<PAGE>   1
                                                                   EXHIBIT 10.53

                               TCI WIRELINE, INC.


                              AMENDED AND RESTATED
                                OPTION AGREEMENT


                 THIS AMENDED AND RESTATED OPTION AGREEMENT ("AGREEMENT") is
made as of the 1st day of December, 1996, by and among TCI WIRELINE, INC., a
Delaware corporation (the "COMPANY"), _____________________ ("GRANTEE") and,
for purposes of paragraphs 11(b) and 11(c) only, TELE-COMMUNICATIONS, INC., a
Delaware corporation ("TCI").  This Agreement amends and restates in its
entirety the option agreement, dated as of December 1, 1996, among the parties
hereto..

                 The Company is on the date hereof a Subsidiary of TCI.  The
Board of Directors of the Company ("COMPANY BOARD") and the Board of Directors
of TCI have each determined that it is in the best interests of the Company and
TCI to grant Grantee the rights and option set forth herein in order to provide
Grantee with additional remuneration for services rendered to the Company and
its predecessors, to encourage Grantee to remain in the employ of TCI and/or
one or more of its Subsidiaries, including the Company, and to provide
additional incentive to Grantee by increasing Grantee's proprietary interest in
the continued success and progress of the Company. Capitalized terms used
herein and not otherwise defined are defined in paragraph 19 below.

                 Accordingly, the Company, Grantee and, for purposes of
paragraphs 11(b) and 11(c) only,  TCI hereby agree as follows:

                 1.       GRANT OF OPTION; OPTION TERM.  (a)  The Company
hereby grants to Grantee the right and option (the "OPTION"), on the terms and
subject to the conditions set forth herein, to purchase the Option Shares from
the Company for a price per Option Share equal to the Option Price.  The Option
Price and Option Shares are subject to adjustment pursuant to paragraph 9
below.  Subject to paragraph 2, the Option shall be exercisable in whole at any
time and in part from time to time during the period commencing on the date
hereof and expiring at 5:00 p.m., Denver, Colorado time ("CLOSE OF BUSINESS")
on the tenth anniversary of the Determination Date, or such earlier date as the
Option may be terminated pursuant to paragraph 6 or paragraph 9(c) (the "OPTION
TERM").

                 (b)      The grant of the Option hereunder, together with the
grant of stock appreciation rights ("CLEC SARS") by TCI Teleport Holdings, Inc.
("TCI TELEPORT") and the grant of stock appreciation rights by TCI Wireless
Holdings, Inc. ("TCI WIRELESS"), shall be deemed to be in substitution for and
replacement of (i) the option to purchase shares of common stock of TCI
Telephony Services, Inc. ("TCI TELEPHONY"), the parent corporation of TCI
Teleport and TCI
<PAGE>   2
Wireless, (ii) the stock appreciation rights with respect to shares of common
stock of  TCI Telephony, and (iii) the option to purchase shares of common
stock of the Company which were previously granted by TCI Telephony and the
Company to Grantee.  The parties acknowledge and agree that such prior grants
of options and stock appreciation rights are hereby terminated and shall cease
to be of any further force and effect.

         2.      CONDITIONS OF EXERCISE; VESTING.  Except as otherwise provided
in the last sentence of this paragraph 2 or in paragraph 9(c), the Option shall
not be exercisable until the first anniversary of the Determination Date, and,
from the first anniversary of the Determination Date to the fifth anniversary
of the Determination Date, the Option shall be exercisable only to the extent
the Option Shares have become available for purchase in accordance with the
following schedule:

<TABLE>
<CAPTION>
             Anniversary of                          Percentage of Option Shares                           
           Determination Date                          Available for Purchase                              
           ------------------                        ---------------------------
                  <S>                                            <C>                                       
                  1st                                             20%                                      
                  2nd                                             40%                                      
                  3rd                                             60%                                      
                  4th                                             80%                                      
                  5th                                            100%                                      
</TABLE>

         Notwithstanding the foregoing, all Option Shares shall become
available for purchase if during the Option Term (i) Grantee's employment with
the TCI Group shall terminate by reason of (x) termination by the TCI Group
without Cause, (y) termination by Grantee for Good Reason or (z) Disability,
(ii) Grantee's employment shall terminate pursuant to provisions of a written
employment agreement, if any, between Grantee and the applicable member(s) of
the TCI Group which expressly permits Grantee to terminate such employment upon
the occurrence of specified events (other than the giving of notice and passage
of time) or (iii) Grantee dies while employed by the TCI Group.  A change of
employment is not a termination of employment within the meaning of this
paragraph 2, provided that, after giving effect to such change, Grantee is an
employee of, or becomes or continues to be a consultant to, any member of the
TCI Group.

