TELE COMMUNICATIONS INC, SC 13D/A, 1994-02-02

TELE COMMUNICATIONS INC
SC 13D/A, 1994-02-02
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 13D
Under the Securities Exchange Act of 1934*
(Amendment No. 5)

TELE-COMMUNICATIONS, INC.

- --------------------------------------------------------------------------------
(Name of Issuer)

(1) Class A Common Stock, par value $1.00 per share
(2) Class B Common Stock, par value $1.00 per share

- --------------------------------------------------------------------------------
(Title of Class of Securities)

(1) 879240 10 9
(2) 879240 20 8

- --------------------------------------------------------------------------------
(CUSIP Number)

John M. Draper, Esq.
Senior Vice President
and General Counsel
Liberty Media Corporation
8101 E. Prentice Avenue
Suite 500
Englewood, CO 80111
Tel. No. (303) 721-5400

- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)

January 27, 1994

- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].

Check the following box if a fee is being paid with this statement. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)

Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.

*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).

Page 1 of 5 pages
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Amendment No. 5)

Statement Of

LIBERTY MEDIA CORPORATION

Pursuant to Section 13(d) of the
Securities Exchange Act of 1934

in respect of

TELE-COMMUNICATIONS, INC.
(Commission File No. 0-5550)

The Report on Schedule 13D filed by Liberty Media Corporation, a Delaware
corporation (the "Reporting Person" or "Liberty"), dated April 5, 1991 (the
"Original Report") as amended on April 8, 1991 ("Amendment No. 1"), on November
4, 1991 ("Amendment No. 2"), on November 15, 1991 ("Amendment No. 3") and on
November 4, 1993 ("Amendment No. 4") is hereby amended and supplemented as set
forth below. The Original Report, as amended by Amendment No. 1, Amendment No.
2, Amendment No. 3 and Amendment No. 4, is hereinafter referred to as the
"Schedule 13D." All capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Schedule 13D.

ITEM 4. PURPOSE OF TRANSACTION

Item 4 of the Schedule 13D is hereby supplemented and amended to include the
following information:

On January 27, 1993, the Company, Liberty, TCI/Liberty Holding Company, a
Delaware corporation ("TCI/Liberty"), TCI Mergeco, Inc., a Delaware corporation
and a wholly-owned subsidiary of TCI/Liberty ("TCI Mergeco") and Liberty
Mergeco, Inc., a Delaware corporation and a wholly-owned subsidiary of
TCI/Liberty ("Liberty Mergeco") entered into an Agreement and Plan of Merger
(the "TCI/Liberty Merger Agreement") providing for, among other things, the
merger of TCI Mergeco with and into TCI (the "TCI Merger") and the merger of
Liberty Mergeco with and into Liberty (the "Liberty Merger"). As a result of
the TCI Merger and the Liberty Merger, the Company and Liberty will be
wholly-owned subsidiaries of TCI/Liberty. A copy of the TCI/Liberty Merger
Agreement (without Exhibits) has been filed as an Exhibit to this Report and is
hereby incorporated by reference herein in its entirety, and the description
contained herein of such document is qualified in its entirety by reference to
such Exhibit.

Page 2 of 5 pages
<PAGE> 3

ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS
OR RELATIONSHIPS WITH RESPECT TO THE
SECURITIES OF THE ISSUER

Item 6 of the Schedule 13D is hereby supplemented and amended to
include the following information:

The information contained in Item 4 above is incorporated by reference
in this Item 6.

ITEM 7. MATERIAL TO BE FILED AS EXHIBITS

Item 7 of the Schedule 13D is hereby supplemented and amended to
include the following information:

7. Agreement and Plan of Merger by and among Tele-Communications,
Inc., Liberty Media Corporation, TCI/Liberty Holding Company,
TCI Mergeco, Inc. and Liberty Mergeco, Inc., dated as of
January 27, 1994.

8. Press Release dated January 31, 1994.

Page 3 of 5 pages
<PAGE> 4

SIGNATURE

After reasonable inquiry and to the best of their knowledge
and belief, the undersigned certify that the information in this statement is
true, complete and correct.

Dated: February 2, 1994

LIBERTY MEDIA CORPORATION

By: /s/ Robert R. Bennett
-----------------------------------
Name: Robert R. Bennett
Title: Senior Vice President

Page 4 of 5 pages
<PAGE> 5

INDEX TO EXHIBITS

8. Press Release dated January 31, 1994.

Page 5 of 5 pages

<PAGE> 1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

TELE-COMMUNICATIONS, INC.

LIBERTY MEDIA CORPORATION,

TCI/LIBERTY HOLDING COMPANY

TCI MERGERCO, INC.

AND

LIBERTY MERGERCO, INC.

AS OF JANUARY 27, 1994

<PAGE> 2
TABLE OF CONTENTS

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ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The Mergers . . . . . . . . . . . . . . . . . . . . 1
1.1 The Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------
1.3 Effect of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------
1.4 Certificate of Incorporation and By-laws of TCI/Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------------------------------------------------
1.5 Certificates of Incorporation and By-laws of the Surviving Corporations . . . . . . . . . . . . . . . . . . . . . 2
-----------------------------------------------------------------------
1.6 Directors and Officers of the Surviving Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------------------------------------------
1.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------
1.8 Definitions of "Subsidiary" and "affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------------------------------

ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Conversion and Exchange of Securities;
Effect of Mergers on TCI and Liberty Stock Plans . . . . . . . . . . . 4
2.1 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------
2.2 TCI/Liberty Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------
2.3 Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
2.4 Definition of "fair market value" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------------------
2.5 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------
2.6 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------
2.7 Stock Options, SARs and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------------------

ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Certain Actions . . . . . . . . . . . . . . . . . . . 15
3.1 TCI Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------------------
3.2 Liberty Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
---------------------------
3.3 Proxy Statement and Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------------------------------------------
3.4 Letters from Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------
3.5 Release of Escrowed TCI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------------------
3.6 Identification of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------------
3.7 State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------------------
3.8 Possible Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------
3.9 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
3.10 Quotation on Nasdaq NMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------
3.11 Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------
</TABLE>

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3.12 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------
3.13 Directors and Executive Officers of TCI/Liberty at the Effective Time . . . . . . . . . . . . . . . . . . . . . 20
---------------------------------------------------------------------

ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Representations and Warranties of Liberty . . . . . . . . . . . . . 20
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------------------------
4.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------------------------
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------
4.4 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------------------
4.5 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------------------------------------------------------------
4.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------------------
4.7 Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------------------------
4.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
4.9 Licenses; Compliance With Regulatory Requirements; Intangible Property . . . . . . . . . . . . . . . . . . . . . 27
----------------------------------------------------------------------
4.10 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------
4.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------
4.12 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------------------
4.13 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------
4.14 Recommendation of Liberty Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-------------------------------
4.15 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-------------

ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Representations and Warranties of TCI . . . . . . . . . . . . . . 33
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------
5.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
---------------------------------------
5.3 Capitalization of TCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------
5.4 TCI Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
------------------------------------
5.5 No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------------------------------------------------------
5.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------------------------
5.7 Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------------------------
5.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------
5.9 Licenses; Compliance with Regulatory Requirements; Intangible Property . . . . . . . . . . . . . . . . . . . . . 39
----------------------------------------------------------------------
5.10 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------------
5.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-----------
5.12 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------------------------
5.13 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------
5.14 Recommendation of TCI Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
---------------------------
</TABLE>

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5.15 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------

ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Representations and Warranties of TCI/Liberty . . . . . . . . . . . . 45
6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
------------
6.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
---------------------------------------
6.3 Newly Issued Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-------------------
6.4 Interim Operations of TCI/Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
---------------------------------

ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Transactions Prior to Closing . . . . . . . . . . . . . . . . 45
7.1 Access to Information Concerning Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-------------------------------------------------------
7.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------
7.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
--------------------
7.4 Conduct of Business by Liberty and TCI Pending the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 46
-----------------------------------------------------------------
7.5 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
---------------
7.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
--------
7.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-------------------------------
7.8 Defense of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
---------------------

ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Conditions Precedent . . . . . . . . . . . . . . . . . . 51
8.1 Conditions Precedent to the Obligations of TCI and Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
----------------------------------------------------------
8.2 Conditions Precedent to the Obligations of TCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
----------------------------------------------
8.3 Conditions Precedent to the Obligations of Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
--------------------------------------------------

ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Termination . . . . . . . . . . . . . . . . . . . . 56
9.1 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
---------------------------
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------------------

ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Miscellaneous . . . . . . . . . . . . . . . . . . . . 57
10.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------------------------------------------------------
10.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------------
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
-------
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10.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
----------------
10.5 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
-----------------------------------
10.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
---------
10.7 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-----------------
10.8 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
--------------
10.9 Knowledge as to Equity Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
---------------------------------
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
------------
10.11 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
--------------
10.12 No Remedy in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
----------------------------------
10.13 Limited Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
-----------------

Exhibit A - Certificate of Incorporation of TCI/Liberty
Exhibit B - By-laws of TCI/Liberty
Exhibit C - Certificate of Incorporation of TCI Surviving Corporation
Exhibit D - Certificate of Incorporation of Liberty Surviving Corporation
Exhibit E - By-laws of TCI Surviving Corporation
Exhibit F - By-laws of Liberty Surviving Corporation
Exhibit G - Other Employee Benefit Plans
Exhibit H - Rule 145 Affiliates
Exhibit I - Directors and Executive Officers of TCI/Liberty

Annex 1 - Opinion of Counsel to be delivered to TCI
Annex 2 - Opinion of Counsel to be delivered to Liberty
</TABLE>

<PAGE> 6

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of January 27, 1994, by and among
TELE-COMMUNICATIONS, INC., a Delaware corporation ("TCI"), LIBERTY MEDIA
CORPORATION, a Delaware corporation ("Liberty"), TCI/LIBERTY HOLDING COMPANY, a
Delaware corporation jointly owned by TCI and Liberty ("TCI/Liberty"), TCI
MERGERCO, INC., a Delaware corporation and a wholly owned subsidiary of
TCI/Liberty ("TCI Mergerco"), and LIBERTY MERGERCO, INC., a Delaware
corporation and a wholly owned subsidiary of TCI/Liberty ("Liberty Mergerco").

WHEREAS, the respective Boards of Directors of TCI and Liberty have approved,
and deem it in the best interests of their respective stockholders to
consummate, the business combination transaction provided for herein, in which
TCI Mergerco would merge with and into TCI (the "TCI Merger"), Liberty Mergerco
would merge with and into Liberty (the "Liberty Merger"; and, together with the
TCI Merger, the "Mergers"), and the surviving corporations of the Mergers would
become wholly-owned subsidiaries of TCI/Liberty;

WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Mergers and also to prescribe certain
conditions to the Mergers; and

WHEREAS, for Federal income tax purposes it is intended that each of the
Mergers shall be tax free to the parties and to the stockholders of each of TCI
and Liberty.

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

ARTICLE I

The Mergers

1.1 The Mergers. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2), (i) TCI Mergerco shall be
merged with and into TCI in accordance with the provisions of the General
Corporation Law of the State of Delaware (the "DGCL"), and the separate
corporate existence of TCI Mergerco shall cease and TCI shall continue as the
surviving corporation (hereinafter sometimes referred to as the "TCI Surviving
Corporation") under the laws of the State of Delaware under the name "TCI
Communications, Inc." and (ii) Liberty Mergerco shall be merged with and into
Liberty in accordance with the provisions of the DGCL, and the separate
corporate existence of Liberty Mergerco shall cease and Liberty shall continue
as the surviving corporation (hereinafter sometimes referred to as the "Liberty
Surviving Corporation") under the laws of the State of Delaware under the name
"Liberty Media Corporation." (TCI and TCI Mergerco are sometimes hereinafter
referred to collectively as the "TCI Constituent Corporations" and Liberty and
Liberty Mergerco are sometimes hereinafter referred to collectively as the
"Liberty Constituent Corporations.") The

<PAGE> 7
TCI Surviving Corporation and the Liberty Surviving Corporation are sometimes
hereinafter referred to collectively as the "Surviving Corporations."

1.2 Effective Time. Subject to the terms and provisions of this Agreement,
there shall be filed with the Delaware Secretary of State, as soon as
practicable on or after the Closing Date (as defined in Section 1.7), (i) a
certificate of merger with respect to the TCI Merger (the "TCI Certificate of
Merger"), in such form as is required by, and executed in accordance with, the
applicable provisions of the DGCL and (ii) a certificate of merger with respect
to the Liberty Merger (the "Liberty Certificate of Merger"), in such form as is
required by, and executed in accordance with, the applicable provisions of the
DGCL. The Mergers shall become effective simultaneously at the time of filing
of the TCI Certificate of Merger and the Liberty Certificate of Merger with the
Delaware Secretary of State or at such other time as may be provided in such
certificates of merger. The time at which the Mergers shall become effective
is referred to herein as the "Effective Time."

1.3 Effect of the Mergers. The Mergers shall have the effects set forth in
Sections 259, 260 and 261 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time (i) all the properties,
rights, privileges, powers and franchises of the TCI Constituent Corporations
shall vest in the TCI Surviving Corporation, and all debts, liabilities and
duties of the TCI Constituent Corporations shall become the debts, liabilities
and duties of the TCI Surviving Corporation and (ii) all the properties,
rights, privileges, powers and franchises of the Liberty Constituent
Corporations shall vest in the Liberty Surviving Corporation, and all debts,
liabilities and duties of the Liberty Constituent Corporations shall become the
debts, liabilities and duties of the Liberty Surviving Corporation. If, at any
time after the Effective Time, either Surviving Corporation considers or is
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in such Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either TCI or TCI
Mergerco, or Liberty or Liberty Mergerco, as the case may be, or otherwise to
carry out the intent and purposes of this Agreement, the officers and directors
of such Surviving Corporation will be authorized to execute and deliver, in the
name and on behalf of each of TCI and TCI Mergerco, or Liberty and Liberty
Mergerco, as the case may be, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of TCI and TCI
Mergerco, or Liberty and Liberty Mergerco, as the case may be, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in such Surviving Corporation or otherwise to carry out the intent
and purposes of this Agreement.

1.4 Certificate of Incorporation and By-laws of TCI/Liberty. From and after
the Effective Time, (a) the Certificate of Incorporation of TCI/Liberty shall
read in its entirety in the form set forth as Exhibit A and (b) the By-laws of
TCI/Liberty shall read in its entirety in the form set forth as Exhibit B, in
each case until thereafter amended as provided by law.

1.5 Certificates of Incorporation and By-laws of the Surviving Corporations.

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<PAGE> 8
(a) The Certificate of Incorporation of TCI, as in effect immediately prior
to the Effective Time, shall be amended, by virtue of the TCI Merger, so as to
read in its entirety in the form set forth as Exhibit C hereto, and as so
amended shall, from and after the Effective Time, be the Certificate of
Incorporation of the TCI Surviving Corporation until thereafter further amended
as provided by law. The Certificate of Incorporation of Liberty, as in effect
immediately prior to the Effective Time, shall be amended, by virtue of the
Liberty Merger, so as to read in its entirety in the form set forth as Exhibit
D hereto, and as so amended shall, from and after the Effective Time, be the
Certificate of Incorporation of the Liberty Surviving Corporation until
thereafter further amended as provided by law.

(b) The By-laws of TCI, as in effect immediately prior to the Effective
Time, shall be amended, immediately following the Effective Time, so as to read
in its entirety in the form set forth as Exhibit E hereto, and as so amended
shall be the By-laws of the TCI Surviving Corporation until thereafter further
amended as provided by law. The By-laws of Liberty, as in effect immediately
prior to the Effective Time, shall be amended immediately following the
Effective Time, so as to read in its entirety in the form set forth as Exhibit
F hereto, and as so amended shall be the By-laws of the Liberty Surviving
Corporation until thereafter further amended as provided by law.

1.6 Directors and Officers of the Surviving Corporations. (a) The initial
directors of TCI Surviving Corporation and Liberty Surviving Corporation shall
be the respective persons that are directors of TCI and Liberty, respectively,
at the Effective Time, and all such directors will continue to hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the respective Certificates of
Incorporation and By-laws of the Surviving Corporations, or as otherwise
provided by applicable law. The initial officers of TCI Surviving Corporation
and Liberty Surviving Corporation shall be the respective persons that are
officers of TCI and Liberty, respectively, at the Effective Time and all such
officers will continue to hold office from the Effective Time until their
respective successors are duly appointed and qualify in the manner provided in
the respective By-laws of the Surviving Corporations, or as otherwise provided
by applicable law.

1.7 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Baker & Botts, L.L.P., 885
Third Avenue, New York, New York, at 10:00 a.m., local time, on a date to be
selected by the parties, which shall be no later than the second business day
after the day on which the last of the conditions set forth in Article VIII
(other than any such conditions which, by their terms, are not capable of being
satisfied until the Closing Date) is satisfied or, where permissible, waived,
unless another place, date or time is agreed to by TCI and Liberty (the date on
which the Closing takes place being referred to herein as the "Closing Date").

1.8 Definitions of "Subsidiary" and "affiliate". Subject to the last
sentence of this Section 1.8, as used in this Agreement, (i) a "Subsidiary" of
any party means any corporation or other organization, whether incorporated or
unincorporated, of which (x), in the case of a corporation, securities or
other interests having by their terms ordinary voting power to elect a

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<PAGE> 9
majority of the Board of Directors or others performing similar functions with
respect to such corporation are directly or indirectly owned or controlled by
such party, by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries or (y) in the case of any organization or entity other
than a corporation, such party, one or more of its Subsidiaries, or such party
and one or more of its Subsidiaries (A) owns a majority of the equity interests
thereof and (B) has the power to elect or direct the election of a majority of
the members of the governing body thereof or otherwise has "control" (within
the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") over such organization or entity; and (ii) except for
purposes of Section 3.6, the term "affiliate" has the meaning assigned to such
term in Rule 12b-2 under the Exchange Act. For purposes of this Agreement
(other than Section 3.6), (A) neither Liberty nor any of its Subsidiaries shall
be deemed to be Subsidiaries or affiliates of TCI or any of TCI's Subsidiaries;
(B) neither TCI nor any of its Subsidiaries (determined after applying the rule
in clause (A) of this sentence) shall be deemed to be affiliates of Liberty or
any of Liberty's Subsidiaries; (C) none of the affiliates (the "Liberty
Affiliates") of Liberty or any of its Subsidiaries (determined after applying
the rules in clauses (A) and (B) of this sentence) shall be deemed to be an
affiliate of TCI or any of TCI's Subsidiaries, unless such Liberty Affiliate
would be such an affiliate if neither TCI nor any of its Subsidiaries (1) owned
any capital stock of Liberty, (2) designated or nominated, or possessed any
contractual right to designate or nominate, any directors of Liberty or any of
its Subsidiaries or (3) otherwise possessed, directly or indirectly, the power
to direct or cause the direction of the management or policies of Liberty or
any of its Subsidiaries; and (D) none of the affiliates ("TCI Affiliates") of
TCI or any of TCI's Subsidiaries (determined after applying the rules in
clauses (A) and (B) of this sentence) shall be deemed to be an affiliate of
Liberty or any of Liberty's Subsidiaries, unless such TCI Affiliate would be
such an affiliate if neither TCI nor any of its Subsidiaries (1) owned any
capital stock of Liberty, (2) designated or nominated, or possessed any
contractual right to designate or nominate, any directors of Liberty or any of
its Subsidiaries or (3) otherwise possessed, directly or indirectly, the power
to direct or cause the direction of the management or policies of Liberty or
any of its Subsidiaries.

ARTICLE II

Conversion and Exchange of Securities;
Effect of Mergers on TCI and Liberty Stock Plans

2.1 Conversion of Securities. At the Effective Time, by virtue of the
Mergers and without any action on the part of any party hereto or the holder of
any of the following securities:

(a) Conversion of TCI Common Stock. Each share of the Class A Common Stock,
par value $1.00 per share, of TCI (the "TCI Class A Stock") issued and
outstanding immediately prior to the Effective Time (other than shares of TCI
Class A Stock to be cancelled pursuant to Section 2.1(f)) shall be converted
into the right to receive one validly issued, fully paid and non-assessable
share of the Class A Common Stock, par value $1.00 per share, of TCI/Liberty
(the "TCI/Liberty Class A Stock") and each share of the Class B Common Stock,

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<PAGE> 10
par value $1.00 per share, of TCI (the "TCI Class B Stock," and collectively
with the TCI Class A Stock, the "TCI Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled
pursuant to Section 2.1(f)) shall be converted into the right to receive one
validly issued, fully paid and non-assessable share of the Class B Common
Stock, par value $1.00 per share, of TCI/Liberty (the "TCI/Liberty Class B
Stock," and collectively with the TCI/Liberty Class A Stock, the "TCI/Liberty
Common Stock"). All such shares of TCI Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive the
shares of TCI/Liberty Common Stock to be issued pursuant to this Section 2.1(a)
(and any dividends or other distributions payable pursuant to Section 2.6(g))
with respect thereto upon the surrender of such certificate in accordance with
Section 2.6, without interest.

(b) Conversion of TCI Preferred Stock. Subject to Section 2.5, each share
of the Convertible Preferred Stock, Series C, par value $1.00 per share, of TCI
(the "TCI Preferred Stock") issued and outstanding immediately prior to the
Effective Time (other than shares of TCI Preferred Stock to be cancelled
pursuant to Section 2.1(f)) shall be converted into the right to receive one
validly issued, fully paid and non- assessable share of the Class A Convertible
Preferred Stock, par value $1.00 per share, of TCI/Liberty (the "TCI/Liberty
Convertible Preferred"), which shall have the designations, preferences, rights
and qualifications, limitations and restrictions set forth in Article IV,
Section B of Exhibit A hereto. Subject to Section 2.5, all such shares of TCI
Preferred Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the shares of TCI/Liberty
Convertible Preferred to be issued pursuant to this Section 2.1(b) (and any
dividends or other distributions payable pursuant to Section 2.6(g)) with
respect thereto upon the surrender of such certificate in accordance with
Section 2.6, without interest.

