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                                                                     Exhibit 2.1

                                                                  Execution Copy




















                  AGREEMENT AND PLAN OF RESTRUCTURING AND MERGER

                                      AMONG

                                   AT&T CORP.

                               ITALY MERGER CORP.

                                       AND

                            TELE-COMMUNICATIONS, INC.

                            Dated as of June 23, 1998

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                                TABLE OF CONTENTS


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


                                   ARTICLE II
                                                                               
         The Restructuring and the Merger..........................   13

            2.1.    The Restructuring..............................   13
            2.2.    The Merger.....................................   14
            2.3.    Effective Time.................................   14
            2.4.    Closing........................................   15


                                   ARTICLE III

         Terms of Merger...........................................   15

            3.1.    Certificate of Incorporation...................   15
            3.2.    The By-Laws....................................   15
            3.3.    Directors......................................   15
            3.4.    Officers.......................................   15


                                   ARTICLE IV

         Share Consideration; Conversion or
            Cancellation of Shares in the Merger...................   16

            4.1.    Share Consideration; Conversion or
                      Cancellation of Shares in the Merger.........   16
            4.2.    Payment for Shares in the Merger...............   21
            4.3.    Fractional Shares..............................   25
            4.4.    Transfer of Shares after the Effective
                      Time.........................................   28
            4.5.    Treatment of Series F Preferred Stock .........   28
            4.6.    Company Series Preferred Stock.................   28


                                    ARTICLE V
 
         Representations and Warranties of the Company.............   28

            5.1.    Organization, Etc. of the Company..............   28
            5.2.    Subsidiaries...................................   29
            5.3.    Agreement......................................   29
            5.4.    Permits; Compliance............................   30



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            5.5.    Opinion of the Company's Financial Advisor.....   30
            5.6.    Capital Stock..................................   30
            5.7.    Litigation.....................................   33
            5.8.    Compliance with Other Instruments, Etc.........   34
            5.9.    Employee Benefit Plans.........................   34
            5.10.   Taxes..........................................   37
            5.11.   Intellectual Property..........................   38
            5.12.   Reports and Financial Statements...............   38
            5.13.   Absence of Certain Changes or Events...........   39
            5.14.   Affiliated Transactions and Certain
                      Other Agreements.............................   40
            5.15.   Brokers and Finders............................   40
            5.16.   Registration Statement.........................   40
            5.17.   Separation of Assets and Liabilities...........   41


                                   ARTICLE VI

         Representations and Warranties of Parent and
            Merger Sub.............................................   43

            6.1.    Organization, Etc. of Parent...................   43
            6.2.    Subsidiaries...................................   43
            6.3.    Agreement......................................   43
            6.4.    Permits; Compliance............................   44
            6.5.    Opinions of Parent's Financial Advisors........   44
            6.6.    Capital Stock..................................   44
            6.7.    Parent Shares..................................   44
            6.8.    Litigation.....................................   45
            6.9.    Compliance with Other Instruments, Etc.........   45
            6.10.   Taxes..........................................   46
            6.11.   Intellectual Property..........................   46
            6.12.   Reports and Financial Statements...............   47
            6.13.   Brokers and Finders............................   48
            6.14.   Registration Statement.........................   48
            6.15.   Ownership of Merger Sub; No Prior Activities;
                      Assets of Merger Sub.........................   48
            6.16.   Ownership of Company Stock.....................   49


                                   ARTICLE VII

         Additional Covenants and Agreements.......................   49

            7.1.    Conduct of Business of the Company.............   49
            7.2.    Other Transactions.............................   55
            7.3.    Stockholder Approval...........................   56
            7.4.    Registration Statement and Proxy Statement.....   57
            7.5.    Reasonable Efforts.............................   58
            7.6.    Access to Information..........................   60
            7.7.    Indemnification of Directors and Officers......   61



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            7.8.    Registration and Listing of Parent
                      Common Shares................................   63
            7.9.    Affiliates of Parent and the Company...........   63
            7.10.   Tax Matters....................................   64
            7.11.   New York Real Property Transfer Tax............   64
            7.12.   Employee Matters...............................   64
            7.13.   Tax Sharing Agreement..........................   66
            7.14.   Other Intercompany Agreements..................   66
            7.15.   Parent Board of Directors......................   66
            7.16.   Parent Charter Amendment; Bylaw Amendment
                      and Policy Statement.........................   67
            7.17.   Intercompany Transactions......................   67
            7.18.   Certain Inter-Group Relationships..............   67
            7.19.   TCI Joint Ventures.............................   67
            7.20.   Certain Actions by Parent and the
                      Surviving Corporation........................   67


                                  ARTICLE VIII

         Conditions................................................   68

            8.1.    Conditions to Each Party's Obligations.........   68
            8.2.    Conditions to Obligations of Parent
                      and Merger Sub...............................   69
            8.3.    Conditions to Obligations of the Company.......   71


                                   ARTICLE IX

         Termination...............................................   72

            9.1.    Termination by Mutual Consent..................   72
            9.2.    Termination by Either Parent or the Company....   72
            9.3.    Termination by the Company.....................   73
            9.4.    Termination by Parent and Merger Sub...........   73
            9.5.    Effect of Termination and Abandonment..........   73
            9.6.    Payment of Certain Fees........................   73


                                    ARTICLE X

         Miscellaneous and General.................................   74

            10.1.   Expenses.......................................   74
            10.2.   Notices, Etc...................................   74
            10.3.   Amendments, Waivers, Etc.......................   75
            10.4.   No Assignment..................................   75
            10.5.   Entire Agreement...............................   75
            10.6.   Specific Performance...........................   76
            10.7.   Remedies Cumulative............................   76



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            10.8.   No Waiver......................................   76
            10.9.   No Third Party Beneficiaries...................   76
            10.10.  Jurisdiction...................................   77
            10.11.  Public Announcements...........................   77
            10.12.  Governing Law..................................   77
            10.13.  Name, Captions, Etc............................   77
            10.14.  Counterparts...................................   77
            10.15.  Survival of Representations, Warranties,
                      Covenants and Agreements.....................   77
            10.16.  Severability...................................   78
            10.17.  Disclosure Statements..........................   78

         EXHIBITS

         A Form of Amendment to the Parent Charter
         B Form of Affiliate Letter
         C Terms of Amendment to Tax Sharing Agreement
         D Form of Bylaw Amendment and Policy Statement


         SCHEDULES

         2.1(a)         Terms of the Company Restructuring
         2.1(c)(i)      Form of Certificate of Incorporation and Bylaws
                          of Liberty Media Corporation
         2.1(c)(ii)     Form of Contribution Agreement
         2.1(c)(iii)    Form of LLC Agreement of Liberty Group LLC
         2.1(c)(iv)     Form of Section 2.1(c)(iv) Letter
         7.12(b)        Definitions of "Good Reason" and "Cause"
         7.12(e)        Form of Tax Protection Agreement
         7.14           Intercompany Agreement Principles
         7.18           Certain Terms of Inter-Group Relationship






















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                          AGREEMENT AND PLAN OF MERGER

                   AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
         June 23, 1998, among AT&T Corp., a New York corporation ("Parent"),
         Italy Merger Corp., a Delaware corporation and a direct wholly owned
         subsidiary of Parent ("Merger Sub"), and Tele-Communications, Inc., a
         Delaware corporation (the
         "Company").


                                    RECITALS

                   WHEREAS, the Boards of Directors of Parent, Merger Sub and
         the Company each have determined that it is advisable and in the best
         interests of their respective stockholders for Merger Sub to merge with
         and into the Company, upon the terms and subject to the conditions of
         this Agreement (the "Merger");

                   WHEREAS, for United States federal income tax purposes, it is
         intended that the Merger shall qualify as a tax-free reorganization
         within the meaning of Section 368(a) of the Code;

                   WHEREAS, Parent, Merger Sub and the Company desire to make
         certain representations, warranties, covenants and agreements in
         connection with the Merger; and

                   WHEREAS, Parent and Merger Sub have required, as a condition
         to their willingness to enter into this Agreement, that the
         Stockholders contemporaneously enter into the Voting Agreement
         concurrently with the execution and delivery of this Agreement.

                   NOW, THEREFORE, in consideration of the mutual
         representations, warranties, covenants and agreements set forth herein,
         Parent, Merger Sub and the Company hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                   As used in this Agreement, the following terms shall have the
         respective meanings set forth below:

                   "Adjusted Liberty Media Group Outstanding Interest
         Fraction":  As defined in the Company Charter.

                   "Adjusted TCI Ventures Group Outstanding Interest
         Fraction":  As defined in the Company Charter.

                   "Affiliate":  As defined in Rule 12b-2 under the Ex-
         change Act.

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                   "@Home":  At Home Corporation, a Delaware corpora-
         tion.

                   "@Home Class A Shares":  Series A Common Stock, par
         value $.01 per share, of @Home.

                   "@Home Class B Shares":  Series B Common Stock, par
         value $.01 per share, of @Home.

                   "@Home Shares":  Collectively, @Home Class A Shares
         and @Home Class B Shares.

                   "Authorization": Any consent, approval or authorization of,
         expiration or termination of any waiting period requirement (including
         pursuant to the HSR Act) by, or filing, registration, qualification,
         declaration or designation with, any Governmental Body.

                   "Benefit Arrangement":  As defined in Section 5.9(a).

                   "Capital Spending Plan":  As defined in Section 7.1.

                   "Certificate of Merger": The certificate of merger with
         respect to the merger of Merger Sub with and into the Company,
         containing the provisions required by, and executed in accordance with,
         Section 251 of the DGCL.

                   "Certificates":  Collectively, TCI Group Certificates, 
         Liberty Media Certificates and, if applicable, TCI Ventures 
         Certificates.

                   "Claim":  As defined in Section 7.7(a).

                   "Closing":  The closing of the Merger.

                   "Closing Date":  The date on which the Closing occurs.

                   "Code":  The Internal Revenue Code of 1986, as amended, 
         and all regulations promulgated thereunder, as in effect
         from time to time.

                   "Committed Acquisition Shares":  As defined in the
         Company Charter.

                   "Company":  Tele-Communications, Inc., a Delaware
         corporation.

                   "Company Charter":  The Amended and Restated Certifi-
         cate of Incorporation of the Company, as amended to the date
         hereof and as it may be further amended prior to the Effective
         Date with the consent of Parent pursuant to Section 7.1.



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                   "Company Class A Preferred Stock":  As defined in
         Section 5.6(c).

                   "Company Class B Junior Preferred Stock":  As defined
         in Section 5.6(c).

                   "Company Common Stock":  As defined in Section
         5.6(a).

                   "Company Disclosure Statement":  The disclosure
         statement, dated the date of this Agreement, delivered by the
         Company to Parent.

                   "Company Employees":  As defined in Section 7.12(d).

                   "Company Permits":  As defined in Section 5.4.

                   "Company Preferred Stock":  As defined in Section
         5.6(a).

                   "Company Representatives":  As defined in Section
         7.6.

                   "Company SEC Reports":  As defined in Section 5.12.

                   "Company Series Preferred Stock":  As defined in Sec-
         tion 5.6(c).

                   "Company Stockholders Meeting":  The stockholders
         meeting of the Company in connection with the transactions con-
         templated hereby, including any adjournments or postponements
         thereof.

                   "Confidentiality Agreement":  The Nondisclosure
         Agreement, dated as of May 26, 1998, between Parent and the
         Company.

                   "Contribution Agreement":  As defined in Section
         2.1(c).

                   "Control": With respect to any Person, the possession, direct
         or indirect, of the power to direct or cause the direction of the
         management and policies of such Person, whether through the ownership
         of voting securities, by contract, or otherwise.

                   "Controlled Group Liability":  As defined in Section
         5.9(e).

                   "DGCL":  The Delaware General Corporation Law.

                   "Effective Time":  As defined in Section 2.3.



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                   "Employee Plan":  As defined in Section 5.9(a).

                   "Employees":  As defined in Section 5.9(a).

                   "ERISA":  The Employee Retirement Income Security Act
         of 1974, as amended, and all regulations promulgated thereun-
         der, as in effect from time to time.

                   "ERISA Affiliates": Any trade or business, whether or not
         incorporated, that is treated as a single employer with the Company or
         any of its Subsidiaries under Section 414(b) or (c) of the Code.

                   "Excess Parent Common Shares":  As defined in Section
         4.3(a).

                   "Excess Parent Liberty Tracking (Liberty) Shares":
         As defined in Section 4.3(b).

                   "Excess Parent Liberty Tracking (Ventures) Shares":
         As defined in Section 4.3(c).

                   "Exchange Act":  The Securities Exchange Act of 1934,
         as amended.

                   "Exchange Agent":  As defined in Section 4.2(a).

                   "Exchange Fund":  The TCI Group Exchange Fund, the
         Liberty Media Exchange Fund or, if applicable, the TCI Ventures
         Exchange Fund.

                   "Exchange Ratios":  The TCI Group Exchange Ratios,
         the Liberty Media Exchange Ratios and, if applicable, the TCI
         Ventures Exchange Ratios.

                   "Executive Agreements":  As defined in Section
         7.12(a).

                   "FCC":  The Federal Communications Commission.

                   "FCC Consent": Actions by the FCC granting its consent to the
         transfer of control of the FCC Licenses in connection with the
         consummation of the transactions contemplated hereby.

                   "FCC Licenses": All licenses, permits, construction permits
         and other authorizations issued by the FCC in connection with the
         business and operations of the Company and its Subsidiaries.

                   "Fractional Fund":  The Fractional Parent Common
         Fund, the Fractional Parent Liberty Tracking (Liberty) Fund or,



                                       -4-

<PAGE>   10









         if applicable, the Fractional Parent Liberty Tracking (Ven-
         tures) Fund.

                   "Fractional Parent Common Fund":  As defined in Sec-
         tion 4.3(a).

                   "Fractional Parent Liberty Tracking (Liberty) Fund":
         As defined in Section 4.3(b).

                   "Fractional Parent Liberty Tracking (Ventures) Fund":
         As defined in Section 4.3(c).

                   "Governmental Body":  Any federal, state, municipal,
         political subdivision or other governmental department, court,
         commission, board, bureau, agency or instrumentality, domestic
         or foreign.

                   "Group":  The TCI Group, the Liberty Media Group or
         the TCI Ventures Group.

                   "HSR Act":  The Hart-Scott-Rodino Antitrust Improve-
         ments Act of 1976, as amended.

                   "Indemnified Parties":  As defined in Section 7.7(a).

                   "Intellectual Property": All industrial and intellectual
         property rights, including Proprietary Technology, patents, patent
         applications, trademarks, trademark applications and registrations,
         service marks, service mark applications and registrations, copyrights,
         know-how, licenses, trade secrets, proprietary processes, formulae and
         customer lists.

                   "knowledge": With respect to the Company, the actual
         knowledge of any executive officer (determined in accordance with Rule
         16a-1(f) under the Exchange Act as in effect on the date hereof) of the
         Company and, with respect to Parent or Merger Sub, the actual knowledge
         of any executive officer (determined in accordance with Rule 16a-1(f)
         under the Exchange Act as in effect on the date hereof) of Parent or
         Merger Sub, as the case may be.

                   "Law":  Any foreign or domestic law, statute, code,
         ordinance, rule, regulation promulgated, or order, judgment,
         writ, stipulation, award, injunction or decree entered by a
         Governmental Body.

                   "Liberty Media Corporation":  Liberty Media
         Corporation, a Delaware corporation.

                   "Liberty/Ventures Group":  Collectively, the TCI
         Ventures Group and the Liberty Media Group.




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                   "Liberty Group LLC":  As defined in the Contribution
         Agreement.

                   "Liberty Media Certificates":  As defined in Section
         4.2(b).

                   "Liberty Media Class A Exchange Ratio":  As defined
         in Section 4.1(b).

                   "Liberty Media Class A Stock":  Series A Liberty Me-
         dia Group Common Stock, par value $1.00 per share, of the
         Company.

                   "Liberty Media Class B Exchange Ratio":  As defined
         in Section 4.1(b).

                   "Liberty Media Class B Stock":  Series B Liberty Me-
         dia Group Common Stock, par value $1.00 per share, of the
         Company.

                   "Liberty Media Exchange Fund":  As defined in Section
         4.2(a).

                   "Liberty Media Exchange Ratios":  As defined in Sec-
         tion 4.1(b).

                   "Liberty Media Group":  The assets, liabilities and
         businesses of the Company known as "Liberty Media Group" (as
         represented by the Liberty Media Tracking Shares).

                   "Liberty Media Group Outstanding Interest Fraction":
         As defined in the Company Charter.

                   "Liberty Media Members":  Those Subsidiaries of the
         Company whose assets, businesses and results of operations are
         attributed to the Liberty Media Group (assuming that the Re-
         structuring had occurred as contemplated by Section 2.1).

                   "Liberty Media Option":  As defined in Section
         4.1(f).

                   "Liberty Media Share Consideration":  As defined in
         Section 4.1(d).

                   "Liberty Media Tracking Shares":  Collectively,
         shares of Liberty Media Class A Stock and shares of Liberty
         Media Class B Stock.

                   "Material Adverse Effect":  With respect to Parent, a
         material adverse effect on the business, properties, operations
         or financial condition of Parent and its Subsidiaries taken as
         a whole, other than any such effect arising out of or resulting



                                       -6-

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         from general economic conditions or from changes in or affecting the
         long-distance telecommunications industry generally. With respect to
         the Company, a material adverse effect on the business, properties,
         operations or financial condition of the Company and its Subsidiaries
         taken as a whole, other than any such effect arising out of or
         resulting from general economic conditions or from changes in or
         affecting the cable television industry generally. With respect to the
         TCI Group, a material adverse effect on the business, properties,
         operations or financial condition of the TCI Group taken as a whole
         (and assuming that the Restructuring had occurred as contemplated by
         Section 2.1), other than any such effect arising out of or resulting
         from general economic conditions or from changes in or affecting the
         cable television industry generally. With respect to the
         Liberty/Ventures Group, a material adverse effect on the business,
         properties, operations or financial condition of the Liberty Media
         Group and the TCI Ventures Group, taken as a whole, other than any such
         effect arising out of or resulting from general economic conditions or
         from changes in or affecting the cable television programming industry
         generally.

                   "Merger":  As defined in the Recitals.

                   "Merger Sub":  Italy Merger Corp., a Delaware corpo-
         ration and a direct wholly owned subsidiary of Parent.

                   "NDTC":  The assets and business of the Company's
         National Digital Television Center.

                   "Number of Shares Issuable with Respect to the Lib-
         erty Media Group Inter-Group Interest":  As defined in the Com-
         pany Charter.

                   "Number of Shares Issuable with Respect to the TCI
         Ventures Group Inter-Group Interest":  As defined in the
         Company Charter.

                   "NASDAQ":  The Nasdaq Stock Market.

                   "NYSE":  The New York Stock Exchange, Inc.

                   "Parent":  AT&T Corp., a New York corporation.

                   "Parent Charter":  The Certificate of Incorporation
         of Parent, as amended to the date hereof.

                   "Parent Charter Amendment":  The proposed amendment
         to the Parent Charter set forth as Exhibit A hereto and ap-
         proved by Parent's Board of Directors pursuant to this Agree-
         ment.




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<PAGE>   13









                   "Parent Common Option":  As defined in Section
         4.1(f).

                   "Parent Common Shares":  Shares of common stock, par
         value $1.00 per share, of Parent.

                   "Parent Disclosure Statement":  The disclosure state-
         ment, dated the date of this Agreement, delivered by Parent to
         the Company.

                   "Parent Liberty Class A Stock": The Class A Liberty Group
         Common Stock, par value $1.00 per share, of Parent having the terms set
         forth in the Parent Charter Amendment.

                   "Parent Liberty Class B Stock": The Class B Liberty Group
         Common Stock, par value $1.00 per share, of Parent having the terms set
         forth in the Parent Charter Amendment.

                   "Parent Liberty Group":  The Liberty Group as defined
         in the Parent Charter Amendment.

                   "Parent Liberty Tracking Option":  As defined in Sec-
         tion 4.1(f).

                   "Parent Liberty Tracking Shares":  Collectively, the
         shares of Parent Liberty Class A Stock and the shares of Parent
         Liberty Class B Stock.

                   "Parent Permits":  As defined in Section 6.4.

                   "Parent Representatives":  As defined in Section 7.6.

                   "Parent SEC Reports":  As defined in Section 6.12(a).

                   "Parent Shares":  Collectively, the Parent Common
         Shares and the Parent Liberty Tracking Shares.

                   "Parent Stockholders Meeting":  The stockholders
         meeting of Parent in connection with the transactions contem-
         plated hereby, including any adjournments or postponements
         thereof.

                   "Permit":  Any franchise, grant, authorization, li-
         cense, permit, easement, variance, exception, consent, cer-
         tificate, approval, clearance or order of any Governmental
         Body.

                   "Person":  Any individual or corporation, company,
         partnership, trust, incorporated or unincorporated association,
         joint venture or other entity of any kind.

                   "Proprietary Technology":  All proprietary processes,
         formulae, inventions, trade secrets, know-how, development


                                       -8-

<PAGE>   14









         tools and other proprietary rights used by the Company and its
         Subsidiaries or Parent and its Subsidiaries, as the case may be,
         pertaining to any product, software or service manufactured, marketed,
         licensed or sold by the Company and its Subsidiaries or Parent and its
         Subsidiaries, as the case may be, in the conduct of their business or
         used, employed or exploited in the development, license, sale,
         marketing, distribution or maintenance thereof, and all documentation
         and media constituting, describing or relating to the above, including
         manuals, memoranda, know-how, notebooks, software, records and
         disclosures.

                   "Proxy Statement":  The joint proxy statement to be
         sent to stockholders of Parent and of the Company to solicit
         proxies for use at the Stockholders Meetings.

                   "Registration Statement":  As defined in Section 7.4.

                   "Restructuring":  As defined in Section 2.1(d).

                   "Rule 145 Affiliate":  As defined in Section 7.9.

                   "SEC":  The Securities and Exchange Commission.

                   "Securities Act":  The Securities Act of 1933, as
         amended.

                   "Series C-Liberty Media Conversion Rate":  56.25 per
         share.

                   "Series C-Liberty Media Exchange Ratio":  As defined
         in Section 4.1(i).

                   "Series C-Liberty Media Preferred Stock":  As defined
         in Section 5.6(c).

                   "Series C Preferred Stock":  As defined in Section
         5.6(c).

                   "Series C-TCI Group Preferred Conversion Rate":
         132.86 per share.

                   "Series C-TCI Group Preferred Exchange Ratio":  As
         defined in Section 4.1(h).

                   "Series C-TCI Group Preferred Stock":  As defined in
         Section 5.6(c).

                   "Series D Preferred Stock":  As defined in Section
         5.6(c).

                   "Series E Preferred Stock":  As defined in Section
         5.6(c).


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<PAGE>   15









                   "Series F Preferred Stock":  As defined in Section
         5.6(c).

                   "Series G Conversion Rate":  1.19 per share.

                   "Series G Exchange Ratio":  As defined in Section
         4.1(j).

                   "Series G Preferred Stock":  As defined in Section
         5.6(c).

                   "Series H Conversion Rate":  0.590625 per share.

                   "Series H Exchange Ratio":  As defined in Section
         4.1(k).

                   "Series H Preferred Stock":  As defined in Section
         5.6(c).

                   "Series Preferred Exchange Ratios":  Collectively,
         the Series C-TCI Group Preferred Exchange Ratio, the Series C-
         Liberty Media Exchange Ratio, the Series G Exchange Ratio and
         the Series H Exchange Ratio.

                   "Share Consideration":  The TCI Group Share Consid-
         eration, the Liberty Media Share Consideration or, if ap-
         plicable, the TCI Ventures Share Consideration.