         3.      MANNER OF EXERCISE.  The Option may be exercised only by
delivering to the Company all of the following and shall be considered
exercised (as to the number of shares specified in the notice referred to in
clause (a) below)) on the later of (i) the first business day on which the
Company has received all of the following deliveries and (ii) the date of
exercise designated in the written notice referred to in clause (a) below (or
if such date is not a business day, the first business day thereafter);
provided that, in the event Grantee's written notice pursuant to clause (a)
below specifies a method of payment of the Option Price which would require an
appraisal pursuant to paragraph 11(c), such Option shall be deemed exercised as
of the later of the date designated in such notice and the date on which all
deliveries specified below (other than the payment of the Option Price) have
been received by the Company (subject in each case to the receipt by the
Company of the appraisal report pursuant to paragraph 11(c) and of the Option
Price):





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                 (a)      written notice, in such form as the Company Board may
         reasonably require, stating that Grantee is exercising the Option and
         setting forth the date (on or after the date of such written notice)
         as of which the Option is being exercised, the number of Option Shares
         to be purchased, the aggregate Option Price to be paid for such Option
         Shares in accordance with this Agreement and the manner in which such
         payment is being made ("OPTION EXERCISE NOTICE");

                 (b)      payment of the Option Price for each Option Share to
         be purchased upon such exercise, in cash or in such other form or
         combination of forms of payment contemplated by paragraph 10, together
         with payment of, or other provision acceptable to the Company Board
         for, any and all withholding taxes required to be withheld by the
         Company upon such exercise, in accordance with paragraph 4;

                 (c)      any other documentation that the Company Board may
         reasonably require (including, without limitation, proof satisfactory
         to the Company Board that the Option is then exercisable for the
         number of Option Shares set forth in such notice); and

                 (d)      for so long as the Company and TCI Teleport are
         Subsidiaries of the same company, evidence satisfactory to the Company
         Board that Grantee is validly and simultaneously exercising the same
         proportion of the CLEC SARs granted to him by TCI Teleport, pursuant
         to that certain stock appreciation rights agreement, dated as of the
         date hereof, among TCI Teleport, Grantee, TCI Telephony Services, Inc.
         and TCI, as the same may hereafter be amended, modified or
         supplemented from time to time (the "CLEC SAR AGREEMENT").

         4.      WITHHOLDING FOR TAXES.  It shall be a condition precedent to
any exercise of the Option that Grantee make provision acceptable to the
Company for the payment or withholding of any and all federal, state and local
taxes required to be withheld by the Company to satisfy the tax liability
associated with such exercise, as determined by the Company Board.

         5.      DELIVERY BY THE COMPANY.  As soon as practicable after receipt
of all the items required by paragraph 3 and, if applicable, paragraph 11(c),
with respect to any exercise of the Option, and subject to the withholding
referred to in paragraph 4, the Company shall deliver or cause to be delivered
to Grantee certificates issued in Grantee's name for the number of whole Option
Shares purchased upon such exercise.  If delivery is by mail, delivery of
Option Shares shall be deemed effected for all purposes when the Company or a
stock transfer agent of the Company shall have deposited the certificates in
the United States mail, addressed to Grantee, and any cash payment (for
fractional shares or otherwise) shall be deemed effected when a Company check,
payable to Grantee and in an amount equal to the amount of the cash payment,
shall have been deposited in the United States mail, addressed to Grantee, in
each case in accordance with paragraph 12.





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<PAGE>   4
                 6.       EARLY TERMINATION OF OPTION.  Unless otherwise
determined by the Company Board in its sole discretion, the Option shall
terminate, prior to the expiration of the ten-year period provided for in
paragraph 1, as follows:

                 (a)      If Grantee's employment with the TCI Group terminates
         other than (i) by Grantee with Good Reason, (ii) by reason of
         Grantee's death or Disability,  (iii) with the written consent of the
         applicable member(s) of the TCI Group, (iv) without such consent if
         such termination is pursuant to provisions of a written employment
         agreement, if any, between Grantee and the applicable member(s) of the
         TCI Group which expressly permits Grantee to terminate such employment
         upon the occurrence of specified events (other than the giving of
         notice and passage of time), or (v) by the TCI Group with or without
         Cause, then the Option shall terminate at the Close of Business on the
         first business day following the expiration of the 90-day period
         beginning on the date of termination of Grantee's employment;

                 (b)      If Grantee dies while employed by the TCI Group, or
         prior to the expiration of a relevant period of time during which the
         Option remains exercisable as provided in this paragraph 6, the Option
         shall terminate at the Close of Business on the first business day
         following the expiration of the one-year period beginning on the date
         of death;

                 (c)      If Grantee's employment with the TCI Group terminates
         by reason of Disability, then the Option shall terminate at the Close
         of Business on the first business day following the expiration of the
         one-year period beginning on the date of termination of Grantee's
         employment;

                 (d)      If Grantee's employment with the TCI Group is
         terminated by the TCI Group for Cause, then the Option shall terminate
         immediately upon such termination of Grantee's employment; and

                 (e)      If Grantee terminates his employment with the TCI
         Group (i) with Good Reason,  (ii) with the written consent of the
         applicable member(s) of the TCI Group or (iii) pursuant to provisions
         of a written employment agreement, if any, between Grantee and the
         applicable member(s) of the TCI Group which expressly permits Grantee
         to terminate such employment upon the occurrence of specified events
         (other than the giving of notice and passage of time), or if the TCI
         Group terminates Grantee's employment with the TCI Group without
         Cause, then the Option Term shall not terminate prior to the end of
         the ten-year period provided for in paragraph 1, except as otherwise
         provided for in paragraph 6(b) or 9(c).

