THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Liberty Media International, Inc. (LBTYA)

5/28/2004 10K Information

CERTAIN INTER-COMPANY AGREEMENTS

We are currently a subsidiary of Liberty Media Corporation, which we refer to as "LMC." LMC was a wholly owned subsidiary of Tele-Communications, Inc. ("TCI") from August 1994 to March 9, 1999.

Agreements with LMC

Following the spin off, our company and LMC will operate independently, and neither will have any ownership interest in the other. In order to govern certain of the ongoing relationships between our company and LMC after the spin off and to provide mechanisms for an orderly transition, we and LMC are entering into certain agreements pursuant to which we will obtain services and facilities and a short-term credit facility from LMC, and we and LMC will indemnify each other against certain liabilities arising from our respective businesses. The following is a summary of the terms of the material agreements we are entering into with LMC. This summary is qualified by reference to the full text of the agreements which have been filed as exhibits to the Form 10 registration statement of which this information statement is a part.

Reorganization Agreement

LMC and a number of LMC subsidiaries, including our company, have entered into a reorganization agreement to provide for, among other things, the principal corporate transactions required to effect the spin off, certain conditions to the spin off and provisions governing the relationship between our company and LMC with respect to and resulting from the spin off.

The reorganization agreement provides that, on or prior to the record date, LMC will transfer to us, or cause its other subsidiaries to transfer to us, substantially all of the assets comprising LMC's International Group not already held by us, cash and certain financial assets. The reorganization agreement also provides for mutual indemnification obligations, which are designed to make our company financially responsible for substantially all of the liabilities relating to the businesses of LMC's International Group prior to the spin off, as well as for all liabilities incurred by our company after the spin off, and to make LMC financially responsible for all potential liabilities of our company which are not related to our businesses, including, for example, liabilities arising as a result of our company having been a subsidiary of LMC.

In addition, the reorganization agreement provides for each of our company and LMC to preserve the confidentiality of all confidential or proprietary information of the other party for three years following the spin off, subject to customary exceptions, including disclosures required by law, court order or government regulation.

The reorganization agreement also provides for adjustments to be made, in connection with the spin off, to stock incentive awards with respect to LMC common stock outstanding as of the record date and the consequent issuance of stock incentive awards with respect to our common stock. For more information on the effect of the spin off on these incentive awards, see "The Spin Off—Treatment of LMC Stock Incentive Awards."

The spin off is conditioned on the receipt by LMC of an opinion from Skadden, Arps, Slate, Meagher & Flom LLP to the effect that, among other things, the spin off will qualify as a tax-free spin off to LMC's shareholders and to LMC for U.S. federal income tax purposes.

The reorganization agreement may be terminated, and the spin off may be abandoned, at any time prior to the date of the spin off, by and in the sole discretion of the LMC board of directors, without the approval of LMC's shareholders or anyone else. In such event, LMC will have no liability to any person under the reorganization agreement or any obligation to effect the spin off.

Facilities and Services Agreement

Pursuant to the facilities and services agreement, following the spin off, LMC will provide us with specified services and benefits, including:

(1) the lease of office space at LMC's executive headquarters, including furniture and furnishings and the use of building services;

(2) telephone, utilities, technical assistance (including information technology, management information systems, network maintenance and data storage), computers, office supplies, postage, courier service, cafeteria access and other office and administrative services;

(3) insurance administration and risk management services;

(4) other services typically performed by LMC's accounting, treasury, engineering, legal, investor relations and tax department personnel; and

(5) such other services as we and LMC may from time to time mutually determine to be necessary or desirable.

We will make payments to LMC under the facilities and services agreement based upon an annual per-square foot occupancy charge and an allocated portion of LMC's personnel costs (taking into account wages and fringe benefits) of the departments expected to provide services to us. The allocated portion of these personnel costs will be based upon the anticipated percentages of time to be spent by LMC personnel in each department performing services for us under the facilities and services agreement. We will also reimburse LMC for direct out-of-pocket costs incurred by LMC for third party services provided to us that are not included in our occupancy charge. We and LMC will evaluate all charges for reasonableness semi-annually and make any adjustments to these charges as we and LMC mutually agree upon. Based upon the square footage currently occupied by us, the current personnel costs of the affected LMC departments and our anticipated percentage usage thereof, the fees payable to LMC for the first year of the facilities and services agreement are expected to be approximately $2.3 million.

The facilities and services agreement will continue in effect for two years, unless earlier terminated (1) by us at any time on at least 30 days' prior written notice, (2) by LMC at any time on at least 180 days' prior notice, (3) by LMC upon written notice to our company, following certain changes in control of our company or our company being the subject of certain bankruptcy or insolvency-related events, or (4) by us upon written notice to LMC, following certain changes in control of LMC or LMC being the subject of certain bankruptcy or insolvency-related events.

Agreements for Aircraft Joint Ownership and Management

LMC has agreed to transfer to us, prior to the spin off, a 25% ownership interest in two of LMC's aircrafts. Following the interest transfer, we and LMC will share the costs of LMC's flight department and the costs of maintaining and operating the jointly owned aircrafts. Costs will be allocated based upon either our respective usage or ownership of such aircrafts, depending on the type of cost.