(c) Conversion of Liberty Common Stock. Subject to Section 2.6(f), (i) each
share of the Class A Common Stock, par value $1.00 per share, of Liberty (the
"Liberty Class A Stock") issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled pursuant to Section 2.1(f))
shall be converted into the right to receive .975 of a validly issued, fully
paid and non-assessable share of the TCI/Liberty Class A Stock and (ii) each
share of the Class B Common Stock, par value $1.00 per share, of Liberty (the
"Liberty Class B Stock," and collectively with the Liberty Class A Stock, the
"Liberty Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled pursuant to Section 2.1(f))
shall be converted into the right to receive .975 of a validly issued, fully
paid and non-assessable share of the TCI/Liberty Class B Stock. All such
shares of Liberty Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of
TCI/Liberty Common Stock to be issued pursuant to this Section 2.1(c) (and any
dividends or other distributions and any cash in lieu of a fractional share
payable pursuant to Sections 2.6(g) and 2.6(f)) with respect thereto upon the
surrender of such certificate in accordance with Section 2.6,

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<PAGE> 11
without interest.

(d) Conversion of Liberty Class B and D Preferred Stock. Each share of (i)
Class B Redeemable Exchangeable Preferred Stock, par value $.01 per share, of
Liberty (the "Liberty Class B Preferred") and (ii) Class D Redeemable Voting
Preferred Stock, par value $.01 per share, of Liberty (the "Liberty Class D
Preferred") issued and outstanding immediately prior to the Effective Time
(other than shares of Liberty Class B Preferred and Liberty Class D Preferred
to be cancelled pursuant to Section 2.1(f)), shall be converted into the right
to receive that number of validly issued, fully paid and non-assessable shares
(and/or fraction of a share) of the Class B Preferred Stock, par value $.01 per
share, of TCI/Liberty ("TCI/Liberty Class B Preferred") equal to the product of
one multiplied by a fraction, the numerator of which is the fair market value
(as defined in Section 2.4) of the share of Liberty Class B Preferred or
Liberty Class D Preferred, as the case may be, to be converted in accordance
with this Section 2.1(d), and the denominator of which is the fair market value
of a share of TCI/Liberty Class B Preferred. All such shares of Liberty Class B
and Class D Preferred shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and the holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of TCI/Liberty Class B
Preferred to be issued pursuant to this Section 2.1(d) (and any dividends or
other distributions payable pursuant to Section 2.6(g)) with respect thereto
upon the surrender of such certificate in accordance with Section 2.6, without
interest. The TCI/Liberty Class B Preferred shall have the designations,
preferences, rights and qualifications, limitations and restrictions set forth
in Article IV, Section C of Exhibit A hereto (as supplemented as contemplated
by said Section). No certificates or scrip representing a fractional share of
TCI/Liberty Class B Preferred shall be issued upon the surrender by any holder
of certificates for Liberty Class B Preferred or Liberty Class D Preferred. In
lieu of such a fractional share, the number of shares of TCI/Liberty Class B
Preferred to which a holder shall be entitled pursuant to this Section 2.1(d)
shall be rounded down to the nearest whole number (after taking into account
all shares of Liberty Class B Preferred and Liberty Class D Preferred owned by
such holder).

(e) Conversion of Liberty Class E Preferred Stock. Each share of the Class
E, 6% Cumulative Redeemable Exchangeable Junior Preferred Stock, par value $.01
per share, of Liberty (the "Liberty Class E Preferred", and collectively with
the Liberty Class B Preferred and Liberty Class D Preferred, the "Liberty
Preferred Stock") issued and outstanding immediately prior to the Effective
Time (other than shares of Liberty Class E Preferred to be cancelled pursuant
to Section 2.1(f)) shall be converted into the right to receive one validly
issued, fully paid and non-assessable share of the Class C, 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share, of
TCI/Liberty (the "TCI/Liberty Class C Preferred", and collectively with the
TCI/Liberty Class A Preferred and the TCI/Liberty Class B Preferred, the
"TCI/Liberty Preferred Stock"), which shall have the designations, preferences,
rights and qualifications, limitations and restrictions set forth in Article
IV, Section D of Exhibit A. All such shares of Liberty Class E Preferred shall
no longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the

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shares of TCI/Liberty Class C Preferred to be issued pursuant to this Section
2.1(e) (and any dividends or other distributions payable pursuant to Section
2.6(g)) with respect thereto upon the surrender of such certificate in
accordance with Section 2.6, without interest.

(f) Treasury Stock. All shares of TCI Common Stock and TCI Preferred Stock
which are held immediately prior to the Effective Time by TCI in its treasury,
and all shares of Liberty Common Stock and Liberty Preferred Stock which are
held immediately prior to the Effective Time by Liberty in its treasury, shall
be cancelled and retired and shall cease to exist, and no capital stock of
TCI/Liberty or other consideration shall be delivered with respect thereto.

(g) TCI Mergerco Stock. Each share of common stock, par value $1.00 per
share, of TCI Mergerco issued and outstanding immediately prior to the
Effective Time shall be converted into one share of the common stock, par value
$1.00 per share, of the TCI Surviving Corporation, and each certificate
evidencing ownership of shares of TCI Mergerco common stock shall from and
after the Effective Time evidence ownership of the same number of shares of
common stock of the TCI Surviving Corporation.

(h) Liberty Mergerco Stock. Each share of common stock, par value $1.00 per
share, of Liberty Mergerco issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par value
$1.00 per share, of the Liberty Surviving Corporation, and each certificate
evidencing ownership of shares of Liberty Mergerco common stock shall from and
after the Effective Time evidence ownership of the same number of shares of
common stock of the Liberty Surviving Corporation.

2.2 TCI/Liberty Stock. Each of TCI Surviving Corporation and Liberty
Surviving Corporation shall, immediately following the Effective Time, return
to TCI/Liberty, without payment of any consideration therefor, any shares of
TCI/Liberty Common Stock held by it immediately prior to the Effective Time,
whereupon such shares shall be cancelled and retired by TCI/Liberty and resume
the status of authorized and unissued shares.

2.3 Transfer Books. At the Effective Time, the stock transfer books of both
TCI and Liberty shall be closed and no transfer of shares of capital stock of
TCI or Liberty shall thereafter be made.

2.4 Definition of "fair market value". For purposes of Section 2.1 and
Section 2.6(f), the term "fair market value" means (i) with respect to a share
of either class of Liberty Common Stock, the average of the last reported sale
prices (or, if on any day no sale price is reported, the average of the quoted
high and low bid prices on such day) of such a share on the Nasdaq National
Market System ("Nasdaq NMS") for the five full trading days immediately
preceding the Closing Date, and (ii) with respect to a share of Liberty Class B
Preferred, Liberty Class D Preferred or TCI/Liberty Class B Preferred, the
value for such share (or the midpoint of any range of values for such share) in
the opinion of CS First Boston Corporation ("CS First Boston") as of the date
of their opinion (which shall be dated not more than five business days prior
to the Closing Date).

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2.5 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of TCI Preferred Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by any stockholder
who is entitled to appraisal rights pursuant to Section 262 of the DGCL, who,
on a timely basis, makes and perfects a demand for appraisal of such shares in
accordance with all requirements and provisions of Section 262 of the DGCL, and
who does not effectively withdraw or lose the right to such appraisal
(collectively, "Dissenting Shares"), shall not be converted as described in
Section 2.1(b), but shall, from and after the Effective Time, represent only
the right to receive such consideration as may be determined to be due to such
stockholder with respect to such Dissenting Shares pursuant to Section 262 of
the DGCL; provided, however, that Dissenting Shares held by any stockholder
who, after the Effective Time, withdraws his demand for appraisal or loses his
right of appraisal with respect to such shares, in either case pursuant to
Section 262 of the DGCL, shall be deemed to have been converted, as of the
Effective Time, into the right to receive the shares of TCI/Liberty Class A
Preferred specified in Section 2.1(b), without interest.

2.6 Exchange of Shares.

(a) Appointment of Exchange Agent. On or before the Closing Date,
TCI/Liberty shall enter into an agreement approved by TCI and Liberty (the
"Exchange Agent Agreement") with an exchange agent jointly selected by TCI and
Liberty (the "Exchange Agent"), authorizing such Exchange Agent to act as
exchange agent hereunder.

(b) Letter of Transmittal. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of TCI Common Stock, TCI Preferred
Stock, Liberty Common Stock or Liberty Preferred Stock (the "Certificates")
whose shares were converted into the right to receive shares of TCI/Liberty
Common Stock or TCI/Liberty Preferred Stock pursuant to Section 2.1: (i) a
notice of the effectiveness of the Mergers and (ii) a letter of transmittal
(which shall state that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) with instructions for use in effecting the surrender and
exchange of the Certificates. Such notice, letter of transmittal and
instructions shall contain such provisions and be in such form as TCI and
Liberty may jointly specify.

(c) Exchange Procedure. Promptly following the surrender, in accordance
with such instructions, of a Certificate to the Exchange Agent (or such other
agent or agents as may be appointed by the Exchange Agent or TCI/Liberty
pursuant to the Exchange Agent Agreement), together with such letter of
transmittal (duly executed) and any other documents required by such
instructions or letter of transmittal, TCI/Liberty shall, subject to Section
2.6(d), cause to be distributed to the person in whose name such Certificate
shall have been issued (i) a certificate registered in the name of such person
representing the number of whole shares of TCI/Liberty Common Stock or
TCI/Liberty Preferred Stock, as the case may be, into which the shares
previously represented by the surrendered Certificate shall have been converted
at the Effective Time pursuant to Section 2.1 and (ii), in the case of a
Certificate which immediately prior to the

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Effective Time represented shares of Liberty Common Stock, payment (which shall
be made by check) of any cash payable in lieu of a fractional share pursuant to
Section 2.6(f). Each Certificate so surrendered shall forthwith be cancelled.

(d) Unregistered Transfers of TCI or Liberty Stock. In the event of a
transfer of ownership of TCI Common Stock, TCI Preferred Stock, Liberty Common
Stock or Liberty Preferred Stock which is not registered in the transfer
records of TCI or Liberty, as the case may be, a certificate representing the
proper number of whole shares of TCI/Liberty Common Stock or TCI/Liberty
Preferred Stock may be issued (and cash in lieu of a fractional share may be
paid) to the transferee if the Certificate representing such TCI Common Stock,
TCI Preferred Stock, Liberty Common Stock or Liberty Preferred Stock
surrendered to the Exchange Agent in accordance with Section 2.6(c) is properly
endorsed for transfer or is accompanied by appropriate and properly endorsed
stock powers (in each case with appropriate signature guarantees) and is
otherwise in proper form to effect such transfer, if the person requesting such
transfer pays to the Exchange Agent any transfer or other taxes payable by
reason of such transfer or establishes to the satisfaction of the Exchange
Agent that such taxes have been paid or are not required to be paid.

(e) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed satisfactory to TCI/Liberty and complying with any other reasonable
requirements imposed by TCI/Liberty, TCI/Liberty will cause to be delivered to
such person in respect of such lost, stolen or destroyed Certificate the
TCI/Liberty Common Stock or TCI/Liberty Preferred Stock and other property
deliverable in respect thereof as determined in accordance with this Article
II. TCI/Liberty may, in its discretion, require the owner of such lost, stolen
or destroyed Certificate to give TCI/Liberty a bond in such sum as it may
direct as indemnity against any claim that may be made against TCI/Liberty or
the applicable Surviving Corporation with respect to the Certificate alleged to
have been lost, stolen or destroyed.

(f) No Fractional Shares of TCI/Liberty Common Stock. No certificates or
scrip representing fractional shares of TCI/Liberty Common Stock shall be
issued upon the surrender for exchange of Certificates which immediately prior
to the Effective Time represented shares of Liberty Common Stock, no stock
split or dividend with respect to shares of TCI/Liberty Common Stock shall
relate to any fractional share interest, and no such fractional share interest
will entitle the owner thereof to vote as, or to any other rights of, a
stockholder of TCI/Liberty. In lieu of such fractional shares, any holder of
Liberty Common Stock who would otherwise be entitled to a fractional share of
TCI/Liberty Class A Stock or TCI/Liberty Class B Stock (after taking into
account all shares of Liberty Class A Stock or Liberty Class B Stock, as the
case may be, owned by such holder), will, upon surrender of his Certificate to
the Exchange Agent in accordance with Section 2.6(c), be entitled to receive
cash in an amount (rounded to the nearest whole cent) determined by multiplying
such fraction by the fair market value of a share of Liberty Class A Stock or
Liberty Class B Stock, as the case may be.

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(g) No Dividends Before Surrender of Certificates. No dividends or other
distributions declared or made with respect to TCI/Liberty Common Stock or
TCI/Liberty Preferred Stock shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of TCI/Liberty Common Stock or
TCI/Liberty Preferred Stock represented thereby, until the holder of record of
such Certificate shall surrender such Certificate as provided herein. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates representing whole
shares of TCI/Liberty Common Stock or TCI/Liberty Preferred Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions, if any, theretofore payable by
TCI/Liberty with respect to such whole shares of TCI/Liberty Common Stock or
TCI/Liberty Preferred Stock the payment date for which was on or prior to such
surrender, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, if any, with a record date prior to such surrender and
with a payment date subsequent to such surrender payable with respect to such
whole shares of TCI/Liberty Common Stock or TCI/Liberty Preferred Stock.

(h) No Further Ownership Rights in TCI or Liberty Stock. All shares of
TCI/Liberty Common Stock or TCI/Liberty Preferred Stock issued and all cash in
lieu of fractional shares paid upon the surrender for exchange of shares of TCI
Common Stock, TCI Preferred Stock, Liberty Common Stock or Liberty Preferred
Stock in accordance with the terms hereof shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to such shares of TCI
Common Stock, TCI Preferred Stock, Liberty Common Stock or Liberty Preferred
Stock (provided, however, that after the Effective Time TCI/Liberty shall, on
behalf of TCI or Liberty, as the case may be, pay as provided in Section 2.6(g)
any dividends or make any other distributions (in TCI/Liberty capital stock in
the case of stock dividends) with a record date prior to the Effective Time
which may have been declared by TCI or Liberty on such shares of TCI Common
Stock, TCI Preferred Stock, Liberty Common Stock or Liberty Preferred Stock
prior to the date hereof or which may be declared after the date hereof in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time). Subject to Section 2.6(i), if, after the Effective Time,
Certificates are presented to a Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.

(i) Abandoned Property Laws. Payment or delivery of any shares of
TCI/Liberty Common Stock or TCI/Liberty Preferred Stock (as the case may be),
any cash in lieu of fractional shares of TCI/Liberty Common Stock and any
dividends or distributions with respect to TCI/Liberty Common Stock or
TCI/Liberty Preferred Stock shall be subject to applicable abandoned property,
escheat and similar laws and neither TCI/Liberty nor either Surviving
Corporation shall be liable to any holder of shares of TCI Common Stock, TCI
Preferred Stock, Liberty Common Stock, Liberty Preferred Stock, TCI/Liberty
Common Stock or TCI/Liberty Preferred Stock for any such shares, for any
dividends or distributions with respect thereto or for any cash in lieu of
fractional shares which may be delivered to any public official pursuant to any
abandoned property, escheat or similar law.

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2.7 Stock Options, SARs and Benefit Plans.

(a) TCI Stock Options and SARS. (i) At the Effective Time, each
outstanding option to purchase shares of TCI Class A Stock (a "TCI Stock
Option") issued by TCI pursuant to the Tele-Communications, Inc. 1992 Stock
Incentive Plan (the "1992 TCI SIP") or the Tele-Communications, Inc. 1982
Incentive Stock Option Plan (the "TCI 1982 ISOP", and collectively with the
1992 TCI SIP, the "TCI Incentive Plans") or issued pursuant to a TCI
Predecessor Plan (as defined below) and assumed by TCI, or otherwise issued by
TCI, whether vested or unvested, shall be assumed by TCI/Liberty. Thereafter,
each TCI Stock Option shall be deemed to constitute an option to purchase, on
the same terms and conditions as were applicable under such TCI Stock Option,
that number of shares of TCI/Liberty Class A Stock which is equal to the number
of shares of TCI Class A Stock that were subject to such TCI Stock Option
immediately prior to the Effective Time, at an exercise price per share of
TCI/Liberty Class A Stock equal to the exercise price per share of TCI Class A
Stock subject to such TCI Stock Option immediately prior to the Effective Time.
The assumption hereinabove provided for shall be accomplished in a manner that
shall, in all respects, comply with the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), with respect to each TCI Stock Option
that is an "incentive stock option" (as defined in Section 422(b) of the Code)
including any requirement that the assumption of such TCI Stock Option by
TCI/Liberty shall not give to the holder any additional benefits that he did
not have prior to such assumption, and TCI/Liberty may make any changes that it
deems necessary or desirable with respect to such assumption in order to
satisfy the requirements of the Code. For purposes of this Agreement, the term
"TCI Predecessor Plans" means (x) the United Artists Entertainment Company 1988
Incentive and Non-Qualified Stock Option Plan, which was terminated on or
before December 2, 1991 and as to which outstanding options were assumed by TCI
pursuant to the Agreement and Plan of Merger, dated as of June 6, 1991, between
United Artists Entertainment Company ("UAE") and TCI (the "1991 Merger
Agreement") and (y) the United Artists Communications, Inc. 1982 Stock Option
Plan and the United Artists Communications, Inc. 1983 Stock Option Plan, which
were each terminated on or before May 25, 1989 and as to which outstanding
options were assumed by UAE pursuant to the Second Amended and Restated
Agreement and Plan of Reorganization and Merger, dated as of March 8, 1988,
among United Artists Communications, Inc., United Cable Television Corporation
and TCI, which options, in turn, were assumed by TCI pursuant to the 1991
Merger Agreement.

(ii) At the Effective Time, each outstanding stock appreciation right with
respect to shares of TCI Class A Stock (a "TCI SAR") issued by TCI pursuant to
a TCI Incentive Plan or issued pursuant to a TCI Predecessor Plan and assumed
by TCI, or otherwise issued by TCI, whether vested or unvested, shall be
assumed by TCI/Liberty. Thereafter, each TCI SAR shall be deemed to constitute
a stock appreciation right, on the same terms and conditions as were applicable
under such TCI SAR, with respect to that number of shares of TCI/Liberty Class
A Stock which is equal to the number of shares of TCI Class A Stock that were
subject to such TCI SAR immediately prior to the Effective Time, at an exercise
price per stock appreciation right equal to (A) in the case of a TCI SAR issued
in tandem with TCI Stock Options, the exercise price per share of the related
TCI Stock Option assumed by TCI/Liberty as determined above and (B) in the case
of a free standing TCI SAR, the base price per share of such TCI SAR

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<PAGE> 17
immediately prior to the Effective Time.

(iii) If the TCI/Liberty SIP (as defined in Section 2.7(e)) is approved
(or deemed approved) by stockholders at the TCI Stockholders Meeting (as
defined in Section 3.1) and the Liberty Stockholders Meeting (as defined in
Section 3.2), respectively, the TCI Surviving Corporation shall use its
reasonable best efforts to cause each holder of a TCI Stock Option or TCI SAR
that is assumed by TCI/Liberty to surrender such TCI Stock Option or TCI SAR,
as promptly as practicable after the Effective Time, to TCI/Liberty in exchange
for a stock option or stock appreciation right, respectively, granted under the
TCI/Liberty SIP, which stock option or stock appreciation right shall contain
terms and conditions that are no less favorable to the holder thereof than
those under such assumed TCI Stock Option or TCI SAR, as the case may be
(subject to such changes as may be agreed to by TCI and Liberty and the holder
of such TCI Stock Option or TCI SAR).

(b) Liberty Stock Options and SARS. (i) At the Effective Time, each
outstanding option to purchase shares of Liberty Class A Stock (a "Liberty
Stock Option") issued by Liberty (whether pursuant to the Liberty Media
Corporation 1991 Stock Incentive Plan (the "Liberty SIP") or otherwise),
whether vested or unvested, shall be assumed by TCI/Liberty. Thereafter, each
Liberty Stock Option shall be deemed to constitute an option to purchase, on
the same terms and conditions as were applicable under such Liberty Stock
Option, that number of shares of TCI/Liberty Class A Stock which is equal to
the number of shares of Liberty Class A Stock that were subject to such Liberty
Stock Option immediately prior to the Effective Time multiplied by .975,
rounded up to the nearest whole number after taking into account all Liberty
Stock Options held by the holder of such Liberty Stock Option, at an exercise
price per share of TCI/Liberty Class A Stock equal to the amount determined by
dividing the exercise price per share of Liberty Class A Stock subject to such
Liberty Stock Option immediately prior to the Effective Time by .975, and
rounding the resulting number down to the nearest whole cent. The assumption
hereinabove provided for shall be accomplished in a manner that shall, in all
respects, comply with the requirements of the Code with respect to each Liberty
Stock Option that is an "incentive stock option" (as defined in Section 422(b)
of the Code) including any requirement that the assumption of such Liberty
Stock Option by TCI/Liberty shall not give to the holder any additional
benefits that he did not have prior to such assumption, and TCI/Liberty may
make any changes that it deems necessary or desirable with respect to such
assumption in order to satisfy the requirements of the Code.

(ii) At the Effective Time, each outstanding stock appreciation right with
respect to shares of Liberty Class A Stock (a "Liberty SAR") issued by Liberty
pursuant to the Liberty SIP, or otherwise issued by Liberty, whether vested or
unvested, shall be assumed by TCI/Liberty. Thereafter, each Liberty SAR shall
be deemed to constitute a stock appreciation right, on the same terms and
conditions as were applicable under such Liberty SAR, with respect to that
number of shares of TCI/Liberty Class A Stock which is equal to the number of
shares of Liberty Class A Stock that were subject to such Liberty SAR
immediately prior to the Effective Time multiplied by .975, rounded up to the
nearest whole number (after taking into account all stock appreciation rights
owned by a holder), at an exercise price per stock

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<PAGE> 18
appreciation right equal to (A) in the case of a Liberty SAR issued in tandem
with Liberty Stock Options, the exercise price per share of the related Liberty
Stock Option assumed by TCI/Liberty as determined above and (B) in the case of
a free standing Liberty SAR, the amount determined by dividing the base price
per share of such Liberty SAR immediately prior to the Effective Time by .975,
and rounding the resulting number down to the nearest whole cent.

