<PAGE>
                                                                  EXHIBIT 10.1.7
 
                            VILLAGE OF LIBERTYVILLE

                            ORDINANCE NO. 97-O- 75
                                                --

                     AN ORDINANCE APPROVING COMPREHENSIVE
                             NEW CABLE REGULATIONS
                    AND A CABLE FRANCHISE RENEWAL AGREEMENT
                  AND LETTER AGREEMENT WITH JONES INTERCABLE

================================================================================

                                Adopted by the
                        President and Board of Trustees
                                      of
                          the Village of Libertyville
                             Lake County, Illinois
                        this 23rd day of September 1997
                             ----        ---------

================================================================================



                    Published in pamphlet form by direction
                 and authority of the Village of Libertyville
                             Lake County, Illinois
                        this 24th day of September 1997
                             ----        ---------
<PAGE>
 
                            VILLAGE OF LIBERTYVILLE
                            ORDINANCE NO. 97-O- 75
                                                --
                                        
                     AN ORDINANCE APPROVING COMPREHENSIVE
                             NEW CABLE REGULATIONS
                    AND A CABLE FRANCHISE RENEWAL AGREEMENT
                  AND LETTER AGREEMENT WITH JONES INTERCABLE
                  ------------------------------------------
                                        
     WHEREAS, Cable TV Fund 12-A, d/b/a Jones Intercable ("Jones Intercable"),
has been the cable television service provider to the Village of Libertyville
pursuant to a cable television franchise granted by the Village pursuant to
Libertyville Ordinance No. 81-O-5 and transferred to Jones Intercable in 1984
(the "Franchise"); and

     WHEREAS, the Franchise was due to expire on March 31, 1996, and has been
extended pursuant to a series of agreements between the Village and Jones
Intercable; and

     WHEREAS, the Village has participated in a Cable Consortium comprised of
the Village, the Villages of Grayslake, Mundelein, and Wauconda, and the County
of Lake; and

     WHEREAS, the Cable Consortium has carefully and thoroughly analyzed the
cable-related needs and interests of the members of the Consortium and has
negotiated with Jones Intercable (i) the terms of a cable ordinance, including
comprehensive regulations applicable to cable television service providers
within the Village and within the jurisdictions of the other members of the
Cable Consortium, (ii) the terms of a cable franchise renewal agreement,
including provisions satisfactory for renewal of the Franchise and of the
franchises between Jones Intercable and the other members of the Consortium, and
(iii) the terms of a letter agreement providing for payment by Jones Intercable
of certain fees, costs, and expenses to the members of the Consortium; and

     WHEREAS, the President and Board of Trustees of the Village of Libertyville
have reviewed all of the provisions of the documents negotiated by the Cable
Consortium, have considered all of the facts and circumstances related to the
Franchise, have analyzed the cable-related needs and

<PAGE>
 
interests of the Village, and have determined that the terms of the proposed
cable ordinance, the proposed cable franchise renewal agreement, and the
proposed letter agreement are appropriate, proper, and in the best interests of
the Village and its residents;

     NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF LIBERTYVILLE, COUNTY OF LAKE, STATE OF ILLINOIS, AS FOLLOWS:

     SECTION ONE: Recital. The foregoing recitals are hereby incorporated
     -----------  -------
herein as if fully set forth.

     SECTION TWO: Approval of Cable Ordinance. The President and Board of
     -----------  ----------------------------                          
Trustees hereby approve the cable ordinance in the form attached hereto and by
this reference incorporated herein as Exhibit A (the "Cable Ordinance").

     SECTION THREE: Approval of Cable Franchise Renewal Agreement. The President
     -------------  ---------------------------------------------             
and Board of Trustees hereby approve the cable franchise renewal agreement in
the form attached hereto and by this reference incorporated herein as Exhibit B
(the "Cable Franchise Renewal Agreement") and hereby authorize and direct the
Village President and the Village Clerk to execute and attest, respectively, the
Cable Franchise Renewal Agreement after Jones Intercable has fully and properly
executed and attested the Cable Franchise Renewal Agreement and after Jones
Intercable has fulfilled the terms of paragraphs numbered 1 and 2 in the Letter
Agreement defined in Section Four of this ordinance.

     SECTION FOUR: Approval of Letter Agreement. The President and Board of
     ------------  ----------------------------                            
Trustees hereby approve the letter agreement between Jones Intercable and the
Village in the form attached hereto and by this reference incorporated herein as
Exhibit C (the "Letter Agreement") and hereby

<PAGE>
 
authorize and direct the Village President and the Village Clerk to execute and
attest, respectively, the Letter Agreement after it has been fully and properly
executed and attested by Jones Intercable.

     SECTION FIVE: Effective Date. This ordinance shall be in full force and
     ------------  --------------                                         
effect from and after its passage, approval, and publication in pamphlet form in
the manner provided by law.



     PASSED this 23rd of September 1997.
                 ----    ---------

     AYES:   LeGATES, LARSON, GIZA, HARGER, FRANZEN, TOPPER
     NAYS:   None
     ABSENT: None

     APPROVED this 24th day of September 1997.
                   ----        ---------


                                       /s/ signature illegible
                                       -----------------------
                                       Village President

ATTEST:

/s/ signature illegible
-----------------------
Village Clerk 


                                      -3-
<PAGE>
 
                            VILLAGE OF LIBERTYVILLE

                     CABLE TELEVISION FRANCHISE ORDINANCE

SEC.1. SHORT TITLE.

       This chapter shall be known and may be cited as the "Village of
Libertyville Cable Television Franchise Ordinance."

SEC.2. DEFINITIONS.

       For the purpose of this chapter the following terms, phrases, words, and
their derivations shall have the meaning given herein:

       "Additional Service" means any subscriber service provided by the grantee
for which a special charge is made based on program or service content, time, or
spectrum space usage.

       "Basic Service" means all subscriber services provided by the Grantee in
one or more service tiers for an established regular monthly fee, which includes
at a minimum the delivery of local broadcast stations, and public, educational
and government access channels. Basic Service does not include optional program
and satellite service tiers, a la carte services, per channel, per program, or
auxiliary services for which a separate charge is made. However, Grantee may
include other satellite signals on the Basic Service tier.

       "Board" means the Village of Libertyville Board of Trustees.

       "Cable Service" means the one-way transmission to subscribers of video
programming or other programming service and subscriber interaction, if any,
which is required for the selection or use of such programming or other
programming service. This definition does not authorize, and shall not be
construed, interpreted, or applied to authorize, the use of the Cable System for
telephone, data, or voice communication services, which services are not
authorized by this chapter.

       "Cable System" or "System" or "Cable Television System" means a system of
antennas, cables, wires, lines, towers, wave guides, or other conductors,
converters, equipment or facilities, designed and constructed for the purpose of
producing, receiving, transmitting, amplifying and distributing, audio, video,
and other forms of electronic, electrical or optical signals, which includes
cable television service and which is located in the Village. The definition
shall not include any such facility that serves or will serve only subscribers
without using Village rights-of-way. The definition of "Cable System" shall not
be construed, interpreted, or applied to authorize telephone, data, or voice
communication services, and no such telephone, data, or voice communication
services are authorized by this chapter. In addition, the definition of "Cable
System" shall not be deemed to circumscribe any valid authority of any
governmental body, including the Village, to regulate the activities of
telephone or telegraph companies, or the provision of any service over the Cable
System that is not a "cable service" as such term is defined herein.


<PAGE>
 
       "Class IV Channel" means a signaling path provided by a cable
communications system to transmit signals of any type from a subscriber terminal
to another point in the cable communications system.

       "Complaint" means any complaint regarding service, picture quality,
charges or other matter relating to the cable system made by a customer to the
Grantee, whether in written or oral form.

       "Control" or "Controlling Interest" means actual working control or
ownership of a System in whatever manner exercised. A rebuttable presumption of
the existence of control or a controlling interest shall arise from the
beneficial ownership, directly or indirectly, by any Person or Entity (except
underwriters during the period in which they are offering securities to the
public) of 5 percent or more of a Cable System or the Franchise under which the
System is operated. A change in the control or controlling interest of an Entity
which has control or a controlling interest in a Grantee shall constitute a
change in the control or controlling interest of the System under the same
criteria. Control or controlling interest as used herein may be held
simultaneously by more than one Person or group of Persons.

       "Converter" means an electronic device which converts signals to a
frequency not susceptible to interference, within the television receiver of a
subscriber, and by an appropriate channel selector also permits a subscriber to
view more than 12 channels delivered by the system at designated converter dial
locations.