Tax Sharing Agreement

On or before the date of the spin off, we will enter into a tax sharing agreement with LMC that governs LMC's and our respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits and other tax matters. References in this summary description of the tax sharing agreement to the terms "tax" or "taxes" mean taxes as well as any interest, penalties, additions to tax or additional amounts in respect of such taxes.

We and our eligible subsidiaries currently join with LMC in the filing of a consolidated return for U.S. federal income tax purposes and also join with LMC in the filing of certain consolidated, combined, and unitary returns for state, local, and foreign tax purposes. However, for periods (or portions thereof) beginning after the spin off, we will not join with LMC in the filing of any federal, state, local or foreign consolidated, combined or unitary tax returns.

Under the tax sharing agreement, except as described below, LMC will be responsible for all U.S. federal, state, local and foreign income taxes reported on a consolidated, combined or unitary return that includes us or one of our subsidiaries, on the one hand, and LMC or one of its subsidiaries (other than us or any of our subsidiaries), on the other hand. In addition, except for certain liabilities relating to dual consolidated losses and gain recognition agreements that are described below, LMC will indemnify us and our subsidiaries against any liabilities arising under its tax sharing agreement with AT&T Corp. We will be responsible for all other taxes (including income taxes not reported on a consolidated, combined, or unitary return by LMC or its subsidiaries) that are attributable to us or one of our subsidiaries, whether accruing before, on or after the spin off. We will have no obligation to reimburse LMC for the use, in any period following the spin off, of a tax benefit created before the spin off, regardless of whether such benefit arose with respect to taxes reported on a consolidated, combined or unitary basis.

Notwithstanding the tax sharing agreement, under U.S. Treasury Regulations, each member of a consolidated group is severally liable for the U.S. federal income tax liability of each other member of the consolidated group. Accordingly, with respect to periods in which we (or our subsidiaries) have been included in LMC's, AT&T Corp.'s or Tele-Communications, Inc.'s consolidated group, we (or our subsidiaries) could be liable to the U.S. government for any U.S. federal income tax liability incurred, but not discharged, by any other member of such consolidated group. However, if any such liability were imposed, we would generally be entitled to be indemnified by LMC for tax liabilities allocated to LMC under the tax sharing agreement.

Our ability to obtain a refund from a carryback of a tax benefit to a year in which we and LMC (or any of our respective subsidiaries) joined in the filing of a consolidated, combined or unitary return will be at the discretion of LMC. Moreover, any refund that we may obtain will be net of any increase in taxes resulting from the carryback for which LMC is otherwise liable under the tax sharing agreement.

The tax sharing agreement provides that we will enter into a closing agreement with the Internal Revenue Service with respect to unrecaptured dual consolidated losses attributable to us or any of our subsidiaries under Section 1503(d) of the Code. Moreover, we agree to be liable for any deemed adjustment to taxes resulting from the recapture of any dual consolidated loss so attributed to us, if such loss is required to be recaptured as a result of one or more specified events described in the U.S. Treasury Regulations occurring after the distribution date. For purposes of the tax sharing agreement, the deemed adjustment to taxes generally will be an amount equal to the recaptured dual consolidated loss multiplied by the highest applicable statutory rate for the applicable taxing jurisdiction, plus interest and any penalties. We estimate the amount of dual consolidated losses attributable to us and our subsidiaries to be approximately $53 million as of December 31, 2003. We must also indemnify and hold harmless LMC and its subsidiaries against any liability arising under LMC's tax sharing agreement with AT&T Corp. with respect to such recaptured dual consolidated loss.

The tax sharing agreement provides that we will be liable for any deemed adjustment to taxes resulting from the recognition of gain pursuant to a gain recognition agreement entered into by LMC (or any parent of a consolidated group of which we or any of our subsidiaries were formerly a member) in accordance with Treasury Regulations Section 1.367(a)-8(b), but only if the recognition of such gain results in an adjustment to the basis of any property held by us or any of our subsidiaries. For purposes of the tax sharing agreement, the deemed adjustment to taxes generally will be an amount equal to the gain recognized multiplied by the highest applicable statutory rate for the applicable taxing jurisdiction, plus interest and any penalties. We must also indemnify and hold harmless LMC and its subsidiaries against any liability arising under its tax sharing agreement with AT&T Corp. with respect to such recognition of gain. However, the amount we are required to indemnify LMC and its subsidiaries for any deemed adjustment to taxes or any liability arising under LMC's tax sharing agreement with AT&T Corp. will be reduced by any amount that LMC or any of its subsidiaries receives pursuant to any indemnification arrangement with any other person arising from or relating to recognition of gain under such gain recognition agreement.

To the extent permitted by applicable tax law, we and LMC will treat any payments made under the tax sharing agreement as a capital contribution or distribution (as applicable) immediately prior to the spin off, and accordingly, as not includible in the taxable income of the recipient. However, if any payment causes, directly or indirectly, an increase in the taxable income of the recipient (or its affiliates), the payor's payment obligation will be grossed up to take into account the deemed taxes owed by the recipient (or its affiliates).