                   "Shares":  Collectively, the TCI Group Shares, the
         Liberty Media Tracking Shares and the TCI Ventures Tracking
         Shares.

                   "Significant Subsidiary":  As defined in Section
         7.2(a).

                   "Sprint PCS Investment":  The interests held by the
         Company in the Sprint Spectrum partnerships.

                   "Stockholders":  Collectively, Dr. John C. Malone and
         Leslie Malone.

                   "Stockholders Meetings":  The Company Stockholders
         Meeting and the Parent Stockholders Meeting.

                   "Subsidiary": As to any Person, any other Person of which at
         least (i) 50% of the equity and (ii) 50% of the voting interests are
         owned, directly or indirectly, by such first Person; provided that, for
         purposes of the covenants set forth in Article VII, references to
         Subsidiaries shall not include any Person as to which such first
         Person's voting interests are subject to a voting agreement, proxy,
         management contract or other arrangement as a result of which such
         first Person does not Control such other Person.


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<PAGE>   16









                   "Superior Proposal":  As defined in Section 7.2(b).

                   "Surviving Corporation":  The surviving corporation
         in the Merger.

                   "Takeover Proposal":  As defined in Section 7.2(a).

                   "Tax":  As defined in Section 5.10(d).

                   "Tax Return":  As defined in Section 5.10(d).

                   "Tax Sharing Agreement":  The Tax Sharing Agreement,
         dated as of October 1, 1997, by and among the Company, TCI Com-
         munications, Inc., Liberty Media Corporation and TCI Ventures
         Group L.L.C.

                   "TCI Group": As defined in the Company Charter (assuming that
         the Restructuring had occurred as contemplated by Section 2.1).

                   "TCI Group Class B Stock":  Series B TCI Group Common
         Stock, par value $1.00 per share, of the Company.

                   "TCI Group Certificates":  As defined in Section
         4.2(b).

                   "TCI Group Class A Exchange Ratio":  As defined in
         Section 4.1(a).

                   "TCI Group Class A Stock":  Series A TCI Group Common
         Stock, par value $1.00 per share, of the Company.

                   "TCI Group Class B Exchange Ratio":  As defined in
         Section 4.1(a).

                   "TCI Group Class B Stock":  Series B TCI Group Common
         Stock, par value $1.00 per share, of the Company.

                   "TCI Group Exchange Fund":  As defined in Section
         4.2(a).

                   "TCI Group Exchange Ratios":  As defined in Section
         4.1(a).

                   "TCI Group Members": Those Subsidiaries of the Company whose
         assets, businesses and results of operations are attributed to the TCI
         Group (assuming that the Restructuring had occurred as contemplated by
         Section 2.1).

                   "TCI Group Option":  As defined in Section 4.1(f).

                   "TCI Group Share Consideration":  As defined in Sec-
         tion 4.1(d).


                                       -11-

<PAGE>   17









                   "TCI Group Shares":  Collectively, the shares of TCI
         Group Class A Stock and the shares of TCI Group Class B Stock.

                   "TCI Ventures Certificates":  As defined in Section
         4.2(b).

                   "TCI Ventures Class A Exchange Ratio":  As defined in
         Section 4.1(c).

                   "TCI Ventures Class A Stock":  Series A TCI Ventures
         Group Common Stock, par value $1.00 per share, of the Company.

                   "TCI Ventures Class B Exchange Ratio":  As defined in
         Section 4.1(c).

                   "TCI Ventures Class B Stock":  Series B TCI Ventures
         Group Common Stock, par value $1.00 per share, of the Company.

                   "TCI Ventures Exchange Fund":  As defined in Section
         4.2(a).

                   "TCI Ventures Exchange Ratios":  As defined in Sec-
         tion 4.1(c).

                   "TCI Ventures Group":  The assets, liabilities and
         businesses of the Company known as "TCI Ventures Group" (as
         represented by the TCI Ventures Tracking Shares).

                   "TCI Ventures Group Outstanding Interest Fraction":
         As defined in the Company Charter.

                   "TCI Ventures Members": Those Subsidiaries of the Company
         whose assets, businesses and results of operations are attributed to
         the TCI Ventures Group (assuming that the Restructuring had occurred as
         contemplated by Section 2.1).

                   "TCI Ventures Option":  As defined in Section 4.1(f).

                   "TCI Ventures Group Preferred Interest":  As defined
         in the Company Charter.

                   "TCI Ventures Share Consideration":  As defined in
         Section 4.1(d).

                   "TCI Ventures Tracking Shares":  Collectively, shares
         of TCI Ventures Class A Stock and shares of TCI Ventures Class
         B Stock.

                   "TCG":  Teleport Communications Group Inc., a Dela-
         ware corporation.

                   "UA Notes":  As defined in Section 5.6(e).



                                       -12-

<PAGE>   18









                   "Voting Agreement":  The Voting Agreement, dated the
         date hereof, by and among Parent and each of the Stockholders.

                   "Westmarc Preferred":  As defined in Section 7.20(b).

                   "Wholly Owned Subsidiary":  As to any Person, a Sub-
         sidiary of such Person 100% of the equity and voting interest
         in which is owned, directly or indirectly, by such Person.


                                   ARTICLE II
         
                        THE RESTRUCTURING AND THE MERGER

                   2.1. The Restructuring. (a) Subject to the terms and
         conditions of this Agreement, prior to the Effective Time, and provided
         that all of the conditions set forth in Article VIII to be satisfied
         prior to the Closing have been satisfied or duly waived, the Company
         shall take the actions set forth in Schedule 2.1(a). By virtue of the
         transfers contemplated by Schedule 2.1(a), TCI Group will obtain
         ownership of, among other things, (i) 31,060,000 @Home Class A Shares
         and 15,400,000 @Home Class B Shares (representing all of the shares of
         capital stock of @Home owned directly or indirectly by the Company),
         together with any dividends, distributions or other consideration
         whatsoever paid or distributed in respect thereof after the date of
         this Agreement, (ii) 1,011,528 shares of Class A common stock of TCG
         and 48,779,388 shares of Class B common stock of TCG (representing all
         of the shares of capital stock of TCG owned directly or indirectly by
         the Company), together with any dividends, distributions or other
         consideration whatsoever paid or distributed in respect thereof or in
         exchange therefor after the date of this Agreement, and (iii) all of
         the assets of or outstanding equity interests in NDTC, together with
         any dividends, distributions or other consideration whatsoever paid or
         distributed in respect thereof after the date of this Agreement. The
         actions contemplated by Schedule 2.1(a) will be effected on a tax-free
         basis to the extent feasible, without creating any deferred
         intercompany gain or other tax consequences, in a manner reasonably
         satisfactory to Parent.

                   (b) To the extent practicable prior to the Effective Time,
         and subject to the reasonable satisfaction of Parent with the form and
         substance of such transactions, the Company shall use its reasonable
         best efforts to cause direct or indirect TCI Group Subsidiaries owning
         TCI Group Shares to merge into the Company (or their respective parent
         corporations) or otherwise to liquidate so that such TCI Group Shares
         are not outstanding for federal income tax purposes at the Effective
         Time, provided that any such merger or liquidation is tax-free.




                                       -13-

<PAGE>   19









                   (c) At or prior to the Effective Time, to the extent the
         Board of Directors of the Company so determines, the Company may, but
         shall not be required to: (i) amend and restate the certificate of
         incorporation and bylaws of Liberty Media Corporation to be in
         substantially the form set forth in Schedule 2.1(c)(i), (ii) cause
         Liberty Media Corporation to enter into a Contribution Agreement in the
         form set forth in Schedule 2.1(c)(ii) with the other parties set forth
         in such agreement (the "Contribution Agreement"), and (iii) create the
         Liberty Group LLC pursuant to an LLC Agreement in the form set forth in
         Schedule 2.1(c)(iii). In the event the Company takes the foregoing
         actions, the rights and obligations of Liberty Media Corporation under
         the agreement contemplated by Section 7.18 shall be assignable to the
         Liberty Group LLC. In the event the Company causes Liberty Media
         Corporation to execute the Contribution Agreement, Parent will execute
         and deliver a letter at the Closing in the form attached as Schedule
         2.1(c)(iv).

                   (d) Subject to the terms and conditions of this Agreement,
         prior to the Effective Time, provided that all of the conditions set
         forth in Article VIII to be satisfied prior to the Closing have been
         satisfied or duly waived, the Company and its appropriate Affiliates
         shall, on a tax-free basis, make such other transfers of assets and
         businesses, and assumptions of liabilities, if any, as are reasonably
         necessary in order to cause the representations and warranties in
         Section 5.17 to be true and correct in all material respects.

         The actions described in this Section 2.1 are collectively re-
         ferred to as the "Restructuring."

                   2.2. The Merger. Subject to the terms and conditions of this
         Agreement, at the Effective Time, Merger Sub shall be merged with and
         into the Company in accordance with the provisions of Section 251 of
         the DGCL and with the effect provided in Sections 259 and 261 of the
         DGCL. The separate corporate existence of Merger Sub shall thereupon
         cease and the Company shall be the Surviving Corporation and shall
         continue its corporate existence as a Subsidiary of Parent and shall
         continue to be governed by the laws of the State of Delaware. At the
         election of Parent, any direct Wholly Owned Subsidiary of Parent with
         respect to which the representation and warranty set forth in Section
         6.15 is true and correct may be substituted for Merger Sub as a
         constituent corporation in the Merger by an appropriate amendment to
         this Agreement complying with the provisions of the DGCL.

                   2.3. Effective Time. The Merger shall become effective on the
         date and at the time (the "Effective Time") that the Certificate of
         Merger shall have been accepted for filing by the Secretary of State of
         the State of Delaware (or such later date and time as may be specified
         in the Certificate of


                                       -14-

<PAGE>   20









         Merger by mutual agreement of Parent, Merger Sub and the Company),
         which shall be on the Closing Date or as soon as practicable
         thereafter.

                   2.4. Closing. Subject to the fulfillment or waiver of the
         conditions set forth in Article VIII, the Closing shall take place (a)
         at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street,
         New York, New York, at 10:00 a.m. on the earliest practicable date (but
         no later than the fifth business day) following the satisfaction or
         waiver of the conditions set forth in Article VIII (other than those
         conditions to be satisfied or waived at the Closing) or (b) at such
         other place and/or time and/or on such other date as Parent, Merger Sub
         and the Company may agree.


                                   ARTICLE III
         
                                 TERMS OF MERGER

                   3.1. Certificate of Incorporation. At the Effective Time, the
         Company Charter shall be amended pursuant to the Certificate of Merger
         to be identical to the Certificate of Incorporation of Merger Sub in
         effect immediately prior to the Effective Time, except that Article
         FIRST thereof shall read as follows: "The name of the Corporation
         (which is hereinafter called the "Corporation") is Tele-Communications,
         Inc." Such Company Charter as so amended shall be the Certificate of
         Incorporation of the Surviving Corporation, until duly amended in
         accordance with the terms thereof and of the DGCL.

                   3.2. The By-Laws. The By-Laws of the Company shall be amended
         as of the Effective Time to be identical to the ByLaws of Merger Sub
         immediately prior to the Effective Time and, in such amended form,
         shall be the By-Laws of the Surviving Corporation, until duly amended
         in accordance with the terms thereof, of the Certificate of
         Incorporation of the Surviving Corporation and of the DGCL.

                   3.3. Directors. The directors of the Company at the Effective
         Time shall, from and after the Effective Time, be the directors of the
         Surviving Corporation until their successors have been duly elected or
         appointed and qualified or until their earlier death, resignation or
         removal in accordance with the Surviving Corporation's Certificate of
         Incorporation and By-Laws.

                   3.4. Officers. The officers of the Company at the Effective
         Time shall, from and after the Effective Time, be the officers of the
         Surviving Corporation until their successors have been duly elected or
         appointed and qualified or until their earlier death, resignation or
         removal in accordance with



                                       -15-

<PAGE>   21









         the Surviving Corporation's Certificate of Incorporation and
         By-Laws.


                                   ARTICLE IV

                       SHARE CONSIDERATION; CONVERSION OR
                       CANCELLATION OF SHARES IN THE MERGER

                   4.1. Share Consideration; Conversion or Cancellation of
         Shares in the Merger. Subject to the provisions of this Article IV, at
         the Effective Time, by virtue of the Merger and without any action on
         the part of the holders thereof, the shares of the constituent
         corporations shall be converted or cancelled as follows:

                   (a) Each share of TCI Group Class A Stock issued and
              outstanding immediately prior to the Effective Time shall be
              converted into the right to receive .7757 of a Parent Common Share
              (the "TCI Group A Exchange Ratio") and each share of TCI Group
              Class B Stock issued and outstanding immediately prior to the
              Effective Time shall be converted into the right to receive .8533
              of a Parent Common Share (the "TCI Group B Exchange Ratio" and,
              together with the TCI Group A Exchange Ratio, the "TCI Group
              Exchange Ratios"). If, prior to the Effective Time, Parent should
              split or combine the Parent Common Shares, or pay a stock dividend
              or other stock distribution in Parent Common Shares, or otherwise
              effect any transaction that changes the Parent Common Shares into
              any other securities (including securities of another
              corporation), or make any other dividend or distribution on the
              Parent Common Shares (other than normal quarterly cash dividends
              as the same may be adjusted from time to time in the ordinary
              course consistent with past practice), then the TCI Group Exchange
              Ratios and the terms of the foregoing exchanges will be
              appropriately adjusted to reflect such split, combination,
              transaction, dividend or other distribution or change.

                   (b) Each share of Liberty Media Class A Stock issued and
              outstanding immediately prior to the Effective Time shall be
              converted into the right to receive one share of Parent Liberty
              Class A Stock (the "Liberty Media Class A Exchange Ratio") and
              each share of Liberty Media Class B Stock issued and outstanding
              immediately prior to the Effective Time shall be converted into
              the right to receive one share of Parent Liberty Class B Stock
              (the "Liberty Media Class B Exchange Ratio" and, together with the
              Liberty Media Class A Exchange Ratio, the "Liberty Media Exchange
              Ratios"). If, prior to the Effective Time, Parent should effect
              any transaction that changes the Parent Common Shares into the
              securities of another corporation, the


                                       -16-

<PAGE>   22









              Liberty Media Exchange Ratios and the terms of the foregoing
              exchanges will be appropriately adjusted to provide for the
              issuance of shares of such other corporation having terms
              identical to the appropriate series of Parent Liberty Tracking
              Shares.

                   (c) To the extent that any TCI Ventures Tracking Shares
              remain outstanding as of the Effective Time, each share of TCI
              Ventures Class A Stock issued and outstanding immediately prior to
              the Effective Time shall be converted into the right to receive
              .52 of a share of Parent Liberty Class A Stock (the "TCI Ventures
              Class A Exchange Ratio") and each share of TCI Ventures Class B
              Stock issued and outstanding immediately prior to the Effective
              Time shall be converted into the right to receive .52 of a share
              of Parent Liberty Class B Stock (the "TCI Ventures Class B
              Exchange Ratio" and, together with the TCI Ventures Class A
              Exchange Ratio, the "TCI Ventures Exchange Ratios"); provided that
              the Company may, in its discretion, adjust the TCI Ventures
              Exchange Ratios as it deems appropriate to reflect the relative
              values of the TCI Ventures Group and the Liberty Media Group. If,
              prior to the Effective Time, Parent should effect any transaction
              that changes the Parent Common Shares into the securities of
              another corporation, the Liberty Media Exchange Ratios and the
              terms of the foregoing exchanges will be appropriately adjusted to
              provide for the issuance of shares of such other corporation
              having terms identical to the appropriate series of Parent Liberty
              Tracking Shares.

                   (d) All Shares converted into the right to receive Parent
              Common Shares or Parent Liberty Tracking Shares pursuant to this
              Section 4.1 shall cease to be outstanding, shall be canceled and
              retired and shall cease to exist, and each holder of a certificate
              representing any such Shares shall thereafter cease to have any
              rights with respect to such Shares, except the right to receive
              for each of the Shares, upon the surrender of such certificate in
              accordance with Section 4.2, (i) in the case of each series of TCI
              Group Shares, the amount of Parent Common Shares with respect to
              each such series specified above (the "TCI Group Share
              Consideration") and cash in lieu of fractional Parent Common
              Shares as contemplated by Section 4.3, (ii) in the case of Liberty
              Media Tracking Shares, the amount of Parent Liberty Tracking
              Shares specified above (the "Liberty Media Share Consideration")
              and cash in lieu of fractional Parent Liberty Tracking Shares as
              contemplated by Section 4.3 and (iii) in the case of TCI Ventures
              Tracking Shares, if applicable, the amount of Parent Liberty
              Tracking Shares specified above (the "TCI Ventures Share
              Consideration") and cash in lieu of fractional Parent Liberty
              Tracking Shares as contemplated by Section 4.3.


                                       -17-

<PAGE>   23









                   (e) Each share of Common Stock, par value $0.01 per share, of
              Merger Sub issued and outstanding immediately prior to the
              Effective Time shall be converted into one share of common stock,
              par value $0.01 per share, of the Surviving Corporation.

                   (f) (i) Each of the then outstanding stock options, if any,
              to purchase TCI Group Shares (each, a "TCI Group Option") issued
              by the Company pursuant to any stock option or similar plan of the
              Company, and any non-plan options to acquire TCI Group Shares set
              forth in Section 5.6 of the Company Disclosure Statement issued by
              the Company pursuant to an option agreement or otherwise issued by
              the Company, shall, by virtue of the Merger, and without any
              further action on the part of any holder thereof, be assumed by
              Parent and converted into a option (a "Parent Common Option") to
              purchase that number of Parent Common Shares determined by
              multiplying the number of TCI Group Shares subject to such TCI
              Group Option at the Effective Time by the appropriate TCI Group
              Exchange Ratio, at an exercise price per Parent Common Share equal
              to the exercise price per share of such TCI Group Option
              immediately prior to the Effective Time divided by such TCI Group
              Exchange Ratio, rounded down to the nearest whole cent. If the
              foregoing calculation results in an assumed TCI Group Option being
              exercisable for a fraction of a Parent Common Share, then the
              number of Parent Common Shares subject to such option shall be
              rounded up to the nearest whole number of shares, with no cash
              being payable for such fractional share. The terms and conditions
              of each Parent Common Option shall otherwise remain as set forth
              in the TCI Group Option converted into such Parent Common Option.

                   (ii) Each of the then outstanding stock options, if any, to
              purchase Liberty Media Tracking Shares (each, a "Liberty Media
              Option") issued by the Company pursuant to any stock option or
              similar plan of the Company, and any non-plan options to acquire
              Liberty Media Tracking Shares set forth in Section 5.6 of the
              Company Disclosure Statement issued by the Company pursuant to an
              option agreement or otherwise issued by the Company, shall, by
              virtue of the Merger, and without any further action on the part
              of any holder thereof, be assumed by Parent and converted into an
              option (a "Parent Liberty Tracking Option") to purchase a number
              of Parent Liberty Tracking Shares equal to the number of Liberty
              Media Tracking Shares subject to such Liberty Media Option at the
              Effective Time, at an exercise price per Parent Liberty Tracking
              Share equal to the exercise price per share of such Liberty Media
              Option immediately prior to the Effective Time. The terms and
              conditions of each Parent Liberty Tracking Option shall otherwise
              remain as set forth in the Liberty Media Option converted into
              such Parent Liberty Tracking Option.


                                       -18-

<PAGE>   24









                   (iii) Each of the then outstanding stock options, if any, to
              purchase TCI Ventures Tracking Shares (each, a "TCI Ventures
              Option") issued by the Company pursuant to any stock option or
              similar plan of the Company, and any non-plan options to acquire
              TCI Ventures Tracking Shares set forth in Section 5.6 of the
              Company Disclosure Statement issued by the Company pursuant to an
              option agreement or otherwise issued by the Company, shall, by
              virtue of the Merger, and without any further action on the part
              of any holder thereof, be assumed by Parent and converted into a
              Parent Liberty Tracking Option to purchase that number of Parent
              Liberty Tracking Shares determined by multiplying the number of
              TCI Ventures Tracking Shares subject to such TCI Ventures Option
              at the Effective Time by the appropriate TCI Ventures Exchange
              Ratio, at an exercise price per Parent Liberty Tracking Share
              equal to the exercise price per share of such TCI Ventures Option
              immediately prior to the Effective Time divided by such TCI
              Ventures Exchange Ratio, rounded down to the nearest whole cent.
              If the foregoing calculation results in an assumed TCI Ventures
              Option being exercisable for a fraction of a Parent Liberty
              Tracking Share, then the number of Parent Liberty Tracking Shares
              subject to such option shall be rounded up to the nearest whole
              number of shares, with no cash being payable for such fractional
              share. The terms and conditions of each Parent Liberty Tracking
              Option shall otherwise remain as set forth in the TCI Ventures
              Option converted into such Parent Liberty Tracking Option.

                   (iv) The adjustment provided herein with respect to any
              options which are "incentive stock options" (as defined in Section
              422 of the Code) shall be and is intended to be effected in a
              manner which is consistent with Section 424(a) of the Code.

                   (v) All restricted Shares granted pursuant to any Employee
              Plan or Benefit Arrangement, and all individual awards of
              restricted Shares not granted pursuant to any Employee Plan or
              Benefit Arrangement, shall be converted into restricted Parent
              Common Shares or Parent Liberty Tracking Shares, as the case may
              be, pursuant to this Section 4.1 and will remain subject to the
              same restrictions applicable to such restricted Shares immediately
              prior to the Effective Time.

                   (vi) The Company shall take all action necessary to provide
              that all outstanding awards of any type granted pursuant to any
              Employee Plan or Benefit Arrangement, and all outstanding
              individual awards not granted pursuant to any Employee Plan or
              Benefit Arrangement, will not vest or become exercisable on an
              accelerated basis in connection



                                       -19-

<PAGE>   25









              with the Merger and will not terminate if not exercised
              prior to the Closing Date.

                   (g) Each share of Company Class B Junior Preferred Stock
              issued and outstanding immediately prior to the Effective Time,
              other than any shares with respect to which appraisal rights are
              perfected under the DGCL, shall remain outstanding in the Merger
              as one share of Class B Junior Preferred Stock of the Surviving
              Corporation.

                   (h) Each share of Series C-TCI Group Preferred Stock issued
              and outstanding immediately prior to the Effective Time, other
              than any shares with respect to which appraisal rights are
              perfected under the DGCL, shall be converted into the right to
              receive a number of Parent Common Shares equal to the product of
              (i) the Series C-TCI Group Preferred Conversion Rate, and (ii) the
              TCI Group A Exchange Ratio (the "Series C-TCI Group Preferred
              Exchange Ratio").

                   (i) Each share of Series C-Liberty Media Preferred Stock
              issued and outstanding immediately prior to the Effective Time
              shall be converted into the right to receive a number of shares of
              Parent Liberty Class A Stock equal to the product of (i)the Series
              C-Liberty Media Conversion Rate, and (ii) the Liberty Media Class
              A Exchange Ratio (the "Series C-Liberty Media Exchange Ratio").

                   (j) Each share of Series G Preferred Stock issued and
              outstanding immediately prior to the Effective Time, other than
              any shares with respect to which appraisal rights are perfected
              under the DGCL, shall be converted into the right to receive a
              number of Parent Common Shares equal to the product of (i) the
              Series G Conversion Rate, and (ii) the TCI Group A Exchange Ratio
              (the "Series G Preferred Ratio").

                   (k) Each share of Series H Preferred Stock issued and
              outstanding immediately prior to the Effective Time shall be
              converted into the right to receive a number of shares of Parent
              Liberty Class A Stock equal to the product of (i)the Series H
              Conversion Rate, and (ii) the Liberty Media Class A Exchange Ratio
              (the "Series H Preferred Ratio").

