The
lease payments for the nine months ended September 30, 1996 and September 30,
1997 were approximately $38,000 and $20,000, respectively. The leases expired
during 1997.

F-42
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(5) COMMITMENTS AND CONTINGENCIES

(a) Leases

CSI is obligated under noncancelable operating leases covering its office
facilities and certain equipment. Rent expense amounted to $261,000, $205,000
and $192,000 for the years ended December 31, 1994, 1995 and 1996,
respectively, and $152,000 and $187,000 for the nine months ended September
30, 1996 and 1997, respectively. Future minimum lease payments under
noncancelable operating leases are as follows (in thousands):

<TABLE>
<S> <C>
October 1 to December 31, 1997......................................... $ 55
1998................................................................... 164
1999................................................................... 158
2000................................................................... 152
2001................................................................... 152
2002 and thereafter.................................................... 139
----
Total minimum operating lease payments............................... $820
====
</TABLE>

CSI is also obligated under various capital leases for equipment that are
guaranteed by one of the owners. The gross amounts of equipment and related
accumulated amortization recorded under capital leases were as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Equipment........................................ $1,243 $1,788 $1,788
Less: accumulated amortization................... 521 852 1,106
------ ------ ------
$ 722 $ 936 $ 682
====== ====== ======
</TABLE>

Future minimum payments under capital leases are as follows (in thousands):

<TABLE>
<S> <C>
October 1, to December 31, 1997....................................... $109
1998.................................................................. 312
1999.................................................................. 287
2000.................................................................. 157
2001.................................................................. 69
----
Total minimum capital lease payments................................ 934
Less: amounts representing interest (at rates ranging from 10% to
18%)................................................................. 160
----
Present value of minimum capital lease payments..................... 774
Less: current installments of obligations under capital leases........ 268
----
Obligations under capital leases, excluding current installments.... $506
====
</TABLE>

(b) Purchase Agreements

CSI has entered into purchase agreements with two long distance telephone
service providers. CSI is committed to minimum monthly purchases under the
agreements which amount to $48,000 in 1997 and 1998, and $23,000 in 1999.

F-43
<PAGE>

CONFERENCE SOURCE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

CSI has entered into a consulting agreement with a stockholder and former
officer of CSI. Total payments under the agreement amount to $120,000, payable
in equal monthly payments through December 1997.

(d) Dispute

A former employee of CSI has claimed that he may be entitled to 5% of the
stock of CSI based on an unsigned paper outlining possible employment terms.
CSI's position is that the only agreements with such employee were set forth
in two successive executed employment agreements, each of which had a specific
provision that such agreement was inclusive as to the terms of employment. CSI
believes that such claim is without merit.

(6) SIGNIFICANT CUSTOMERS

Two customers accounted for the following percentages of revenues and
accounts receivable:

<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES PERCENTAGE OF ACCOUNTS RECEIVABLE
----------------------------------- -------------------------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
------------------- -------------- ------------------------ SEPTEMBER 30,
1994 1995 1996 1996 1997 1995 1996 1997
----- ----- ----- ------ ------ ----------- ----------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customer A.............. 14% 30% 49% 49% 48% 47% 58% 53%
Customer B.............. 14% 24% 21% 21% 24% 26% 26% 28%
</TABLE>

(7) SUBSEQUENT EVENTS (UNAUDITED)

In November 1997, all of the outstanding stock of CSI was acquired by a
wholly owned subsidiary of VIALOG Corporation ("VIALOG") for cash. CSI was the
surviving entity of the merger and became a wholly owned subsidiary of VIALOG.
Under the terms of the merger agreement, the stockholders of CSI agreed to
make an election under Section 338(h) 10 of the Internal Revenue Code in order
for the merger to be treated as an asset purchase by the Internal Revenue
Service.

At the time of the merger, the tax election of CSI under the provisions of
the Internal Revenue Code was changed from an S corporation to a C
Corporation. As a result, CSI will be subject to corporate income taxes
subsequent to the date of the merger.

In November 1997, the remaining balance of long-term debt described in note
3 was repaid in full, plus accrued interest.

F-44
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors Call Points, Inc.:

We have audited the accompanying balance sheets of Call Points, Inc. ("Call
Points") as of December 31, 1995 and 1996, and the related statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1996. These financial statements are the
responsibility of Call Points' management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Call Points, Inc. as of
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1996,
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Call
Points will continue as a going concern. As discussed in Note 10 to the
financial statements, Call Points' recurring losses and working capital
deficiency raise substantial doubt about the entity's ability to continue as a
going concern. Management's plans in regard to these matters are also
described in Note 10. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

KPMG Peat Marwick llp

January 17, 1997
Birmingham, Alabama

F-45
<PAGE>

CALL POINTS, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 149 $ 31 $ 481
Trade accounts receivable, less allowance for
doubtful accounts of $73, $85 and $68 at De-
cember 31, 1995, December 31, 1996 and Sep-
tember 30, 1997 respectively (notes 4 and
8).......................................... 787 1,080 1,244
Due from related parties..................... 22 1 --
Prepaid expenses............................. 4 3 3
------- ------- -------
Total current assets....................... 962 1,115 1,728
------- ------- -------
Property and equipment, net (notes 2, 3 and
4)............................................ 2,256 1,919 1,659
Other assets................................... 4 2 --
------- ------- -------
Total assets............................... $ 3,222 $ 3,036 $ 3,387
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of notes payable to
related parties
(notes 4 and 7)............................. $ 439 $ 574 $ 861
Current installments of obligations under
capital lease-related party
(note 3).................................... -- 43 --
Accounts payable............................. 359 394 363
Accrued expenses (note 5).................... 273 315 595
Due to related parties (note 7).............. 140 169 --
------- ------- -------
Total current liabilities.................. 1,211 1,495 1,819
------- ------- -------
Notes payable to related parties, excluding
current installments
(notes 4 and 7)............................... 784 625 338
------- ------- -------
Total liabilities.......................... 1,995 2,120 2,157
------- ------- -------
Stockholders' equity:
Common stock--Class A, $1 par value. Autho-
rized 8,000 shares;
issued and outstanding 1,000 shares......... 1 1 1
Common stock--Class B, $1 par value. Autho-
rized 12,000 shares;
issued and outstanding 1,400 shares......... 1 1 1
Additional paid-in capital................... 3,132 3,132 3,132
Accumulated deficit.......................... (1,907) (2,218) (1,904)
------- ------- -------
Total stockholders' equity................. 1,227 916 1,230
------- ------- -------
Commitments and contingencies (notes 9, 10, 11
and 12)
Total liabilities and stockholders' equi-
ty........................................ $ 3,222 $ 3,036 $ 3,387
======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-46
<PAGE>

CALL POINTS, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- ------------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues (note 8)........... $ 8,537 $ 6,852 $ 7,509 $ 5,606 $ 6,230
Cost of revenues................ 6,140 5,331 5,898 4,392 4,763
------- ------- ------- -------- --------
Gross profit.................. 2,397 1,521 1,611 1,214 1,467
Selling, general and administra-
tive expenses.................. 2,035 1,820 1,873 1,377 1,160
------- ------- ------- -------- --------
Income (loss) from opera-
tions........................ 362 (299) (262) (163) 307
Other income (expense):
Other income (expense), net... 3 (7) -- -- --
Interest income/(expense),
net.......................... (64) (65) (49) (48) 7
------- ------- ------- -------- --------
Income (loss) before income
tax expense.................. 301 (371) (311) (211) 314
Income taxes (note 6)........... -- -- -- -- --
------- ------- ------- -------- --------
Net income (loss)............. $ 301 $ (371) $ (311) $ (211) $ 314
======= ======= ======= ======== ========
</TABLE>

See accompanying notes to financial statements.

F-47
<PAGE>

CALL POINTS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
--------------- ADDITIONAL TOTAL
NUMBER PAR PAID-IN ACCUMULATED STOCKHOLDERS'
OF SHARES VALUE CAPITAL DEFICIT EQUITY
--------- ----- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1993.................... 2,400 $ 2 $3,132 $(1,837) $1,297
Net income............. -- -- -- 301 301
----- ---- ------ ------- ------
Balance at December 31,
1994.................... 2,400 2 3,132 (1,536) 1,598
Net loss............... -- -- -- (371) (371)
----- ---- ------ ------- ------
Balance at December 31,
1995.................... 2,400 2 3,132 (1,907) 1,227
Net loss............... -- -- -- (311) (311)
----- ---- ------ ------- ------
Balance at December 31,
1996.................... 2,400 2 3,132 (2,218) 916
Net income (unau-
dited)................ -- -- -- 314 314
----- ---- ------ ------- ------
Balance at September 30,
1997 (unaudited)........ 2,400 $ 2 $3,132 $(1,904) $1,230
===== ==== ====== ======= ======
</TABLE>

See accompanying notes to financial statements.

F-48
<PAGE>

CALL POINTS, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- --------------
1994 1995 1996 1996 1997
------- ------- ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)................... $ 301 $ (371) $ (311) $ (211) $ 314
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization...... 841 845 696 519 536
Changes in operating assets and
liabilities:
Trade accounts receivable, net.... (199) 183 (293) (212) (164)
Due from related parties.......... 16 14 21 -- 1
Prepaid expenses.................. -- 1 1 1 --
Other assets...................... 1 -- -- 31 2
Accounts payable.................. (146) 22 35 121 (31)
Accrued expenses.................. 71 (130) 42 13 280
Due to related parties............ (65) 277 29 -- (169)
------- ------- ------- ------ ------
Net cash provided by operating
activities...................... 820 841 220 262 769
------- ------- ------- ------ ------
Cash flows from investing
activities:
Additions to property and
equipment......................... (148) (105) (50) (39) (276)
------- ------- ------- ------ ------
Cash flows from financing
activities:
Principal payments on notes payable
to related party.................. (651) (669) (249) (249) --
Principal payments under capital
lease obligations--related party.. -- -- (39) (18) (43)
Principal repayment of long-term
debt.............................. (44) (8) -- -- --
------- ------- ------- ------ ------
Net cash used in financing
activities...................... (695) (677) (288) (267) (43)
------- ------- ------- ------ ------
Net increase (decrease) in cash and
cash equivalents................... (23) 59 (118) (44) 450
Cash and cash equivalents at
beginning of period................ 113 90 149 149 31
------- ------- ------- ------ ------
Cash and cash equivalents at end of
period............................. $ 90 $ 149 $ 31 $ 105 $ 481
======= ======= ======= ====== ======
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest.......................... $ 263 $ 65 $ 48 $ 48 $ --
======= ======= ======= ====== ======
Supplemental schedule of noncash
investing and financing activities:
During 1996, the Company issued
notes payable to a related party
to refinance two existing notes
payable and to acquire new
equipment as follows:
Notes payable--related party
(refinanced)..................... $ 455
Acquisition of equipment.......... 225
-------
Notes payable--related party..... $ 680
=======
During 1995, the Company issued
notes payable to a related party
to finance the acquisition of new
equipment and to finance operating
expenses due to the related party
as follows:
Acquisition of equipment
financed......................... $ 250
Financing of amounts due to
related parties.................. 409
-------
Notes payable--related party..... $ 659
=======
</TABLE>

During 1994, the Company offset a note payable--related party in the amount
of $135 against amounts due from a related party. Also during 1994, the
Company acquired equipment from a related party in exchange for notes payable
in the amount of $601.

See accompanying notes to financial statements.

F-49
<PAGE>

CALL POINTS, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Call Points, Inc. ("Call Points") was incorporated in Delaware on December
29, 1988. Call Points operated as a division of one of its stockholders prior
to incorporation and is located at the stockholder's principal place of
business in Montgomery, Alabama. Call Points is a provider of international
group communications services to a wide range of organizations.

(b) Interim Financial Statements

The financial statements of Call Points as of September 30, 1997 and for the
nine months ended September 30, 1996 and 1997 are unaudited. All adjustments
and accruals (consisting only of normal recurring adjustments) have been
recorded that, in the opinion of management, are necessary for a fair
presentation. Results of operations for the interim periods are not
necessarily indicative of the results for the full year.

Management of Call Points has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.

(d) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand and money market deposits.

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation of machinery and
equipment and furniture and fixtures is provided on the straight-line basis
over the estimated useful lives of the respective assets. The estimated useful
lives are as follows: three to eight years for furniture and fixtures; five to
ten years for machinery and equipment.

(f) Income Taxes

(g) Revenue Recognition

Revenue for conference calls is recognized upon completion of the call.
Revenue for services is recognized upon performance of the service.

(h) Research and Development

Call Points maintains a technical support and engineering department that,
in part, develops customized features and products for group communications.
In accordance with SFAS No. 2, Accounting for Research and

F-50
<PAGE>

CALL POINTS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Development Costs, Call Points charges to expense (included in cost of
revenues) that portion of this department's costs which are related to
research and development activities. Call Points' research and development
expenses for the years ended December 31, 1994, 1995 and 1996 were $217,000,
$199,000 and $236,000, respectively. Call Points' research and development
expenses for the nine months ended September 30, 1996 and 1997 were $177,000
and $161,000, respectively.

(i) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Call Points adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
during 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this Statement did not have a material impact on Call
Points' financial position, results of operations, or liquidity.

(j) Reclassifications

Certain items in the 1994 and 1995 financial statements have been
reclassified to conform with classifications used in the 1996 financial
statements.

(2) PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and fixtures........................... $ 382 $ 419 $ 512
Machinery and equipment.......................... 4,348 4,668 4,851
------ ------ ------
4,730 5,087 5,363
Less: accumulated depreciation................. 2,474 3,168 3,704
------ ------ ------
Property and equipment, net...................... $2,256 $1,919 $1,659
====== ====== ======
</TABLE>

(3) OBLIGATIONS UNDER CAPITAL LEASE--RELATED PARTY

Call Points was obligated to a related party under a capital lease that
expired during 1997. Leased equipment with a cost basis of $83,000 and
accumulated depreciation of $6,000 is included in property and equipment at
December 31, 1996. The present value of future minimum lease payments at
December 31, 1996 and September 30, 1997 is $43,000 and $0, respectively, and
is included in current liabilities.

F-51
<PAGE>

CALL POINTS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(4) NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Notes payable to stockholder; due in monthly
installments of $15,000, including interest at 8%
through December 25, 2000 (note 7)................ $ -- $ 659 $ 659
Notes payable to affiliate; due in monthly
installments of $25,000, including interest at 8%
through July 15, 1998 (note 7).................... 666 540 540
Note payable to stockholder; due in monthly
installments of $9,678, including interest at 8%
through July 15, 1998............................. 270 -- --
Note payable to stockholder; due in monthly
installments of $7,834, including interest at 8%
through January 1, 1999........................... 250 -- --
Notes payable to stockholders; noninterest bearing
and due in monthly installments of $37,500 through
January 1996; royalty payments accounted for as
interest were 10.4% of average indebtedness in
1995; secured by certain equipment and accounts
receivable........................................ 37 -- --
------ ------ ------
Total notes payable to related parties........... 1,223 1,199 1,199
Less current installments........................ 439 574 861
------ ------ ------
Notes payable to related parties, excluding
current installments............................ $ 784 $ 625 $ 338
====== ====== ======
</TABLE>

The aggregate maturities of notes payable to related parties are as follows
(in thousands):

<TABLE>
<S> <C>
October 1, to December 31, 1997................................. $ 574
1998............................................................ 304
1999............................................................ 160
2000............................................................ 161
------
$1,199
======
</TABLE>

(5) ACCRUED EXPENSES

Accrued expenses consist of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------SEPTEMBER 30,
1995 1996 1997
------ -------------------
(UNAUDITED)
<S> <C> <C> <C>
Accrued long distance fees...................... $ 208 $ 252 $ 354
Accrued fees and other expenses................. 65 63 145
Uninvoiced equipment purchases.................. -- -- 96
------ ----- -----
$ 273 $ 315 $ 595
====== ===== =====
</TABLE>

F-52
<PAGE>

CALL POINTS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(6) INCOME TAXES

The components of income tax expense for the years ended December 31, 1994,
1995 and 1996, were as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995 1996
----- ----- ----
<S> <C> <C> <C>
Current:
Tax on income before carryforwards................... $ 240 $ -- $--
Tax benefit of loss carryforwards.................... (240) -- --
Deferred:
Deferred tax expense (exclusive of the effects of
other component listed below)....................... 113 (133) (112)
Increase (decrease) in valuation allowance for de-
ferred tax assets................................... (113) 133 112
----- ----- ----
$ -- $ -- $--
===== ===== ====
</TABLE>

Call Points had no income tax expense or benefit for the years ended
December 31, 1994, 1995 and 1996, which differs from the expected income tax
(benefit) expense computed by applying the federal statutory rate of 34% to
income (loss) before taxes as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Income tax expense (benefit) at statutory rate........ $ 102 $(126) $(106)
Meals and entertainment............................... 2 1 1
State income tax, net of federal benefit.............. 9 (8) (7)
Change in valuation allowance for deferred taxes
allocated to income tax expense...................... (113) 133 112
----- ----- -----
$ -- $ -- $ --
===== ===== =====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
1995 1996
----- ----
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to the allowance for
doubtful accounts.......................................... $ 24 $ 34
Intangible assets, principally due to differences in
amortization............................................... 11 --
Equipment spare parts, principally due to differences in
obsolescence reserves...................................... -- 4
Minimum tax credit carryforward............................. 12 12
Accrued expenses, principally due to vacation............... 4 4
Net operating loss carryforward............................. 858 939
----- ----
Total gross deferred tax assets........................... 909 993
Valuation allowance......................................... (736) (848)
----- ----
Net deferred tax assets................................... 173 145
Deferred tax liabilities:
Equipment, principally due to differences in depreciation... 171 143
Prepaid expenses............................................ 1 1
Other....................................................... 1 1
----- ----
Total deferred tax liabilities............................ 173 145
----- ----
Net deferred tax asset.................................... $ -- $--
===== ====
</TABLE>

F-53
<PAGE>

CALL POINTS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

At December 31, 1996, Call Points has net operating loss carryforwards of
approximately $2.5 million. These carryforwards begin to expire in 2004. Upon
a change in ownership as defined in Section 382 of the Internal Revenue Code,
the ability to utilize these net operating losses may be limited (see note
11). Call Points also has alternative minimum tax credit carryforwards of
$12,000 which are available to reduce future regular income taxes, if any,
over an indefinite period.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. SFAS
109 requires that a valuation allowance be recorded against tax assets which
are not likely to be realized. Specifically, Call Points' carryforwards expire
at specific future dates and utilization of certain carryforwards is limited
to specific amounts each year. However, due to the uncertain nature of their
ultimate realization based upon past performance and expiration dates, Call
Points has established a full valuation allowance against these carryforward
benefits and is recognizing the benefits only as reassessment demonstrates
they are realizable.

(7) RELATED PARTY TRANSACTIONS

Call Points negotiated a restructuring agreement among its stockholders on
March 14, 1991. The significant terms of the agreement included: the
acquisition of teleconferencing bridges from certain stockholders for $2.3
million, in exchange for noninterest bearing notes payable due over a period
of five years; options for certain stockholders to purchase Class B common
stock of other stockholders for $900,000; monthly royalty payments based on
billed minutes through January 2006; forgiveness of certain notes payable to
stockholders totaling $522,000; a noncompete agreement; and a license
agreement. Royalty payments accounted for as interest expense were $61,000,
$27,000, and $0 for the years ended December 31, 1994, 1995 and 1996,
respectively. During 1995 and 1996, certain note payments were not made to
related parties. Although the principal amount of the notes was not changed,
the related parties waived $12,000 and $41,000 of interest payments during
1995 and 1996, respectively.

Call Points incurred expenses for services provided by its stockholders
affiliates are as follows (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- --------------
1994 1995 1996 1996 1997
------- ------- ------- ------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Automotive usage................. $ 8 $ 4 $ 3 $ 2 $ 4
Computer rental.................. 19 19 18 12 6
Long-distance usage.............. 79 92 81 61 62
Management services.............. 64 67 94 70 66
Office space rental.............. 69 68 68 51 44
Miscellaneous.................... -- 1 -- -- 1
Teleconferencing bridge expense.. 286 207 137 103 49
</TABLE>

Teleconferencing bridge expenses include charges for access, maintenance and
equipment rental.

Call Points acquired equipment from its stockholders for which it issued
notes payable to them in the amount of $250,000 in 1995 and $225,000 in 1996.

F-54
<PAGE>

CALL POINTS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(8) SIGNIFICANT CUSTOMERS

For the years ended December 31, 1995 and 1996, one customer accounted for
approximately 10% and 17% of net revenues, respectively. For the nine months
ended September 30, 1996 and 1997, the same customer accounted for
approximately 14% and 20% of net revenues, respectively.

(9) LEGAL PROCEEDINGS

Call Points is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on Call
Points' financial position, results of operations or liquidity.

(10) GOING CONCERN UNCERTAINTIES

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of
Call Points as a going concern. During 1994, Call Points did not retain a
significant portion of sales to one customer which represented approximately
15% of revenues. While management has been aggressively pursuing additional
customers, Call Points was unable to replace the revenue volume it lost in
1994 and therefore realized net losses of $371,000 in 1995 and $311,000 in
1996. At December 31, 1996, Call Points' current liabilities exceeded current
assets by $380,000. The recurring losses and working capital deficiency create
an uncertainty about Call Points' ability to continue as a going concern. Call
Points has continued to aggressively market its services and has established a
Quality Assurance department in an effort to improve and maintain customer
satisfaction. Management believes these factors will continue to contribute
towards achieving and maintaining a consistent level of profitability.

(11) SUBSEQUENT EVENTS (UNAUDITED)

On November 12, 1997, VIALOG Corporation ("VIALOG)" acquired all of the
assets and certain liabilities of Call Points for cash and shares of Common
Stock of VIALOG. In conjunction with the acquisition, VIALOG obtained two-year
non-competition agreements from the principal stockholder and a key employee
of Call Points.

In April 1997, Call Points settled one of the claims discussed in Note 9,
which required Call Points to make payment to the plaintiff of $30,000, which
Call Points paid in April 1997 and which is reflected in income from
operations for the nine months ended September 30, 1997. In July 1997, Call
Points settled one of the claims discussed in note 9, which required Call
Points to make payment to the plaintiff of $28,000, which Call Points paid in
July 1997 and which is reflected in income from operations for the nine months
ended September 30, 1997.

F-55
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Kendall Square Teleconferencing, Inc.:

We have audited the accompanying balance sheets of Kendall Square
Teleconferencing, Inc. ("TCC") as of December 31, 1995 and 1996, and the
related statements of operations, stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1996. These financial
statements are the responsibility of TCC's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kendall Square
Teleconferencing, Inc. as of December 31, 1995 and 1996 and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick llp

January 18, 1997
Boston, Massachusetts

F-56
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
--------------
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (NOTE 3)
Current assets:
Cash and cash equivalents...................... $ 61 $ 104 $ --
Trade accounts receivable, less allowance for
doubtful accounts of $30, $60 and $85 at De-
cember 31, 1995, December 31, 1996 and Septem-
ber 30, 1997, respectively.................... 283 471 782
Due from related party (note 8)................ 16 61 70
Note receivable, stockholder................... 11 -- --
Other current assets........................... -- 28 3
------ ------ ------
Total current assets......................... 371 664 855
------ ------ ------
Property and equipment, net (notes 2, 3 and 4)... 643 733 902
Other assets..................................... 5 10 12
Deferred income taxes (note 6)................... 26 -- --
------ ------ ------
Total assets................................. $1,045 $1,407 $1,769
====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note
3)............................................ $ 43 $ 28 $ 59
Current installments of obligations under capi-
tal leases (note 4)........................... 33 65 103
Accounts payable (note 8)...................... 279 438 343
Accrued expenses (note 5)...................... 33 127 232
Income taxes payable (note 6).................. 74 -- --
Distributions payable.......................... -- 45 130
Other current liabilities...................... -- 11 3
------ ------ ------
Total current liabilities.................... 462 714 870
------ ------ ------
Long-term debt, excluding current installments
(note 3)........................................ 55 26 7
Obligations under capital leases, excluding cur-
rent installments
(note 4)........................................ 105 157 221
Other liabilities................................ 21 -- --
Deferred income taxes (note 6)................... 47 -- --
------ ------ ------
Total liabilities............................ 690 897 1,098
------ ------ ------
Stockholders' equity:
Common stock, no par value. Authorized 15,000
shares;
issued and outstanding 1,000 shares at Decem-
ber 31, 1995; 1,740 at December 31, 1996 and
September 30, 1997............................ 62 68 68
Treasury stock, 428 common shares at cost...... (15) (15) (15)
Note receivable, stockholder................... -- (6) (6)
Retained earnings.............................. 308 463 624
------ ------ ------
Total stockholders' equity................... 355 510 671
------ ------ ------
Commitments and contingencies (notes 4, 8 and 10)
Total liabilities and stockholders' equity... $1,045 $1,407 $1,769
====== ====== ======
</TABLE>
See accompanying notes to financial statements.

F-57
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- ------------------
1994 1995 1996 1996 1997
------ ------ ------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues (note 8 and 9)....... $1,515 $2,329 $3,396 $ 2,501 $ 3,003
Cost of revenues.................. 816 1,129 1,813 1,351 1,650
------ ------ ------ -------- --------
Gross profit.................. 699 1,200 1,583 1,150 1,353
Selling, general and administra-
tive expenses.................... 510 889 1,329 969 1,015
------ ------ ------ -------- --------
Income from operations........ 189 311 254 181 338
Other income (expense):
Interest expense, net........... (6) (23) (42) (31) (31)
Other income.................... 19 33 -- -- --
------ ------ ------ -------- --------
Income before income tax ex-
pense........................ 202 321 212 150 307
Income tax expense (note 6)....... 82 129 -- -- --
------ ------ ------ -------- --------
Net income.................... $ 120 $ 192 $ 212 $ 150 $ 307
====== ====== ====== ======== ========
</TABLE>

See accompanying notes to financial statements.

F-58
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK NOTE TOTAL
------------- ----------------- RECEIVABLE RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT STOCKHOLDER EARNINGS EQUITY
------ ------ ------- ------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993................... 1,000 $ 35 -- $ -- $-- $ 16 $ 51
Shares repurchased by
the Company.......... -- -- (428) (15) -- (20) (35)
Issuance of stock
options.............. -- 27 -- -- -- -- 27
Net income............ -- -- -- -- -- 120 120
------ ---- ------- ------- ---- ----- -----
Balance at December 31,
1994................... 1,000 62 (428) (15) -- 116 163
Net income............ -- -- -- -- -- 192 192
------ ---- ------- ------- ---- ----- -----
Balance at December 31,
1995................... 1,000 62 (428) (15) -- 308 355
Exercise of stock
options.............. 740 6 -- -- (6) -- --
Distributions:
Declared............ -- -- -- -- -- (45) (45)
Asset Distribution.. -- -- -- -- -- (12) (12)
Net income............ -- -- -- -- -- 212 212
------ ---- ------- ------- ---- ----- -----
Balance at December 31,
1996................... 1,740 68 (428) (15) (6) 463 510
Net income
(unaudited).......... -- -- -- -- -- 307 307
Distributions:
Cash (unaudited).... -- -- -- -- -- (16) (16)
Declared
(unaudited)........ -- -- -- -- -- (130) (130)
------ ---- ------- ------- ---- ----- -----
Balance at September 30,
1997 (unaudited)....... 1 ,740 $ 68 (428) $ (15) $ (6) $ 624 $ 671
====== ==== ======= ======= ==== ===== =====
</TABLE>

See accompanying notes to financial statements.