       "FCC" means the Federal Communications Commission and any legally
appointed, designated or elected agent or successor.

       "Grantee" means a person or entity to whom or which a franchise under
this chapter is granted by the Village, along with the lawful successors or
assigns of such person or entity.

       "Gross Revenues" means all revenue collected directly or indirectly by
the Grantee, arising from or attributable to the provision of cable service by
the Grantee within the Village including, but not limited to: fees charged
Subscribers for any basic, optional, premium, per-channel or per-program
service; franchise fees; installation and re-connection fees; leased channel
fees; converter rentals and/or sales; program guide revenues; studio or
production equipment rentals; late or administrative fees; upgrade, downgrade or
other change-in-service fees; advertising revenues; revenues from home shopping
and bank-at-home channels; revenues from the sale, exchange, use or cable cast
of any programming developed on the system for community or institutional use;
and any value (at retail price levels) of any non-monetary remuneration received
by Grantee in consideration of the performance of advertising or any other
service of the system; provided, however, that this shall not include any taxes
on services furnished by the Grantee herein imposed directly upon any subscriber
or user by the state, local or other governmental unit and collected by the
Grantee on behalf of the governmental unit.

       "Installation" means the connection of the System from feeder cable to
subscribers' terminals.

       "May" is permissive.

                                      -2-
<PAGE>
 
       "Monitoring" means observing a communications signal, or the absence of a
signal, where the observer is neither the subscriber nor the programmer, whether
the signal is observed by visual or electronic means, for any purpose
whatsoever; provided monitoring shall not include system-wide, non-individually
addressed sweeps of the system for purposes of verifying system integrity,
controlling return paths transmissions, or billing for pay services.

       "Normal Business Hours" means those hours during which similar businesses
in the Village are open to serve customers. In all cases, normal business hours
must include some evening hours at least one night per week, and some weekend
hours.

       "Normal Operating Conditions" means those service conditions that are
within the control of the Grantee. Those conditions that are not within the
control of the Grantee are defined in Section 40 of this chapter.

       "Person" means any natural person, or any association, firm, partnership,
joint venture, corporation, or other legally recognized entity or organization,
whether for-profit or not-for-profit, but excluding the Village.

       "Public Way" means, except where expressly limited by this chapter or a
franchise and, in any event, only to the extent necessary to permit the
installation and maintenance of a Cable System, the surface, the air space above
the surface, and the area below the surface of any public street, highway, lane,
path, alley, sidewalk, boulevard, drive, bridge, conduit, tunnel, park, parkway,
waterway, utility easement (as defined in Section 541 of the Cable Act) or other
public right-of-way now or hereafter held by, or dedicated to, the Village in
which the rights and title of the Village are such as to entitle the Village and
the Grantee to the use thereof for the purpose of installing and maintaining the
Grantee's Cable System. No reference in this chapter to "Public Way" shall be
deemed to be a representation or guarantee by the Village that its title or
interest in any property is sufficient to permit its use for such purpose, and a
franchise shall, by the use of such term, be deemed to grant only such rights to
use property in the Village as the Village may have the right and power to grant
in such franchise.

       "Shall" is mandatory.

       "Service Area" means all areas within the Village corporate limits.

       "Service Interruption" or "Outage" means the loss of either picture or
sound or both for any channel for single or multiple subscriber(s).

       "Street" means the surface of and all rights-of-way and the space above
and below any public street, road, highway, freeway, lane, path, Public Way or
place, sidewalk, alley, court, boulevard, parkway, drive or easement now or
hereafter held by the Village for the purpose of public travel.

       "Subscriber" means any person, firm, Grantee, corporation, or association
lawfully receiving Cable Service provided by a Grantee pursuant to this chapter.


                                      -3-
<PAGE>
 
       "User" means a party utilizing a cable television system channel for
purposes of production or transmission of material to subscribers, as contrasted
with receipt thereof in a subscriber capacity.

       "Village" means the Village of Libertyville, Illinois.

       "Village Administrator" means the Village Administrator of the Village or
his or her designee.

SEC.3. RIGHTS AND PRIVILEGES OF GRANTEE.

       Any cable television franchise granted by the Village shall grant to the
Grantee the right and privilege to erect, construct, operate, and maintain in,
upon, along, across, above, over, and under the streets now in existence and as
may be created or established during its terms any poles, wires, cable,
underground conduits, manholes, and other television conductors and fixtures
necessary for the maintenance and operation of a Cable System, but only in
strict compliance with the provisions of such franchise and this chapter. Each
such franchise shall include the following terms: (1) a franchise fee not less
than the fee required pursuant to Section 29 of this chapter; (2) performance
security not less than the security required pursuant to Section 14 of this
chapter; (3) a franchise term not longer than the maximum term provided in
Section 6 of this chapter, and (4) specially designated noncommercial channels
for use by local governmental, educational, and public authorities as provided
in Section 35 of this chapter.

SEC.4. AGREEMENT AND INCORPORATION OF APPLICATION BY REFERENCE.

       (a) The execution of a franchise agreement by the Grantee shall be
agreement and acknowledgment of the Grantee to be bound by all the terms and
conditions contained in this chapter.

       (b) The Grantee shall provide all services specifically set forth in its
application and shall provide cable television service within the confines of
the Village; and by its acceptance of the franchise, the Grantee specifically
grants and agrees that its application is thereby incorporated by reference and
made a part of the franchise.

SEC.5. FRANCHISE TERRITORY.

       Any franchise is for the current territorial limits of the Village and
for any area henceforth added thereto during the term of the franchise.

SEC.6. DURATION AND ACCEPTANCE OF FRANCHISE.

       Any franchise and the rights, privileges and authority hereby authorized
shall take effect and be in force from and after the signing of a franchise
agreement by the Village, as provided by law, and shall continue in force and
effect for an initial term of no longer than 12 years; provided, however, that
such franchise shall have no force or effect and shall be null and void except
only if the Grantee, within 30 days after the date of Village approval of the
franchise, shall file with the Village its unconditional acceptance of the
franchise and promise to comply with and abide by all

                                     -4- 
<PAGE>
 
of its provisions, terms and conditions and the provisions of this chapter. Such
acceptance and promise shall be in writing duly executed and sworn to, by, or on
behalf of the Grantee before a notary public or other officer authorized by law
to administer oaths. Such franchise shall be non-exclusive and revocable.

SEC.7. FRANCHISE RENEWAL.

       (a) To the extent applicable, current federal procedures and standards
pursuant to 47 U.S.C. (S) 546 shall govern the renewal of any franchise awarded
under this chapter.

       (b) In the event that any or all of the applicable provisions of federal
law are repealed or otherwise modified, and to the full extent consistent with
such applicable provisions then in effect, the following section(s) shall apply:

           (1)  At least 24 months prior to the expiration of the franchise, the
                Grantee shall inform the Village in writing of its intent to
                seek renewal of the franchise.

           (2)  The Grantee shall submit a proposal for renewal which
                demonstrates:

                a.   That it has been and continues to be in substantial
                     compliance with the terms, conditions, and limitations of
                     this chapter and its franchise;

                b.   That its system has been installed, constructed, maintained
                     and operated in accordance with the accepted standards of
                     the industry, and this chapter and its franchise;

                c.   That it has the legal, technical, financial, and other
                     qualifications to provide the services, facilities, and
                     equipment set forth in its proposal; and

                d.   That it has made a good faith effort to provide services
                     and facilities which accommodate the demonstrated needs and
                     interests of the community as may be reasonably ascertained
                     by the Village, with public input; and that it has made a
                     good faith effort to maintain, operate, and extend its
                     system as the state of the art progresses so as to assure
                     its Subscribers high quality service, balanced against the
                     costs of such needs and interests.

           (3)  The Village shall proceed to determine whether the Grantee has
                satisfactorily performed its obligations under the franchise. To
                determine satisfactory performance, the Village shall consider
                technical developments, performance of the system and the
                quality of the operator's service, including signal quality,
                response to customer complaints, and billing practices, but
                without regard to the mix or quality of cable services or other
                services provided over the system. The Village shall also
                consider the Grantee's reports made to the Village and to the
                FCC, and the Village may require the Grantee to make

                                      -5-
<PAGE>
 
                available specified records, documents, and information for this
                purpose, and may inquire specifically whether the Grantee will
                supply services sufficient to meet community needs and interests
                in light of the costs of such needs and interests. Provision
                shall be made for public comment with adequate prior notice of
                at least 10 days.