                   (l) If, prior to the Effective Time, Parent should split or
              combine the Parent Common Shares, or pay a stock dividend or other
              stock distribution in Parent Common Shares, or otherwise effect
              any transaction that changes the Parent Common Shares into any
              other securities (including securities of another corporation), or
              make any other dividend or distribution on the Parent Common
              Shares (other than normal quarterly cash dividends as the same


                                       -20-

<PAGE>   26









              may be adjusted from time to time in the ordinary course
              consistent with past practice), the Series Preferred Exchange
              Ratios and the terms of the exchanges described in Sections 4.1(h)
              through (k) will be appropriately adjusted to provide for the
              issuance of shares of such other corporation having terms
              substantially identical to the Parent Common Shares or identical
              to the appropriate series of Parent Liberty Tracking Shares, as
              appropriate.

                   4.2. Payment for Shares in the Merger. The manner of making
         payment for Shares in the Merger shall be as follows:

                   (a) At the Effective Time, Parent shall make available to an
              exchange agent selected by Parent and reasonably acceptable to the
              Company (the "Exchange Agent"), (i) for the benefit of those
              Persons who immediately prior to the Effective Time were the
              holders of TCI Group Shares, a sufficient number of certificates
              representing Parent Common Shares required to effect the delivery
              of the aggregate TCI Group Share Consideration required to be
              issued pursuant to Section 4.1 (the certificates representing
              Parent Common Shares comprising such aggregate TCI Group Share
              Consideration being hereinafter referred to as the "TCI Group
              Exchange Fund"), (ii) for the benefit of those Persons who
              immediately prior to the Effective Time were the holders of
              Liberty Media Tracking Shares, a sufficient number of certificates
              representing the appropriate series of Parent Liberty Tracking
              Shares required to effect the delivery of the aggregate Liberty
              Media Share Consideration required to be issued pursuant to
              Section 4.1 (the certificates representing Parent Liberty Tracking
              Shares comprising such aggregate Liberty Media Share Consideration
              being hereinafter referred to as the "Liberty Media Exchange
              Fund"), and (iii) if applicable, for the benefit of those Persons
              who immediately prior to the Effective Time were the holders of
              TCI Ventures Tracking Shares, a sufficient number of certificates
              representing the appropriate series of Parent Liberty Tracking
              Shares required to effect the delivery of the aggregate TCI
              Ventures Share Consideration required to be issued pursuant to
              Section 4.1 (the certificates representing Parent Liberty Tracking
              Shares comprising such aggregate TCI Ventures Share Consideration
              being hereinafter referred to as the "TCI Ventures Exchange
              Fund"). The Exchange Agent shall, pursuant to irrevocable
              instructions, deliver the Parent Common Shares and the Parent
              Liberty Tracking Shares contemplated to be issued pursuant to
              Section 4.1 and effect the sales provided for in Section 4.3 out
              of the applicable Exchange Fund. The Exchange Funds shall not be
              used for any other purpose.





                                       -21-

<PAGE>   27









                   (b) (i) Promptly 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 outstanding TCI Group Shares (the "TCI Group
              Certificates") (1) a form of letter of transmittal (which shall
              specify that delivery shall be effected, and risk of loss and
              title to the TCI Group Certificates shall pass, only upon proper
              delivery of the TCI Group Certificates to the Exchange Agent) and
              (2) instructions for use in effecting the surrender of the TCI
              Group Certificates for payment therefor. Upon surrender of TCI
              Group Certificates for cancellation to the Exchange Agent,
              together with such letter of transmittal duly executed and any
              other required documents, the holder of such TCI Group
              Certificates shall be entitled to receive for each of the TCI
              Group Shares represented by such TCI Group Certificates the
              appropriate TCI Group Share Consideration and the TCI Group
              Certificates so surrendered shall forthwith be canceled. Until so
              surrendered, TCI Group Certificates shall represent solely the
              right to receive the appropriate TCI Group Share Consideration and
              any cash in lieu of fractional Parent Common Shares as
              contemplated by Section 4.3 with respect to each of the TCI Group
              Shares represented thereby. No dividends or other distributions
              that are declared on the Parent Common Shares and payable to the
              holders of record thereof after the Effective Time will be paid to
              Persons entitled by reason of the Merger to receive Parent Common
              Shares until such Persons surrender their TCI Group Certificates.
              Upon such surrender, there shall be paid to the Person in whose
              name the Parent Common Shares are issued any dividends or other
              distributions having a record date after the Effective Time and
              payable with respect to such Parent Common Shares between the
              Effective Time and the time of such surrender. After such
              surrender, there shall be paid on the applicable payment date, to
              the Person in whose name the Parent Common Shares are issued, any
              dividends or other distributions on such Parent Common Shares, as
              applicable, which shall have a record date after the Effective
              Time and prior to such surrender and a payment date after such
              surrender. In no event shall the Persons entitled to receive such
              dividends or other distributions be entitled to receive interest
              on such dividends or other distributions.

                        (ii) Promptly 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 outstanding Liberty Media Tracking Shares (the
              "Liberty Media Certificates") (1) a form of letter of transmittal
              (which shall specify that delivery shall be effected, and risk of
              loss and title to the Liberty Media Certificates shall pass, only
              upon proper delivery of the Liberty Media Certificates to the


                                       -22-

<PAGE>   28









              Exchange Agent) and (2) instructions for use in effecting the
              surrender of the Liberty Media Certificates for payment therefor.
              Upon surrender of Liberty Media Certificates for cancellation to
              the Exchange Agent, together with such letter of transmittal duly
              executed and any other required documents, the holder of such
              Liberty Media Certificates shall be entitled to receive for each
              of the Liberty Media Tracking Shares represented by such Liberty
              Media Certificates the appropriate Liberty Media Share
              Consideration and the Liberty Media Certificates so surrendered
              shall forthwith be canceled. Until so surrendered, Liberty Media
              Certificates shall represent solely the right to receive the
              appropriate Liberty Media Share Consideration and any cash in lieu
              of fractional Parent Liberty Tracking Shares as contemplated by
              Section 4.3 with respect to each of the Liberty Media Tracking
              Shares represented thereby. No dividends or other distributions
              that are declared on the Parent Liberty Tracking Shares and
              payable to the holders of record thereof after the Effective Time
              will be paid to Persons entitled by reason of the Merger to
              receive Parent Liberty Tracking Shares until such Persons
              surrender their Liberty Media Certificates. Upon such surrender,
              there shall be paid to the Person in whose name the Parent Liberty
              Tracking Shares are issued any dividends or other distributions
              having a record date after the Effective Time and payable with
              respect to such Parent Liberty Tracking Shares between the
              Effective Time and the time of such surrender. After such
              surrender, there shall be paid on the applicable payment date, to
              the Person in whose name the Parent Liberty Tracking Shares are
              issued, any dividends or other distributions on such Parent
              Liberty Tracking Shares, as applicable, which shall have a record
              date after the Effective Time and prior to such surrender and a
              payment date after such surrender. In no event shall the Persons
              entitled to receive such dividends or other distributions be
              entitled to receive interest on such dividends or other
              distributions.

                        (iii) Promptly after the Effective Time, the Exchange
              Agent shall mail to each holder of record, if any, of a
              certificate or certificates which immediately prior to the
              Effective Time represented outstanding TCI Ventures Tracking
              Shares (the "TCI Ventures Certificates") (1) a form of letter of
              transmittal (which shall specify that delivery shall be effected,
              and risk of loss and title to the TCI Ventures Certificates shall
              pass, only upon proper delivery of the TCI Ventures Certificates
              to the Exchange Agent) and (2) instructions for use in effecting
              the surrender of the TCI Ventures Certificates for payment
              therefor. Upon surrender of TCI Ventures Certificates for
              cancellation to the Exchange Agent, together with such letter of
              transmittal duly executed and any


                                       -23-

<PAGE>   29









              other required documents, the holder of such TCI Ventures
              Certificates shall be entitled to receive for each of the TCI
              Ventures Tracking Shares represented by such TCI Ventures
              Certificates the appropriate TCI Ventures Share Consideration and
              the TCI Ventures Certificates so surrendered shall forthwith be
              canceled. Until so surrendered, TCI Ventures Certificates shall
              represent solely the right to receive the appropriate TCI Ventures
              Share Consideration and any cash in lieu of fractional Parent
              Liberty Tracking Shares as contemplated by Section 4.3 with
              respect to each of the TCI Ventures Tracking Shares represented
              thereby. No dividends or other distributions that are declared on
              the Parent Liberty Tracking Shares and payable to the holders of
              record thereof after the Effective Time will be paid to Persons
              entitled by reason of the Merger to receive Parent Liberty
              Tracking Shares until such Persons surrender their TCI Ventures
              Certificates. Upon such surrender, there shall be paid to the
              Person in whose name the Parent Liberty Tracking Shares are issued
              any dividends or other distributions having a record date after
              the Effective Time and payable with respect to such Parent Liberty
              Tracking Shares between the Effective Time and the time of such
              surrender. After such surrender, there shall be paid on the
              applicable payment date, to the Person in whose name the Parent
              Liberty Tracking Shares are issued, any dividends or other
              distributions on such Parent Liberty Tracking Shares, as
              applicable, which shall have a record date after the Effective
              Time and prior to such surrender and a payment date after such
              surrender. In no event shall the Persons entitled to receive such
              dividends or other distributions be entitled to receive interest
              on such dividends or other distributions.

                        (iv) If any cash or any certificate representing Parent
              Common Shares or Parent Liberty Tracking Shares is to be paid to
              or issued in a name other than that in which the Certificate
              surrendered in exchange therefor is registered, it shall be a
              condition of such exchange that the Certificate so surrendered
              shall be properly endorsed and otherwise in proper form for
              transfer and that the Person requesting such exchange shall pay to
              the Exchange Agent any transfer or other taxes required by reason
              of the issuance of certificates for such Parent Common Shares or
              Parent Liberty Tracking Shares, as applicable, in a name other
              than that of the registered holder of the Certificate surrendered,
              or shall establish to the reasonable satisfaction of the Exchange
              Agent that such tax has been paid or is not applicable.
              Notwithstanding the foregoing, neither the Exchange Agent nor any
              party hereto shall be liable to a holder of Shares for any Parent
              Common Shares or Parent Liberty Tracking Shares, as applicable, or
              dividends thereon or other distributions with respect thereto


                                       -24-

<PAGE>   30









              or, in accordance with Section 4.3, proceeds of the sale of
              fractional interests, delivered to a public official pursuant to
              applicable escheat law. The Exchange Agent shall not be entitled
              to vote or exercise any rights of ownership with respect to the
              Parent Common Shares or Parent Liberty Tracking Shares held by it
              from time to time hereunder, except that, subject to applicable
              escheat law, it shall receive and hold all dividends or other
              distributions paid or distributed with respect to such Parent
              Common Shares or Parent Liberty Tracking Shares, as applicable,
              for the account of the Persons entitled thereto.

                   (c) Certificates surrendered for exchange by any Person
              constituting a Rule 145 Affiliate of the Company shall not be
              exchanged for certificates representing Parent Common Shares or
              Parent Liberty Tracking Shares, as applicable, until Parent has
              received a written agreement from such Person as provided in
              Section 7.9.

                   (d) Any portion of the applicable Exchange Fund and the
              applicable Fractional Fund (and any dividends or other
              distributions with respect to such portion of the applicable
              Exchange Fund) which remains unclaimed by the former stockholders
              of the Company for one year after the Effective Time shall be
              delivered to Parent, upon demand of Parent, and any former
              stockholders of the Company shall thereafter look only to Parent
              for payment of their claim for the applicable Share Consideration
              (and any such dividends or other distributions) or for any cash in
              lieu of fractional Parent Common Shares or Parent Liberty Tracking
              Shares, as applicable.

                   (e) In the event that any Certificate has 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
              and, if required by the Surviving Corporation, the posting by such
              Person of a bond in such reasonable amount as Parent may direct as
              indemnity against any claim that may be made against it with
              respect to such Certificate, Parent will, in exchange for such
              lost, stolen or destroyed Certificate, issue or cause to be issued
              the number of Parent Common Shares or Parent Liberty Tracking
              Shares, as applicable, and pay or cause to be paid any amounts
              deliverable in respect thereof pursuant to this Article IV.

                   4.3. Fractional Shares. (a) No fractional Parent Common
         Shares shall be issued in the Merger. In lieu of any such fractional
         securities, each holder of TCI Group Shares who would otherwise have
         been entitled to a fraction of a Parent Common Share upon surrender of
         TCI Group Certificates for exchange pursuant to this Article IV will be
         paid an amount in cash (without interest) equal to such holder's
         proportionate


                                       -25-

<PAGE>   31









         interest in the net proceeds from the sale or sales in the open market
         by the Exchange Agent, on behalf of all such holders, of the aggregate
         fractional Parent Common Shares issued pursuant to this Article IV. As
         soon as practicable following the Effective Time, the Exchange Agent
         shall determine the excess of (i) the number of full Parent Common
         Shares delivered to the Exchange Agent by Parent over (ii) the
         aggregate number of full Parent Common Shares to be distributed to
         holders of TCI Group Shares (such excess being herein called the
         "Excess Parent Common Shares"). The Exchange Agent, as agent for the
         former holders of TCI Group Shares, shall sell the Excess Parent Common
         Shares at the prevailing prices on the NYSE. The sales of the Excess
         Parent Common Shares by the Exchange Agent shall be executed on the
         NYSE through one or more member firms of the NYSE and shall be executed
         in round lots to the extent practicable. Parent shall pay all
         commissions, transfer taxes and other out-of-pocket transaction costs,
         including the expenses and compensation of the Exchange Agent, incurred
         in connection with such sale of Excess Parent Common Shares. Until the
         net proceeds of such sale have been distributed to the former holders
         of TCI Group Shares, the Exchange Agent will hold such proceeds in
         trust for such former holders (the "Fractional Parent Common Fund"). As
         soon as practicable after the determination of the amount of cash to be
         paid to former holders of TCI Group Shares in lieu of any fractional
         interests, the Exchange Agent shall make available in accordance with
         this Agreement such amounts to such former holders.

                   (b) No fractional Parent Liberty Tracking Shares shall be
         issued in the Merger to any former holder of Liberty Media Tracking
         Shares. In lieu of any such fractional securities, each holder of
         Liberty Media Tracking Shares who would otherwise have been entitled to
         a fraction of a Parent Liberty Tracking Share upon surrender of Liberty
         Media Certificates for exchange pursuant to this Article IV will be
         paid an amount in cash (without interest) equal to such holder's
         proportionate interest in the net proceeds from the sale or sales in
         the open market by the Exchange Agent, on behalf of all such holders,
         of the aggregate fractional Parent Liberty Tracking Shares attributable
         to the Liberty Media Tracking Shares and issued pursuant to this
         Article IV. As soon as practicable following the Effective Time, the
         Exchange Agent shall determine the excess of (i) the number of full
         Parent Liberty Tracking Shares delivered to the Exchange Agent by
         Parent over (ii) the aggregate number of full Parent Liberty Tracking
         Shares to be distributed to holders of Liberty Media Tracking Shares
         (such excess being herein called the "Excess Parent Liberty Tracking
         (Liberty) Shares"). The Exchange Agent, as agent for the former holders
         of Liberty Media Tracking Shares, shall sell the Excess Parent Liberty
         Tracking (Liberty) Shares at the prevailing prices on the NYSE (or on
         such other exchange or trading system on which the Parent Liberty
         Tracking Shares are authorized). The sales of the Excess Parent Liberty
         Tracking (Liberty) Shares by the


                                       -26-

<PAGE>   32









         Exchange Agent shall be executed in such manner as determined
         reasonably by the Exchange Agent. Parent shall pay all commissions,
         transfer taxes and other out-of-pocket transaction costs, including the
         expenses and compensation of the Exchange Agent, incurred in connection
         with such sale of Excess Parent Liberty Tracking (Liberty) Shares.
         Until the net proceeds of such sale have been distributed to the former
         holders of Liberty Media Tracking Shares, the Exchange Agent will hold
         such proceeds in trust for such former holders (the "Fractional Parent
         Liberty Tracking (Liberty) Fund"). As soon as practicable after the
         determination of the amount of cash to be paid to former holders of
         Liberty Media Tracking Shares in lieu of any fractional interests, the
         Exchange Agent shall make available in accordance with this Agreement
         such amounts to such former holders.

                   (c) If applicable, no fractional Parent Liberty Tracking
         Shares shall be issued in the Merger to any former holder of TCI
         Ventures Tracking Shares. In lieu of any such fractional securities,
         each holder of TCI Ventures Tracking Shares who would otherwise have
         been entitled to a fraction of a Parent Liberty Tracking Share upon
         surrender of TCI Ventures Certificates for exchange pursuant to this
         Article IV will be paid an amount in cash (without interest) equal to
         such holder's proportionate interest in the net proceeds from the sale
         or sales in the open market by the Exchange Agent, on behalf of all
         such holders, of the aggregate fractional Parent Liberty Tracking
         Shares attributable to the TCI Ventures Tracking Shares and issued
         pursuant to this Article IV. As soon as practicable following the
         Effective Time, the Exchange Agent shall determine the excess of (i)
         the number of full Parent Liberty Tracking Shares delivered to the
         Exchange Agent by Parent over (ii) the aggregate number of full Parent
         Liberty Tracking Shares to be distributed to holders of TCI Ventures
         Tracking Shares (such excess being herein called the "Excess Parent
         Liberty Tracking (Ventures) Shares"). The Exchange Agent, as agent for
         the former holders of TCI Ventures Tracking Shares, shall sell the
         Excess Parent Liberty Tracking (Ventures) Shares at the prevailing
         prices on the NYSE (or on such other exchange or trading system on
         which the Parent Liberty Tracking Shares are authorized). The sales of
         the Excess Parent Liberty Tracking (Ventures) Shares by the Exchange
         Agent shall be executed in such manner as determined reasonable by the
         Exchange Agent. Parent shall pay all commissions, transfer taxes and
         other out-of-pocket transaction costs, including the expenses and
         compensation of the Exchange Agent, incurred in connection with such
         sale of Excess Parent Liberty Tracking (Ventures) Shares. Until the net
         proceeds of such sale have been distributed to the former holders of
         TCI Ventures Tracking Shares, the Exchange Agent will hold such
         proceeds in trust for such former holders (the "Fractional Parent
         Liberty Tracking (Ventures) Fund"). As soon as practicable after the
         determination of the amount of cash to be paid to former holders of TCI


                                       -27-

<PAGE>   33









         Ventures Tracking Shares in lieu of any fractional interests, the
         Exchange Agent shall make available in accordance with this Agreement
         such amounts to such former holders.

                   4.4. Transfer of Shares after the Effective Time. No
         transfers of Shares shall be made on the stock transfer books of the
         Company after the close of business on the day prior to the date of the
         Effective Time.

                   4.5. Treatment of Series F Preferred Stock. Prior to the
         Effective Time, the Company shall take all action necessary either (a)
         to cause each share of Series F Preferred Stock beneficially owned by
         it or any of its Subsidiaries to be converted into 1,496.65 shares of
         TCI Group Class A Stock in accordance with the terms of the Company
         Charter, or (b) to redeem all shares of Series F Preferred Stock in
         exchange for an aggregate of 416,528,172 shares of TCI Group Class A
         Stock, plus any additional shares of TCI Group Class A Stock issuable
         in accordance with the Company Charter as a result of the accrual of
         dividends thereon after the date hereof.

                   4.6. Company Series Preferred Stock. After the Effective
         Time, Parent and the Surviving Corporation shall establish reasonable
         procedures to facilitate the exchange of the Company Series Preferred
         Stock for Parent Common Shares or Parent Liberty Tracking Shares as
         contemplated by Sections 4.1(g) through (l). All shares of Company
         Series Preferred Stock converted into the right to receive Parent
         Common Shares or Parent Liberty Tracking Shares pursuant to Section 4.1
         shall cease to be outstanding, shall be canceled and retired and shall
         cease to exist, and each holder of a certificate representing any such
         shares of Company Series Preferred Stock shall thereafter cease to have
         any rights with respect to such shares of Company Series Preferred
         Stock, except the right to receive therefor, upon the surrender of such
         certificate in accordance with such procedures, the Parent Common
         Shares or Parent Liberty Tracking Shares specified therein and cash in
         lieu of any fractional shares as reasonably determined by the Surviving
         Corporation.


                                    ARTICLE V

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                   The Company hereby represents and warrants to Parent and
         Merger Sub that, except as set forth in the Company Disclosure
         Statement:

                   5.1. Organization, Etc. of the Company. The Company is a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of Delaware and has all




                                       -28-

<PAGE>   34









         requisite corporate power and authority to own, lease and operate its
         properties and to carry on its business as now conducted and proposed
         by the Company to be conducted. The Company is duly qualified and in
         good standing 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 necessary and where the failure to be so qualified
         or in good standing has or would have, individually or in the
         aggregate, a Material Adverse Effect on the Company or on the TCI
         Group.

                   5.2. Subsidiaries. Section 5.2 of the Company Disclosure
         Statement contains a complete and accurate list of all of the
         Subsidiaries of the Company (by Group) as of the date hereof. Each
         Subsidiary of the Company (a) is a corporation or other legal entity
         duly organized, validly existing and (if applicable) in good standing
         under the laws of the jurisdiction of its organization and has all
         requisite corporate, partnership or similar power and authority to own
         its properties and conduct its business and operations as currently
         conducted, except where the failure to be duly organized, validly
         existing and in good standing or to have such power and authority does
         not and would not have, individually or in the aggregate, a Material
         Adverse Effect on the Company or on the TCI Group, and (b) is duly
         qualified and in good standing 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 necessary, except where the
         failure to be so qualified or in good standing does not and would not
         have, individually or in the aggregate, a Material Adverse Effect on
         the Company or on the TCI Group.

                   5.3. Agreement. The Company has all necessary corporate power
         and authority to execute and deliver this Agreement, to perform its
         obligations hereunder and to consummate the transactions contemplated
         hereby. This Agreement and the consummation of the transactions
         contemplated hereby have been approved by the Board of Directors of the
         Company and have been duly authorized by all other necessary corporate
         action on the part of the Company, except for the approval of the
         Company's stockholders contemplated by Section 7.3. This Agreement has
         been duly executed and delivered by a duly authorized officer of the
         Company and (assuming the due execution and delivery of this Agreement
         by the other parties hereto) constitutes a valid and binding agreement
         of the Company, enforceable against the Company in accordance with its
         terms. The Board of Directors of the Company has approved the
         transactions contemplated by this Agreement and the Voting Agreement,
         including the Merger, so as to render the provisions of Section 203 of
         the DGCL inapplicable to the transactions contemplated by this
         Agreement and to Parent and Merger Sub in connection with this
         Agreement and the Voting Agreement. The Board of Directors of the
         Company



                                       -29-

<PAGE>   35









         has directed that this Agreement be submitted to the stockholders of
         the Company for their approval. The affirmative approval, by vote or
         written consent, of the holders of Shares representing a majority of
         the votes that may be cast by the holders of all outstanding Shares
         (voting as a single class) is the only vote of the holders of any class
         or series of capital stock of the Company necessary to adopt this
         Agreement and approve the Merger.