F-59
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------ ------------------
1994 1995 1996 1996 1997
---- ----- ----- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $120 $ 192 $ 212 $ 150 $ 307
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 16 67 133 109 138
Deferred income taxes................ 34 32 (21) (21) --
Compensation expense arising from
stock options granted............... 27 -- -- -- --
Gain on disposal of assets........... (19) (33) -- -- --
Forgiveness of note receivable,
stockholder......................... -- -- 11 -- --
Changes in operating assets and
liabilities:
Trade accounts receivable, net...... (98) (133) (222) (170) (311)
Due from related party.............. -- -- (45) (20) (9)
Other current assets................ 15 -- (28) (6) 25
Other assets........................ (52) 46 (5) (4) (2)
Accounts payable.................... (28) 41 114 (99) (95)
Income taxes payable................ 23 (27) (74) (74) --
Accrued expenses.................... 24 5 94 159 105
Other current liabilities........... -- -- 11 8 (8)
Other liabilities................... -- 21 (21) -- --
---- ----- ----- -------- --------
Net cash provided by operating
activities........................ 62 211 159 32 150
---- ----- ----- -------- --------
Cash flows from investing activities:
Additions to property and equipment... (39) (231) (156) (153) (144)
Proceeds from sale of equipment....... 19 -- -- -- --
---- ----- ----- -------- --------
Net cash used in investing
activities........................ (20) (231) (156) (153) (144)
---- ----- ----- -------- --------
Cash flows from financing activities:
Proceeds from notes payable........... 20 121 -- -- 45
Principal payments on notes payable... (59) (53) (44) (29) (33)
Principal payments of capital lease
obligations.......................... -- -- (51) (34) (61)
Proceeds from capital lease
obligations.......................... -- -- 135 135 --
Repayment of stockholder loan......... (10) -- -- -- --
Payments to acquire treasury stock.... (35) -- -- -- --
Distributions to stockholders......... -- -- -- -- (61)
---- ----- ----- -------- --------
Net cash provided by (used in)
financing activities.............. (84) 68 40 72 (110)
---- ----- ----- -------- --------
Net increase (decrease) in cash and
cash equivalents....................... (42) 48 43 (49) (104)
Cash and cash equivalents at beginning
of period............................. 55 13 61 61 104
---- ----- ----- -------- --------
Cash and cash equivalents at end of
period................................ $ 13 $ 61 $ 104 $ 12 $ --
==== ===== ===== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest............................. $ 6 $ 19 $ 46 $ 34 $ 31
==== ===== ===== ======== ========
Taxes................................ $ 38 $ 92 $ 18 $ -- $ 13
==== ===== ===== ======== ========
Supplemental schedule of noncash
investing and financing activities:
Equipment acquired through capital
lease obligation..................... $-- $ 148 $ -- $ -- $ 163
==== ===== ===== ======== ========
Equipment acquired through accounts
payable to a related party (note 8).. $-- $ 216 $ 67 $ -- $ --
==== ===== ===== ======== ========
Distribution of assets to
stockholders......................... $-- $ -- $ 12 $ -- $ --
==== ===== ===== ======== ========
Distributions declared................ $-- $ -- $ 45 $ -- $ 130
==== ===== ===== ======== ========
</TABLE>
See accompanying notes to financial statements.

F-60
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Kendall Square Teleconferencing, Inc. ("TCC") provides group communications
services to a variety of customers, primarily located in the United States.
The Company was incorporated in 1987 and has its operations center located in
Cambridge, Massachusetts. Prior to November 29, 1996, TCC operated under the
name Teleconversant Ltd.

On December 2, 1996, certain assets of TCC related to a contract for
services provided by TCC were distributed to certain of the stockholders of
TCC. These assets were incidental to the basic operations of TCC. The assets
distributed consisted of property and equipment, accounts receivable, accounts
payable and a customer contract with a net carrying value of $12,000 at
December 31, 1996. Revenues associated with the customer contract were
$642,000, $727,000, $565,000 and $707,000 for the years ended December 31,
1994, 1995 and the period January 1, to September 30, 1996 and January 1 to
December 2, 1996, respectively.

(b) Interim Financial Statements

The financial statements of TCC as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 are unaudited. All adjustments and
accruals (consisting only of normal recurring adjustments) have been recorded
that, in the opinion of management, are necessary for a fair presentation.
Results of operations for the interim periods are not necessarily indicative
of the results for the full year.

Revenue for conference calls is recognized upon completion of the call.
Revenue for services is recognized upon performance of the service.

(d) Cash and Cash Equivalents

TCC considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents.

(e) Property and Equipment

Property and equipment are stated at cost. Equipment under capital leases is
stated at the present value of minimum lease payments. Depreciation of
property and equipment is provided on the straight-line method over the
estimated useful lives of the respective assets. The estimated useful lives
are as follows: seven to ten years for furniture and fixtures; five to seven
years for office equipment; seven years for conferencing equipment; and three
years for purchased computer software. Equipment held under capital leases is
amortized straight line over the shorter of the lease life or the estimated
useful life of the assets, generally seven years.

(f) Income Taxes

Effective January 1, 1996, TCC elected by consent of its stockholders to be
taxed under the provisions of Subchapter S of the Internal Revenue Code. Under
those provisions, TCC does not pay corporate income taxes on its taxable
income. Instead, the stockholders are liable for individual income taxes on
TCC's taxable income. Prior to that election, income taxes were accounted for
under the asset and liability method. Deferred tax assets and liabilities were
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and

F-61
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

tax credit carryforwards. Deferred tax assets and liabilities were measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates was
recognized in income in the period that includes the enactment date.

(g) Use of Estimates

Management of TCC has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates.

(h) Research and Development

TCC maintains a technical support and engineering department that, in part,
develops features and products for group communications. In accordance with
SFAS No. 2, Accounting for Research and Development Costs, TCC charges to
expense (included in cost of revenues) that portion of this department's costs
which are related to research and development activities. TCC's research and
development expenses for the years ended December 31, 1994, 1995 and 1996 were
$51,000, $51,000 and $75,000, respectively. TCC's research and development
expenses for the nine months ended September 30, 1996 and 1997 were $56,000
and $90,000, respectively.

(i) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

TCC adopted the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, during 1996.
This Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this Statement did not have a material impact on
TCC's financial position, results of operations, or liquidity.

(j) Stock Option Plan

Prior to January 1, 1996, TCC accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise price.
During 1996, TCC adopted SFAS No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro
forma earnings per share disclosures for employee stock option grants made in
1995 and later years as if the fair-value-based method defined in SFAS No. 123
had been applied. TCC has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No.
123. There were no stock option grants during 1995 and 1996 and for the nine
month period ended September 30, 1997, therefore, no pro forma disclosures
have been provided for these periods.

F-62
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(2) PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and fixtures......................... $ 3 $ 16 $ 32
Office equipment............................... 37 64 142
Conferencing equipment......................... 651 738 890
Purchased computer software.................... -- 96 153
------ ------ ------
691 914 1,217
Less: accumulated depreciation and amortiza-
tion.......................................... 48 181 315
------ ------ ------
Property and equipment, net.................. $ 643 $733 $ 902
====== ====== ======
</TABLE>

(3) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 30,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable to bank, due on demand at prime
plus 1% (9.5% at September 30, 1997); secured
by all assets and personal guarantees of
certain stockholders......................... $ -- $ -- $ 35
Note payable to bank, due in monthly
installments of $1,389 plus interest at 10%
through December, 1996; secured by certain
equipment. Balance was repaid during 1996.... 5 -- --
Note payable to bank; due in monthly
installments of $2,740 including interest at
11% through January 1999; secured by certain
equipment and personal guarantees of certain
stockholders. Additional principal repayments
were made without penalty during 1996........ 82 54 31
Note payable to bank; due in monthly
installments of $699, including interest at
11% through May, 1997; secured by certain
equipment. Balance was repaid during 1996.... 11 -- --
------ ------ -----
Total long-term debt........................ 98 54 66
Less: current installments.................. 43 28 59
------ ------ -----
Long-term debt, excluding current install-
ments...................................... $ 55 $ 26 $ 7
====== ====== =====
</TABLE>

The aggregate maturities of long-term debt are as follows (in thousands):

<TABLE>
<S> <C>
October 1 to December 31, 1997......................................... $41
1998................................................................... 23
1999................................................................... 2
---
$66
===
</TABLE>

F-63
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(4) LEASES

TCC is obligated for equipment under various capital leases that expire at
various dates during the next four years. At December 31, 1995 and 1996, and
September 30, 1997 the gross amount of equipment and related accumulated
amortization recorded under capital leases were as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Equipment........................................ $ 142 $ 357 $520
Less: accumulated amortization................... 7 68 145
------ ------ ----
$ 135 $ 289 $375
====== ====== ====
</TABLE>

Amortization of assets held under capital leases is included in depreciation
expense.

TCC also leases two facilities under operating leases expiring at various
dates through March, 2001. TCC's total rent expense was $29,000, $47,000 and
$108,000 for the years ended December 31, 1994, 1995 and 1996, respectively,
and $65,000 and $103,000 for the nine months ended September 30, 1996 and
1997, respectively. Future minimum payments under operating and capital leases
(which are guaranteed by certain stockholders) are as follows (in thousands):

<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- -------
(UNAUDITED)
<S> <C> <C>
October 1, to December 31, 1997.......................... $ 47 $ 29
1998..................................................... 188 147
1999..................................................... 176 126
2000..................................................... 176 69
2001..................................................... 44 30
---- ----
Total future minimum lease payments.................... $631 $401
====
Less: imputed interest................................... 77
----
Present value of minimum capital lease payments........ 324
Less: current installments of obligations under capital
leases................................................ 103
----
Obligations under capital leases excluding current
installments.......................................... $221
====
</TABLE>

(5) ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Accrued wages and related........................ $ 3 $ 53 $ 53
Accrued telephone charges and related............ 30 74 179
----- ------ ----
$33 $127 $232
===== ====== ====
</TABLE>

F-64
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(6) INCOME TAXES

Income tax expense consists of the following for the years ended December
31:

<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current.................................................... $ 48 $ 97
Deferred................................................... 34 32
------ -------
$ 82 $ 129
====== =======
</TABLE>

There is no income tax expense recorded for the year ended December 31, 1996
as a result of TCC's election to be taxed under the provisions of Subchapter
S. Income tax expense differed from the amounts computed by applying the U.S.
statutory federal income tax rate of 34% as a result of the following:

<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Income tax expense at statutory rate...................... $ 69 $ 109
State income tax, net of federal tax benefit.............. 12 19
Nondeductible expenses and other differences.............. 1 1
------ -------
$ 82 $ 129
====== =======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1995 are
presented below:

<TABLE>
<CAPTION>
1995
--------------
(IN THOUSANDS)
<S> <C>
Deferred tax assets:
Allowance for doubtful accounts and accrued expenses..... $15
Stock compensation....................................... 11
---
Total gross deferred tax asset......................... 26
---
Deferred tax liabilities:
Property and equipment................................... 47
---
Total gross deferred tax liability..................... 47
---
Net deferred tax liability............................. $21
===
</TABLE>

(7) STOCK OPTIONS

In January 1994, the Board of Directors granted options to five individuals
to purchase an aggregate of 740 shares of common stock at an exercise price of
$8.77 per share. The options vested immediately and expire three years from
the date of grant. On January 2, 1996, all 740 options were exercised in
exchange for $6,490 in notes receivable from stockholders.

(8) RELATED PARTY TRANSACTIONS

TCC provides conferencing services to customers of Conferencing Services
International Inc. ("CSII"), a company owned by the spouse of a stockholder.
Total revenue from CSII was $80,000, $86,000 and $175,000 for the years ended
December 31, 1994, 1995 and 1996, respectively, and $75,000 and $183,000 for
the nine

F-65
<PAGE>

KENDALL SQUARE TELECONFERENCING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

month periods ended September 30, 1996 and 1997, respectively. Total accounts
receivable from CSII were $16,000 and $61,000 and $70,000 at December 31, 1995
and 1996 and September 30, 1997, respectively.

TCC has certain accounts payable to a supplier. Several stockholders are
also stockholders of the supplier company. The amounts outstanding are
$209,000, $89,000 and $110,000 at December 31, 1995 and 1996 and September 30,
1997, respectively, and are included in accounts payable.

TCC pays consulting fees to several of its stockholders. Total consulting
fees were $37,000, $45,000 and $14,000 for the years ended December 31, 1994,
1995 and 1996, respectively. There were no consulting fees for the nine month
periods ending September 30, 1996 and 1997.

(9) SIGNIFICANT CUSTOMERS

For the years ended December 31, 1994, 1995 and 1996 and for the nine months
ended September 30, 1996 and 1997, no customer accounted for more than 10% of
TCC's net revenues. At December 31, 1996 and September 30, 1997, one customer,
CSII, the related party discussed in note 8, accounted for 11% and 7% of the
total accounts receivable balance, respectively.

(10) SUBSEQUENT EVENTS (UNAUDITED)

On November 12, 1997, VIALOG Corporation ("VIALOG") acquired all of the
outstanding stock of TCC for cash and Common Stock of VIALOG and TCC became a
wholly owned subsidiary of VIALOG. The acquisition of TCC will be accounted
for by the purchase method. Accordingly, all of the identified tangible and
intangible assets and liabilities will be recorded at their current fair
market value and the excess of the purchase price over the fair value of the
net assets acquired will be recorded as intangible assets, which will be
amortized over periods up to 20 years.

In conjunction with this merger, the tax status of Access was converted from
an S corporation to a C corporation, whereby TCC will now be liable for income
taxes.

In November 1997, all of the long-term debt described in note 3 was repaid
in full, plus accrued interest.

F-66
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Boards of Directors American Conferencing Company, Inc. and Resource
Objectives, Inc.:

We have audited the accompanying combined balance sheets of American
Conferencing Company, Inc. and Resource Objectives, Inc. (collectively
"Americo") as of December 31, 1995 and 1996, and the related combined
statements of operations, stockholders' equity (deficit), and cash flows for
each of the years in the three-year period ended December 31, 1996. These
combined financial statements are the responsibility of Americo's management.
Our responsibility is to express an opinion on these combined financial
statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of American
Conferencing Company, Inc. and Resource Objectives, Inc. as of December 31,
1995 and 1996, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1996, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick llp

January 20, 1997
Short Hills, New Jersey

F-67
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

COMBINED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (note 3)
Current assets:
Cash........................................... $ 17 $ 39 $ 9
Trade accounts receivable, net (note 8)........ 217 213 235
Inventory...................................... 30 4 3
Deferred income taxes (note 6)................. -- 15 15
Prepaid expenses and other current assets...... 5 5 44
------ ------ -----
Total current assets......................... 269 276 306
------ ------ -----
Property and equipment, net (note 2)............. 122 111 556
Other assets..................................... 14 17 78
------ ------ -----
Total assets................................. $ 405 $ 404 $ 940
====== ====== =====
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Line of credit agreement (note 3).............. $ 35 $ 35 $ 45
Current installments of long-term debt (note
11)........................................... -- -- 38
Current installments of obligations under capi-
tal leases ................................... 15 7 23
Accounts payable............................... 100 64 535
Accrued expenses (notes 4 and 5)............... 57 196 311
Income taxes payable........................... 17 14 --
Due to stockholder (note 5).................... 14 18 46
------ ------ -----
Total current liabilities.................... 238 334 998
------ ------ -----
Long-term debt, excluding current installments
(note 11)....................................... -- -- 104
Obligations under capital leases, excluding cur-
rent installments .............................. 16 -- 80
Other liabilities................................ 4 -- --
Deferred income taxes (note 6)................... 13 14 --
------ ------ -----
Total liabilities............................ 271 348 1,182
Stockholders' equity (deficit):
American Conferencing Company Inc.--common
stock, at stated value
Authorized 1,000 shares; issued and outstanding
50 shares..................................... 1 1 1
Resource Objectives, Inc.--common stock, at
stated value. Authorized 1,000 shares; issued
and outstanding 100 shares in 1995 and 1996... -- -- --
Resource Objectives, Inc.--treasury stock, 50
shares in 1995 and 1996....................... (35) (35) --
Retained earnings (deficit).................... 168 90 (243)
------ ------ -----
Total stockholders' equity (deficit)......... 134 56 (242)
------ ------ -----
Commitments and contingencies (notes 7 and 10)
Total liabilities and stockholders' equity... $ 405 $ 404 $ 940
====== ====== =====
</TABLE>

See accompanying notes to combined financial statements.

F-68
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------ ------------------
1994 1995 1996 1996 1997
--------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues (note 8)............ $ 772 $ 1,227 $ 1,679 $ 1,210 $ 1,581
Cost of revenues................. 335 625 854 631 1,051
------ -------- -------- -------- --------
Gross profit................... 437 602 825 579 530
Selling, general, and administra-
tive expenses................... 345 514 889 593 840
------ -------- -------- -------- --------
Income (loss) from operations.. 92 88 (64) (14) (310)
Interest expense, net............ 6 6 9 10 13
------ -------- -------- -------- --------
Income (loss) before income tax
expense (benefit)................ 86 82 (73) (24) (323)
Income tax expense (benefit)
(note 6)........................ 16 22 (14) -- (25)
------ -------- -------- -------- --------
Net income (loss).............. $ 70 $ 60 $ (59) $ (24) $ (298)
====== ======== ======== ======== ========
</TABLE>

See accompanying notes to combined financial statements.

F-69
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
AMERICAN
CONFERENCING
COMPANY, INC. RESOURCE OBJECTIVES, INC.
COMMON STOCK COMMON STOCK
------------- ------------------------------
NUMBER NUMBER TOTAL
OF STATED OF STATED TREASURY RETAINED STOCKHOLDERS'
SHARES VALUE SHARES VALUE STOCK EARNINGS (DEFICIT) EQUITY (DEFICIT)
------ ------ -------- -------- --------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993...................... 50 $ 1 100 $ -- $ (35) $ 38 $ 4
Net income............... -- -- -- -- -- 70 70
--- ---- -------- -------- -------- ----- -----
Balance at December 31,
1994...................... 50 1 100 -- (35) 108 74
Net income............... -- -- -- -- -- 60 60
--- ---- -------- -------- -------- ----- -----
Balance at December 31,
1995...................... 50 1 100 -- (35) 168 134
Net loss................. -- -- -- -- -- (59) (59)
Dividends................ -- -- -- -- -- (19) (19)
--- ---- -------- -------- -------- ----- -----
Balance at December 31,
1996...................... 50 1 100 -- (35) 90 56
Net loss (unaudited)..... -- -- -- -- -- (298) (298)
Merger and recapitaliza-
tion (note 1a) (unau-
dited).................. 20 -- (100) -- 35 (35) --
--- ---- -------- -------- -------- ----- -----
Balance at September 30,
1997 (unaudited).............70 $ 1 -- $ -- $ -- $(243) $(242)
=== ==== ======== ======== ======== ===== =====
</TABLE>

See accompanying notes to combined financial statements.

F-70
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------- ------------------
1994 1995 1996 1996 1997
----- ----- ----- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................... $ 70 $ 60 $ (59) $ (24) $ (298)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization....... 27 32 36 30 48
Deferred income taxes............... 9 -- (14) -- (14)
Changes in operating assets and lia-
bilities:
Trade accounts receivable, net..... (80) (35) 4 28 (22)
Inventory.......................... (11) (17) 26 23 1
Prepaid expenses and other current
assets............................ 2 -- -- -- (39)
Other assets....................... (6) (2) (3) (18) (61)
Accounts payable................... 18 (21) (36) (70) 131
Accrued expenses................... (26) 38 139 21 115
Income taxes payable............... -- 16 (3) (17) (14)
Due to stockholder................. 30 (48) 4 35 28
Other liabilities.................. 10 (6) (4) 11 --
----- ----- ----- -------- --------
Net cash provided by (used in) op-
erating activities............... 43 17 90 19 (125)
----- ----- ----- -------- --------
Cash flows from investing activities:
Additions to property and equipment.. (47) (17) (25) (21) (47)
----- ----- ----- -------- --------
Cash flows from financing activities:
Proceeds from revolving line of cred-
it.................................. -- 35 -- 10 10
Proceeds from issuance of long-term
debt................................ -- -- -- -- 150
Principal payments on long-term
debt................................ -- -- -- -- (8)
Principal payments under capital
lease obligations................... (1) (18) (24) -- (10)
Dividends............................ -- (19) (16) --
----- ----- ----- -------- --------
Net cash provided by (used in) fi-
nancing activities............... (1) 17 (43) (6) 142
----- ----- ----- -------- --------
Net increase (decrease) in cash....... (5) 17 22 (8) (30)
Cash at beginning of period........... 5 -- 17 17 39
----- ----- ----- -------- --------
Cash at end of period................. $ -- $ 17 $ 39 $ 9 $ 9
===== ===== ===== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest............................ $ 6 $ 6 $ 9 $ 6 $ 16
===== ===== ===== ======== ========
Income taxes........................ $ 17 $ 6 $ 3 $ -- $ 1
===== ===== ===== ======== ========
Supplemental schedule of non cash
investing and financing activities:
Equipment acquired through capital
lease obligation.................... $ -- $ -- $ -- $ -- $ 106
===== ===== ===== ======== ========
Equipment acquired through accounts
payable............................. $ -- $ -- $ -- $ -- $ 340
===== ===== ===== ======== ========
</TABLE>

See accompanying notes to combined financial statements.

F-71
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

American Conferencing Company, Inc. ("Americo") is a provider of group
communications services to a variety of customers primarily located in the
United States. Americo was incorporated in April 1987 and is headquartered in
Oradell, New Jersey.

Resource Objectives, Inc. ("ROI") is a reseller of teleconferencing
equipment and a provider of consulting services. ROI was incorporated in
September 1983 and is headquartered in Oradell, New Jersey. Effective in
January 1997, ROI was merged with and into Americo with the surviving entity
being Americo.

(b) Interim Financial Statements

The financial statements of Americo as of September 30, 1997 and for the
nine months ended September 30, 1996 and 1997 are unaudited. All adjustments
and accruals (consisting only of normal recurring adjustments) have been
recorded that, in the opinion of management, are necessarily for a fair
presentation. Results of operations for the interim periods are not
necessarily indicative of the results for the full year.

Through 1996, the financial statements of Americo and ROI were combined, as
the 100% stockholder of ROI owned 50% of the stock of Americo, and ROI owned
the remaining 50% of Americo stock. Affiliated company accounts and
transactions are eliminated in combination.

(d) Use of Estimates

Management of Americo and ROI have made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these combined
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.

(e) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market.

(f) Property and Equipment

Property and equipment are stated at cost. Depreciation of property and
equipment is provided on the straight-line method over the estimated useful
lives of the respective assets. The estimated useful lives are as follows: ten
years for machinery and equipment; seven years for furniture and fixtures; and
five to seven years for office equipment. Capitalized lease equipment is
amortized over the lives of the leases, generally seven years.

(g) Income Taxes

F-72
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

(h) Revenue Recognition

Revenue for conference calls is recognized upon completion of the call.
Revenue for services is recognized upon performance of the service. Sales of
teleconferencing equipment are recognized upon shipment.

(i) Research and Development

Americo maintains a technical support and engineering department that, in
part, develops features and products for group communications. In accordance
with SFAS No. 2, Accounting for Research and Development Costs, Americo
charges to expense (included in cost of revenues) that portion of this
department's costs which are related to research and development activities.
Americo's research and development expenses for the years ended December 31,
1994, 1995 and 1996 were $24,000, $62,000 and $85,000, respectively. Americo's
research and development expenses for the nine months ended September 30,
1996, and 1997 were $62,000 and $63,000, respectively.

(j) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Americo and ROI adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
in 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this Statement did not have an impact on the combined
statements of financial position, results of operations, or liquidity.

(k) Treasury Stock

Treasury stock purchases are recorded at cost.

(2) PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Machinery and equipment........................ $ 125 $ 125 $545
Furniture and fixtures......................... 3 7 50
Office equipment............................... 142 163 193
------ ------ ----
270 295 788
Less: accumulated depreciation and amortiza-
tion.......................................... 148 184 232
------ ------ ----
Property and equipment, net.................... $ 122 $ 111 $556
====== ====== ====
</TABLE>

(3) LINE OF CREDIT

Americo has a line of credit agreement with a commercial bank which permits
Americo to borrow up to $50,000. Amounts borrowed under the line were $35,000,
$35,000 and $45,000 at December 31, 1995, December

F-73
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

31, 1996 and September 30, 1997, respectively. Amounts borrowed under the line
bear interest at the bank's base lending rate plus 1.25% (10% at September 30,
1997). Substantially all assets of Americo are pledged as security for amounts
borrowed under the line of credit agreement. In addition, the line of credit
is guaranteed by the sole stockholder.

(4) ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Accrued payroll, commissions and related tax-
es........................................... $ 15 $ 22 $ 27
Accrued payroll-stockholder................... 15 65 139
Accrued fees and other expenses............... 27 1 4
Profit Sharing Plan accrual................... -- 52 74
Money Purchase Plan accrual................... -- 56 67
----- ------ ----
$ 57 $ 196 $311
===== ====== ====
</TABLE>

(5) RELATED PARTY TRANSACTIONS

(a) Due to Stockholder

Amounts due to stockholder consist of short-term demand notes at December
31, 1995, December 31, 1996 and September 30, 1997. In addition, included in
accrued expenses at December 31, 1995, December 31, 1996 and September 30,
1997 is accrued payroll of $15,000, $65,000 and $139,000, respectively, due to
this stockholder.

(b) Lease Transactions

ROI leases certain equipment to Americo. Total rent expense under these
leases for the years ended December 31, 1994, 1995 and 1996 was $40,000,
$105,000, and $105,000, respectively, and $83,000 and $9,000 for the nine
months ended September 30, 1996 and 1997, respectively. All rent expense under
these leases has been eliminated in the accompanying combined statements of
operations.

F-74
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(6) INCOME TAXES

The components of income tax expense (benefit) attributable to income (loss)
before income tax expense (benefit) consists of the following for years ended:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Federal............................................ $ 5 $ 2 $ 7
State.............................................. 2 7 9
----- ----- ----
$ 7 $ 9 $ 16
===== ===== ====
1995:
Federal............................................ $ 15 $ -- $ 15
State.............................................. 7 -- 7
----- ----- ----
$ 22 $ -- $ 22
===== ===== ====
1996:
Federal............................................ $ -- (8) $ (8)
State.............................................. -- (6) (6)
----- ----- ----
$ -- $ (14) $(14)
===== ===== ====
</TABLE>

Income tax expense (benefit) differed from the amounts computed by applying
the U.S. statutory federal income tax rate of 34% as a result of the
following:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)................. $ 29 $ 28 $(25)
State income taxes, net of federal tax benefit............ 4 5 (4)
Tax rate differential..................................... (16) (15) 14
Nondeductible expenses and other differences.............. (1) 4 1
---- ---- ----
$ 16 $ 22 $(14)
==== ==== ====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31 are presented
below:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accrued expenses.......................................... $ -- $ 15
------- ------
Total gross deferred tax asset.......................... -- 15
------- ------
Deferred tax liabilities:
Property and equipment.................................... 13 14
------- ------
Total gross deferred tax liability...................... 13 14
------- ------
Net deferred tax liability (asset)...................... $ 13 $ (1)
======= ======
</TABLE>

In assessing the realizability of deferred tax assets, Americo considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Due to the fact that Americo has sufficient
taxable income in carryback periods, and Americo projects future taxable
income over the periods in which the deferred tax assets are deductible, the
ultimate realization of deferred tax assets recognized appears more likely
than not.

F-75
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(7) COMMITMENTS

Americo has entered into noncancelable operating leases covering certain
office space and equipment. Rent expense amounted to $22,000, $67,000 and
$76,000 for the years ended December 31, 1994, 1995 and 1996, respectively and
$38,000 and $86,000 for the nine month periods ended September 30, 1996 and
1997, respectively. In June 1997, Americo entered into a 10-year lease
agreement for Americo's headquarters in Oradell, New Jersey. The lease
commenced in September 1997. Future minimum payments under noncancelable lease
agreements are as follows:

<TABLE>
<CAPTION>
OPERATING
LEASE
--------------
(IN THOUSANDS)
<S> <C>
October 1, to December 31, 1997.............. $ 33
1998......................................... 192
1999......................................... 197
2000......................................... 197
2001......................................... 197
Thereafter................................... 1,373
-------
Total minimum lease payments............. $ 2,189
=======
</TABLE>

(8) SIGNIFICANT CUSTOMERS

For the year ended December 31, 1996, and the nine months ended September
30, 1997, one customer accounted for approximately 17% and 15% of net
revenues, respectively and approximately 14% and 25% of accounts receivable,
respectively.

(9) EMPLOYEE BENEFIT PLANS

During 1996, Americo adopted a Money Purchase Plan and a Profit Sharing
Plan. The plans cover substantially all employees who generally work 1,000
hours or more per year and have attained the age of 21. Americo will make a
contribution to the Money Purchase Plan for 10% of each eligible participant's
compensation. Contributions into the Profit Sharing Plan are discretionary.
Money Purchase Plan contributions charged to operations for the year ended
December 31, 1996 and nine months ended September 30, 1997, were $48,000 and
$67,000, respectively. Profit Sharing Plan contributions charged to operations
for the year ended December 31, 1996 and nine months ended September 30, 1997
were $71,000 and $74,000, respectively.