         In any event in which the Option remains exercisable for a period of
time following the date of termination of Grantee's employment as provided
above, the Option may be exercised during such period of time only to the
extent it was exercisable as provided in paragraph 2 or paragraph 9(c) on such
date of termination of Grantee's employment.  A change of employment is not a
termination





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<PAGE>   5
of employment within the meaning of this paragraph 6, provided that, after
giving effect to such change, Grantee is an employee of, or becomes or
continues to be a consultant to, any member of the TCI Group.  Anything
contained herein to the contrary notwithstanding, the Option shall in any event
terminate upon the expiration of the ten-year period provided for in paragraph
1, if not theretofore terminated.

         7.      NONTRANSFERABILITY OF OPTION.  During Grantee's lifetime, the
Option is not and shall not be transferable (voluntarily or involuntarily)
other than pursuant to a Domestic Relations Order and, except as otherwise
required pursuant to a Domestic Relations Order, is exercisable only by Grantee
or Grantee's court appointed legal representative.  Grantee may designate a
beneficiary or beneficiaries to whom the Option shall pass upon Grantee's death
and may change such designation from time to time by filing a written
designation of beneficiary or beneficiaries with the Company on the form
annexed hereto as Exhibit A or such other form as may be prescribed by the
Company Board, provided that no such designation shall be effective unless so
filed prior to the death of Grantee.  If no such designation is made or if the
designated beneficiary does not survive Grantee's death, the Option shall pass
by will or the laws of descent and distribution.  Following Grantee's death,
the Option, if otherwise exercisable, may be exercised by the person to whom
the Option passes according to the foregoing, and such person shall be deemed
to be Grantee for purposes of any applicable provisions of this Agreement.

         8.      NO SHAREHOLDER RIGHTS; NO GUARANTEE OF EMPLOYMENT.  (a)
Grantee shall not be deemed for any purpose to be, or to have any of the rights
of, a stockholder of the Company with respect to any Option Shares unless and
until such Option Shares have been issued to Grantee by the Company.  The
existence of this Agreement or the Option shall not affect in any way the right
or power of the Company or its stockholders to accomplish any corporate act.

                 (b)      Nothing contained in this Agreement, and no action by
the Company or the Company Board with respect hereto, shall confer or be
construed to confer on Grantee any right to continue in the employ of the TCI
Group or any member thereof or interfere in any way with the right of TCI, the
Company or any employing member of the TCI Group to terminate Grantee's
employment at any time, with or without Cause, except as otherwise expressly
provided in any written employment agreement between the applicable member(s)
of the TCI Group and Grantee.

         9.      ADJUSTMENTS; ACCELERATION.  (a) If, after December 31, 1996,
the Company (i) pays a dividend or makes a distribution on the Company Common
Stock in shares of Company Common Stock; (ii) subdivides the outstanding shares
of Company Common Stock into a greater number of shares or (iii) combines the
outstanding shares of Company Common Stock into a smaller number of shares,
then this Option and the number of Option Shares and the Option Price per share
in effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision or
combination shall be adjusted so that Grantee upon exercise thereafter of the
Option may receive the number of shares of Company Common Stock that Grantee
would have owned immediately following such event if Grantee had exercised the
Option immediately prior to the record date for, or effective date of, as the
case may be, such event. The





                                       5
<PAGE>   6
adjustment contemplated by the preceding sentence shall be made successively
whenever any event listed above shall occur.  For a dividend or distribution,
the adjustment shall become effective immediately after the record date for the
dividend or distribution.  For a subdivision or combination, the adjustment
shall become effective immediately after the effective date of the subdivision
or combination.  Adjustments to the Option Price shall be made on a per share
basis so that the aggregate Option Price of all remaining Option Shares
following such adjustment is unchanged.

                 (b)      The Option shall also be subject to adjustment
(including, without limitation, as to the number of Option Shares and the
Option Price per share) in the sole discretion of the Company Board and in such
manner as the Company Board may deem equitable and appropriate in connection
with the occurrence of any of the following events after December 31, 1996 that
affects the Company Common Stock such that an adjustment would be required in
order to preserve the benefits or potential benefits intended to be made
available under this Agreement: any dividend or distribution on the Company
Common Stock in shares of the Company's capital stock (other than Company
Common Stock); any reclassification of the Company Common Stock into shares of
the Company's capital stock (other than a reclassification by way of an
Approved Transaction); any extraordinary cash dividend; any distribution of any
rights, warrants or options to holders of Company Common Stock; any
distribution of any assets or debt securities (other than cash dividends or
distributions that are not extraordinary cash dividends); any recapitalization,
reorganization, split up or spin off; and any merger, consolidation or binding
share exchange that reclassifies or changes the outstanding Company Common
Stock or other similar corporate event (other than those which constitute
Approved Transactions).  Notwithstanding the foregoing, in the event of any
reclassification or recapitalization of the Company Common Stock into two or
more classes or series of common stock with different voting rights (however
the same may be effected), no adjustment to the Option shall be required that
would entitle Grantee to receive shares of any class or series of common stock
of the Company other than the class or series with the fewest number of votes
per share. Adjustments to the Option Price shall be made on a per share basis
so that the aggregate Option Price of all remaining Option Shares following
such adjustment is unchanged.