                   5.4. Permits; Compliance. Each of the Company and its
         Subsidiaries is in possession of all Permits from appropriate
         Governmental Bodies (including the FCC) necessary for the Company or
         any of its Subsidiaries to own, lease and operate its properties or to
         carry on their respective businesses as they are now being conducted
         (the "Company Permits"), and all such Company Permits are valid, and in
         full force and effect, except where the failure to have, or the
         suspension or cancellation of, any of the Company Permits does not and
         would not, individually or in the aggregate, (a) have a Material
         Adverse Effect on the Company or on the TCI Group or (b) prevent or
         materially delay the consummation of the Merger. No suspension or
         cancellation of any of the Company Permits is pending or, to the
         knowledge of the Company, threatened, except where the failure to have,
         or the suspension or cancellation of, any of the Company Permits does
         not and would not, individually or in the aggregate, (x) have a
         Material Adverse Effect on the Company or on the TCI Group or (y)
         prevent or materially delay the consummation of the Merger. Neither the
         Company nor any of its Subsidiaries is in conflict with, or in default
         or violation of, (i) any Law applicable to the Company or any of its
         Subsidiaries or by which any property, asset or operation of the
         Company or any of its Subsidiaries is bound or affected or (ii) any
         Company Permits, except for such conflicts, defaults or violations that
         do not and would not, individually or in the aggregate, (A) have a
         Material Adverse Effect on the Company or on the TCI Group or (B)
         prevent or materially delay the consummation of the Merger.

                   5.5. Opinion of the Company's Financial Advisor. The Board of
         Directors of the Company has received the opinion, dated as of the date
         hereof, of Donaldson, Lufkin & Jenrette Securities Corporation to the
         effect that the Exchange Ratios are fair to the stockholders of the
         Company from a financial point of view.

                   5.6. Capital Stock. (a) The authorized capital stock of the
         Company consists of 3,602,375,096 shares, consisting of 3,550,000,000
         shares of common stock, par value $1.00 per share ("Company Common
         Stock"), and 52,375,096 shares of preferred stock, par value $.01 per
         share ("Company Preferred Stock").




                                       -30-

<PAGE>   36









                   (b) The authorized Company Common Stock consists of (1)
         1,750,000,000 shares of TCI Group Class A Stock, (2) 150,000,000 shares
         of TCI Group Class B Stock, (3) 750,000,000 shares of Liberty Media
         Class A Stock, (4) 75,000,000 shares of Liberty Media Class B Stock,
         (5) 750,000,000 shares of TCI Ventures Class A Stock, and (6)
         75,000,000 shares of TCI Ventures Class B Stock. As of the close of
         business on April 30, 1998, there were issued and outstanding (net of
         shares held in treasury and shares held by Subsidiaries all of the
         common stock of which is beneficially owned by the Company):
         472,207,363 shares of TCI Group Class A Stock, 50,126,345 shares of TCI
         Group Class B Stock, 326,076,668 shares of Liberty Media Class A Stock,
         31,745,757 shares of Liberty Media Class B Stock, 377,114,654 shares of
         TCI Ventures Class A Stock and 45,367,134 shares of TCI Ventures Class
         B Stock. As of the close of business on April 30, 1998, there were held
         in the treasury of the Company (including shares held by Subsidiaries):
         137,008,021 shares of TCI Group Class A Stock, 23,954,972 shares of TCI
         Group Class B Stock, 31,780,822 shares of Liberty Media Class A Stock,
         3,499,261 shares of Liberty Media Class B Stock, 61,450 shares of TCI
         Ventures Class A Stock and 432,196 shares of TCI Ventures Class B
         Stock. Except for one share of TCI Group Class A Stock owned by a
         Liberty Media Member, there are no TCI Group Shares, shares of Company
         Class B Junior Preferred Stock, Series C-TCI Group Preferred Stock,
         Series F Preferred Stock, Series G Preferred Stock or any other
         securities convertible into or exchangeable or exercisable for TCI
         Group Shares held by any Liberty Media Member or TCI Ventures Member.

                   (c) The Company Preferred Stock consists of (1) 700,000
         shares of Class A Preferred Stock ("Company Class A Preferred Stock"),
         (2) 1,675,096 shares of Class B 6% Cumulative Redeemable Exchangeable
         Junior Preferred Stock ("Company Class B Junior Preferred Stock"), and
         (3) 50,000,000 shares of Series Preferred Stock ("Company Series
         Preferred Stock"). Of the Company Series Preferred Stock, 80,000 shares
         have been designated Convertible Preferred Stock, Series C ("Series C
         Preferred Stock"), 70,575 shares have been designated Convertible
         Preferred Stock, Series C-TCI Group ("Series C-TCI Group Preferred
         Stock"), 70,575 shares have been designated Convertible Preferred
         Stock, Series C-Liberty Media ("Series C-Liberty Media Preferred
         Stock"), 1,000,000 shares have been designated Convertible Preferred
         Stock, Series D ("Series D Preferred Stock"), 400,000 shares have been
         designated Redeemable Convertible Preferred Stock, Series E ("Series E
         Preferred Stock"), 500,000 shares have been designated Convertible
         Redeemable Participating Preferred Stock, Series F ("Series F Preferred
         Stock"), 7,259,380 shares have been designated Redeemable Convertible
         TCI Group Preferred Stock, Series G ("Series G Preferred Stock"), and
         7,259,380 shares have been designated Redeemable Convertible Liberty
         Media Group Common Stock, Series H ("Series H Preferred Stock"). As of
         the close


                                       -31-

<PAGE>   37









         of business on April 30, 1998, there were issued and outstanding no
         shares of Company Class A Preferred Stock, 1,552,490 shares of Company
         Class B Junior Preferred Stock, no shares of Series C Preferred Stock,
         53,120 shares of Series C- TCI Group Preferred Stock, 70,575 shares of
         Series C-Liberty Media Preferred Stock, no shares of Series D Preferred
         Stock, no shares of Series E Preferred Stock, 278,307 shares of Series
         F Preferred Stock, 6,547,294 shares of Series G Preferred Stock and
         6,567,794 shares of Series H Preferred Stock.

                   (d) All outstanding shares of Company Common Stock and
         Company Preferred Stock are duly authorized, validly issued, fully paid
         and nonassessable, and no class of capital stock of the Company is
         entitled to preemptive rights.

                   (e) As of March 31, 1998, there were no options, warrants or
         other rights to acquire capital stock (or securities convertible into
         or exercisable or exchangeable for capital stock) from the Company,
         other than (i) the right of the holders of (A) TCI Group Class B Stock
         to convert shares of TCI Group Class B Stock into TCI Group Class A
         Stock, (B) Liberty Media Class B Stock to convert shares of Liberty
         Media Class B Stock into Liberty Media Class A Stock, and (C) TCI
         Ventures Class B Stock to convert shares of TCI Group Class B Stock
         into TCI Group Class A Stock, in each case, pursuant to the Company
         Charter, (ii) options or other rights outstanding as of the close of
         business on March 31, 1998 representing in the aggregate the right to
         purchase or otherwise acquire up to 15,256,188 shares of TCI Group
         Class A Stock, 14,511,570 shares of TCI Group Class B Stock, 11,986,412
         shares of Liberty Media Class A Stock, no shares of Liberty Media Class
         B Stock, 13,700,856 shares of TCI Ventures Class A Stock, and 2,800,000
         shares of TCI Ventures Class B Stock, pursuant to Employee Plans or
         Benefit Arrangements or otherwise, (iii) 24,163,259 shares of TCI Group
         Class A Stock, 19,416,910 shares of Liberty Media Class A Stock, and
         20,711,373 shares of TCI Ventures Class A Stock issuable upon exchange
         of the TCI UA, Inc. Convertible Notes due December 12, 2021 (the "UA
         Note"), and (iv)(A) 7,057,523 shares of TCI Group Class A Stock
         issuable upon conversion of the Series C-TCI Group Preferred Stock, at
         a conversion rate equal to the Series C-TCI Group Preferred Conversion
         Rate, (B) 3,969,844 shares of Liberty Media Class A Stock issuable upon
         conversion of the Series C-Liberty Media Preferred Stock, at a
         conversion rate equal to the Series C- Liberty Media Conversion Rate,
         (C) 60,210 shares of TCI Group Class A Stock and 33,868 shares of
         Liberty Media Class A Stock issuable upon conversion of the Series D
         Preferred Stock, (D) 7,791,280 shares of TCI Group Class A Stock
         issuable upon conversion of the Series G Preferred Stock, at a
         conversion rate equal to the Series G Conversion Rate, (E) 3,879,103
         shares of Liberty Media Class A Stock issuable upon conversion of the
         Series H Preferred Stock, at a conversion rate equal to the Series H
         Conversion Rate, (F) 9,747,400 shares of TCI Group


                                       -32-

<PAGE>   38









         Class A Stock issuable upon exchange of the shares of Series A
         Preferred Stock, par value $.01 per share, of TCI Communications, Inc.,
         (G) 34,087,114 shares of TCI Group Class A Stock issuable upon exchange
         of the shares of Class A Senior Cumulative Exchangeable Preferred
         Stock, par value $100 per share, of TCI Pacific Communications, Inc.,
         and (H) 1,084,056 shares of TCI Group Class A Stock issuable upon
         exchange of the Exchangeable Preferred Stock, Series A, par value $.01
         per share, of ETC NSCI Holdings, Inc. Upon consummation of the Merger,
         none of such options or convertible securities will be exercisable for
         or convertible into any shares of capital stock of the Company, but
         instead, will either be exchanged in the Merger or be adjusted to be
         exercisable for or convertible into Parent Common Shares or Parent
         Liberty Tracking Shares (and, if applicable, will continue to be
         exercisable for or convertible into TSATA shares) in accordance with
         the terms of this Agreement and of such securities.

                   (f) Since March 31, 1998 until the execution of this
         Agreement, the Company has not issued any capital stock or any options,
         warrants or other rights to acquire capital stock (or securities
         convertible into or exercisable or exchangeable for capital stock)
         other than (i) the issuance of shares of Company Common Stock pursuant
         to options referred to in clause (ii) of the foregoing paragraph (e)
         that were outstanding as of March 31, 1998 or that were issued
         subsequently as set forth in clause (ii) of this paragraph (f), and
         (ii) the award of options to purchase or restricted shares under
         Employee Plans and Benefits Arrangements with respect to an aggregate
         of not more than 1,350,000 shares of TCI Group Class A Stock (and
         grants of options and awards with respect to Liberty Media Class A
         Stock or TCI Ventures Class A Stock). Except as disclosed in Section
         5.6 of the Company Disclosure Statement, all outstanding shares of
         capital stock of, or other equity or voting interest in, the
         Significant Subsidiaries of the Company are owned by the Company or a
         direct or indirect Wholly Owned Subsidiary of the Company, free and
         clear of all liens, charges, encumbrances, claims and options of any
         nature and no Person has any right to acquire any shares of capital
         stock of, or other equity or voting interest in, any Subsidiary of the
         Company.

                   (g) As of March 31, 1998 and the date hereof, the following
         were all zero: Number of Shares Issuable with Respect to the Italy
         Programming Group Inter-Group Interest, the Number of Shares Issuable
         with Respect to the Italy Ventures Inter-Group Interest, the Committed
         Acquisition Shares and the Italy Ventures Preferred Interest.

                   5.7.  Litigation.  Except as disclosed in the Company
         SEC Reports filed prior to the date hereof, there are, as of
         the date hereof, no actions, suits, investigations or
         proceedings (adjudicatory, rulemaking or otherwise) pending or,


                                       -33-

<PAGE>   39









         to the knowledge of the Company, threatened against the Company or any
         of its Subsidiaries (or any Employee Plan or Benefit Arrangement), or
         any property of the Company or any such Subsidiary (including
         Intellectual Property), before any arbitrator of any kind or in or
         before or by any Governmental Body, except actions, suits,
         investigations or proceedings which, individually or in the aggregate,
         would not, if adversely determined, (a) have a Material Adverse Effect
         on the Company or on the TCI Group or (b) prevent or materially delay
         the consummation of the Merger.

                   5.8. Compliance with Other Instruments, Etc. Neither the
         Company nor any Subsidiary of the Company is in violation of any term
         of (a) its charter, by-laws or other organizational documents, or (b)
         any agreement or instrument related to indebtedness for borrowed money
         or any other agreement to which it is a party or by which it is bound,
         the consequences of which violation, whether individually or in the
         aggregate, do or would (i) have a Material Adverse Effect on the
         Company or on the TCI Group or (ii) prevent or materially delay the
         consummation of the Merger. Assuming the approval of the Company's
         stockholders as contemplated by Section 7.3, the execution, delivery
         and performance of this Agreement and the consummation of the
         transactions contemplated hereby will not result in any violation of or
         conflict with, or constitute a default under, the charter, bylaws or
         other organizational documents of the Company (or any of its
         Subsidiaries). Except as set forth in Section 5.8 of the Company
         Disclosure Statement, the execution, delivery and performance of this
         Agreement and the consummation of the transactions contemplated hereby
         will not result in any violation of or conflict with, constitute a
         default under, require any consent, waiver or notice under any term of,
         or result in the reduction or loss of any benefit or the creation or
         acceleration of any right or obligation under, any agreement, note,
         bond, mortgage, indenture, contract, lease, Permit or other obligation
         or right (excluding options, restricted stock, employment contracts and
         other employee related obligations or rights which are addressed in
         Section 5.9(f)) to which the Company or any of its Subsidiaries is a
         party or by which any of the assets or properties of the Company or any
         of its Subsidiaries is bound, or any instrument or Law, or result in
         the creation of (or impose any obligation on the Company or any of its
         Subsidiaries to create) any mortgage, lien, charge, security interest
         or other encumbrance upon any of the properties or assets of the
         Company or any of its Subsidiaries pursuant to any such term, except
         where any of the foregoing, individually or in the aggregate, does not
         and would not (i) have a Material Adverse Effect on the Company or on
         the TCI Group or (ii) prevent or materially delay the consummation of
         the Merger.

                   5.9.  Employee Benefit Plans.  (a)  The Company Dis-
         closure Statement sets forth as of the date hereof a true and


                                       -34-

<PAGE>   40









         complete list of each material "employee benefit plan" (as defined in
         Section 3(3) of ERISA) of the Company and its Subsidiaries in which
         current or former employees, agents, directors, or independent
         contractors of the Company or its Subsidiaries ("Employees")
         participate or pursuant to which the Company or any of its Subsidiaries
         may have a liability with respect to Employees (each, an "Employee
         Plan"), and each other material plan, program, policy, contract or
         arrangement of the Company and its Subsidiaries providing for bonuses,
         pensions, deferred pay, stock or stock related awards, severance pay,
         salary continuation or similar benefits, hospitalization, medical,
         dental or disability benefits, life insurance or other employee
         benefits, or compensation to or for any Employees or any beneficiaries
         or dependents of any Employees (other than directors' and officers'
         liability policies), whether or not insured or funded (each, a "Benefit
         Arrangement"). Except as disclosed on the Company Disclosure Statement,
         neither the Company nor any of its Subsidiaries has any commitment to
         establish any material additional Employee Plans or Benefit
         Arrangements or to modify or change materially any existing Employee
         Plan or Benefit Arrangement. The Company has made available to Parent
         with respect to each Employee Plan and Benefit Arrangement: (i) a true
         and complete copy of all written documents comprising such Employee
         Plan or Benefit Arrangement (including amendments and individual
         agreements relating thereto) or, if there is no such written document,
         an accurate and complete description of such Employee Plan or Benefit
         Arrangement; (ii) the most recent Form 5500 or Form 5500-C (including
         all schedules thereto), if applicable; (iii) the most recent financial
         statements and actuarial reports, if any; (iv) the summary plan
         description currently in effect and all material modifications thereof,
         if any; and (v) the most recent Internal Revenue Service determination
         letter, if any. For purposes of the Company Disclosure Statement and
         for making available documents with respect to Employee Plans and
         Benefit Arrangements, but not for purposes of the remainder of this
         Section 5.9, Employee Plans and Benefit Arrangements shall be limited
         to Employee Plans and Benefit Arrangements of the Company and its ERISA
         Affiliates.

                   (b) Each Employee Plan and Benefit Arrangement has been
         established and maintained in accordance with its terms and in
         compliance with all applicable Laws, including ERISA and the Code (and
         the prohibited transaction provisions of ERISA and the Code), and all
         contributions required to be made to the Employee Plans and Benefit
         Arrangements have been made in a timely fashion, except where such
         failure to establish, maintain or comply, or to make such
         contributions, individually or in the aggregate, does not and would not
         have a Material Adverse Effect on the Company or on the TCI Group. Each
         Employee Plan that is intended to be qualified under Section 401(a) of
         the Code has received a favorable determination letter or is subject to
         a favorable notification letter from the Internal


                                       -35-

<PAGE>   41









         Revenue Service, and, to the knowledge of the Company, no event has
         occurred which results or would result in a revocation of such letter.

                   (c) Except as set forth in Section 5.9 of the Company
         Disclosure Statement, no Employee Plan is subject to Title IV of ERISA.

                   (d) Except as set forth in Section 5.9 of the Company
         Disclosure Statement, no Employee Plan is a "multiemployer plan" (as
         defined in Section 3(37) of ERISA) or a "multiple employer plan"
         described in Section 4063(a) of ERISA, and the Company has not at any
         time in the past five years, contributed to or been obligated to
         contribute to such a multiemployer plan or multiple employer plan.

                   (e) Neither the Company nor any ERISA Affiliate has any
         Controlled Group Liability, nor do any circumstances exist that could
         result in any of them having any Controlled Group Liability, which
         would have a Material Adverse Effect on the Company or on the TCI
         Group. "Controlled Group Liability" means any and all liabilities under
         (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412
         and 4971 of the Code, or (iv) the continuation coverage requirements of
         Sections 601 et seq. of ERISA and section 4980B of the Code.

                   (f) Except as set forth in Section 5.9 of the Company
         Disclosure Statement, none of the execution or delivery of this
         Agreement, the Voting Agreement, stockholder approval of the Merger by
         the stockholders of the Company at the Company Stockholders Meeting or
         otherwise, or the consummation of the transactions contemplated hereby
         or thereby (either alone or together with any additional or subsequent
         events), constitutes an event under any Employee Plan, Benefit
         Arrangement, loan to, or individual agreement or contract with, an
         Employee that may result in any material payment (whether of severance
         pay or otherwise), restriction or limitation upon the assets of any
         Employee Plan or Benefit Agreement, acceleration of payment or vesting,
         increase in benefits or compensation, or required funding, with respect
         to any Employee, or the forgiveness of any loan or other commitment of
         any Employees.

                   (g) There are no actions, suits, arbitrations, inquiries,
         investigations or other proceedings (other than routine claims for
         benefits) pending or, to the Company's knowledge, threatened, with
         respect to any Employee Plan or Benefit Arrangement, except for any of
         the foregoing that do not and would not have, individually or in the
         aggregate, a Material Adverse Effect on the Company or on the TCI
         Group.

                   (h) Except as disclosed on the Company Disclosure Statement,
         no material amounts paid or payable by the Company or any ERISA
         Affiliate to or with respect to any Employee


                                       -36-

<PAGE>   42









         (including any such amounts that may be payable as a result of the
         execution and delivery of this Agreement or the Voting Agreement or the
         consummation of the transactions contemplated hereby or thereby) will
         fail to be deductible for United States federal income tax purposes by
         reason of Section 280G of the Code.

                   (i) Except as set forth in Section 5.9 of the Company
         Disclosure Statement, no Employees and no beneficiaries or dependents
         of Employees are entitled under any Employee Plan or Benefit
         Arrangement to post-employment welfare benefits of any kind, including
         death or medical benefits, other than coverage mandated by Section
         4980B of the Code.

                   (j) Except as set forth in Section 5.9 of the Company
         Disclosure Statement, there are no agreements with, or pending
         petitions for recognition of, a labor union or association as the
         exclusive bargaining agent for any of the employees of the Company or
         any of its Subsidiaries; no such petitions have been pending at any
         time within two years of the date of this Agreement and, to the
         knowledge of the Company, there has not been any organizing effort by
         any union or other group seeking to represent any employees of the
         Company or any of its Subsidiaries as their exclusive bargaining agent
         at any time within two years of the date of this Agreement. There are
         no labor strikes, work stoppages or other labor troubles, other than
         routine grievance matters, now pending, or, to the Company's knowledge,
         threatened, against the Company or any of its Subsidiaries which have
         or would have, individually or in the aggregate, a Material Adverse
         Effect on the Company or on the TCI Group, and there have not been any
         such labor strikes, work stoppages or other labor troubles, other than
         routine grievance matters, with respect to the Company or any of its
         Subsidiaries at any time within two years of the date of this
         Agreement.

                   5.10. Taxes. (a) The Company and its Subsidiaries have filed
         all income Tax Returns and all material other United States federal,
         state, county, local and foreign Tax Returns required to be filed by
         them. The Company and its Subsidiaries have paid all material Taxes
         due, other than Taxes appropriate reserves for which have been made in
         the Company's financial statements (and, to the extent material, such
         reserves have been accurately described in the Company SEC Reports).
         There are no material assessments or adjustments that have been
         asserted in writing against the Company or its Subsidiaries for any
         period for which the Company has not made appropriate reserves in the
         Company's financial statements included in the Company SEC Reports.

                   (b) There are no material claims or assessments pending
         against the Company or any of its Subsidiaries for any alleged
         deficiency in any Tax, and the Company has not been


                                       -37-

<PAGE>   43









         notified in writing of any proposed material Tax claims or assessments
         against the Company or any of its Subsidiaries (other than, in each
         case, claims or assessments for which adequate reserves in the Company
         financial statements have been established or which are being contested
         in good faith or are immaterial in amount). Except as set forth in
         Section 5.10(b) of the Company Disclosure Statement and subject to the
         qualifications set forth therein, there are no material "deferred
         intercompany transactions" or "intercompany transactions" the gain or
         loss in which has not yet been taken into account under the
         consolidated return Treasury Regulations currently or previously in
         effect.

                   (c) There are no liens for Taxes on the assets of the Company
         or any of its Subsidiaries, except for statutory liens for current
         Taxes not yet due and payable (and except for liens which do not and
         would not, individually or in the aggregate, have a Material Adverse
         Effect on the Company or on the TCI Group).

                   (d) For purposes of this Agreement, the term "Tax" means any
         United States federal, state, county or local, or foreign or provincial
         income, gross receipts, property, sales, use, license, excise,
         franchise, employment, payroll, value added, alternative or added
         minimum, ad valorem or transfer tax, or any other tax, custom, duty or
         governmental fee or other like assessment or charge of any kind
         whatsoever, together with any interest or penalty imposed by any
         Governmental Body. The term "Tax Return" means a report, return or
         other information (including any attached schedules or any amendments
         to such report, return or other information) required to be supplied to
         or filed with a Governmental Body with respect to any Tax, including an
         information return, claim for refund, amended return or declaration or
         estimated Tax.

                   5.11. Intellectual Property. The Company and its Subsidiaries
         own, have the defensible right to use, or are indemnified for or
         otherwise protected from any material risk for using, the Intellectual
         Property used in their respective businesses, except where the failure
         to own, have the right to use or be indemnified for or protected from
         any material risk of using such Intellectual Property, individually or
         in the aggregate, does not and would not have a Material Adverse Effect
         on the Company or on the TCI Group.

                   5.12. Reports and Financial Statements. (a) The Company has
         filed all Reports on Form 10-K, Form 10-Q and Form 8-K, registration
         statements and proxy statements required to be filed with the SEC since
         January 1, 1996 (collectively, the "Company SEC Reports"). The Company
         has previously furnished or made available to Parent true and complete
         copies of all the Company SEC Reports filed prior to the date hereof.
         None of



                                       -38-

<PAGE>   44









         the Company SEC Reports, as of their respective dates, contained any
         untrue statement of 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. Each of the consolidated balance sheets (including the
         related notes) included in the Company SEC Reports presents fairly, in
         all material respects, the consolidated financial position of the
         Company and its Subsidiaries as of the respective dates thereof, and
         the other related statements (including the related notes) included in
         the Company SEC Reports present fairly, in all material respects, the
         results of operations and the changes in financial position of the
         Company and its Subsidiaries for the respective periods or as of the
         respective dates set forth therein, all in conformity with generally
         accepted accounting principles consistently applied during the periods
         involved, except as otherwise noted therein and subject, in the case of
         the unaudited interim financial statements, to normal year-end
         adjustments. All of the Company SEC Reports, as of their respective
         dates, complied as to form in all material respects with the
         requirements of the Exchange Act, the Securities Act and the applicable
         rules and regulations thereunder.