(10) SUBSEQUENT EVENTS (UNAUDITED)

On November 12, 1997, VIALOG Corporation ("VIALOG") acquired all of the
outstanding stock of Americo for cash and shares of Common Stock of VIALOG and
Americo became a wholly owned subsidiary of VIALOG. The acquisition of Americo
will be accounted for by the purchase method. Accordingly, all of the
identified tangible and intangible assets and liabilities will be recorded at
their current fair market value and the excess of the purchase price over the
fair value of the net assets acquired will be recorded as intangible assets,
which will be amortized up to 20 years.

F-76
<PAGE>

AMERICAN CONFERENCING COMPANY, INC.
AND RESOURCE OBJECTIVES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

In June 1997, Americo entered into a term loan in the amount of $150,000, of
which $38,000 is classified as current, with a bank in order to finance the
relocation of its operating facilities. The loan has an interest rate of 10%
and is payable over four years in equal monthly installments of $3,804,
including interest. Substantially all assets of Americo are pledged as
security for the amount borrowed under the loan. This note was repaid in full
in November 1997. In November 1997, the line of credit described in note 3 was
paid down in full.

F-77
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors Communication Development Corporation:

We have audited the accompanying balance sheets of Communication Development
Corporation ("CDC") as of December 31, 1995 and 1996, and the related
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1996. These financial
statements are the responsibility of CDC's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Communication Development
Corporation as of December 31, 1995 and 1996 and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

January 17, 1997
Boston, Massachusetts

F-78
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
------------ SEPTEMBER 30,
1995 1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (NOTE 3)
Current assets:
Cash and cash equivalents......................... $ 18 $ 90 $ 55
Trade accounts receivable, less allowance for
doubtful accounts of $2 at December 31, 1995 and
1996 and $10 at September 30, 1997 (note 7)...... 237 186 396
Income taxes receivable........................... 6 1 --
Prepaid expenses and other current assets......... 8 9 28
----- ------ -----
Total current assets............................ 269 286 479
----- ------ -----
Property and equipment, net (note 2)................ 212 128 100
Other assets........................................ 1 1 4
----- ------ -----
Total assets.................................... $ 482 $ 415 $ 583
===== ====== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under line of credit (note 3).......... $ 37 $ -- $ --
Current installments of long-term debt (note 3)... 35 33 24
Accounts payable.................................. 82 74 72
Accrued expenses (note 5)......................... 9 102 37
Income taxes payable.............................. -- -- 94
Deferred income taxes (note 6).................... 35 7 7
----- ------ -----
Total current liabilities....................... 198 216 234
----- ------ -----
Long-term debt, excluding current installments (note
3)................................................. 72 42 25
Deferred income taxes (note 6)...................... 30 19 19
----- ------ -----
Total liabilities............................... 300 277 278
----- ------ -----
Stockholders' equity:
Common stock, no par value. Authorized, issued and
outstanding 5,000 shares at December 31, 1995 and
1996............................................. 2 2 2
Retained earnings................................. 180 136 303
----- ------ -----
Total stockholders' equity...................... 182 138 305
----- ------ -----
Commitments and contingencies (notes 4 and 8)
Total liabilities and stockholders' equity...... $ 482 $ 415 $ 583
===== ====== =====
</TABLE>

See accompanying notes to financial statements.

F-79
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------- -----------------
1994 1995 1996 1996 1997
------ ------ ------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues (note 7)................. $1,121 $1,131 $1,480 $ 1,080 $ 1,486
Cost of revenues...................... 709 765 886 615 766
------ ------ ------ -------- --------
Gross profit........................ 412 366 594 465 720
Selling, general and administrative
expenses............................. 337 377 655 411 442
------ ------ ------ -------- --------
Income (loss) from operations....... 75 (11) (61) 54 278
Interest expense, net................. 7 17 11 7 4
------ ------ ------ -------- --------
Income (loss) before income tax ex-
pense (benefit).................... 68 (28) (72) 47 274
Income tax expense (benefit) (note
6)................................... 29 (11) (28) 18 107
------ ------ ------ -------- --------
Net income (loss)................... $ 39 $ (17) $ (44) $ 29 $ 167
====== ====== ====== ======== ========
</TABLE>

See accompanying notes to financial statements.

F-80
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
--------------- TOTAL
NUMBER RETAINED STOCKHOLDERS'
OF SHARES VALUE EARNINGS EQUITY
--------- ----- -------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993........... 5,000 $ 2 $158 $160
Net income........................... -- -- 39 39
----- ---- ---- ----
Balance at December 31, 1994........... 5,000 2 197 199
Net loss............................. -- -- (17) (17)
----- ---- ---- ----
Balance at December 31, 1995........... 5,000 2 180 182
Net loss............................. -- -- (44) (44)
----- ---- ---- ----
Balance at December 31, 1996........... 5,000 2 136 138
Net income (unaudited)............... -- -- 167 167
----- ---- ---- ----
Balance at September 30, 1997 (unau-
dited)................................ 5,000 $ 2 $303 $305
===== ==== ==== ====
</TABLE>

See accompanying notes to financial statements.

F-81
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31 SEPTEMBER 30,
----------------- -------------------
1994 1995 1996 1996 1997
----- ---- ---- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)..................... $ 39 $(17) $(44) $ 29 $ 167
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization........ 77 95 86 71 49
Deferred income taxes................ 1 (11) (39) 17 --
Changes in operating assets and
liabilities:
Trade accounts receivable, net..... (27) (73) 51 29 (210)
Income taxes receivable............ -- -- 5 -- 1
Prepaid expenses and other current
assets............................ (4) (1) (1) 2 (19)
Other asset........................ -- -- -- (2) (3)
Accounts payable................... 41 21 (8) (7) (2)
Accrued expenses................... 9 (3) 93 (2) (65)
Income taxes payable............... 23 (3) -- -- 94
----- ---- ---- -------- ---------
Net cash provided by operating
activities...................... 159 8 143 137 12
----- ---- ---- -------- ---------
Cash flows from investing activity:
Additions to property and equipment... (183) (4) (2) (13) (21)
----- ---- ---- -------- ---------
Cash flows from financing activities:
Proceeds from borrowings under line of
credit............................... -- 37 -- -- --
Repayments of borrowings under line of
credit............................... (38) -- (37) (37) --
Proceeds from long-term debt.......... 100 -- -- -- --
Principal repayments of long-term
debt................................. (31) (36) (32) (26) (26)
----- ---- ---- -------- ---------
Net cash provided by (used in)
financing activities............ 31 1 (69) (63) (26)
----- ---- ---- -------- ---------
Net increase (decrease) in cash and
cash equivalents...................... 7 5 72 61 (35)
Cash and cash equivalents at beginning
of period............................. 6 13 18 18 90
----- ---- ---- -------- ---------
Cash and cash equivalents at end of
period................................ $ 13 $ 18 $ 90 $ 79 $ 55
===== ==== ==== ======== =========
Supplemental cash flow information:
Cash paid during the year for:
Interest............................. $ 7 $ 17 $ 11 $ 8 $ 4
===== ==== ==== ======== =========
Taxes................................ $ 9 $ 3 $-- $ -- $ 16
===== ==== ==== ======== =========
</TABLE>

See accompanying notes to financial statements.

F-82
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Communication Development Corporation ("CDC") provides audio group
communications services to a variety of customers, primarily located in the
United States. CDC was incorporated in 1991 and has its operations center in
Danbury, Connecticut.

(b) Interim Financial Statements

The financial statements of CDC as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 are unaudited. All adjustments and
accruals (consisting only of normal recurring adjustments) have been recorded
that, in the opinion of management, are necessary for a fair presentation.
Results of operations for the interim periods are not necessarily indicative
of the results for the full year.

Management of CDC has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare the financial statements in conformity with
generally accepted accounting principles. Actual results could differ from
those estimates.

(d) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and money market deposits.

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
provided on the straight-line basis over the estimated useful lives of the
respective assets, generally five years. Leasehold improvements are amortized
over the shorter of the lease term or three years.

(f) Income Taxes

(g) Revenue Recognition

Revenue for conference calls is recognized upon completion of the call.
Revenue for services is recognized upon performance of the service.

(h) Research and Development

CDC maintains a technical support and engineering department that, in part,
develops features and products for group communications. In accordance with
SFAS No. 2, Accounting for Research and Development Costs, CDC charges to
expense (included in cost of revenues) that portion of this department's costs
which are related

F-83
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

to research and development activities. CDC's research and development
expenses for the years ended December 31, 1994, 1995 and 1996 were $51,000,
$49,000 and $56,000, respectively. CDC's research and development expenses for
the nine months ended September 30, 1996 and 1997 were $42 and $76,
respectively.

(i) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

CDC adopted the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of, during 1996. This
Statement requires that long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Adoption
of this Statement did not have a material impact on CDC's financial position,
results of operations, or liquidity.

(2) PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Teleconferencing equipment..................... $ 427 $ 427 $427
Office equipment............................... 41 43 64
Leasehold improvements......................... 10 10 10
------ ------ ----
478 480 501
Less: accumulated depreciation and amortiza-
tion.......................................... 266 352 401
------ ------ ----
Property and equipment, net.................. $ 212 $ 128 $100
====== ====== ====
</TABLE>

(3) DEBT

(a) Line of Credit

CDC has a line of credit with a bank which provides for borrowings of up to
$125,000. Borrowings under this arrangement bear interest at 1% above the
bank's base lending rate (8.5%, 9.25% and 9.5% at December 31, 1995 and 1996
and September 30, 1997, respectively). The loan agreement is renewable
annually in January, is collateralized by accounts receivable, and is
guaranteed by the stockholders. Amounts borrowed under the line of credit were
$37,000, $0 and $0 at December 31, 1995 and 1996 and September 30, 1997,
respectively.

(b) Long-term Debt

Long-term debt at December 31, 1995 and 1996 and September 30, 1997 consists
of bank term notes which are payable in equal monthly installments of
principal plus interest at 1% above the bank's base lending rate through
December 1999. The notes are collateralized by substantially all the assets of
CDC and are guaranteed by the stockholders. Amounts outstanding are as follows
(in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Bank term notes................................. $ 107 $ 75 $49
Less: current installments...................... 35 33 24
------ ----- ---
Long-term debt excluding current installments... $ 72 $ 42 $25
====== ===== ===
</TABLE>

F-84
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The aggregate maturities of long-term debt are as follows (in thousands):

<TABLE>
<S> <C>
October 1 to December 31, 1997.......................... $ 7
1998.................................................... 20
1999.................................................... 22
---
$49
===
</TABLE>

(4) COMMITMENTS

CDC rents its office facility under a noncancelable operating lease expiring
in February 1998. Rental expense under this lease for the years ending
December 31, 1994, 1995 and 1996 was $31,000, $57,000 and $65,000,
respectively and $53,000 and $55,000 for the nine months ending September 30,
1996 and 1997, respectively. Future minimum lease payments under this lease
are as follows (in thousands):

<TABLE>
<S> <C>
October 1 to December 31, 1997.......................... $18
1998.................................................... 12
---
Total minimum lease payments.......................... $30
===
</TABLE>

(5) ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Accrued officer bonus............................ $ -- $ 90 $ --
Accrued long distance charges.................... -- -- --
Accrued payroll and related taxes................ 8 6 30
Other accrued expenses........................... 1 6 7
------ ------ -----
$ 9 $ 102 $ 37
====== ====== =====
</TABLE>

(6) INCOME TAXES

Income tax expense (benefit) consists of the following for the years ended
December 31:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C>
1994:
Federal............................................ $ 21 $ 1 $ 22
State.............................................. 7 -- 7
----- ----- ----
$ 28 $ 1 $ 29
===== ===== ====
1995:
Federal............................................ $ -- $ (8) $ (8)
State.............................................. -- (3) (3)
----- ----- ----
$ -- $ (11) $(11)
===== ===== ====
1996:
Federal............................................ $ 8 $ (29) $(21)
State.............................................. 3 (10) (7)
----- ----- ----
$ 11 $ (39) $(28)
===== ===== ====
</TABLE>

F-85
<PAGE>

COMMUNICATION DEVELOPMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Income tax expense (benefit) differed from the amounts computed by applying
the U.S. statutory federal income tax rate of 34% as a result of the
following:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Computed "expected" tax expense (benefit).................. $23 $ (9) $(24)
State and local income taxes, net of federal tax benefit... 5 (2) (5)
Nondeductible items and other differences.................. 1 -- 1
--- ---- ----
$29 $(11) $(28)
=== ==== ====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31 are presented
below:
<TABLE>
<CAPTION>
1995 1996
---- -----
(IN
THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss............................................. $29 $ --
--- -----
Total gross deferred tax assets.............................. 29 --
--- -----
Deferred tax liabilities:
Property and equipment......................................... 30 19
Accrued expenses............................................... 64 7
--- -----
Total gross deferred tax liabilities......................... 94 26
--- -----
Net deferred tax liability....................................... $65 $ 26
=== =====
</TABLE>

(7) SIGNIFICANT CUSTOMERS

The same five customers accounted for the following percentages of net
revenues and accounts receivable:

<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF NET REVENUES ACCOUNTS RECEIVABLE
----------------------------------- -----------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
------------------- -------------- -------------- SEPTEMBER 30,
1994 1995 1996 1996 1997 1995 1996 1997
----- ----- ----- ------ ------ ------ ------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customer A...... 25% 63% 35% 41% 35% 33% 17% 21%
Customer B...... -- 11% -- 10% -- 30% 25% --
Customer C...... 11% 10% 11% 12% 10% -- -- 10%
Customer D...... -- -- -- -- -- -- 14% --
Customer E...... -- -- -- -- 13% -- -- 16%
</TABLE>

(8) SUBSEQUENT EVENTS (UNAUDITED)

On November 12, 1997, VIALOG Corporation ("VIALOG") acquired all of the
outstanding stock of CDC for cash and shares of Common Stock of VIALOG and CDC
became a wholly owned subsidiary of VIALOG. The acquisition of CDC will be
accounted for by the purchase method. Accordingly, all of the identified
tangible and intangible assets and liabilities will be recorded at their
current fair market value and the excess of the purchase price over the fair
value of the net assets acquired will be recorded as intangible assets, which
will be amortized up to 20 years.

In November 1997, the remaining balances of the long-term debt described in
note 3 (b) was repaid in full, plus accrued interest.

F-86
<PAGE>

[PHOTO DESCRIPTION: SEVERAL PERSONS SEATED
AROUND A TELEVISION]

[PHOTO DESCRIPTION: MAN IN COAT TALKING ON CELLULAR PHONE; CAR
IN BACKGROUND]

[PHOTO DESCRIPTION: PERSON SEATED BESIDE IGLOO]

HELPING YOU MEET ALL YOUR GLOBAL COMMUNICATIONS NEEDS.

[PHOTO DESCRIPTION: MAN TALKING ON CELLULAR PHONE; BUILDING IN
BACKGROUND]
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITA-
TION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITA-
TION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 10
Use of Proceeds.......................................................... 17
Dividend Policy.......................................................... 17
Capitalization........................................................... 18
Dilution................................................................. 19
Selected Financial Data.................................................. 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Industry Overview........................................................ 28
Business................................................................. 31
Management............................................................... 41
Certain Transactions..................................................... 48
Principal Stockholders................................................... 52
Description of Capital Stock............................................. 53
Shares Eligible for Future Sale.......................................... 58
Underwriting............................................................. 59
Legal Matters............................................................ 61
Experts.................................................................. 61
Available Information.................................................... 61
Index to Financial Statements............................................ F-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

LOGO

Common Stock

---------------
PROSPECTUS
---------------

PRUDENTIAL SECURITIES INCORPORATED

JEFFERIES & COMPANY, INC.

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses (other than the underwriting
compensation expected to be incurred) in connection with the Offering
described in this Registration Statement. All of such amounts (except the SEC
Registration Fee, the NASD Filing Fee and the Nasdaq National Market Listing
Fee) are estimates.

<TABLE>
<S> <C>
SEC Registration Fee............................................. $16,963
NASD Filing Fee.................................................. 6,250
Nasdaq National Market Listing Fee...............................
Blue Sky Fees and Expenses.......................................
Printing and Engraving Costs.....................................
Legal Fees and Expenses..........................................
Accounting Fees and Expenses.....................................
Transfer Agent and Registrar Fees and Expenses...................
Miscellaneous....................................................
-------
Total.......................................................... $
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 67 of Chapter 156B of the Massachusetts General Laws, or the
Massachusetts Business Corporation Law (the "MBCL"), provides that the
indemnification of directors, officers, employees and other agents of a
corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its request
in any capacity with respect to any employee benefit plan, may be provided by
it to whatever extent shall be specified in or authorized by (i) the articles
of organization or (ii) a by-law adopted by the stockholders or (iii) a vote
adopted by the holders of a majority of the shares of stock entitled to vote
on the election of directors. Except as the articles of organization or by-
laws otherwise require, indemnification of any persons who are not directors
of the corporation may be provided by it to the extent authorized by the
directors. Such indemnification may include payment by the corporation of
expenses incurred in defending a civil or criminal action or proceeding in
advance of the final disposition of such action or proceeding, upon receipt of
an undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be entitled to indemnification, which undertaking may be
accepted without reference to the financial ability of such person to make
repayment. Any such indemnification may be provided although the person to be
indemnified is no longer an officer, director, employee or agent of the
corporation or of such other organization or no longer serves with respect to
any such employee benefit plan. Section 67 further provides that no
indemnification shall be provided for any person with respect to any matter as
to which he shall have been adjudicated in any proceeding not to have acted in
good faith in the reasonable belief that his action was in the best interest
of the corporation or to the extent that such matter relates to service with
respect to any employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan. Article VI of the
Company's Articles of Organization provides that the Company shall, to the
fullest extent permitted by the laws of the Commonwealth of Massachusetts,
indemnify each person who is, or shall have been, a director, officer,
employee or agent of the Company, or who is serving or shall have served, at
the request of the Company, as director or officer of another organization or
in any capacity with respect to any employee benefit plan of the Company,
against all liabilities and expenses (including judgments, fines, penalties,
amounts paid or to be paid in settlement and reasonable attorney's fees)
imposed upon or incurred by any such person in connection with or arising out
of claims made, or any action, suit or proceeding threatened or brought
against him or in which he may be involved by reason of any action taken or
omitted by him as a director, officer, employee or agent, or as a result of
any service with respect to any such employee benefit plan.

Section 13(b)(1 1/2) of Chapter 156B of the MBCL permits a corporation to
include in its articles of organization a provision eliminating or limiting
the personal liability of a director to the corporation or its

II-1
<PAGE>

stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 61 or 62 of the MBCL (relating to unlawful payment of dividends,
unlawful stock purchase and redemption and loans to insiders) or (iv) for any
transaction from which the director derived an improper personal benefit.
Article VI of the Company's Articles of Organization provides that the
Company's directors shall not be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except in the
circumstances that are set forth in the MBCL.

The effect of these provisions is to permit indemnification by the Company
for, among other liabilities, liabilities arising out of the Securities Act.

The Underwriting Agreement (the form of which appears as Exhibit 1.1)
provides for indemnification of the Company's directors and officers in
certain circumstances.

Section 67 of the MBCL also affords a Massachusetts corporation the power to
obtain insurance on behalf of its directors and officers against liabilities
incurred by them in those capacities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the
Securities Act of 1933. Except as set forth in (vii) below, none of the sales
of the securities issued by the Company have involved the use of an
underwriter, and no commissions were paid in connection with the sale of any
of the securities issued by the Company.

(i) From January 1, 1996 to October 31, 1996, the Company issued
1,222,650 shares of Common Stock, $.01 par value to twelve accredited
investors and twenty-one of its consultants and employees at value ranging
from $.01 per share to $.555 per share for a total consideration of
$173,152. The issuance of shares to consultants and employees may be
considered to be compensation to such individuals and the Company expensed
$36,753 in 1996 as compensation.

(ii) In November 1996 the Company issued 212,500 shares of Common Stock
to twenty accredited investors and four employees at a value of $4.00 per
share for a total consideration of $850,000. The issuance of shares to
employees may be considered to be compensation to such individuals and the
Company expensed $90,000 in 1996 as compensation.

(iii) On February 12, 1997, the Company issued an aggregate of 52,000
shares of Common Stock at $.05 per share to two of its consultants upon the
exercise of two NQSOs for an aggregate purchase price of $2,600.

(iv) On February 24, 1997, the Company issued to eight accredited
investors promissory notes in the aggregate principal amount of $500,000
bearing interest at 8.0% per annum and payable upon the earlier of ten days
following the closing of an initial public offering of the Company's common
stock or one year from their date of issuance (the "February Notes"),
together with warrants to purchase an aggregate of II 1, 1 18 shares of the
Company's common stock at an exercise price of $4.50 per share (the
"February Warrants"). The February Notes were paid in November 1997. The
February Warrants expire on February 28, 1999 and contain anti-dilution
provisions. As of the date of this Registration Statement, the February
Warrants entitle the holders thereof to purchase an aggregate of 33,450
additional shares of common stock as a result of required anti-dilution
adjustments. The February Notes and February Warrants were issued to
accredited investors only pursuant to the registration exemption provided
in Rule 506 of Regulation D under the Securities Act.

(v) In September 1997, the Company issued to fifteen accredited investors
(who were existing stockholders or noteholders of the Company) subordinated
convertible promissory notes in the aggregate principal amount of $255,500
bearing interest at 10% per annum and payable upon the earlier to occur of

II-2
<PAGE>

five days following (i) the closing of a sale of the Company's equity
securities or debt securities for an aggregate purchase price of $50.0
million or more and (ii) January 1, 1998 (the "September Notes"). Each
September Note was convertible at the holder's option prior to and
including the due date, into the number of shares of the Company's Common
Stock determined by dividing the outstanding principal of the September
Note by $4.00. All holders of the September Notes elected to convert the
September Notes into Common Stock simultaneously with the Company's
unrelated sale in November 1997 of $75.0 million of senior notes and
warrants as described below.

(vi) On October 16, 1997, the Company declared a 2:1 stock split.

(vii) On November 12, 1997, the Company issued to Jefferies & Company, as
underwriter, 75,000 units, with each unit (a "Unit"; collectively, the
"Units") consisting of (i) a senior note due 2001 in the principal amount
of $1,000 bearing interest at 12% per annum (a "Senior Note"; collectively,
the "Senior Notes"), and (ii) one warrant to purchase 10.0886 shares of the
Company's Common Stock, subject to adjustment in certain circumstances, at
an exercise price of $.01 par value per share (a "November Warrant";
collectively, the "November Warrants"). Jefferies & Company paid $72.0
million for the Units, or 96% of the principal amount of the Senior Notes.
As additional compensation to Jefferies & Company, the Company issued, for
no additional consideration, 30 warrants to purchase 302,658 shares of the
Company's Common Stock at an initial exercise price of $.01 per share.

Immediately upon the consummation of the sale of the Units, Jefferies &
Company offered and sold the Units at the face value of $1,000 per Unit to
certain "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) and to a limited number of accredited investors.

The November Warrants are exercisable on or after November 12, 1997. The
shares purchasable upon the exercise of the November Warrants and the
exercise price will be subject to adjustment in certain events including:
(i) the payment by the Company of dividends (or other distributions) on the
Common Stock of the Company payable in shares of such Common Stock or other
shares of the Company's capital stock, (ii) subdivisions, combinations and
reclassifications of the Common Stock, and (iii) the distribution to all
holders of the Common Stock of any the Company's assets, debt securities or
any rights or warrants to purchase securities (excluding cash dividends or
other cash distributions from current or retained earnings).

Subject to certain exceptions set forth in the warrant agreement under
which the November Warrants were issued, if the Company issues (i) shares
of Common Stock for a consideration per share less than the current market
value per share or (ii) any securities convertible into or exchangeable for
Common Stock for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities that is less
than the current market value per share on the date of issuance of such
securities, the Company shall offer to sell to each holder of warrants, at
the same price and on the same terms offered to all other prospective
buyers (provided that the holder of warrants shall not be required to buy
any other securities in order to buy such Common Stock or convertible
securities), a portion of such Common Stock or convertible securities that
is equal to such holder's portion of the Common Stock then outstanding if
immediately prior thereto all the warrants had been exercised. Each such
holder may elect to buy all or any portion of the Common Stock or
convertible securities offered or may decline to purchase any.

In case of certain consolidations or mergers of the Company, or the sale
of all or substantially all of the assets of the Company to another
corporation, each November Warrant will thereafter be exercisable for the
right to receive the kind and amount of shares of stock or other securities
or property to which such holder would have been entitled as a result of
such consolidation, merger or sale had the warrants been exercised
immediately prior thereto.

(viii) See "Certain Transactions-Organization of the Company" in the
Prospectus for a discussion of the issuance of shares of the Company's
Common Stock and options to purchase shares of the Company's Common Stock
on November 12, 1997 in connection with the acquisitions of the Operating
Centers.

(ix) On January 12, 1998, the Company issued 45,030 shares of Common
Stock at $.2775 per share to one of its former employees upon the exercise
of his incentive stock option for an aggregate purchase price of
$12,495.83.

II-3
<PAGE>

(x) On April 14, 1998, the Company issued 2,500 shares of Common Stock to
Thomas Walsh as partial compensation for his services in connection with
the Company's purchase of the Reston Center in November 1997.