(iii) If the TCI/Liberty SIP is approved (or deemed approved) by
stockholders at the TCI Stockholders Meeting and the Liberty Stockholders
Meeting, respectively, the Liberty Surviving Corporation shall use its
reasonable best efforts to cause each holder of a Liberty Stock Option or
Liberty SAR that is assumed by TCI/Liberty to surrender such Liberty Stock
Option or Liberty SAR, as promptly as practicable after the Effective Time, to
TCI/Liberty in exchange for a stock option or stock appreciation right,
respectively, granted under the TCI/Liberty SIP, which stock option or stock
appreciation right shall contain terms and conditions that are no less
favorable to the holder thereof than those under such assumed Liberty Stock
Option or Liberty SAR, as the case may be (subject to such changes as may be
agreed to by TCI and Liberty and the holder of such Liberty Stock Option or
Liberty SAR). Notwithstanding the foregoing, the terms of the TCI/Liberty
stock options and stock appreciation rights issued under the TCI/Liberty SIP
may contain such variations from the terms of any Liberty Stock Options or
Liberty SAR's, respectively, exchanged therefor which were not issued under a
plan complying with Rule 16b-3 under the Exchange Act, as TCI/Liberty may
determine are necessary or desirable for such TCI/Liberty stock options and
stock appreciation rights to comply with Rule 16b-3.

(c) Actions by TCI and Liberty. Each of TCI and Liberty shall distribute to
each holder of a TCI Stock Option or a TCI SAR, or a Liberty Stock Option or a
Liberty SAR, as the case may be, not less than 10 business days prior to the
TCI Stockholders Meeting and the Liberty Stockholders Meeting, respectively,
(i) an appropriate notice setting forth such holder's rights under the related
TCI Incentive Plan, TCI Predecessor Plan or Liberty SIP and/or the agreement
between such holder and TCI or Liberty, as the case may be, evidencing the
grant of such TCI Stock Option, TCI SAR, Liberty Stock Option or Liberty SAR to
such holder and (ii) a form of assumption agreement between such holder and
TCI/Liberty (an "Assumption Agreement"), containing terms consistent with the
provisions hereof. No holder of a TCI Stock Option, TCI SAR, Liberty Stock
Option or Liberty SAR shall be entitled to receive upon exercise thereof
following the Effective Time TCI/Liberty Class A Stock or any payment from
TCI/Liberty in respect thereof unless such holder shall have executed and
delivered an Assumption Agreement to TCI/Liberty.

(d) Actions by TCI/Liberty. TCI/Liberty shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of TCI/Liberty
Class A Stock for delivery upon exercise of (i) TCI Stock Options, Liberty
Stock Options or Liberty SARS assumed by it pursuant to this Section 2.7 and
the Assumption Agreements or (ii)(x) stock options exchanged for such TCI Stock
Options and Liberty Stock Options and (y) stock appreciation rights exchanged
for such Liberty SARS, in accordance with Sections 2.7(a)(iii) and 2.7(b)(iii).
As soon as practicable after the Effective Time, TCI/Liberty shall file a
registration statement on

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<PAGE> 19
Form S-3 or Form S-8 (which may be filed as a post-effective amendment to the
Registration Statement (as defined in Section 3.3)), as the case may be (or any
successor forms), or another appropriate form with respect to the shares of
TCI/Liberty Class A Stock subject to such options and stock appreciation
rights, and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such options
remain outstanding.

(e) TCI/Liberty Stock Incentive Plan. TCI and Liberty shall cause
TCI/Liberty to adopt a stock incentive plan (the "TCI/Liberty SIP") which
satisfies the requirements of Rule 16b-3 under the Exchange Act. Each of TCI
and Liberty shall cause the TCI Liberty SIP to be presented to their
stockholders for approval at the TCI Stockholders Meeting and the Liberty
Stockholders Meeting, respectively. The TCI/Liberty SIP shall contain terms
and provisions that are substantially similar to those contained in the 1992
TCI SIP (with such changes thereto as may be necessary to provide the holders
of stock appreciation rights granted by Liberty in 1991 to obtain substantially
identical TCI/Liberty stock appreciation rights upon any exchange thereof in
accordance with Section 2.7(b)(iii)).

(f) Stock Plans. (i) TCI shall take all actions necessary to amend the
Tele-Communications, Inc. Employee Stock Purchase Plan (the "TCI ESPP") prior
to the Effective Time to provide that the TCI ESPP shall not purchase any
capital stock of TCI or the TCI Surviving Corporation at or after the Effective
Time. As of the Effective Time, the 1992 TCI SIP (except to the extent that
the terms thereof are incorporated by reference in, or otherwise govern the
construction, interpretation or administration of, any TCI Stock Options or TCI
SARs assumed by TCI/Liberty) shall automatically terminate. TCI and its
Subsidiaries shall comply with all requirements regarding withholding of taxes
in connection with the cancellations, terminations and other actions described
in this Section 2.7(f)(i).

(ii) As of the Effective Time, the Liberty SIP (except to the extent that
the terms thereof are incorporated by reference in, or otherwise govern the
construction, interpretation or administration of, any Liberty Stock Options or
Liberty SARs assumed by TCI/Liberty) shall automatically terminate.

(g) Other Employment Benefit Plans. The effects of the Mergers, if any, on
the other employee benefit plans and arrangements of TCI and its Subsidiaries
and Liberty and its Subsidiaries shall be as set forth on Exhibit G attached
hereto. TCI and its Subsidiaries and Liberty and its Subsidiaries shall comply
with all requirements regarding withholding of taxes in connection with any
actions and matters described on Exhibit G.

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ARTICLE III

Certain Actions

3.1 TCI Stockholder Meeting. Subject to the fiduciary duties of the Board of
Directors of TCI (the "TCI Board") under applicable law (as determined by the
TCI Board in good faith after consultation with and based upon advice of
counsel) (i) TCI and the TCI Board will take all action necessary in accordance
with applicable law and TCI's Restated Certificate of Incorporation and By-laws
to duly call and hold, on a date to be mutually agreed upon by TCI and Liberty,
a meeting of TCI's stockholders (the "TCI Stockholders Meeting") for the
purpose of considering and voting upon (x) this Agreement (the "Merger
Proposal") and (y) the TCI/Liberty SIP and (ii) the TCI Board will recommend
that TCI's stockholders vote in favor of approval and adoption of the Merger
Proposal and approval of the TCI/Liberty SIP, and TCI will use reasonable
efforts to solicit from its stockholders proxies in favor of approval and
adoption of the Merger Proposal and approval of the TCI/Liberty SIP.

3.2 Liberty Stockholder Meeting. Subject to the fiduciary duties of the
Board of Directors of Liberty (the "Liberty Board") under applicable law (as
determined by the Liberty Board in good faith after consultation with and based
upon advice of counsel), (i) Liberty and the Liberty Board will take all action
necessary in accordance with applicable law and Liberty's Restated Certificate
of Incorporation and By-laws to duly call and hold, on a date to be mutually
agreed upon by Liberty and TCI, a meeting of Liberty's stockholders (the
"Liberty Stockholders Meeting") for the purpose of considering and voting upon
(x) the Merger Proposal and (y) the TCI/Liberty SIP and (ii) the Liberty Board
will recommend that Liberty's stockholders vote in favor of approval and
adoption of the Merger Proposal and approval of the TCI/Liberty SIP, and
Liberty will use reasonable efforts to solicit from its stockholders proxies in
favor of approval and adoption of the Merger Proposal and approval of the
TCI/Liberty SIP.

3.3 Proxy Statement and Registration Statement. TCI and Liberty shall
prepare and file with the Securities and Exchange Commission (the "Commission")
a preliminary joint proxy statement relating to the transactions contemplated
by this Agreement (the "Joint Proxy Statement") as soon as reasonably
practicable, and shall use their respective best efforts to promptly respond to
the comments of the Commission thereon. TCI and Liberty shall prepare, and
shall cause TCI/Liberty to file with the Commission as soon as practicable
after the Commission clears the Joint Proxy Statement, a registration statement
on Form S-4 (or any successor form), which shall include as a prospectus the
Joint Proxy Statement in the form cleared for mailing to stockholders by the
Commission (the "Joint Proxy Statement/Prospectus"), with respect to the
TCI/Liberty Common Stock and TCI/Liberty Class C Preferred Stock to be issued
in the Mergers and the TCI/Liberty Class A Stock issuable upon exercise of (i)
TCI Stock Options, Liberty Stock Options and Liberty SARs to be assumed by
TCI/Liberty or (ii) TCI/Liberty stock options and TCI/Liberty stock
appreciation rights granted under the TCI/Liberty SIP and exchanged for TCI
Stock Options and Liberty Stock Options or TCI SARs and Liberty SARs, as the
case may be (the "Registration Statement"). TCI and Liberty shall each use
reasonable efforts to cause the Registration Statement to be declared effective
as soon as

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<PAGE> 21
practicable after such filing. As promptly as practicable after the
Registration Statement is declared effective by the Commission, each of TCI and
Liberty shall mail the Joint Proxy Statement/Prospectus to its respective
stockholders. TCI and Liberty shall cause TCI/Liberty to take any reasonable
actions required to be taken under applicable state securities or "blue sky"
laws in connection with the issuance of the securities of TCI/Liberty to be
covered by the Registration Statement. Each of TCI and Liberty shall notify
the other promptly of the receipt of any comments of the Commission and of any
request by the Commission for amendments or supplements to the Joint Proxy
Statement, the Joint Proxy Statement/Prospectus or the Registration Statement
or for additional information and shall supply one another with copies of all
correspondence with the Commission with respect to any of the foregoing
filings. If at any time prior to the TCI Stockholders Meeting or the Liberty
Stockholders Meeting any event should occur relating to TCI or any of its
Subsidiaries or any of their respective officers, directors or affiliates which
should be described in an amendment of, or supplement to, the Joint Proxy
Statement/Prospectus or the Registration Statement, TCI shall promptly inform
Liberty. If at any time prior to the Liberty Stockholders Meeting or the TCI
Stockholders Meeting any event should occur relating to Liberty or any of its
Subsidiaries or any of their respective officers, directors or affiliates which
should be described in an amendment of, or supplement to, the Joint Proxy
Statement/Prospectus or the Registration Statement, Liberty shall promptly
inform TCI. Whenever any event occurs which should be described in an
amendment of, or a supplement to, the Joint Proxy Statement/Prospectus or the
Registration Statement, TCI and Liberty shall, upon learning of such event,
cooperate with each other to promptly prepare, file and clear with the
Commission and (if required by applicable law) mail such amendment or
supplement to the stockholders of TCI and Liberty.

3.4 Letters from Accountants. TCI will use its reasonable efforts to cause
to be delivered to Liberty a letter of KPMG Peat Marwick, TCI's independent
auditors, dated a date within two business days before the date on which the
Registration Statement becomes effective and addressed to Liberty, in form
reasonably satisfactory to Liberty and customary in scope and substance for
letters delivered by nationally recognized independent auditors in connection
with registration statements similar to the Registration Statement. Liberty
will use its reasonable efforts to cause to be delivered to TCI a letter of
KPMG Peat Marwick, Liberty's independent auditors, dated a date within two
business days before the date on which the Registration Statement becomes
effective and addressed to TCI, in form reasonably satisfactory to TCI and
customary in scope and substance for letters delivered by nationally recognized
independent auditors in connection with registration statements similar to the
Registration Statement.

3.5 Release of Escrowed TCI Common Stock. Liberty and TCI shall use their
respective reasonable efforts, and shall fully cooperate with each other, to
cause the release to Liberty Surviving Corporation, or any wholly owned
Subsidiary of Liberty Surviving Corporation, immediately after the Effective
Time, of all shares of TCI Common Stock deposited with Chemical Bank, N.A. (as
successor to Manufacturers Hanover Trust Company), as escrow agent, pursuant to
that certain escrow agreement referenced in the terms of the Liberty Class B
Preferred.

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3.6 Identification of Affiliates. Each of TCI and Liberty shall deliver to
the other a letter identifying all persons who such party knows are or such
party has reason to believe may be, as of the date of the TCI Stockholders
Meeting and Liberty Stockholders Meeting, its "affiliates" for purposes of Rule
145 under the Securities Act of 1933, as amended (the "Securities Act"). Each
of TCI and Liberty shall use reasonable efforts to cause each person who is
identified as an "affiliate" in the letter referred to above to deliver to the
other party, on or prior to the Closing Date, a written agreement, in
substantially the form annexed hereto as Exhibit H, that such person will not
offer to sell or otherwise dispose of any of the shares of TCI/Liberty Common
Stock or TCI/Liberty Preferred Stock issued to such person pursuant to the
Mergers in violation of the Securities Act and the rules and regulations
thereunder.

3.7 State Takeover Statutes. Liberty will, upon the request of TCI, take all
reasonable steps to (i) exempt the Liberty Merger from the requirements of any
applicable state takeover law and (ii) assist in any challenge by TCI to the
validity or applicability to the Liberty Merger of any state takeover law. TCI
will, upon the request of Liberty, take all reasonable steps to (x) exempt the
TCI Merger from the requirements of any applicable state takeover law and (y)
assist in any challenge by Liberty to the validity or applicability to the TCI
Merger of any state takeover law.

3.8 Possible Restructuring. Each of the parties hereto shall use its
reasonable efforts, and shall consult and fully cooperate with each other, to
cause the transactions contemplated by this Agreement to be completely tax free
for Federal income tax purposes to each of the parties to this Agreement and to
the shareholders of TCI and Liberty (other than in respect of cash paid in lieu
of fractional shares pursuant to Section 2.6(f) or for Dissenting Shares).
Without limiting the generality of the foregoing, and subject to compliance
with any legal requirements, if necessary to obtain an opinion of counsel to
the foregoing effect the parties agree that either (i) TCI shall, and shall
cause its Subsidiaries to, sell to Liberty or one or more Subsidiaries of
Liberty, immediately prior to the TCI Merger, such properties and assets owned
by TCI or such Subsidiaries as may be required to obtain such opinion (the
"Asset Transfer Alternative") or (ii) Liberty shall be merged with and into
TCI, with TCI continuing as the surviving corporation (the "Alternative
Merger"). If the parties cannot mutually agree as to which of the foregoing
alternatives to pursue or as to the valuation of properties and assets proposed
to be sold pursuant to the Asset Transfer Alternative, then the parties shall
pursue the Alternative Merger. Any sale of properties and assets in connection
with the Asset Transfer Alternative shall be for the fair market value thereof,
such value to be determined by mutual agreement of TCI and Liberty. In the
event the Alternative Merger is pursued, the parties agree to negotiate in good
faith an amendment to this Agreement providing for (x) the Alternative Merger
and (y) each holder of Liberty Common Stock or Liberty Preferred Stock
receiving, in lieu of TCI/Liberty Common Stock or TCI Liberty Preferred Stock,
shares of TCI Common Stock or a new series of TCI preferred stock, as the case
may be, on substantially the same terms (and based on the same exchange ratios)
as provided in Section 2.1. The parties agree that no further changes shall be
made in any such amendment to the terms of this Agreement, except to the extent
that changes are necessitated due to the structure of the Alternative Merger,
in which event any such changes shall not alter materially the economic
benefits of the provisions hereof to the respective

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stockholders of TCI or Liberty.

3.9 Reasonable Efforts. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties hereto shall use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement
as soon as reasonably practicable, including such actions or things as any
other party hereto may reasonably request in order to cause any of the
conditions to such other party's obligation to consummate such transactions
specified in Article VIII to be fully satisfied. Without limiting the
generality of the foregoing, the parties shall (and shall cause their
respective Subsidiaries, and use their reasonable efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide reasonable assistance to each other in (i) the preparation and filing
with the Commission of the Joint Proxy Statement, the Joint Proxy
Statement/Prospectus and the Registration Statement and any necessary
amendments of, or supplements to, any thereof; (ii) seeking to have such Joint
Proxy Statement cleared, and the Registration Statement declared effective, by
the Commission as soon as reasonably practicable after filing with the
Commission; (iii) taking such actions as may reasonably be required under
applicable state securities or "blue sky" laws in connection with the issuance
of the securities covered by the Registration Statement; (iv) obtaining all
necessary consents, approvals, waivers, licenses, permits, authorizations,
registrations, qualifications or other permission or action by, and giving all
necessary notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity (as defined in Section 4.5(v)) or other
person or entity; (v) filing all Notification and Report Forms required under
the HSR Act (as defined in Section 4.5 (ii)(F)) as a result of the transactions
contemplated by this Agreement and promptly complying with any requests for
additional information and documentary material that may be requested pursuant
to the HSR Act; (vi) lifting any permanent or preliminary injunction or
restraining order or other similar order issued or entered by any court or
Governmental Entity (an "Injunction") of any type referred to in Section
8.1(d); (vii) developing and implementing reasonable tax planning measures for
TCI/Liberty and each of the Surviving Corporations in light of the transactions
contemplated hereby; (viii) providing all such information about such party,
its Subsidiaries and its officers, directors, partners and affiliates and
making all applications and filings as may be necessary or reasonably requested
in connection with any of the foregoing; and (ix) in general, consummating and
making effective the transactions contemplated hereby; provided, however, that
in order to obtain any consent, approval, waiver, license, permit,
authorization, registration, qualification or other permission or action or the
lifting of any Injunction referred to in clause (iv) or (vi) of this sentence,
(x) no party shall be required to pay any consideration, to divest itself of
any of, or otherwise rearrange the composition of, its assets or to agree to
any conditions or requirements which are materially adverse or burdensome and
(y) without the other party's prior consent, each of Liberty and TCI shall not,
and shall not permit any of its Subsidiaries or affiliates to, amend, or agree
to amend, in any material respect any License (as defined in Section 4.9) or
Contract (as defined in Section 4.5(iv)). Prior to making any application to
or filing with any Governmental Entity or other person or entity in connection
with this Agreement, each of TCI and Liberty shall provide the other party with
drafts thereof and afford the other party a reasonable opportunity to comment

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on such drafts.

3.10 Quotation on Nasdaq NMS. TCI/Liberty shall use its reasonable best
efforts to cause the shares of TCI/Liberty Common Stock and TCI/Liberty Class C
Preferred Stock to be issued in the Mergers and upon exercise of TCI Stock
Options, Liberty Stock Options and Liberty SARs (or TCI/Liberty stock options
or stock appreciation rights exchanged therefor) to be included in the Nasdaq
NMS upon issuance.

3.11 Voting Agreement.

(a) TCI shall, and shall cause each of its Subsidiaries to, vote all shares
of Liberty Common Stock and, if eligible to vote, shares of Liberty Preferred
Stock owned by it, at any meeting of stockholders of Liberty or in connection
with any action taken by written consent of stockholders of Liberty, (i) in
favor of the transactions contemplated by this Agreement (including, at the
Liberty Stockholders Meeting, in favor of the Merger Proposal and the
TCI/Liberty SIP) and (ii), except as otherwise agreed by Liberty, against any
action or agreement that would impede or interfere with the transactions
contemplated by this Agreement.

(b) Liberty shall, and shall cause each of its Subsidiaries to, vote all
shares of TCI Common Stock owned by it at any meeting of stockholders of TCI or
in connection with any action taken by written consent of stockholders of TCI,
(i) in favor of the transactions contemplated by this Agreement (including, at
the TCI Stockholders Meeting, in favor of the Merger Proposal and the
TCI/Liberty SIP) and (ii), except as otherwise agreed by TCI, against any
action or agreement that would impede or interfere with the transactions
contemplated by this Agreement.

3.12 Restrictions on Transfer.

(a) TCI shall not, and shall not permit any of its Subsidiaries to, prior to
the Liberty Merger, sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, or grant any right (including, without limitation, as to voting)
with respect to, any shares of Liberty Common Stock or Liberty Preferred Stock
owned by it; provided, that the foregoing shall not (i) prevent TCI from
transferring any such shares to one or more Subsidiaries of TCI, or a
Subsidiary of TCI from transferring any such shares to TCI and/or one or more
other Subsidiaries of TCI or (ii) be violated by any pledge or other
hypothecation in effect on the date of this Agreement.

(b) Liberty shall not, and shall not permit any of its Subsidiaries to,
prior to the TCI Merger, sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, or grant any right (including, without limitation, as to
voting) with respect to, any shares of TCI Common Stock owned by it; provided,
that the foregoing shall not (i) prevent Liberty from transferring any such
shares to one or more Subsidiaries of Liberty, or a Subsidiary of Liberty from
transferring any such shares to Liberty and/or one or more other Subsidiaries
of Liberty or (ii) be violated by any pledge or other hypothecation in effect
on the date of this Agreement or the escrow of shares of TCI Class A Stock
pursuant to the terms of the Liberty Class B Preferred.

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3.13 Directors and Executive Officers of TCI/Liberty at the Effective Time.
TCI and Liberty shall take such action as may be necessary to cause the
directors and executive officers of TCI/Liberty, immediately prior to the
Effective Time, to consist solely of those persons indicated on Exhibit I
hereto.

ARTICLE IV

Representations and Warranties of Liberty

Liberty hereby represents and warrants to each of TCI and TCI/Liberty as
follows:

4.1 Organization and Qualification. Each of Liberty and its "significant
subsidiaries" (as defined in Rule 1-02 of Regulation S-X of the Rules and
Regulations of the Commission) (i) is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (ii) has all requisite
corporate or partnership power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and (iii)
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed or in good standing has not had, either individually or
in the aggregate, a material adverse effect on the business, assets, results of
operations or financial condition of Liberty and its Subsidiaries, taken as a
whole. Each entity in which Liberty, directly or through one or more of its
Subsidiaries, has an investment accounted for by the equity method which is
material to the business, assets, results of operations or financial condition
of Liberty and its Subsidiaries, taken as a whole (the "Liberty Equity
Affiliates"), to the knowledge of Liberty, is a corporation or partnership (A)
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (B) has all requisite
corporate or partnership power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and (C) is
duly qualified to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it, or the nature of its
activities, makes such qualification necessary, except in each case where such
failure to be so existing and in good standing or to have such power and
authority or to be so qualified to do business and be in good standing has not
had, individually or in the aggregate, a material adverse effect on the
business, assets, results of operations or financial condition of Liberty and
its Subsidiaries, taken as a whole. Liberty has delivered to TCI true and
complete copies of its Restated Certificate of Incorporation and By-laws, as
amended through and in effect on the date hereof.

4.2 Authorization and Validity of Agreement. Liberty has all requisite
corporate power and authority to enter into this Agreement and, subject to
obtaining the approval of its stockholders specified in Section 4.15, to
perform its obligations hereunder and consummate the transactions contemplated
hereby. The execution, delivery and performance by Liberty of this Agreement
and the consummation of the transactions contemplated hereby have been duly

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<PAGE> 26
authorized by the Liberty Board and by all other necessary corporate action on
the part of Liberty, subject, in the case of the consummation by it of the
Liberty Merger, to such approval of Liberty's stockholders. This Agreement has
been duly executed and delivered by Liberty and is a valid and binding
obligation of Liberty, enforceable in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).