                   (b) The Company and its Subsidiaries have not made any
         misstatements of fact, or omitted to disclose any fact, to any
         Governmental Body, or taken or failed to take any action, which
         misstatements or omissions, actions or failures to act, individually or
         in the aggregate, subject or would subject any Company Permits referred
         to in Section 5.4 to revocation or failure to renew, except where such
         revocation or failure to renew, individually or in the aggregate, does
         not and would not have a Material Adverse Effect on the Company or on
         the TCI Group.

                   (c) Except (i) as and to the extent disclosed or reserved
         against on the balance sheet of the Company as of December 31, 1997
         included in the Company SEC Reports, or (ii) as incurred after the date
         thereof in the ordinary course of business consistent with prior
         practice and not prohibited by this Agreement, the Company does not
         have any liabilities or obligations of any nature, absolute, accrued,
         contingent or otherwise and whether due or to become due, that,
         individually or in the aggregate, have or would have a Material Adverse
         Effect on the Company or on the TCI Group.

                   5.13. Absence of Certain Changes or Events. During the period
         since December 31, 1997, except as disclosed in the Company SEC Reports
         filed prior to the date hereof, (a) the business of the Company and its
         Subsidiaries has been conducted only in the ordinary course, consistent
         with past practice, except for the execution and delivery of this
         Agreement and the



                                       -39-

<PAGE>   45









         consummation of the transactions contemplated hereby, and except as
         otherwise expressly permitted or required by this Agreement, (b)
         neither the Company nor any of its Subsidiaries has taken any action or
         omitted to take any action, or entered into any contract, agreement,
         commitment or arrangement to take any action or omit to take any
         action, which, if taken or omitted after the date hereof, would violate
         Section 7.1, and (c) there has not been, and, to the best knowledge of
         the Company, nothing has occurred that would have, a Material Adverse
         Effect on the Company or on the TCI Group.

                   5.14. Affiliated Transactions and Certain Other Agreements.
         Set forth in Section 5.14 of the Company Disclosure Statement is an
         accurate and complete listing, as of the date hereof, of (a) all
         contracts, leases, agreements or understandings, whether written or
         oral, to which the Company or any of its Subsidiaries is a party or is
         otherwise bound which contain any restriction or limitation on the
         ability of the Company or any of its Affiliates (other than the
         Stockholders and their non-Company Affiliates) to engage in any
         business anywhere in the world, other than any such contracts, leases,
         agreements or understandings the loss or breach of which, individually
         or in the aggregate, does not and would not have a Material Adverse
         Effect on the Company or on the TCI Group, and (b) all contracts,
         leases, agreements or understandings, whether written or oral, giving
         any Person the right to require the Company to register Shares or to
         participate in any registration of Shares. The Company has previously
         provided or made available to Parent true and complete copies of each
         of the foregoing agreements. Except as disclosed in the Company SEC
         Reports, there are no relationships or transactions of a type required
         to be disclosed in the Company SEC Reports pursuant to Item 404 of
         Regulation S-K promulgated under the Securities Act.

                   5.15. Brokers and Finders. Except for the fees and expenses
         payable to Donaldson, Lufkin & Jenrette Securities Corporation, which
         fees and expenses are reflected in its agreements with the Company,
         copies of which have been furnished to Parent, the Company has not
         employed any investment banker, broker, finder, consultant or
         intermediary in connection with the transactions contemplated by this
         Agreement which would be entitled to any investment banking, brokerage,
         finder's or similar fee or commission in connection with this Agreement
         or the transactions contemplated hereby.

                   5.16. Registration Statement. None of the information
         supplied or to be supplied by the Company in writing for inclusion or
         incorporation by reference in the Registration Statement will at the
         time it becomes effective, contain any untrue statement of a material
         fact or omit to state any material fact required to be stated therein
         or necessary in order to make the statements therein not misleading. If
         at any time


                                       -40-

<PAGE>   46









         prior to the Effective Time any event with respect to the Company, its
         officers and directors or any of its Subsidiaries shall occur which is
         required to be described in an amendment of, or a supplement to the
         Registration Statement, the Company shall notify Parent thereof by
         reference to this Section 5.16 and such event shall be so described.
         Any such amendment or supplement shall be promptly filed with the SEC
         and, as and to the extent required by law, disseminated to the
         stockholders of the Company, and such amendment or supplement shall
         comply in all material respects with all provisions of the Securities
         Act.

                   5.17. Separation of Assets and Liabilities. (a) Each of the
         combined balance sheets (including the related notes) of each of the
         TCI Group, the Liberty Media Group and the TCI Ventures Group included
         in the Company SEC Reports presents fairly, respectively, in all
         material respects, the combined financial position of each of the TCI
         Group, the Liberty Media Group and the TCI Ventures Group as of the
         respective dates thereof, and the other related statements (including
         the related notes) included in the Company SEC Reports present fairly,
         respectively, in all material respects, the results of operations and
         the changes in financial position of each of the TCI Group, the Liberty
         Media Group and the TCI Ventures Group for the respective periods or as
         of the respective dates set forth therein, all in conformity with
         generally accepted accounting principles consistently applied during
         the periods involved, except as otherwise noted therein and subject, in
         the case of the unaudited interim financial statements, to normal
         year-end adjustments. Except (i) as and to the extent disclosed or
         reserved against on the balance sheet of the TCI Group, the Liberty
         Media Group or the TCI Ventures Group as of December 31, 1997 included
         in the Company SEC Reports, or (ii) as incurred after the date thereof
         in the ordinary course of business consistent with prior practice and
         not prohibited by this Agreement, none of the TCI Group, the Liberty
         Media Group or the TCI Ventures Group has any liabilities or
         obligations of any nature, absolute, accrued, contingent or otherwise
         and whether due or to become due, that, individually or in the
         aggregate, have or would have a Material Adverse Effect on the Company
         or on the TCI Group.

                   (b) Set forth in Section 5.17(b) of the Company Disclosure
         Statement is an accurate and complete listing, as of the date hereof,
         of all contracts, leases, agreements or understandings, whether written
         or oral, that are material to TCI Group taken as a whole, with or on
         behalf of any Liberty Media Member or TCI Ventures Member to which any
         TCI Group Member is a party or is otherwise bound, or by which any of
         their respective properties or assets is subject or bound, other than
         contracts or agreements between any Liberty Media Member or TCI
         Ventures Member, on the one hand, and any TCI Group Member, on the
         other hand, entered into in the ordinary course of business


                                       -41-

<PAGE>   47









         and having terms and conditions that are no less favorable to TCI Group
         than those available to unaffiliated third parties generally. Section
         5.17(b) of the Company Disclosure Statement also sets forth a summary
         as of March 31, 1998 and the date hereof of the material debt and
         equity interests of any TCI Group Member, Liberty Media Member or TCI
         Ventures Member in any member of any other Group.

                   (c) (i) Except as set forth in Section 5.17(c)(i) of the
         Company Disclosure Statement, all of the material properties and assets
         (tangible, intangible or otherwise) and obligations and liabilities of
         any nature, absolute, accrued, contingent or otherwise and whether due
         or to become due, that are reflected on the financial statements
         referred to in Section 5.17(a) relate to the respective business and
         operations of the TCI Group, the Liberty Media Group and the TCI
         Ventures Group (as such businesses and operations are described in Note
         1 to the Company's consolidated audited financial statements for the
         year ended December 31, 1997) (respectively, the "TCI Group Business,"
         the "Liberty Media Business," and the "TCI Ventures Business").

                   (ii) As of the Effective Time, except as set forth in Section
         5.17(c)(ii) of the Company Disclosure Statement or as otherwise
         expressly permitted or required pursuant to this Agreement, and
         assuming that the Restructuring has occurred, (A) TCI Ventures LLC,
         directly or through its Subsidiaries, will own all of the material
         properties and assets (tangible, intangible or otherwise) of the
         Company or any of its Subsidiaries primarily relating to the Liberty
         Media Business or the TCI Ventures Business, and will have primary
         liability for, or will have assumed, all material obligations and
         liabilities of any nature, absolute, accrued, contingent or otherwise
         and whether due or to become due, primarily relating to the Liberty
         Media Business or the TCI Ventures Business, and (B) the Company and
         its Subsidiaries, other than TCI Ventures LLC and its Subsidiaries,
         will own all of the material properties and assets (tangible,
         intangible or otherwise) of the Company or any of its Subsidiaries
         primarily relating to the TCI Group Business, and will have primary
         liability for, or will have assumed, all material obligations and
         liabilities of any nature, absolute, accrued, contingent or otherwise
         and whether due or to become due, primarily relating to the TCI Group
         Business; provided that the shares of TCG (or the Parent Common Shares
         into which they may be exchanged) will be held by TCI Ventures LLC but
         will be attributed to the TCI Group.









                                       -42-

<PAGE>   48









                                   ARTICLE VI

             REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

                   Parent and Merger Sub each represents and warrants to the
         Company that, except as set forth in the Parent Disclosure Statement
         (each section of which qualifies the correspondingly numbered
         representation and warranty or covenant as specified therein):

                   6.1. Organization, Etc. of Parent. Parent is a corporation
         duly organized, validly existing and in good standing under the laws of
         the State of New York and has all requisite corporate power and
         authority to own, lease and operate its properties and to carry on its
         business as now conducted and proposed by Parent to be conducted.
         Parent is duly qualified and in good standing 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 necessary and where
         the failure to be so qualified or in good standing has or would have,
         individually or in the aggregate, a Material Adverse Effect on Parent.

                   6.2. Subsidiaries. Each Subsidiary of Parent (a) is a
         corporation or other legal entity duly organized, validly existing and
         (if applicable) in good standing under the laws of the jurisdiction of
         its organization and has all requisite corporate, partnership or
         similar power and authority to own its properties and conduct its
         business and operations as currently conducted, except where the
         failure to be duly organized, validly existing and in good standing or
         to have such power and authority does not and would not have,
         individually or in the aggregate, a Material Adverse Effect on Parent,
         and (b) is duly qualified and in good standing 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 necessary, except
         where the failure to be so qualified or in good standing does not and
         would not have, individually or in the aggregate, a Material Adverse
         Effect on Parent.

                   6.3. Agreement. Each of Parent and Merger Sub has all
         necessary corporate power and authority to execute and deliver this
         Agreement, to perform its obligations hereunder and to consummate the
         transactions contemplated hereby. This Agreement and the consummation
         of the transactions contemplated hereby have been approved by the
         respective Boards of Directors of Parent and Merger Sub and by Parent
         as the sole stockholder of Merger Sub, and have been duly authorized by
         all other necessary corporate action on the part of Parent or Merger
         Sub, except for the approval of the Parent's stockholders contemplated
         by Section 7.3. This Agreement has been duly executed and delivered by
         a duly authorized officer of Parent and of Merger Sub and (assuming the
         due execution and delivery of this


                                       -43-

<PAGE>   49









         Agreement by the Company) constitutes a valid and binding agreement of
         Parent and Merger Sub, enforceable against Parent and Merger Sub in
         accordance with its terms.

                   6.4. Permits; Compliance. Each of Parent and its Subsidiaries
         is in possession of all Permits from appropriate Governmental Bodies
         (including the FCC) necessary for Parent or any of its Subsidiaries to
         own, lease and operate its properties or to carry on their respective
         businesses as they are now being conducted (the "Parent Permits"), and
         all such Parent Permits are valid, and in full force and effect, except
         where the failure to have, or the suspension or cancellation of, any of
         the Parent Permits does not and would not, individually or in the
         aggregate, (a) have a Material Adverse Effect on Parent or (b) prevent
         or materially delay the consummation of the Merger. No suspension or
         cancellation of any of the Parent Permits is pending or, to the
         knowledge of Parent, threatened, except where the failure to have, or
         the suspension or cancellation of, any of the Parent Permits does not
         and would not, individually or in the aggregate, (x) have a Material
         Adverse Effect on Parent or (y) prevent or materially delay the
         consummation of the Merger. Neither Parent nor any of its Subsidiaries
         is in conflict with, or in default or violation of, (i) any Law
         applicable to Parent or any of its Subsidiaries or by which any
         property, asset or operation of Parent or any of its Subsidiaries is
         bound or affected or (ii) any Parent Permits, except for such
         conflicts, defaults or violations that do not and would not,
         individually or in the aggregate, (A) have a Material Adverse Effect on
         Parent or (B) prevent or materially delay the consummation of the
         Merger.

                   6.5. Opinions of Parent's Financial Advisors. The Board of
         Directors of Parent has received the opinions, dated as of the date of
         this Agreement, of Goldman Sachs & Co. and Credit Suisse First Boston
         Corporation to the effect that, as of such date, the Exchange Ratios,
         collectively, are fair to Parent from a financial point of view.

                   6.6. Capital Stock. As of the date hereof, the authorized
         capital stock of Parent consists of (a) 6,000,000,000 Parent Common
         Shares and (ii) 100,000,000 shares of preferred stock, $1.00 par value
         per share. All of the outstanding shares of capital stock of Parent are
         duly authorized, validly issued, fully paid and nonassessable, and no
         class of capital stock of Parent is entitled to preemptive rights. As
         of the close of business on April 30, 1998, 1,624,198,000 Parent Common
         Shares and no shares of Parent preferred stock were issued and
         outstanding. Except as disclosed in the Parent SEC Reports, all
         outstanding shares of capital stock of the Significant Subsidiaries (as
         defined for purposes of Regulation S-X under the Exchange Act) of
         Parent are owned by Parent or a direct or indirect Wholly Owned
         Subsidiary of Parent, free and clear of all liens, charges,
         encumbrances, claims and options


                                       -44-

<PAGE>   50









         of any nature. As of the close of business on April 30, 1998, there
         were outstanding options to acquire no more than 69,000,000 Parent
         Common Shares.

                   6.7. Parent Shares. The Parent Common Shares and the Parent
         Liberty Tracking Shares to be issued pursuant to Article IV will, when
         issued, be duly authorized, validly issued, fully paid and
         nonassessable and no stockholder of Parent will have any preemptive
         right of subscription or purchase in respect thereof. The Parent Common
         Shares and the Parent Liberty Tracking Shares to be issued in the
         Merger will, when issued, be registered under the Securities Act and
         the Exchange Act and registered or exempt from registration under any
         applicable state securities laws.

                   6.8. Litigation. Except as disclosed in the Parent SEC
         Reports filed prior to the date hereof, there are, as of the date
         hereof, no actions, suits, investigations or proceedings (adjudicatory,
         rulemaking or otherwise) pending or, to the knowledge of Parent,
         threatened against Parent or any of its Subsidiaries or any Benefit
         Plans of Parent or any of its Subsidiaries, or any property of Parent
         or any such Subsidiary (including Intellectual Property), in any court
         or before any arbitrator of any kind or in or before or by any
         Governmental Body, except actions, suits, investigations or proceedings
         or which, individually or in the aggregate, would not, if adversely
         determined, (a) have a Material Adverse Effect on Parent or (b) prevent
         or materially delay the consummation of the Merger.

                   6.9. Compliance with Other Instruments, Etc. Neither Parent
         nor any Subsidiary of Parent is in violation of any term of (a) its
         charter, by-laws or other organizational documents, or (b) any
         agreement or instrument related to indebtedness for borrowed money or
         any other agreement to which it is a party or by which it is bound, the
         consequences of which violation, whether individually or in the
         aggregate, do or would (i) have a Material Adverse Effect on Parent or
         (ii) prevent or materially delay the consummation of the Merger.
         Assuming the approval of Parent's stockholders as contemplated by
         Section 7.3, the execution, delivery and performance of this Agreement
         and the consummation of the transactions contemplated hereby will not
         result in any violation of or conflict with, or constitute a default
         under, the charter, bylaws or other organizational documents of Parent
         (or any of its Subsidiaries). Except as set forth in Section 6.9 of the
         Parent Disclosure Statement, the execution, delivery and performance of
         this Agreement and the consummation of the transactions contemplated
         hereby will not result in any violation of or conflict with, constitute
         a default under, require any consent, waiver or notice under any term
         of, or result in the reduction or loss of any benefit or the creation
         or acceleration of any obligation



                                       -45-

<PAGE>   51









         under, any agreement, note, bond, mortgage, indenture, contract, lease,
         Permit or other obligation or any instrument to which Parent or any of
         its Subsidiaries is a party or by which any of the assets or properties
         of Parent or any of its Subsidiaries is bound or any instrument or Law,
         or result in the creation of (or impose any obligation on Parent or any
         of its Subsidiaries to create) any mortgage, lien, charge, security
         interest or other encumbrance upon any of the properties or assets of
         Parent or any of its Subsidiaries pursuant to any such term, except
         where any of the foregoing, individually or in the aggregate, does not
         and would not (i) have a Material Adverse Effect on Parent or (ii)
         prevent or materially delay the consummation of the Merger.

                   6.10. Taxes. (a) Parent and its Subsidiaries have filed all
         income Tax Returns and all material other United States federal, state,
         county, local and foreign Tax Returns required to be filed by them.
         Parent and its Subsidiaries have paid all material Taxes due, other
         than Taxes appropriate reserves for which have been made in Parent's
         financial statements (and, to the extent material, such reserves have
         been accurately described in the Parent SEC Reports). There are no
         material assessments or adjustments that have been asserted in writing
         against Parent or its Subsidiaries for any period for which Parent has
         not made appropriate reserves in Parent's financial statements included
         in Parent SEC Reports.

                   (b) There are no material claims or assessments pending
         against Parent or any of its Subsidiaries for any alleged deficiency in
         any Tax, and Parent has not been notified in writing of any proposed
         material Tax claims or assessments against Parent or any of its
         Subsidiaries (other than, in each case, claims or assessments for which
         adequate reserves in Parent financial statements have been established
         or which are being contested in good faith or are immaterial in
         amount).

                   (c) There are no liens for Taxes on the assets of Parent or
         any of its Subsidiaries, except for statutory liens for current Taxes
         not yet due and payable (and except for liens which do not and would
         not, individually or in the aggregate, have a Material Adverse Effect
         on Parent).

                   6.11. Intellectual Property. Parent and its Subsidiaries own,
         have the defensible right to use, or are indemnified for or otherwise
         protected from any material risk for using the Intellectual Property
         used in their respective businesses, except where the failure to own,
         have the right to use or be indemnified for or protected from any
         material risk of using such Intellectual Property, individually or in
         the aggregate, does not and would not have a Material Adverse Effect on
         Parent.




                                       -46-

<PAGE>   52









                   6.12. Reports and Financial Statements. (a) Parent has filed
         all Reports on Form 10-K, Form 10-Q and Form 8-K, registration
         statements and proxy statements required to be filed with the SEC since
         January 1, 1996 (collectively, the "Parent SEC Reports"). Parent has
         previously furnished or made available to the Company true and complete
         copies of all Parent SEC Reports filed prior to the date hereof. None
         of the Parent SEC Reports, as of their respective dates, contained any
         untrue statement of 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. Each of the balance sheets (including the related notes)
         included in the Parent SEC Reports presents fairly, in all material
         respects, the consolidated financial position of Parent and its
         Subsidiaries as of the respective dates thereof, and the other related
         statements (including the related notes) included in the Parent SEC
         Reports present fairly, in all material respects, the results of
         operations and the changes in financial position of Parent and its
         Subsidiaries for the respective periods or as of the respective dates
         set forth therein, all in conformity with generally accepted accounting
         principles consistently applied during the periods involved, except as
         otherwise noted therein and subject, in the case of the unaudited
         interim financial statements, to normal year-end adjustments. All of
         the Parent SEC Reports, as of their respective dates, complied as to
         form in all material respects with the requirements of the Exchange
         Act, the Securities Act and the applicable rules and regulations
         thereunder.

                   (b) Parent and its Subsidiaries have not made any
         misstatements of fact, or omitted to disclose any fact, to any
         Governmental Body, or taken or failed to take any action, which
         misstatements or omissions, actions or failures to act, individually or
         in the aggregate, subject or would subject any Parent Permits referred
         to in Section 6.4 to revocation or failure to renew, except where such
         revocation or failure to renew, individually or in the aggregate, does
         not and would not have a Material Adverse Effect on Parent.

                   (c) Except (i) as and to the extent disclosed or reserved
         against on the balance sheet of Parent as of December 31, 1997 included
         in the Parent SEC Reports, or (ii) as incurred after the date thereof
         in the ordinary course of business consistent with prior practice and
         not prohibited by this Agreement, Parent does not have any liabilities
         or obligations of any nature, absolute, accrued, contingent or
         otherwise and whether due or to become due, that, individually or in
         the aggregate, have or would have a Material Adverse Effect on Parent.

                   (d) During the period since December 31, 1997, except as
         disclosed in the Parent SEC Reports filed prior to the


                                       -47-

<PAGE>   53









         date hereof, there has not been, and, to the best knowledge of Parent,
         nothing has occurred that would have, a Material Adverse Effect on
         Parent.

                   6.13. Brokers and Finders. Except for the fees and expenses
         payable to Credit Suisse First Boston Corporation and Goldman Sachs &
         Co., which fees and expenses will be paid by Parent, Parent has not
         employed any investment banker, broker, finder, consultant or
         intermediary in connection with the transactions contemplated by this
         Agreement which would be entitled to any investment banking, brokerage,
         finder's or similar fee or commission in connection with this Agreement
         or the transactions contemplated hereby.

                   6.14. Registration Statement. None of the information to be
         supplied by Parent or Merger Sub in writing for inclusion or
         incorporation by reference in the Registration Statement will at the
         time it becomes effective, contain any untrue statement of a material
         fact or omit to state any material fact required to be stated therein
         or necessary in order to make the statements therein not misleading. If
         at any time prior to the Effective Time any event with respect to
         Parent, its officers and directors or any of its Subsidiaries shall
         occur which is required to be described in an amendment of, or a
         supplement to the Registration Statement, Parent shall notify the
         Company thereof by reference to this Section 6.14 and such event shall
         be so described. Any such amendment or supplement shall be promptly
         filed with the SEC and, as and to the extent required by law,
         disseminated to the stockholders of the Company, and such amendment or
         supplement shall comply in all material respects with all provisions of
         the Securities Act. The Registration Statement will comply (with
         respect to Parent and Merger Sub and information provided in writing
         therefor by Parent or Merger Sub) as to form in all material respects
         with the provisions of the Securities Act.

                   6.15.  Ownership of Merger Sub; No Prior Activities;
         Assets of Merger Sub.

                   (a) Merger Sub was formed by Parent solely for the purpose of
         engaging in the transactions contemplated hereby.

                   (b) As of the date hereof and the Effective Time, the capital
         stock of Merger Sub is and will be owned 100% by Parent directly.
         Further, there are not as of the date hereof and there will not be at
         the Effective Time any outstanding or authorized options, warrants,
         calls, rights, commitments or any other agreements of any character to
         or by which Merger Sub is a party or may be bound requiring it to
         issue, transfer, sell, purchase, redeem or acquire any shares of
         capital stock or any securities or rights convertible into,
         exchangeable for, or evidencing the right to subscribe for or acquire,
         any shares of capital stock of Merger Sub.


                                       -48-

<PAGE>   54









                   (c) As of the date hereof and immediately prior to the
         Effective Time, except for obligations or liabilities incurred in
         connection with its incorporation or organization and the transactions
         contemplated hereby and by the Voting Agreement, Merger Sub has not and
         will not have incurred, directly or indirectly through any Subsidiary
         or Affiliate, any obligations or liabilities or engaged in any business
         or activities of any type or kind whatsoever or entered into any
         agreements or arrangements with any Person.