                 (c)      The Company Board may at any time in its sole
discretion determine that the Option shall become exercisable in full, without
regard to paragraph 2, whether immediately, upon the occurrence of specified
events, or otherwise.  Without limiting the generality of the foregoing, in the
event of any Board Change, Control Purchase or Approved Transaction that occurs
with respect to TCI following December 31, 1996 and prior to the earlier of
such time as the Company ceases to be a Subsidiary of TCI or such time as the
Company becomes a Public Company, the Option shall become exercisable in full,
without regard to paragraph 2, effective upon the Board Change or Control
Purchase or immediately prior to consummation of the Approved Transaction, as
applicable (or at such earlier time as the Company Board in its sole discretion
may determine); provided, however, that to the extent not theretofore exercised
the Option shall terminate upon the first to occur of the consummation of the
Approved Transaction or the expiration or early termination of the Option Term.
In the event that (i) at any time after December 31, 1996 while the Company is
a Subsidiary of TCI, an Approved Transaction occurs with respect to the Company
after giving effect to which the Company will cease to be a Subsidiary of TCI
or (ii) an Approved





                                       6
<PAGE>   7
Transaction, Board Change or Control Purchase occurs with respect to the
Company at a time following December 31, 1996 that the Company is no longer a
Subsidiary of TCI, then, in any such case,  the Option shall become exercisable
in full, without regard to paragraph 2, effective upon the Board Change or
Control Purchase or immediately prior to consummation of the Approved
Transaction, as applicable (or at such earlier time as the Company Board in its
sole discretion may determine); provided, however, that to the extent not
theretofore exercised the Option shall terminate upon the first to occur of the
consummation of the Approved Transaction or the expiration or early termination
of the Option Term.  Notwithstanding the foregoing, the Company Board may, in
its discretion, determine that the Option will not become exercisable on an
accelerated basis in connection with an Approved Transaction and/or will not
terminate if not exercised prior to consummation of the Approved Transaction,
if the Board or the surviving or acquiring corporation, as the case may be,
shall have taken or made effective provision for the taking of such action as
in the opinion of the Company Board is equitable and appropriate to substitute
a new stock option for the Option evidenced by this Agreement or to assume this
Agreement and the Option evidenced hereby and in order to make such new or
assumed stock option, as nearly as may be practicable, equivalent to the Option
evidenced by this Agreement as then in effect (but before giving effect to any
acceleration of the exercisability hereof unless otherwise determined by the
Company Board), taking into account, to the extent applicable, the kind and
amount of securities, cash or other assets into or for which the Company Common
Stock may be changed, converted or exchanged in connection with the Approved
Transaction.

                 (d)      All actions taken by the Company Board with respect
to the Option pursuant to this paragraph 9 shall be consistent with any actions
taken by the Company Board with respect to the Other Options.  When an
adjustment to the Option pursuant to paragraph 9(a) or 9(b) becomes effective
immediately after the record date for an event, the Company may defer until the
occurrence of such event issuing to Grantee the additional shares of Company
Common Stock (or cash, securities or other property) issuable or deliverable
upon any exercise of the Option after such record date and before the
occurrence of such event by reason of the adjustment required by such event
over and above the shares of Company Common Stock that would have been issuable
upon such exercise absent such adjustment.

         10.     MANNER OF PAYMENT.  The method or methods of payment of the
Option Price for the shares of Company Common Stock to be purchased upon
exercise of the Option and any amounts required by paragraph 4 shall consist of
(i) cash, (ii) check, (iii) promissory note in such form and with such security
as shall be acceptable to the Company Board in its sole discretion (except that
this method of payment will not be available for amounts required by paragraph
4), (iv) whole shares of Company Common Stock already owned by Grantee, (v) the
withholding of shares of Company Common Stock issuable upon exercise of the
Option, (vi) the delivery, together with a properly executed exercise notice,
of irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the purchase price (except that
this method of payment will not be available until the Company is a Public
Company), (vii) the delivery, together with a copy of a properly executed CLEC
SAR exercise notice, of instructions by Grantee to TCI Teleport instructing it
to pay to the Company all or a portion of the aggregate Option Price





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<PAGE>   8
payable in respect of such exercise of the Option from the proceeds payable to
Grantee pursuant to his exercise of CLEC SARs required in accordance with
paragraph 3(d) hereof, or (viii) any combination of the foregoing methods of
payment, as Grantee may elect and shall designate in the Option Exercise
Notice.   Any shares of Company Common Stock delivered or withheld in payment
of any amount due hereunder shall be valued for such purposes (i) if the Option
is exercised prior to such time as the Company is a Public Company, at the
Appraised Public Trading Value of such shares on the applicable date of
exercise of the Option, determined as provided in paragraph 11(c), and (ii) if
the Option is exercised when the Company is a Public Company, at the Fair
Market Value of such shares on the applicable date of exercise of the Option.