Each of the transactions set forth in the preceding clauses were completed
without registration of the relevant security under the Securities Act in
reliance upon one or more of the exemptions afforded by Section 4(2) of the
Securities Act for transactions not involving a public offering, Rule 701
promulgated under the Securities Act for transactions with directors,
consultants, and employees and Rule 506 of Regulation D promulgated under the
Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1+ Form of Underwriting Agreement.
2.1 Agreement and Plan of Reorganization By and Among VIALOG
Corporation, TBMA Acquisition Corporation and Telephone Business
Meetings, Inc. and C. Raymond Marvin Dated as of September 8, 1997.
2.2 Amendment to Agreement and Plan of Reorganization By and Among
VIALOG Corporation, TBMA Acquisition Corporation, Telephone
Business Meetings, Inc. and C. Raymond Marvin Dated as of October
20, 1997.
2.3 Letter Agreement Dated November 5, 1997 between VIALOG Corporation,
Telephone Business Meetings, Inc. and C. Raymond Marvin.
2.4 Amended and Restated Agreement and Plan of Reorganization By and
Among VIALOG Corporation, CSII Acquisition Corporation and
Conference Source International, Inc. and Judy B. Crawford and Olen
E. Crawford Dated as of September 8, 1997.
2.5 Amended and Restated Asset Purchase Agreement By and Among VIALOG
Corporation, Call Points Acquisition Corporation, Call Points, Inc.
and Ropir Industries, Inc. Dated as of October 17, 1997.
2.6 Amended and Restated Agreement and Plan of Reorganization By and
Among VIALOG Corporation, KST Acquisition Corporation, Kendall
Square Teleconferencing, Inc., Courtney Snyder, Paul Ballantine,
John Hassett and Dwight Grader Dated as of September 30, 1997.
2.7 First Amendment to Amended and Restated Agreement and Plan of
Reorganization By and Among VIALOG Corporation, KST Acquisition
Corporation, Kendall Square Teleconferencing, Inc. and Courtney
Snyder, Paul Ballantine, John Hassett and Dwight Grader Dated
October 24, 1997.
2.8 Amended and Restated Agreement and Plan of Reorganization By and
Among VIALOG Corporation, AMCS Acquisition Corporation and American
Conferencing Company, Inc. and David Lipsky Dated as of September
30, 1997.
2.9 Amended and Restated Agreement and Plan of Reorganization By and
Among VIALOG Corporation, CDC Acquisition Corporation and
Communications Development Corporation and Patti R. Bisbano and
Maurya Suda Dated as of September 30, 1997.
2.10 First Amendment to Amended and Restated Agreement and Plan of
Reorganization By and Among VIALOG Corporation, CDC Acquisition
Corporation, Communication Development Corporation and Patti R.
Bisbano and Maurya Suda Dated as of October 24, 1997.
3.1 Restated Articles of Organization of the Company.
3.2 Amended and Restated By-Laws of the Company.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.3 Certificate of Incorporation of Communication Development
Corporation.
3.4 By-Laws of Communication Development Corporation.
3.5 Articles of Incorporation of Conference Source International, Inc.
3.6 By-Laws of Conference Source International, Inc.
3.7 Unanimous Consent of Board of Directors of Conference Source
International, Inc. Amending Section 2 of Article II of the By-
Laws.
3.8 Certificate of Incorporation of Telephone Business Meetings, Inc.
3.9 Regulations of Telephone Business Meetings, Inc.
3.10 Articles of Organization of Kendall Square Teleconferencing, Inc.
(f/k/a Teleconversant, LTD)
3.11 Articles of Amendment of Certificate of Incorporation of Kendall
Square Teleconferencing, Inc. Changing the Name of the Company from
Teleconversant, Ltd. To Kendall Square Teleconferencing, Inc.
3.12 Articles of Amendment of Certificate of Incorporation of Kendall
Square Teleconferencing, Inc. Deleting the Stock Transfer
Restrictions in Article V in Their Entirety.
3.13 By-Laws of Kendall Square Teleconferencing, Inc.
3.14 Certificate of Incorporation of American Conferencing Company, Inc.
(f/k/a AMCS Acquisition Corporation)
3.15 Certificate of Merger of American Conferencing Company, Inc. Into
AMCS Acquisition Corporation Evidencing Name Change, Filed with the
Secretary of State of Delaware.
3.16 By-Laws of American Conferencing Company, Inc.
3.17 Certificate of Incorporation of Call Points, Inc. (f/k/a Call
Points Acquisition Corporation).
3.18 Certificate of Amendment of Certificate of Incorporation of Call
Points Evidencing Name Change, Filed with the Secretary of State of
Delaware.
3.19 By-Laws of Call Points, Inc.
4.1+ Form of certificate evidencing ownership of Common Stock of the
Company.
4.2 Indenture Dated as of November 12, 1997 Among VIALOG Corporation,
Telephone Business Meetings, Inc., Conference Source International,
Inc., Kendall Square Teleconferencing, Inc., American Conferencing
Company, Inc., Communication Development Corporation, Inc., Call
Points, Inc. and State Street Bank and Trust Company (including
Forms of Series A Security and Series B Security attached to the
Indenture as Exhibits A-1 and A-2, respectively).
4.3 Unit Agreement Dated as of November 12, 1997 By and Among VIALOG
Corporation, Telephone Business Meetings, Inc., Conference Source
International, Inc., Call Points, Inc., Kendall Square
Teleconferencing, Inc., American Conferencing Company, Inc.,
Communication Development Corporation, and State Street Bank and
Trust Company (including Form of Unit Certificate attached to the
Unit Agreement as Exhibit A).
4.4 Warrant Agreement Dated as of November 12, 1997 Between VIALOG
Corporation and State Street Bank and Trust Company (including Form
of Warrant Certificate attached to the Warrant Agreement as Exhibit
A).
4.5 Security Holders' and Registration Rights Agreement Dated as of
November 12, 1997 Among VIALOG Corporation and Jefferies & Company,
Inc.
4.6 Registration Rights Agreement Dated as of November 12, 1997 By and
Among VIALOG Corporation, Kendall Square Teleconferencing, Inc.,
AMCS Acquisition Corporation, Communication Development
Corporation, Telephone Business Meetings, Inc., Conference Source
International, Inc., Call Points Acquisition Corporation and
Jefferies & Company, Inc.
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
5.1+ Opinion of Mirick, O'Connell, DeMallie & Lougee, LLP.
10.1 1996 Stock Plan of the Company.
10.2 Equipment Lease between CSI and Ally Capital Corporation Dated
April 1, 1996.
10.3 Equipment Lease between CSI and The CIT Group/Equipment Financing,
Inc. Dated November 11, 1996.
10.4 Equipment Lease between CSI and BSFS Equipment Leasing Dated April
8, 1996.
10.5 Equipment Lease between TCC (f/k/a Teleconversant Ltd.) and Wasco
Funding Corp. Dated May 21, 1996.
10.6 Equipment Lease between TCC (f/k/a Teleconversant Ltd.) and Wasco
Funding Corp. Dated July 20, 1995.
10.7 Lease between Aetna Life Insurance Company and ACCESS, as Amended,
Dated December 6, 1994.
10.8 Lease Agreement between SPP Real Estate (Georgia II), Inc. and CSI
Dated November 1, 1996.
10.9 Amended & Restated Employment Agreement By and Between VIALOG
Corporation and Glenn D. Bolduc Dated May 6, 1997.
10.10 Employment Agreement By and Between Telephone Business Meetings,
Inc. and C. Raymond Marvin Dated as of November 12, 1997.
10.11 Amendment to Employment Agreement between the Company and C.
Raymond Marvin Effective as of December 31, 1997.
10.12 Employment Agreement By and Between CSII Acquisition Corporation
and Judy B. Crawford Dated as of November 12, 1997.
10.13 Employment Agreement By and Between Kendall Square
Teleconferencing, Inc. and Courtney Snyder Dated November 12, 1997.
10.14 Employment Agreement By and Between American Conferencing Company,
Inc. and David Lipsky Dated as of November 12, 1997.
10.15 Employment Agreement By and Between Communication Development
Corporation and Patti R. Bisbano Dated as of November 12, 1997.
10.16 Employment Agreement By and Between the Company and William Pucci
Dated as of October 1, 1996.
10.17 Employment Agreement By and Between the Company and John Dion Dated
as of November 4, 1996.
10.18 Employment Agreement By and Between the Company and Gary Vilardi
Dated as of April 1, 1997.
10.19 Employment Agreement By and Between the Company and Robert Moore
Dated as of October 20, 1997.
10.20 Employment Agreement By and Between the Company and John Williams
Dated as of October 14, 1997.
10.21* Employment Agreement By and Between Call Points, Inc. and Olen E.
Crawford Dated as of November 20, 1997.
10.22 Stockholder Agreement By and Among John J. Hassett and VIALOG
Corporation Dated as of November 6, 1997.
10.23 Form of Registration Rights Agreement between VIALOG Corporation
and certain of its stockholders specified in Schedules I and II
attached thereto.
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.24 Lease Between Tower Investment Group and Communication
Development Corp. Dated February 23, 1990, Including Subsequent
Modifications Thereto.
10.25 Lease Agreement by and Between 680-690 Kinderkamack Road and
American Conferencing Company, Inc. Dated June 1997.
10.26 Lease Between Robert A. Jones and K. George Najarian, Trustees of
Old Cambridge Realty Trust and Old Kendall Square Realty Trust,
and Kendall Square Teleconferencing, Inc. (f/k/a Teleconversant,
Ltd.) Dated February 15, 1996.
10.27 Lease Between Ropir Communications and Call Points, Inc.
Commencing May 1, 1995.
10.28 Amendment to Lease Between Ropir Industries, Inc. and Call
Points, Inc.
10.29 Equipment Lease between Kendall Square Teleconferencing, Inc. and
Wasco Funding Corp. Dated July 31, 1997.
10.30 Sublease between Eisai Research Institute of Boston, Inc. and
VIALOG Corporation Dated as of August 20, 1997.
10.31** Assignment of Lease between Telephone Business Meetings, Inc. and
CMC Datacomm, Inc. dated as of March 13, 1998.
10.32*** Letter Agreement between Nolan Enterprises and Communication
Development Corporation dated March 31, 1998.
10.33*** Fourth Lease Modification & Extension Agreement by and between
Danbury Executive Tower Investment Group Limited Liability
Partnership and Communication Development Corporation dated April
1998.
10.34*** Lease between Connecticut General Life Insurance Company, on
behalf of its Separate Account R, and VIALOG Corporation dated
April 7, 1998.
11.1+ Statement regarding computation of per share earnings.
21.1 Subsidiaries of the Company.
23.1*** Consent of KPMG Peat Marwick LLP.
23.2+ Consent of Mirick, O'Connell, DeMallie & Lougee, LLP.
24 Power of Attorney (included on the signature page of this
Registration Statement).
27.1 Financial Data Schedule.
99.1* Form of Letter of Transmittal for Exchange Offer.
</TABLE>
- --------
+ To be filed by amendment.
All non-marked Exhibits listed above are incorporated by reference to the
Exhibits to the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on January 9, 1998 (File No. 333-44041).
* Incorporated by reference to the Exhibits to Amendment No. 1 to the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission on February 10, 1998 (File No. 333-44041).
** Incorporated by reference to the Exhibits to Form 10-K for the fiscal year
ended December 31, 1997 filed with the Securities and Exchange Commission
on March 31, 1998 (File No. 333-22585).
***Filed herewith.

(b) Financial Statement Schedules

All financial statement schedules have been omitted because they are not
required, not applicable, or the information to be included in the financial
statement schedules is included in the Consolidated Financial Statements or
the notes thereto.

II-7
<PAGE>

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance on Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it is declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-8
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOSTON, COMMONWEALTH OF
MASSACHUSETTS, ON MAY 22 , 1998.

VIALOG Corporation

/s/ Glenn D. Bolduc
By: _________________________________
GLENN D. BOLDUC PRESIDENT AND
CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that VIALOG CORPORATION, a corporation
organized under the laws of the Commonwealth of Massachusetts (the
"Corporation"), and the undersigned officers and directors of the Corporation,
individually and in their respective capacities indicated below, hereby make,
constitute and appoint GLENN D. BOLDUC and JOHN J. DION its and their true and
lawful attorneys, their separate or joint signatures sufficient to bind, with
power of substitution, to execute, deliver and file in its or their behalf,
and in each person's respective capacity or capacities as shown below, with
the Securities and Exchange Commission (or any other governmental authority) a
Registration Statement on Form S-1 under the Securities Act of 1933, as
amended, any amendments to and any and all documents in support of or
supplemental to said registration statement by the Corporation, and any
additional registration statements filed pursuant to Rule 462(b); and the
Corporation and each said person hereby grant to said attorneys full power and
authority to do and perform each and every act and thing whatsoever as any one
of said attorneys may deem necessary or advisable to carry out the full intent
of this Power of Attorney to the same extent and with the same effect as the
Corporation or the undersigned officers and directors of the Corporation might
or could do personally in its or their capacity or capacities as aforesaid;
and the Corporation of each of said persons hereby ratify, confirm and approve
all acts and things that any one of said attorneys may do or cause to be done
by virtue of this Power of Attorney and its signature or their signatures as
the same may be signed by any one of said attorneys to said registration
statement and any and all documents in support of or supplemental to said
Registration Statement and any and all amendments thereto.

II-9
<PAGE>

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:

<TABLE>
<S> <C>
SIGNATURE TITLE
DATE

/s/ Glenn D. Bolduc President, Chief May 22, 1998
- ------------------------------------- Executive Officer,
GLENN D. BOLDUC Treasurer and
Director

/s/ John J. Dion Vice President-- May 22, 1998
- ------------------------------------- Finance, Principal
JOHN J. DION Financial Officer
and Principal
Accounting Officer

/s/ Joanna M. Jacobson Director May 22, 1998
- -------------------------------------
JOANNA M. JACOBSON

/s/ David L. Lougee Director May 22, 1998
- -------------------------------------
DAVID L. LOUGEE

Director , 1998
- -------------------------------------
DAVID L. LIPSKY

/s/ Patti R. Bisbano Director May 20, 1998
- -------------------------------------
PATTI R. BISBANO
</TABLE>

II-10
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.8 Certificate of Incorporation of Telephone Business Meetings, Inc.
3.9 Regulations of Telephone Business Meetings, Inc.
3.10 Articles of Organization of Kendall Square Teleconferencing, Inc.
(f/k/a Teleconversant, LTD)
3.11 Articles of Amendment of Certificate of Incorporation of Kendall
Square Teleconferencing, Inc. Changing the Name of the Company from
Teleconversant, Ltd. To Kendall Square Teleconferencing, Inc.
3.12 Articles of Amendment of Certificate of Incorporation of Kendall
Square Teleconferencing, Inc. Deleting the Stock Transfer
Restrictions in Article V in Their Entirety.
3.13 By-Laws of Kendall Square Teleconferencing, Inc.
3.14 Certificate of Incorporation of American Conferencing Company, Inc.
(f/k/a AMCS Acquisition Corporation)
3.15 Certificate of Merger of American Conferencing Company, Inc. Into
AMCS Acquisition Corporation Evidencing Name Change, Filed with the
Secretary of State of Delaware.
3.16 By-Laws of American Conferencing Company, Inc.
3.17 Certificate of Incorporation of Call Points, Inc. (f/k/a Call
Points Acquisition Corporation).
3.18 Certificate of Amendment of Certificate of Incorporation of Call
Points Evidencing Name Change, Filed with the Secretary of State of
Delaware.
3.19 By-Laws of Call Points, Inc.
4.1+ Form of certificate evidencing ownership of Common Stock of the
Company.
4.2 Indenture Dated as of November 12, 1997 Among VIALOG Corporation,
Telephone Business Meetings, Inc., Conference Source International,
Inc., Kendall Square Teleconferencing, Inc., American Conferencing
Company, Inc., Communication Development Corporation, Inc., Call
Points, Inc. and State Street Bank and Trust Company (including
Forms of Series A Security and Series B Security attached to the
Indenture as Exhibits A-1 and A-2, respectively).
4.3 Unit Agreement Dated as of November 12, 1997 By and Among VIALOG
Corporation, Telephone Business Meetings, Inc., Conference Source
International, Inc., Call Points, Inc., Kendall Square
Teleconferencing, Inc., American Conferencing Company, Inc.,
Communication Development Corporation, and State Street Bank and
Trust Company (including Form of Unit Certificate attached to the
Unit Agreement as Exhibit A).
4.4 Warrant Agreement Dated as of November 12, 1997 Between VIALOG
Corporation and State Street Bank and Trust Company (including Form
of Warrant Certificate attached to the Warrant Agreement as Exhibit
A).
4.5 Security Holders' and Registration Rights Agreement Dated as of
November 12, 1997 Among VIALOG Corporation and Jefferies & Company,
Inc.
4.6 Registration Rights Agreement Dated as of November 12, 1997 By and
Among VIALOG Corporation, Kendall Square Teleconferencing, Inc.,
AMCS Acquisition Corporation, Communication Development
Corporation, Telephone Business Meetings, Inc., Conference Source
International, Inc., Call Points Acquisition Corporation and
Jefferies & Company, Inc.
5.1+ Opinion of Mirick, O'Connell, DeMallie & Lougee, LLP.
10.1 1996 Stock Plan of the Company.
10.2 Equipment Lease between CSI and Ally Capital Corporation Dated
April 1, 1996.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.3 Equipment Lease between CSI and The CIT Group/Equipment Financing,
Inc. Dated November 11, 1996.
10.4 Equipment Lease between CSI and BSFS Equipment Leasing Dated April
8, 1996.
10.5 Equipment Lease between TCC (f/k/a Teleconversant Ltd.) and Wasco
Funding Corp. Dated May 21, 1996.
10.6 Equipment Lease between TCC (f/k/a Teleconversant Ltd.) and Wasco
Funding Corp. Dated July 20, 1995.
10.7 Lease between Aetna Life Insurance Company and ACCESS, as Amended,
Dated December 6, 1994.
10.8 Lease Agreement between SPP Real Estate (Georgia II), Inc. and CSI
Dated November 1, 1996.
10.9 Amended & Restated Employment Agreement By and Between VIALOG
Corporation and Glenn D. Bolduc Dated May 6, 1997.
10.10 Employment Agreement By and Between Telephone Business Meetings,
Inc. and C. Raymond Marvin Dated as of November 12, 1997.
10.11 Amendment to Employment Agreement between the Company and C.
Raymond Marvin Effective as of December 31, 1997.
10.12 Employment Agreement By and Between CSII Acquisition Corporation
and Judy B. Crawford Dated as of November 12, 1997.
10.13 Employment Agreement By and Between Kendall Square
Teleconferencing, Inc. and Courtney Snyder Dated November 12, 1997.
10.14 Employment Agreement By and Between American Conferencing Company,
Inc. and David Lipsky Dated as of November 12, 1997.
10.15 Employment Agreement By and Between Communication Development
Corporation and Patti R. Bisbano Dated as of November 12, 1997.
10.16 Employment Agreement By and Between the Company and William Pucci
Dated as of October 1, 1996.
10.17 Employment Agreement By and Between the Company and John Dion Dated
as of November 4, 1996.
10.18 Employment Agreement By and Between the Company and Gary Vilardi
Dated as of April 1, 1997.
10.19 Employment Agreement By and Between the Company and Robert Moore
Dated as of October 20, 1997.
10.20 Employment Agreement By and Between the Company and John Williams
Dated as of October 14, 1997.
10.21* Employment Agreement By and Between Call Points, Inc. and Olen E.
Crawford Dated as of November 20, 1997.
10.22 Stockholder Agreement By and Among John J. Hassett and VIALOG
Corporation Dated as of November 6, 1997.
10.23 Form of Registration Rights Agreement between VIALOG Corporation
and certain of its stockholders specified in Schedules I and II
attached thereto.
10.24 Lease Between Tower Investment Group and Communication Development
Corp. Dated February 23, 1990, Including Subsequent Modifications
Thereto.
10.25 Lease Agreement by and Between 680-690 Kinderkamack Road and
American Conferencing Company, Inc. Dated June 1997.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.26 Lease Between Robert A. Jones and K. George Najarian, Trustees of
Old Cambridge Realty Trust and Old Kendall Square Realty Trust,
and Kendall Square Teleconferencing, Inc. (f/k/a Teleconversant,
Ltd.) Dated February 15, 1996.
10.27 Lease Between Ropir Communications and Call Points, Inc.
Commencing May 1, 1995.
10.28 Amendment to Lease Between Ropir Industries, Inc. and Call
Points, Inc.
10.29 Equipment Lease between Kendall Square Teleconferencing, Inc. and
Wasco Funding Corp. Dated July 31, 1997.
10.30 Sublease between Eisai Research Institute of Boston, Inc. and
VIALOG Corporation Dated as of August 20, 1997.
10.31** Assignment of Lease between Telephone Business Meetings, Inc. and
CMC Datacomm, Inc. dated as of March 13, 1998.
10.32*** Letter Agreement between Nolan Enterprises and Communication
Development Corporation dated March 31, 1998.
10.33*** Fourth Lease Modification & Extension Agreement by and between
Danbury Executive Tower Investment Group Limited Liability
Partnership and Communication Development Corporation dated April
1998.
10.34*** Lease between Connecticut General Life Insurance Company, on
behalf of its Separate Account R, and VIALOG Corporation dated
April 7, 1998.
11.1+ Statement regarding computation of per share earnings.
21.1 Subsidiaries of the Company.
23.1*** Consent of KPMG Peat Marwick LLP.
23.2+ Consent of Mirick, O'Connell, DeMallie & Lougee, LLP.
24 Power of Attorney (included on the signature page of this
Registration Statement).
27.1 Financial Data Schedule.
99.1* Form of Letter of Transmittal for Exchange Offer.
</TABLE>
- --------
+ To be filed by amendment.
All non-marked Exhibits listed above are incorporated by reference to the
Exhibits to the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on January 9, 1998 (File No. 333-44041).
* Incorporated by reference to the Exhibits to Amendment No. 1 to the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission on February 10, 1998 (File No. 333-44041).
** Incorporated by reference to the Exhibits to Form 10-K for the fiscal year
ended December 31, 1997 filed with the Securities and Exchange Commission
on March 31, 1998 (File No. 333-22585).
***Filed herewith.

<PAGE>

EXHIBIT 10.32
-------------

NOLAN ENTERPRISES
Real Estate Investment & Development Co.
323 Main Street
Danbury, Connecticut 06810
TEL. (203) 797-8255 FAX (203) 797-8104

March 31, 1998

Communication Development Corporation
Ms. Patricia Bisbano
30 Main Street
Suite #400
Danbury, CT 06810

RE: VIDEO CONFERENCE ROOM

Dear Patty:

This letter will serve to follow up our conversations regarding the use of
office space for a video conferencing center at Danbury Executive Tower, 30 Main
Street, Danbury, Connecticut.

As we discussed to date, we offer to lease said 794 square feet of office space.
We will make certain improvements which will consist of new carpeting, painting,
ceiling tiles and a new entry doorway.

We agree to provide this office space to Communications Development Corporation
for a video conference center for a period of one (1) year at the following
rental rates.
<TABLE>
<S> <C>
May 1, 1998 and June 1, 1998 $500.00
July 1, 1998 and August 1, 1998 $550.00
September 1, 1998 to February 28, 1999 $600.00
March 1, 1999 and April 1, 1999 $650.00
</TABLE>

Kindly acknowledge your acceptance of these terms by signing below where
indicated.

Very truly yours, DATE 3/31/98
NOLAN ENTERPRISES -------------------
ACKNOWLEDGED & ACCEPTED BY
COMMUNICATIONS DEVELOPMENT
CORPORATION

By /s/ Mark J. Nolan By /s/ Patricia Bisbano
----------------- ---------------------------
Mark J. Nolan Patricia Bisbano, President
For Danbury Executive Tower
Investment Group, LLP

<PAGE>

EXHIBIT 10.33
-------------

FOURTH LEASE MODIFICATION & EXTENSION AGREEMENT

THIS AGREEMENT made this ___________ day of April 1998, by and between
DANBURY EXECUTIVE TOWER INVESTMENT GROUP LIMITED LIABILITY PARTNERSHIP, a
Connecticut limited liability partnership (hereinafter "OWNER"), successor to
TOWER INVESTMENT GROUP, ("TIG") 323 Main Street, Danbury, Connecticut acting
herein by Mark J. Nolan, duly authorized partner (hereinafter "OWNER") and
COMMUNICATION DEVELOPMENT CORPORATION, 30 Main Street, Danbury, acting herein by
Patricia Bisbano, President, (hereinafter "TENANT").

WITNESSETH

WHEREAS, on the 23rd day of February 1990 OWNER and TENANT entered into a
certain Lease Agreement (hereinafter referred to as "AGREEMENT") for office
space at 30 Main Street, Danbury, Connecticut, for a term of Three (3) years;
and

WHEREAS, on the 1st day of January 1993 OWNER and TENANT entered into a
Lease Modification; and

WHEREAS, on the 22nd day of February 1993 OWNER and TENANT entered into a
Second Lease Modification; and

WHEREAS, on the 24th day of August 1994 OWNER and TENANT entered into a
Third Lease Modification; and

WHEREAS, OWNER and TENANT wish to further modify the Agreement in
accordance with the terms and conditions contained herein;

WITNESSETH

NOW THEREFORE, in consideration of ONE DOLLAR ($1.00) and other valuable
consideration and the terms, conditions and covenants enumerated herein, OWNER
and TENANT hereby agree to modify the Agreement as follows:

1. Paragraph 2 entitled TERM is modified as follows:

The term of the Agreement shall be extended for three (3) years so that
the new termination date shall be February 28, 2001.

2. Paragraph 3.1 entitled AMOUNT is modified as follows:

a) The basic rent for the period from March 1, 1998 through February 28,
1999 shall be $7,010.00 per month.
<PAGE>

b) The basic rent for the period from March 1, 1999 through February 28,
2000 shall be $7,126.00 per month.
c) The basic rent for the period from March 1, 2000 through February 2001
shall be $7,243.00 per month.

3. Paragraph 4.2 entitled PRORATA SHARE is modified to reflect that commencing
with TENANT'S occupancy of the additional 800 square feet the PRORATA SHARE
SHALL BE 10.16%.

4. Paragraph 4.4 entitled GROSS RENTABLE AREA of the Agreement is modified to
reflect a new GROSS RENTABLE AREA OF 5607.60 SQUARE FEET AS FOLLOWS: WHEN
TENANT TAKES POSSESSION OF ADDITIONAL SPACE, BASIC RENT SHALL INCREASE
PRORATA.

IN ALL OTHER respects the Agreement remains unmodified and the terms,
convenants and conditions contained in the Agreement are hereby reaffirmed and
restated and no term, covenant or condition shall be deemed to have been waived
by any prior action or nonaction of the OWNER.

IN WITNESS WHEREOF the parties hereto execute this Agreement in duplicate
this ___ day of ______________ 1998.

OWNER

DANBURY EXECUTIVE TOWER
INVESTMENT GROUP LIMITED LIABILITY
PARTNERSHIP

DATE 04/01/98 By: /S/ Mark J. Nolan
------------------ --------------------------------
Mark J. Nolan

TENANT

COMMUNICATION DEVELOPMENT CORPORATION

DATE 03/31/98 By: /S/ Patricia Bisbano
------------------ --------------------------------
It's President, Patricia Bisbano

<PAGE>

EXHIBIT 10.34
-------------

DATE OF LEASE EXECUTION: April 7, 1998

ARTICLE I

REFERENCE DATA

1.1 SUBJECTS REFERRED TO:

Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1:

LANDLORD: Connecticut General Life Insurance Company, on behalf of its
Separate Account R

MANAGING AGENT: Trammell Crow NE, Inc.

LANDLORD'S & MANAGING AGENT'S ADDRESS:

Trammell Crow NE, Inc.
25 First Street
Cambridge, MA 02140
Attn: Larry M. Glazer

LANDLORD'S CONSTRUCTION REPRESENTATIVE: Gretchen McGill

TENANT: VIALOG Corporation, a Massachusetts corporation

TENANT'S ADDRESS (FOR NOTICE AND BILLING):

VIALOG Corporation
35 New England Business Center
Andover, Massachusetts 01810
Attn: Teri LaPrade

TENANT'S CONSTRUCTION REPRESENTATIVE: Robert Bean

LOT: The land known and numbered as 35 New England Business
Center, Andover, Massachusetts.

BUILDING: The building located on the Lot.

PREMISES: The space located on the first (1st) floor of the Building as
shown on Exhibit A.

1
<PAGE>

RENTABLE FLOOR AREA
OF THE PREMISES: 11,907 square feet, subject to certification by Landlord

TOTAL RENTABLE FLOOR AREA OF THE BUILDING: 85,563 square feet

SCHEDULED TERM COMMENCEMENT DATE: June 15, 1998

TERM: Commencing on the Term Commencement Date and continuing for
six (6) years thereafter, plus the partial month at the
beginning of the Term, if any, unless sooner terminated as
provided herein

ANNUAL BASE RENT: $105,000.00 for the first six (6) months of the Term,
$135,000.00 for the next six (6) months of the Term, and
$178,605.00 for the remainder of the Term.

ESTIMATED ANNUAL CHARGE FOR
TENANT'S SHARE OF PREMISES EXPENSES: $5.38 per square foot of Rentable Floor
Area of the Premises.

ESTIMATED ANNUAL ELECTRICITY CHARGE: $1.00 per square foot of Rentable Floor
Area of the Premises

TENANT IMPROVEMENT ALLOWANCE: $20.00 per square foot of Rentable Floor Area of
the Premises.

PERMITTED USES: Office Uses

COMMERCIAL GENERAL LIABILITY INSURANCE:

$1,000,000 combined single limit per occurrence,
$2,000,000 annual aggregate, if aggregate is location
specific, otherwise $10,000,000 annual aggregate.

BROKER: Trammell Crow NE, Inc.

SECURITY DEPOSIT: $59,535.00

1.2 EXHIBITS.

The exhibits listed below in this section are incorporated in this Lease by
reference and are to be construed as part of this Lease:

EXHIBIT A Plan showing Premises.

2
<PAGE>

EXHIBIT B Specifications for Landlord's Work.

EXHIBIT C Rules and Regulations.

EXHIBIT D Declaration of Easements.