4.3 Capitalization. The authorized capital stock of Liberty consists of 300
million shares of Liberty Class A Stock, 100 million shares of Liberty Class B
Stock, 11,000 shares of Class A Redeemable Convertible Preferred Stock
("Liberty Class A Preferred"), 106,000 shares of Liberty Class B Preferred,
400,000 shares of Class C Redeemable Exchangeable Preferred Stock ("Liberty
Class C Preferred"), 18,000 shares of Liberty Class D Preferred, two million
shares of Liberty Class E Preferred and five million shares of Class F Serial
Preferred Stock ("Liberty Class F Preferred"). As of the close of business on
January 18, 1994, (i) 87,513,778 shares of Liberty Class A Stock were issued
and outstanding, 56,000 shares were reserved for issuance upon exercise of
outstanding Liberty Stock Options and no shares were held by Liberty in its
treasury or by any Subsidiary of Liberty; (ii) 43,340,320 shares of Liberty
Class B Stock were issued and outstanding and no shares were issued and held by
Liberty in its treasury or by any Subsidiary of Liberty; (iii) no shares of
Liberty Class A Preferred were issued and outstanding or held by Liberty in its
treasury or by any Subsidiary of Liberty; (iv) 105,353 shares of Liberty Class
B Preferred were issued and outstanding and no shares were held by Liberty in
its treasury or by any Subsidiary of Liberty; (iv) no shares of Liberty Class C
Preferred were issued or outstanding or held by Liberty in its treasury or by
any Subsidiary of Liberty; (v) 17,238 shares of Liberty Class D Preferred were
issued and outstanding and no shares were held by Liberty in its treasury or by
any Subsidiary of Liberty; (vi) 1,675,096 shares of Liberty Class E Preferred
were issued and outstanding and no shares were held by Liberty in its treasury
or by any Subsidiary of Liberty; and (vii) no shares of Liberty Class F
Preferred were issued and outstanding or held by Liberty in its treasury or by
any Subsidiary of Liberty. All issued and outstanding shares of Liberty Common
Stock and Liberty Preferred Stock have been validly issued and are fully paid
and nonassessable, are not subject to and have not been issued in violation of
any preemptive rights and have not been issued in violation of any Federal or
state securities laws. There are no issued or outstanding bonds, debentures,
notes or other indebtedness of Liberty or any of its Subsidiaries which have
the right to vote (or which are convertible into other securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt").
Except as set forth on Schedule 4.3, there are not as of the date hereof, and
will not at any time to and including the Effective Time be, any outstanding or
authorized subscriptions, options, warrants, calls, rights, commitments or any
other agreements of any character to or by which Liberty or any of its
Subsidiaries is a party or is bound which, directly or indirectly, obligate
Liberty or any of its Subsidiaries to issue, deliver or sell or cause to be
issued, delivered or sold any additional shares of Liberty Common Stock or
Liberty Preferred Stock or any other capital stock, equity interest or Voting
Debt of Liberty or any Subsidiary of Liberty or any securities convertible
into, or exercisable or exchangeable for, or evidencing the right to subscribe
for any such shares, interests or Voting Debt or obligating Liberty or any of
its Subsidiaries to

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<PAGE> 27
grant, extend or enter into any such subscription, option, warrant, call or
right. Since the close of business on January 18, 1994, no shares of capital
stock of Liberty have been issued or have been transferred from Liberty's
treasury. Immediately after the Effective Time, there will be no subscription,
option, warrant, call, right, commitment or agreement which will entitle
(conditionally or unconditionally) any person or entity to purchase or
otherwise acquire, or will obligate (conditionally or unconditionally) the
Liberty Surviving Corporation (as Liberty's successor) or any Subsidiary of the
Liberty Surviving Corporation that was a Subsidiary of Liberty to sell, issue
or deliver, any shares of capital stock, any other equity interest or any
Voting Debt of the Liberty Surviving Corporation or obligating the Liberty
Surviving Corporation or any such Subsidiary to grant, extend or enter into any
such subscription, warrant, call, right, commitment or agreement. Except for
the Liberty SIP and except as set forth on Schedule 4.3 or Schedule 4.12(a),
neither Liberty nor any of its Subsidiaries has adopted, authorized or assumed
any plans, arrangements or practices for the benefit of its officers, employees
or directors which require or permit the issuance, sale, purchase or grant of
any capital stock, other equity interests or Voting Debt of Liberty or any
Subsidiary of Liberty, any other securities convertible into, or exercisable or
exchangeable for, any such stock, interests or Voting Debt or any phantom
shares, phantom equity interests or stock or equity appreciation rights.
Except as set forth on Schedule 4.3, all shares of capital stock of and all
partnership or other equity interests in each Subsidiary of Liberty and in each
Liberty Equity Affiliate owned directly or indirectly by Liberty are owned free
and clear of any lien, security interest, pledge, charge, claim, option, right
to acquire, restriction on transfer, voting restriction or agreement, or any
other restriction or encumbrance of any nature whatsoever (a "Lien") and the
shares of capital stock of each corporate Subsidiary of Liberty are validly
issued, fully paid and nonassessable. Except as set forth on Schedule 4.3,
there are not, and immediately after the Effective Time there will not be, any
outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or other agreements of any character that, directly or indirectly,
(x) call for or relate to the sale, pledge, transfer or other disposition by
Liberty or Liberty Surviving Corporation or any Subsidiary of Liberty or
Liberty Surviving Corporation of any shares of capital stock, any partnership
or other equity interests or any Voting Debt of any Subsidiary of Liberty or
Liberty Surviving Corporation or of any Liberty Equity Affiliate owned directly
or indirectly by Liberty or Liberty Surviving Corporation or any Subsidiary of
Liberty or Liberty Surviving Corporation, or (y) relate to the voting or
control of such capital stock, partnership or other equity interests or Voting
Debt.

4.4 Reports and Financial Statements. Liberty has heretofore made available
to TCI true and complete copies of all reports, registration statements,
definitive proxy statements and other documents (in each case together with all
amendments thereto) filed by Liberty with the Commission since June 30, 1991
(such reports, registration statements, definitive proxy statements and other
documents, together with any amendments thereto, are sometimes collectively
referred to as the "Liberty Commission Filings"). The Liberty Commission
Filings constitute all of the documents (other than preliminary material) that
Liberty was required to file with the Commission since such date. As of their
respective dates, each of the Liberty Commission Filings complied in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations under each such Act, and none of the
Liberty Commission Filings contained as of such date any untrue statement of a
material fact or omitted

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<PAGE> 28
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except that no representation or warranty is made with respect
to any information regarding TCI included in the Liberty Commission Filings
which was furnished by TCI expressly for use therein). When filed with the
Commission, the financial statements included in the Liberty Commission Filings
complied as to form in all material respects with the applicable rules and
regulations of the Commission and were prepared in accordance with generally
accepted accounting principles (as in effect from time to time) applied on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto), and such financial statements fairly present the
consolidated financial position of Liberty and its consolidated Subsidiaries as
at the dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments. Except as and to the extent reflected or reserved against in the
financial statements included in Liberty's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1993 or as disclosed therein and except as set
forth on Schedule 4.4, none of Liberty, any Subsidiary of Liberty or, to the
knowledge of Liberty, any Liberty Equity Affiliate had as of such date any
liability or obligation of any kind required to be reflected on a balance sheet
of Liberty and its consolidated subsidiaries prepared in accordance with the
applicable rules and regulations of the Commission which was material to the
business, assets, results of operations or financial condition of Liberty and
its Subsidiaries, taken as a whole. Since September 30, 1993, except as
disclosed in the Liberty Commission Filings filed with the Commission prior to
the date hereof and except as set forth on Schedule 4.4, none of Liberty, any
Subsidiary of Liberty or, to the knowledge of Liberty, any Liberty Equity
Affiliate has incurred any liability or obligation of any kind which, in any
case or in the aggregate, is material to the business, assets, results of
operations or financial condition of Liberty and its Subsidiaries, taken as a
whole.

4.5 No Approvals or Notices Required; No Conflict with Instruments. Except as
set forth on Schedule 4.5, the execution and delivery by Liberty of this
Agreement do not, and the performance by Liberty of its obligations hereunder
and the consummation of the transactions contemplated hereby will not:

(i) assuming approval of the Merger Proposal by Liberty's stockholders as
contemplated by Section 4.15, conflict with or violate the Restated
Certificate of Incorporation or By-laws of Liberty or the charter or bylaws of
any corporate Subsidiary of Liberty or the partnership agreement of any
partnership Subsidiary of Liberty;

(ii) require any consent, approval, order or authorization of or other
action by any Governmental Entity (as defined in clause (v) of this Section
4.5) (a "Government Consent") or any registration, qualification, declaration
or filing with or notice to any Governmental Entity (a "Governmental Filing"),
in each case on the part of or with respect to Liberty, any Subsidiary of
Liberty or, to the knowledge of Liberty, any Liberty Equity Affiliate, the
absence or omission of which would, either individually or in the aggregate,
have a material adverse effect on the transactions contemplated hereby or on

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<PAGE> 29
the business, assets, results of operations or financial condition of Liberty
and its Subsidiaries, taken as a whole, or the Liberty Surviving Corporation
and its Subsidiaries, taken as a whole, except for (A) the filing with the
Commission of the Joint Proxy Statement and the Registration Statement and
such reports under Sections 13(a) and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated
hereby, (B) the filing of the Liberty Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which Liberty is qualified to do business, (C)
such Government Consents and Governmental Filings (the "FCC Approvals") as may
be required under the Communications Act of 1934, as amended (the
"Communications Act"), (D) such Government Consents and Governmental Filings
(the "Local Approvals") with foreign, state and local governmental authorities
(including foreign, state and local authorities granting franchises to operate
cable systems) as may be required with respect to the Licenses (as defined in
Section 4.9) held by Liberty, any of its Subsidiaries or, to the knowledge of
Liberty, any of the Liberty Equity Affiliates or as may otherwise be required
under laws applicable to the conduct of the businesses of Liberty and its
Subsidiaries in the ordinary course, (E) the Governmental Filings to be made
on the part of or with respect to TCI referred to in clauses (ii)(A) and
(ii)(B) of Section 5.5, as applicable, and such Government Consents and
Governmental Filings as may be required in connection with the issuance of
TCI/Liberty stock as contemplated hereby pursuant to state securities and blue
sky laws; and (F) the Governmental Filings required pursuant to the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act");

(iii) require, on the part of Liberty, any Subsidiary of Liberty, or, to
the knowledge of Liberty, any Liberty Equity Affiliate, any consent by or
approval of (a "Contract Consent") or notice to (a "Contract Notice") any
other person or entity (other than a Governmental Entity), whether under any
License or other Contract (as defined in clause (iv) of this Section 4.5) or
otherwise, the absence or omission of which would, either individually or in
the aggregate, have a material adverse effect on the transactions contemplated
hereby or on the business, assets, results of operations or financial
condition of Liberty and its Subsidiaries, taken as a whole, or the Liberty
Surviving Corporation and its Subsidiaries, taken as a whole;

(iv) assuming that the Contract Consents and Contract Notices described on
Schedule 4.5 are obtained and given and that any Government Consents and
Governmental Filings required under any Licenses (as defined in Section 4.9)
are obtained or made, conflict with, result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
the loss of any material benefit under or the creation of a Lien or other
encumbrance on any assets pursuant to (any such conflict, violation, breach,
default, right of termination, cancellation or acceleration, loss or creation,
a "Violation") any Contract (which term shall mean and include any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit, authorization,
license, contract,

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<PAGE> 30
instrument, employee benefit plan or practice, or other agreement, obligation,
commitment or concession of any nature) to which Liberty, any Subsidiary of
Liberty or, to the knowledge of Liberty, any Liberty Equity Affiliate is a
party, by which Liberty, any Subsidiary of Liberty or, to the knowledge of
Liberty, any Liberty Equity Affiliate or any of their respective assets or
properties is bound or affected or pursuant to which Liberty, any Subsidiary
of Liberty or, to the knowledge of Liberty, any Liberty Equity Affiliate is
entitled to any rights or benefits (including the Licenses), except for such
Violations which would not, either individually or in the aggregate, have a
material adverse effect on the transactions contemplated hereby or on the
business, assets, results of operations or financial condition of Liberty and
its Subsidiaries, taken as a whole, or the Liberty Surviving Corporation and
its Subsidiaries, taken as a whole; or

(v) assuming that the Merger Proposal is approved by Liberty's stockholders
and assuming that the Government Consents and Governmental Filings specified
in clause (ii) of this Section 4.5 are obtained, made and given, result in a
Violation of, under or pursuant to any law, rule, regulation, order, judgment
or decree applicable to Liberty, any Subsidiary of Liberty or, to the
knowledge of Liberty, any Liberty Equity Affiliate or by which any of their
respective properties or assets are bound or affected, except for such
Violations which would not, either individually or in the aggregate, have a
material adverse effect on the transactions contemplated hereby or on the
business, assets, results of operations or financial condition of Liberty and
its Subsidiaries, taken as a whole, or the Liberty Surviving Corporation and
its Subsidiaries, taken as a whole. As used herein, the term "Governmental
Entity" means and includes any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign.

4.6 Absence of Certain Changes or Events. Except as otherwise disclosed in
the Liberty Commission Filings filed with the Commission prior to the date
hereof or as set forth on Schedule 4.6, during the period commencing on October
1, 1993 and ending on the date of this Agreement, (i) there has not been any
material adverse change in, and no event has occurred and no condition exists
which, individually or together with other events or conditions, has had a
material adverse effect on, the business, assets, results of operations or
financial condition of Liberty and its Subsidiaries, taken as a whole
(excluding events or conditions generally affecting the cable television or
cable programming industries in the United States or affecting general business
or economic conditions in the United States) and (ii) neither Liberty nor any
of its Subsidiaries has taken any action which, if taken after the date of this
Agreement without the consent of TCI, would violate Section 7.4 hereof.

4.7 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Liberty or any of its affiliates, directors,
officers, employees, agents or representatives in writing specifically for
inclusion or incorporation by reference in, and which is included or
incorporated by reference in, (i) the Registration Statement or any amendment
or supplement thereto filed or to be filed by TCI/Liberty with the Commission
under the Securities Act, (ii) the Joint Proxy Statement/Prospectus or (iii)
any other documents filed or to be filed with the Commission or any other
Governmental Entity in connection with the transactions

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<PAGE> 31
contemplated hereby, will, at the respective times such documents are filed,
and, in the case of the Registration Statement or any amendment or supplement
thereto, when the same becomes effective, at the time of the TCI Stockholders
Meeting or the Liberty Stockholders Meeting or any other meeting of Liberty's
stockholders or TCI's stockholders to be held in connection with the Mergers or
at the Effective Time, and, in the case of the Joint Proxy Statement/Prospectus
or any amendment or supplement thereto, at the time of mailing of the Joint
Proxy Statement/Prospectus to Liberty's stockholders and TCI's stockholders or
at the time of the Liberty Stockholders Meeting or the TCI Stockholders Meeting
or any other meeting of Liberty's stockholders or TCI's stockholders to be held
in connection with the Mergers, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Liberty
Stockholders Meeting or the TCI Stockholders Meeting. For this purpose, any
such information included or incorporated by reference in any such document
will be deemed to have been so supplied in writing specifically for inclusion
or incorporation therein if such document was available for review by Liberty a
reasonable time before such document was filed (but the foregoing shall not be
the exclusive manner in which it may be established that such information was
so supplied). The Registration Statement and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the
respective rules and regulations under each such Act.

4.8 Legal Proceedings. Except as set forth in the Liberty Commission Filings
filed with the Commission prior to the date hereof or as set forth on Schedule
4.8, (i) there is no suit, action or proceeding pending or, to the knowledge of
Liberty, any investigation pending or any suit, action, proceeding or
investigation threatened, against, involving or affecting Liberty, any
Subsidiary of Liberty or, to the knowledge of Liberty, any Liberty Equity
Affiliate or any of its or their properties or rights (excluding suits,
actions, proceedings or investigations generally affecting the cable television
or cable programming industries in a particular state or in the United States
and to which neither Liberty nor any Subsidiary of Liberty is a party), which,
if adversely determined, is, insofar as Liberty can reasonably foresee,
reasonably likely to have, either individually or in the aggregate, a material
adverse effect on the business, assets, results of operations or financial
condition of Liberty and its Subsidiaries, taken as a whole; (ii) there is no
judgment, decree, Injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator applicable to
Liberty, any Subsidiary of Liberty or, to the knowledge of Liberty, any Liberty
Equity Affiliate having, or which, insofar as Liberty can reasonably foresee,
is reasonably likely to have, either individually or in the aggregate, any such
effect; and (iii) to the knowledge of Liberty, there is no action, suit,
proceeding or investigation pending or threatened against Liberty which seeks
to restrain, enjoin or delay the consummation of either Merger or any of the
other transactions contemplated hereby or which seeks damages in connection
therewith, and no Injunction of any type referred to in Section 8.1(d) has been
entered or issued. The term "order" as used in the immediately preceding
sentence shall not be deemed to include any Licenses.

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<PAGE> 32
4.9 Licenses; Compliance With Regulatory Requirements; Intangible Property.
Liberty, its Subsidiaries and, to the knowledge of Liberty, the Liberty Equity
Affiliates, hold all licenses, franchises, ordinances, authorizations, permits,
certificates, variances, exemptions, orders and approvals, domestic or foreign
(collectively, the "Licenses") which are material to the operation of the
businesses of Liberty and its Subsidiaries, taken as a whole. Each of Liberty,
its Subsidiaries and, to the knowledge of Liberty, the Liberty Equity
Affiliates is in compliance with, and has conducted its business so as to
comply with, the terms of their respective Licenses and with all applicable
laws, rules, regulations, ordinances and codes, domestic or foreign, including
laws, rules, regulations, ordinances and codes relating to the protection of
the environment, except where the failure so to comply has not had, either
individually or in the aggregate, a material adverse effect on the business,
assets, results of operations or financial condition of Liberty and its
Subsidiaries, taken as a whole. Without limiting the generality of the
foregoing, Liberty, its Subsidiaries and, to the knowledge of Liberty, the
Liberty Equity Affiliates, (i) have all Licenses (the "FCC Licenses") issued by
the Federal Communications Commission (the "FCC") and all Licenses of foreign,
state and local governmental authorities (the "Franchises") required for the
operation of the cable television systems and related facilities (the "CATV
Systems") being operated on the date hereof by Liberty, any of its Subsidiaries
or, to the knowledge of Liberty, any of the Liberty Equity Affiliates, (ii)
have duly and currently filed all reports and other information required to be
filed by the FCC or any other Governmental Entity in connection with such FCC
Licenses and Franchises and (iii) are not in violation of any of such FCC
Licenses or Franchises, other than the lack of FCC Licenses or Franchises,
delays in filing reports or possible violations which have not had and, insofar
as can reasonably be foreseen, in the future will not have a material adverse
effect on the business, assets, results of operations or financial condition of
Liberty and its Subsidiaries, taken as a whole. Except as Liberty shall have
previously advised TCI in writing, Liberty and its Subsidiaries own or have
adequate rights to use all patents, trademarks, trade names, service marks,
trade secrets, copyrights and other proprietary intellectual property rights as
are material in connection with the businesses of Liberty and its Subsidiaries,
taken as a whole.

4.10 Brokers or Finders. No agent, broker, investment banker, financial
advisor or other person or entity is or will be entitled, by reason of any
agreement, act or statement by Liberty or any of its Subsidiaries, directors,
officers, employees or affiliates, to any financial advisory, broker's,
finder's or similar fee or commission, to reimbursement of expenses or to
indemnification or contribution in connection with any of the transactions
contemplated by this Agreement, except Merrill Lynch & Co ("Merrill Lynch"),
whose fees and expenses and claims for indemnification and contribution will be
paid by Liberty in accordance with Liberty's agreement with such firm (a copy
of which has provided to TCI prior to the date hereof), and Liberty agrees to
indemnify and hold TCI and TCI/Liberty harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions,
expenses or claims for indemnification or contribution asserted by any person
on the basis of any act or statement made or alleged to have been made by
Liberty or any of its Subsidiaries, directors, officers, employees or
affiliates.

4.11 Tax Matters. Except as set forth on Schedule 4.11, to the knowledge of
Liberty

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(i) there has been duly filed by or on behalf of Liberty and each of its
Subsidiaries (and each of their respective predecessors (except that no
representation or warranty is made as to TCI or any of its Subsidiaries)), or
filing extensions from the appropriate Federal, state, foreign and local
Governmental Entities have been obtained with respect to, all material Federal,
state, foreign and local tax returns and reports required to be filed on or
prior to the date hereof, (ii) payment in full or adequate provision for the
payment of all taxes required to be paid in respect of the periods covered by
such tax returns and reports has been made (except in respect of state, local
and foreign taxes which are in the aggregate immaterial in amount) and (iii) a
reserve which Liberty reasonably believes to be adequate has been set up for
the payment of all such taxes anticipated to be payable in respect of periods
through the date hereof. None of the Federal income tax returns required to be
filed by or on behalf of Liberty and each of its Subsidiaries consolidated in
such returns (and their respective predecessors (except that no representation
or warranty is made as to TCI or any of its Subsidiaries)) under the Code or
any predecessor statute (the "Liberty Consolidated Returns") are currently
under examination by the Internal Revenue Service ("IRS"). There have not been
any deficiencies or assessments asserted in writing by the IRS with respect to
the Liberty Consolidated Returns. Except as set forth on Schedule 4.11,
neither Liberty nor any of its Subsidiaries (nor any of their respective
predecessors (except that no representation or warranty is made as to TCI or
any of its Subsidiaries)) has, with regard to any assets or property held,
acquired or to be acquired by Liberty or any of its Subsidiaries, filed a
consent pursuant to Section 341(f) of the Code or any predecessor statute. For
the purpose of this Agreement, the term "tax" (including, with correlative
meaning, the terms "taxes" and "taxable") shall include all Federal, state,
local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts.