           (4)  The Village shall then prepare any amendments to this chapter
                and the franchise that it believes necessary.

           (5)  If the Village finds the Grantee's performance satisfactory, and
                finds the Grantee's technical, legal, and financial abilities
                acceptable, and finds the Grantee's renewal proposal meets the
                future cable-related needs of the Village, balanced against the
                costs of meeting these needs and interests, a new franchise
                shall be granted pursuant to this chapter as amended for a
                period to be determined by the Village.

           (6)  If the Grantee is determined by the Village to have performed
                unsatisfactorily, new applicants may be sought and evaluated and
                a franchise award shall be made by the Village according to
                franchising procedures adopted by the Village.

SEC.8. FRANCHISE REVIEW AND MODIFICATION.

       (a) To the extent applicable, the modification provisions of the Cable
Act, as the same may be amended from time to time, shall govern the procedures
and standards for modification of a franchise. The Grantee may file a request
for modification of a franchise with the Village in accordance with said
modification provisions at any time during the term of the franchise.

       (b) To the extent that the modification provisions of the Cable Act, as
the same may be amended from time to time, are repealed or otherwise not
applicable, a franchise may be modified to the extent permitted by applicable
law, according to the standards set forth in Subsection (c) below and in other
applicable provisions of this chapter.

       (c) It shall be the policy of the Village to amend a franchise with the
consent of the Grantee when necessary to enable the Grantee to take advantage of
technological advancements that will afford the Grantee an opportunity to more
effectively, efficiently, or economically serve the Subscribers; provided,
however, that this Subsection shall not be construed to require the Village to
adopt any such amendment. Further, the Village may modify or revise the terms of
a franchise at any time if necessary to protect the public health or safety.

SEC.9. POLICE POWERS.

       (a) In accepting a franchise, the Grantee acknowledges that its rights
thereunder are subject to the police power of the Village to adopt and enforce
general ordinances necessary to the safety and welfare of the public; and it
agrees to comply with all applicable general laws and ordinances enacted by the
Village pursuant to such power.


                                      -6-
<PAGE>
 
        (b) Any conflict between the provisions of a franchise and any other
present or future lawful exercise of the Village's police powers shall be
resolved in favor of the latter.

SEC.10. FRANCHISE REQUIRED.

        No cable television system shall be allowed to operate or to occupy or
use any Public Way for system installation and maintenance purposes without a
franchise.

SEC.11. USE OF GRANTEE FACILITIES.

       The Village shall have the right to install and maintain free of charge
upon the poles of the Grantee any wire or pole fixtures that do not unreasonably
interfere with the cable television system operations of the Grantee. The
Village shall indemnify and hold harmless the Grantee from any claim that might
arise due to or as a result of the Village's use.

SEC.12. INITIAL FRANCHISE COSTS.

       Grantee shall pay all costs and charges incidental to the awarding or
enforcing of its initial franchise, including but not limited to:
administrative, engineering, legal and consulting expenses, all costs of
publications of notices prior to any public meeting provided for pursuant to
this chapter, and any costs not covered by application fees incurred by the
Village in its study, preparation of proposal documents, evaluation of all
applications, and examinations of the applicant's qualifications.

SEC.13. NOTICES.

       All notices from the Grantee to the Village pursuant to any franchise
shall be sent to the Office of the Village President, with a copy to the Village
Administrator. The Grantee shall maintain with the Village, throughout the term
of the franchise, an address for service of notices by mail. The Grantee shall
maintain a central office to address any issues relating to operating under this
chapter.

SEC.14. LETTER OF CREDIT AND CASH SECURITY DEPOSIT.

       (a) Within 15 days after the award of an initial franchise, the Grantee
shall deposit with the Village either an irrevocable letter of credit from a
financial institution acceptable to the Village Board of Trustees or a cash
security deposit in the amount of $100,000.00. The form and content of such
letter of credit shall be approved by the Village Attorney. No interest shall be
paid on any cash deposit.

       (b) Within 15 days after the award of a renewal franchise, the Grantee
shall deposit with the Village an irrevocable letter of credit from a financial
institution acceptable to the Village Board of Trustees in the amount of
$25,000.00 and a cash security deposit in the amount of $5,000.00. The form and
content of such letter of credit shall be approved by the Village Attorney. No
interest shall be paid on any cash security deposit.


                                      -7-
<PAGE>
 
       (c) The letter of credit and cash security deposit shall be used to
ensure the faithful performance of the Grantee of all provisions of this
chapter, and to ensure compliance with all orders, permits and directions of any
agency, commission, board, department, division, or office of the Village having
jurisdiction over its acts or defaults under this chapter, and to ensure the
payment by the Grantee of any claims, liens, and taxes and penalties assessed
pursuant to Section 47 of this chapter due the Village which arise by reason of
the construction, operation or maintenance of the system.

       (d) The letter of credit and cash security deposit shall be maintained at
the amount established herein for the entire term of the franchise, even if
amounts have to be withdrawn pursuant to this chapter. Grantee shall promptly
replace any amounts withdrawn from the letter of credit or security deposit.

       (e) If the Grantee fails to pay to the Village any compensation within
the time fixed herein; or fails to pay to the Village any penalties assessed on
taxes due and unpaid; or fails to repay the Village any damages, costs or
expenses which the Village incurs as a result of the Grantee's failure to comply
with all rules, regulations, orders, permits, and other directives of the
Village issued pursuant to a franchise or which the Village is compelled to pay
by reason of any act or default of the Grantee in connection with a franchise;
or fails to properly and adequately restore any public way, public property or
private property disturbed by the Grantee's activities; or fails to pay any
costs incurred by the Village in connection with the award of any franchise or
renewal franchise; or otherwise fails to faithfully perform the duties and
responsibilities of a franchise, then the Village may withdraw money from the
letter of credit or cash security fund in accordance with the procedures set
forth in Subsection (f) below.

       (f) The Village shall provide Grantee with written notice informing
Grantee that such amounts are due to the Village. The written notice shall
describe, in reasonable detail, the reasons for the assessment. The Grantee
shall have 15 days subsequent to receipt of the notice within which to cure
every failure cited by the Village or to notify the Village that there is a
dispute as to whether Grantee believes such amounts are due the Village. Such
notice by the Grantee to the Village shall specify with particularity the basis
of Grantee's belief that such monies are not due the Village.

       (g) The rights reserved to the Village with respect to the letter of
credit and cash security deposit are in addition to all other rights of the
Village, whether reserved by the franchise or authorized by law, and no action,
proceeding or exercise of a right with respect to such letter of credit and
security deposit shall affect any other right the Village may have.

       (h) The letter of credit shall contain the following endorsement: "It is
hereby understood and agreed that this letter of credit may not be canceled by
the issuer bank nor the intention not to renew be stated by the issuer bank
until 45 days after receipt by the Village, by registered mail, of a written
notice of such intention to cancel or not to renew."

       (i) Receipt of the 45-day notice by the Village shall be construed as a
default granting the Village the right to immediate payment from the issuer bank
of the entire amount of the letter of credit.


                                      -8-
<PAGE>
 
       (j) The Village, at any time during the term of a franchise, may waive,
in writing, Grantee's requirement to maintain a letter of credit or cash
security deposit.

SEC.15. CONSTRUCTION BOND.

       (a) Prior to being approved for an initial installation of a system, the
Grantee shall file with the Village a construction bond in the amount of not
less than 110 percent of the costs to install the System in the service area
contained in the application or renewal proposal in favor of the Village. This
bond shall be maintained throughout the construction period and until such time
as determined by the Village, unless specified in the franchise agreement.

       (b) Prior to being approved for an upgrade of the system that involves
significant excavation or other disturbance of Public Way, the Grantee shall
file with the Village a performance bond in the amount of not less than
$100,000.00. This bond shall be maintained throughout the upgrade period and
until such time as determined by the Village, unless specified in the franchise
agreement.

       (c) If the Grantee fails to diligently pursue and complete the
construction required for the installation or upgrade of its cable system, or
fails to well and truly observe, fulfill and perform each term and condition of
this chapter or of the franchise as it relates to construction, installation or
upgrade of the system, then there shall be recoverable jointly and severally,
from the principal and surety of the bond, the cost of completing such
construction and any damages or loss suffered by the Village as a result,
including the full amount of any compensation, indemnification, or cost of
removal or abandonment of any property of the Grantee, plus a reasonable
allowance for attorney's fees, including the Village's legal staff, and costs,
up to the full amount of the bond. This Section shall be an additional remedy
for any and all violations outlined in Subsection 14(e).