EXHIBIT E ERISA Parties in Interest List Separate Account R

3
<PAGE>

1.3 TABLE OF CONTENTS PAGE

ARTICLE II PREMISES AND TERM............................................. 7
2.1 DESCRIPTION OF PREMISES....................................... 7
2.2 TERM.......................................................... 8

ARTICLE III CONSTRUCTION.................................................. 8
3.1 DELIVERY OF PREMISES.......................................... 8
3.2 PREPARATION OF PREMISES FOR OCCUPANCY......................... 9
3.3 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION................. 10
3.4 CONSTRUCTION REPRESENTATIVES.................................. 10
3.5 ALTERATIONS AND ADDITIONS..................................... 10

ARTICLE IV RENT.......................................................... 11
4.1 RENT.......................................................... 11
4.2 OPERATING COSTS............................................... 12
4.3 ESTIMATED PREMISES EXPENSE PAYMENTS........................... 14
4.4 ELECTRICITY................................................... 15
4.5 CHANGE OF CALENDAR YEAR....................................... 16
4.6 PAYMENTS...................................................... 16

ARTICLE V LANDLORD'S COVENANTS.......................................... 17
5.1 LANDLORD'S COVENANTS DURING THE TERM.......................... 17
5.1.1 Building Services...................................... 17
5.1.2 Additional Building Services........................... 17
5.1.3 Repairs................................................ 17
5.1.4 Tenant Directory....................................... 17
5.1.5 Quiet Enjoyment........................................ 17
5.1.6 Notice of Release of Hazardous Materials............... 18
5.2 INTERRUPTIONS................................................. 18

ARTICLE VI TENANT'S COVENANTS............................................ 18
6.1 TENANT'S COVENANTS DURING THE TERM............................ 18
6.1.1 Tenant's Payments...................................... 18
6.1.2 Repairs and Yielding Up................................ 19
6.1.3 Occupancy and Use...................................... 19
6.1.4 Rules and Regulations.................................. 20
6.1.5 Safety Appliances...................................... 20
6.1.6 Assignment and Subletting.............................. 20
6.1.7 Indemnity.............................................. 21
6.1.8 Tenant's Insurance..................................... 22
6.1.9 Tenant's Worker's Compensation Insurance............... 22
6.1.10 Landlord's Right of Entry.............................. 23

4
<PAGE>

6.1.11 Loading................................................ 23
6.1.12 Landlord's Costs....................................... 23
6.1.13 Tenant's Property...................................... 23
6.1.14 Labor or Materialmen's Liens........................... 23
6.1.15 Changes or Additions................................... 23
6.1.16 Holdover............................................... 24
6.1.17 Security............................................... 24
6.1.18 Declaration of Easements............................... 24
ARTICLE VII DAMAGE AND DESTRUCTION; CONDEMNATION.......................... 24
7.1 FIRE OR OTHER CASUALTY........................................ 24
7.2 EMINENT DOMAIN................................................ 26

ARTICLE VIII RIGHTS OF MORTGAGEE.......................................... 28
8.1 PRIORITY OF LEASE............................................. 28
8.2 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE'S
LIABILITY................................................... 28
8.3 MORTGAGEE'S ELECTION.......................................... 29
8.4 NO PREPAYMENT OR MODIFICATION, ETC............................ 29
8.5 NO RELEASE OR TERMINATION..................................... 29
8.6 CONTINUING OFFER.............................................. 30

ARTICLE IX DEFAULT....................................................... 30
9.1 EVENTS OF DEFAULT............................................. 30
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION........................ 31
9.3 DEFAULT BY LANDLORD........................................... 33

ARTICLE X MISCELLANEOUS................................................. 33
10.1 NOTICE OF LEASE............................................... 33
10.2 NOTICES FROM ONE PARTY TO THE OTHER........................... 33
10.3 BIND AND INURE................................................ 33
10.4 NO SURRENDER.................................................. 34
10.5 NO WAIVER, ETC................................................ 34
10.6 NO ACCORD AND SATISFACTION.................................... 34
10.7 CUMULATIVE REMEDIES........................................... 35
10.8 LANDLORD'S RIGHT TO CURE...................................... 35
10.9 ESTOPPEL CERTIFICATE.......................................... 35
10.10 WAIVER OF SUBROGATION......................................... 36
10.11 ACTS OF GOD................................................... 36
10.12 BROKERAGE..................................................... 36
10.13 SUBMISSION NOT AN OFFER....................................... 36
10.14 APPLICABLE LAW AND CONSTRUCTION............................... 37
10.15 AUTHORITY OF TENANT........................................... 37
10.16 SECURITY DEPOSIT.............................................. 38
10.17 ERISA MATTERS................................................. 38

5
<PAGE>

ARTICLE II

PREMISES AND TERM

2.1 DESCRIPTION OF PREMISES.

Subject to and with the benefit of the provisions of this Lease, Landlord
hereby leases to Tenant, and Tenant leases from Landlord, the Premises.

Tenant shall have, as appurtenant to the Premises, the right to use in
common with others entitled thereto: (a) the common facilities included in the
Building or on the Lot, including the parking facility serving the Building on a
"first come, first served" basis, elevators and restrooms, and loading docks and
loading areas, subject to Landlord's rules and regulations governing the use
thereof, and (b) the building service fixtures and equipment serving the
Premises.

Landlord reserves the right from time to time, without unreasonable
interference with Tenant's use, (a) to install, repair, replace, use, maintain
and relocate for service to the Premises building service fixtures and equipment
wherever located in the Building or on the Lot and (b) to alter or relocate any
common facilities, it being understood that if any parking spaces are provided,
the same may be relocated from time to time by Landlord, provided that in all
events substitutions are substantially equivalent. Landlord also reserves the
right at all reasonable times upon reasonable advance notice (except no notice
is required in the event of an emergency) to enter upon the Premises, inspect
the same and show the same to others, and in Landlord's discretion to make
repairs, alterations or substitutions for the protection and maintenance of the
Building or any part thereof.

No more than once during the Term and not during the last twelve (12)
months of the Term, Landlord shall have the right to relocate Tenant to similar
space in the Building, provided that, Landlord gives written notice to Tenant of
such relocation stating the area to which Tenant is to be relocated and the
effective date of such relocation at least 3 months prior to such effective
date. From and after the effective date of such relocation, the Premises as
used herein shall be deemed to refer to the space to which Tenant is relocated.
At the request of Landlord, Tenant shall enter into a written amendment to this
Lease to reflect such relocation of the Premises and, if any, an adjustment in
the Rentable Floor Area of the Premises and corresponding adjustment in the
Annual Base Rent. Landlord shall reimburse Tenant for all out-of-pocket
relocation costs incurred by Tenant in relocating the Premises.

2.2 TERM.

To have and to hold for a period (the "Term") commencing on the Term
Commencement Date (as defined in Section 3.2 hereof) and continuing for the
Term, unless sooner terminated as provided herein.

6
<PAGE>

ARTICLE III

CONSTRUCTION

3.1 DELIVERY OF PREMISES.

Tenant acknowledges that Tenant has had an opportunity to inspect the
Premises. Except as set forth hereinafter, the Premises, shall be delivered to
Tenant As Is, Where Is with all faults and without representations, warranty or
guaranty of any kind by Landlord to Tenant. Landlord shall improve the Premises
in accordance with plans prepared by Landlord and approved by Tenant (the
"Plans"), such approval not to be unreasonably withheld which plans shall be
consistent with the Specifications for Landlord's Work set forth in Exhibit B
("Landlord's Work"). Landlord shall provide a copy of a Certificate of
Occupancy for the Premises to Tenant upon substantial completion of the
Premises. Landlord shall use the contractor requested by Tenant in connection
with Landlord's Work, subject to Landlord's approval of such contractor, such
approval not to be unreasonably withheld or delayed. At Landlord's cost,
Landlord shall also complete the common area corridor on the first floor of the
Building leading to the Premises in accordance with Building standard
specifications.

The proposed Plans shall be approved or disapproved by Tenant no later than
five (5) business days after their delivery to Tenant. Tenant shall be deemed
to have approved the proposed Plans if Landlord does not receive a notice from
Tenant disapproving the Plans and specifying in detail reasonable grounds for
disapproval (a "Disapproval Notice") within said five (5) business day period.
If Landlord receives a Disapproval Notice within said five (5) business day
period, Landlord shall revise the Plans to respond to any reasonable grounds for
disapproval specified therein and resubmit the Plans to Tenant. The revised
Plans shall be approved or disapproved by Tenant no later than two (2) business
days after their delivery to Tenant. Tenant shall be deemed to have approved
the revised Plans if Landlord does not receive a Disapproval Notice from Tenant
within said two (2) business day period; provided, however, that Tenant shall
not be permitted to raise any grounds for disapproval which were not raised in
the previous Disapproval Notice, unless they relate to changes in the revised
Plans from the previous Plans reviewed by Tenant. In the event that Landlord
receives a Disapproval Notice within said two (2) business day period, any
further review of the Plans shall be subject to the same process until the Plans
are approved. Time is of the essence of these provisions.

Landlord shall pay all costs to complete Landlord's Work, including
architectural and engineering fees, up to the Tenant Improvement Allowance. All
costs in excess of the Tenant Improvement Allowance shall be paid by Tenant
within ten (10) days of invoice by Landlord to Tenant therefor from time to
time.

All of Tenant's construction, installation of furnishings, and later
changes or additions shall be coordinated with any work being performed by
Landlord in such manner as to maintain harmonious labor relations and not to
damage the Building or Lot or interfere with Building operations.

7
<PAGE>

Tenant shall pay an amount equal to all costs incurred by Landlord as a
result of any change orders signed by Tenant and Landlord affecting Landlord's
Work. Amounts due and payable on account of such change orders shall be paid by
Tenant to Landlord within 30 days of Landlord's invoice to Tenant therefor.

Landlord will not approve any construction, alterations, or additions
requiring unusual expense to readapt the Premises to normal office use on lease
termination or increasing the cost of construction, insurance or taxes on the
Building or of Landlord's services called for by Section 5.1 unless Tenant first
gives assurances acceptable to Landlord that such readaptation will be made
prior to such termination without expense to Landlord and makes provisions
acceptable to Landlord for payment of such increased cost. Landlord will also
disapprove any alterations or additions requested by Tenant which will delay
completion of the Premises.

3.2 PREPARATION OF PREMISES FOR OCCUPANCY.

Landlord agrees to use reasonable efforts to have the Premises completed no
later than the Scheduled Term Commencement Date, subject to delays beyond
Landlord's reasonable control and delays caused by Tenant. The Term
Commencement Date shall be the earlier of (a) the date on which Landlord
substantially completes Landlord's Work as reasonably determined by Landlord,
provided that if Landlord is delayed in completing Landlord's Work as a result
of a delay caused by Tenant, including, without limitation, Tenant's failure to
comply with the provisions of Section 3.1 hereof or a change order requested by
Tenant, the Premises shall be deemed to be substantially complete on the date on
which Landlord would have substantially completed the Premises, but for such
delay caused by Tenant, as reasonably determined by Landlord, or (b) Tenant's
occupancy of the Premises.

3.3 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION.

All construction work required or permitted by this Lease, whether by
Landlord or by Tenant, shall be done in a good and workmanlike manner and in
compliance with all applicable laws and all lawful ordinances, regulations and
orders of governmental authority and insurers of the Building and the Lot.
Either party may inspect the work of the other at reasonable times and promptly
shall give notice of observed defects. Landlord's obligations under Sections
3.1 and 3.2 shall be deemed to have been performed when Tenant commences to
occupy any portion of the Premises for the Permitted Uses except for items which
are incomplete or do not conform with the requirements of Section 3.1 and as to
which Tenant shall in either case have given written notice to Landlord within
three (3) weeks after such commencement; provided, however, that Landlord shall
correct latent defects in the Premises if Tenant provides written notice to
Landlord thereof within twelve (12) months after such commencement. If Tenant
shall not have commenced to occupy the Premises for the Permitted Uses within 30
days after the Term Commencement Date, a certificate of completion by a licensed
architect or registered engineer shall be conclusive evidence that Landlord has
performed all such obligations except for items stated in such certificate to be
incomplete or not in conformity with such requirements.

8
<PAGE>

3.4 CONSTRUCTION REPRESENTATIVES.

Each party authorizes the other to rely in connection with their respective
rights and obligations under this Article III upon approval and other actions on
the party's behalf by any person designated as its construction representative
in Section 1.1 hereof or by any other person designated by such party as its
construction representative by notice to the party relying.

3.5 ALTERATIONS AND ADDITIONS.

This Section 3.5 shall apply before and during the Term. Tenant shall not
make any alterations and additions to the Premises except in accordance with
plans and specifications first approved by Landlord. In no event shall any
alterations or additions be considered or approved by Landlord which (a) involve
or might affect any structural or exterior element of the Building or Building
mechanical systems, including the common facilities of the Building, or (b) will
require unusual expense to readapt the Premises to normal office use on Lease
termination or increase the cost of construction or of insurance or taxes on the
Building or the Lot. All alterations and additions shall become a part of the
Premises, unless and until Landlord, at its option, shall specify the same for
removal pursuant to Section 6.1.2. All of Tenant's alterations and additions
and installation and delivery of telephone systems, furnishings, and equipment
shall be coordinated with any work being performed by Landlord and shall be
performed in such manner, and by such persons as shall maintain harmonious labor
relations and not cause any damage to the Building or interference with Building
construction or operation and, except for installation of furnishings, equipment
and telephone systems, and except as otherwise expressly set forth herein, shall
be performed by general contractors first approved by Landlord. Before
commencing any work Tenant shall: secure all licenses and permits necessary
therefor; deliver to Landlord a statement of the names of all its contractors
and subcontractors (the identity of which must have been previously approved by
Landlord as hereinabove contemplated) and the estimated cost of all labor and
material to be furnished by them; and cause each contractor to carry (i)
workmen's compensation insurance in statutory amounts covering all the
contractor's and subcontractor's employees and (ii) comprehensive public
liability insurance with such limits as Landlord may reasonably require, but in
no event less than a combined single limit of $1,500,000 (all such insurance to
be written in companies approved by Landlord and insuring Landlord and Tenant as
well as the contractors), and to deliver to Landlord certificates of all such
insurance. Tenant agrees to pay promptly when due, and to defend and indemnify
Landlord from and against, the entire cost of any work done on the Premises by
Tenant, its agents, employees or independent contractors, and not to cause or
permit any liens for labor or materials performed or furnished in connection
therewith to attach to the Building or the Lot and immediately to discharge any
such liens which may so attach. Tenant shall pay within fourteen (14) days
after being billed therefor by Landlord, as additional rent, one hundred percent
(100%) of any increase in real estate taxes on the Premises not otherwise billed
to Tenant which shall, at any time after the commencement of the Term, result
from any alteration, addition or improvement to the Premises made by or on
behalf of Tenant.

9
<PAGE>

ARTICLE IV

RENT

4.1 RENT.

Tenant agrees to pay rent to Landlord without any offset or reduction
whatever (except as made in accordance with the express provisions of this
Lease), equal to 1/12th of the Annual Base Rent in equal monthly installments in
advance on the first day of each calendar month included in the Term after the
Term Commencement Date; and for any portion of a calendar month at the beginning
or end of the Term, at the proportionate rate payable for such portion, in
advance.

4.2 OPERATING COSTS.

A. Tenant shall pay to Landlord, as additional rent, Tenant's Share of
Premises Expenses (as defined below), if any, on or before the 30th day
following receipt by Tenant of Landlord's Statement (as defined below). As soon
as practicable after the end of each calendar year ending during the Term and
after Lease termination, Landlord shall render a statement ("Landlord's
Statement") in reasonable detail and according to usual accounting practices
certified by Landlord and showing for the preceding calendar year or fraction
thereof, as the case may be, Landlord's Operating Costs,

EXCLUDING the interest and amortization on mortgages for the Building and
the Lot or leasehold interests therein; the cost of special services rendered to
tenants (including Tenant) for which a special charge is made; brokers'
commissions and finders' fees, costs incurred by Landlord to the extent they are
reimbursed by insurance proceeds or under warranties, and costs incurred by
Landlord in connection with disputes between Landlord and other tenants, l

BUT INCLUDING, without limitation: real estate taxes (as defined below) on
the Building and the Lot; installments and interest on assessments for public
betterments or public improvements; expenses of any proceedings for abatement of
taxes and assessments with respect to any fiscal year or fraction of a fiscal
year; premiums for insurance (including, without limitation, fire, casualty and
liability insurance); fees payable to third parties for financial audits of
Landlord's Operating Costs; compensation and all fringe benefits, worker's
compensation insurance premiums and payroll taxes paid by Landlord to, for or
with respect to all persons engaged in the operating, maintaining, or cleaning
of the Building and the Lot, including, without limitation, a superintendent
available to the Building; all electricity charges related to the common areas
of the Building and heat pumps servicing the Building, and all utility charges
incurred in the operation and maintenance of the Premises, the Building and the
Lot not billed directly to tenants by Landlord or by the utility company (it
being understood that each tenant shall pay electricity charges for lights and
outlet consumption in such tenant's premises separately); all costs of cleaning
the common areas of the Building and all windows on the exterior of the
Building; all costs of maintenance, repairing, managing and operating the
Building (including without limitation, all structural components and common
facilities of the

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Building); payments to independent contractors under service
contracts for cleaning the common areas and windows of the Building as aforesaid
and for operating, managing, maintaining and repairing the Building and the Lot
(which payments may be to affiliates of Landlord or Managing Agent provided the
same are at reasonable rates consistent with the type of occupancy) and payments
for the Managing Agent space for a building office on the ground floor or above;
management fees not to exceed the rate of five percent (5%) of the aggregate
fixed rent for the Building; all charges to Landlord allocable to the Building
and the Lot for services performed by the manager of the office park in which
the Building and the Lot are located or costs incurred with respect to such
office park and, to the extent Landlord incurs additional charges applicable to
the Building and another building or buildings located in the office park, the
Building's pro rata share (as reasonably determined by Landlord) of such
charges; and all other reasonable and necessary expenses paid in connection with
the cleaning, operating, managing, maintaining and repairing of the Building and
the Lot, and properly chargeable against income, it being agreed that if
Landlord installs a new or replacement capital item for the purpose of reducing
Landlord's Operating Costs or which is required by law or the purpose of which
is to maintain the Building as a first class office building, the cost thereof
as reasonably amortized by Landlord, with interest at the prime commercial rate
in effect from time to time at Bank of Boston in Boston, Massachusetts on the
unamortized amount, shall be included in Landlord's Operating Costs.

The term "real estate taxes" as used above shall mean all taxes of every
kind and nature assessed by any governmental authority on the Lot, Building and
improvements, which Landlord shall become obligated to pay because of or in
connection with the ownership, leasing and operation of the Lot, Building and
improvements, subject to the following: There shall be excluded from such taxes
all income taxes, excess profits taxes, excise taxes, franchise taxes, and
estate, succession, inheritance and transfer taxes, provided, however, that if
at any time during the Term the present system of ad valorem taxation of real
property shall be changed so that in lieu of the whole or any part of the ad
valorem tax on real property, there shall be assessed on Landlord a capital levy
or other tax on the gross rents received with respect to the Lot, Building and
improvements, or both, or a federal, state, county, municipal, or other local
income, franchise, excise or similar tax, assessment, levy or charge (distinct
from any now in effect) measured by or based, in whole or in part, upon any such
gross rents, then any and all of such taxes, assessments, levies or charges, to
the extent so measured or based, shall be deemed to be included within the term
"real estate taxes."

B. "Premises Expenses" shall mean one hundred (100%) percent of Landlord's
Operating Costs attributable to the Building and the Lot; provided, however,
that in any calendar year in which the average annual occupancy of the Building
is less than 95%, Landlord's Operating Costs as defined herein shall also
include such additional costs as would reasonably have been incurred by Landlord
with respect to the operating, administration, cleaning, repair, maintenance and
management of the Property with 95% average annual occupancy.

C. With respect to each calendar year falling within the Term, Tenant
shall pay to Landlord, as additional rent, an amount equal to the product of (i)
Landlord's Operating Costs for such calendar year, and (ii) a fraction, the
numerator of which shall be the Rentable Floor Area of

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the Premises and the denominator of which shall be the Total Rentable Floor Area
of the Building (such amount being referred to as "Tenant's Share of Premises
Expenses"), or with respect to any portion of any calendar year falling within
the Term, a pro rata share thereof for such portion.

D. Notwithstanding any other provision of this Section 4.2, if the Term
expires or is terminated as of a date other than the last day of a calendar
year, then for such fraction of a calendar year at the end of the Term, Tenant's
last payment to Landlord under this Section 4.2 shall be made on the basis of
Landlord's best estimate of the items otherwise includable in Landlord's
Statement and shall be made on or before the later of (a) 10 days after Landlord
delivers such estimate to Tenant or (b) the last day of the Term, with an
appropriate payment or refund to be made upon submission of Landlord's
Statement.

E. Landlord agrees to keep books and records with respect to Premises
Expenses. Tenant, its authorized agent or representative, or a public
accounting firm selected by Tenant, shall have the right upon advance written
notice to Landlord to inspect those portions of the books of Landlord relating
to Premises Expenses at the offices of Landlord's Managing Agent during business
hours for the purpose of verifying information set forth in Landlord's
Statements. Such inspection shall be at Tenant's sole cost, unless an audit
conclusively determines that Landlord has overstated Landlord's Operating Costs
in Landlord's Statement for the current year by over five percent (5%), in which
event Landlord shall reimburse Tenant for the reasonable cost of such audit. In
any event, errors disclosed shall be properly adjusted, and an appropriate
adjustment shall be made to the payment of Tenant's Share of Premises Expense
next coming due, or a payment made by Landlord to Tenant (or Tenant to Landlord
as the case may be) in the amount of such adjustment if the Term has ended.

4.3 ESTIMATED PREMISES EXPENSE PAYMENTS.

With respect to each calendar year or fraction thereof during the Term,
Tenant shall pay to Landlord, as additional rent, on the first day of each month
of such calendar year and each ensuing calendar year thereafter, estimated
monthly Premises Expense payments (hereinafter "Estimated Monthly Premises
Expense Payments") equal to 1/12th of Landlord's estimate of Tenant's Share of
Premises Expenses for the respective calendar year (which amount shall initially
be based upon the Estimated Annual Charge for Tenant's Share of Premises
Expenses set forth in Section 1.1 hereof, as the same may be adjusted by
Landlord in accordance herewith), with an appropriate additional payment (or
credit by Landlord against Tenant's future payments of Tenant's Share of
Premises Expenses) to be made within 30 days after Landlord's Statement is
delivered to Tenant. Landlord may adjust such Estimated Monthly Premises
Expense Payments from time to time and at any time during a calendar year, and
Tenant shall pay, as additional rent, on the first day of each month following
receipt of Landlord's notice thereof, the adjusted Estimated Monthly Premises
Expense Payment.

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4.4 ELECTRICITY.

Tenant will be billed for electricity for Tenant's lights and outlet
consumption on a monthly basis based on an annual estimate of $1.00 per rentable
square foot. Should the actual average expense to Landlord per square foot for
Tenant's electricity be different, an additional charge or a credit will be made
at the end of each year's occupancy to be paid with or credited against the next
monthly charge for Tenant's electricity. Notwithstanding the foregoing,
Landlord reserves the right to assess Tenant's charge for electricity based on
an engineer's survey of Tenant's electrical usage conducted from time to time or
on sub-metering of all or part of the Premises or to separately meter the
Premises in order that Tenant be billed directly for such charges by the
provider of electricity. Such charges for Tenant's electricity shall be paid by
Tenant as additional rent, either to Landlord at the same time and in the same
manner as payments of Annual Base Rent or, if payable directly to the provider
of electricity, directly to such provider before the charges therefor are due.
Notwithstanding the foregoing, subject to Section 6.1.15 hereof, Tenant shall
have the right to install a submeter (or to direct Landlord to install such
submeter as part of Landlord's Work), at Tenant's sole cost and expense, to
measure all of Tenant's consumption of electricity for Tenant's lights and
outlet consumption in the Premises, in which event Tenant shall pay electricity
for Tenant's lights and outlet consumption on a monthly basis based upon
Tenant's actual usage as measured by such submeter.

Tenant covenants and agrees that its use of electric current shall not
exceed 3.0 watts per square foot of usable floor area and that its total
connected lighting load will not exceed the maximum load from time to time
permitted by applicable governmental regulations. In the event Tenant
introduces into the Premises personnel or equipment which overloads the capacity
of the Building system or in any other way interferes with the system's ability
to perform adequately its proper functions, supplementary systems including
check meters may, if and as needed, at Landlord's option, be provided by
Landlord, at Tenant's expense. Landlord shall not in any way be liable or
responsible to Tenant for any loss or damage or expense which Tenant may sustain
or incur if, during the Term of this Lease, either the quantity or character of
electric current is changed or electric current is no longer available or
suitable for Tenant's requirements due to a factor or cause beyond Landlord's
control.

Landlord reserves the exclusive right to provide electric and other utility
service to the Building. Tenant may request permission from Landlord (which
consent may be withheld in its sole discretion) to arrange electric and other
utility service exclusively serving the Premises. Should such permission be
granted, however, such service shall be installed only in such locations and in
such manner as shall be specifically approved by Landlord in its sole
discretion, Tenant shall be responsible for restoration of any damage caused by
such installation and Tenant shall be responsible for removal of such
installations at the termination of this Lease. Landlord may limit Tenant's
choice of electrical or other utility providers in order to avoid proliferation
of such services to the Building or for any other reason. In no event, however,
shall Landlord be responsible for any damages or inconvenience caused by
interruption in or poor quality of electricity or other utility services
provided to the Building or the Premises unless such damages are caused by the
negligence of Landlord, its agents or employees.

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4.5 CHANGE OF CALENDAR YEAR.

Landlord shall have the right from time to time to change the periods of
accounting under Section 4.2 to any annual period other than a calendar year
(excepting, however, during the current calendar year), and upon any such change
all items referred to in this Section 4.4 shall be appropriately apportioned.
In all Landlord's Statements rendered under this Section 4.4, amounts for
periods partially within and partially without the accounting periods shall be
appropriately apportioned, and any items which are not determinable at the time
of a Landlord's Statement shall be included therein on the basis of Landlord's
estimate, and with respect thereto Landlord shall render promptly after
determination a supplemental Landlord's Statement, and appropriate adjustment
shall be made according thereto. All Landlord's Statements shall be prepared on
an accrual basis of accounting.

4.6 PAYMENTS.

All payments of Annual Base Rent and additional rent shall be made to
Managing Agent, or to such other person as Landlord may from time to time
designate. If any installment of Annual Base Rent or additional rent or on
account of leasehold improvements is paid more than 10 days after the due date
thereof, at Landlord's election, it shall bear interest at a rate equal to the
average prime commercial rate from time to time established by the Bank of
Boston in Boston, Massachusetts plus 4% per annum from such due date, which
interest shall be immediately due and payable as further additional rent.

ARTICLE V

LANDLORD'S COVENANTS

5.1 LANDLORD'S COVENANTS DURING THE TERM.

Landlord covenants during the Term:

5.1.1 Building Services - To furnish during normal working hours heat, air-
conditioning, elevator service, and hot and chilled water service during the
Term, and to furnish cleaning service, snow removal, lighting of parking areas
and maintenance of Building utility systems. Landlord shall also take
reasonable security precautions in managing the Building. "Normal working
hours" shall mean the hours of 8:00 A.M. through 6:00 P.M. Monday through Friday
and the hours of 8:00 A.M. through 1:00 P.M. on Saturdays, and no hours on legal
holidays and Sundays; provided, however, that Tenant shall have access to the
Building 24 hours a day, 365 days a year, by means of a key or other access
device to the main lobby of the Building to be provided to Tenant by Landlord.
Tenant shall pay when due all amounts and charges for such services during hours
other than normal working hours and shall indemnify and hold harmless Landlord
from and against any and all claims, liabilities, damages, losses, costs and
expenses (including reasonable attorneys' fees) in connection therewith.
Landlord is not and shall not be

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required to furnish to Tenant or any other occupant of the Premises telephone or
other communication service.

5.1.2 Additional Building Services - To furnish, through Landlord's
employees or independent contractors, reasonable additional Building operation
services upon reasonable advance request of Tenant at equitable rates from time
to time established by Landlord to be paid by Tenant;

5.1.3 Repairs - Except as otherwise provided in Article VII, to make such
repairs to the roof, exterior walls, floor slabs, other structural components
and common facilities of the Building as may be necessary to keep them in
serviceable condition; and

5.1.4 Tenant Directory - To include Tenant's name on the Tenant directory
maintained by Landlord in the main lobby of the Building.

5.1.5 Quiet Enjoyment - That Landlord has the right to make this Lease and
that Tenant on paying the rent and performing its obligations hereunder shall
peacefully and quietly have, hold and enjoy the Premises throughout the Term
without any manner of hindrance or molestation from Landlord or anyone claiming
under Landlord, subject however to all the terms and provisions hereof.

5.1.6 Notice of Release of Hazardous Materials - To provide written
notice to Tenant if Landlord receives written notice that there has been a
release or a threat of release of Hazardous Materials on the Lot or the
Building.