         11.     RESTRICTIONS IMPOSED BY LAW; CERTAIN PUT RIGHTS; APPRAISAL
PROCEDURES. (a) Grantee acknowledges that neither the Option nor any of the
Option Shares has been registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and that the Option Shares may not be transferred in the
absence of such registration or the availability of an exemption therefrom
under the Securities Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.  Neither the Company nor any other
person shall have any obligation to register any Option Shares, or any transfer
of Option Shares, under the Securities Act, the Exchange Act or any other state
or federal securities law.  Certificates representing Option Shares purchased
by Grantee hereunder may bear such restrictive and other legends as counsel for
the Company shall require in order to insure compliance with any such law or
any rule or regulation promulgated thereunder.  Grantee agrees that Grantee
will not exercise the Option (and that the Company shall not be obligated to
deliver any Option Shares upon any exercise of the Option) if counsel for the
Company determines that such exercise or delivery would violate any applicable
law or any rule or regulation of any governmental authority, or any rule or
regulation of, or agreement of the Company with, any securities exchange or
association upon which the Company Common Stock is listed or quoted.  The
Company shall in no event be obligated to take any affirmative action in order
to cause the exercise of the Option or the resulting delivery of the shares of
Company Common Stock to comply with any such law, rule, regulation or
agreement.  Without limiting the generality of the foregoing, but subject to
paragraph 11(b), Grantee acknowledges and agrees that unless and until the
Company becomes a Public Company or, if earlier, ceases to be a Subsidiary of
TCI, the Option Shares may not be transferred to any person (other than to
Grantee's designated beneficiary pursuant to paragraph 7 upon Grantee's death)
without the prior written consent of TCI.

                 (b)      In the event that the Company has not become a Public
Company on or before February 1, 2001, Grantee shall have the right, by written
notice given to TCI at any time thereafter, to require TCI to purchase all, and
not less than all, the Option Shares for a purchase price equal to the
Appraised Public Trading Value of the Option Shares determined as provided in
paragraph 11(c) (the "PUT RIGHT"); provided, however, that the Put Right shall
expire upon the first to occur of the Company's becoming a Public Company and
the Company's ceasing to be a Subsidiary of TCI; and, provided, further, that
if Grantee dies prior to February 1, 2001, the Put Right shall become
exercisable by his beneficiary or beneficiaries pursuant to paragraph 7 or his
heirs, devisees or distributees, as applicable, from and after the date of
Grantee's death.  Grantee's notice of the exercise of his Put Right (the "PUT
EXERCISE NOTICE") shall set forth the number of Option Shares





                                       8
<PAGE>   9
then owned by Grantee and/or that remain subject to the Option and shall
contain the information required by paragraph 11(c).  In the event that any
Option Shares remain subject to the Option, Grantee shall exercise the balance
of the Option in full prior to the closing of the purchase pursuant to the Put
Right.  If the Put Right is exercised, TCI shall have the right to pay the
purchase price for the Option Shares in cash, shares of Tele-Communications,
Inc. Series A TCI Group Common Stock, $1.00 par value per share, or any
successor class or series of TCI's common stock, or if any class or series of
TCI's common stock is hereafter created that is intended to track the separate
performance of specified assets or businesses of TCI that include assets and
businesses of the Company, shares of such class or series (and if more than one
series of such "tracking stock" is created with different voting rights, the
series with the lower voting rights), provided that shares of the same class or
series of securities being so delivered are then listed or traded on NASDAQ or
a national securities exchange and are actively traded (collectively the "TCI
STOCK"), or any combination of cash and shares of TCI Stock as TCI may elect.
It shall be a condition to TCI's right to deliver shares of TCI Stock in
satisfaction of its obligations hereunder that the shares so delivered have
been registered under the Securities Act on Form S-8 (or other available form)
and if Grantee's sale of such shares in the public market would be restricted
(other than as to manner of sale) pursuant to Rule 144 under the Securities Act
then a resale prospectus shall be prepared by TCI and provided to Grantee for
his use in selling such shares.  If TCI elects to pay all or any portion of the
purchase price for the Option Shares in shares of TCI Stock, said shares shall
be valued for such purpose at the most recent Closing Price thereof preceding
the date of delivery of such shares to Grantee.  The closing of the purchase of
the Option Shares pursuant to this paragraph 11(b) shall occur on the 10th day
following the receipt by Grantee and TCI of notice pursuant to paragraph 11(c)
of the final determination of the Appraised Public Trading Value of the Option
Shares (or on such other date as the parties may agree).

                 (c)      Grantee's Put Exercise Notice and any Option Exercise
Notice that provides for the delivery or withholding of shares of Company
Common Stock as a manner of payment of the Option Price or of amounts required
under paragraph 4 shall identify the Public Appraiser selected by Grantee to
make the determination of Appraised Public Trading Value (the "FIRST
APPRAISER").  Within 10 days after receipt of the Put Exercise Notice or Option
Exercise Notice, as applicable, TCI or the Company, as applicable, shall notify
Grantee in writing of the Applicable Person's selection of a Public Appraiser
(the "SECOND APPRAISER").  The First Appraiser and the Second Appraiser shall
each submit its determination of the Appraised Public Trading Value of the
Option Shares to Grantee and the Applicable Person within 30 days of the date
of its selection.  If the respective determinations of Appraised Public Trading
Value by such Public Appraisers vary by less than 10% of the higher
determination, then the Appraised Public Trading Value shall be the average of
the two determinations.  If such determinations vary by ten percent (10%) or
more of the higher determination, the two Public Appraisers shall promptly
designate a third Public Appraiser (the "THIRD APPRAISER").  Neither Grantee
nor the Applicable Person shall provide, and the First Appraiser and Second
Appraiser shall be instructed not to provide, any information to the Third
Appraiser as to the determination of the First Appraiser and Second Appraiser
or otherwise influence such Third Appraiser's determination.  The Third
Appraiser shall submit its determination of the Appraised Public Trading Value
to Grantee and the Applicable Person within 30 days of the date of





                                       9
<PAGE>   10
its selection.  The Appraised Public Trading Value shall be equal to the
average of the two closest of the three determinations, provided that, if the
difference between the highest and middle determinations is no more than 105%
and no less than 95% of the difference between the middle and lowest
determinations, the Appraised Public Trading Value shall be equal to the middle
determination.  The Public Appraisers shall jointly notify the Applicable
Person and Grantee in writing of their final determination of the Appraised
Public Trading Value of the Option Shares within five (5) days thereafter.
Grantee and the Applicable Person shall each pay the fees and expenses of his
or its own Public Appraiser and one-half of the fees and expenses of the Third
Appraiser, if any.