       (d) The bond shall contain the following endorsement: "It is hereby
understood and agreed that this bond may not be canceled by the surety nor the
intention not to renew be stated by the surety until 45 days after receipt by
the Village, by registered mail, a written notice of such intent to cancel or
not to renew."

       (e) Upon receipt of a 45-day notice, this shall be construed as default
granting the Village the right to demand payment on the bond.

       (f) The Village, at any time during the term of this chapter, may, in
writing, waive or reduce Grantee's requirement to maintain a performance bond.

SEC.16. LIABILITY AND INSURANCE.

       (a) The Grantee shall maintain and by its acceptance of a franchise
specifically agrees that it will maintain throughout the term of the franchise,
liability insurance insuring the Grantee and the Village and the Village's
officers, boards, commissions, elected and appointed officials, agents,
and employees, in the minimum amounts of:

           (1)  $2,000,000.00 for bodily injury or death to each person;

                                      -9-
<PAGE>
 
           (2)  $3,000,000.00 for bodily injury or death from any one accident;

           (3)  $3,000,000.00 for property damage from any one accident;

           (4)  $2,000,000.00 for all other types of liability.

       (b) The Grantee shall carry and maintain in its own name automobile
liability insurance with a limit of $2,000,000 for each person and $2,000,000
for each accident for property damage with respect to owned and non-owned
automobiles for the operation of which the Grantee is responsible

       (c) The certificate of insurance obtained by the Grantee in compliance
with this Section must be approved by the Village Attorney and such insurance
policy certificate of insurance, along with written evidence of payment of
required premiums, shall be filed and maintained with the Village during the
term of the franchise. The Grantee shall immediately advise the Village Attorney
of any litigation that may develop that would affect this insurance.

       (d) Neither the provisions of this Section, nor any damages recovered by
the Village thereunder, shall be construed to or limit the liability of the
Grantee under any franchise issued hereunder or for damages.

       (e) Such insurance policies provided for herein shall name the Grantor,
its officers, boards, commissions, agents and employees as additional insured,
and shall be primary to any insurance carried by the Grantor. The insurance
policies required by this Section shall be carried and maintained by the Grantee
throughout the term of the franchise and such other period of time during which
the Grantee operates or is engaged in the removal of its cable system. Each
policy shall contain the following endorsement: "It is hereby understood and
agreed that this insurance policy may not be canceled by the surety nor the
intention not to renew be stated by the surety until 30 days after receipt by
the Village, by registered mail, of written notice of such intention to cancel
or not to renew."

SEC.17. INDEMNIFICATION.

       (a) The Village shall not at any time be liable for injury or damage
occurring to any Person or property from any cause whatsoever arising out of the
construction, maintenance, repair, use, operation, condition or dismantling of
the Grantee's Cable Television System or due to the act or omission of any
Person or entity other than the Village or those Persons or entities for which
the Village is legally liable as a matter of law.

       (b) The Grantee shall, at its sole cost and expense, indemnify and hold
harmless the Village, all associated, affiliated, allied and subsidiary entities
of the Village now existing or hereinafter created, and their respective
officers, boards, commissions, employees, agents, attorneys and contractors
(hereinafter referred to as "Indemnitees") from and against:

           (1)  Any and all liabilities, obligations, damages, penalties,
                claims, liens, costs, charges, losses and expenses (including,
                without limitation, fees and

                                     -10-
<PAGE>
 
                expenses of attorneys, expert witnesses and consultants), which
                may be imposed upon, incurred by or asserted against the
                Indemnitees by reason of any act or omission of the Grantee, its
                personnel, employees, agents, contractors or subcontractors,
                resulting in personal injury, bodily injury, sickness, disease
                or death to any Person or damage to, loss of or destruction of
                tangible or intangible property, libel, slander, invasion of
                privacy and unauthorized use of any trademark, trade name,
                copyright, patent, service mark or any other right of any
                Person, firm or corporation, which may arise out of or be in any
                way connected with the construction, installation, operation,
                maintenance, use or condition of the Cable Television System
                caused by Grantee, its subcontractors or agents or the Grantee's
                failure to comply with any federal, state or local statute,
                ordinance or regulation.

           (2)  Any and all liabilities, obligations, damages, penalties,
                claims, liens, costs, charges, losses and expenses (including,
                without limitation, fees and expenses of attorneys, expert
                witnesses and consultants), which are imposed upon, incurred by
                or asserted against the Indemnitees by reason of any claim or
                lien arising out of work, labor, materials or supplies provided
                or supplied to the Grantee, its contractors or subcontractors,
                for the installation, construction, operation or maintenance of
                the Cable Television System. Upon the written request of the
                Village such claim or lien shall be discharged or bonded within
                15 days following such request.

           (3)  Any and all liabilities, obligations, damages, penalties,
                claims, liens, costs, charges, losses and expenses (including,
                without limitation, fees and expenses of attorneys, expert
                witnesses, and consultants), which may be imposed upon,
                incurred by or asserted against the Indemnitees by reason of any
                financing or securities offering by Grantee or its Affiliates
                for violations of the common law or any laws, statutes or
                regulations of the State of Illinois or of the United States,
                including those of the Federal Securities and Exchange
                Commission, whether by the Grantee or otherwise; excluding
                therefrom, however, claims which are solely based upon and arise
                solely out of information supplied by the Village to the Grantee
                in writing and included in the offering materials with the
                express written approval of the Village prior to the offering.

       (c) The Grantee undertakes and assumes for its officers, agents,
contractors and subcontractors and employees all risk of dangerous conditions,
if any, on or about any village-owned or controlled property, including public
rights-of-way and easements, and the Grantee hereby agrees to indemnify and hold
harmless the Indemnitees against and from any claim asserted or liability
imposed upon the Indemnitees for personal injury or property damage to any
Person arising out of the installation, operation, maintenance or condition of
the Cable Television System or the Grantee's failure to comply with any federal,
state or local statute, ordinance or regulation, except for any claim asserted
or liability imposed upon the Indemnitees that arises or is related to willful
negligence by the Indemnitees.


                                     -11-
<PAGE>
 
       (d) In the event any action or proceeding shall be brought against the
Indemnitees by reason of any matter for which the Indemnitees are indemnified
hereunder, the Grantee shall, upon notice from any of the Indemnitees, at the
Grantee's sole cost and expense, resist and defend the same with legal counsel
acceptable to the Village Attorney, provided further, however, that the Grantee
shall not admit liability in any such matter on behalf of the Indemnitees
without the written consent of the Village Attorney or the Village Attorney's
designee.

       (e) The Village shall give the Grantee prompt notice of the making of any
written claim or the commencement of any action, suit or other proceeding
covered by the provisions of this Section.

       (f) Nothing in this chapter or in any franchise is intended to, or shall
be construed or applied to, express or imply a waiver by the Village of
statutory provisions, privileges or immunities of any kind or nature as set
forth in Illinois Statutes, including the limits of liability of the Village as
exists presently or as may be increased from time to time by the Legislature.

SEC.18. RIGHTS OF INDIVIDUALS.

       (a) The Grantee shall not deny service, deny access, or otherwise
discriminate against subscribers, channel users, or general citizens on the
basis of race, color, religion, national origin, income, gender, marital status,
sexual preference or age. The Grantee shall comply at all times with all other
applicable federal, state and local laws and regulations and all executive and
administrative orders relating to nondiscrimination which are hereby
incorporated and made part of this chapter by reference.

       (b) The Grantee shall strictly adhere to the equal employment opportunity
requirements of the Federal Communications Commission and of state and local
governments, and as amended from time to time.

       (c) The Grantee shall, at all times, comply with the privacy requirements
of state and federal law.

       (d) Grantee shall make cable service available to all residential areas
within the Village, provided that all such permission as may be required from
the owner of the property is reasonably available, and that service can be
provided in accordance with the line extension requirements of Section 21.
Grantee will only be required to provide service to multi-dwelling units so long
as the owner of the facility consents to the following:

           (1)  To Grantee's providing of the service to units of the facility;

           (2)  To reasonable conditions and times for installation, maintenance
                and inspection of the system on the facility premises;

           (3)  To reasonable conditions promulgated by Grantee to protect
                Grantee's equipment and to encourage widespread use of the
                system; and


                                     -12-
<PAGE>
 
           (4)  To not demand payment from Grantee for permitting Grantee to
                provide service to the facility and to not discriminate in
                rental charges, or otherwise, between tenants who receive Cable
                Service and those who do not.