5.2 INTERRUPTIONS.

Landlord shall not be liable to Tenant for any compensation or reduction of
rent by reason of inconvenience or annoyance or for loss of business arising
from power losses or shortages or from the necessity of Landlord's entering the
Premises for any of the purposes in this Lease authorized, or for repairing the
Premises or any portion of the Building or the Lot. In case Landlord is
prevented or delayed from making any repairs, alterations or improvements, or
furnishing any service or performing any other covenant or duty to be performed
on Landlord's part, by reason of any cause beyond Landlord's reasonable control,
Landlord shall not be liable to Tenant therefor, nor, except as expressly
otherwise provided in Article VII, shall Tenant be entitled to any abatement or
reduction of rent by reason thereof, nor shall the same give rise to a claim in
Tenant's favor that such failure constitutes actual or constructive total or
partial, eviction from the Premises.

Landlord reserves the right to stop any service or utility system when
necessary by reason of accident or emergency or until necessary repairs have
been completed. Except in case of emergency repairs, Landlord will give Tenant
reasonable advance notice of any contemplated stoppage and will use reasonable
efforts to avoid unnecessary inconvenience to Tenant by reason thereof.

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Landlord also reserves the right to institute such policies, programs and
measures as may be necessary, required or expedient for the conservation or
preservation of energy or energy services or as may be necessary or required to
comply with applicable codes, rules, regulations or standards.

ARTICLE VI

TENANT'S COVENANTS

6.1 TENANT'S COVENANTS DURING THE TERM.

Tenant covenants during the Term and such further time as Tenant occupies
any part of the Premises:

6.1.1 Tenant's Payments - To pay when due (a) all Annual Base Rent and
additional rent, (b) all taxes which may be imposed on Tenant's personal
property in the Premises (including, without limitation, Tenant's fixtures and
equipment) regardless to whomever assessed, (c) all charges by public utilities
for electricity, telephone (including service inspections therefor) and other
services rendered to the Premises not otherwise required hereunder to be
furnished by Landlord without charge and not consumed in connection with any
services required to be furnished by Landlord without charge, and (d) as
additional rent, all charges to Landlord for services rendered pursuant to
Section 5.1.2 hereof.

6.1.2 Repairs and Yielding Up - Except as otherwise provided in Article VII
and Section 5.1.3, to keep the Premises in good order, repair and condition,
reasonable wear only excepted; and at the expiration or termination of this
Lease peaceably to yield up the Premises and all alterations and additions
therein in such order, repair and condition, first removing all goods and
effects of Tenant and any alterations and additions, the removal of which
alterations and additions is required by agreement or specified to be removed by
Landlord by notice to Tenant, and repairing all damage caused by such removal
and restoring the Premises and leaving them clean and neat.

6.1.3 Occupancy and Use - Continuously from the Commencement Date, to use
and occupy the Premises only for the Permitted Uses; not to injure or deface the
Building or the Lot; to keep the Premises clean and in a neat and orderly
condition; and not to permit in the Building any use thereof which is improper,
offensive, contrary to law or ordinances, or liable to create a nuisance or to
invalidate or increase the premiums for any insurance on the Building or its
contents or liable to render necessary any alteration or addition to the
Building; not to dump, flush, or in any way introduce any hazardous substances
or any other toxic substances into the sewage or other waste disposal system
serving the Premises, not to generate, store or dispose of hazardous substances
in or on the Premises, or the Lot or dispose of hazardous substances from the
Premises to any other location without the prior written consent of Landlord and
then only in compliance with the Resource Conservation and Recovery Act of 1976,
as amended, 42 U.S.C. (S)6901 et seq., and all other applicable laws, ordinances
and regulations; to notify Landlord of

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any incident which would require the filing of a notice under applicable
federal, state, or local law; not to store or dispose of hazardous substances on
the Premises without first submitting to Landlord a list of all such hazardous
substances and all permits required therefor and thereafter providing to
Landlord on an annual basis Tenant's certification that all such permits have
been renewed with copies of such renewed permits; and to comply with the orders
and regulations of all governmental authorities with respect to zoning,
building, fire, health and other codes, regulations, ordinances or laws
applicable to the Premises. "Hazardous substances" as used in this paragraph
shall mean "hazardous substances" as defined in the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S)9601
and regulations adopted pursuant to said Act, and "hazardous substances",
"hazardous wastes", "toxic substances", "toxic wastes" and terms of similar
import under other applicable federal and state statutes and regulations adopted
pursuant thereto.

6.1.4 Rules and Regulations - To comply with the Rules and Regulations set
forth in Exhibit C and all other reasonable Rules and Regulations hereafter made
by Landlord, of which Tenant has been given notice, for the care and use of the
Building and the Lot and their facilities and approaches, it being understood
that Landlord shall not be liable to Tenant for the failure of other tenants of
the Building to conform to such Rules and Regulations. Landlord shall enforce
the Rules and Regulations in a nondiscriminatory manner.

6.1.5 Safety Appliances - To keep the Premises equipped with all safety
appliances required by law or ordinance or any other regulation of any public
authority because of any use made by Tenant and to procure all licenses and
permits so required because of such use and, if requested by Landlord, to do any
work so required because of such use, it being understood that the foregoing
provisions shall not be construed to broaden in any way Tenant's Permitted Uses.

6.1.6 Assignment and Subletting.

A. Not without the prior written consent of Landlord to assign,
mortgage, pledge, encumber, sell or transfer this Lease, in whole or in part, to
make any sublease, or to permit occupancy of the Premises or any part thereof by
anyone other than Tenant, voluntarily or by operation of law (it being
understood that in no event shall Landlord consent to any such assignment,
sublease or occupancy if the same is on terms more favorable to the successor
occupant than to the then occupant); as additional rent, to reimburse Landlord
promptly for reasonable legal and other expenses incurred by Landlord in
connection with any request by Tenant for consent to assignment or subletting;
no assignment or subletting shall affect the continuing primary liability of
Tenant (which, following assignment, shall be joint and several with the
assignee); no consent to any of the foregoing in a specific instance shall
operate as a waiver in any subsequent instance. Landlord's consent to any
proposed assignment or subletting is required both as to the terms and
conditions thereof, and as to the creditworthiness of the proposed assignee or
subtenant and the consistency of the proposed assignee's or subtenant's business
with other uses and tenants in the Building. In the event that any assignee or
subtenant pays to Tenant any amounts in excess of the Annual Base Rent and
additional rent then payable hereunder, or pro rata portion thereof on a square
footage basis for any portion of the Premises, Tenant shall promptly pay 50% of
said excess to Landlord as and when received by Tenant. If

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Tenant requests Landlord's consent to assign this Lease or sublet more than 25%
of the Premises, Landlord shall have the option, exercisable by written notice
to Tenant given within 10 days after receipt of such request, to terminate this
Lease as of a date specified in such notice which shall be not less than 30 or
more than 60 days after the date of such notice.

If, at any time during the Term of this Lease, Tenant is:

(i) a corporation or a trust (whether or not having shares of
beneficial interest) and there shall occur a change in a majority of the persons
then having power to participate in the election or appointment of the
directors, trustees or other persons exercising like functions and managing the
affairs of Tenant; or

(ii) a partnership or association or otherwise not a natural person
(and is not a corporation or a trust) and there shall occur a change in a
majority of the persons who then are members of such partnership or association
or who comprise Tenant;

Tenant shall so notify Landlord and Landlord may terminate this Lease by notice
to Tenant given within ninety (90) days thereafter if, in Landlord's reasonable
judgment, the credit of Tenant is thereby materially impaired. This paragraph
shall not apply if (1) the initial Tenant named herein is a corporation and the
outstanding voting stock thereof is listed on a recognized securities exchange
or becomes listed on a recognized Securities Exchange, or (2) if the ownership
of the stock thereof is altered through the exercise of stock options or stock
warrants in existence as of the date of this Lease.

B. The foregoing provisions of subparagraph (A) of this Section 6.1.6
shall not be deemed violated by an assignment of this Lease to any parent,
wholly-owned subsidiary of such parent corporation or affiliate of Tenant
("affiliate of Tenant" shall mean any corporation which directly controls,
beneficially owns or is under common control with Tenant, or which is directly
controlled or beneficially owned by Tenant); provided however, that no such
assignment shall be binding upon Landlord unless the assignee shall execute,
acknowledge and deliver to Landlord an agreement in recordable form, whereby the
assignee agrees unconditionally to be personally bound by and to perform all the
terms, covenants and conditions of this Lease on Tenant's part to be observed
and performed, whether or not accruing prior to or after the date of such
assignment and whether or not relating to matters arising prior to such
assignment and further agrees that, notwithstanding such assignment, the
provisions of this Section 6.1.6 shall continue to be binding upon such assignee
with respect to all future assignments.

C. Not to assign this Lease to a party which results from a
consolidation, merger, acquisition or sale of substantially all of the assets
and stock of Tenant without obtaining, on each occasion, the prior written
consent of Landlord.

6.1.7 Indemnity - To defend, with counsel approved by Landlord, all
actions against Landlord, any partner, trustee, stockholder, officer, director,
employee or beneficiary of Landlord, holders of mortgages secured by the
Premises or the Building and Lot and any other party having an interest in the
Premises ("Indemnified Parties") with respect to, and to pay,

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protect, indemnify and save harmless, to the extent permitted by law, all
Indemnified Parties from and against, any and all liabilities, losses damages,
costs, expenses (including reasonable attorneys' fees and expenses), causes of
action, suits, claims, demands or judgments of any nature arising from (i)
injury to or death of any person, or damage to or loss of property, on the
Premises or on adjoining sidewalks, streets or ways, or connected with the use,
condition or occupancy of any of the foregoing unless caused by the negligence
of Landlord or its servants or agents, (ii) violation of this Lease, or (iii)
any act, fault, omission, or other misconduct of Tenant or its agents,
employees, contractors, licensees, sublessees or invitees.

6.1.8 Tenant's Insurance - To maintain (a) all risk property insurance in
amounts sufficient to fully cover Tenant's improvements and all property in the
Premises which is not owned by Landlord and (b) public liability insurance on
the Premises, with Landlord named as an additional insured, indemnifying
Landlord and Tenant against all claims and demands for (i) injury to or death of
any person or damage to or loss of property, on the Premises or adjoining walks,
streets or ways, or connected with the use, condition or occupancy of any of the
foregoing of unless caused by the negligence of Landlord or its servants or
agents, (ii) violation of this Lease, or (iii) any act, fault or omission, or
other misconduct of Tenant or its agents, employees, contractors, licensees,
sublessees or invitees, in amounts which shall, at the beginning of the Term, be
at least equal to the limits set forth in Section 1.1, and from time to time
during the Term, shall be for such higher limits, if any, as are customarily
carried in the area in which the Premises are located on property similar to the
Premises and used for similar purposes, and shall be written on the "Occurrence
Basis", and to furnish Landlord with certificates thereof. Such insurance shall
be effected under valid and enforceable policies with insurers authorized to do
business in Massachusetts as stock or mutual companies that are rated in the
current edition of Best's Key Rating Guide, Property and Casualty as A and as
----------------------------------------------
Class VII or higher. Such policies shall name Landlord and Tenant as the
insureds as their respective interests may appear. Not later than the first to
occur of (a) the Commencement Date or (b) the commencement of any activities by
Tenant in or about the Premises and thereafter not less than 30 days prior to
the expiration dates of the expiring policies theretofore furnished pursuant to
this Section 6.1.8, Tenant shall deliver to Landlord certificates of insurance
issued by the insurers evidencing all such policies in form satisfactory to
Landlord, accompanied by evidence satisfactory to Landlord of payment of the
first installment of the premiums. Each such policy shall provide that it may
not be cancelled and that its form, terms or conditions may not be changed
without at least 30 days prior written notice to each insured named therein.

6.1.9 Tenant's Worker's Compensation Insurance - To keep all of Tenant's
employees working in the Premises covered by worker's compensation insurance in
statutory amounts and to furnish Landlord with certificates thereof.

6.1.10 Landlord's Right of Entry - To permit Landlord and Landlord's agents
entry: to examine the Premises at reasonable times and, if Landlord shall so
elect, to make repairs or replacements; to remove, at Tenant's expense, any
changes, additions, signs, curtains, blinds, shades, awnings, aerials,
flagpoles, or the like not consented to in writing; and to show the Premises to
prospective tenants during the 12 months preceding expiration of the Term and to
prospective purchasers and mortgagees at all reasonable times.

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6.1.11 Loading - Not to place Tenant's Property, as defined in Section
6.1.13, upon the Premises so as to exceed a rate of 80 pounds of live load per
square foot and not to move any safe, vault or other heavy equipment in, about
or out of the Premises except in such manner as Landlord shall in each instance
approve; Tenant's business machines and mechanical equipment which cause
vibration or noise that may be transmitted to the Building structure shall be
placed and maintained by Tenant in settings of cork, rubber, spring, or other
types of vibration eliminators sufficient to eliminate such vibration or noise.

6.1.12 Landlord's Costs - In case Landlord shall be made party to any
litigation commenced by or against Tenant or by or against any parties in
possession of the Premises or any part thereof claiming under Tenant, to pay, as
additional rent, all costs including, without implied limitation, reasonable
counsel fees incurred by or imposed upon Landlord in connection with such
litigation and, as additional rent, also to pay all such costs and fees incurred
by Landlord in connection with the successful enforcement by Landlord of any
obligations of Tenant under this Lease.

6.1.13 Tenant's Property - All the furnishings, fixtures, equipment,
effects and property of every kind, nature and description of Tenant and of all
persons claiming by, through or under Tenant which, during the continuance of
this Lease or any occupancy of the Premises by Tenant or anyone claiming under
Tenant, may be on the Premises or elsewhere in the Building or on the Lot shall
be at the sole risk and hazard of Tenant, and if the whole or any part thereof
shall be destroyed or damaged by fire, water or otherwise, or by the leakage or
bursting of water pipes, steam pipes, or other pipes, by theft, or from any
other cause, no part of said loss or damage is to be charged to or to be borne
by Landlord unless due to the gross negligence of Landlord.

6.1.14 Labor or Materialmen's Liens - To pay promptly when due the entire
cost of any work done on the Premises by Tenant, its agents, employees, or
independent contractors; not to cause or permit any liens for labor or materials
performed or furnished in connection therewith to attach to the Premises; and
immediately to discharge any such liens which may so attach.

6.1.15 Changes or Additions - Not to make any changes or additions to the
Premises without Landlord's prior written consent and only in accordance with
Article III hereto, provided that Tenant shall reimburse Landlord for all costs
incurred by Landlord in reviewing Tenant's proposed changes or additions, and
provided further that, in order to protect the functional integrity of the
Building, all such changes and additions shall be performed by contractors
selected from a list of approved contractors prepared by Landlord from time to
time.

6.1.16 Holdover - To pay to Landlord the greater of twice (a) the then fair
market rent as conclusively determined by Landlord or (b) the total of the
Annual Base Rent and additional rent then applicable for each month or portion
thereof Tenant shall retain possession of the Premises or any part thereof after
the termination of this Lease, whether by lapse of time or otherwise, and also
to pay all damages sustained by Landlord on account thereof; the provisions of
this subsection shall not operate as a waiver by Landlord of the right of re-
entry provided in this Lease; at the option of Landlord exercised by a written
notice given to Tenant while such holding

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over continues, such holding over shall constitute an extension of this Lease
for a period of one year.

6.1.17 Security - To indemnify, and save Landlord harmless from any claim
for injury to person or damage to property asserted by any personnel, employee,
guest, invitee or agent of Tenant which is suffered or occurs in or about the
Premises or in or about the Building or the Lot by reason of the act of any
intruder or any other person in or about the Premises or the Building.

6.1.18 Declaration of Easements - To comply with the Declaration of
Easements attached hereto as Exhibit D; it being understood that Landlord shall
not be liable to Tenant for the failure of other tenants of the Building or
other premises to conform to such Declaration of Easements.

ARTICLE VII

DAMAGE AND DESTRUCTION; CONDEMNATION

7.1 FIRE OR OTHER CASUALTY

7.1.1 Subject to the provisions of Section 7.1.2 hereof, in the event
during the Term hereof the Premises shall be partially damaged (as distinguished
from "substantially damaged" as such term is hereinafter defined) by fire,
explosion, casualty or any other occurrence covered or as may be required to be
covered, as herein provided, by Landlord's insurance or by such casualty plus
required demolition, or by action taken to reduce the impact of any such event,
Landlord shall forthwith proceed to repair such damage and restore the Premises,
or so much thereof as was originally constructed or delivered by Landlord to
substantially its condition at the time of such fire, explosion, casualty or
occurrence, provided that Landlord shall not be obligated to expend for such
repair an amount in excess of the insurance proceeds recovered as a result of
such damage and, further provided that Tenant is not then in default of any of
its obligations under this Lease beyond any applicable cure period. Landlord
shall not be responsible for any delay which may result from any cause beyond
Landlord's reasonable control.

7.1.2 If, however, (i) the Premises should be damaged or destroyed (a) by
fire or other casualty (1) to the extent of 25% or more of the cost of
replacement, or (2) so that 25% or more of the principal area contained in the
Premises shall be rendered untenantable, or (b) by any casualty other than those
covered by insurance policies required to be maintained by Landlord under this
Lease (hereinafter "substantially damaged"), or (ii) the Premises shall be
damaged in whole or in part during the last 2 years of the Term, or (iii) there
shall be damage to the Premises of a character as cannot reasonably be expected
to be repaired within 12 months from the date of casualty, or (iv) such
restoration involves the demolition of or repair of damage to 25% percent or
more of the Premises, or (v) applicable law requires the demolition of the
Building or forbids the rebuilding of the damaged portion of the Building, or
(vi) such restoration requires repairs in an amount in excess of the insurance
proceeds recovered or recoverable, or (vii) Landlord's mortgagee shall require
that the insurance proceeds from such damage or destruction be applied against
the principal balance due on any mortgage, Landlord may, at its option, either
terminate

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this Lease or elect to repair the Premises and Landlord shall notify Tenant as
to its election within 90 days after such fire or casualty. If Landlord elects
to terminate this Lease, the Term hereof shall end on the date specified in the
notice (which shall be the end of a calendar month and not sooner than 30 days
after such election was made). If Landlord does not elect to terminate this
Lease, then Landlord shall perform such repairs set forth in Section 7.1.3
hereof and Tenant shall perform such repairs in the Building as set forth in
Section 7.1.4 hereof, and the Term shall continue without interruption and this
Lease shall remain in full force and effect.

If Landlord has not elected to terminate this Lease and if there shall be
damage to the Premises of a character as cannot (in the judgment of Landlord's
engineer) reasonably be expected to be repaired within 24 months from the date
of casualty, then Tenant may, at its option, terminate this Lease provided that
Tenant's election shall be made within 30 days of Landlord's delivery of the
estimate of Landlord's engineer as to the time period required for restoration.

7.1.3 If neither Landlord nor Tenant elects to terminate this Lease as
provided in Section 7.1.2 hereof and if Tenant is not then in default of any of
its obligations under the Lease beyond any applicable cure period provided for
herein, Landlord shall, provided any third party mortgagee of the Building makes
insurance proceeds available for restoration, reconstruct as much of the
Premises as was originally constructed by Landlord (it being understood by
Tenant that Landlord shall not be responsible for any reconstruction of
leasehold improvements, which reconstruction is the sole responsibility of
Tenant) to substantially its condition at the time of such damage, but Landlord
shall not be responsible for any delays which may result from any cause beyond
Landlord's reasonable control.

7.1.4 If Landlord does not elect to terminate this Lease as provided in
Section 7.1.2 hereof, Tenant shall, at its own cost and expense, repair and
restore the Premises in accordance with the provisions of Section 6.1.15 hereof
to the extent not required to be repaired by Landlord pursuant to the provisions
of this Section 7.1, including, but not limited to, the repairing and/or
replacement of its merchandise, trade fixtures, furnishings and equipment in a
manner and to at least a condition equal to that prior to its damage or
destruction. Tenant agrees to commence the performance of its work when
notified by Landlord that the work to be performed by Tenant can, in accordance
with good construction practices, then be commenced and Tenant shall complete
such work as promptly thereafter as is practicable, but in no event more than 90
days thereafter.

7.1.5 All proceeds payable from Landlord's insurance policies with respect
to the Premises shall belong to and shall be payable to Landlord. If Landlord
does not elect to terminate this Lease as provided in Section 7.1.2 hereof,
Landlord shall disburse and apply so much of any insurance recovery as shall be
necessary against the cost to Landlord of restoration and rebuilding of
Landlord's work referred to in Section 7.1.3 hereof, subject to the prior rights
of any lessor under a ground or underlying lease covering the Building and/or
the holder of any mortgage liens against the Building.

7.1.6 In the event that the provisions of Section 7.1.1 or Section 7.1.2
shall become applicable, the Annual Base Rent and additional rent shall be
abated or reduced proportionately

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during any period in which, by reason of such damage or destruction, there is
substantial interference with the operation of the business of Tenant in the
Premises, having regard to the extent to which Tenant may be required to
discontinue its business in the Premises, and such abatement or reduction shall
continue for the period commencing with such destruction or damage and ending
with the completion by Landlord of such work of repair and/or reconstruction as
Landlord is obligated to do.

7.2 EMINENT DOMAIN.

If, after the execution and before termination of this Lease, the entire
Premises shall be taken by eminent domain or destroyed by the action of any
public or quasi-public authority, or in the event of conveyance in lieu thereof,
the Term shall cease as of the day possession shall be taken by such authority,
and Tenant shall pay rent up to that date with a pro-rata refund by Landlord of
such rent and additional rent as shall have been paid in advance for a period
subsequent to the date of the taking of possession.

If less than 25% of the Premises shall be so taken or conveyed, this Lease
shall cease only as respects the parts so taken or conveyed, as of the day
possession shall be taken, and Tenant shall pay rent up to that day, with an
appropriate refund by Landlord of such rent as may have been paid in advance for
a period subsequent to the date of the taking of possession, and thereafter the
Annual Base Rent shall be equitably adjusted. Pending agreement of such rental
adjustment, Tenant agrees to pay to Landlord the Annual Base Rent in effect
immediately prior to the taking by eminent domain. Landlord shall at its
expense make all necessary repairs or alterations so as to constitute the
remaining premises a complete architectural unit.

If more than 25% of the Premises shall be so taken or conveyed, then the
Term shall cease only as respects the part so taken or conveyed, from the day
possession shall be taken, and Tenant shall pay rent to that date with an
appropriate refund by Landlord of such rent as may have been paid in advance for
a period subsequent to the date of the taking of possession, but Landlord shall
have the right to terminate this Lease upon notice to Tenant in writing within
30 days after such taking of possession. If Landlord does not elect to
terminate the Lease, all of the terms herein provided shall continue in effect
except that the Annual Base Rent shall be equitably adjusted, and Landlord shall
make all necessary repairs or alterations so as to constitute the remaining
premises a complete architectural unit.

All compensation awarded for any such taking or conveyance, whether for the
whole or a part of the Premises, shall be the property of Landlord, whether such
damages shall be awarded as compensation for diminution in the value of the
leasehold or of the fee of or underlying leasehold interest in the Premises, and
Tenant hereby assigns to Landlord all of Tenant's right, title and interest in
and to any and all such compensation; provided, however, that Tenant shall be
entitled to seek a separate award for Tenant's stock, trade fixtures and
relocation expense.

In the event of any taking of the Premises or any part thereof for
temporary use, this Lease shall be and remain unaffected thereby and rent shall
not abate.

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ARTICLE VIII

RIGHTS OF MORTGAGEE

8.1 PRIORITY OF LEASE.

This Lease is and shall continue to be subject and subordinate to any
presently existing mortgage or deed of trust of record covering the Lot or
Building or both (the "mortgaged premises"). The holder of any such presently
existing mortgage or deed of trust shall have the election to subordinate the
same to the rights and interests of Tenant under this Lease exercisable by
filing with the appropriate recording office a notice of such election,
whereupon the Tenant's rights and interests hereunder shall have priority over
such mortgage or deed of trust.

Unless the option provided for in the next following sentence shall be
exercised, this Lease shall be superior to and shall not be subordinate to, any
mortgage, deed of trust or other voluntary lien hereafter placed on the
mortgaged premises. The holder of any such mortgage, deed of trust or other
voluntary lien shall have the option to subordinate this Lease to the same,
provided that such holder enters into an agreement with Tenant by the terms of
which the holder will agree to recognize the rights of Tenant under this Lease
and to accept Tenant as tenant of the Premises under the terms and conditions of
this Lease in the event of acquisition of title by such holder through
foreclosure proceedings or otherwise and Tenant will agree to recognize the
holder of such mortgage as Landlord in such event, which agreement shall be made
to expressly bind and inure to the benefit of the successors and assigns of
Tenant and of the holder and upon anyone purchasing the mortgaged premises at
any foreclosure sale. Any such mortgage to which this Lease shall be
subordinated may contain such terms, provisions and conditions as the holder
deems usual or customary.

8.2 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE'S LIABILITY.

The word "mortgage" as used herein includes mortgages, deeds of trust or
other similar instruments evidencing other voluntary liens or encumbrances, and
modifications, consolidations, extensions, renewals, replacements and
substitutes thereof. The word "holder" shall mean a mortgagee, and any
subsequent holder or holders of a mortgage. Until the holder of a mortgage
shall enter and take possession of the Premises for the purpose of foreclosure,
such holder shall have only such rights of Landlord as are necessary to preserve
the integrity of this Lease as security. Upon entry and taking possession of
the Premises for the purpose of foreclosure, such holder shall have all the
rights of Landlord. Notwithstanding any other provision of this Lease to the
contrary, including without limitation Section 10.4, no such holder of a
mortgage shall be liable, either as mortgagee or as assignee, to perform, or be
liable in damages for failure to perform any of the obligations of Landlord
unless and until such holder shall enter and take possession of the Premises for
the purpose of foreclosure, and such holder shall not in any event be liable to
perform or for failure to perform the obligations of Landlord

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under Section 3.1. Upon entry for the purpose of foreclosure, such holder shall
be liable to perform all of the obligations of Landlord (except for the
obligations under Section 3.1), subject to and with the benefit of the
provisions of Section 10.4, provided that a discontinuance of any foreclosure
proceeding shall be deemed a conveyance under said provisions to the owner of
the equity of the Premises.

8.3 MORTGAGEE'S ELECTION.

Notwithstanding any other provision to the contrary contained in this
Lease, if prior to substantial completion of Landlord's obligations under
Article III, any holder of a first mortgage on the mortgaged premises enters and
takes possession thereof for the purpose of foreclosing the mortgage, such
holder may elect, by written notice given to Tenant and Landlord at any time
within 90 days after such entry and taking of possession, not to perform
Landlord's obligations under Article III, and in such event such holder and all
persons claiming under it shall be relieved of all obligations to perform, and
all liability for failure to perform, said Landlord's obligations under Article
III, and Tenant may terminate this Lease and all its obligations hereunder by
written notice to Landlord and such holder given within 30 days after the day on
which such holder shall have given its notice as aforesaid.

8.4 NO PREPAYMENT OR MODIFICATION, ETC.

Tenant shall not pay Annual Base Rent, additional rent, or any other charge
more than 10 days prior to the due date thereof. No prepayment of Annual Base
Rent, additional rent or other charge, no assignment of this Lease and no
agreement to modify so as to reduce the rent, change the Term, or otherwise
materially change the rights of Landlord under this Lease, or to relieve Tenant
of any obligations or liability under this Lease, shall be valid unless
consented to in writing by Landlord's mortgagees of record, if any.

8.5 NO RELEASE OR TERMINATION.

No act or failure to act on the part of Landlord which would entitle Tenant
under the terms of this Lease, or by law, to be relieved of Tenant's obligations
hereunder or to terminate this Lease, shall result in a release or termination
of such obligations or a termination of this Lease unless (i) Tenant shall have
first given written notice of Landlord's act or failure to act to Landlord's
mortgagees of record, if any, specifying the act or failure to act on the part
of Landlord which could or would give basis to Tenant's rights and (ii) such
mortgagees, after receipt of such notice, have failed or refused to correct or
cure the condition complained of within a reasonable time thereafter, but
nothing contained in this Section 8.5 shall be deemed to impose any obligation
on any such mortgagee to correct or cure any such condition. "Reasonable time"
as used above means and includes a reasonable time to obtain possession of the
mortgaged premises, if the mortgagee elects to do so, and a reasonable time to
correct or cure the condition if such condition is determined to exist.

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8.6 CONTINUING OFFER.