         12.      RESCISSION OF OPTION EXERCISE.  In the event that Grantee's
exercise of a CLEC SAR is rescinded pursuant to the terms of the CLEC SAR
Agreement, the corresponding exercise of the Option by Grantee hereunder shall
likewise be deemed rescinded and void ab initio, and the Option Shares which
were the subject of such Option Exercise Notice shall not be issued and shall
continue to be subject to future exercise in accordance with the terms of this
Agreement.

         13.     NOTICE.  Unless the Company or TCI, as applicable, notifies
Grantee in writing of a change of address, any notice or other communication to
the Applicable Person with respect to this Agreement shall be in writing and
shall be delivered personally or sent by first class mail, postage prepaid and
addressed as follows:

                                  If to the Company:

                                  TCI Wireline, Inc.
                                  5619 DTC Parkway
                                  Englewood, Colorado 80111
                                  Attention: General Counsel

                                  If to TCI:

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

Any notice or other communication by the Company or TCI to Grantee with respect
to this Agreement shall be in writing and shall be delivered personally, or
shall be sent by first class mail, postage prepaid, to Grantee's address as
listed in the records of TCI on the date hereof, unless the Company has
received written notification from Grantee of a change of address.  Except as
otherwise provided in paragraph 5, all notices and other communications
hereunder, including without limitation any Option Exercise Notice or Put
Exercise Notice, shall be effective when actually received.





                                       10
<PAGE>   11
         14.     GOVERNING LAW.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware.

         15.     CONSTRUCTION.  References in this Agreement to "this
Agreement" and  the words "herein," "hereof," "hereunder" and similar terms
refer to this Agreement, including all Exhibits, as a whole, unless the context
otherwise requires.  The headings of the paragraphs of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.
All decisions of the Company Board upon questions regarding this Agreement
shall be conclusive.

         16.     DUPLICATE ORIGINALS.  The Company, TCI and Grantee may sign
any number of copies of this Agreement.  Each signed copy shall be an original,
but all of them together represent the same agreement.

         17.     ENTIRE AGREEMENT.  This Agreement is in satisfaction of and in
lieu of all prior discussions and agreements, oral or written, between or among
TCI, the Company and Grantee, or any of them, with respect to the subject
matter hereof.  Each of TCI, the Company and Grantee hereby declares and
represents that no promise or agreement not herein expressed has been made and
that this Agreement contains the entire agreement between and among the parties
hereto with respect to the Option and supersedes and makes null and void any
prior agreements between or among TCI, the Company and Grantee, or any of them,
regarding the Option.

         18.     AMENDMENT.  This Agreement may be amended, modified or
supplemented by the Company, without the consent of the Grantee, (i) to cure
any ambiguity or to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein or (ii) to make such
other changes as the Company, upon advice of counsel, determines are necessary
or advisable because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation, including,
without limitation, any applicable federal or state securities laws.  Except as
provided above, this Agreement may be amended, modified or supplemented only by
written agreement of the parties hereto.

         19.     DEFINITIONS.  As used in this Agreement, the following terms
have the corresponding meanings:

                 "APPLICABLE PERSON" means TCI or the Company, as applicable.

                 "APPRAISED PUBLIC TRADING VALUE" means the price at which a
share of Company Common Stock would trade assuming that the Company is a Public
Company and the Company Common Stock is publicly traded and widely held.

                 "APPROVED TRANSACTION", when used with respect to TCI or the
Company, as applicable, means any transaction in which the Relevant Board (or,
if approval of the Relevant Board is not required as a matter of law, the
stockholders of the Applicable Person) shall approve (i) any





                                       11
<PAGE>   12
consolidation or merger of the Applicable Person, or binding share exchange,
pursuant to which shares of common stock of the Applicable Person would be
changed or converted into or exchanged for cash, securities or other property,
other than any such transaction in which the common stockholders of the
Applicable Person immediately prior to such transaction have the same
proportionate ownership of the common stock of, and voting power with respect
to, the surviving corporation immediately after such transaction, (ii) any
merger, consolidation or binding share exchange to which the Applicable Person
is a party as a result of which the persons who are common stockholders of the
Applicable Person immediately prior thereto have less than a majority of the
combined voting power of the outstanding capital stock of the Applicable Person
ordinarily (and apart from the rights accruing under special circumstances)
having the right to vote in the election of directors immediately following
such merger, consolidation or binding share exchange, (iii) the adoption of any
plan or proposal for the liquidation or dissolution of the Applicable Person,
or (iv) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Applicable Person.  Notwithstanding the foregoing, none of such
transactions that occur with respect to the Company while the Company is a
Subsidiary of TCI and that are effected in connection with a spin off of the
Company or rights offering of Company Common Stock to TCI's stockholders or
equivalent transaction shall constitute an Approved Transaction.