SEC.19. PUBLIC NOTICE.

       Minimum public notice of any public meeting relating to the franchise
shall follow state statutory requirements and shall be on at least one channel
of the Grantee's System between the hours of 7:00 p.m. and 9:00 p.m., for five
consecutive days prior to the meeting.

SEC.20. SERVICE AVAILABILITY AND RECORD REQUEST.

       The Grantee shall provide cable television service throughout the entire
franchise area pursuant to the provisions of this chapter and the franchise and
shall keep a record for at least three years of all requests for service
received by the Grantee. This record shall be available for public inspection at
the local office of the Grantee during regular office hours.

SEC.21. SYSTEM CONSTRUCTION.

       (a) New construction timetable.

           (1)  Within two years from the date of the award of an initial
                franchise, the Grantee must make cable television service
                available to every dwelling unit within the service area.

                a.   The Grantee must make cable television service available to
                     at least 20 percent of the dwelling units within the
                     service area within six months from the date of the award
                     of the franchise.

                b.   The Grantee must make cable television service available to
                     at least 50 percent of the dwelling units within the
                     service area within one year from the date of the award of
                     the franchise.

           (2)  The Grantee, in its application, may propose a timetable of
                construction which will make cable television service available
                in the service area sooner than the above minimum requirements,
                in which case said schedule will be made part of the franchise
                agreement, and will be binding upon the Grantee.

           (3)  Any delay beyond the terms of this timetable, unless
                specifically approved by the Village, will be considered a
                violation of this chapter for which the provisions of either
                Sections 39 or 47 shall apply, as determined by the Village.

           (4)  In special circumstances and for good cause shown by the
                Grantee, the Village, in the exercise of its sole discretion,
                may waive 100 percent completion within the two-year time frame,
                provided that substantial


                                     -13-
<PAGE>
 
                completion is accomplished within the allotted time frame,
                substantial completion to be not less than 95 percent.
                Justification for less than 100 percent must be submitted
                subject to the approval of the Village.

       (b) Line extensions:

           (1)  In areas of the franchise territory not initially served, a
                Grantee shall be required to extend its system pursuant to the
                following requirements:

                a.   No customer shall be refused service arbitrarily. To
                     expedite the process of extending the Cable System into a
                     new subdivision, the Village will forward to the Grantee an
                     approved engineering plan of each project. Subject to the
                     density requirements, the Grantee shall commence the design
                     and construction process upon receipt of the final
                     engineering plan. Upon notification from the Village that
                     the first home in the project has been approved for a
                     building permit, the Grantee shall have a maximum of three
                     months to complete the construction/activation process
                     within the applicable project phase, barring any unforeseen
                     adverse weather or ground conditions.

                b.   The Grantee shall extend and make cable television service
                     available to every dwelling unit in all unserved,
                     developing areas having at least 25 dwelling units planned
                     per street mile, as measured from the existing system, and
                     shall extend its system simultaneously with the
                     installation of utility lines.

                c.   The Grantee shall extend and make cable television service
                     available to any isolated resident outside the initial
                     service area requesting connection at the standard
                     connection charge, if the connection to the isolated
                     resident would require no more than a standard 125-foot
                     drop line.

           (2)  In areas not meeting the requirements for mandatory extension of
                service, the Grantee shall provide, upon the request of a
                potential subscriber desiring service, an estimate of the
                Grantee's costs required to extend service to the subscriber.
                The Grantee shall then extend service upon request of the
                potential subscriber. The Grantee may require advance payment or
                assurance of payment satisfactory to the Grantee. In the event
                the area subsequently reaches the density required for mandatory
                extension, such payments shall be refunded to the subscriber.

           (3)  In cases of new construction or property development where
                utilities are to be placed underground, all cable system
                facilities also shall be placed underground, except as otherwise
                specifically approved in advance by the Village. If the Grantee
                receives notice of such new construction or property
                development, including the date on which open trenching is
                available for the


                                     -14-
<PAGE>
 
                Grantee's work (the "Notice"), then the Grantee shall provide,
                to the developer or property owner and to the Village, the
                specifications for its trenching and the Grantee shall install
                its conduit, pedestals and vaults, and laterals within five
                working days after the trenches first become available to the
                Grantee for such work. Costs of trenching and easements required
                to bring service to the development shall be borne by the
                developer or property owner; provided, however, that if the
                Grantee fails to install its conduit, pedestals and vaults, and
                laterals within said five working days, then the cost of any new
                trenching, and easements if necessary, shall be borne by the
                Grantee. The Notice may be given to the Grantee at the address
                stated in the franchise agreement or to the local general
                manager or system engineer of the Grantee. Written or oral
                notice from the developer, property owner, or Village shall be
                sufficient to qualify as the Notice.

       (c) Nothing herein shall be construed to prevent the Grantee from serving
areas of the Village not covered under this Section upon agreement with
developers, property owners, residents, or businesses, provided that all
applicable fees are paid by the Grantee to the Village therefor, including
without limitation the franchise fee provided in this chapter.

       (d) A Grantee, in its new or renewal application, may propose a line
extension policy that will result in serving more residents of the Village than
as required above, in which case the Grantee's policy will be incorporated into
the franchise agreement and will be binding on the Grantee.

       (e) The violation of this Section shall be considered a violation of this
chapter for which the provisions of either Sections 39 or 47 shall apply, as
determined by the Village.

SEC.22. CONSTRUCTION AND TECHNICAL STANDARDS.

       (a) The Grantee shall construct, install, operate and maintain its system
in a manner consistent with all laws, ordinances, construction standards,
governmental requirements, and FCC technical standards. In addition, the Grantee
shall provide the Village, upon request, a written report of the results of the
Grantee's annual proof of performance tests conducted pursuant to Federal
Communications Commission standards and requirements.

       (b)  The following additional specifications shall apply:

            (1) Construction, installation and maintenance of the cable
                television system shall be performed in an orderly and
                workmanlike manner. All cables and wires shall be installed,
                where possible, parallel with electric and telephone lines.
                Multiple cable configurations shall be arranged in parallel and
                bundled with due respect for engineering considerations.

            (2) The Grantee shall at all times comply with the most recent
                version adopted by the Village of:


                             -15-                
<PAGE>
 
                a.   National Electrical Safety Code (National Bureau of
                     Standards);

                b.   National Electrical Code (National Bureau of Fire
                     Underwriters);

                c.   Bell System Code of Pole Line Construction; and

                d.   Applicable FCC or other federal, state and local
                     regulations.

           (3)  In any event, the System shall not endanger or interfere with
                the safety of persons or property in the franchise area or other
                areas where the Grantee may have equipment located.

           (4)  Any antenna structure used in the system shall comply with
                construction, marking, and lighting of antenna structure,
                required by the United States Department of Transportation.

           (5)  All working facilities and conditions used during construction,
                installation and maintenance of the System shall comply with the
                standards of the Occupational Safety and Health Administration.

           (6)  The Grantee regularly shall check radio frequency leakage at
                reception locations for emergency radio services to prove that
                no interference signal combinations are possible. Stray
                radiation shall be measured adjacent to any proposed
                aeronautical navigation radio sites to prove no interference to
                airborne navigational reception in the normal flight patterns.
                FCC rules and regulations shall govern.

           (7)  The Grantee shall maintain equipment capable of providing
                standby power for headend, transportation and trunk amplifiers
                for a minimum of two hours.

           (8)  In all areas of the Village where the cables, wires and other
                like facilities of public utilities are placed underground, all
                cables, wires and other like facilities of the Grantee installed
                after the effective date of the Grantee's franchise shall be
                placed underground. When public utilities relocate their
                facilities from pole to underground, the Grantee shall
                concurrently do so at no expense to the Village.

       (c) Plans & Permits.