4.12 Employee Benefit Plans; ERISA.

(a) Schedule 4.12(a) contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to at any time since January 1,
1993 by Liberty or by any trade or business, whether or not incorporated (a
"Liberty ERISA Affiliate"), that together with Liberty would be deemed a
"single employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), for the benefit of any
employee or former employee of Liberty or any Liberty ERISA Affiliate including
any such type of plan established, maintained or contributed to under the laws
of any foreign country (the "Liberty Plans"). Schedule 4.12(a) identifies each
Liberty Plan that is an "employee benefit plan," as defined in Section 3(3) of
ERISA. Liberty has heretofore delivered to TCI true and complete copies of
each Liberty Plan and, if the Liberty Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding document.

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<PAGE> 34
(b) Except as set forth in Schedule 4.12(b), (i) no Liberty Plan is subject
to Title IV of ERISA or Section 412 of the Code and (ii) neither Liberty nor
any Liberty ERISA Affiliate made, or was required to make, contributions to any
employee benefit plan subject to Title IV of ERISA during the five year period
ending on the Effective Time.

(c) Concerning each Liberty Plan that is or has been subject to the funding
requirements of Title I, Subtitle B, Part 3 of ERISA, the funding method used
in connection with such Liberty Plan is, and at all times has been, acceptable
under ERISA, each of the actuarial assumptions employed in connection with
determining the funding of each such Liberty Plan is, and at all times has
been, reasonable and satisfies the requirements of Section 412(c)(3) of the
Code and Section 302(c)(3) of ERISA, and Schedule 4.12(c) sets forth, as of the
date hereof, (A) the actuarially determined present value of all benefit
liabilities within the meaning of Section 4001(a)(16) of ERISA ("Liberty
Benefit Liabilities") determined on an ongoing plan basis, employing in making
such determination the same actuarial assumptions as were used in determining
plan fundings for the most recently completed plan year unless any such
assumption is not reasonable, in which event such assumption has been changed
to a reasonable assumption, (B) the actuarially determined present value of all
Liberty Benefit Liabilities under each such Liberty Plan employing in such
determination the same actuarial assumptions, except turnover assumptions, as
were used in determining funding for such plan for the most recently completed
plan year unless any such assumption is not reasonable, in which event such
assumption has been changed to a reasonable assumption, (C) the fair market
value of the assets held to fund each such Liberty Plan, (D) the funding method
used in connection with each such Liberty Plan and (E) identification of the
amount and related plan with respect to which there is or has been any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA.
Schedule 4.12(c) sets forth a reasonable good faith estimate of material
changes between January 1, 1993 and the date hereof in the value of benefits or
plan assets described in the preceding clause (A), (B) or (C); Schedule 4.12(c)
sets forth the information described in said clauses (A), (B), (C) and (D) as
of the date hereof, including a separate statement of liabilities attributable
to unpredictable contingent event benefits within the meaning of Section
412(l)(7)(B)(ii) of the Code and Section 302(d)(7)(B)(ii) of ERISA. The sum of
the amount of unfunded Liberty Benefit Liabilities under all Liberty Plans
(excluding each such plan with an amount of unfunded Liberty Benefit
Liabilities of zero or less) is not more than $1,000,000; all contributions
required by Section 515 of ERISA to be made by Liberty or any Liberty ERISA
Affiliate to Liberty Plans have been timely made; with respect to any such
Liberty Plan and concerning each Liberty Plan which is in whole or in part an
"individual account plan" (as defined in Section 3(34) of ERISA), there is set
forth in Schedule 4.12(c) (A) the amount of any liability of Liberty or any
Liberty ERISA Affiliate for contributions due or to become due with respect to
each such Liberty Plan for periods up to the date hereof, and the date any such
amounts were paid and (B) the amount of any contribution accrued or paid or
expected to be accrued or paid with respect to such Liberty Plan for the plan
year in which the Effective Time occurs; with respect to any such Liberty Plan
no such plan has been terminated or subject to a "spin-off" or "spin-off
termination" or partial termination and no assets of any such Liberty Plan have
been used or employed in a manner so as to subject them to an excise tax
imposed under Section 4980 of the Code; each such Liberty Plan permits
termination thereof, and distribution of any assets in excess of those required
to pay

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<PAGE> 35
Liberty Benefit Liabilities may be distributed to or for the benefit of Liberty
or any Liberty ERISA Affiliate, and Section 4044(d) of ERISA would not prevent
such reversion; and with respect to any such Liberty Plan, any reduction in
benefits was preceded by an adequate and appropriate notice to the parties
described in and as required by Section 204(h) of ERISA. There are no former
employees or participants who are entitled to earn additional pension benefits
by reason of "grow in" or other rights with respect to service or time periods
after such employees have been terminated from employment with Liberty, or any
Liberty ERISA Affiliates.

(d) Neither Liberty nor any Liberty ERISA Affiliate has engaged in any
transaction described under Section 4069 of ERISA nor can any claim,
encumbrance or other lien be imposed on Liberty, any Liberty ERISA Affiliates
or assets of any of the foregoing under Section 4068 of ERISA.

(e) Each Liberty Plan that utilizes a funding vehicle described in Section
501(c)(9) of the Code or is subject to the provisions of Section 505 of the
Code has been the subject of a notification by the IRS that such funding
vehicle qualifies for tax-exempt status under Section 501(c)(9) of the Code
and/or such Liberty Plan complies with Section 505 of the Code, unless the IRS
does not as a matter of policy issue such notification with respect to that
particular type of plan. Each such Liberty Plan satisfies, where appropriate,
the requirements of Sections 501(c)(9) and 505 of the Code.

(f) Schedule 4.12(f) contains a list of, and Liberty has delivered to TCI
true and complete copies of, all other material personnel policy, stock option
plan, collective bargaining agreement, bonus, incentive award, vacation pay,
severance pay, consulting agreement or any other employee benefit plan,
agreement, arrangement or understanding which Liberty or any Liberty ERISA
Affiliate maintains, or to which Liberty or any Liberty ERISA Affiliate
contributes, is required to contribute or has contributed since January 1,
1993, and which is not required under paragraph (a) or (b) above to be listed
in Schedule 4.12(a) or (b), respectively (including, without limitation, with
respect to any plans which are unwritten, a detailed written description of
eligibility, participation, benefits, funding arrangements, assets and any
other matters which relate to the obligations of Liberty or any Liberty ERISA
Affiliate).

(g) Liberty and each Liberty ERISA Affiliate have complied in all material
respects with all requirements for premium payments, including any interest and
penalty charges for late payment, due the Pension Benefit Guaranty Corporation
("PBGC") with respect to each Liberty Plan and each separate plan year for
which any premiums are required. Except as set forth in Schedule 4.12(g), and
except for transactions required by this Agreement, from the period commencing
January 1, 1987 through the Effective Time there has been no "reportable event"
(as defined in Section 4043(b) of ERISA and the regulations promulgated by the
PBGC thereunder) with respect to any Liberty Plan subject to Title IV of ERISA
for which notice to the PBGC has not, by rule or regulation, been waived.
There is not any unsatisfied material liability to the PBGC which has been
incurred by Liberty or any Liberty ERISA Affiliate on account of any Liberty
Plan subject to Title IV of ERISA. From the period commencing January 1, 1987
through the Effective Time, no filing has been or will be made by Liberty or
any

30
<PAGE> 36
Liberty ERISA Affiliate with the PBGC to terminate, nor has any proceeding been
commenced by the PBGC to terminate, any Liberty Plan subject to Title IV of
ERISA which was maintained, or wholly or partially funded, by Liberty or any
Liberty ERISA Affiliate. Neither Liberty nor any Liberty Equity Affiliate (i)
has ceased operations at a facility so as to become subject to the provisions
of Section 4062(e) of ERISA, (ii) has withdrawn from any Liberty Plan with
respect to which it is a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, (iii) has ceased contributions on or
before the Effective Time to any Liberty Plan subject to Section 4064(a) of
ERISA to which Liberty or any Liberty ERISA Affiliate has made contributions
during the five calendar years prior to the Effective Time, or (iv) has
incurred a complete or partial withdrawal from any Liberty Plan that is a
multiemployer plan (as defined in either Section 3(37) or Section 4001(a)(3) of
ERISA (a "Multiemployer Plan")) so as to incur withdrawal liability as defined
in Section 4201 of ERISA (without regard to any subsequent reduction or waiver
of such liability under Section 4207 or 4208 of ERISA). No employee pension
benefit plan which is a Multiemployer Plan to which Liberty or any Liberty
ERISA Affiliate contributes is in "reorganization" (as defined in Section 4241
of ERISA) or "insolvent" (as defined in Section 4245 of ERISA). There is not
now, nor can there ever be, any liability under Section 4064 of ERISA to
Liberty or any Liberty ERISA Affiliate by reason of participation in any
Liberty Plan by Liberty or any Liberty ERISA Affiliate on or prior to the
Effective Time. There has been no amendment to any Liberty Plan that would
require the furnishing of security under Section 401(a)(29) of the Code. There
has been no event or circumstance and there can be no event or circumstance
which has or may result in any liability being asserted by any Liberty Plan,
the PBGC or any other person or entity under Title IV of ERISA against Liberty
or any Liberty ERISA Affiliate or against TCI/Liberty (assuming consummation of
the Mergers). Neither Liberty nor any Liberty ERISA Affiliate has any
liability to any Liberty Plan for contributions under Section 412(m) of the
Code or Section 302(e) of ERISA, nor has any claim, encumbrance or other lien
been imposed under Section 412(n) of the Code or Section 302(f) of ERISA nor is
there any liability for excise taxes imposed under Section 4971 of the Code,
and all liabilities arising under Section 412(c)(11) of the Code with respect
to contributions to any Liberty Plan have been set forth in Schedule 4.12(g).
Copies of any notices to the PBGC under Section 412(n) of the Code or Section
302(f) of ERISA with respect to any Liberty Plan have been delivered to TCI;
and copies of notices required to be given to participants under Section 101(d)
of ERISA with respect to any Liberty Plan have previously been delivered to
TCI.

(h) True and complete copies of each plan, agreement, arrangement or
understanding referred to in Schedule 4.12(g), the most recent determination
letter issued by the IRS with respect to each Liberty Plan, annual reports on
Form 5500 required to be filed with any Governmental Entity for each Liberty
Plan which is an employee pension benefit plan for the three most recent plan
years and all actuarial reports for the last two plan years of each Liberty
Plan, other than an "individual account plan," have heretofore been delivered
by Liberty to TCI.

(i) Except as set forth in Schedule 4.12(i), neither Liberty nor any Liberty
ERISA Affiliate is a party to or bound by the terms of any collective
bargaining agreement. Liberty and each Liberty ERISA Affiliate is in
compliance in all material respects with all

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<PAGE> 37
applicable laws respecting the employment and employment practices, terms and
conditions of employment and wage and hours of its employees and is not engaged
in any unfair labor practice. To the knowledge of Liberty, all of the
employees of Liberty and the Liberty ERISA Affiliates who work in the United
States are lawfully authorized to work in the United States according to
federal immigration laws. There is no labor strike or labor disturbance
pending or, to the knowledge of Liberty threatened against Liberty or any
Liberty ERISA Affiliate, and during the past five years neither Liberty nor any
Liberty ERISA Affiliate has experienced a work stoppage.

(j) Each Liberty Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, Section 406 of ERISA and Section 4975 of the Code.

(k) Each Liberty Plan which is intended to be "qualified" within the meaning
of Section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under Section 501(a) of the Code.

(l) Except as set forth in Schedule 4.12(l), no Liberty Plan provides
benefits, including without limitation death or medical benefits, with respect
to current or former employees of Liberty or any Liberty ERISA Affiliate beyond
their retirement or other termination of service (other than (i) coverage
mandated by applicable law and (ii) death benefits or retirement benefits under
any "employee pension plan," as that term is defined in Section 3(2) of ERISA).

(m) Except as set forth in Schedule 4.12(m), there are no material pending,
threatened or anticipated claims by or on behalf of any Liberty Plan, by any
employee or beneficiary covered under an such Liberty Plan, or otherwise
involving any such Plan (other than routine claims for benefits).

4.13 Fairness Opinion. On January 24, 1994, Liberty received a written
opinion of Merrill Lynch, to the effect that, as of such date, the respective
exchange ratios in the Liberty Merger and the TCI Merger, taken together, are
fair to the holders of the shares of Liberty Common Stock (other than TCI or
its affiliates) from a financial point of view.

4.14 Recommendation of Liberty Board. The Liberty Board at a meeting duly
called and held on January 24, 1994, and acting on the unanimous recommendation
of a special committee of outside directors, has, by resolutions adopted by at
least 75% of the members of the entire Liberty Board, (i) determined that the
Merger Proposal is fair to, and in the best interests of, the stockholders of
Liberty (other than TCI and its Subsidiaries), (ii) approved this Agreement and
the transactions contemplated hereby and (iii) recommended that the
stockholders of Liberty approve and adopt the Merger Proposal.

4.15 Vote Required. The only vote of stockholders of Liberty required under
the DGCL and Liberty's Restated Certificate of Incorporation and By-laws in
order to approve and adopt the Merger Proposal is the affirmative vote of the
holders of (i) a majority of the aggregate

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<PAGE> 38
voting power of the issued and outstanding shares of Liberty Class A Stock and
Liberty Class B Stock voting together as a single class, (ii) at least 66-2/3%
of the number of shares of Liberty Class B Preferred voting as a separate class
and (iii) at least 66-2/3% of the number of shares of Liberty Class D Preferred
voting as a separate class, and no vote or approval of or other action by the
holders of any other class of the Liberty Preferred Stock is required.

ARTICLE V

Representations and Warranties of TCI

TCI hereby represents and warrants to each of Liberty and TCI/Liberty as
follows:

5.1 Organization. Each of TCI and TCI's "significant subsidiaries" (as
defined in Rule 1-02 of Regulation S-X, but excluding Liberty and its
Subsidiaries) (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and (iii) is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed or in good standing has not had, either individually or
in the aggregate, a material adverse effect on the business, assets, results of
operations or financial condition of TCI and its Subsidiaries, taken as a
whole. Each entity (excluding Liberty and its Subsidiaries) in which TCI,
directly or through one or more of its Subsidiaries, has an investment
accounted for by the equity method which is material to the business, assets,
results of operations or financial condition of TCI and its Subsidiaries, taken
as a whole (the "TCI Equity Affiliates"), to the knowledge of TCI, is a
corporation or partnership (A) duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (B) has all requisite corporate or partnership power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and (C) is duly qualified to do business and is in
good standing in each jurisdiction in which the properties owned, leased or
operated by it, or the nature of its activities, makes such qualification
necessary, except in each case where such failure to be so existing and in good
standing or to have such power and authority or to be so qualified to do
business and be in good standing has not had, individually or in the aggregate,
a material adverse effect on the business, assets, results of operations or
financial condition of TCI and its Subsidiaries, taken as a whole. TCI has
delivered to Liberty true and complete copies of its Restated Certificate of
Incorporation and By-laws, as amended through and in effect on the date hereof.

5.2 Authorization and Validity of Agreement. TCI has all requisite corporate
power and authority to enter into this Agreement and, subject to obtaining the
approval of its stockholders specified in Section 5.15, perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance by TCI of this

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<PAGE> 39
Agreement and the consummation by TCI of the transactions contemplated hereby
have been duly authorized by the TCI Board and by all other necessary corporate
action on its part, subject, in the case of consummation by it of the TCI
Merger, to such approval of TCI's stockholders. This Agreement has been duly
executed and delivered by TCI and is a valid and binding obligation of TCI,
enforceable in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).

5.3 Capitalization of TCI. The authorized capital stock of TCI consists of
one billion shares of TCI Class A Stock, 100 million shares of TCI Class B
Stock and ten million shares of "blank-check" preferred stock, of which 6,201
shares have been designated "Convertible Preferred Stock Series C" pursuant to
Section 151(g) of the DGCL. As of the close of business on December 31, 1993,
(i) 481,836,852 shares of TCI Class A Stock were issued and outstanding,
8,321,186 shares were reserved for issuance upon exercise of TCI Stock Options,
1,265,004 shares were reserved for issuance upon conversion of the TCI
Preferred Stock, 41,060,990 shares were reserved for issuance upon conversion
of outstanding convertible debt securities and 79,335,038 shares were held by
TCI in its treasury or by its Subsidiaries; (ii) 47,258,787 shares of TCI Class
B Stock were issued and outstanding and no shares were held by TCI in its
treasury or by any Subsidiary; and (iii) 6,201 shares of TCI Preferred Stock
were issued and outstanding and no shares were held by TCI in its treasury or
by its Subsidiaries. All issued and outstanding shares of TCI Common Stock and
TCI Preferred Stock have been validly issued and are fully paid and
nonassessable, are not subject to and have not been issued in violation of any
preemptive rights and have not been issued in violation of any Federal or state
securities laws. TCI has no issued or outstanding Voting Debt. Except as set
forth on Schedule 5.3, there are not, as of the date hereof, and will not at
any time to and including the Effective Time be, any outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments or any other
agreement of any character to or by which TCI or any of its Subsidiaries is a
party or is bound which, directly or indirectly, obligate TCI or any of its
Subsidiaries to issue, deliver or sell or cause to be issued, delivered or sold
any additional shares of TCI Class A Stock, TCI Class B Stock, TCI Preferred
Stock or any other capital stock, equity interest or Voting Debt of TCI or any
Subsidiary of TCI or any other securities convertible into, or exercisable or
exchangeable for, or evidencing the right to subscribe for any such shares,
interests or Voting Debt or obligating TCI or any of its Subsidiaries to grant,
extend or enter into any such subscription, option, warrant, call or right.
Except as set forth on Schedule 5.3, since the close of business on December
31, 1993, no shares of capital stock of TCI have been issued or have been
transferred from TCI's treasury. Immediately after the Effective Time, there
will be no subscription, option, warrant, call, right, commitment or agreement
which will entitle (conditionally or unconditionally) any person or entity to
purchase or otherwise acquire, or will obligate (conditionally or
unconditionally) the TCI Surviving Corporation (as TCI's successor) or any
Subsidiary of the TCI Surviving Corporation that was a Subsidiary of TCI to
sell, issue or deliver, any shares of capital stock, any other equity interest
or any Voting Debt of the TCI Surviving Corporation or obligating the TCI
Surviving Corporation or any such Subsidiary to grant, extend or enter into any
such subscription, warrant, call, right, commitment or agreement. Except for
the TCI Incentive Plans and except as set forth on Schedule 5.3 or Schedule
5.12(a), neither TCI nor any of its Subsidiaries has adopted,

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<PAGE> 40
authorized or assumed any plans, arrangements or practices for the benefit of
its officers, employees or directors which require or permit the issuance,
sale, purchase or grant of any capital stock, other equity interests or Voting
Debt of TCI or any Subsidiary of TCI, any other securities convertible into, or
exercisable or exchangeable for, any such stock, interests or Voting Debt or
any phantom shares, phantom equity interests or stock or equity appreciation
rights. Except as set forth on Schedule 5.3, all shares of capital stock of
and all partnership or other equity interests in each Subsidiary of TCI and in
each TCI Equity Affiliate owned directly or indirectly by TCI are owned free
and clear of any Lien and the shares of capital stock of each corporate
Subsidiary of TCI are validly issued, fully paid and nonassessable. Except as
set forth on Schedule 5.3, there are not, and immediately after the Effective
Time there will not be, any outstanding or authorized subscriptions, options,
warrants, calls, rights, commitments or other agreements of any character that,
directly or indirectly, (x) call for or relate to the sale, pledge, transfer or
other disposition by TCI or TCI Surviving Corporation or any Subsidiary of TCI
or TCI Surviving Corporation of any shares of capital stock, any partnership or
other equity interests or any Voting Debt of any Subsidiary of TCI or TCI
Surviving Corporation or of any TCI Equity Affiliate owned directly or
indirectly by TCI or TCI Surviving Corporation or any Subsidiary of TCI or TCI
Surviving Corporation, or (y) relate to the voting or control of such capital
stock, partnership or other equity interests or Voting Debt.

5.4 TCI Reports and Financial Statements. TCI has heretofore made available
to Liberty true and complete copies of all reports, registration statements,
definitive proxy statements and other documents (in each case together with all
amendments thereto) filed by TCI with the Commission since January 1, 1991
(such reports, registration statements, definitive proxy statements and other
documents, together with any amendments thereto, are sometimes collectively
referred to as the "TCI Commission Filings"). The TCI Commission Filings
constitute all of the documents (other than preliminary material) that TCI was
required to file with the Commission since such date. As of their respective
dates, each of the TCI Commission Filings complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and
the rules and regulations under each such Act, and none of the TCI Commission
Filings contained as of such date any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading (except that no representation or warranty is made
with respect to any information regarding Liberty included in the TCI
Commission Filings which was furnished by Liberty expressly for use therein).
When filed with the Commission, the financial statements included in the TCI
Commission Filings complied as to form in all material respects with the
applicable rules and regulations of the Commission and were prepared in
accordance with generally accepted accounting principles (as in effect from
time to time) applied on a consistent basis (except as may be indicated therein
or in the notes or schedules thereto), and such financial statements fairly
present the consolidated financial position of TCI and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal,
recurring year-end audit adjustments. Except as and to the extent reflected or
reserved against in the

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<PAGE> 41
financial statements included in TCI's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993 or as disclosed therein and except as set
forth on Schedule 5.4, none of TCI, any of TCI's Subsidiaries or, to the
knowledge of TCI, any TCI Equity Affiliate had as of such date any liability or
obligation of any kind required to be reflected on a balance sheet of TCI and
its consolidated Subsidiaries prepared in accordance with the applicable rules
and regulations of the Commission which was material to the business, assets,
results of operations or financial condition of TCI and its Subsidiaries, taken
as a whole. Since September 30, 1993, except as disclosed in the TCI
Commission Filings filed with the Commission prior to the date hereof and
except as set forth on Schedule 5.4, none of TCI, any of TCI's Subsidiaries or,
to the knowledge of TCI, any TCI Equity Affiliate has incurred any liability or
obligation of any kind which, in any case or in the aggregate, is material to
the business, assets, results of operations or financial condition of TCI and
its Subsidiaries, taken as a whole.