                 "BOARD CHANGE" means, during any period of two consecutive
years, individuals who at the beginning of such period constituted the entire
Relevant Board cease for any reason to constitute a majority thereof unless the
election, or the nomination for election, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.

                 "CAUSE" has the meaning ascribed thereto in any employment
agreement between Grantee and the applicable member of the TCI Group, and in
the absence of any such employment agreement shall include, but not be limited
to, insubordination, dishonesty, incompetence, moral turpitude, other
misconduct of any kind or the refusal to perform one's duties and
responsibilities for any reason other than illness or incapacity, or negligence
in the performance of any of one's material duties or responsibilities that
continues after written notice from the Company, as determined in good faith by
the Company Board; provided, however, that if such termination occurs within
twelve (12) months after (i) an Approved Transaction, Control Purchase or Board
Change occurs (x) with respect to TCI following December 31, 1996 and prior to
the earlier of such time as the Company ceases to be a Subsidiary of TCI or
such time as the Company becomes a Public Company or (y) with respect to the
Company at any time following December 31, 1996 that the Company is no longer a
Subsidiary of TCI, or (ii) an Approved Transaction occurs with respect to the
Company at any time after December 31, 1996 and while the Company is a
Subsidiary of TCI and after giving effect to such Approved Transaction the
Company will cease to be a Subsidiary of TCI, then "Cause" shall mean only a
felony conviction for fraud, misappropriation or embezzlement.

                 "CLOSING PRICE" of a share of TCI Stock on any day means the
last sale price (or, if no last sale is reported, the average of the high bid
and low asked prices) for a share of TCI Stock





                                       12
<PAGE>   13
on such day (or, if such day is not a trading day, on the next preceding
trading day) as reported on NASDAQ or, if not reported on NASDAQ, as quoted by
the National Quotation Bureau Incorporated, or if the TCI Stock is listed on an
exchange, on the principal exchange on which the TCI Stock is listed.  If for
any day the Closing Price of a share of TCI Stock is not determinable by any of
the foregoing means, then the Closing Price for such day shall be determined in
good faith by TCI on the basis of such quotations and other considerations as
TCI may deem appropriate.

                 "CODE" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute or statutes thereto.  Reference to
any specific Code section shall include any  successor section.

                 "COMPANY COMMON STOCK" means the Common Stock, $1.00 par value
per share, of the Company.

                 "CONTROL PURCHASE" means any transaction (or series of related
transactions) in which (i) any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other
than the Applicable Person, any Subsidiary of the Applicable Person or any
employee benefit plan sponsored by the Applicable Person or any Subsidiary of
the Applicable Person) shall purchase any common stock of the Applicable Person
(or securities convertible into common stock of the Applicable Person) for
cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Relevant Board, or (ii) any
person (as such term is so defined), corporation or other entity (other than
the Applicable Person, any Subsidiary of the Applicable Person, any employee
benefit plan sponsored by the Applicable Person or any Subsidiary of the
Applicable Person, or any Controlling Person (as defined below)) shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Applicable Person
representing 20% or more of the combined voting power of the then outstanding
securities of the Applicable Person ordinarily (and apart from the rights
accruing under special circumstances) having the right to vote in the election
of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in
the case of rights to acquire the Applicable Person's securities), other than
in a transaction (or series of related transactions) approved by the Relevant
Board.  For purposes of this definition, "Controlling Person" means each of (a)
the Chairman of the Board, the President and each of the directors of the
Applicable Person as of December 31, 1996, (b) the respective family members,
estates and heirs of (i) Bob Magness and (ii) each of the persons referred to
in clause (a) above and any trust or other investment vehicle for the primary
benefit of any of such persons or their respective family members or heirs and
(c) Kearns-Tribune Corporation, a Delaware corporation.  As used with respect
to any person, the term "family member" means the spouse, siblings and lineal
descendants of such person.

                 "DETERMINATION DATE" means February 1, 1996.

                 "DISABILITY" means the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that (a) can be expected to





                                       13
<PAGE>   14
result in death or (b) has lasted or can be expected to last for a continuous
period of not less than 12 months.

                 "DOMESTIC RELATIONS ORDER" means a domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.

                 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder.  References to any specific section of the Exchange Act or rule
thereunder shall include any successor section or rule.

                 "FAIR MARKET VALUE" of a share of Company Common Stock on any
day means the last sale price (or, if no last sale price is reported, the
average of the high bid and low asked prices) for a share of Company Common
Stock on such day (or, if such day is not a trading day, on the next preceding
trading day) as reported on NASDAQ or, if not reported on NASDAQ, as quoted by
the National Quotation Bureau Incorporated, or if the Company Common Stock is
listed on an exchange, on the principal exchange on which the Company Common
Stock is listed.  If for any day the Fair Market Value of a share of Company
Common Stock is not determinable by any of the foregoing means, then the Fair
Market Value for such day shall be determined in good faith by the Company
Board on the basis of such quotations and other considerations as the Company
Board deems appropriate.

