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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 3, 2000
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VTEL CORPORATION
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(Exact name of registrant as specified in its charter)

Delaware                       0-20008               74-2415696
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(State or other jurisdiction of       (Commission File         (IRS Employer
incorporation)                    Number)           Identification No.)

108 Wild Basin Road, Austin, Texas                                 78746
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(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:           (512) 437-2700
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(Not Applicable)
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(Former name or former address, if changed since last report)

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Item 5.  Other Events
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The Registrant has settled a lawsuit pending in the 126th Judicial District
Court in Travis County,  Texas which the  Registrant  had  previously  initiated
against five former  employees who left the Registrant in September 1996 to form
Via Video  Communications,  Inc.  ("Via  Video").  Via  Video  was  subsequently
acquired  by Polycom,  Inc.  Pursuant to the  settlement  agreement,  the former
employees of the Registrant  have paid the  Registrant  $2.5 million in cash and
have  delivered  to the  Registrant  300,800  shares of common stock of Polycom,
Inc.,  having a market value  $39,104,000  as of March 3, 2000, in settlement of
the claims asserted by the  Registrant.  The parties have agreed to dismissal of
all claims and counterclaims  and third party claims in the lawsuit,  ending the
litigation.  Separately,  the Registrant voluntarily dismissed Polycom, Inc. and
Via Video from the case without consideration.

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SIGNATURES

Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

VTEL CORPORATION
(Registrant)

Date: March 3, 2000               By:      /s/ Stephen Von Rump
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Stephen Von Rump
President and Chief Executive Officer

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