5.5 No Approvals or Notices Required; No Conflict with Instruments. Except
as set forth on Schedule 5.5, the execution and delivery by TCI of this
Agreement do not, and the performance by TCI of its obligations hereunder and
the consummation of the transactions contemplated hereby will not:

(i) assuming approval of the Merger Proposal by TCI's stockholders as
contemplated by Section 5.15, conflict with or violate the Restated
Certificate of Incorporation or By-laws of TCI or any corporate Subsidiary of
TCI or the partnership agreement or any partnership Subsidiary or TCI;

(ii) require any Government Consent or Governmental Filing, in each case on
the part of or with respect to TCI, any Subsidiary of TCI or, to the knowledge
of TCI, any TCI Equity Affiliate, the absence or omission of which would,
either individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of TCI and its Subsidiaries, taken as a
whole, or the TCI Surviving Corporation and its Subsidiaries, taken as a
whole, except for (A) the filing with the Commission of the Joint Proxy
Statement, the Registration Statement, and such reports and other documents,
if any, under Sections 12(g), 13(a), 13(d) and 16(a) of the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby, (B) the filing of the TCI Certificate of Merger with the
Secretary of State of the State of Delaware, and appropriate documents with
the relevant authorities of other states in which TCI is qualified to do
business, (C) the FCC Approvals and the Local Approvals, (D) such Government
Consents and Governmental Filings as may be required in connection with the
issuance of TCI/Liberty stock as contemplated hereby pursuant to state
securities and blue sky laws, (E) the Governmental Filings to be made on the
part of or with respect to Liberty referred to in clauses (ii)(A) and (B) of
Section 4.5 and (F) the Governmental Filings required pursuant to the
pre-merger notification requirements of the HSR Act;

(iii) require, on the part of TCI, any Subsidiary of TCI or, to the
knowledge of TCI, any TCI Equity Affiliate, any Contract Consent or Contract
Notice, the absence or

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<PAGE> 42
omission of which would, either individually or in the aggregate, have a
material adverse effect on the transactions contemplated hereby or on the
business, assets, results of operations or financial condition of TCI and its
Subsidiaries, taken as a whole, or the TCI Surviving Corporation and its
Subsidiaries, taken as a whole;

(iv) assuming that the Contract Consents and Contract Notices described on
Schedule 5.5 are obtained and given and that any Government Consents and
Governmental Filings required under any Licenses are obtained or made, result
in any Violation of any Contract to which TCI, any Subsidiary of TCI or, to
the knowledge of TCI, any TCI Equity Affiliate is a party, by which TCI, any
Subsidiary of TCI or, to the knowledge of TCI, any TCI Equity Affiliate or any
of their respective assets or properties is bound or affected or pursuant to
which TCI, any Subsidiary of TCI or, to the knowledge of TCI, any TCI Equity
Affiliate is entitled to any rights or benefits, except for such Violations
which would not, either individually or in the aggregate, have a material
adverse effect on the transactions contemplated hereby or on the business,
assets, results of operations or financial condition of TCI and its
Subsidiaries, taken as a whole, or the TCI Surviving Corporation and its
Subsidiaries, taken as a whole; or

(v) assuming that the Merger Proposal is approved by TCI's stockholders and
assuming that the Government Consents and Governmental Filings specified in
clause (ii) of this Section 5.5 are obtained, made and given, result in a
Violation of, under or pursuant to any law, rule, regulation, order, judgment
or decree applicable to TCI, any Subsidiary of TCI or, to the knowledge of
TCI, any TCI Equity Affiliate or by which any of their respective properties
or assets are bound or affected, except for such Violations which would not,
either individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of TCI and its Subsidiaries, taken as a
whole, or the TCI Surviving Corporation and its Subsidiaries, taken as a
whole.

5.6 Absence of Certain Changes or Events. Except as otherwise disclosed in
the TCI Commission Filings filed with the Commission prior to the date hereof
or as set forth on Schedule 5.6, during the period commencing on October 1,
1993 and ending on the date of this Agreement, (i) there has not been any
material adverse change in, and no event has occurred and no condition exists
which, individually or together with other events or conditions, has had a
material adverse effect on, the business, assets, results of operations or
financial condition of TCI and its Subsidiaries, taken as a whole (excluding
events or conditions generally affecting the cable television or cable
programming industries in the United States or affecting general business or
economic conditions in the United States) and (ii) neither TCI nor any of its
Subsidiaries has taken any action which, if taken after the date of this
Agreement without the consent of Liberty, would violate Section 7.4 hereof.

5.7 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by TCI or any of its affiliates, directors,
officers, employees, agents or representatives in writing specifically for
inclusion or incorporation by reference in, and which is included or

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incorporated by reference in, (i) the Registration Statement or any amendment
or supplement thereto, (ii) the Joint Proxy Statement/Prospectus or (iii) any
other documents filed or to be filed with the Commission or any other
Governmental Entity in connection with the transactions contemplated hereby,
will, at the respective times such documents are filed, and, in the case of the
Registration Statement or any amendment or supplement thereto, when the same
becomes effective, at the time of the TCI Stockholders Meeting or the Liberty
Stockholders Meeting or any other meeting of TCI's stockholders or Liberty's
stockholders to be held in connection with the Mergers or at the Effective
Time, and, in the case of the Joint Proxy Statement/Prospectus or any amendment
or supplement thereto, at the time of mailing of the Joint Proxy
Statement/Prospectus to TCI's and Liberty's stockholders or at the time of the
TCI Stockholders Meeting or the Liberty Stockholders Meeting, or any other
meeting of TCI's stockholders or Liberty's stockholders to be held in
connection with the Mergers, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Liberty
Stockholders Meeting or the TCI Stockholders Meeting. For this purpose, any
such information included or incorporated by reference in any such document
will be deemed to have been so supplied in writing specifically for inclusion
or incorporation therein if such document was available for review by TCI a
reasonable time before such document was filed (but the foregoing shall not be
the exclusive manner in which it may be established that such information was
so supplied). The Registration Statement and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and the
respective rules and regulations under each such Act.

5.8 Legal Proceedings. Except as set forth in the TCI Commission Filings
filed with the Commission prior to the date hereof or as set forth on Schedule
5.8, (i) there is no suit, action or proceeding pending or, to the knowledge of
TCI, any investigation pending or any suit, action, proceeding or investigation
threatened, against, involving or affecting TCI, any Subsidiary of TCI or, to
the knowledge of TCI, any TCI Equity Affiliate or any of its or their
properties or rights (excluding suits, actions, proceedings or investigations
generally affecting the cable television industry in a particular state or in
the United States and to which neither TCI nor any Subsidiary of TCI is a
party), which, if adversely determined, is, insofar as TCI can reasonably
foresee, reasonably likely to have, either individually or in the aggregate, a
material adverse effect on the business, assets, results of operations or
financial condition of TCI and its Subsidiaries, taken as a whole; (ii) there
is no judgment, decree, Injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator applicable to
TCI, any Subsidiary of TCI or, to the knowledge of TCI, any TCI Equity
Affiliate having, or which, insofar as TCI can reasonably foresee, is
reasonably likely to have, either individually or in the aggregate, any such
effect; and (iii) to the knowledge of TCI, there is no action, suit, proceeding
or investigation pending or threatened against TCI which seeks to restrain,
enjoin or delay the consummation of either Merger or any of the other
transactions contemplated hereby or which seeks damages in connection
therewith, and no Injunction of any type referred to in Section 8.1(d) has been
entered or issued. The term "order" as used in the immediately preceding
sentence shall not be deemed

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to include any Licenses.

5.9 Licenses; Compliance with Regulatory Requirements; Intangible Property.
TCI, its Subsidiaries and, to the knowledge of TCI, the TCI Equity Affiliates
hold all Licenses which are material to the operation of the businesses of TCI
and its Subsidiaries, taken as a whole. Each of TCI, its Subsidiaries and, to
the knowledge of TCI, the TCI Equity Affiliates is in compliance with, and has
conducted its business so as to comply with, the terms of their respective
Licenses and with all applicable laws, rules, regulations, ordinances and
codes, domestic or foreign, including laws, rules, regulations, ordinances and
codes relating to the protection of the environment, except where the failure
so to comply has not had, either individually or in the aggregate, a material
adverse effect on the business, assets, results of operations or financial
condition of TCI and its Subsidiaries, taken as a whole. Without limiting the
generality of the foregoing, TCI, its Subsidiaries and, to the knowledge of
TCI, the TCI Equity Affiliates (i) have all FCC Licenses and Franchises
required for the operation of the CATV Systems being operated on the date
hereof by TCI, any of its Subsidiaries, or, to the knowledge of TCI, any TCI
Equity Affiliate, (ii) have duly and currently filed all reports and other
information required to be filed by the FCC or any other Governmental Entity in
connection with such FCC Licenses and Franchises and (iii) are not in violation
of any of such FCC Licenses or Franchises, other than the lack of FCC Licenses
or Franchises, delays in filing reports or possible violations which have not
had and, insofar as can reasonably be foreseen, in the future will not have a
material adverse effect on the business, assets, results of operations or
financial condition of TCI and its Subsidiaries, taken as a whole. TCI and its
Subsidiaries own or have adequate rights to use all patents, trademarks, trade
names, service marks, trade secrets, copyrights and other proprietary
intellectual property rights as are material in connection with the businesses
of TCI and its Subsidiaries, taken as a whole.

5.10 Brokers or Finders. No agent, broker, investment banker, financial
advisor or other person or entity is or will be entitled, by reason of any
agreement, act or statement by TCI or any of its Subsidiaries, directors,
officers, employees or affiliates, to any financial advisory, broker's,
finder's or similar fee or commission, to reimbursement of expenses or to
indemnification or contribution in connection with any of the transactions
contemplated by this Agreement, except CS First Boston, whose fees and expenses
and claims for indemnification and contribution will be paid by TCI in
accordance with TCI's agreement with such firm (a copy of which has been (or
following its execution by TCI will promptly be) provided to Liberty), and TCI
agrees to indemnify and hold Liberty and TCI/Liberty harmless from and against
any and all claims, liabilities or obligations with respect to any such fees,
commissions, expenses or claims for indemnification or contribution asserted by
any person on the basis of any act or statement made or alleged to have been
made by TCI or any of its Subsidiaries, directors, officers, employees or
affiliates.

5.11 Tax Matters. Except as set forth on Schedule 5.11, to the knowledge of
TCI, (i) there has been duly filed by or on behalf of TCI and each of its
Subsidiaries (and each of their respective predecessors (except that no
representation or warranty is made as to Liberty or any of its Subsidiaries)),
or filing extensions from the appropriate Federal, state, foreign and local

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<PAGE> 45
Governmental Entities have been obtained with respect to, all material Federal,
state, foreign and local tax returns and reports required to be filed on or
prior to the date hereof, (ii) payment in full or adequate provision for the
payment of all taxes required to be paid in respect of the periods covered by
such tax returns and reports has been made (except in respect of state, local
and foreign taxes which are in the aggregate immaterial in amount) and (iii) a
reserve which TCI reasonably believes to be adequate has been set up for the
payment of all such taxes anticipated to be payable in respect of periods
through the date hereof. Except as set forth on Schedule 5.11, none of the
Federal income tax returns required to be filed by or on behalf of TCI and each
of its Subsidiaries consolidated in such returns (and their respective
predecessors (except that no representation or warranty is made as to Liberty
or any of its Subsidiaries)) under the Code or any predecessor statute (the
"TCI Consolidated Returns") are currently under examination by the IRS. There
have not been any deficiencies or assessments asserted in writing by the IRS
with respect to the TCI Consolidated Returns. Except as set forth on Schedule
5.11, neither TCI nor any of its Subsidiaries (nor any of their respective
predecessors (except that no representation or warranty is made as to Liberty
or any of its Subsidiaries)) has, with regard to any assets or property held,
acquired or to be acquired by TCI or any of its Subsidiaries, filed a consent
pursuant to Section 341(f) of the Code or any predecessor statute.

5.12 Employee Benefit Plans; ERISA.

(a) Schedule 5.12(a) contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to at any time since January 1,
1993 by TCI or by any trade or business, whether or not incorporated (a "TCI
ERISA Affiliate"), that together with TCI would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), for the benefit of any employee or former
employee of TCI or any TCI ERISA Affiliate including any such type of plan
established, maintained or contributed to under the laws of any foreign country
(the "TCI Plans"). Schedule 5.12(a) identifies each TCI Plan that is an
"employee benefit plan," as defined in Section 3(3) of ERISA. TCI has
heretofore delivered to Liberty true and complete copies of each TCI Plan and,
if the TCI Plan is funded through a trust or any third party funding vehicle, a
copy of the trust or other funding document.

(b) Except as set forth in Schedule 5.12(b), (i) no TCI Plan is subject to
Title IV of ERISA or Section 412 of the Code and (ii) neither TCI nor any TCI
ERISA Affiliate made, or was required to make, contributions to any employee
benefit plan subject to Title IV of ERISA during the five year period ending on
the Effective Time.

(c) Concerning each TCI Plan that is or has been subject to the funding
requirements of Title I, Subtitle B, Part 3 of ERISA, the funding method used
in connection with such TCI Plan is, and at all times has been, acceptable
under ERISA, each of the actuarial

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<PAGE> 46
assumptions employed in connection with determining the funding of each such
TCI Plan is, and at all times has been, reasonable and satisfies the
requirements of Section 412(c)(3) of the Code and Section 302(c)(3) of ERISA,
and Schedule 5.12(c) sets forth, as of the date hereof, (A) the actuarially
determined present value of all benefit liabilities within the meaning of
Section 4001(a)(16) of ERISA ("TCI Benefit Liabilities") determined on an
ongoing plan basis, employing in making such determination the same actuarial
assumptions as were used in determining plan fundings for the most recently
completed plan year unless any such assumption is not reasonable, in which
event such assumption has been changed to a reasonable assumption, (B) the
actuarially determined present value of all TCI Benefit Liabilities under each
such TCI Plan employing in such determination the same actuarial assumptions,
except turnover assumptions, as were used in determining funding for such plan
for the most recently completed plan year unless any such assumption is not
reasonable, in which event such assumption has been changed to a reasonable
assumption, (C) the fair market value of the assets held to fund each such TCI
Plan, (D) the funding method used in connection with each such TCI Plan and (E)
identification of the amount and related plan with respect to which there is or
has been any "accumulated funding deficiency," as defined in Section 302(a)(2)
of ERISA. Schedule 5.12(c) sets forth a reasonable good faith estimate of
material changes between January 1, 1993 and the date hereof in the value of
benefits or plan assets described in the preceding clause (A), (B) or (C);
Schedule 5.12(c) sets forth the information described in said clauses (A), (B),
(C) and (D) as of the date hereof, including a separate statement of
liabilities attributable to unpredictable contingent event benefits within the
meaning of Section 412(l)(7)(B)(ii) of the Code and Section 302(d)(7)(B)(ii) of
ERISA. The sum of the amount of unfunded TCI Benefit Liabilities under all TCI
Plans (excluding each such plan with an amount of unfunded Benefit Liabilities
of zero or less) is not more than $1,000,000; all contributions required by
Section 515 of ERISA to be made by TCI or any TCI ERISA Affiliate to TCI Plans
have been timely made; with respect to any such TCI Plan and concerning each
TCI Plan which is in whole or in part an "individual account plan" (as defined
in Section 3(34) of ERISA), there is set forth in Schedule 5.12(c) (A) the
amount of any liability of TCI or any TCI ERISA Affiliate for contributions due
or to become due with respect to each such TCI Plan for periods up to the date
hereof, and the date any such amounts were paid and (B) the amount of any
contribution accrued or paid or expected to be accrued or paid with respect to
such TCI Plan for the plan year in which the Effective Time occurs; with
respect to any such TCI Plan no such plan has been terminated or subject to a
"spin-off" or "spin-off termination" or partial termination and no assets of
any such TCI Plan have been used or employed in a manner so as to subject them
to an excise tax imposed under Section 4980 of the Code; each such TCI Plan
permits termination thereof, and distribution of any assets in excess of those
required to pay TCI Benefit Liabilities may be distributed to or for the
benefit of TCI or any TCI ERISA Affiliate, and Section 4044(d) of ERISA would
not prevent such reversion; and with respect to any such TCI Plan, any
reduction in benefits was preceded by an adequate and appropriate notice to the
parties described in and as required by Section 204(h) of ERISA. There are no
former employees or participants who are entitled to earn additional pension
benefits by reason of "grow in" or other rights with respect to service or time
periods after such employees have been terminated from employment with TCI, or
any TCI ERISA Affiliates.

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(d) Neither TCI nor any TCI ERISA Affiliate has engaged in any transaction
described under Section 4069 of ERISA nor can any claim, encumbrance or other
lien be imposed on TCI, any TCI ERISA Affiliates or assets of any of the
foregoing under Section 4068 of ERISA.

(e) Each TCI Plan that utilizes a funding vehicle described in Section
501(c)(9) of the Code or is subject to the provisions of Section 505 of the
Code has been the subject of a notification by the IRS that such funding
vehicle qualifies for tax-exempt status under Section 501(c)(9) of the Code
and/or such TCI Plan complies with Section 505 of the Code, unless the IRS does
not as a matter of policy issue such notification with respect to that
particular type of plan. Each such TCI Plan satisfies, where appropriate, the
requirements of Sections 501(c)(9) and 505 of the Code.

(f) Schedule 5.12(f) contains a list of, and TCI has delivered to Liberty
true and complete copies of, all other material personnel policy, stock option
plan, collective bargaining agreement, bonus, incentive award, vacation pay,
severance pay, consulting agreement or any other employee benefit plan,
agreement, arrangement or understanding which TCI or any TCI ERISA Affiliate
maintains, or to which TCI or any TCI ERISA Affiliate contributes, is required
to contribute or has contributed since January 1, 1993, and which is not
required under paragraph (a) or (b) above to be listed in Schedule 5.12(a) or
(b), respectively (including, without limitation, with respect to any plans
which are unwritten, a detailed written description of eligibility,
participation, benefits, funding arrangements, assets and any other matters
which relate to the obligations of TCI or any TCI ERISA Affiliate).

(g) TCI and each TCI ERISA Affiliate have complied in all material respects
with all requirements for premium payments, including any interest and penalty
charges for late payment, due the Pension Benefit Guaranty Corporation ("PBGC")
with respect to each TCI Plan and each separate plan year for which any
premiums are required. Except as set forth in Schedule 5.12(g), and except for
transactions required by this Agreement, from the period commencing January 1,
1987 through the Effective Time there has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the regulations promulgated by the PBGC
thereunder) with respect to any TCI Plan subject to Title IV of ERISA for which
notice to the PBGC has not, by rule or regulation, been waived. There is not
any unsatisfied material liability to the PBGC which has been incurred by TCI
or any TCI ERISA Affiliate on account of any TCI Plan subject to Title IV of
ERISA. From the period commencing January 1, 1987 through the Effective Time,
no filing has been or will be made by TCI or any TCI ERISA Affiliate with the
PBGC to terminate, nor has any proceeding been commenced by the PBGC to
terminate, any TCI Plan subject to Title IV of ERISA which was maintained, or
wholly or partially funded, by TCI or any TCI ERISA Affiliate. Neither TCI nor
any TCI Equity Affiliate (i) has ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of ERISA, (ii) has
withdrawn from any TCI Plan with respect to which it is a substantial employer
so as to become subject to the provisions of Section 4063 of ERISA, (iii) has
ceased contributions on or before the Effective Time to any TCI Plan subject to
Section 4064(a) of ERISA to which TCI or any TCI ERISA Affiliate has made
contributions during the five calendar years prior to the Effective

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Time, or (iv) has incurred a complete or partial withdrawal from any TCI Plan
that is a multiemployer plan (as defined in either Section 3(37) or Section
4001(a)(3) of ERISA (a "Multiemployer Plan")) so as to incur withdrawal
liability as defined in Section 4201 of ERISA (without regard to any subsequent
reduction or waiver of such liability under Section 4207 or 4208 of ERISA). No
employee pension benefit which is a Multiemployer Plan to which TCI or any TCI
ERISA Affiliate contributes is in "reorganization" (as defined in Section 4241
of ERISA) or "insolvent" (as defined in Section 4245 of ERISA). There is not
now, nor can there ever be, any liability under Section 4064 of ERISA to TCI or
any TCI ERISA Affiliate by reason of participation in any TCI Plan by TCI or
any TCI ERISA Affiliate on or prior to the Effective Time. There has been no
amendment to any TCI Plan that would require the furnishing of security under
Section 401(a)(29) of the Code. There has been no event or circumstance and
there can be no event or circumstance which has or may result in any liability
being asserted by any TCI Plan, the PBGC or any other person or entity under
Title IV of ERISA against TCI or any TCI ERISA Affiliate or against TCI/Liberty
(assuming consummation of the Mergers). Neither TCI nor any TCI ERISA
Affiliate has any liability to any TCI Plan for contributions under Section
412(m) of the Code or Section 302(e) of ERISA, nor has any claim, encumbrance
or other lien been imposed under Section 412(n) of the Code or Section 302(f)
of ERISA nor is there any liability for excise taxes imposed under Section 4971
of the Code, and all liabilities arising under Section 412(c)(11) of the Code
with respect to contributions to any TCI Plan have been set forth in Schedule
5.12(g). Copies of any notices to the PBGC under Section 412(n) of the Code or
Section 302(f) of ERISA with respect to any TCI Plan have been delivered to
Liberty; and copies of notices required to be given to participants under
Section 101(d) of ERISA with respect to any TCI Plan have previously been
delivered to Liberty.

(h) True and complete copies of each plan, agreement, arrangement or
understanding referred to in Schedule 5.12(g), the most recent determination
letter issued by the IRS with respect to each TCI Plan, annual reports on Form
5500 required to be filed with any Governmental Entity for each TCI Plan which
is an employee pension benefit plan for the three most recent plan years and
all actuarial reports for the last two plan years of each TCI Plan, other than
an "individual account plan," have heretofore been delivered by TCI to Liberty.

(i) Except as set forth in Schedule 5.12(i), neither TCI nor any TCI ERISA
Affiliate is a party to or bound by the terms of any collective bargaining
agreement. TCI and each TCI ERISA Affiliate is in compliance in all material
respects with all applicable laws respecting the employment and employment
practices, terms and conditions of employment and wage and hours of its
employees and is not engaged in any unfair labor practice. To the knowledge of
TCI, all of the employees of TCI and the TCI ERISA Affiliates who work in the
United States are lawfully authorized to work in the United States according to
federal immigration laws. There is no labor strike or labor disturbance
pending or, to the knowledge of TCI threatened against TCI or any TCI ERISA
Affiliate, and during the past five years neither TCI nor any TCI ERISA
Affiliate has experienced a work stoppage.

(j) Each TCI Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, Section 406 of

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ERISA and Section 4975 of the Code.