                 "GOOD REASON" means the occurrence of any of the following
prior to any termination of employment by Grantee:

                 (i)      any reduction in Grantee's annual rate of salary
         (other than a reduction to which Grantee consents);

                 (ii)     a failure by TCI or the Company to continue in effect
         any employee benefit plan in which Grantee was participating, or the
         taking of any action by TCI or the Company that would adversely affect
         Grantee's participation in, or materially reduce Grantee's benefits
         under, any such employee benefit plan, unless such failure or such
         taking of any action adversely affects the senior members of the
         corporate management of TCI or the Company (as applicable) generally;

                 (iii)    the assignment to Grantee of duties and
         responsibilities that are materially more oppressive or onerous than
         those attendant to Grantee's position on the date hereof;

                 (iv)     the relocation of the office location assigned to
         Grantee by the Company to a location more than 20 miles from Grantee's
         current location without





                                       14
<PAGE>   15
         Grantee's consent, unless the new location is within the Denver/Boulder
         metropolitan area; or

                 (v)      the failure of the Company to obtain, prior to the
         time of any reorganization, merger, consolidation, disposition of all
         or substantially all of the assets of the Company or similar
         transaction effective after the date hereof, in which the Company is
         not the surviving person, the unconditional assumption in writing or
         by operation of law of the Company's obligations to Grantee under this
         Agreement by each direct successor to the Company in any such
         transaction.

                 "NASDAQ" means The Nasdaq Stock Market.

                 "OPTION PRICE" means $12,502 per Option Share, plus an
interest factor of 6% per annum on such amount from the date hereof to the date
of exercise (calculated on the basis of a 365-day year and actual days
elapsed), as such amount per Option Share may be adjusted from time to time
pursuant to paragraph 9.

                 "OPTION SHARES" means an aggregate number of shares of Company
Common Stock equal to 10 (which number represents 1% of the number of shares of
Company Common Stock issued and outstanding on the date hereof), as such number
of shares may be adjusted from time to time pursuant to paragraph 9.

                 "OTHER OPTIONS" means the options to purchase shares of
Company Common Stock granted pursuant to those other Option Agreements dated as
of the date hereof among the Company, TCI and the grantees named therein,
respectively.

                 "PUBLIC APPRAISER" means, as of any date of selection, an
investment banking firm of national reputation that is not affiliated with TCI,
the Company or Grantee.

                 "PUBLIC COMPANY" means a person the common equity securities
of which are registered under Section 12(b) or 12(g) of the Exchange Act and
which common equity securities are listed for trading on the New York Stock
Exchange or the NASDAQ National Market.

                 "RELEVANT BOARD", when used with respect to TCI, means the
Board of Directors of TCI and, when used with respect to the Company, means the
Company Board.

                 "SUBSIDIARY", when used with respect to TCI or the Company, as
applicable, means any present or future subsidiary (as defined in Section
424(f) of the Code) of the Applicable Person or any business entity in which
the Applicable Person owns, directly or indirectly, 50% or more of the voting,
capital or profits interests.  An entity shall be deemed a Subsidiary of the
Applicable Person for purposes of this definition only for such periods as the
requisite ownership or control relationship is maintained.





                                       15
<PAGE>   16
                 "TCI GROUP" means TCI and its Subsidiaries, collectively, or
the applicable of TCI or a Subsidiary of TCI, as the context may require.  If
the Company ceases to be a Subsidiary of TCI, the Company and its Subsidiaries
shall, notwithstanding the last sentence of the definition of Subsidiary above,
be deemed for purposes of this definition only to continue to be Subsidiaries
of TCI and, accordingly, members of the TCI Group.

         20.     RULES BY COMPANY BOARD.   The rights of Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Company Board may adopt from time to time hereafter.

                 IN WITNESS WHEREOF, the Company, Grantee and, for purposes of
paragraphs 11(b) and 11(c) only, TCI have caused this Agreement to be duly
executed and delivered as of the date first written above.



ATTEST:                                    TCI WIRELINE, INC.



                                           By:
-------------------------                      --------------------------------
Assistant Secretary                            Name:              
                                               Title:             



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

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

                                           TELE-COMMUNICATIONS, INC.



                                           By:
                                               -------------------------------
                                               Name:              
                                               Title:             





                                       16
<PAGE>   17
                                                          Exhibit A to Agreement
                                                    dated as of December 1, 1996



                              TCI WIRELINE,  INC.

                        OPTION TO PURCHASE COMMON STOCK


                           DESIGNATION OF BENEFICIARY


         I, ___________________________________________ (the "Grantee"), hereby

declare that upon my death __________________________________________ (the
                                Name
"Beneficiary") of

______________________________________________________________________________ ,
Street Address                          City               State     Zip Code

who is my ____________________________________________, shall be entitled to the
                Relationship to Grantee

Option and all other rights accorded Grantee by the above-referenced grant
agreement (the "Agreement").

         It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of Grantee's death.  If any such condition is not
satisfied, such rights shall devolve according to Grantee's will or the laws of
descent and distribution.

         All prior designations of beneficiary under the Agreement are hereby
revoked.  This Designation of Beneficiary may only be revoked in writing,
signed by Grantee, and filed with Tele-Communications, Inc. and TCI Wireline,
Inc., prior to Grantee's death.




-------------------------                       -----------------------------
Date                                            Grantee