                   (d) Parent will take all action necessary to ensure that
         Merger Sub at no time prior to the Effective Time owns any material
         assets other than an amount of cash necessary to incorporate Merger Sub
         and to pay the expenses of the Merger attributable to Merger Sub if the
         Merger is consummated.

                   6.16. Ownership of Company Stock. Neither Parent nor any
         Subsidiary of Parent (excluding any employee benefit plan, or related
         trust, of Parent or its Subsidiaries) owns or, to the knowledge of
         Parent, has owned within the last two years, any shares of the capital
         stock of the Company. Between the date of this Agreement and the
         Effective Time, neither Parent nor any Subsidiary of Parent (excluding
         any employee benefit plan, or related trust, of Parent or its
         Subsidiaries) will purchase or otherwise acquire any shares of the
         capital stock of the Company (except pursuant to the terms of this
         Agreement).


                                   ARTICLE VII

                       ADDITIONAL COVENANTS AND AGREEMENTS

                   7.1. Conduct of Business of the Company. Except as set forth
         in Section 7.1 of the Company Disclosure Statement, as expressly
         permitted by this Agreement (any transaction permitted by Schedule 7.18
         or pursuant to the Restructuring being deemed expressly permitted), as
         described in the Company's Capital Spending Plan, dated June 2, 1998,
         previously delivered by the Company to Parent (the "Capital Spending
         Plan"), as required by any change in applicable Law, or as otherwise
         agreed by Parent in writing, during the period from the date of this
         Agreement to the Effective Time, (i) the Company will, and will cause
         each of the TCI Group Members to, conduct the TCI Group Business in the
         ordinary course of business consistent with past practice, and (ii) to
         the extent consistent with the foregoing, the Company will, and will
         cause each of the TCI Group Members to, seek to preserve intact its
         current business organizations, keep available the service of its
         current officers and employees, and preserve its relationships with
         customers, suppliers and others having business dealings with it, in
         each case with respect to the TCI



                                       -49-

<PAGE>   55









         Group Business, with the objective that the goodwill and ongoing
         businesses of the TCI Group shall be unimpaired at the Effective Time.
         Without limiting the generality of the foregoing, from and including
         the date hereof to the Effective Time, the Company will not, and will
         not permit any of the TCI Group Members to, without the prior written
         consent of Parent (except to the extent set forth in Section 7.1 of the
         Company Disclosure Statement):

                   (a) except for (i) TCI Group Shares issued upon exercise of
              options or other rights outstanding as of the date hereof under
              Employee Plans or Benefit Arrangements in accordance with the
              terms thereof, (ii) TCI Group Shares issued in connection with the
              conversion of convertible or exchangeable securities of the
              Company or its Subsidiaries outstanding as of the date hereof in
              accordance with the terms of such securities, (iii) shares of TCI
              Group Class A Stock issued upon conversion of shares of TCI Group
              Class B Stock outstanding on the date hereof or issued pursuant to
              convertible securities to acquire TCI Group Class B Stock
              outstanding on the date hereof, in accordance with the terms of
              the Company Charter as in effect on the date hereof, (iv) with
              respect to Liberty Media Tracking Shares or TCI Ventures Tracking
              Shares to the extent permitted pursuant to Section 7.18, (v)
              options to purchase, restricted stock awards of, or other
              compensation payable in shares of, TCI Group Class A Stock, up to
              an aggregate of 3,000,000 shares of TCI Group Class A Stock, and
              (vi) issuance of up to 14,511,570 shares of TCI Group Class B
              Stock which John C. Malone and certain members of the Magness
              family have the right to acquire from the Company, upon exercise
              of such right in accordance with the terms thereof, issue,
              deliver, sell, dispose of, pledge or otherwise encumber, or
              authorize or propose the issuance, sale, disposition or pledge or
              other encumbrance of (A) any additional shares of its capital
              stock of any class (including the Shares), or any securities or
              rights convertible into, exchangeable for, or evidencing the right
              to subscribe for any shares of its capital stock, or any rights,
              warrants, options, calls, commitments or any other agreements of
              any character to purchase or acquire any shares of its capital
              stock or any securities or rights convertible into, exchangeable
              for, or evidencing the right to subscribe for, any shares of its
              capital stock, or (B) any other securities in respect of, in lieu
              of, or in substitution for, Shares outstanding on the date hereof;

                   (b) except with respect to Liberty Media Tracking Shares or
              TCI Ventures Tracking Shares to the extent permitted pursuant to
              Section 7.18, redeem, purchase or




                                       -50-

<PAGE>   56









              otherwise acquire, or propose to redeem, purchase or otherwise
              acquire, any of its outstanding securities (including the Shares),
              other than pursuant to existing agreements requiring the Company
              to repurchase or acquire any shares of its capital stock (provided
              that such repurchase or acquisition is in accordance with the
              terms of such agreement as in effect on the date hereof);

                   (c) except for conversions of shares of TCI Group Class B
              Stock outstanding on the date hereof into shares of TCI Group
              Class A Stock, in accordance with the terms of the Company Charter
              as in effect on the date hereof, split, combine, subdivide or
              reclassify any shares of its capital stock or declare, set aside
              for payment or pay any dividend, or make any other actual,
              constructive or deemed distribution in respect of any shares of
              its capital stock or otherwise make any payments to stockholders
              in their capacity as such (other than dividends or distributions
              paid by any Wholly Owned Subsidiary of the Company to the Company
              or another Wholly Owned Subsidiary within the same Group);

                   (d) (i) grant any increases in the compensation of any of its
              directors, officers or employees, except in the ordinary course of
              business consistent with past practice, (ii) pay or award or agree
              to pay or award any pension, retirement allowance, or other
              nonequity incentive awards, or other employee benefit, not
              required by any of the Employee Plans or Benefit Arrangements to
              any current or former director, officer or employees, whether past
              or present, or to any other Person, except for payments or awards
              that are in the ordinary course of business, consistent with past
              practice, and that are not material, (iii) pay or award or agree
              to pay or award any stock option or equity incentive awards,
              except to the extent permitted by Section 7.1(a)(v) and except for
              options to purchase or awards of Liberty Media Shares or TCI
              Ventures Shares (subject to the limitations of Section 7.18), (iv)
              enter into any new or amend any existing employment agreement with
              any director, officer or employee, except for employment
              agreements with new employees entered into in the ordinary course
              of business consistent with past practice and except for
              amendments in the ordinary course of business, consistent with
              past practice, that do not materially increase benefits or
              payments, (v) enter into any new or amend any existing severance
              agreement with any current or former director, officer or
              employee, except for agreements or amendments in the ordinary
              course of business, consistent with past practice, that do not
              provide for material benefits, or (vi) become obligated under any
              new Employee Plan or Benefit Arrangement, which was not in
              existence on the date hereof, or amend or exercise discretion
              pursuant to any such Employee Plan or


                                       -51-

<PAGE>   57









              Benefit Arrangement in existence on the date hereof, except for
              any such amendment or exercise of discretion in the ordinary
              course of business, consistent with past practice, that does not
              provide for material benefits; provided, however, that the
              foregoing shall not be applicable to any such payment or increase,
              or any such agreement, so long as the associated costs and
              expenses related thereto are attributed to the Liberty/Ventures
              Group; and provided, further, that the Company is expressly
              authorized to enter into tax protection agreements in the form set
              forth in Schedule 7.12(e) with those employees listed on Schedule
              7.12(e);

                   (e) adopt a plan of complete or partial liquidation,
              dissolution, merger, consolidation, restructuring,
              recapitalization or other reorganization of the Company or any TCI
              Group Member not constituting an inactive Subsidiary (other than
              the Merger or as provided in Section 2.1(b), and other than (i)
              with respect to TCI Group Member such of the foregoing as do not
              change the beneficial ownership interest of the Company in such
              TCI Group Member and (ii) with respect to the Company, any such
              merger, consolidation, restructuring, recapitalization or other
              reorganization that is used to effect an acquisition permitted
              pursuant to Section 7.1(f) and which does not result in a change
              of control of the Company or change the Shares into a different
              number or kind of securities);

                   (f) make any acquisition, by means of merger, consolidation
              or otherwise (other than any acquisition by any Liberty Media
              Member or any TCI Ventures Member to the extent permitted under
              Section 7.18), of (i) any direct or indirect ownership interest in
              or assets comprising any business enterprise or operation or (ii)
              except in the ordinary course and consistent with past practice,
              any other assets; provided, however, that the Company may make
              such acquisitions for cash in an amount not to exceed $10 million
              in the case of any single acquisition or $50 million for all such
              acquisitions in the aggregate during any 12-month period; provided
              further that such acquisitions do not and would not prevent or
              materially delay the consummation of the Merger; and provided
              further that the foregoing shall not prevent the Company from
              exploring on a preliminary basis and conducting diligence
              investigations (including having discussions with any potential
              acquisition target) with respect to any potential acquisition that
              would require Parent's consent hereunder, for the purpose of
              determining the desirability of such potential acquisition and
              developing the basis on which to seek Parent's consent, so long as
              the Company does not submit any formal proposal or indication of
              interest with respect to such an acquisition to such acquisition
              target, or make any binding commitments with


                                       -52-

<PAGE>   58









              respect to such potential acquisition, without obtaining Parent's
              consent; and provided further that in the event the Company is
              offered an opportunity under which it is required either to
              acquire or dispose of certain of its cable television system and
              related assets or related investments prior to the Effective Time
              and the taking of such action requires Parent's consent hereunder,
              Parent will not withhold its consent unreasonably;

                   (g) (i) dispose of any controlling interest in any material
              business enterprise or operation of the TCI Group, (ii) make any
              other disposition of any other direct or indirect ownership
              interest in or assets comprising a material business enterprise or
              operation of the TCI Group (except for the replacement or upgrade
              of assets, or disposition of unnecessary assets, in the ordinary
              course and consistent with past practice), or (iii) except in the
              ordinary course and consistent with past practice, dispose of any
              other assets of the TCI Group;

                   (h) adopt any amendments to the Company Charter or the
              By-Laws of the Company or alter through merger, liquidation,
              reorganization, restructuring or in any other fashion the
              corporate structure or ownership of any TCI Group Member not
              constituting an inactive Subsidiary of the Company;

                   (i) incur any indebtedness for borrowed money or guarantee
              any indebtedness of any other Person or make any loans, advances
              or capital contributions to, or investments in, any other Person
              (other than to the Company or any Wholly Owned Subsidiary of the
              Company), except that (A) the Company may incur additional
              indebtedness after the date hereof, under existing credit
              facilities (or any renewals thereof), resulting in aggregate net
              proceeds to the Company from such additional indebtedness not
              exceeding $50 million, (B) the Company may refinance outstanding
              indebtedness (including indebtedness incurred pursuant to this
              Section 7.1), without increase in the amount thereof, so long as
              the terms thereof are no less favorable to the Company and the
              maturity thereof is no more than one year or such debt is
              prepayable without penalty, and (C) any Subsidiary of the Company
              that is not a member of the TCI Group shall be permitted to do any
              of the foregoing to the extent permitted pursuant to Section 7.18;

                   (j) engage in the conduct of any business other than the
              Company's existing businesses (except that the Liberty Media Group
              and the TCI Ventures Group may engage in other businesses to the
              extent permitted pursuant to Section 7.18);




                                       -53-

<PAGE>   59









                   (k) enter into any agreement or exercise any discretion
              providing for acceleration of payment or performance as a result
              of a change of control of the Company or its Subsidiaries;
              provided that this paragraph (k) shall not restrict the Company's
              right to respond or take action in response to any such
              acceleration so long as such action is permitted under this
              Section 7.1;

                   (l) enter into any contracts, arrangements or understandings
              requiring in the aggregate the purchase of equipment, materials,
              supplies or services in excess of $50 million (or, with respect to
              the Liberty Media Group and the TCI Ventures Group, as permitted
              pursuant to Section 7.18), other than any such contracts,
              arrangements or understandings providing for capital spending of
              the Company or the TCI Group Members in accordance with the
              Capital Spending Plan;

                   (m) enter into or amend or waive any right under any
              agreement with any Affiliates of the Company (other than its
              Subsidiaries) or with any Stockholder or any Affiliate of any
              Stockholder (other than as set forth in the Voting Agreement),
              other than any of the foregoing as may be done in the ordinary
              course of business and that is not material, individually or in
              the aggregate, to TCI Group;

                   (n) settle or compromise any material litigation with respect
              to TCI Group or waive, release or assign any material rights or
              claims with respect to TCI Group, except in the ordinary course of
              business consistent with past practice;

                   (o) take any action (other than the Merger and as specified
              in Section 4) that would result in a change in any of the
              following: (i) the Number of Shares Issuable with Respect to the
              Liberty Media Group Inter-Group Interest, (ii) the Adjusted
              Liberty Media Group Outstanding Interest Fraction, (iii) the
              Liberty Media Group Outstanding Interest Fraction, (iv) the Number
              of Shares Issuable with Respect to the TCI Ventures Group
              InterGroup Interest, (v) the Adjusted TCI Ventures Group
              Outstanding Interest Fraction, (vi) the TCI Ventures Group
              Outstanding Interest Fraction, (vii) the Committed Acquisition
              Shares (other than a reduction thereof) and (viii) the TCI
              Ventures Group Preferred Interest;

                   (p) except as expressly contemplated by the Restructuring or
              except as expressly permitted by Section 7.17, (i) engage in or
              allow any direct or indirect transfer of any material properties
              or assets or obligations or liabilities between any of the TCI
              Group Members, on the one hand, and any Liberty Media Member or
              TCI Ventures Member, on the other hand, or (ii) engage in any
              other transaction


                                       -54-

<PAGE>   60









              involving any TCI Group Member, on the one hand, and any
              Liberty Media Member or TCI Ventures Member, on the other
              hand;

                   (q) authorize, recommend or propose (other than to Parent),
              or announce an intention to do any of the foregoing, or enter into
              any contract, agreement, commitment or arrangement to do any of
              the foregoing.

                   7.2. Other Transactions. (a) The Company shall not, nor shall
         it permit any of its Subsidiaries to, nor shall it authorize or permit
         any officer, director or employee or any investment banker, attorney,
         accountant, agent or other advisor or representative of the Company or
         any of its respective Subsidiaries to, (i) solicit, initiate or
         knowingly encourage the submission of any Takeover Proposal, (ii) enter
         into any agreement with respect to a Takeover Proposal or (iii)
         participate in any discussions or negotiations regarding, or furnish to
         any Person any information with respect to, or take any other action to
         facilitate any inquiries or the making of any proposal that
         constitutes, or may reasonably be expected to lead to, any Takeover
         Proposal; provided, however, that to the extent required by the
         fiduciary obligations of the Board of Directors of the Company, as
         determined in good faith by a majority of the members thereof (after
         receipt of advice from Richards, Layton & Finger, outside legal counsel
         to the Board of Directors), the Company may, in response to unsolicited
         requests therefor, participate in discussions or negotiations with, or
         furnish information pursuant to a confidentiality agreement no less
         favorable to such party than the Confidentiality Agreement to, any
         Person who indicates a willingness to make a Superior Proposal. For all
         purposes of this Agreement, "Takeover Proposal" means any proposal for
         a merger, consolidation, share exchange, business combination or other
         similar transaction involving the Company or any of its Significant
         Subsidiaries or any proposal or offer to acquire, directly or
         indirectly, an equity interest in, any voting securities of, or a
         substantial portion of the assets of, the Company or any of its
         Significant Subsidiaries, other than the transactions contemplated by
         this Agreement and other than any transaction involving solely Liberty
         Media Members or TCI Ventures Members which would not prevent or
         materially delay consummation of the Merger. The Company immediately
         shall cease and cause to be terminated all existing discussions or
         negotiations with any Persons conducted heretofore with respect to, or
         that could reasonably be expected to lead to, any Takeover Proposal. As
         used herein, a "Significant Subsidiary" means any Subsidiary that would
         constitute a "significant subsidiary" within the meaning of Rule 1-02
         of Regulation S-X of the SEC.

              (b) Neither the Board of Directors of the Company nor any
         committee thereof shall (i) withdraw or modify, or propose to withdraw
         or modify, in a manner adverse to Parent, the approval


                                       -55-

<PAGE>   61









         or recommendation by the Board of Directors of the Company or any such
         committee of this Agreement or the Merger or (ii) approve or recommend,
         or propose to approve or recommend, any Takeover Proposal.
         Notwithstanding the foregoing, (A) the Board of Directors of the
         Company or any committee thereof, to the extent required by its
         fiduciary obligations, as determined in good faith by a majority of the
         members thereof (after receipt of advice from Richards, Layton &
         Finger, outside legal counsel to the Board of Directors), may approve
         or recommend a Superior Proposal (and, in connection therewith,
         withdraw or modify its approval or recommendation of this Agreement or
         the Merger) and (B) nothing contained in this Agreement shall prevent
         the Board of Directors of Parent or the Company from complying with
         Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with
         regard to a Takeover Proposal. For all purposes of this Agreement,
         "Superior Proposal" means a bona fide written proposal made by a third
         party to acquire the Company pursuant to a tender or exchange offer, a
         merger, a share exchange, a sale of all or substantially all its assets
         or otherwise on terms which a majority of the members of the Board of
         Directors of the Company determines in good faith (taking into account
         the advice of independent financial advisors) to be more favorable to
         the Company and its stockholders than the Merger (and any revised
         proposal made by Parent) and for which financing, to the extent
         required, is then fully committed or reasonably determined to be
         available by the Board of Directors of the Company.

                   7.3. Stockholder Approval. (a) Parent and the Company each
         shall call its respective Stockholders Meeting to be held as promptly
         as practicable for the purpose of voting upon, in the case of Parent,
         the Parent Charter Amendment and the issuance of Parent Common Shares
         and Parent Liberty Tracking Shares in connection with the Merger and,
         in the case of the Company, this Agreement and the transactions
         contemplated hereby. Except as otherwise required by the fiduciary
         duties of its Board of Directors (as determined in good faith by such
         Board following the receipt of advice of its outside legal counsel to
         such effect), (i)(A) the Company will, through the Board of Directors
         (based on the recommendation of its Special Committee), recommend to
         its stockholders the approval and adoption of this Agreement and the
         Merger, and (B) Parent will, through its Board of Directors, recommend
         to its stockholders the approval of the Parent Charter Amendment and
         the approval of the issuance of the Parent Common Shares and Parent
         Liberty Tracking Shares in connection with the Merger, and (ii) each of
         the Company and Parent will use their respective best efforts to obtain
         the foregoing approval of their respective stockholders. Parent and the
         Company shall coordinate and cooperate with respect to the timing of
         the Stockholders Meetings and shall use their respective reasonable
         best efforts to hold the Stockholders Meeting on the same day as soon
         as practicable



                                       -56-

<PAGE>   62









         after the date on which the Registration Statement becomes ef-
         fective.

                   (b) Notwithstanding the provisions of Section 7.3(a), after
         the adoption of this Agreement by the stockholders of the Company,
         without the affirmative approval, by vote or written consent, of the
         holders of Shares representing a majority of the votes that may be cast
         by the holders of all then outstanding Shares, the Company will not (i)
         enter into any amendment to this Agreement that would alter or change
         any of the terms and conditions of this Agreement if such alteration or
         change would adversely affect the holders of Shares, or (ii) waive any
         condition set forth in Section 8.1 or Section 8.3 if such waiver would
         materially adversely affect the holders of Shares.

                   (c) Parent, as the sole stockholder of Merger Sub, hereby
         consents to the adoption of this Agreement by Merger Sub and agrees
         that such consent shall be treated for all purposes as a vote duly
         adopted at a meeting of the stockholders of Merger Sub held for this
         purpose.

                   7.4. Registration Statement and Proxy Statement. (a) As
         promptly as practicable after the date of this Agreement, Parent and
         the Company shall prepare and file with the SEC a preliminary joint
         proxy statement in form and substance reasonably satisfactory to each
         of Parent and the Company and Parent shall prepare and file with the
         SEC a registration statement on Form S-4 (the "Registration
         Statement"), in which the joint proxy statement will be included as
         part of a prospectus, in connection with the registration under the
         Securities Act of the Parent Common Shares and Parent Liberty Tracking
         Shares issuable upon conversion of the Shares (and any securities
         convertible into or exchangeable for Shares) and the other transactions
         contemplated hereby. Each of Parent and the Company shall use its
         reasonable best efforts to respond to any comments of the SEC, to have
         the Registration Statement to be declared effective as promptly as
         practicable after such filing and to cause the Proxy Statement approved
         by the SEC to be mailed to the Company's stockholders at the earliest
         practicable time. The Company and Parent will notify the other party
         promptly of the receipt of any comments from the SEC or its staff and
         of any request by the SEC or its staff or any other governmental
         officials for amendments or supplements to the Registration Statement,
         the Proxy Statement or any other filing or for additional information,
         and will supply the other with copies of all correspondence between it
         and any of its representatives, on the one hand, and the SEC, or its
         staff or any other governmental officials, on the other hand, with
         respect to the Registration Statement, the Proxy Statement, the
         Restructuring, the Merger or any other filing relating thereto. The
         Proxy Statement, the Registration Statement and such other filings
         shall comply in all material respects with all


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<PAGE>   63









         applicable requirements of law. Whenever any event occurs which is
         required to be set forth in an amendment or supplement to the Proxy
         Statement, the Registration Statement or any other filing, Parent or
         the Company, as the case may be, shall promptly inform the other party
         of such occurrence and cooperate in filing with the SEC or its staff or
         any other government officials, and/or mailing to stockholders of the
         Company, such amendment or supplement. The Company and Parent each
         shall promptly provide the other (or its counsel) copies of all filings
         made by it with any Governmental Body in connection with this Agreement
         and the transactions contemplated hereby. Each party hereto agrees to
         cooperate reasonably with each other party in connection with the
         preparation and filing of the Registration Statement, including
         providing information to the other party with respect to itself as may
         be reasonably required in connection therewith.

                   (b) The Proxy Statement shall include the recommendation of
         the Board of Directors of the Company in favor of approval and adoption
         of this Agreement and the Merger except to the extent the Board of
         Directors of the Company shall have withdrawn or modified its approval
         or recommendation of this Agreement or the Merger as permitted by
         Section 7.2(b) or 7.3(a), and the recommendation of the Board of
         Directors of Parent in favor of approval of the issuance of Parent
         Shares in the Merger and the Parent Charter Amendment, except to the
         extent the Board of Directors of Parent shall have withdrawn or
         modified its approval or recommendation of the issuance of Parent
         Shares in the Merger or the Parent Charter Amendment as permitted by
         Section 7.3(a). The Company shall use its reasonable best effort to
         cause the Proxy Statement to be mailed to its stockholders, and Parent
         shall use its reasonable best efforts to cause the Proxy Statement to
         be mailed to its stockholders, in each case as promptly as practicable
         after the Registration Statement becomes effective.