(k) Each TCI Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code.

(l) Except as set forth in Schedule 5.12(l), no TCI Plan provides benefits,
including without limitation death or medical benefits, with respect to current
or former employees of TCI or any TCI ERISA Affiliate beyond their retirement
or other termination of service (other than (i) coverage mandated by applicable
law and (ii) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA).

(m) Except as set forth in Schedule 5.12(m), there are no material pending,
threatened or anticipated claims by or on behalf of any TCI Plan, by any
employee or beneficiary covered under an such TCI Plan, or otherwise involving
any such TCI Plan (other than routine claims for benefits).

5.13 Fairness Opinion. On January 24, 1994, TCI received an oral opinion of
CS First Boston to the effect that, as of such date, the consideration to be
received by the holders of TCI Common Stock (other than Liberty and its
affiliates) in the TCI Merger is fair, from a financial point of view, to such
stockholders.

5.14 Recommendation of TCI Board. The TCI Board at a meeting duly called and
held on January 24, 1994, has, by resolutions adopted by at least 75% of the
members of the entire TCI Board, (i) determined that the Merger Proposal is
fair to, and in the best interests of, the stockholders of TCI (other than
Liberty and its Subsidiaries), (ii) approved this Agreement and the
transactions contemplated hereby and (iii) recommended that the stockholders of
TCI approve and adopt the Merger Proposal.

5.15 Vote Required. The only vote of stockholders of TCI required under the
DGCL and TCI's Restated Certificate of Incorporation and By-laws in order to
approve and adopt this Agreement and the terms contemplated hereby is the
affirmative vote of the holders of a majority of the aggregate voting power of
the issued and outstanding shares of TCI Class A Stock and TCI Class B Stock
voting together as a single class.

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ARTICLE VI

Representations and Warranties of TCI/Liberty

TCI/Liberty hereby represents and warrants to each of TCI and Liberty as
follows:

6.1 Organization. Each of TCI/Liberty, TCI Mergerco and Liberty Mergerco is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

6.2 Authorization and Validity of Agreement. Each of TCI/Liberty, TCI
Mergerco and Liberty Mergerco has all requisite corporate power and authority
to enter into this Agreement and perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by each of TCI/Liberty, TCI Mergerco and Liberty Mergerco of this
Agreement and the consummation by each of TCI/Liberty, TCI Mergerco and Liberty
Mergerco of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on its part. This Agreement has been duly
executed and delivered by each of TCI/Liberty, TCI Mergerco and Liberty
Mergerco and is a valid and binding obligation of each of TCI/Liberty, TCI
Mergerco and Liberty Mergerco, enforceable in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).

6.3 Newly Issued Shares. The shares of TCI/Liberty Common Stock and
TCI/Liberty Preferred Stock to be issued and delivered by TCI/Liberty pursuant
to Section 2.1 will be, when the Mergers have become effective and such shares
are issued and delivered as provided in Section 2.1 and as described in the
Registration Statement, duly authorized, validly issued, fully paid and
nonassessable.

6.4 Interim Operations of TCI/Liberty. Prior to the Effective Time,
TCI/Liberty, TCI Mergerco and Liberty Mergerco will engage in no business
activities, will have no subsidiaries (other than, in the case of TCI/Liberty,
TCI Mergerco and Liberty Mergerco) and will conduct their respective operations
only as contemplated hereby.

ARTICLE VII

Transactions Prior to Closing

7.1 Access to Information Concerning Properties and Records. Upon reasonable
notice, each of TCI and Liberty shall (and shall cause each of its
Subsidiaries, and use its reasonable efforts to cause its other affiliates, to)
afford to the officers, employees, counsel, accountants and other authorized
representatives of the other full access during normal business hours to all
its properties, personnel, books and records and furnish promptly to such
persons

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such information concerning its business, properties, personnel and affairs as
such persons shall from time to time reasonably request.

7.2 Confidentiality. Each party shall, and shall use its reasonable efforts
to cause its officers, employees and authorized representatives to, (i) hold in
confidence all confidential information obtained by it or them from any other
party or any of such other party's officers, employees or authorized
representatives pursuant to this Agreement (unless such information is or
becomes publicly available or readily ascertainable from public or published
information or trade sources through no wrongful act of such first party) and
(ii) use all such data and information solely for the purpose of consummating
the transactions contemplated hereby, except, in either case, as may be
otherwise required by law or legal process or as may be necessary or
appropriate in connection with the enforcement of, or any litigation
concerning, this Agreement. In the event this Agreement is terminated, each
party shall promptly return, if so requested by any other party, all nonpublic
documents obtained from such other party in connection with the transactions
contemplated hereby and any copies thereof which may have been made by such
first party and shall use its reasonable efforts to cause its officers,
employees and authorized representatives to whom such documents were furnished
promptly to return such documents and any copies thereof any of them may have
made. The foregoing provisions shall not apply (A) to TCI with respect to any
information or reports relating to Liberty which are not obtained by TCI, its
officers, employees or authorized representatives through TCI's due diligence
investigation conducted by TCI's officers, employees and authorized
representatives exclusively in connection with the transactions contemplated
hereby or (B) to Liberty with respect to any information or reports relating to
TCI which are not obtained by Liberty, its officers, employees or authorized
representatives through Liberty's due diligence investigation conducted by
Liberty's officers, employees and authorized representatives exclusively in
connection with the transactions contemplated hereby.

7.3 Public Announcements. Neither TCI nor Liberty shall, nor shall either
TCI or Liberty permit any of its Subsidiaries to (and each such party shall use
its reasonable efforts to cause its affiliates, directors, officers, employees,
agents and representatives not to), issue any press release, make any public
announcement or furnish any written statement to its employees or stockholders
generally concerning the transactions contemplated by this Agreement without
the consent of the other party (which consent shall not be unreasonably
withheld), except to the extent required by applicable law or the applicable
requirements of the National Association of Securities Dealers, Inc. with
respect to issuers whose securities are quoted on NASDAQ NMS (and in either
such case such party shall, to the extent consistent with timely compliance
with such requirement, consult with the other party prior to making the
required release, announcement or statement).

7.4 Conduct of Business by Liberty and TCI Pending the Effective Time. Each
of Liberty and TCI shall, and, with respect to paragraphs (b) through (g)
below, shall cause each of its Subsidiaries to, except as permitted, required
or specifically contemplated by this Agreement or consented to or approved in
writing by the other party (which consent or approval shall not be unreasonably
withheld) and except as set forth in Schedule 7.4, during the period

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commencing on the date hereof and ending at the Effective Time:

(a) not (i) make any change or amendments in its charter or by-laws; (ii)
issue, grant, sell or deliver any shares of its capital stock or other
securities, or any securities convertible into, or options, warrants or rights
of any kind to subscribe to or acquire, any shares of its capital stock or
other securities, other than (x) in the case of Liberty, issuances of Liberty
Class A Stock (A) upon exercise of Liberty Stock Options outstanding on the
date of and disclosed pursuant to this Agreement in accordance with their
existing terms and (B) on conversion of shares of Liberty Class B Stock at the
option of the holders thereof in accordance with the existing terms of
Liberty's Restated Certificate of Incorporation and (y) in the case of TCI,
issuances of TCI Class A Stock (A) upon exercise of TCI Stock Options
outstanding on the date of and disclosed pursuant to this Agreement in
accordance with their existing terms and (B) on conversion of shares of TCI
Class B Stock and TCI Preferred Stock at the option of the holders thereof in
accordance with the existing terms of TCI's Restated Certificate of
Incorporation; (iii) split, combine or reclassify the outstanding shares of its
capital stock or issue any capital stock or other securities in exchange for
any such shares; (iv) redeem, purchase, or otherwise acquire, directly or
indirectly, (x) in the case of Liberty, any shares of capital stock or any
other securities of Liberty, other than as required by existing agreements with
minority investors in any of Liberty's Subsidiaries and (y) in the case of TCI,
any shares of capital stock or any other securities of TCI, other than as
required by existing agreements with minority investors in any of TCI's
Subsidiaries; (v) amend or modify any outstanding options, warrants or rights
to acquire, or securities convertible into, shares of its capital stock or
other securities, amend or modify any outstanding stock appreciation rights or
restricted stock awards or grant, adopt or authorize any stock or equity
appreciation rights, restricted stock or equity, stock or equity purchase,
stock or equity bonus or similar plan, arrangement or agreement; (vi) make any
other changes in its capital structure; (vii) declare, set aside, pay or make
any dividend or other distribution or payment (whether in cash, property or
securities) with respect to its capital stock or other securities, except for
(x) in the case of Liberty, regular annual dividends on the Liberty Class E
Preferred (which may be paid in cash or, at the option of Liberty, shares of
Liberty Class A Stock) as provided by the existing terms of such Liberty Class
E Preferred and (y) in the case of TCI, regular quarterly cash dividends on the
TCI Preferred Stock as provided by the existing terms of the TCI Preferred
Stock; (viii) sell or pledge any stock, equity or partnership interest owned by
it, except for dispositions permitted by this Section 7.4; or (ix) enter into
or assume any contract, agreement, obligation, commitment or arrangement with
respect to any of the foregoing;

(b) not (i) establish, amend or modify any employee benefit plan of any kind
referred to in Section 4.12(a) or 5.12(a), as the case may be, except in the
ordinary course of business consistent with past practice or to the extent
required by any applicable law or the existing terms of such employee benefit
plan or the provisions of this Agreement; (ii) other than as contemplated or
otherwise permitted by this Agreement and other than in connection with normal
cash management practices conducted in the ordinary and usual course of their
business and consistent with past practice, make any advance or loan to or
engage in any transaction with any director, officer, partner or affiliate not
required by the terms of an existing Contract; or

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(iii) enter into or assume any contract, agreement, obligation, commitment or
arrangement with respect to any of the foregoing;

(c) not acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof,
except for (i) in the case of TCI and its Subsidiaries, any single acquisition
or related series of acquisitions in which the aggregate purchase price is less
than $500,000,000, and (ii) in the case of Liberty and its Subsidiaries, any
single acquisition or related series of acquisitions in which the aggregate
purchase price is less than $250,000,000;

(d) not sell, lease or encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets, except for (i) in
the case of TCI and its Subsidiaries, any single disposition or related series
of dispositions in which the aggregate fair market value of the assets disposed
of does not exceed $500,000,000, and (ii) in the case of Liberty and its
Subsidiaries, any single disposition or related series of dispositions in which
the aggregate fair market value of the assets disposed of does not exceed
$250,000,000;

(e) not incur (which shall not be deemed to include entering into credit
agreements, lines of credit or similar arrangements until borrowings are made
under such arrangements) any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others other
than (i) in the ordinary course of business consistent with past practice and
(ii) as may be necessary in connection with acquisitions permitted by this
Section 7.4; provided, however, that the foregoing shall not prohibit (x) any
renewal, extension, amendment or refinancing of existing indebtedness (provided
there is no increase in the interest rate or the principal amount of such
indebtedness) and (y) the incurrence of any new indebtedness, or the amendment
or refinancing of any existing indebtedness (whether or not permitted by the
preceding clause (x)), if such indebtedness would be prepayable in full at the
Effective Time without material restrictions (other than customary prepayment
penalties and premiums that, in the case of any refinancing, are no greater
that those contained in the indebtedness being refinanced));

(f) conduct its business only in, and not take any action except in, the
ordinary and usual course of its business and consistent with past practices,
and use reasonable efforts, in the ordinary and usual course of business and
consistent with past practices, to preserve intact its business organization,
to preserve its Licenses in full force and effect, to keep available the
services of its present officers and key employees, and to preserve the good
will of those having business relationships with it; provided, however, that
the provisions of this subsection (f) shall not prohibit any action permitted
to be taken pursuant to any other subsection of this Section 7.4, and shall not
prohibit any Subsidiary of TCI or Liberty from taking any of the actions set
forth in Section 7.4(a); and

(g) not take any action that would or is reasonably likely to result in any
of

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the conditions set forth in Article VIII not being met as of the Closing Date.

7.5 No Solicitation. Subject to the fiduciary duties of its directors under
applicable law, each of Liberty and TCI will not, directly or indirectly,
through any officer, director, employee, agent or representative or otherwise
(i) solicit or initiate the submission of proposals or offers from any other
person or entity relating to any Takeover Proposal (as defined below); (ii)
cooperate with, or furnish or cause to be furnished any non-public information
concerning its business, properties or assets or the business, properties or
assets of any of its Subsidiaries to, any other person or entity in connection
with any Takeover Proposal; (iii) negotiate with any other person or entity
with respect to any Takeover Proposal; or (iv) enter into any agreement or
understanding with any other person or entity with the intent to effect any
Takeover Proposal. Each of Liberty and TCI will immediately give written
notice to the other of the details of any Takeover Proposal of which it is
currently or becomes aware. Notwithstanding the foregoing, nothing contained
in this Section 7.5 shall prohibit Liberty or TCI or their respective Boards of
Directors, to the extent required by their fiduciary duties under applicable
law, from (i) providing information to, or participating in discussions or
negotiations with, any person or entity that makes an unsolicited inquiry with
respect to such party if the Board of Directors of such party reasonably
believes such person or entity may propose a Takeover Proposal on terms that
are superior, from a financial point of view, to the terms of the Mergers for
the stockholders of such party (a "Superior Takeover Proposal") or (ii)
entering into an agreement with respect to a Superior Takeover Proposal after
receipt by the other party of written notice of (A) the material terms of such
Superior Takeover Proposal and (B) the identity of the person making such
proposal. As used in this Section, "Takeover Proposal" means, with respect to
Liberty or TCI, any proposal, other than as contemplated by this Agreement, for
a merger, consolidation, reorganization, other business combination or
recapitalization involving such party, for the acquisition of a 25% or greater
interest in the equity or in any class or series of capital stock of such
party, for the acquisition of the right to cast 25% or more of the votes on any
matter with respect to such party or for the acquisition of assets of such
party or its Subsidiaries (or both) constituting 40% or more of the
consolidated assets of such party or which generate 40% or more of the
consolidated revenues of such party or the effect of which may be to prohibit,
restrict or delay the consummation of the transactions contemplated by this
Agreement. Nothing contained herein shall be construed to prohibit either
Liberty or TCI or the Liberty Board or the TCI Board, respectively, from making
any disclosure to its stockholders which, in the judgment of such board as
advised by its counsel, may be required by applicable law in connection with
any such proposal or offer. This Section 7.5 shall not apply to the Takeover
Proposal of Bell Atlantic Corporation ("Bell Atlantic") set forth in that
certain letter of intent dated October 12, 1993, as the same may be modified or
amended with the consent of Liberty and TCI (such consent to be deemed granted
if (x) Liberty and TCI execute an amendment to such letter of intent, (y)
Liberty and TCI execute a definitive merger agreement with Bell Atlantic with
respect to a Takeover Proposal or (z) neither Liberty nor TCI has issued a
press release to the effect that negotiations with Bell Atlantic concerning its
Takeover Proposal have been terminated).

7.6 Expenses. Whether or not the Mergers are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be

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paid by the party incurring such cost or expense, except that the costs and
expenses incurred in connection with mailing and/or printing of the Joint Proxy
Statement, the Joint Proxy Statement/Prospectus and the Registration Statement
(and any amendment of or supplement thereto) shall be borne 80% by TCI and 20%
by Liberty. Notwithstanding the foregoing, but subject to Sections 10.12 and
10.13, if this Agreement is terminated by TCI or Liberty (the "non-breaching
party") as a result of a material willful breach by the other party (the
"breaching party") of its covenants or agreements contained herein or the
representations and warranties made by it herein, the breaching party shall
reimburse the non-breaching party for all out-of-pocket costs and expenses
incurred in connection with the transactions contemplated by this Agreement.
Such payment shall be made against receipt of documentation in reasonable
detail supporting the amount of such costs and expenses. Any payment required
to be made by the breaching party hereunder shall be made within five business
days of the termination of this Agreement by delivery to the non-breaching
party of a certified or bank cashier's check payable in next-day funds.

7.7 Notification of Certain Matters. Between the date hereof and the
Effective Time, each party will give prompt notice in writing to the other
parties of: (i) any information that indicates that any of its representations
or warranties contained herein was not true and correct as of the date hereof
or will not be true and correct at and as of the Effective Time with the same
force and effect as if made at and as of the Effective Time (except for changes
permitted or contemplated by this Agreement), (ii) the occurrence of any event
which will result, or has a reasonable prospect of resulting, in the failure of
any condition specified in Article VIII hereof to be satisfied, (iii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement or that such transactions otherwise may violate
the rights of or confer remedies upon such third party and (iv) any notice of,
or other communication relating to, any litigation referred to in Section 7.8
or any order or judgment entered or rendered therein.

7.8 Defense of Litigation. Each of TCI and Liberty agrees to vigorously
defend against all actions, suits or proceedings in which such party is named
as a defendant which seek to enjoin, restrain or prohibit the transactions
contemplated hereby or seek damages with respect to such transactions. Neither
TCI nor Liberty shall settle any such action, suit or proceeding or fail to
perfect on a timely basis any right to appeal any judgment rendered or order
entered against such party therein without the consent of the other party
(which consent shall not be withheld unreasonably). Each of TCI and Liberty
further agrees to use its reasonable efforts to cause each of its affiliates,
directors and officers to vigorously defend any action, suit or proceeding in
which such affiliate, director or officer is named as a defendant and which
seeks any such relief to comply with this Section to the same extent as if such
person were a party hereto.

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ARTICLE VIII

Conditions Precedent

8.1 Conditions Precedent to the Obligations of TCI and Liberty. The
respective obligations of TCI and Liberty to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions:

(a) Approval of Stockholders. The Merger Proposal shall have been approved
and adopted by the requisite vote (i) of the stockholders of TCI under the DGCL
and TCI's Restated Certificate of Incorporation and By-laws and (ii) of the
stockholders of Liberty under the DGCL and Liberty's Restated Certificate of
Incorporation and By-laws.

(b) HSR Act. All applicable waiting periods under the HSR Act shall have
expired or been terminated without receipt of any objections or commencement of
litigation or threat thereof by the appropriate governmental enforcement agency
to restrain the transactions contemplated hereby.

(c) Registration. The Registration Statement (as amended or supplemented)
shall have become effective under the Securities Act and shall not be subject
to any stop order, and no action, suit, proceeding or investigation seeking a
stop order or to suspend the effectiveness of the Registration Statement shall
have been initiated and be continuing or shall have been threatened and be
unresolved. TCI/Liberty shall have received all state securities law or blue
sky permits and authorizations necessary to carry out the transactions
contemplated hereby, such permits and authorizations shall be in full force and
effect and no action, suit, proceeding or investigation seeking to revoke or
suspend the effectiveness of any such permit or authorization shall have been
initiated and be continuing or shall have been threatened and be unresolved.

(d) Absence of Injunctions. No permanent or preliminary Injunction or
restraining order or other order by any court or other Governmental Entity of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the transactions contemplated hereby as provided herein shall
be in effect.

(e) No Adverse Enactments. There shall not have been any action taken, or
any statute, rule, regulation, order, judgment or decree enacted, promulgated,
entered, issued or enforced by any foreign or United States federal, state or
local Governmental Entity, and there shall be no action, suit or proceeding
pending which (i) makes the transactions contemplated by this Agreement illegal
or imposes or may impose material damages or penalties in connection therewith,
(ii) requires divestiture of a material portion of the business of TCI and its
Subsidiaries, taken as a whole, or Liberty and its Subsidiaries, taken as a
whole, (iii) would, as of or after the Effective Time and assuming consummation
of the Mergers, impose material limitations on the ability of TCI/Liberty
effectively to exercise full rights of ownership of shares of capital stock of
either Surviving Corporation (including the right to vote such shares on all

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matters properly presented to the stockholders of such Surviving Corporation)
or (iv) would so materially adversely impact the economic or business benefits
of the consummation of either or both Mergers as to render such consummation
inadvisable.

(f) Receipt of Licenses, Permits and Consents. Other than the filing of the
TCI Certificate of Merger and the Liberty Certificate of Merger with the
Delaware Secretary of State and filings due after the Effective Time, all Local
Approvals, all FCC Approvals and all other Government Consents as are required
in connection with the consummation of the transactions contemplated hereby
shall have been obtained and shall be in full force and effect, all
Governmental Filings as are required in connection with the consummation of
such transactions shall have been made, and all waiting periods, if any,
applicable to the consummation of such transactions imposed by any Governmental
Entity shall have expired, other than those which, if not obtained, in force or
effect, made or expired (as the case may be) would not, either individually or
in the aggregate, have a material adverse effect on (i) the transactions
contemplated hereby or (ii) the business, assets, results of operations,
financial condition or prospects of TCI and its Subsidiaries, taken as a whole,
Liberty and its Subsidiaries, taken as a whole, or, as of or after the
Effective Time and assuming consummation of the Mergers, TCI/Liberty and its
Subsidiaries, taken as a whole. For purposes hereof, the failure to obtain
Local Approvals relating to Franchises for the operation of CATV Systems
serving, in the aggregate, (x) in the case of Liberty, 150,000 or fewer of the
subscribers to the basic cable television services offered by Liberty or its
Subsidiaries, or (y), in the case of TCI, 400,000 or fewer of the subscribers
to the basic cable television services offered by TCI or its Subsidiaries shall
be deemed not to have any such material adverse effect.

(g) Tax Opinion. Each of TCI and Liberty shall have received, prior to the
effective date of the Registration Statement, the opinion of Baker & Botts,
L.L.P., in form and substance reasonably satisfactory to each of TCI and
Liberty, to the effect that the Mergers will be completely tax free for Federal
income tax purposes to each party to this Agreement and to the respective
stockholders of TCI and Liberty (other than in respect of any cash paid in lieu
of fractional shares or for Dissenting Shares), which opinion shall not have
been withdrawn prior to the Effective Time.

(h) NMS Listing. The shares of TCI/Liberty Common Stock issuable to
stockholders of TCI and Liberty in accordance with Article II shall have been
authorized for listing on the Nasdaq NMS upon official notice of issuance.

8.2 Conditions Precedent to the Obligations of TCI. The obligation of TCI to
consummate the transactions contemplated by this Agreement is also subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by TCI:

(a) Accuracy of Representations and Warranties. All representations and
warranties of Liberty contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the date of this
Agreement and (except to the extent such representations and

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warranties speak as of a specified earlier date) on and as of the Closing Date,
with the same force and effect as though made on and as of the Closing Date,
except for changes permitted or contemplated by this Agreement.