           (1)  Right to review; briefings.

                a.   The Village shall have the right to review the Grantee's
                     construction plans and specifications prior to the
                     commencement of any new construction to assure compliance
                     with the standards specified in this chapter and to inspect
                     all aspects of Cable System construction. The Village shall
                     not, however, be required to review or approve such


                                     -16-
<PAGE>
 
                     plans and specifications or to make such inspections, and
                     the Village specifically disclaims such obligation. The
                     Grantee shall be solely responsible for taking all steps
                     necessary to assure compliance with such standards and to
                     ensure that the Cable System is installed in a safe manner
                     and pursuant to the terms and conditions of this chapter
                     and the franchise agreement.

                b.   Before beginning new construction of, or on any part of,
                     the Cable System, the Grantee's chief engineer or
                     designated individual shall meet with the Village
                     Administrator or designated individual to explain the
                     Grantee's construction plans and work program in detail.
                     Similar briefings shall be held from time to time as deemed
                     necessary by either the Village or the Grantee until the
                     work is completed.

           (2)  The Grantee shall, within 90 days after the Effective Date of
                its franchise, furnish to the Village complete "as-built" plans
                of the Cable System and shall, thereafter, furnish to the
                Village amendments to such plans within 45 days after completion
                of any extension or modification of the Cable System. If so
                requested by the Grantee, the Village shall keep such as-built
                plans confidential to the extent allowable by law, and shall
                show such plans only to those employees, contractors or Village
                officials who need to see them as a part of their
                responsibilities to the Village, or pursuant to their J.U.L.I.E.
                responsibilities.

           (3)  The Grantee shall obtain permits from the Village before
                commencing any new construction of or within the Cable System,
                with specific permission being required for the opening or
                disturbance of any Public Way within the Village. The permit
                application shall include a plan drawn in sufficient detail to
                demonstrate to the Village that the Cable System will be
                constructed in accordance with all applicable codes and
                ordinances. Where cable is to be installed on existing poles,
                the permit application shall include a drawing showing the
                existing poles and additional poles, if requested. Without
                characterizing the violation of other provisions of this
                chapter, the failure to obtain said permits shall constitute a
                material violation of this chapter. The Grantee also, before the
                commencement of new construction of, or on any part of, the
                Cable System, shall become and remain a member of the J.U.L.I.E.
                system.

       (d) All work involved in the construction, operation, maintenance,
repair, and removal of the Cable System, or any part thereof, shall be performed
in a workmanlike manner using materials of good and durable quality. If, at any
time, it is determined by the Village or any other agency or authority of
competent jurisdiction that any part of the Cable System, including without
limitation any means used to distribute signals over or within the Cable System,
is harmful to the health or safety of any Person, then the Grantee, at its sole
cost and expense, shall promptly correct all such conditions. Any contractor,
subcontractor, or other Person proposed to be employed for the installation,
maintenance, relocation, or repair of Cable System equipment or facilities shall
be

                                     -17-
<PAGE>
 
licensed in accordance with applicable laws and shall be thoroughly experienced
in the work for which he or she is retained.

       (e) Unless expressly provided otherwise in the Franchise, the Grantee
shall at all times comply with any and all rules and regulations enacted or to
be enacted by the Village with reference to construction activity in Public
Ways. All poles, wires, conduits, cables, equipment, pipes, appurtenances,
structures, and other facilities of the Cable System shall be installed and
located in compliance with all applicable Village codes and ordinances and the
applicable provisions of the Franchise so as to cause minimum interference with
the rights and reasonable convenience of the general public, all as determined
by the Village in its sole and absolute discretion. Unless the Village shall in
writing waive its right to review plans, no construction or other work relating
to such facilities within the Public Ways of the Village shall be commenced
until the Village shall have approved and issued a permit on the plans,
specifications and methods for such work. Any such permit may be so conditioned
or restricted as deemed necessary by the Village to assure compliance with the
Franchise and to protect the public health and safety. All such facilities shall
at all times be kept and maintained in a safe condition and in good order and
repair. The Grantee shall at all times employ reasonable care and shall install,
maintain, and use commonly accepted methods and devices for preventing failures
and accidents that are likely to cause damage, injuries or nuisances to the
general public. Suitable barricades, flags, lights, flares or other devices
shall be used at such times and places as are required by applicable ordinances
and at such additional times and places as are required for the safety of all
members of the general public. Any such facilities placed in any Public Way by
the Grantee shall be placed and maintained in such a manner as not to interfere
with the usual travel or other existing or projected uses of such Public Way.

       (f) Excavation Work and Time Periods.

           (1)  No excavation on or in any Public Way, public property or
                private property in the Village permitted hereunder in
                connection with the installation of any Cable System facilities
                shall be made more than 24 hours immediately before installation
                of such facilities. The Grantee may apply for a waiver in
                unusual circumstances.

           (2)  The Grantee shall notify the Village Administrator at least 72
                hours before any excavation on or in any Public Way, public
                property or private property so that the Village Administrator
                will have the opportunity to inspect such excavation work.

           (3)  All excavations in lawns or grassy parkways shall be promptly
                backfilled, tamped and restored with sod in accordance with the
                applicable provisions of this chapter.

       (g) Location of Pedestals and Vaults.

           (1)  Pedestals and Similar Above Ground Appurtenances.



                                     -18-
<PAGE>
 
           a.   The Village has determined that pedestals and similar
                aboveground appurtenances located on a Public Way (other than in
                an alley or as provided in Paragraph c below) or on public
                property will adversely affect the appearance of the Village and
                of the property therein and, accordingly, pursuant to Section
                541(a)(2) of the Cable Act, the Grantee shall not under any
                circumstances install or locate a pedestal or any similar above
                ground appurtenance on any Public Way (other than in an alley or
                as provided in Paragraph c below) or on any public property as a
                part of any new construction or any relocation or
                reinstallation.

           b.   Pedestals or similar above ground appurtenances may be installed
                on private property only with the express, prior written consent
                and permission of the affected property owner or his or her
                authorized agent, or the duly elected or appointed
                representative of the affected property; provided, however, that
                such pedestals or above ground appurtenances shall comply with
                all applicable provisions of the Village of Libertyville
                Municipal Code.

           c.   Notwithstanding Paragraph b above, pedestals or similar above
                ground appurtenances may be installed within certain utility
                easements on private property without the consent or permission
                of the affected property owner provided that (i) the Grantee is
                lawfully authorized to use such utility easement pursuant to
                state or federal law; (ii) no such pedestal or similar above
                ground appurtenance may be installed unless, at the time of the
                desired installation, there exists within the utility easement,
                a similar above ground appurtenance of another utility company
                or entity; and (iii) the Grantee's pedestal or similar above
                ground appurtenance shall be located as close as is practicable
                to said existing above ground appurtenance.

       (2) Vaults.

           a.   The Grantee shall not install underground vaults on any Public
                Way after the effective date of this franchise, except in
                accordance with and pursuant to the provisions of paragraph d.
                of this subsection. All underground vaults shall be flush
                mounted with the surface of the land area.

           b.   The Grantee shall inform the owner of any private property in
                the Village where the Grantee contemplates placing a vault on
                the parkway immediately adjacent to said private property, that
                the owner has the right to elect between the construction and
                installation of an underground vault on the owner's private
                property or on the Public Way (including, without limitation,
                the parkway) immediately adjacent to the owner's property. Said
                notice shall be in writing, in


                                     -19-
<PAGE>
 
                form and substance acceptable to the Village Administrator, and
                delivered by certified mail or personal delivery to said owner
                at least 30 days immediately before the commencement of
                construction on or around the owner's property.

           c.   If the owner elects to allow construction and installation of an
                underground vault on the owner's property, then the owner shall
                be required to grant the Grantee and easement, in form reviewed
                and approved by the Village Attorney, allowing for such
                construction and installation.

           d.   If the owner (i) elects not to allow construction and
                installation of an underground vault on the owner's property; or
                (ii) fails to respond to the election notice delivered by the
                Grantee pursuant to Paragraph b above within 45 days after the
                owner receives the notice; or (iii) refuses to grant the Grantee
                the easement pursuant to Paragraph c above within 30 days after
                the owner's receipt of an easement document, then the Grantee
                shall be entitled to construct and install an underground vault
                on the Public Way (including, without limitation, the parkway)
                that is immediately adjacent to the owner's property.

SEC.23. USE OF STREETS.

       (a) The Grantee's system, poles, wires and appurtenances shall be
located, erected and maintained so that none of its facilities shall endanger
or interfere with the lives of persons or interfere with the rights or
reasonable convenience of property owners who adjoin any of the streets and
Public Ways, or interfere with any improvements the Village may make, or hinder
or obstruct the free use of the streets, alleys, bridges, easements or public
property.