                   7.5. Reasonable Efforts. (a) Subject to Section 7.5(c), the
         Company and Parent shall, and shall use all reasonable efforts to cause
         their respective Subsidiaries, as applicable, to: (i) promptly make all
         filings and seek to obtain all Authorizations required under all
         applicable Laws with respect to the Merger and the other transactions
         contemplated hereby and will reasonably consult and cooperate with each
         other with respect thereto; (ii) not take any action (including
         effecting or agreeing to effect or announcing an intention or proposal
         to effect, any acquisition, business combination or other transaction
         except as set forth in the Parent Disclosure Statement or the Company
         Disclosure Statement, as the case may be) which would impair the
         ability of the parties to consummate the Merger (regardless of whether
         such action would otherwise be permitted or not prohibited hereunder);
         and (iii) use all reasonable efforts to promptly (x) take, or cause to
         be taken, all other actions and (y) do, or cause to be done, all other


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<PAGE>   64









         things reasonably necessary, proper or appropriate to satisfy the
         conditions set forth in Article VIII (unless waived) and to consummate
         and make effective the transactions contemplated by this Agreement on
         the terms and conditions set forth herein (including seeking to remove
         promptly any injunction or other legal barrier that may prevent such
         consummation). Each party shall promptly notify the other party of any
         communication to that party from any Governmental Body in connection
         with any required filing with, or approval or review by, such
         Governmental Body in connection with the Merger and permit the other
         party to review in advance any proposed communication to any
         Governmental Body in such connection to the extent permitted by
         applicable law. Notwithstanding the foregoing, in connection with any
         filing or submission required or action to be taken by either the
         Company or Parent or any of their respective Subsidiaries to effect the
         Merger and to consummate the other transactions contemplated hereby,
         (A) neither the Company nor any of its Subsidiaries shall, without
         Parent's prior written consent, commit to any divestiture or hold
         separate or similar transaction with respect to any asset or business
         of TCI Group, and each of the Company and the TCI Group Members shall
         commit to, and shall use reasonable efforts to effect, such thereof
         (which commitments may, at the Company's option, be conditioned upon
         and effective as of the Effective Time) as Parent shall reasonably
         request, and (B) neither Parent nor any of its Subsidiaries shall be
         required to divest or hold separate or otherwise take (or refrain from
         taking) or commit to take (or refrain from taking) any action that
         limits its freedom of action with respect to, or its ability to retain,
         the Company or any of its Subsidiaries or any material portion of the
         assets of the Company and its Subsidiaries, or any of the business,
         product lines or assets of Parent or any of its Subsidiaries, if any of
         the foregoing, individually or in the aggregate, would have a Material
         Adverse Effect on the Company or on the TCI Group (or an effect on
         Parent and its Subsidiaries that, were such effect applied to the
         Company and its Subsidiaries, would constitute a Material Adverse
         Effect on the Company or on the TCI Group).

                   (b) In addition to the foregoing, the Company agrees that, in
         connection with obtaining any Authorization required in connection with
         the Merger and the transactions contemplated hereby, the Company will
         and will cause its Subsidiaries (i) to commit to the divestiture by the
         Company and its Subsidiaries of their entire interest in the Spectrum
         PCS Investment, and (ii) following stockholder approval of the Parent
         Charter Amendment and the issuance of Parent Shares in the Merger, (x)
         to place such interest in a trust or other arrangement acceptable to
         the applicable Governmental Bodies pending such divestiture, and (y)
         otherwise to comply with such requirements in connection with such
         divestiture as may be imposed by the applicable Governmental Bodies.



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<PAGE>   65









                   (c) Nothing in this Agreement shall prevent or restrict
         Parent and its Subsidiaries from engaging in any merger, acquisition,
         business combination or other transaction (whether or not Parent is the
         surviving corporation); provided that such merger, acquisition,
         business combination or other transaction would not (i) prevent, or
         delay beyond September 30, 1999, the ability of Parent to consummate
         the Merger or (ii) cause the Merger to fail to qualify as a tax-free
         reorganization; and provided, further, that the parties will not delay
         the Closing in order to obtain any Authorizations to close another
         subsequently announced transaction, or until such other Authorizations
         are obtained.

                   7.6. Access to Information. Subject to currently existing
         contractual and legal restrictions applicable to the Company (which the
         Company represents and warrants are not material with respect to TCI
         Group), and upon reasonable notice, the Company shall (and shall cause
         each TCI Group Member to) afford to officers, employees, counsel,
         accountants and other authorized representatives of Parent ("Parent
         Representatives") reasonable access, during normal business hours
         throughout the period prior to the Effective Time, to its properties,
         books and records (including, subject to execution of appropriate
         access letters, the work papers of independent accountants), such
         access not to unreasonably interfere with the Company's business or
         operations, and, during such period, shall (and shall cause each of the
         TCI Group Members to) furnish promptly to such Parent Representatives
         all information concerning its business, properties and personnel as
         may reasonably be requested, provided that no investigation pursuant to
         this Section 7.6 shall affect or be deemed to modify any of the
         respective representations or warranties made by the Company. Subject
         to currently existing contractual and legal restrictions applicable to
         Parent (which Parent represents and warrants are not material), and
         upon reasonable notice, Parent shall (and shall cause its Significant
         Subsidiaries to) furnish to to officers, employees, counsel,
         accountants and other authorized representatives of the Company
         ("Company Representatives") such information concerning its business,
         properties and personnel as may reasonably be requested, provided that
         no investigation pursuant to this Section 7.6 shall affect or be deemed
         to modify any of the respective representations or warranties made by
         Parent. Each of Parent and the Company agrees that it will not, and
         will cause the Parent Representatives or Company Representatives, as
         the case may be, not to, use any information obtained pursuant to this
         Section 7.6 for any purpose unrelated to the consummation of the
         transactions contemplated by this Agreement. All information obtained
         pursuant to this Section 7.6 shall be subject to the Confidentiality
         Agreement, which shall remain in full force and effect until
         consummation of the Merger or, if the Merger is not consummated, for
         the period specified therein; provided, however, that neither Parent
         nor the Company shall be precluded


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<PAGE>   66









         from making any disclosure which it deems required by law in connection
         with the Merger. All requests for access to the Company and the TCI
         Group Members pursuant to this Section 7.6 shall be made through the
         representatives of the Company named in Section 7.6 of the Company
         Disclosure Statement, and all requests for information to Parent and
         its Significant Subsidiaries pursuant to this Section 7.6 shall be made
         through the representatives of Parent named in Section 7.6 of the
         Parent Disclosure Statement.

                   7.7. Indemnification of Directors and Officers. (a) From and
         after the Effective Time, Parent and the Surviving Corporation shall
         jointly and severally indemnify, defend and hold harmless the present
         and former officers, directors and employees of the Company and any of
         its Subsidiaries, and any Person who is or was serving at the request
         of the Company as an officer, director or employee or agent of another
         Person, against all losses, expenses, claims, damages or liabilities
         arising out of actions or omissions occurring on or prior to the
         Effective Time (including the transactions contemplated by this
         Agreement) to the fullest extent permitted under applicable Law (and
         shall also, subject to Section 7.7(b), advance expenses as incurred to
         the fullest extent permitted under applicable Law, provided that the
         Person to whom expenses are advanced provides an undertaking to repay
         such advances if it is ultimately determined that such Person is not
         entitled to indemnification); provided, however, that such
         indemnification shall be provided only to the extent any directors' and
         officers' liability insurance policy of the Company or its Subsidiaries
         does not provide coverage and actual payment thereunder with respect to
         the matters that would otherwise be subject to indemnification
         hereunder (it being understood that Parent or the Surviving Corporation
         shall, subject to Section 7.7(b), advance expenses on a current basis
         as provided in this paragraph (a) notwithstanding such insurance
         coverage to the extent that payments thereunder have not yet been made,
         in which case Parent or the Surviving Corporation, as the case may be,
         shall be entitled to repayment of such advances from the proceeds of
         such insurance coverage); and provided, further, that (subject to
         Parent not causing the Surviving Corporation to divest the assets of
         the Parent Liberty Group) Parent's indemnification obligation will not
         apply to any losses, expenses, claims, damages or liabilities arising
         out of actions or omissions, whether occurring on, prior to or
         following the Effective Time, that relate to the Liberty Media Group or
         the TCI Ventures Group (including with respect to the Liberty Media
         Exchange Ratios or, if applicable, the TCI Ventures Exchange Ratios,
         the Restructuring insofar as it relates to the Liberty Media Group and
         the TCI Ventures Group, disclosures with respect to the Liberty Media
         Group or the TCI Ventures Group, or any other decisions with respect to
         the Liberty Media Group or the TCI Ventures Group); provided that the
         foregoing shall not be deemed to affect the obligations of the
         Surviving


                                       -61-

<PAGE>   67









         Corporation hereunder. Parent and Merger Sub agree that all rights to
         indemnification, including provisions relating to advances of expenses
         incurred in defense of any action, suit or proceeding, whether civil,
         criminal, administrative or investigative (each, a "Claim"), existing
         in favor of the present or former directors, officers, employees,
         fiduciaries and agents of the Company or any of its Subsidiaries, and
         any Person who is or was serving at the request of the Company as an
         officer, director or employee or agent of another Person (collectively,
         the "Indemnified Parties") as provided in the Company Charter or
         By-Laws or pursuant to other agreements, or certificates of
         incorporation or by-laws or similar documents of any of the Company's
         Subsidiaries, as in effect as of the date hereof, with respect to
         matters occurring through the Effective Time, shall survive the Merger
         and shall continue in full force and effect for a period of not less
         than six years from the Effective Time; provided, however, that all
         rights to indemnification in respect of any Claim asserted, made or
         commenced within such period shall continue until the final disposition
         of such Claim. The Surviving Corporation shall maintain in effect for
         not less than six years after the Effective Time the current policies
         of directors' and officers' liability insurance maintained by the
         Company and the Company's Subsidiaries with respect to matters
         occurring prior to the Effective Time; provided, however, that (i) the
         Surviving Corporation may substitute therefor policies of at least the
         same coverage containing terms and conditions which are no less
         advantageous to the Indemnified Parties with an insurance company or
         companies, the claims paying ability of which is substantially
         equivalent to the claims paying ability of the insurance company or
         companies providing such insurance coverage for directors and officers
         of Parent and (ii) the Surviving Corporation shall not be required to
         pay an annual premium for such insurance in excess of three times the
         last annual premium paid prior to the date hereof, but in such case
         shall purchase as much coverage as possible for such amount.

                   (b) In the event that any Claim relating hereto or to the
         transactions contemplated by this Agreement is commenced, before the
         Effective Time, the parties hereto agree to cooperate and use their
         respective reasonable efforts to vigorously defend against and respond
         thereto. Any Indemnified Party wishing to claim indemnification under
         paragraph (a) of Section 7.7, upon learning of any such claim, action,
         suit, proceeding or investigation, shall promptly notify Parent
         thereof, whereupon Parent or the Surviving Corporation shall have the
         right, from and after the Effective Time, to assume and control the
         defense thereof, and upon such assumption, the Surviving Corporation
         shall not be liable to such Indemnified Parties for any legal expenses
         of other counsel or any other expenses subsequently incurred by such
         Indemnified Parties in connection with the defense thereof.
         Notwithstanding the foregoing, if counsel for the Indemnified Parties
         advises that


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<PAGE>   68









         there are issues which raise conflicts of interest between Parent or
         the Surviving Corporation and the Indemnified Parties, the Indemnified
         Parties may retain separate counsel and the Surviving Corporation will
         pay all reasonable fees and expenses of such counsel; provided that the
         Surviving Corporation will not be obligated pursuant to this sentence
         to pay for more than one firm of counsel for all Indemnified Parties in
         any jurisdiction. The Surviving Corporation shall not be liable for any
         settlement effected without its prior written consent.

                   (c) This Section 7.7 is intended to benefit the Indemnified
         Parties and shall be binding on all successors and assigns of Parent,
         Merger Sub and the Surviving Corporation.

                   7.8. Registration and Listing of Parent Common Shares. (a)
         Parent will use all reasonable efforts to register the Parent Common
         Shares and Parent Liberty Tracking Shares to be issued pursuant to this
         Agreement, and upon exercise of stock options granted to employees of
         the Company and its Subsidiaries (or upon conversion of any convertible
         or exchangeable securities), under the applicable provisions of the
         Securities Act and, if required, under any applicable state securities
         laws.

                   (b) Parent will use all reasonable efforts to cause the
         Parent Common Shares and Parent Liberty Tracking Shares to be issued
         pursuant to this Agreement and upon exercise of stock options granted
         to employees of the Company and its Subsidiaries (or upon conversion of
         any convertible or exchangeable securities), to be listed for trading
         on the NYSE or, in the case of the Parent Liberty Tracking Shares, at
         Parent's option, on the National Market System of NASDAQ.

                   7.9. Affiliates of Parent and the Company. Concurrently with
         the execution of this Agreement, each of the directors of the Company
         has executed an agreement to the effect set forth in this Section 7.9.
         Prior to the Effective Time, the Company shall deliver to Parent a
         letter identifying all other Persons who, to the Company's knowledge,
         at the time of the Company Stockholders Meeting or at the Effective
         Time, may be deemed to be "affiliates" of the Company for purposes of
         Rule 145 under the Securities Act or who may otherwise be deemed to be
         Affiliates of the Company (the "Rule 145 Affiliates"). The Company
         shall use all reasonable efforts to cause each Person who is identified
         as a Rule 145 Affiliate in such list to deliver to Parent on or prior
         to the 30th day prior to the Effective Time, a written agreement, in
         the form attached hereto as Exhibit B, that such Rule 145 Affiliate
         will not sell, pledge, transfer or otherwise dispose of any Parent
         Common Shares or Parent Liberty Tracking Shares issued to such Rule 145
         Affiliate pursuant to the Merger, except pursuant to an effective
         registration statement or in compliance with Rule 145



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<PAGE>   69









         under the Securities Act or an exemption from the registration
         requirements of the Securities Act.

                   7.10. Tax Matters. Each of the parties shall use all
         reasonable efforts to cause the Merger to constitute a tax-free
         "reorganization" under Section 368(a) of the Code. None of the parties
         will knowingly take any action, and none of the parties will permit any
         of its Subsidiaries or Affiliates knowingly to take any action, that
         would cause the Merger to fail to qualify as a tax-free reorganization
         under Section 368(a) of the Code. Each of the parties shall use all
         reasonable efforts to permit Wachtell, Lipton, Rosen & Katz and Baker &
         Botts, L.L.P. to issue their opinions provided in Sections 8.2(d) and
         8.3(d), respectively. Each party agrees to report the Merger on all tax
         returns and other filings as a tax-free reorganization under Section
         368(a) of the Code. Except as otherwise provided herein, without the
         prior written consent of Parent or unless the Liberty/Ventures Group
         agrees to assume the tax burden thereof, the Company shall not (and
         shall not permit any Subsidiary to) take any action that would cause a
         material acceleration of income under any "deferred intercompany
         transaction" or "intercompany transaction" that is disclosed in Part 2
         of Section 5.10(b) of the Company Disclosure Statement.

                   7.11. New York Real Property Transfer Tax. Any liability
         arising out of New York State and/or New York City Real Property
         Transfer Taxes, with respect to interests in real property owned,
         directly or indirectly, by the Company immediately prior to the Merger,
         if applicable and due with respect to the Merger, shall be borne by the
         Surviving Corporation and expressly shall not be a liability of the
         stockholders of the Company.

                   7.12. Employee Matters. (a) From and after the Effective
         Time, Parent will cause the Surviving Corporation to honor, in
         accordance with their terms, the executive, employment and other
         agreements and arrangements relating to officers and employees of TCI
         Group set forth in Section 7.12(a) of the Company Disclosure Statement
         (the "Executive Agreements") and all the Employee Plans and Benefit
         Arrangements relating to TCI Group; provided, however, that nothing
         herein shall preclude any change in any Executive Agreement, Employee
         Plan or Benefit Arrangement effective on a prospective basis that is
         permitted pursuant to the terms of the applicable Employee Plan or
         Benefit Arrangement. Company performance in respect of any performance
         or other programs shall be calculated without taking into account any
         expenses or costs directly associated with or arising as a result of
         the transactions contemplated by this Agreement or any non-recurring
         charges that would not reasonably be expected to have been incurred had
         the transactions contemplated by this Agreement not occurred. With
         respect to employees of TCI Group, Parent shall assume the obligations
         of the Company under the Employee Plans and Benefit Arrangements


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<PAGE>   70









         as in effect immediately prior to the Effective Time and will provide
         employee benefit plans with aggregate employee benefits to Company
         Employees that are no less favorable than the aggregate benefits
         provided to them immediately prior to the Effective Time; provided that
         Parent at its sole option may provide employee benefits to Company
         Employees which, in the aggregate, are no less favorable than those
         applicable to similarly situated employees of Parent. With respect to
         any plans established by Parent, to the extent a Company Employee
         becomes eligible to participate in any such plans, Parent shall grant
         to such Company Employee from and after the Effective Time, credit for
         all service with the Company and its affiliates and predecessors (and
         any other service credited by the Company under similar Employee Plans
         and Benefit Arrangements) prior to the Effective Time for eligibility
         to participate, benefit accrual and vesting purposes (except that no
         such credit shall be required for (i) benefit accrual purposes under
         defined benefit pension plans, or the schedule of benefits under
         Parent's severance pay and short-term disability plans and programs,
         (ii) eligibility to receive post-retirement ancillary benefits
         (consisting at this time of medical, dental, death and telephone
         concession benefits) or (iii) calculating Parent service for purposes
         of "bridging" prior Parent service under Parent benefit plans). To the
         extent Parent benefit plans provide medi-cal or dental welfare
         benefits, such plans shall waive any pre-existing conditions and
         actively at-work exclusions with respect to Company Employees (but only
         to the extent such Company Employees were provided coverage under the
         Employee Plans and Benefit Arrangements) and shall provide that any
         expenses incurred on or before the Effective Time in the applicable
         plan year by or on behalf of any Company Employees shall be taken into
         account under the Parent benefit plans for the purposes of satisfying
         applicable deductible, co-insurance and maximum out-of-pocket
         provisions for such Company Employees.

                   (b) The Company may amend and/or take action with respect to
         its 1996 Stock Incentive Plan prior to the Effective Time to provide
         that upon a termination of employment by a Company Employee with good
         reason or by the Company without cause (in each case as defined in
         Schedule 7.12(b) attached hereto) following the Effective Time, that
         options, stock appreciation rights or other awards granted under such
         plan in 1997 and outstanding as of the Effective Time shall be fully
         vested, and in the case of stock options or stock appreciation rights
         be immediately exercisable, and will remain outstanding for their full
         original term as if the individual had remained employed by the
         Company.

                   (c) Parent agrees to maintain the Company's severance plans
         as in effect on the date hereof for a period of two years from the
         Effective Time, without adverse amendment, for the benefit of Company
         Employees.



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<PAGE>   71









                   (d) For purposes of this Section 7.12, the term "Company
         Employees" shall mean all individuals employed by the TCI Group
         (including those on lay-off, disability or leave of absence, paid or
         unpaid) immediately prior to the Effective Time.

                   (e) The Company may enter into excise tax protective
         agreements with certain of its employees and consultants (including
         non-employee directors) in substantially the form attached as Schedule
         7.12(e); provided that the TCI Group shall assume the obligations under
         such agreements solely for Company Employees, and the obligations under
         such agreements for employees of the Liberty/Ventures Group shall be
         assumed by the Liberty/Ventures Group.

                   7.13. Tax Sharing Agreement. Concurrently with the Closing,
         the parties shall enter into an amendment to the Tax Sharing Agreement
         consistent with the transactions contemplated by this Agreement, with
         respect to taxable periods (or portions thereof) beginning on or after
         the Effective Time, on the terms set forth in Exhibit C hereto.

                   7.14. Other Intercompany Agreements. The TCI Group, the
         Liberty Media Group and the TCI Ventures Group will comply with the
         principles set forth in Schedule 7.14 with respect to any agreements
         between any TCI Group Member, on the one hand, and any Liberty Media
         Member or TCI Ventures Member, on the other hand. At the Effective
         Time, the Company, on behalf of the TCI Group, and the appropriate
         Subsidiary or Subsidiaries of the Company, on behalf of the Parent
         Liberty Group, will enter into an agreement having the terms set forth
         in Schedule 7.14.

                   7.15. Parent Board of Directors. At the Effective Time,
         Parent will expand the size of its Board of Directors by one and will
         appoint Dr. John C. Malone (or, in the event Dr. Malone is unable to
         serve, such other person as may be designated by the Company and
         reasonably satisfactory to Parent) to the Parent Board of Directors.
         From the Effective Time until the third anniversary thereof, Parent
         will nominate Dr. Malone (or such other person) for reelection to the
         Parent Board of Directors at each subsequent annual or special meeting
         of the stockholders of Parent at which Dr. Malone's (or such other
         person's) term is to expire. Thereafter (and during such period to the
         extent Dr. Malone or such other person is unable to serve as a
         director), so long as any Parent Liberty Tracking Shares remain
         outstanding, Parent will nominate and recommend the election to the
         Parent Board of Directors a person (who may be Dr. Malone) who, in the
         Parent Board of Directors' reasonable judgment, by virtue of his or her
         background and experience, will understand and reflect issues of
         concern to the Parent Liberty Group and the holders of Parent Liberty
         Tracking Shares.


                                       -66-

<PAGE>   72









                   7.16. Parent Charter Amendment, Bylaw Amendment and Policy
         Statement. The Board of Directors of Parent has approved the Parent
         Charter Amendment in the form attached hereto as Exhibit A which
         amendment, subject to the approval of the holders of a majority of the
         Parent Common Shares outstanding at the special meeting of stockholders
         referred to in Section 7.3 and the filing thereof with the Secretary of
         State of New York, will become effective immediately prior to the
         Effective Time. The Board of Directors has also approved the amendment
         to Parent's bylaws, and the policy statement with respect to Parent
         Liberty Tracking Shares, in the form attached hereto as Exhibit D, each
         of which will become effective as of the Effective Time.

                   7.17. Intercompany Transactions. Except as otherwise
         expressly provided by the Restructuring, in the event that after the
         date hereof and prior to the Effective Time, the Company or any of its
         Subsidiaries engages in any action or transaction contemplated by
         clause (i) or (ii) of Section 7.1(p), the applicable entities shall
         establish a commercially reasonable arms' length intercompany loan or
         other non-equity based account to reflect such transactions.

                   7.18. Certain Inter-Group Relationships. From and including
         the date hereof to the Effective Time, the Company will and will cause
         its Subsidiaries to comply with the provisions set forth in Schedule
         7.18. At the Effective Time, Parent, on behalf of the Common Stock
         Group (as defined in Schedule 7.18), the Company, on behalf of TCI
         Group, and the appropriate Subsidiary or Subsidiaries of the Company,
         on behalf of the Parent Liberty Group, will enter into an agreement
         having the terms set forth in Schedule 7.18, which agreement shall be
         valid, binding and in full force and effect at the Effective Time.

                   7.19. Cable Joint Ventures. The Company is currently in the
         process of restructuring certain of its cable television system assets
         by contributing certain assets to partnerships and other joint
         ventures. The Company agrees that as and when reasonably requested by
         Parent, the Company will consult with Parent regarding the status of
         such restructuring transactions, including the terms and conditions
         upon which such joint ventures would assume certain indebtedness
         associated with such cable systems.

                   7.20. Certain Actions by Parent and the Surviving
         Corporation. (a) Prior to the Effective Time, neither Parent nor its
         Subsidiaries will enter into any exchange offer or similar transaction
         in which the holders of Parent Common Shares become entitled to
         exchange shares of Parent Common Shares for other securities of Parent
         or any Subsidiary of Parent.



                                       -67-

<PAGE>   73









                   (b) For a period of 15 years following the Effective Time,
         neither Parent nor the Surviving Corporation shall directly or
         indirectly take any action to redeem or change or modify the terms and
         provisions of the preferred stock of Westmarc, Inc. (the "Westmarc
         Preferred") or cause the holders of the Westmarc Preferred to become
         entitled to rights of appraisal, including, without limitation, by
         merger, consolidation, binding share exchange or otherwise, or sell,
         transfer or dispose of all or substantially all of the assets of
         Westmarc, or take any other action the effect of which is to impair
         Westmarc's ability to pay dividends on the Westmarc Preferred in
         accordance with its terms.

                   (c) Prior to the Effective Time, Parent will not issue or
         sell any Parent Liberty Tracking Shares, or issue or grant any options,
         warrants or other rights to acquire Parent Liberty Tracking Shares or
         issue or sell any security which is convertible into or exercisable or
         exchangeable for Parent Liberty Tracking Shares.