(b) Performance of Agreements. Liberty shall have performed in all material
respects all obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement to be performed
or complied with by it prior to or on the Closing Date.

(c) Officer's Certificates. TCI shall have received such certificates of
Liberty, dated the Closing Date, signed by executive officers of Liberty to
evidence satisfaction of the conditions set forth in Sections 8.1(a), 8.1(d),
8.1(e), 8.1(f) and 8.2(g) (insofar as each relates to Liberty) and in Sections
8.2(a) and 8.2(b) as may be reasonably requested by TCI.

(d) Opinion of Counsel. TCI shall have received a favorable opinion from
Liberty's General Counsel, John M. Draper, Esq., dated the Closing Date,
substantially to the effect set forth in Annex 1. In rendering such opinion,
such counsel may rely as to factual matters upon certificates or other
documents furnished by officers of Liberty and by government officials, and
upon such other documents and data as such counsel deems appropriate as a basis
for the opinion. Such counsel may specify the jurisdiction or jurisdictions in
which he is admitted to practice, that he is not admitted to practice in any
other jurisdiction or expert in the law of any other jurisdiction and that, to
the extent the foregoing opinion concerns the laws of any other jurisdiction or
pertains to matters beyond the scope of such counsel's expertise, such counsel
may rely upon the opinion of counsel admitted to practice in such other
jurisdiction. Any opinion relied upon by such counsel shall be delivered
together with the opinion of such counsel, which shall state that such counsel
believes that reliance thereon is justified.

(e) Fairness Opinion. TCI shall have received a written opinion of CS First
Boston, dated within five days of the date of the Joint Proxy
Statement/Prospectus, to the effect that, as of the date of such opinion, the
consideration to be received by the holders of TCI Common Stock (other than
Liberty and its affiliates) in the TCI Merger is fair to such stockholders,
from a financial point of view. Such opinion shall have been included in the
Joint Proxy Statement/Prospectus mailed to TCI stockholders in connection with
the TCI Stockholders Meeting, and shall not have been withdrawn prior to the
Effective Time.

(f) Proceedings Satisfactory. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated hereby or
incidental hereto and all other related legal matters shall have been
reasonably satisfactory to and approved by counsel for TCI, and such counsel
shall have been furnished with such certified copies of such corporate actions
and proceedings and such other instruments and documents as such counsel shall
have reasonably requested.

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(g) Contract Consents and Notices. All Contract Consents and Contract
Notices which are referred to in Section 4.5 or 5.5 or otherwise required in
connection with the consummation of the transactions contemplated hereby and
which, if not obtained or given, would have, individually or in the aggregate,
in the reasonable judgment of TCI, a material adverse effect on (i) the
transactions contemplated hereby or (ii) the business, assets, results of
operations, financial condition or prospects of TCI and its Subsidiaries, taken
as a whole, Liberty and its Subsidiaries, taken as a whole, or, as of or after
the Effective Time and assuming consummation of the Mergers, TCI/Liberty and
its Subsidiaries, taken as a whole, shall have been obtained and given.

(h) No Material Adverse Change. Since the date hereof nothing shall have
occurred, which, individually or in the aggregate, has had or, in the
reasonable judgment of TCI, is reasonably likely to have, a material adverse
effect on the business, assets, results of operations, financial condition or
prospects of Liberty and its Subsidiaries, taken as a whole or, as of or after
the Effective Time and assuming consummation of the Mergers, TCI/Liberty and
its Subsidiaries, taken as a whole (including any potential change or event
disclosed on any Schedule which, subsequent to the date hereof, actually
occurs), excluding, in all cases, events or conditions generally affecting the
cable television or cable programming industry or affecting general business or
economic conditions.

8.3 Conditions Precedent to the Obligations of Liberty. The obligation of
Liberty to consummate the transactions contemplated by this Agreement is also
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, unless waived by Liberty:

(a) Accuracy of Representations and Warranties. All representations and
warranties of TCI contained herein shall, if specifically qualified by
materiality, be true and correct and, if not so qualified, be true and correct
in all material respects in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of a
specified earlier date) on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date, except for changes
permitted or contemplated by this Agreement.

(b) Performance of Agreements. TCI shall have performed in all material
respects all obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement to be performed
or complied with by it prior to or on the Closing Date.

(c) Officer's Certificates. Liberty shall have received such certificates
of TCI, dated the Closing Date, signed by executive officers of TCI to evidence
satisfaction of the conditions set forth in Sections 8.1(a), 8.1(d), 8.1(e),
8.1(f) and 8.3(g) (insofar as each relates to TCI) and in Sections 8.3(a) and
8.3(b) as may be reasonably requested by Liberty.

(d) Opinion of Counsel. Liberty shall have received a favorable opinion
from Sherman & Howard L.L.C, dated the Closing Date, substantially to the
effect set forth in

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Annex 2. In rendering such opinion, such counsel may rely as to factual matters
upon certificates or other documents furnished by officers of TCI and by
government officials, and upon such other documents and data as such counsel
deems appropriate as a basis for the opinion. Such counsel may specify the
jurisdiction or jurisdictions in which the members thereof are admitted to
practice, that they are not admitted to practice in any other jurisdiction or
experts in the law of any other jurisdiction and that, to the extent the
foregoing opinion concerns the laws of any other jurisdiction or pertains to
matters beyond the scope of such counsel's engagement, such counsel may rely
upon the opinion of counsel admitted to practice in such other jurisdiction.
Any opinion relied upon by such counsel shall be delivered together with the
opinion of such counsel, which shall state that such counsel believes that
reliance thereon is justified.

(e) Fairness Opinion. Liberty shall have received a written opinion of
Merrill Lynch, dated within five days of the date of the Joint Proxy
Statement/Prospectus, to the effect that, as of the date of such opinion, the
exchange ratios in the Liberty Merger and the TCI Merger, taken together, are
fair to the holders of shares of Liberty Common Stock (other than TCI and its
affiliates) from a financial point of view. Such opinion shall have been
included in the Joint Proxy Statement/Prospectus mailed to Liberty stockholders
in connection with the Liberty Stockholders Meeting, and shall not have been
withdrawn prior to the Effective Time.

(f) Proceedings Satisfactory. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated hereby or
incidental hereto and all other related legal matters shall have been
reasonably satisfactory to and approved by counsel for Liberty, and such
counsel shall have been furnished with such certified copies of such corporate
actions and proceedings and such other instruments and documents as it shall
have reasonably requested.

(g) Contract Consents and Notices. All Contract Consents and Contract
Notices which are referred to in Section 4.5 or 5.5 or otherwise required in
connection with the consummation of the transactions contemplated hereby and
which, if not obtained or given, would have, individually or in the aggregate,
in the reasonable judgment of Liberty, a material adverse effect on (i) the
transactions contemplated hereby or (ii) the business, assets, results of
operations, financial condition or prospects of TCI and its Subsidiaries, taken
as a whole, Liberty and its Subsidiaries, taken as a whole, or, as of or after
the Effective Time and assuming consummation of the Mergers, TCI/Liberty and
its Subsidiaries, taken as a whole, shall have been obtained and given.

(h) No Material Adverse Change. Since the date hereof nothing shall have
occurred which, individually or in the aggregate, has had or, in the reasonable
judgment of Liberty, is reasonably likely to have, a material adverse effect on
the business, assets, results of operations, financial condition or prospects
of TCI and its Subsidiaries, taken as a whole, or as of or after the Effective
Time and assuming consummation of the Mergers, TCI/Liberty and its
Subsidiaries, taken as a whole (including any potential change or event
disclosed on any Schedule which, subsequent to the date hereof, actually
occurs), excluding, in all cases, events or conditions

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generally affecting the cable television or cable programming industry or
affecting general business or economic conditions.

ARTICLE IX

Termination

9.1 Termination and Abandonment. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Mergers by the stockholders of TCI or Liberty: (i) by
mutual consent of TCI and Liberty; or (ii) by either TCI or Liberty: (A) if
the Mergers shall not have been consummated before September 30, 1994, provided
that the right to terminate this Agreement pursuant to this clause (ii)(A)
shall not be available to any party whose failure to perform any of its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time has resulted in the failure of the Mergers to be consummated
before such date, (B) if there has been a material breach by the other party of
any of its representations, warranties, covenants or agreements contained in
this Agreement and such breach shall not have been cured within five business
days after written notice thereof shall have been received by the party alleged
to be in breach, (C) if any court of competent jurisdiction or other competent
governmental authority shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting
either Merger and such order, decree, ruling or other action shall have become
final and nonappealable or (D) if the approval of the Merger Proposal by the
stockholders of TCI or Liberty shall not have been obtained by reason of the
failure to obtain the required vote upon a vote taken at a duly held meeting of
stockholders or at any adjournment thereof and if the terminating party has
complied with its obligations under Section 3.1 or 3.2 (as the case may be);
(iii) by TCI: (A) if the Liberty Board shall have withdrawn or modified in any
manner adverse to TCI its recommendation to the Liberty stockholders referred
to in Section 4.14 or (B) if the TCI Board (x) withdraws or modifies in a
manner adverse to Liberty its recommendation referred to in Section 5.14 if at
such time there exists a Superior Takeover Proposal with respect to TCI or (y)
recommends to TCI's stockholders approval or acceptance of such Superior
Takeover Proposal, in each case only if the TCI Board, after consultation and
based upon the advice of outside counsel (who may be such party's regularly
engaged outside counsel) determines in good faith that such action is necessary
for the TCI Board to comply with its fiduciary duties to TCI stockholders under
applicable law; or (iv) by Liberty: (A) if the TCI Board shall have withdrawn
or modified in any manner adverse to Liberty its recommendation to the TCI
Stockholders referred to in Section 5.14 or (B) if the Liberty Board (x)
withdraws or modifies in a manner adverse to TCI its recommendation referred to
in Section 4.14 if at such time there exists a Superior Takeover Proposal with
respect to Liberty or (y) recommends to Liberty's stockholders approval or
acceptance of such Superior Takeover Proposal, in each case only if the Liberty
Board, after consultation and based upon the advice of outside counsel (who may
be such party's regularly engaged outside counsel) determines in good faith
that such action is necessary for the Liberty Board to comply with its
fiduciary duties to Liberty stockholders under applicable law.

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9.2 Effect of Termination. In the event of any termination of this Agreement
by TCI or Liberty pursuant to Section 9.1, this Agreement forthwith shall
become void, and there shall be no liability or obligation on the part of any
party hereto except (i) as provided in Sections 4.10, 5.10, 7.2 and 7.6, which
shall survive such termination and (ii) subject to Sections 10.12 and 10.13, to
the extent such termination results from the willful breach by TCI or Liberty
of any of its representations, warranties, covenants or agreements contained in
this Agreement.

ARTICLE X

Miscellaneous

10.1 Nonsurvival of Representations, Warranties and Agreements. The
respective representations and warranties of the parties contained herein or in
any certificate or other instrument delivered prior to or at the Closing shall
not be deemed waived or otherwise affected by any investigation made by any
party hereto. None of the representations, warranties, covenants or agreements
contained in this Agreement or in any certificate or other instrument delivered
pursuant to this Agreement shall survive the Effective Time, except for (i) the
agreements contained in Article II, Sections 4.10, 5.10 and 7.6 and in this
Article X, and (ii) the agreements of the "affiliates" of TCI and Liberty
delivered pursuant to Section 3.6.

10.2 Indemnification.

(a) Post-Merger Indemnification of TCI and Liberty Directors and Officers.
After the Effective Time, TCI/Liberty shall indemnify and hold harmless each
person who was, at any time prior to the Effective Time, a director, officer,
employee or agent of TCI or Liberty (individually an "Indemnified Party" and,
collectively, the "Indemnified Parties") against (i) all losses, claims,
damages, costs, expenses (including fees and expenses of counsel properly
retained by an Indemnified Party under this Section 10.2) (promptly as
statements therefor are received), liabilities or judgments or amounts that are
paid in settlement with the approval of TCI/Liberty (which approval shall not
be unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person was at any time prior to the Effective
Time a director, officer, employee or agent of TCI or Liberty, whether
pertaining to any matter existing or occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby (and TCI/Liberty shall pay
expenses in advance of the final disposition of any such action, suit,
proceeding or investigation to each Indemnified Party (including fees and
expenses of counsel properly retained by an Indemnified Party under this
Section 10.2), promptly as statements therefor are received, to the full extent
permitted by law upon receipt of the undertaking contemplated by Section 145(e)
of the DGCL), in each case to the full extent that (x) a corporation is
permitted under Delaware law to indemnify or advance expenses to its own

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directors, officers, employees or agents, as the case may be, (y) such
Indemnified Party would have been entitled to be indemnified (A) by TCI, if
such Indemnified Party was a director, officer, employee or agent of TCI, with
respect to the Indemnified Liabilities in question under TCI's Restated
Certificate of Incorporation and By-Laws as in effect on January 1, 1994 and
under any indemnification agreement with TCI in a form disclosed to TCI/Liberty
prior to the date hereof and (B) by Liberty, if such Indemnified Party was a
director, officer, employee or agent of Liberty, with respect to the
Indemnified Liabilities in question under Liberty's Restated Certificate of
Incorporation and By-laws as in effect on January 1, 1994 and under any
indemnification agreement with Liberty in a form disclosed to TCI/Liberty prior
to the date hereof and (z) such indemnification otherwise is permitted by
applicable law. In the event any such claim, action, suit, proceeding or
investigation is asserted or commenced against any Indemnified Party (whether
before or after the Effective Time), TCI/Liberty will be entitled to
participate and, to the extent that it may wish, to assume the defense thereof,
except that if TCI/Liberty also is a subject of such claim, action, suit,
proceeding or investigation and there is, under applicable standards of
professional conduct, a conflict on any significant issue between the position
of TCI/Liberty and the position of such Indemnified Party, or if TCI/Liberty
shall fail to assume responsibility for such defense, such Indemnified Party
may, subject to Section 10.2(b), retain counsel who will represent such
Indemnified Party, and TCI/Liberty shall pay all reasonable fees and expenses
of such counsel promptly as statements therefor are received; provided that
such Indemnified Party shall vigorously defend (or, if the defense is assumed
by TCI/Liberty, use his best efforts to assist in the vigorous defense of) any
such matter; provided, further, that TCI/Liberty shall not be liable for any
settlement effected without its written consent, which consent, however, shall
not be unreasonably withheld; and provided, further, that TCI/Liberty shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, after exhaustion of all
avenues of appeal, that such Indemnified Party is not entitled to
indemnification hereunder.

(b) Procedures. Any Indemnified Party wishing to claim indemnification or
advancement of expenses under Section 10.2(a), upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify TCI/Liberty
(provided that the failure so to notify TCI/Liberty shall not relieve
TCI/Liberty from any liability which it may have under this Section 10.2,
except to the extent such failure materially prejudices TCI/Liberty) and shall
deliver to TCI/Liberty an undertaking to repay any amounts advanced pursuant
thereto when and if a court of competent jurisdiction shall ultimately
determine, after exhaustion of all avenues of appeal, that such Indemnified
Party is not entitled to indemnification hereunder. In no event may the
Indemnified Parties retain more than one lead law firm and one local counsel to
represent them with respect to any such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the position of any two or more Indemnified Parties in which case
the Indemnified Parties may (unless the defense of such matter has been assumed
by TCI/Liberty as provided herein) retain, at the expense of TCI/Liberty, such
number of additional counsel as are necessary to eliminate all conflicts of the
type referred to above.

(c) Survival. This Section 10.2 shall survive the consummation of the
Mergers. The provisions of this Section are intended to be for the benefit of
and shall be enforceable by

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each of the Indemnified Parties and his heirs and legal representatives.

10.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by
telegram or confirmed telex or telecopier, as follows:

(a) if to TCI or TCI/Liberty, to:

Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Attn: General Counsel

(b) if to Liberty, to:

Liberty Media Corporation
8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111
Attn: General Counsel

or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of
a change of address shall be effective only upon actual receipt thereof.

10.4 Entire Agreement. This Agreement (including the Exhibits, Annexes,
Schedules and other documents referred to herein) constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.

10.5 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of
the rights, benefits or obligations hereunder may be assigned by any party
(whether by operation of law (other than pursuant to the Mergers) or otherwise)
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties or their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, other than rights conferred upon Indemnified Parties under
Section 10.2 and upon stockholders, directors, officers, affiliates, agents and
representatives of the parties under Section 10.13.

10.6 Amendment. This Agreement may be amended by the parties, by action
taken or authorized by their respective Boards of Directors, at any time before
or after approval of any

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matters presented in connection with the Mergers by the stockholders of TCI or
Liberty, but, after any such approval by the stockholders of TCI and Liberty,
no amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.

10.7 Extension; Waiver. At any time prior to the Effective Time, TCI or
Liberty, by action taken or authorized by such party's Board of Directors, may,
to the extent legally allowed, (i) extend the time specified herein for the
performance of any of the obligations of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, (iii) waive compliance by
the other party with any of the agreements or covenants of such other party
contained herein or (iv) waive any condition to such waiving party's obligation
to consummate the transactions contemplated hereby or to any of such waiving
party's other obligations hereunder. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. Any such extension or
waiver by any party shall be binding on such party but not on the other party
entitled to the benefits of the provision of this Agreement affected unless
such other party also has agreed to such extension or waiver. No such waiver
shall constitute a waiver of, or estoppel with respect to, any subsequent or
other breach or failure to strictly comply with the provisions of this
Agreement. The failure of any party to insist on strict compliance with this
Agreement or to assert any of its rights or remedies hereunder or with respect
hereto shall not constitute a waiver of such rights or remedies. Whenever this
Agreement requires or permits consent or approval by any party, such consent or
approval shall be effective if given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 10.7.

10.8 Interpretation. When a reference is made in this Agreement to Sections,
Articles, Exhibits, Annexes or Schedules, such reference shall be to a Section,
Article, Exhibit, Annex or Schedule (as the case may be) of this Agreement
unless otherwise indicated. When a reference is made in this Agreement to a
"party" or "parties", such reference shall be to a party or parties to this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is
to be made available. The use of any gender herein shall be deemed to be or
include the other genders and the use of the singular herein shall be deemed to
be or include the plural (and vice versa), wherever appropriate. The use of
the words "hereof", "herein", "hereunder" and words of similar import shall
refer to this entire Agreement, and not to any particular article, section,
subsection, clause, paragraph or other subdivision of this Agreement, unless
the context clearly indicates otherwise.

10.9 Knowledge as to Equity Affiliates. Whenever any representation and
warranty is made herein (i) "to the knowledge of Liberty," or words of similar
intent or effect, with respect

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to any Liberty Equity Affiliates, such representation and warranty shall be
deemed to be made to the knowledge of the senior management (vice presidents
and higher officers) of Liberty, without investigation and (ii) "to the
knowledge of TCI," or words of similar intent or effect, with respect to any
TCI Equity Affiliates, such representation and warranty shall be deemed to be
made to the knowledge of the senior management (senior vice presidents and
higher officers) of TCI, without investigation.

10.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.

10.11 Applicable Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflict of laws rules thereof.

10.12 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent governmental authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take any action required
herein, the other parties shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach thereof or of any other provision of this Agreement
or part hereof as a result of such holding or order.

10.13 Limited Liability. Notwithstanding any other provision of this
Agreement, no stockholder, director, officer, affiliate, agent or
representative of any party (other than TCI and Liberty as stockholders of
TCI/Liberty and TCI/Liberty as the sole stockholder of each of TCI Mergerco and
Liberty Mergerco) shall have any liability in respect of or relating to the
covenants, obligations, representations or warranties of such party hereunder
or in respect of any certificate delivered with respect thereto and, to the
fullest extent legally permissible, each party, for itself and its
stockholders, directors, officers and affiliates, waives and agrees not to seek
to assert or enforce any such liability which any such person otherwise might
have pursuant to applicable law.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan
of Merger as of the date first above written.

<TABLE>
<S> <C>
TELE-COMMUNICATIONS, INC.
Attest:

By: /s/ Stephen M. Brett
-------------------------------------
/s/ Mary S. Willis Its: Senior Vice President
- --------------------------------
Mary S. Willis
</TABLE>

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<TABLE>
<S> <C>
LIBERTY MEDIA CORPORATION
Attest:

By: /s/ Peter R. Barton
/s/ Robert R. Bennett -------------------------------------
- -------------------------------- Its: President
Robert R. Bennett

TCI/LIBERTY HOLDING COMPANY
Attest:

By: /s/ Stephen M. Brett
/s/ Mary S. Willis -------------------------------------
- -------------------------------- Its: Vice President
Mary S. Willis

TCI MERGERCO, INC.
Attest:

By: /s/ Stephen M. Brett
/s/ Mary S. Willis -------------------------------------
- -------------------------------- Its: Vice President
Mary S. Willis

LIBERTY MERGERCO, INC.
Attest:

By: /s/ Peter R. Barton
/s/ Robert R. Bennett -------------------------------------
- -------------------------------- Its: President
Robert R. Bennett
</TABLE>

<PAGE> 1
[LIBERTY MEDIA CORPORATION LETTERHEAD]

FOR IMMEDIATE RELEASE
January 31, 1994

LIBERTY MEDIA AND TELE-COMMUNICATIONS, INC.

ANNOUNCE SIGNING OF MERGER AGREEMENT

ENGLEWOOD, COLORADO ... Liberty Media Corporation ("Liberty") and
Tele-Communications, Inc. ("TCI") announced today that they have entered into a
definitive agreement providing for a combination of the two companies.

As previously announced, the transaction will be structured as a tax-free
exchange of Class A and Class B shares of both companies for like shares of a
newly formed holding company, TCI/Liberty Holding Company. TCI common
shareholders will receive one share of the new company for each of their
shares. Liberty commons hareholders will receive 0.975 shares of the new
company for each of their shares. Holders of Liberty's Class E Preferred Stock
will receive one share of a substantially similar class of preferred stock of
the new company.

The transaction is subject to the approval of both sets of shareholders as well
as various regulatory approvals and other customary conditions. It is
anticipated that the closing will take place during the second quarter of this
year.

Liberty's Class A Common Stock, Class B Common Stock and Class B, 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock is traded in the
over-the-counter market under the symbols of LBTYA, LBTYB and LBTYP,
respectively.

CONTACT: Vivian Carr (303) 721-5406