We will be responsible for preparing and filing all tax returns that include us or one of our subsidiaries other than any consolidated, combined or unitary income tax return that includes us or one of our subsidiaries, on the one hand, and LMC or one of its subsidiaries (other than us or any of our subsidiaries), on the other hand, and we will have the authority to respond to and conduct all tax proceedings, including tax audits, involving any taxes or any deemed adjustment to taxes reported on such tax returns. LMC will be responsible for preparing and filing all consolidated, combined or unitary income tax returns that include us or one of our subsidiaries, on the one hand, and LMC or one of its subsidiaries (other than us or any of our subsidiaries), on the other hand, and LMC will have the authority to respond to and conduct all tax proceedings, including tax audits, relating to taxes or any deemed adjustment to taxes reported on such tax returns. LMC will also have the authority to respond to and conduct all tax proceedings relating to any liability arising under its tax sharing agreement with AT&T Corp. We will be entitled to participate in any tax proceeding involving any taxes or deemed adjustment to taxes, or any liabilities under LMC's tax sharing agreement with AT&T Corp., for which we are liable under the tax sharing agreement. The tax sharing agreement further provides for cooperation between LMC and our company with respect to tax matters, the exchange of information and the retention of records that may affect the tax liabilities of the parties to the agreement.

Finally, the tax sharing agreement requires that neither we nor any of our subsidiaries will take, or fail to take, any action where such action, or failure to act, would be inconsistent with or prohibit the spin off from qualifying as a tax-free transaction to LMC and to you under Section 355 of the Code. Moreover, we must indemnify LMC and its subsidiaries, officers and directors for any loss, including any deemed adjustment to taxes of LMC, resulting from (1) such action or failure to act, if such action or failure to act precludes the spin off from qualifying as a tax-free transaction or (2) any breach of any representation or covenant given by us or one of our subsidiaries in connection with the tax opinion delivered to LMC by Skadden, Arps, Slate, Meagher & Flom LLP and any other tax opinion delivered to LMC, in each case relating to the qualification of the spin off as a tax-free distribution described in Section 355 of the Code. See "The Spin Off—Material U.S. Federal Income Tax Consequences of the Spin Off." For purposes of the tax sharing agreement, the deemed adjustment to taxes generally will be an amount equal to the gain recognized by LMC multiplied by the highest applicable statutory rate for the applicable taxing jurisdiction, plus interest and any penalties.

Short-Term Credit Facility

LMC has agreed to make loans to us from time to time through December 31, 2004, up to an aggregate principal amount of $500 million (less the amount of certain inter-company notes outstanding between a subsidiary of our company and LMC). The loans will bear interest at 6% per annum, compounded semi-annually. Proceeds of the loans may be used to fund working capital requirements, investments and acquisitions. We will be required to use our reasonable best efforts to obtain external equity or debt financing after the spin off and to make mandatory prepayments of the loans from the proceeds of such external financing. Any such prepayment will reduce the available amount of loans we may borrow from LMC. The outstanding principal amount of the loans, together with accrued interest, will be due and payable on March 31, 2005, whether or not we have obtained sufficient external financing.

Other

We have also entered into certain other arrangements with LMC with respect to specific assets which have been contributed to us pursuant to the reorganization agreement, such as our interest in J-COM. For more information on the arrangements relating to our interest in J-COM, see "Business—Operations—Japan—Jupiter Telecommunications Co., Ltd."

Services Agreement with UGC

We and our subsidiary, UGC, are entering into an agreement pursuant to which we and UGC will obtain certain services from each other.

Pursuant to the services agreement, following the spin off, UGC will provide us with specified services and benefits, including employee benefit administration, payroll, tax withholding, workers' compensation administration and enrollment in UGC's benefit plans, in each case with respect to persons employed by our company following the spin off, and such other services as we and UGC may from time to time mutually determine to be necessary or desirable. Also, pursuant to the services agreement, we will provide to UGC certain services typically performed by accounting and tax department personnel, which may include services provided to us by LMC's accounting and tax department personnel pursuant to our facilities and services agreement with LMC.

We will pay UGC an annual fee of $20,000 for providing the foregoing benefits and services to our company and our employees. In addition, we will reimburse UGC for direct out-of-pocket costs incurred by UGC for third party services in providing the foregoing benefits and services to our company and our employees. UGC will pay us the portion of any accounting or tax department personnel costs (taking into account wages and fringe benefits) that is expected to be attributable to time spent performing services for UGC under the services agreement. We and UGC will evaluate all charges for reasonableness periodically and make any adjustments as we and UGC mutually agree upon.

The services agreement will continue in effect until the close of business on December 31, 2004. The services agreement will be renewed automatically for one year periods thereafter, unless earlier terminated (1) by us at any time on at least 30 days' prior written notice, (2) by UGC at any time on at least 180 days' prior written notice, (3) by UGC upon written notice to our company, following our company being the subject of certain bankruptcy or insolvency-related events, (4) by us upon written notice to UGC, following UGC being the subject of certain bankruptcy or insolvency-related events, or (5) immediately upon the occurrence of certain changes in control of UGC.