                                  ARTICLE VIII

                                   CONDITIONS

                   8.1. Conditions to Each Party's Obligations. The respective
         obligations of each party to consummate the transactions contemplated
         by this Agreement are subject to the fulfillment at or prior to the
         Effective Time of each of the following conditions, any or all of which
         may be waived in whole or in part by the party being benefitted
         thereby, to the extent permitted by applicable Law:

                   (a) Stockholder Approval. The Parent Charter Amendment and
              Parent's issuance of Parent Shares as contemplated hereby shall
              have been duly approved and adopted by the requisite holders of
              Parent Common Shares at the Parent Stockholders Meeting, and this
              Agreement and the transactions contemplated hereby shall have been
              duly approved and adopted by the requisite holders of Shares at
              the Company Stockholders Meeting, in each case, in accordance with
              applicable Law and the Certificates of Incorporation and By-Laws
              of the Parent and the Company, respectively (it being agreed that
              the condition set forth in this Section 8.1(a) shall not be waived
              by the parties), and the Parent Charter Amendment, and the
              amendment to Parent's bylaws and policy statement set forth in
              Exhibit D, shall each be in full force and effect;

                   (b) HSR Act; FCC. Any waiting period applicable to this
              Agreement and the transactions contemplated hereby under the HSR
              Act shall have expired or early termination thereof shall have
              been granted, and the FCC Consent shall


                                       -68-

<PAGE>   74









              have been granted, in each case without limitation, restriction or
              condition that has or would have a Material Adverse Effect on the
              Company or on the TCI Group or on the Liberty/Ventures Group (or
              an effect on Parent and its Subsidiaries that, were such effect
              applied to the Company and its Subsidiaries, would constitute a
              Material Adverse Effect on the Company or on the TCI Group).

                   (c) No Injunction. There shall not be in effect any judgment,
              writ, order, injunction or decree of any court or Governmental
              Body of competent jurisdiction, restraining, enjoining or
              otherwise preventing consummation of the transactions contemplated
              by this Agreement or permitting such consummation only subject to
              any condition or restriction that has or would have a Material
              Adverse Effect on the Company or on the TCI Group or on the
              Liberty/ Ventures Group (or an effect on Parent and its
              Subsidiaries that, were such effect applied to the Company and its
              Subsidiaries, would constitute a Material Adverse Effect on the
              Company or on the TCI Group).

                   (d) Registration Statement. The Registration Statement shall
              have been declared effective and shall be effective at the
              Effective Time, and no stop order suspending effectiveness shall
              have been issued, no action, suit, proceeding or investigation by
              the SEC to suspend the effectiveness thereof shall have been
              initiated and be continuing, and all necessary approvals under
              state securities laws or the Securities Act or Exchange Act
              relating to the issuance or trading of the Parent Common Shares or
              the Parent Liberty Tracking Shares shall have been received.

                   (e) Listing of Parent Shares. The Parent Common Shares and
              the Parent Liberty Tracking Shares required to be issued hereunder
              shall have been approved for listing on the NYSE (or, in the case
              of the Parent Liberty Tracking Shares, at Parent's option, on the
              National Market System of NASDAQ), subject only to official notice
              of issuance.

                   8.2. Conditions to Obligations of Parent and Merger Sub. The
         respective obligations of Parent and Merger Sub to consummate the
         transactions contemplated by this Agreement are subject to the
         fulfillment at or prior to the Effective Time of each of the following
         additional conditions, any or all of which may be waived in whole or
         part by Parent to the extent permitted by applicable Law:

                   (a) Representations and Warranties True. The representations
              and warranties of the Company contained herein or otherwise
              required to be made after the date hereof in a writing expressly
              referred to herein by or on


                                       -69-

<PAGE>   75









              behalf of the Company pursuant to this Agreement, to the extent
              qualified by materiality or Material Adverse Effect, shall have
              been true and, to the extent not qualified by materiality or
              Material Adverse Effect, shall have been true in all material
              respects, in each case when made and on and as of the Closing Date
              as though made on and as of the Closing Date (except for
              representations and warranties made as of a specified date, which
              need be true, or true in all material respects, as the case may
              be, only as of the specified date).

                   (b) Performance. The Company shall have performed or complied
              in all material respects with all agreements and conditions
              contained herein required to be performed or complied with by it
              prior to or at the time of the Closing.

                   (c) Compliance Certificate. The Company shall have delivered
              to Parent a certificate, dated the date of the Closing, signed by
              the President or any Vice President of the Company (but without
              personal liability thereto), certifying as to the fulfillment of
              the conditions specified in Sections 8.2(a) and 8.2(b).

                   (d) Tax Opinion. Parent shall have received an opinion of
              Wachtell, Lipton, Rosen & Katz, dated the Effective Time, to the
              effect that (i) the Merger should be treated for federal income
              tax purposes as a reorganization within the meaning of Section
              368(a) of the Code; (ii) each of Parent, Merger Sub and the
              Company should be a party to the reorganization within the meaning
              of Section 368(b) of the Code; (iii) no gain or loss should be
              recognized by the Company, Parent or Merger Sub as a result of the
              Merger; and (iv) no gain or loss should be recognized by a
              stockholder of the Company as a result of the Merger with respect
              to the Shares converted solely into Parent Common Shares or Parent
              Liberty Tracking Shares. In rendering such opinion, Wachtell,
              Lipton, Rosen & Katz may receive and rely upon representations
              contained in certificates of the Company, Parent, Merger Sub and
              others, in each case in form and substance reasonably acceptable
              to Wachtell, Lipton, Rosen & Katz.

                   (e) Other Authorizations. All Authorizations (other than
              those specified in Section 8.1(b) hereof) required in connection
              with the execution and delivery of this Agreement and the
              performance of the obligations hereunder shall have been made or
              obtained, without any limitation, restriction or condition that
              has or would have a Material Adverse Effect on the Company (or an
              effect on Parent and its Subsidiaries that, were such effect
              applied to the Company and its Subsidiaries, would constitute a
              Material



                                       -70-

<PAGE>   76









              Adverse Effect on the Company), except for such Authorizations the
              failure of which to have been made or obtained does not and would
              not, individually or in the aggregate, have a Material Adverse
              Effect on the Company (or an effect on Parent and its Subsidiaries
              that, were such effect applied to the Company and its
              Subsidiaries, would constitute a Material Adverse Effect on the
              Company).

                   8.3. Conditions to Obligations of the Company. The
         obligations of the Company to consummate the transactions contemplated
         by this Agreement are subject to the fulfillment at or prior to the
         Effective Time of each of the following conditions, any or all of which
         may be waived in whole or in part by the Company to the extent
         permitted by applicable Law:

                   (a) Representations and Warranties True. The representations
              and warranties of Parent and Merger Sub contained herein or
              otherwise required to be made after the date hereof in a writing
              expressly referred to herein by or on behalf of Parent and Merger
              Sub pursuant to this Agreement, to the extent qualified by
              materiality or Material Adverse Effect, shall have been true and,
              to the extent not qualified by materiality or Material Adverse
              Effect, shall have been true in all material respects, in each
              case when made and on and as of the Closing Date as though made on
              and as of the Closing Date (except for representations and
              warranties made as of a specified date, which need be true, or
              true in all material respects, as the case may be, only as of the
              specified date).

                   (b) Performance. Parent shall have performed or complied in
              all material respects with all agreements and conditions contained
              herein required to be performed or complied with by it prior to or
              at the time of the Closing.

                   (c) Compliance Certificate. Parent shall have delivered to
              the Company a certificate, dated the date of the Closing, signed
              by the President or any Vice President of Parent (but without
              personal liability thereto), certifying as to the fulfillment of
              the conditions specified in Sections 8.3(a) and 8.2(b).

                   (d) Tax Opinion. The Company shall have received an opinion
              of Baker & Botts, L.L.P., dated the Effective Time, to the effect
              that (i) the Merger should be treated for federal income tax
              purposes as a reorganization within the meaning of Section 368(a)
              of the Code; (ii) each of Parent, Merger Sub and the Company
              should be a party to the reorganization within the meaning of
              Section 368(b) of the Code; (iii) no gain or loss should be
              recognized by the Company as a result of the Merger; and (iv) no
              gain or loss should be recognized by a stockholder of the Company


                                       -71-

<PAGE>   77









              as a result of the Merger with respect to the Shares converted
              solely into Parent Common Shares or Parent Liberty Tracking
              Shares. In rendering such opinion, Baker & Botts, L.L.P. may
              receive and rely upon representations contained in certificates of
              Parent and Merger Sub, the Company and others, in each case in
              form and substance reasonably acceptable to Baker & Botts, L.L.P.


                                   ARTICLE IX

                                   TERMINATION

                   9.1. Termination by Mutual Consent. This Agreement may be
         terminated and the Merger may be abandoned at any time prior to the
         Effective Time, before or after the approval by holders of Shares,
         either by the mutual written consent of Parent and the Company, or by
         mutual action of their respective Boards of Directors.

                   9.2. Termination by Either Parent or the Company. This
         Agreement may be terminated (upon notice from the terminating party to
         the other parties) and the Merger may be abandoned by action of the
         Board of Directors of either Parent or the Company if: (a) the Merger
         shall not have been consummated by March 31, 1999, provided that the
         right to terminate this Agreement under this clause (a) shall not be
         available to any party whose failure to fulfill any obligation under
         this Agreement has been the cause of or resulted in the failure of the
         Merger to occur on or before such date, and provided, further, that in
         the event that the failure of the Merger to occur on or before March
         31, 1999 is the result of (i) a delay attributable to any transaction
         permitted pursuant to Section 7.5(c) or (ii) the failure of any of the
         conditions set forth in Section 8.1(b), 8.1(c) or 8.2(e) to be
         satisfied or waived prior to March 31, 1999, either Parent or the
         Company may extend such date to June 30, 1999 and, if such conditions
         have not been satisfied or waived by such date, to further extend such
         date to September 30, 1999 (so long as the party extending such date
         believes in good faith that such conditions are capable of being
         satisfied by such date), (b) any court of competent jurisdiction in the
         United States or Governmental Body in the United States shall have
         issued an order, decree or ruling or taken any other action permanently
         restraining, enjoining or otherwise prohibiting the Merger and such
         order, decree, ruling or other action shall have become final and
         nonappealable, (c) the amendment to the Parent Charter and Parent's
         issuance of Parent Common Shares and Parent Liberty Tracking Shares as
         contemplated hereby are not duly approved and adopted by the requisite
         holders of Parent Common Shares on or prior to March 31, 1999, or (d)
         this Agreement and the transactions contemplated hereby are not duly
         approved and adopted by the requisite holders of Shares on or prior to
         March 31, 1999. In


                                       -72-

<PAGE>   78









         addition, this Agreement may be terminated by Parent (upon notice from
         Parent to the Company) and the Merger may be abandoned by action of the
         Board of Directors of Parent if any of the Stockholders shall have
         breached any of their representations, covenants or obligations under
         the Voting Agreement in any material respect and such breach shall not
         be curable.

                   9.3. Termination by the Company. This Agreement may be
         terminated (upon notice to Parent) by the Company and the Merger may be
         abandoned by action of the Board of Directors of the Company if (a) the
         Board of Directors of Parent shall have withdrawn or modified its
         approval or recommendation of the issuance of Parent Shares in the
         Merger or the Parent Charter Amendment as permitted by Section 7.3(a)
         or (b) Parent or Merger Sub breaches or fails in any material respect
         to perform or comply with its covenants and agreements contained herein
         or breaches its representations and warranties, in each case that is
         not curable, such that the conditions set forth in Sections 8.3(a) and
         (b) cannot be satisfied.

                   9.4. Termination by Parent and Merger Sub. This Agreement may
         be terminated (upon notice to the Company) by Parent and Merger Sub,
         and the Merger may be abandoned by action of the Board of Directors of
         Parent if (a) the Board of Directors of the Company shall have
         withdrawn or modified its approval or recommendation of this Agreement
         or the Merger as permitted by Section 7.2(b) or 7.3(a) or (b) the
         Company breaches or fails in any material respect to perform or comply
         with its covenants and agreements contained herein or breaches its
         representations and warranties, in each case that is not curable, such
         that the conditions set forth in Section 8.2(a) and (b) cannot be
         satisfied.

                   9.5. Effect of Termination and Abandonment. In the event of
         termination of this Agreement and abandonment of the Merger pursuant to
         this Article IX, no party hereto (or any of its directors or officers)
         shall have any liability or further obligation to any other party to
         this Agreement, except as provided in Section 7.6 or Section 9.6, and
         except that nothing herein will relieve any party from liability for
         any breach of this Agreement.

                   9.6. Payment of Certain Fees. (a) In the event that (i)
         Parent announces or effects a merger, acquisition, joint venture,
         business combination or other transaction, as contemplated by Section
         7.5(c), that involves the acquisition of significant businesses, assets
         or properties, (ii) such announcement or transaction is a significant
         factor in the failure of any of the conditions set forth in Section
         8.1(b), 8.1(c) or 8.2(e) to be satisfied or waived prior to September
         30, 1999 (which test will not be met if such announcement or
         transaction would not have been a significant factor but for a
         transaction or transactions announced by the Company following


                                       -73-

<PAGE>   79









         execution of this Agreement), (iii) this Agreement is terminated
         pursuant to Section 9.2(a), and (iv) Parent would have been obligated
         to consummate the Merger but for the failure of any of the conditions
         set forth in Section 8.1(b), 8.1(c) or 8.2(e) to be satisfied or waived
         prior to the date of such termination, then promptly following such
         termination Parent will pay to the Company the sum of $1.75 billion in
         cash.

                   (b) In the event that this Agreement is terminated pursuant
         to Section 9.2(c) or 9.3(a), promptly following such termination Parent
         will pay to the Company the sum of $1.75 billion in cash. In the event
         that that this Agreement is terminated pursuant to Section 9.2(d) or
         9.4(a), promptly following such termination the Company will pay to
         Parent the sum of $1.75 billion in cash.


                                    ARTICLE X

                            MISCELLANEOUS AND GENERAL

                   10.1. Expenses. Except as set forth in Sections 7.11 and
         7.18, each party shall bear its own expenses, including the fees and
         expenses of any attorneys, accountants, investment bankers, brokers,
         finders or other intermediaries or other Persons engaged by it,
         incurred in connection with this Agreement and the transactions
         contemplated hereby.

                   10.2. Notices, Etc. All notices, requests, demands or other
         communications required by or otherwise with respect to this Agreement
         shall be in writing and shall be deemed to have been duly given to any
         party when delivered personally (by courier service or otherwise), when
         delivered by telecopy and confirmed by return telecopy, or upon receipt
         after being mailed by first-class mail, postage prepaid and return
         receipt requested in each case to the applicable addresses set forth
         below:

                   If to the Company:

                        Tele-Communications, Inc.
                        Terrance Tower II
                        5619 DTC Parkway
                        Englewood, Colorado  80111-3000
                        Attn:  Stephen M. Brett, Esq.
                        Facsimile:  (303) 488-3245









                                       -74-

<PAGE>   80









                   with a copy to:

                        Baker & Botts L.L.P.
                        599 Lexington Avenue
                        New York, New York  10022
                       Attn: Elizabeth M. Markowski, Esq.
                           Frederick H. McGrath, Esq.
                        Facsimile:  (212)  705-5125

                   If to Parent or Merger Sub:

                        AT&T, Inc.
                        295 North Maple Avenue
                         Basking Ridge, New Jersey 07920
                        Attn:  Vice President-Law
                             and Corporate Secretary
                            Facsimile: (908) 221-6618

                   with a copy to:

                         Wachtell, Lipton, Rosen & Katz
                        51 West 52nd Street
                        New York, New York  10019
                        Attn:  Richard D. Katcher, Esq.
                               Steven A. Rosenblum, Esq.
                        Facsimile:  (212) 403-2000

         or to such other address as such party shall have designated by notice
         so given to each other party.

                   10.3. Amendments, Waivers, Etc. This Agreement may be
         amended, changed, supplemented, waived or otherwise modified only by an
         instrument in writing signed by the party (or, in the case of Section
         7.7, the Indemnified Party) against whom enforcement is sought;
         provided that, after the adoption of this Agreement by the stockholders
         of the Company, no such amendment, change, supplement or waiver shall
         be made without the further requisite approval of such stockholders if
         such amendment, change, supplement or waiver by law requires the
         further approval by such stockholders.

                   10.4. No Assignment. This Agreement shall be binding upon and
         shall inure to the benefit of and be enforceable by the parties and
         their respective successors and assigns; provided that, except as
         otherwise expressly set forth in this Agreement, neither the rights nor
         the obligations of any party may be assigned or delegated without the
         prior written consent of the other party.

                   10.5.  Entire Agreement.  Except as otherwise pro-
         vided herein, this Agreement (together with the Confidentiality




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<PAGE>   81









         Agreement between Parent and the Company and the other agreements
         expressly contemplated hereby) embodies the entire agreement and
         understanding between the parties relating to the subject matter hereof
         and supersedes all prior agreements and understandings relating to such
         subject matter. There are no representations, warranties or covenants
         by the parties hereto relating to such subject matter other than those
         expressly set forth in this Agreement (including the Company Disclosure
         Statement and the Parent Disclosure Statement) and any writings
         expressly required hereby.

                   10.6. Specific Performance. The parties acknowledge that
         money damages are not an adequate remedy for violations of this
         Agreement and that any party may, in its sole discretion, apply to a
         court of competent jurisdiction for specific performance or injunctive
         or such other relief as such court may deem just and proper in order to
         enforce this Agreement or prevent any violation hereof and, to the
         extent permitted by applicable Law, each party waives any objection to
         the imposition of such relief.

                   10.7. Remedies Cumulative. All rights, powers and remedies
         provided under this Agreement or otherwise available in respect hereof
         at law or in equity shall be cumulative and not alternative, and the
         exercise or beginning of the exercise of any thereof by any party shall
         not preclude the simultaneous or later exercise of any other such
         right, power or remedy by such party.

                   10.8. No Waiver. The failure of any party hereto to exercise
         any right, power or remedy provided under this Agreement or otherwise
         available in respect hereof at law or in equity, or to insist upon
         compliance by any other party hereto with its obligations hereunder,
         and any custom or practice of the parties at variance with the terms
         hereof, shall not constitute a waiver by such party of its right to
         exercise any such or other right, power or remedy or to demand such
         compliance.

                   10.9. No Third Party Beneficiaries. This Agreement is not
         intended to be for the benefit of and shall not be enforceable by any
         Person or entity who or which is not a party hereto, except for the
         indemnification provisions contained in Section 7.7, which provisions
         may be enforced by any Indemnified Party referred to therein and except
         that the provisions of Section 7.3(b) may be enforced by holders of
         Shares. Notwithstanding anything to the contrary contained in this
         Agreement, the provisions of Section 7.7 of this Agreement may not be
         amended or altered in any manner with respect to any Indemnified Party
         without the written consent of such Indemnified Party. No assignment of
         this Agreement shall relieve Parent from its obligations to any
         Indemnified Party contained in Section 7.7 of this Agreement.


                                       -76-

<PAGE>   82









                   10.10. Jurisdiction. Each party hereby irrevocably submits to
         the exclusive jurisdiction of the United States District Court for the
         District of Delaware or the Chancery Court of the State of Delaware in
         any action, suit or proceeding arising in connection with this
         Agreement, and agrees that any such action, suit or proceeding shall be
         brought only in such court (and waives any objection based on forum non
         conveniens or any other objection to venue therein); provided, however,
         that such consent to jurisdiction is solely for the purpose referred to
         in this Section 10.10 and shall not be deemed to be a general
         submission to the jurisdiction of said courts or in the State of
         Delaware other than for such purpose. Parent, Merger Sub and the
         Company hereby waive any right to a trial by jury in connection with
         any such action, suit or proceeding.

                   10.11. Public Announcements. Parent and the Company will
         agree upon the timing and content of the initial press release to be
         issued describing the transactions contemplated by this Agreement, and
         will not make any public announcement thereof prior to reaching such
         agreement unless required to do so by applicable Law or regulation. To
         the extent reasonably requested by either party, each party will
         thereafter consult with and provide reasonable cooperation to the other
         in connection with the issuance of further press releases or other
         public documents describing the transactions contemplated by this
         Agreement.

                   10.12. Governing Law. This Agreement and all disputes
         hereunder shall be governed by and construed and enforced in accordance
         with the internal laws of the State of Delaware, without regard to
         principles of conflict of laws.

                   10.13. Name, Captions, Etc. The name assigned this Agreement
         and the section captions used herein are for convenience of reference
         only and shall not affect the interpretation or construction hereof.
         Unless otherwise specified, (a) the terms "hereof", "herein" and
         similar terms refer to this Agreement as a whole and (b) references
         herein to Articles or Sections refer to articles or sections of this
         Agreement. Wherever appearing herein, the word "including" shall be
         deemed to be followed by the words "without limitation."

                   10.14. Counterparts. This Agreement may be executed in any
         number of counterparts, each of which shall be deemed to be an
         original, but all of which together shall constitute one instrument.
         Each counterpart may consist of a number of copies each signed by less
         than all, but together signed by all, the parties hereto.

                   10.15. Survival of Representations, Warranties, Covenants and
         Agreements. The respective representations and warranties of the
         parties contained herein or in any certificates or other documents
         delivered prior to or at the Closing shall


                                       -77-

<PAGE>   83









         survive the execution and delivery of this Agreement, notwithstanding
         any investigation made or information obtained by the other parties,
         but shall terminate at the Effective Time. The respective covenants and
         agreements of the parties contained herein or in any other documents
         delivered prior to or at the Closing shall survive the execution and
         delivery of this Agreement and shall only terminate in accordance with
         their respective terms.

                   10.16. Severability. In case any provision in this Agreement
         shall be held invalid, illegal or unenforceable in a jurisdiction, such
         provision shall be modified or deleted, as to the jurisdiction
         involved, only to the extent necessary to render the same valid, legal
         and enforceable, and the validity, legality and enforceability of the
         remaining provisions hereof shall not in any way be affected or
         impaired thereby nor shall the validity, legality or enforceability of
         such provision be affected thereby in any other jurisdiction.

                   10.17. Disclosure Statements. The parties acknowledge that
         the Company Disclosure Statement and the Parent Disclosure Statement to
         this Agreement (i) relate to certain matters concerning the disclosures
         required and transactions contemplated by this Agreement, (ii) are
         qualified in their entirety by reference to specific provisions of this
         Agreement, (iii) are not intended to constitute and shall not be
         construed as indicating that such matter is required to be disclosed,
         nor shall such disclosure be construed as an admission that such
         information is material with respect to the Company or Parent, as the
         case may be, except to the extent required by this Agreement, and (iv)
         disclosure of the information contained in one section or part of the
         Company Disclosure Statement or the Parent Disclosure Statement shall
         be deemed as proper disclosure for all sections or parts of the Company
         Disclosure Statement or the Parent Disclosure Statement, as the case
         may be, only if appropriately cross-referenced or if the relevance
         thereof is reasonably apparent from the context in which it appears.

















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<PAGE>   84









                   IN WITNESS WHEREOF, this Agreement has been executed and
         delivered by the parties set forth below.

                                    TELE-COMMUNICATIONS, INC.



                                    By: /s/ John C. Malone
                                       Name:  John C. Malone
                                       Title:  Chairman and CEO



                                   AT&T CORP.



                                    By: /s/ C. Michael Armstrong
                                       Name:  C. Michael Armstrong
                                       Title:  Chairman and CEO



                                    ITALY MERGER CORP.



                                    By: /s/ Daniel E. Somers
                                       Name:  Daniel E. Somers
                                       Title:  President