The covenants and agreements contained in this Lease with respect to the
rights, powers and benefits of a mortgagee (particularly, without limitation
thereby, the covenants and agreements contained in this Article VIII) constitute
a continuing offer to any person, corporation or other entity, which by
accepting or requiring an assignment of this Lease or by entry or foreclosure
assumes the obligations herein set forth with respect to such mortgagee; such
mortgagee is hereby constituted a party to this Lease as an obligee hereunder to
the same extent as though its name were written hereon as such; and such
mortgagee shall be entitled to enforce such provisions in its own name. Tenant
agrees on request of Landlord to execute and deliver from time to time any
agreement which may reasonably be deemed necessary to implement the provisions
of this Article VIII.

ARTICLE IX

DEFAULT

9.1 EVENTS OF DEFAULT.

If any default by Tenant continues, in case of Annual Base Rent, additional
rent or any other monetary obligation to Landlord for more than 5 days; or if
any default by Tenant under the provisions of Section 10.9 hereof continues for
more than 10 days; or if any default by Tenant continues in any other case for
more than 30 days after notice and such additional time, if any, as is
reasonably necessary to cure the default if the default is of such a nature that
it cannot reasonably be cured in 30 days and Tenant promptly commences to cure
such default and diligently pursues such cure without interruption to
completion; or if Tenant becomes insolvent, fails to pay its debts as they fall
due, files a petition under any Chapter of the U.S. Bankruptcy Code, 11 U.S.C.
101 et seq., as it may be amended (or any similar petition under any insolvency
law of any jurisdiction), or if such petition is filed against Tenant; or if
Tenant proposes any dissolution, liquidation, composition, financial
reorganization or recapitalization with creditors, makes an assignment or trust
mortgage for benefit of creditors, or if a receiver, trustee, custodian or
similar agent is appointed or takes possession with respect to any property of
Tenant; or if the leasehold hereby created is taken on execution or other
process of law in any action against Tenant; then, and in any such case,
Landlord and the agents and servants of Landlord may, in addition to and not in
derogation of any remedies for any preceding breach of covenant, immediately or
at any time thereafter while such default continues and without further notice,
at Landlord's election, do any one or more of the following: (1) give Tenant
written notice stating that the Lease is terminated, effective upon the giving
of such notice or upon a date stated in such notice, as Landlord may elect, in
which event the Lease shall be irrevocably extinguished and terminated as stated
in such notice without any further action, or (2) with or without process of
law, in a lawful manner enter and repossess the Premises as of Landlord's former
estate, and expel Tenant and those claiming through or under Tenant, and remove
its and their effects, without being guilty of trespass, in which event the
Lease shall be irrevocably extinguished and terminated at the time of such
entry, or (3) pursue any other rights or remedies permitted by law.

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Any such termination of the Lease shall be without prejudice to any remedies
which might otherwise be used for arrears of rent or prior breach of covenant,
and in the event of such termination Tenant shall remain liable under this Lease
as hereinafter provided. Tenant hereby waives all statutory rights (including,
without limitation, rights of redemption, if any) to the extent such rights may
be lawfully waived, and Landlord, without notice to Tenant, may store Tenant's
effects and those of any person claiming through or under Tenant at the expense
and risk of Tenant and, if Landlord so elects, may sell such effects at public
auction or private sale and apply the net proceeds to the payment of all sums
due to Landlord from Tenant, if any, and pay over the balance, if any, to
Tenant.

9.2 TENANT'S OBLIGATIONS AFTER TERMINATION.

In the event that this Lease is terminated under any of the provisions
contained in Section 9.1 or shall be otherwise terminated for breach of any
obligation of Tenant, Tenant covenants to pay forthwith to Landlord, as
compensation, (i) the excess of the total rent reserved for the residue of the
Term over the rental value of the Premises for said residue of the Term and (ii)
the unamortized portion of the actual out-of-pocket costs and expenses incurred
by Landlord in completing the Leasehold Improvements, amortized on a straight-
line reduction basis from 100% to 0% over a 6 year period commencing on the
Commencement Date. In calculating the rent reserved, there shall be included,
in addition to the Annual Base Rent and all additional rent, the value of all
other consideration agreed to be paid or performed by Tenant for said residue.
Tenant further covenants as an additional and cumulative obligation after any
such ending to pay punctually to Landlord all the sums and perform all the
obligations which Tenant covenants in this Lease to pay and to perform in the
same manner and to the same extent and at the same time as if this Lease had not
been terminated. In calculating the amounts to be paid by Tenant under the next
foregoing covenant, Tenant shall be credited with any amount paid to Landlord as
compensation as provided in the first sentence of this Section 9.2 and also with
the net proceeds of any rents obtained by Landlord by reletting the Premises,
after deducting all Landlord's expenses in connection with such reletting,
including, without implied limitation, all repossession costs, brokerage
commissions, fees for legal services and expenses of preparing the Premises for
such reletting, it being agreed by Tenant that Landlord may (i) relet the
Premises or any part or parts thereof for a term or terms which may at
Landlord's option be equal to or less than or exceed the period which would
otherwise have constituted the balance of the Term and may grant such
concessions and free rent as Landlord in its sole judgment considers advisable
or necessary to relet the same and (ii) make such alterations, repairs and
decorations in the Premises as Landlord in its sole judgment considers advisable
or necessary to relet the same, and no action of Landlord in accordance with the
foregoing or failure to relet or to collect rent under reletting shall operate
or be construed to release or reduce Tenant's liability as aforesaid.

So long as at least 12 months of the Term remain unexpired at the time of
such termination, in lieu of any other damages or indemnity and in lieu of full
recovery by Landlord of all sums payable under all the foregoing provisions of
this Section 9.2, Landlord may by written notice to Tenant, at any time after
this Lease is terminated under any of the provisions contained in Section 9.1,
or is otherwise terminated for breach of any obligation of Tenant and before
such full recovery, elect to recover and Tenant shall thereupon pay, as
liquidated damages, an amount

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<PAGE>

equal to the aggregate of the Annual Base Rent and additional rent accrued under
Article IV in the 12 months ended next prior to such termination plus the amount
of Annual Base Rent and additional rent of any kind accrued and unpaid at the
time of termination and less the amount of any recovery by Landlord under the
foregoing provisions of this Section 9.2 up to the time of payment of such
liquidated damages.

Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater, equal to, or less than the amount of the loss or damages
referred to above.

9.3 DEFAULT BY LANDLORD.

Landlord shall in no event be in default in the performance of any of
Landlord's obligations hereunder unless and until Landlord shall have failed to
perform such obligations within thirty (30) days, together with such additional
time as may reasonably be required to correct any such default, after notice by
Tenant to Landlord properly specifying in reasonable detail the respects in
which Landlord has failed to perform any such obligations.

ARTICLE X

MISCELLANEOUS

10.1 NOTICE OF LEASE.

Upon request of either party, both parties shall execute and deliver, after
the Term begins, a short form of this Lease in form appropriate for recording or
registration, and if this Lease is terminated before the Term expires, an
instrument in such form acknowledging the date of termination.

10.2 NOTICES FROM ONE PARTY TO THE OTHER.

All notices required or permitted hereunder shall be in writing and
addressed, if to the Tenant, at Tenant's Address or such other address as Tenant
shall have last designated by notice in writing to Landlord and, if to Landlord,
at Landlord's Address or such other address as Landlord shall have last
designated by notice in writing to Tenant. Any notice shall have been deemed
duly given if mailed to such address postage prepaid, registered or certified
mail, return receipt requested, when deposited with the U.S. Postal Service, or
if delivered to such address by hand, when so delivered.

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10.3 BIND AND INURE.

The obligations of this Lease shall run with the land, and this Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Landlord named herein and
each successive owner of the Premises shall be liable only for the obligations
accruing during the period of its ownership. The obligations of Landlord shall
be binding upon the assets of Landlord which comprise the Building and the Lot
but not upon other assets of Landlord. No individual partner, trustee,
stockholder, officer, director, employee or beneficiary of Landlord shall be
personally liable under this Lease and Tenant shall look solely to Landlord's
interest in the Building and the Lot in pursuit of its remedies upon an event of
default hereunder, and the general assets of the individual partners, trustees,
stockholders, officers, employees or beneficiaries of Landlord shall not be
subject to levy, execution or other enforcement procedure for the satisfaction
of the remedies of Tenant.

10.4 NO SURRENDER.

The delivery of keys to any employee of Landlord or to Landlord's agent or
any employee thereof shall not operate as a termination of this Lease or a
surrender of the Premises.

10.5 NO WAIVER, ETC.

The failure of Landlord to seek redress for violation of, or to insist upon
the strict performance of any covenant or condition of this Lease or any of the
Rules and Regulations referred to in Section 6.1.4, whether heretofore or
hereafter adopted by Landlord, shall not be deemed a waiver of such violation
nor prevent a subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation, nor
shall the failure of Landlord to enforce any of said Rules and Regulations
against any other tenant in the Building be deemed a waiver of any such Rules or
Regulations. The receipt by Landlord of Annual Base Rent or additional rent
with knowledge of the breach of any covenant of this Lease shall not be deemed a
waiver of such breach by Landlord, unless such waiver be in writing and signed
by Landlord. No consent or waiver, express or implied, by Landlord to or of any
breach of any agreement or duty shall be construed as a waiver or consent to or
of any other breach of the same or any other agreement or duty.

10.6 NO ACCORD AND SATISFACTION.

No acceptance by Landlord of a lesser sum than the Annual Base Rent and
additional rent then due shall be deemed to be other than on account of the
earliest installment of such rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed as
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
pursue any other remedy in this Lease provided.

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10.7 CUMULATIVE REMEDIES.

The specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by Tenant of any provisions of this Lease. In addition to
the other remedies provided in this Lease, Landlord shall be entitled to the
restraint by injunction of the violation or attempted or threatened violation of
any of the covenants, conditions or provisions of this Lease or to a decree
compelling specific performance of any such covenants, conditions or provisions.

10.8 LANDLORD'S RIGHT TO CURE.

If Tenant shall at any time default in the performance of any obligation
under this Lease, Landlord shall have the right, but shall not be obligated, to
enter upon the Premises and to perform such obligation, notwithstanding the fact
that no specific provision for such substituted performance by Landlord is made
in this Lease with respect to such default. In performing such obligation,
Landlord may make any payment of money or perform any other act. All sums so
paid by Landlord (together with interest at the rate of 4% per annum in excess
of the then prime commercial rate of interest being charged by the Bank of
Boston in Boston, Massachusetts) and all necessary incidental costs and expenses
in connection with the performance of any such act by Landlord, shall be deemed
to be additional rent under this Lease and shall be payable to Landlord
immediately on demand. Landlord may exercise the foregoing rights without
waiving any other of its rights or releasing Tenant from any of its obligations
under this Lease.

10.9 ESTOPPEL CERTIFICATE.

Each party agrees, from time to time, upon not less than 15 days' prior
written request by the other, to execute, acknowledge and deliver to the other a
statement in writing certifying that this Lease is unmodified and in full force
and effect; that Tenant has no defenses, offsets or counterclaims against its
obligations to pay the Annual Base Rent and additional rent and to perform its
other covenants under this Lease; that there are no uncured defaults of Landlord
or Tenant under this Lease (or, if there have been modifications, that this
Lease is in full force and effect as modified and stating the modifications,
and, if there are any defenses, offsets, counterclaims, or defaults, setting
them forth in reasonable detail); and the dates to which the Annual Base Rent,
additional rent and other charges have been paid. Any such statement delivered
pursuant to this Section 10.10 shall be in a form reasonably acceptable to and
may be relied upon by any prospective purchaser or mortgagee of premises which
include the Premises or any prospective assignee of any such mortgagee, or any
permitted assignee or subtenant of Tenant.

10.10 WAIVER OF SUBROGATION.

Any insurance carried by either party with respect to the Premises and
property therein or occurrences thereon shall include a clause or endorsement
denying to the insurer rights of subrogation against the other party to the
extent rights have been waived by the insured prior to

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occurrences of injury or loss. Each party, notwithstanding any provisions of
this Lease to the contrary, hereby waives any rights of recovery against the
other for injury or loss due to hazards covered by insurance containing such
clause or endorsement to the extent of the indemnification received thereunder.

10.11 ACTS OF GOD.

In any case where either party hereto is required to do any act, delays
caused by or resulting from Acts of God, war, civil commotion, fire, flood or
other casualty, labor difficulties, shortages of labor, materials or equipment,
government regulations, unusually severe weather, or other causes beyond such
party's reasonable control shall not be counted in determining the time during
which work shall be completed, whether such time be designated by a fixed date,
a fixed time or a "reasonable time", and such time shall be deemed to be
extended by the period of such delay.

10.12 BROKERAGE.

Tenant and Landlord represent and warrant that they dealt with no brokers
in connection with this transaction other than the Broker and agree to defend,
with counsel approved by the other, indemnify and save the other harmless from
and against any and all cost, expense or liability for any compensation,
commissions or charges claimed by a broker or agent, other than the Broker in
connection with this Lease. Landlord hereby agrees to pay the brokerage fees to
the Broker in connection with the execution and delivery of this Lease.

10.13 SUBMISSION NOT AN OFFER.

The submission of a draft of this Lease or a summary of some or all of
its provisions does not constitute an offer to lease or demise the Premises, it
being understood and agreed that neither Landlord nor Tenant shall be legally
bound with respect to the leasing of the Premises unless and until this Lease
has been executed by both Landlord and Tenant and a fully executed copy has been
delivered to each of them.

10.14 APPLICABLE LAW AND CONSTRUCTION.

This Lease shall be governed by and construed in accordance with the laws
of the state in which the Premises are located. If any term, covenant,
condition or provision of this Lease or the application thereof to any person or
circumstances shall be declared invalid or unenforceable by the final ruling of
a court of competent jurisdiction having final review, the remaining terms,
covenants, conditions and provisions of this Lease and their application to
persons or circumstances shall not be affected thereby and shall continue to be
enforced and recognized as valid agreements of the parties, and in the place of
such invalid or unenforceable provision, there shall be substituted a like, but
valid and enforceable provision which comports to the findings of the aforesaid
court and most nearly accomplishes the original intention of the parties.

31
<PAGE>

There are no oral or written agreements between Landlord and Tenant
affecting this Lease. This Lease may be amended, and the provisions hereof may
be waived or modified, only by instruments in writing executed by Landlord and
Tenant.

The titles of the several Articles and Sections contained herein are for
convenience only and shall not be considered in construing this Lease.

Unless repugnant to the context, the words "Landlord" and "Tenant"
appearing in this Lease shall be construed to mean those named above and their
respective heirs, executors, administrators, successors and assigns, and those
claiming through or under them respectively. If there be more than one tenant,
the obligations imposed by this Lease upon Tenant shall be joint and several.

10.15 AUTHORITY OF TENANT

Tenant represents and warrants to Landlord (which representations and
warranties shall survive the delivery of this Lease) that: (a) Tenant (i) is
duly organized, validly existing and in good standing under the laws of its
state of incorporation, (ii) has the corporate power and authority to carry on
businesses now being conducted and is qualified to do business in every
jurisdiction where such qualification is necessary and (iii) has the corporate
power to execute and deliver and perform its obligations under this Lease and
(b) the execution, delivery and performance by Tenant of its obligations under
this Lease have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the corporate charter or by-laws of the Tenant or any indenture,
agreement or other instrument to which it is a party or by which it is bound.

10.16 SECURITY DEPOSIT

Simultaneously with Tenant's execution and delivery of this Lease, Tenant
shall pay to Landlord an amount equal to the Security Deposit to be held by
Landlord, as security, without interest, for and during the Term. Landlord
shall have the right, but not the obligation from time to time without prejudice
to any other remedy Landlord may have on account thereof, to apply the Security
Deposit or any portion thereof or interest thereon, to Landlord's damage
resulting from any default by Tenant. On termination of the Term, the Security
Deposit, or the portion thereof then held by Landlord shall be returned to
Tenant, provided there exists no breach of any provision of this Lease by
Tenant. If all or any part of the Security Deposit is applied to an obligation
of Tenant hereunder, Tenant shall immediately upon request by Landlord restore
the Security Deposit to its original amount. Tenant shall not have the right to
call upon Landlord to apply all or any part of the Security Deposit to cure any
default or fulfill any obligation of Tenant, but such use shall be solely in the
discretion of Landlord. Upon any conveyance by Landlord of its interest under
this Lease, the Security Deposit may be delivered by Landlord to Landlord's
grantee or transferee. Upon any such delivery, Tenant hereby releases Landlord
herein named of any and all liability with respect to the Security Deposit, its
application and return, and Tenant agrees to look solely to such grantee or
transferee. It is further understood that this provision shall also apply to
subsequent grantees and transferees.

32
<PAGE>

10.17 ERISA MATTERS

It is understood that Landlord is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended and in effect from
time to time ("ERISA") and as a result may be prohibited by law from engaging in
certain transactions. Tenant represents and warrants to the best of its
knowledge after due inquiry that neither Tenant nor its "affiliates" (as defined
in Part V (c) of Prohibited Transaction Exemption 84-14, issued March 12, 1984)
has, or within the immediately preceding one year has exercised the authority to
appoint or terminate CIGNA Investments, Inc. or its affiliate as an asset
manager with respect to the assets of any plan identified on Exhibit E attached
hereto.

EXECUTED as a sealed instrument in two or more counterparts on the day and
year first above written.

LANDLORD:

CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf
of its Separate Account R

By: CIGNA Investment, Inc.

By: /S/ Leon Pouncy
--------------------------
Its: Managing Director

TENANT:

VIALOG CORPORATION

By: /S/ Glenn D. Bolduc
---------------------------------
Name: Glenn D. Bolduc
Title: President and CEO
Hereunto duly authorized

A copy of Tenant's corporate authorization for
such execution is attached hereto.

33
<PAGE>

EXHIBIT A

Plan Showing Premises

(A one page diagram of the Premises is set forth under Exhibit A)
<PAGE>

EXHIBIT B
35 NEW ENGLAND BUSINESS CENTER
TENANT FINISH WORK

Landlord, in accordance with the allowance for Tenant Improvements stipulated in
this proposal , shall furnish and install in accordance with final, approved
plans, the following Building Standard Improvements.

1. Floor Covering

(a) Carpeting shall be provided in the areas of the premises specified on
the approved plan. The building standard carpet shall be 30 ounce
direct glue down, dense cut pile carpet or textured loop.
(b) Vinyl composition tile floor (12' x 12' x 3/32') shall be provided in
the specified portions of the space.
(c) Vinyl wall base shall be provide don each side of partitions and along
exterior walls.

2. Ceiling

Acoustical ceilings will be provided through the premises as designated
in approved plans. Ceilings will be 2' x 2' tegular with reveal edge,
off-white fissured. Ceiling height is designed for 8'6'' off each
floor.

3. Drywall

(a) Demising walls will consist of 5/8'' gypsum board on 2 1/2 studs
from the floor to the underside of the structure above, with
sound-batt insulation.
(b) Interior walls will consist of 5/8" gypsum board on 2 1/2 studs
from the floor to penetrate the ceiling grid.

4. Painting

(a) All standard interior partitions, all exterior wall surfaces and
all demising partitions within the premises will receive two
coats of eggshell latex wall paint. Color selection will be made
from building standard samples submitted by Landlord.

(b) Building standard entrance/exit door frames to and from the
premises will be hollow metal.

5. Doors and Hardware

(a) Tenant entry doors will be full height, 1 3/4" thick, solid
core, cherry doors. Doors will be set in building standard
pre-finished metal door frames.
<PAGE>

(b) Building standard interior doors shall be 3' x 7' and 1 3/4"
thick, solid core, cherry doors, set in building standard
hollow metal door frames.

(c) Tenant entry doors will have brushed chrome door hardware
package consisting of lockset and hinges. Each door will have
a doorstop and closer.

(d) Building standard interior doors will have one brushed chrome
door hardware package consisting of latchset and hinges. Each
door will have a doorstop.

6. Electrical

(a) Lighting: Standard lighting fixtures shall be 2' x 4' x 3
1/2", 3 tube, parabolic, with 18 cells and an energy saving
ballast. One fixture will be provided per 85 square feet.

(b) Switching: One 20 amp wall-mounted, single pole light switch
shall be provided per every eight standard allowance light
fixtures.

(c) Outlets: Duplex receptacles will be 120 volt, 15 amp grounding
type, completely installed and circuited with a total of 8
duplex receptacles per circuit.

7. HVAC

(a) The variable air volume HVAC system will be designed and
installed in accordance with the Energy Article of the
Massachusetts Building Code to provide adequate heating and
air conditioning for the respective seasons. Plans will be
provided by Landlord and will include full distribution and
mixing of the HVAC system.

(b) Terminal control boxes shall be supplied on a basis of one
per 750 square feet.

8. Sprinklers

Sprinklers will be concealed head type with flat white covers and will
be provided to meet Code requirements for a light hazard index.
<PAGE>

EXHIBIT C TO
NEW ENGLAND BUSINESS CENTER
LEASE

Rules and Regulations

RULES AND REGULATIONS. Tenant agrees to observe the rights reserved to
Landlord in the Lease and agrees, for itself, its employees, agents, clients,
invitees and guests, to comply with the following rules and regulations and with
such reasonable modifications thereof and additions thereto as Landlord may
take, from time to time, for the building.

1. Any sign, lettering, curtain, picture, notice or advertisement
installed within Tenant's Premises (including but not limited to Tenant
identification signs on doors to the Premises) which is visible outside
of the Premises shall be installed at Tenant's costs and in such
manner, character and style as Landlord may approve in writing. No
sign, lettering, picture, notice or advertisement shall be placed on
any outside window or in any position so as to be visible from outside
the Building or from any atrium or lobbies of the Building.

2. Tenant shall not use the name of the Building or use pictures or
illustrations of the Building in advertising or other publicity without
prior written consent of the Landlord.

3. Tenant, its customers, invitees, licensees, and guests shall not
obstruct sidewalks, entrances, passages, courts, corridors, vestibules,
halls, elevators and stairways in/and about the Building. Tenant shall
not place objects against glass partitions or doors or windows or
adjacent to any open common space which would be unsightly from the
Building corridors or from the exterior of the Building, and will
promptly remove the same upon notice from Landlord.

4. Tenant shall not make noises, cause disturbances, create vibrations,
odors or noxious fumes or use for operate any electrical or electronic
devices or other devices that emit sound waves or are dangerous to
other tenants and occupants of the Building or that would interfere
with the operation of any device or equipment or radio or television
broadcasting or reception from or within the Building or elsewhere, or
with the operation of roads or highways in the vicinity of the Building
and shall not place or install any projections, antennae, aerials or
similar devices inside or outside of the Premises.

5. Tenant shall not perform any room-to-room canvass to solicit business
from other tenants in the Building, and shall not exhibit, sell or
offer to sell, use rent or exchange any item or services in or from the
Premises unless ordinarily embraced within Tenant's use of the Premises
as specified in its lease.
<PAGE>

6. Tenants shall not waste electricity or water and agrees to cooperate
fully with Landlord to assure the most cost effective operation of the
Building's heating and air conditioning and shall refrain from
attempting to adjust any controls. Tenant shall keep public corridor
doors closed.

7. Door keys for doors in the Premises will be furnished at the
commencement of the Lease by Landlord. Tenant shall not affix
additional locks on doors and shall purchase duplicate keys only from
Landlord. When the Lease is terminated, Tenant shall return all keys to
Landlord and will provide Landlord the means of opening any sages,
cabinets or vaults left in the Premises.

8. Tenant assumes full responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other
means of entry to the Premise closed and secured.

9. Peddlers, solicitors and beggars shall be reported to the office of the
Building ar as Landlord otherwise requests.

10. Tenant shall not install nor operate machinery or any mechanical
devices of a nature not directly related to Tenant's ordinary use of
the Premises, or use any method of heating other than that provided for
in this lease, without the written permission of Landlord.

11. No person or contractor not employed by Landlord shall be used to
perform window washing, cleaning, decorating, repair or other work in
the Premises.

12. Tenant may not (without Landlord's approval therefor, which approval
will be signified on Tenant Plans submitted pursuant to the Lease) and
Tenant shall not permit of suffer anyone to:

(a) Cook in the Premises;

(b) Place vending or dispensing machines of any kind in or about the
Premises;

13. Tenant shall not:
<PAGE>

(a) Use the Premises for lodging, manufacturing or for any immoral or
illegal purposes.

(b) Use the Premises to engage in the manufacture or sale of, or permit the
use of, any spirituous, fermented, intoxicating or alcoholic beverages
on the Premises.

14. In no event shall any person bring into the Building inflammables such
as gasoline, kerosene, naphtha and benzene, or explosives or firearms
(except as may be used in normal back security procedures) or any other
article of intrinsically dangerous nature. If by reason of the failure
of Tenant to comply with the provisions of this paragraph, any
insurance premium payable by Landlord for all or any part of the
Building shall at any time be increased above normal insurance premiums
for insurance not covering the items aforesaid, Landlord shall have the
option to either terminate the Lease or to require Tenant to make
immediate payment for the whole of the increased insurance premium.

15. Tenant shall comply with all applicable federal, state and municipal
laws, ordinances and regulations and building rules, and shall not
directly or indirectly make any use of the Premises which may be
prohibited thereby or which shall be dangerous to person or property or
shall increase the cost of insurance or require additional insurance
coverage.

16. If Tenant desires signal, communication, alarm or other utility or
service connection installed or changed, the same shall be made at the
expense of Tenant, with approval and under direction of Landlord.
Landlord shall have the right to approve where and how electrical,
telephone and telegraph wires are to be introduced, and the location of
the telephones, call boxes and other office equipment affixed to the
leased Premises; provided, that such approval shall not be unreasonable
withheld. Landlord reserves the right to enter upon the leased Premises
for the purpose of installing additional electrical wiring and/or other
utilities for the benefit of the Tenant or adjoining tenants.

17. Bicycles shall not be permitted in the Building in other than Landlord-
designated areas.

18. Tenant shall cooperate and participate in all security programs
affecting the Building.

19. In the event Landlord allows one or more tenants in the Building to do
any act prohibited herein, Landlord shall not be precluded from denying
any other Tenant the right to do any such act.
<PAGE>

20. Tenant, or the employees, agents, servants, visitors or licensees of
Tenant shall not at any time place, leave or discard any rubbish,
paper, articles, or objects of any kind whatsoever outside the doors of
the Premises or in the corridors or passageways of the Building except
in receptacles for that purpose. No animals or birds shall be brought
or kept in or about the Building.

21. Landlord shall have the right to prohibit any advertising by Tenant
which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability for offices, and, upon written notice from
the Landlord, Tenant will refrain from or discontinue such advertising.

22. Tenant shall not mark, pain, drill into, alter, or in any way deface
any part of the Building or the Premises. No boring, driving of nails
or screws, cutting or stringing of wires shall be permitted, except
with the prior written consent of Landlord, and as Landlord may direct.
Tenant shall not install any resilient tile or similar floor covering
in the Premises except with the approval of Landlord. The use of cement
or other similar adhesive material is expressly prohibited.

23. Landlord shall have the right to limit or control the number and format
of listings on the main Building directory.

24. Tenant's use of delivery areas, loading areas and freight elevators
shall be scheduled in advance with Landlord and shall be subject to the
approval of Landlord.

25. Entry and exiting to and from the Office Park and use of all roads,
driveways and walkways in the Office Park shall be subject to such
traffic and use rules and regulations as Landlord may promulgate and
provide to Tenant from time to time.

26. Landlord reserves the right to exclude or expel any person who, in the
reasonable judgment of the Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner be in
violation of these Rules and Regulations.

27. Landlord reserves the right to make such other uniform and reasonable
rules and regulations as may from time to time be needed for the
safety, care and cleanliness or for the preservation of good order
therein.
<PAGE>

EXHIBIT D

DECLARATION OF EASEMENTS
------------------------

Instruments made as of the 23rd day of September, 1988 by and among
Thomas M. Alperin, Theodore R. Tye, John P. Feeney and Julia B. Marciano, as
Trustees of New England Business Center Realty Trust under Declaration of Trust
dated December 1, 1987, recorded with the Essex North Registry of Deeds in Book
2645, Page 165, as amended of record ("Declarant").