       (b) In case of any disturbance of pavement, sidewalk, landscaping,
driveway or other surfacing, the Grantee shall, at its own cost and expense and
in a manner approved by the Village, replace and restore all paving, sidewalk,
driveway, landscaping, or surface of any street or alley disturbed, in at least
as good condition as before the work was commenced and in accordance with
standards for such work set by the Village. If, after 30 days, restoration
measures are not performed to the reasonable satisfaction of the Village, the
Village may undertake remedial restoration activities, such activities to be
performed at the Grantee's cost, with such costs to be chargeable against the
security deposit required of the Grantee in Subsection 14(e) of this chapter.

       (c) Erection, removal and common uses of poles:

           (1)  No poles or other wire-holding structures shall be erected by
                the Grantee without prior approval of the Village with regard to
                location, height, types, and any other pertinent aspect.
                However, no location of any pole or wire-holding structure of
                the Grantee shall be a vested interest and such poles or
                structures shall be removed or modified by the Grantee at its
                own expense


                                     -20-
<PAGE>
 
                whenever the Village determines that the public convenience
                would be enhanced thereby.

           (2)  Where poles or other wire-holding structures already existing
                for use in serving the Village are available for use by the
                Grantee, but it does not make arrangements for such use, the
                Village may require the Grantee to use such poles and structures
                if it determines that the public convenience would be enhanced
                thereby and the terms of the use available to the Grantee are
                just and reasonable.

           (3)  Where the Village or a public utility serving the Village
                desires to make use of the poles or other wire-holding
                structures of the Grantee, but agreement thereof with the
                Grantee cannot be reached, the Village may require the Grantee
                to permit such use for such consideration and upon such terms as
                the Village shall determine to be just and reasonable, if the
                Village determines that the use would enhance the public
                convenience and would not unduly interfere with the Grantee's
                operations.

       (d) If at any time during the period of the franchise the Village shall
elect to alter, or change the grade of any street, alley or other Public Ways or
utilities, the Grantee, upon reasonable notice by the Village, shall promptly
remove or relocate as necessary its poles, wires, cables, underground conduits,
manholes and other fixtures at its own expense.

       (e) The Grantee shall, on the request of any person holding a building
moving permit issued by the Village, temporarily raise or lower its wires to
permit the moving of buildings. The expense of such temporary removal, raising
or lowering of wires shall be paid by the person requesting the same, and the
Grantee shall have the authority to require such payment in advance. The Grantee
shall be given not less than 48 hours advance notice to arrange for such
temporary wire changes.

       (f) The Grantee shall not remove any tree or trim any portion, either
above, at or below ground level, of any tree within any public place without the
prior consent of the Village. The Grantee shall provide notice to any affected
residents at the same time that the Grantee applies to the Village for consent
to perform tree trimming. The Village shall have the right to do the trimming
requested by the Grantee at the cost of the Grantee. Regardless of who performs
the work requested by the Grantee, the Grantee shall be responsible, shall
defend and hold Village harmless from any and all damages to any tree as a
result of trimming, or to the property surrounding any tree, whether such tree
is trimmed or removed.

       (g) The Grantee shall not use road cuts for the laying of cable or wires
without the prior approval of the Village.

       (h) The right of the Grantee to use and occupy the Public Ways shall not
be exclusive. The Village reserves the right to grant any right or use of such
Public Ways to any Person at any time during the term of the franchise or any
other franchise subsequently granted to any other Person.


                                     -21-
<PAGE>
 
       (i) If any public way or portion thereof used by the Grantee shall be
vacated by the Village, or the use thereof discontinued by the Village or the
Grantee, during the term of the franchise, then the Grantee shall forthwith at
its sole cost and expense remove its facilities therefrom unless specifically
permitted to continue to use the same and, on the removal thereof, the Grantee
shall restore, repair, or reconstruct the Public Way area where such removal has
occurred to its original condition as required by the Village. In the event of
any failure, neglect, or refusal by the Grantee, after 30 days written notice
from the Village to repair, improve, or maintain such Public Way, the Village
may, but shall be under no obligation to, conduct such work, or cause it to be
conducted, and the actual cost thereof shall be paid by the Grantee in the time
and manner as directed by the Village. Collection may be made by resort to the
letter of credit or cash security deposit established pursuant to Section 14 of
this chapter, or by court action, or otherwise.

SEC.24. OPERATIONAL STANDARDS.

       (a) The Grantee shall maintain all parts of the system in good condition
throughout the entire franchise period.

       (b) Upon the reasonable request for service by any person located within
the franchise territory, the Grantee shall, within 30 days, finish the requested
service to such person within terms of the line extension policy. A request for
service shall be unreasonable for the purpose of this subsection if no trunk
line installation capable of servicing that person's block has been installed.

       (c) Temporary Service Drops:

           (1)  The Grantee shall put forth every effort to bury temporary drops
                within 10 working days after placement. Any delays for any other
                reason than listed will be communicated to the Village. The
                following delays will be found understandable and within the
                course of doing business: weather, ground conditions, street
                bores, system redesign requirements and any other unusual
                obstacle, such as obstructive landscaping that is created by the
                customer.

           (2)  Upon request of the Village the Grantee shall provide a monthly
                report to the Village on the number of drops pending.

       (d) The Grantee shall render efficient service, make repairs promptly,
and interrupt service only for good cause and for the shortest time possible.
Such interruptions, insofar as possible, shall be preceded by notice and shall
occur during periods of minimum system use.

       (e) The Grantee shall not allow its cable or other operations to
interfere with television reception of subscribers or persons not served by the
Grantee, nor shall the system interfere with, obstruct or hinder in any manner
the operation of the various utilities serving the residents within the confines
of the Village nor shall other utilities interfere with the Grantee's system.



                                     -22-
<PAGE>
 
SECTION 25. CUSTOMER SERVICE STANDARDS.

       (a) Nothing in this chapter shall be construed to prohibit the
enforcement of any federal, state or local law or regulation concerning customer
service or consumer protection that imposes customer service standards or
consumer protection requirements that exceed the customer service standards set
out in this chapter or that address matters not addressed in this chapter.

       (b) The Grantee shall maintain a local or toll-free telephone access line
which is available to its subscribers and shall have knowledgeable, qualified
representatives available to respond to customer telephone inquiries 24 hours
per day, seven days per week. Under normal operating conditions, telephone
answer time, including wait time and the time required to transfer the call,
shall not exceed 30 seconds. This standard shall be met no less than 90 percent
of the time as measured on a quarterly basis. Under normal operating conditions,
the customer will receive a busy signal less than three percent of the time.

       (c) Customer service centers and bill payment locations will be open for
walk-in customer transactions a minimum of eight hours per day Monday through
Friday, unless there is a need to modify those hours because of the location or
customers served. The Grantee and Village by mutual consent shall establish
supplemental hours on weekdays and weekends as fits the needs of the community.

       (d) Under normal operating conditions, each of the following standards
will be met no less than 95 percent of the time as measured on an annual basis.

           (1)  Standard installations will be performed within seven business
                days after an order has been placed. A standard installation is
                one that is within 125 feet of the existing system.

           (2)  Excluding those situations that are beyond its control, the
                Grantee will respond to any service interruption promptly and in
                no event later than 24 hours from the time of initial
                notification. All other regular service requests will be
                responded to within 36 hours during the normal work week for
                that system. The appointment window alternatives for
                installations, service calls and other installation activities
                will be: "morning" or "afternoon"; not to exceed a four-hour
                "window" during normal business hours for the system, or at a
                time that is mutually acceptable. The Grantee shall schedule
                supplemental hours during which appointments can be scheduled
                based on the needs of the community. If at any time an installer
                or technician is running late, an attempt to contact the
                customer will be made and the appointment rescheduled as
                necessary at a time that is convenient to the customer.

       (e) In the event of a Service Interruption, the following standards for
Subscriber credits shall be applied by the Grantee:



                                     -23-
<PAGE>
 
           (1)  If a Subscriber experiences a Service Interruption totaling four
                hours or more on one, two, or three days in any calendar month,
                then the Grantee shall provide a credit to that Subscriber equal
                to one-thirtieth of one month's total fees paid by that
                Subscriber for each day on which such a Service Interruption
                occurs; provided, however, that such credit shall not apply to a
                Subscriber disconnected because of non-payment or excessive
                signal leakage. Such credit shall be provided by the Grantee
                automatically upon notice from that Subscriber of such Service
                Interruption, regardless of whether that Subscriber requests a
                credit.