WITNESSETH THAT:
----------------

WHEREAS, Declarant is the fee owner of the Land shown on a plan in
three sheets entitled "Definitive Plan, New England Business Center Drive,
Andover, Mass." Dated March 4, 1988, latest revision April 21, 1988, by Haynes
Engineering, Inc. recorded with said Deeds on June 8, 1988 as Plan No. 11172
("Subdivision Plan"); and

WHEREAS , THE LAND SHOWN ON THE Subdivision Plan has been lawfully
subdivided into six lots, identified as Parcel 1, Parcel 2, Parcel 3, Parcel 4,
Parcel 5 and Parcel 6 on the Subdivision Plan (said Parcels 1 through 6 being
collectively hereinafter referred to as the "Premises"); and

WHEREAS, New England Business Center Drive, as shown on the Subdivision
Plan, provides a common entrance/roadway to the Premises; and

WHEREAS, Declarant plans to develop the Premises as an integrated
office/research and development park to be known as New England Business Center
("NEBC"); and

WHEREAS, the development of NEBC requires that each of the buildings
and other improvements to be constructed on each of the six parcels (or on any
future parcels that may be created by the consolidation or resubdivision of the
land included within the Premises) shall have the benefit of certain rights and
easements for access, utility and drainage purposes affecting one or more of the
other parcels within NEBC, including rights to use New England Business Center
Drive as a common entrance/roadway; and

WHEREAS, Declarant intends to provide for an overall park manager for
NEBC to maintain such common facilities and to create a mechanism for each
parcel within NEBC to contribute its share of such maintenance costs; and

WHEREAS, the various easement areas referenced in this instrument are
shown on the Subdivision Plan;

NOW, THEREFORE, for consideration paid, and intending to benefit and to
burden each of the parcels within NEBC as described herein for purposes of
furthering the common development plan for NEBC, Declarant declares for itself,
its successors and assigns, as owner from time to time of all or any portion of
the premises, that Parcel 1, Parcel 2, Parcel 3. Parcel 4,
<PAGE>

Parcel 5 and Parcel 6 (and any future parcels that may be created by the
consolidation or resubdivision of the land included within the Premises) shall
have the benefit of and be burdened by the following rights and easements in
connection with the development of NEBC.

1. Access. There shall be appurtenant to each Parcel, in common with every
------
other parcel comprising a portion of the Premises, the permanent right
and easement:

(a) to use New England Business Center Drive for all purposes for
which streets and ways are now or in the future may be used in
the Town of Andover, including installation of utilities;

(b) to use that portion of Parcel 2 identified on Sheet 2 of the
Subdivision Plan as "25' Wide Access & Utility Easement" for
the purpose of providing emergency access to such Parcel;

(c) to use that portion of the area identified on Sheet 2 of the
Subdivision Plan as "40' Wide Access Easement" that is located
on Parcel 2 for the purpose of providing emergency access to
such Parcel;

(d) to use those portions of Parcel 4 identified on Sheet 2 of the
Subdivision Plan as "25' Wide Access & Utility Easement" and
"20' Wide Emergency Access Easement" for the purpose of
providing emergency access to such Parcel; and

(e) to use that portion of the area identified on Sheet 2 of the
Subdivision Plan as "40' Wide Access Easement" that is located
on Parcel 4 for the purpose of providing emergency access to
such Parcel,

2. Utilities. There shall be appurtenant to each Parcel, in common with
every other Parcel comprising a portion of the Premises, the permanent
right and easement:

(a) to install, maintain, repair, replace, relocate and use
utilities (including drainage and water lines) in, under and
through that portion of Parcel 2 identified on Sheet 2 of the
Subdivision Plan as "25' Wide Access & Utility Easement";

(b) to install, maintain, repair, replace, relocate and use
utilities (including drainage and water lines) in, under and
through those portions of Parcel 4 identified on Sheet 2 of
the Subdivision Plan as "25' Wide Access & Utility Easement"
and "20' Wide Utility Easement";

(c) to install, maintain, repair, replace, relocate and use sewer
lines in, under and through (i) that portion of the area
identified on the Subdivision Plan as "30' Wide Sewer
Easement" that is located on Parcel 3, and (ii) a 15 foot wide
strip of Parcel 3 that is located adjacent to and easterly of
said "30' Wide Sewer Easement";

(d) to install, maintain, repair, replace, relocate and use sewer
lines in, under and through (i) that portion of the area
identified on the Subdivision Plan as "30' Wide Sewer
Easement" that is located on Parcel 5, and (ii) a 15 foot wide
strip of Parcel 5 that is located adjacent to and easterly of
said "30' Wide Sewer Easement";
<PAGE>

(e) to install, maintain, repair, replace, relocate and use
electric and telephone utilities in, under, over and through
that portion of the area identified on the Subdivision Plan as
"10' x 25' Electric & Telephone Easement" that is located on
Parcel 1;

(f) to install, maintain, repair, replace, relocate and use
electric and telephone utilities in, under, over and through
that portion of the area identified on the Subdivision Plan as
"10' x 25' Electric & Telephone Easement" that is located on
Parcel 2;

(g) to install, maintain, repair, replace, relocate and use
electric and telephone utilities in, under, over and through
that portion of Parcel 5 identified on the Subdivision Plan as
"10' x 25' Electric & Telephone Easement";

(h) to use, install, maintain, repair, replace, relocate and use
drainage lines in, under and through both of those portions of
Parcel 1 identified on the Subdivision Plan as "20' Wide Drain
Easement";

(i) to use, install, maintain, repair, replace, relocate and use
drainage lines in, under and through that portion of Parcel 5
identified on the Subdivision Plan as "20' Wide Drain
Easement";

(j) to use, install, maintain, repair, replace, relocate and use
drainage lines in, under and through both of those portions of
Parcel 6 identified on the Subdivision Plan as "20' Wide Drain
Easement".

3. Common Driveways.
-----------------

(a) There shall be appurtenant to Parcel 2 the permanent right and
easement, in common with Parcel 4, to use that portion of
Parcel 4 identified on Sheet 2 of the Subdivision Plan as "25'
Wide Access & Utility Easement" for all purposes for which
streets and ways are now or in the future may be used in the
Town of Andover, including installation of utilities.

(b) There shall be appurtenant to Parcel 3 the permanent right and
easement, in common with Parcel 5, to use that portion of
Parcel 5 identified on Sheet 1 of the Subdivision Plan as "15'
Wide Access Easement to Parcel 3" (which area is identified on
Sheet 2 of the Subdivision Plan as "15' Wide Access Easement
to Parcel 3") for all purposes for which streets and ways are
now or in the future may be used in the Town of Andover,
including installation of utilities.

(c) There shall be appurtenant to Parcel 4 the permanent right and
easement, in common with Parcel 2, to use (i) that portion of
Parcel 2 identified on Sheet 2 of the Subdivision Plan as "25'
Wide Access & Utility Easement" and (ii) that portion of the
area identified as "40' Wide Access Easement" that is located
on Parcel 2 for all purposes which streets and ways are now or
in the future may be used in the Town of Andover, including
installation of utilities.

(d) There shall be appurtenant to Parcel 5 the permanent right and
easement, in common with Parcel 3, to use that portion of the
area identified on the Subdivision Plan as "30' Wide Sewer
Easement" that is both located on Parcel 3 and adjacent to
that portion of Parcel 5 identified on Sheet 1 of the
Subdivision Plan as "15' Wide Access Easement to Parcel 3"
(which area is identified on
<PAGE>

Sheet 2 of the Subdivision Plan as "15' Access Easement to
Parcel 3") for all purposes for which streets and ways are now
or in the future may be used in the Town of Andover, including
installation of utilities.

4. Parcels Affected by Easement Areas. Any parcel affected by a particular
-----------------------------------
easement area may use the same in common with other parcels with
easement rights therein for the same purposes and for any other
purposes not inconsistent with the easement rights appurtenant to the
other parcels.

5. Definitions. As used in this instrument, utilities (including drainage
------------
lines) shall include all necessary end-walls, catch basins, manholes,
transformers and any other necessary fixtures, apparatus and
appurtenances of the same and any replacements of any of the foregoing.

6. Possible Resubdivision or consolidation of Parcels. In the Event that
---------------------------------------------------
Declarant resubdivides or consolidates some or all of Parcel 1, Parcel
2, Parcel 3, Parcel 4, Parcel 5 or Parcel 6, it is Declarant's
intention that the resulting parcels shall have as appurtenant thereto
the same rights and easements provided for herein with respect to the
same easement areas shown on the Subdivision Plan.

7. Administration of Agreement and Functions of Park Manager.
----------------------------------------------------------

(a) Appointment - Declarant hereby appoints National Development Asset
-----------
Management, Inc. a Pennsylvania corporation, (NDAM) as Park Manager
for as long as Declarant owns any parcel or manages any building within
NEBC. For as long as Declarant owns any parcel or manages any building
within NEBC, Declarant shall have the right to replace NDAM and to
appoint any other entity as Park Manager. Prior to the sale by
Declarant of its last remaining parcel within NEBC, Declarant shall
turn over the maintenance functions hereunder to an entity to be formed
by the majority vote of all of the then parcel owners within NEBC and
shall record a certificate with said Deeds designating such entity. If
Declarant fails to take such action within thirty (30) days of such
sale, the majority of such parcel owners shall make such designation
and shall record such a certificate, which shall be conclusive on all
parties.

(b) Maintenance. The Park Manager shall maintain all easement areas within
------------
NEBC including snowplowing, landscaping, roadway, utility, lighting and
drainage maintenance, and environmental testing. Not withstanding the
foregoing, the owner of Parcel 3 shall be responsible for and shall
bear the expense of snowplowing, landscaping, and roadway, lighting and
drainage maintenance for the easement area described in Section 3(b)
and 3(d) above.
<PAGE>

(c) Environmental Testing. The Park Manager shall have the right, but not
----------------------
the obligation, to administer a general testing program within NEBC to
assure compliance by owners and tenants within NEBC with the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. 36091 et
seq., the Massachusetts Hazardous Waste Management Act, as amended,
M.G.L. c.21C, the Massachusetts Oil and Hazardous Material Release
Prevention and Response Act, M.G.L. c.21E, as amended, and all other
applicable codes, regulations, ordinances and laws. Said testing
program shall be a common expense of the owners of Parcel 1, 2, 3
and 4.

If the Park Manager has reason to believe that there is non-compliance
with any such laws on any parcel within NEBC, the Park Manager may, at
its option, after giving notice to the owner of such parcel and 30 days
to cure such non-compliance (or to commence and diligently prosecute
such cure to completion), investigate, inspect and bring into
conformity with law such noncompliance at the sole expense of the owner
of such parcel.

(d) Payment and Collection of Maintenance Fees.
-------------------------------------------

(i) The owners of Parcels 1, 2, 3 and 4 within NEBC shall each be
responsible for its share of annual common park maintenance fees. Such
parcel owner's share shall be determined by a fraction, the numerator
of which shall be the square footage of the building on the individual
parcel and the denominator of which shall be the total square footage
of occupied buildings within NEBC. There shall be a pro-ration for the
number of months in the year in which a certificate of occupancy for
any building is issued.

The term "common park maintenance fees" shall include the following:
(i)snowplowing, landscaping, roadway, utility, lighting and drainage
maintenance and operational costs (including replacement costs) for all
easement areas, (ii)environmental testing costs, (iii)maintenance and
operational costs (including park amenities or services and (iv)taxes,
operational costs and management fees associated with the foregoing.

(ii) The Park Manager shall prepare an annual statement of estimated common
park maintenance fees at the beginning of each calendar year. Parcel
owners shall be billed quarterly (or annually, in the Park Manager's
discretion) according to such statement. A final statement shall be
issued within 60 days after the end of each calendar year. Any overages
shall be applied to the following year's common park maintenance fees.
Such expense budget may be modified by the Park Manager during the year
for any unusual expenses
<PAGE>

(iii) If the owner of any parcel (the "defaulting party") fails to pay its
obligations hereunder within thirty (30) days' after receiving a bill
therefor, the Park Manager may charge interest on such costs at the
Bank of Boston prime rate plus four percent (4%) (the "Default Rate").
In addition, the Park Manager shall be permitted to record a notice of
lien of such obligation with said Deeds pursuant to the provisions of
G.L. c.254; and in connection with the recording of such notice of
lien, such owner hereby appoints the Park Manager, such appointment
being coupled with an interest and being unconditional and irrevocable,
as its true and lawful attorney with full power of substitution and
with the power for the other, or in the name and capacity of the
appointing party, to execute such notice of lien in the name of and on
behalf of the other, so as to permit such notice of lien to be so
recorded.

(iv) At its discretion, the Park Manager may bill directly any parcel owner
for expenses that the Park Manager determines are associated with the
willful act or gross negligence of such parcel owner, its agents or
invitees.

8. Relocation of Easement Areas. Unless prohibited by a public authority
-----------------------------
having jurisdiction, any parcel owner or the Park Manager shall
have the right, at any time and from time to time, to relocate any
or all of an easement area (and the utilities therein) elsewhere
upon the same parcel provided that (a)the parcel owner provides
reasonable advance written notice to the Park Manager, describing
such relocation; (b)the work of any such relocation is paid for
by the party undertaking the relocation; (c)such relocation, and
the work in completing the relocation, has received all necessary
governmental approvals, complies with all applicable laws and
regulations (including without limitation laws for the protection
of wetlands) and does not affect any permits or approvals
applicable to any portion of New England Business Center
(including without limitation, subdivision approval for New
England Business Center); and (d)such work, once commenced, is
diligently prosecuted to completion, is done in a good and
workmanlike manner and does not unreasonably interrupt utility
services within the affected easement area. Upon the recording
with said Deeds of (i)a plan showing each relocation (the cost of
which shall be borne by the party undertaking the relocation) and
(ii)a certificate by the party effecting such relocation
referring to this instrument and certifying to the fact that such
relocation has been completed as required hereby, the rights and
easements created herein with respect to those portions of an
easement area so relocated shall cease and determine and shall
attach to the relocated portions thereof as if originally created
with respect thereto.

9. Underground Installation of Utilities. All utilities that may be
--------------------------------------
installed pursuant to the rights created herein shall be installed
underground, provided that stormwater drainage pipes located in those
portions of Parcels 1, 5 and 6 indicated on the Subdivision Plan as
"20' Wide Drain Easement" may terminate in headwalls and swales, if
permitted by law,
<PAGE>

and above ground electrical transformers may be located within the
various areas designated as "10' x 25' Electric & Telephone Easement".

10. Compliance with Law. Each party exercising any rights hereunder shall
--------------------
comply with all applicable laws and regulations. If necessary to allow
the full exercise of rights hereunder by a particular benefited owner,
the owner of any other parcel shall, if requested, execute appropriate
consents, approvals, permit applications or the like evidencing the
rights created hereunder.

11. Restoration of Easement Areas. If, in the exercise of any easement
------------------------------
rights hereunder, any party shall disturb the surface of an easement
area, such party shall, as nearly as may be practicable, promptly
restore the same to its former condition.

12. Entry to Effect Easement Rights. The rights and easements provided for
--------------------------------
herein with respect to utilities and roadway maintenance shall include,
in each instance, the right and easement to enter upon the relevant
easement area at any time and from time to time upon reasonable advance
notice to the owner of the affected parcel and the Park Manager (except
in the event of an emergency, when no notice shall be required), in
connection with the exercise of such rights.

13. Self-Help if Park Manager Fails to Perform. If the Park Manager fails
-------------------------------------------
to perform its obligations hereunder, any affected parcel owner may
undertake to perform such obligations, provided that, prior to taking
such action, a parcel owner must give 15 days' advance written notice
to the Park Manager (except in the event of an emergency, when no
notice shall be required). In such event, the cost so incurred by a
parcel owner shall be shared among the parcels according to the formula
set forth in Section 7(d)(i) above.

14. Insurance. Each parcel owner shall carry its own insurance in
----------
connection with the exercise of it easement rights on other lots within
NEBC and agrees to indemnify, exonerate and hold harmless the other
parcel owners within NEBC, and those claiming by, through or under
them, from and against any and all loss, liability, cost, damage and
expense arising out of, or alleged to have arisen out of, any
excavation, construction or other work or entry made on an easement
area in connection herewith by such parcel owner, or any lessee,
employee, agent or contractor of any of them acting under or pursuant
to this instrument including, without limitation, injury (including
death) to persons and damage to property.

Before entering upon an easement area on land of another parcel owner
in connection with any such excavation, construction or other work, the
party making such entry or on whose behalf such entry is to be made
shall furnish the affected parcel owner with a
<PAGE>

certificate of public liability insurance in an amount not less than
$1,000,000 (which may be under a blanket or umbrella policy or
policies, so-called) bearing an endorsement naming the affected parcel
owner as an insured thereunder and specifically insuring the liability
of such party under this paragraph, and thereafter shall keep such
insurance coverage in full force and effect during the period of the
work. Such certificate shall provide for 30-days advance notice to the
affected parcel owner in the event of cancellation of coverage.

With respect to the use of New England Business Center Drive, each
parcel owner within NEBC shall carry its own general public liability
insurance in connection therewith in an amount not less than $1,000,000
per individual and $3,000,000 per occurrence.

15. Taxes. Each parcel owner shall pay for taxes, charges and assessments
------
upon the easement areas situated on its respective parcel.

16. Rights of Mortgagees. Any mortgagee who acquires title to a parcel, by
---------------------
foreclosure or by deed in lieu of foreclosure, shall acquire title
subject to all the terms, provisions and restrictions of this Agreement
and shall be liable during the period of its ownership of the parcel
for the performance of all obligations to be performed by the owner of
such parcel under this Agreement; provided, however, any such mortgagee
shall not be liable (a) for the performance of any obligation under
this Agreement required to be performed by the owner prior to
acquisition of title by such mortgagee; or (b) for the performance of
any obligation under this Agreement required to be performed by the
owner after such mortgagee has disposed of its interest in such parcel.

17. Notices. Any notice, consent, approval, election or demand permitted or
--------
required under this Agreement shall be made in writing, signed by the
party giving such notice, consent, approval, election or demand, and
shall be deemed sufficiently given three (3) business days following
the date the same is (i) sent by registered or certified mail, postage
prepaid, return receipt requested, to the party for which such notice
is intended, at the address as may be designated by notice given in
conformity with the terms of this Section 17 or (ii) sent to such
address via a recognized commercial delivery service for next-day
delivery (provided the sender of such notice shall have received a
written receipt from such delivery service of acceptance by such
commercial service of such notice, consent, approval, election or
demand for delivery):

As to Declarant and the Park Manager:

c/o National Development Associates,Inc.
199 Wells Avenue
Newton, MA 02159
ATTN: Property Management
<PAGE>

and with respect to future parcel owners within NEBC, to such other
persons, including mortgagees, and such other addresses as shall from
time to time be designated by like notice to the parties hereto.

Each notice, consent, approval, election or demand permitted under this
Agreement to be sent to any party shall also be sent to each of the
mortgagees entitled to receive a duplicate copy if sent to such party,
and such notice, consent, approval, election or demand shall not be
effective unless sent to each such mortgagee whose name and address has
been given to the Declarant and the Park Manager as aforesaid.

18. Notice of Default to Mortgagees. Whenever any party gives a notice to
--------------------------------
another party of any default of such other party's obligations under
this Agreement, the sending party shall send a copy of such notice to
each mortgagee who is entitled to receive notices in respect of the
defaulting party as provided in Section 17 hereof. Notwithstanding any
provision contained herein to the contrary, each mortgagee entitled to
receive such notices in respect of any such defaulting party shall have
an additional ten (10) days beyond the time that any monetary default
would otherwise become delinquent in respect of the defaulting party,
to cure any such default; and an additional thirty (30) days, beyond
the time that any non-monetary default of any such defaulting party
would otherwise become delinquent, to cure any such default.

19. Estoppel Certificates. The Park Manager agrees, from time to time, upon
----------------------
not less than thirty (30) days' prior written notice by any other
party, to execute, acknowledge and deliver to the requesting party a
statement in writing certifying that this Agreement is unmodified and
in full force and effect and that the certifying party has no defenses,
offsets or counterclaims against its obligations hereunder, and that,
to the best of its knowledge, there are no uncured defaults of any
other party under this Agreement (or if there have been any
modifications, that the same is in full force and effect as modified,
and stating the modifications and, if there are any defenses, offsets,
unpaid charges, counterclaims or defaults, setting them forth in
reasonable detail). Any such statement delivered pursuant to this
Section 19 may be relied upon by any prospective purchaser, lessee, or
mortgagee of all or any part of a parcel (or leasehold therein) owned
by the requesting party, or any prospective assignee of any mortgagee
of any such parcel, portion thereof or leasehold therein.

20. Pro-ration of Real Estate Taxes. Until each parcel shown on the
--------------------------------
Subdivision Plan is separately assessed for real estate taxes by the
Town of Andover, each parcel shall be responsible for its pro rata
portion of the total tax bill for NEBC (a) based upon square footage in
the case of land value and (b) as reasonably determined by the Park
Manager in the case of improvements.

21. Limited Liability. Except as herein otherwise expressly provided, the
------------------
owner of any parcel within NEBC shall be liable only for any breach of
such owner's obligations
<PAGE>

hereunder occurring during such owner's period of ownership thereof. In
no event shall any partner, trustee, principal, officer, director,
shareholder, employee or agent of or in any owner or mortgagee have or
incur any personal liability for any of the liabilities or obligations
of any owner or mortgagee and no personal judgment shall be sought,
levied or enforced against any such person individually, it being
understood and agreed by the Declarant and the Park Manager that their
recourse hereunder shall be limited to the interest of any owner or
mortgagee in its parcel and the assets of such entity itself.
Notwithstanding the foregoing, a mortgagee who has acquired title to a
parcel by foreclosure shall not be personally liable hereunder
provided, however, that such mortgagee shall first apply any monies
received from a foreclosure or other sale to payments due hereunder for
charges which have accrued during the mortgagee's period of ownership
prior to the mortgagee applying any such monies to the mortgage debt or
otherwise retaining the same.

22. Successors and Assigns: Covenant Running with the Land. The rights and
obligations herein contained shall inure to the benefit of and be
binding upon Declarant and its successors and assigns as owners from
time to time of all or any portion of parcels 1, 2, 3, 4, 5 or 6,
respectively, and shall be covenants running with the land. A mortgagee
of a parcel who comes into possession of a parcel, and any purchaser at
the foreclosure sale or grantee of a deed in lieu of foreclosure, shall
be deemed a successor to such party and thereafter be deemed such
"party" hereunder. Any mortgage or deed of trust upon the fee of any
parcel shall be subordinate to this Agreement; however, no amendment or
modification of this Agreement shall be effective without the prior
written consent of any mortgagee holding a mortgage upon a parcel.

23. Ownership of New England Business Center Drive. Declarant hereby grants
-----------------------------------------------
to Parcel 1, Parcel 2, Parcel 3, Parcel 4, Parcel 5 and Parcel 6, as
appurtenant thereto, an undivided one-sixth (1/6) interest as tenants
in common in and to New England Business Center Drive as shown on the
Subdivision Plan, subject to the rights and easement affecting the same
created hereunder. If the parcels on the Subdivision Plan are changed
through consolidation or resubdivision, the fractional ownership
interest appurtenant to each parcel shall ipso facto be deemed to be a
new fraction of which the numerator shall be one (1) and the
denominator shall be the number of parcels within NEBC. Such fractional
ownership interest can be alienated, conveyed or transferred only as
part of the parcel to which it is appurtenant, excepting only a
conveyance by all of the parcel owners within NEBC of the fee interest
in New England Business Center Drive to the Town of Andover or to a
similar public authority. In confirmation of the foregoing, the
Declarant shall include such fractional interest as an appurtenant
right in the deed to a third party of each parcel within NEBC.

24. No Merger. The rights and easements hereby created shall not merge into
----------
the title of any benefited land notwithstanding common ownership of any
parcels, or any part thereof.
<PAGE>

25. Captions. The captions of this Agreement are inserted only as a matter
---------
of convenience and for reference. They do not define, limit or describe
the scope or intent of this Agreement, and they shall not affect the
interpretation hereof.

26. Severability. If any provision of this Agreement shall to any extent to
-------------
invalid or unenforceable, the remainder of this Agreement (or the
application of such provision to persons or circumstances other than
those in respect of which it is invalid or unenforceable) shall not be
affected, and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

27. Governing Laws. This Agreement shall be construed and governed in
---------------
accordance with the laws of the Commonwealth of Massachusetts.

28. Dedication. Nothing herein contained shall be deemed to be a gift or
-----------
dedication of any part of the real estate affected hereby to the
general public or for the general public or for any public purpose
whatsoever, it being the intention of the parties that this Agreement
shall be strictly limited to and for the purpose herein expressed.

29. Written Consent Required. Whenever a consent or approval of the owner
-------------------------
of any parcel is required hereunder, the consent of the construction or
permanent mortgagee in connection with such parcel also shall be
required. Whenever a party or a construction or permanent mortgagee is
requested to consent to or approve of any matter with respect to which
its consent or approval is required by this Agreement, such consent or
approval shall be given in writing, and shall not be unreasonably
withheld or delayed.

30. Amendment. This Agreement may be amended or otherwise modified only by
----------
a writing signed and acknowledged by each separate parcel owner within
NEBC and recorded with said Deeds.

31. Counterparts. This Agreement may be signed in several counterparts,
-------------
each of which shall be deemed an original, and all of such counterparts
shall constitute one and the same instrument.

EXECUTED under seal as of the day and year first above written.

NEW ENGLAND BUSINESS CENTER REALTY TRUST

By /s/ Thomas M. Alperin
-----------------------------------------------
Thomas M. Alperin, as Trustee as aforesaid
and not individually

By /s/ Theodore R. Tye
-----------------------------------------------
Theodore R. Tye, as Trustee as aforesaid
and not individually
<PAGE>

By /s/ John P. Fenney
-----------------------------------------------
John P. Fenney, as Trustee as aforesaid
and not individually

By /s/ Julia B. Marciano
-----------------------------------------------
Julia B. Marciano, as Trustee as aforesaid
and not individually

National Development Asset Management, Inc. joins herein for purposes of
agreeing to perform the obligations of Park Manager hereunder.

National Development Asset Management, Inc.

By /s/ Thomas M. Alperin
------------------------------------------------
Thomas M. Alperin,
its Executive Vice President

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. Oct. 18 , 1988

Then personally appeared the above-named Thomas M. Alperin and
acknowledged the foregoing instrument to be his free act and deed as trustee as
aforesaid, before me.

/s/ Patricia A. Tuohy
--------------------------------------------
Notary Public
My Commission Expires: 2/1/91

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. Oct. 19 , 1988

Then personally appeared the above-named Theodore R. Tye and
acknowledged the foregoing instrument to be his free act and deed as trustee as
aforesaid, before me.

/s/ Meredith G. Brewer
--------------------------------------------
Notary Public
My Commission Expires: 1/22/94
<PAGE>

COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. October 20 , 1988

Then personally appeared the above-named John P. Feeney and
acknowledged the foregoing instrument to be his free act and deed as trustee as
aforesaid, before me.

/s/ Robert A. <unreadable>
-------------------------------------------------
Notary Public
My Commission Expires: 1/6/95

COMMONWEALTH OF CONNECTICUT

Hartford, ss. Oct. 19 , 1988

Then personally appeared the above-named Julia B. Marciano and
acknowledged the foregoing instrument to be her free act and deed as trustee as
aforesaid, before me.

/s/ Paula A. Grimaldi
------------------------------------------------
Notary Public
My Commission Expires: 3/31/91

Recorded Oct.21, 1988 at 1:36PM #25654
<PAGE>

EXHIBIT E
to

----------------------------

ERISA Parties in Interest List
------------------------------
Separate Account R
------------------

1. Treasurer of the State of North Carolina

2. The United Nations Joint Staff Pension Fund

3. Maryland State Retirement System

4. International Bank for Reconstruction and Development World Bank
Pension Department (Staff Retirement Plan 1)

5. The School Employees Retirement Board of Ohio

6. International Monetary Fund as Trustee of the Staff Retirement Plan

7. Public School Teachers Pension & Retirement Fund of Chicago

PLEASE BE ADVISED THAT THE PRECEDING IS A LIST OF RETIREMENT PLANS WHICH MAY
HAVE AN INTEREST IN SEPARATE ACCOUNT R AS OF THE DATE HEREOF IN EXCESS OF TEN
PERCENT (10%). THIS EXHIBIT IS SUBJECT TO CHANGE AS HOLDERS OF INTERESTS ARE
EITHER ADDED OR SUBTRACTED OR THE PERCENTAGE INTEREST HELD BY ANY PLAN CHANGES.

As of January 1, 1998

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
VIALOG Corporation:

We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP

Boston, Massachusetts
May 22, 1998