           (2)  If a Subscriber experiences a Service Interruption totaling four
                hours or more on four or more days in any calendar month, then
                the Grantee shall provide a credit to that Subscriber equal to
                one month's total fees paid by that Subscriber; provided,
                however, that such credit shall not apply to a Subscriber
                disconnected because of non-payment or excessive signal leakage.
                Such credit shall be provided by the Grantee automatically upon
                notice from that Subscriber of the fourth such Service
                Interruption, regardless of whether that Subscriber requests a
                credit.

       (f) The Grantee shall provide written information for each of the
following areas at the time of installation and at any future time upon the
request of the customer:

           (1)  Product and services offered; and

           (2)  Prices and service options; and

           (3)  Installation and service policies; and

           (4)  How to use the cable television services.

       (g) Bills will be clear, concise and understandable, with all charges for
cable services itemized.

       (h) A Grantee may not impose a late, administrative or other fee on a
customer for nonpayment of a bill until 30 days have elapsed after the end of
the billing cycle which is the subject of the unpaid bill.

       (I) Credits will be issued promptly, but no later than the customer's
next billing cycle following the resolution of the request and the return of the
equipment by the Grantee if service has been terminated.

       (j) The Grantee shall notify customers a minimum of 30 days in advance of
any rate or channel change.

       (k) The Grantee shall maintain and operate its network in accordance with
the rules and regulations incorporated herein and as may be promulgated by state
or federal regulators.


                                     -24-
<PAGE>
 
       (l) The Grantee shall continue, through the term of the franchise, to
maintain the technical standards and quality of service set forth in this
chapter and the franchise. Should the Village find, by resolution, that the
Grantee has failed to maintain these technical standards and quality of service,
and should it, by resolution, specifically enumerate improvements to be made,
the Grantee shall make such improvements. Failure to make such improvements
within three months of such resolution will constitute a breach of a condition
for which penalties contained in Section 47 are applicable.

       (m) The Grantee shall keep a monthly service log which indicates the
nature of each service complaint received in the last 24 months, the date and
time each complaint was received, the disposition of each complaint, and the
time and date thereof. This log shall be sent to the Village monthly upon
request.

       (n) The Grantee shall provide a copy of the Customer Service Standards
included in this Section to every subscriber via a bill insert at least once
every calendar year. The Grantee shall also provide a copy of these Customer
Service Standards to every new customer within 30 days of connection.

SEC.26. CONTINUITY OF SERVICE MANDATORY.

       (a) It shall be the right of all subscribers to continue receiving
service as long as their financial and other obligations to the Grantee are
honored. If the Grantee elects to over build, rebuild, modify or sell the
system, or the Village gives notice of intent to terminate or fails to renew the
franchise, the Grantee shall act so as to ensure that all subscribers receive
continuous, uninterrupted service regardless of the circumstances for a period
not to exceed six months after the franchise has terminated.

       (b) If there is a change of franchise, or if a new operator acquires the
system, the Grantee shall cooperate with the Village, new franchisee and
operator in maintaining continuity of service to all subscribers. During such
period, the Grantee shall be entitled to the revenues for any period during
which it operates the system.

       (c) If the Grantee fails to operate the system for three consecutive days
without prior approval of the Village or without just cause, the Village may, at
its option, operate the system or designate an operator until such time as the
Grantee restores service under conditions acceptable to the Village or a
permanent operator is selected. If the Village is required to fulfill this
obligation for the Grantee, the Village shall be entitled to all revenues for
any period during which it operates the system and shall be entitled to draw on
the letter of credit and cash security deposit established pursuant to Section
14 of this chapter to recover all of its costs and damages in excess of such
revenues, and, in any event, the Grantee shall be obligated to reimburse the
Village for all costs or damages incurred by the Village resulting from the
Grantee's failure to perform that the Village does not recover from such
revenues or said letter of credit or cash security deposit.



                                     -25-
<PAGE>
 
SEC.27. COMPLAINT PROCEDURE.

       (a) During the term of the franchise and any renewal thereof, the Grantee
shall maintain a central office for the purpose of receiving and resolving all
complaints regarding the quality of service, equipment malfunctions, and similar
matters. The office must be reachable by a local and/or toll-free telephone call
to receive complaints regarding quality of service, equipment functions and
similar matters. The Grantee will make good faith efforts to arrange for one or
more payment locations in a central location where customers can pay bills or
conduct other business activities.

       (b) As subscribers are connected or reconnected to the system, the
Grantee shall, by appropriate means such as a card or brochure, furnish
information concerning the procedures for making inquiries or complaints,
including the name, address and local or toll free telephone number of the
employee or employees or agent to whom such inquiries or complaints are to be
addressed.

       (c) When there have been similar complaints made, or where there exists
other evidence, which, in the judgment of the Village, in consultation with the
Grantee, casts doubt on the reliability or quality of cable service, the Village
shall have the right and authority to require the Grantee to test, analyze and
report on the performance of the system. The Grantee shall fully cooperate with
the Village in performing such testing and shall prepare results and a report,
if requested, within 30 days after notice. Such report shall include the
following information:

           (1)  The nature of the complaint or problem that precipitated the
                special tests; and

           (2)  The system component(s) tested; and

           (3)  The equipment used and procedures employed in testing; and

           (4)  The method, if any, in which such complaint or problem was
                resolved; and

           (5)  Any other information pertinent to the tests and analysis which
                may be required.

       (d) If, after receiving Grantee's report, and after the Grantee has
completed any corrective action identified in the report, the Village determines
that reasonable evidence still exists of inadequate System Performance, then the
Village may enlist an independent engineer at Grantee's expense to perform tests
and analysis directed toward such suspected failures to meet the requirements of
this chapter. Grantee shall cooperate and permit such testing.

     (e) The Village shall require tests, analysis and reports covering specific
subjects and characteristics based on complaints or other evidence only when the
Village has reasonable grounds to believe that the complaints or other evidence
require that tests be performed to protect the public against substandard cable
service.



                                     -26-
<PAGE>
 
SEC.28. GRANTEE RULES AND REGULATIONS.

       The Grantee shall have the authority to promulgate such rules,
regulations, terms, and conditions governing the conduct of its business as
shall be reasonably necessary to enable the Grantee to exercise its rights and
perform its obligations under the franchise, and to assure uninterrupted service
to each and all of its customers; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.

SEC.29. FRANCHISE FEE.

       (a) A Grantee shall pay to the Village a franchise fee of not less than
five percent of the Grantee's gross revenues or such other maximum amount as
allowed by law.

       (b) The franchise fee payment shall be in addition to any other tax or
payment owed to the Village by the Grantee and shall not be construed as payment
in lieu of municipal property taxes or other state, county or local taxes.

       (c) The franchise fee and any other costs or penalties assessed shall be
payable quarterly on a calendar year basis to the Village within 30 days after
the end of each quarter. The Grantee shall also file a complete and accurate
verified statement of all gross receipts as previously defined within said 30
days.

       (d) The Village shall have the right to inspect and copy the Grantee's
income records and the right to audit and to recompute any amounts determined to
be payable under this chapter. Any additional amount due the Village as a result
of an audit shall be paid within 30 days following written notice to the Grantee
by the Village, which notice shall include a copy of the audit report. If any
audit discloses an underpayment of a franchise fee by an amount in excess of
five percent of the applicable fee, then the Grantee shall pay the full cost of
the audit. The Grantee shall maintain books and records of its operations within
and related to the Village and the Grantee's cable system in sufficient detail
to show gross revenue, by service category, consistent with generally accepted
accounting principles. Said books and records shall be retained in accordance
with the Grantee's document retention policies, but in no event less than five
years.

       (e) If any franchise payment or re-computed amount, cost or penalty, is
not made on or before the applicable dates heretofore specified, interest shall
be charged daily from such date at an annual rate of 12 percent.

       (f) The acceptance by the Village of any franchise fee payment shall not
in any way be construed as an accord that the amount paid is in fact the correct
amount, nor shall such acceptance of any payment be construed as a release of
any claim the Village may have for further or additional sums payable under the
provisions of the franchise. All franchise fee payments shall be subject to
audit and re-computation by the Village in accordance with this Section.

       (g) The Grantee shall acknowledge as follows:


                                     -27-
<PAGE>
 
           (1)  The franchise fee is not a tax; and

           (2)  The franchise fee shall be in addition to any and all taxes,
                other fees or charges that the Grantee or any affiliate shall be
                required to pay to the Village or to any state or federal agency
                or authority, all of which shall be separate and distinct
                obligations of the Grantee and its affiliates; and

           (3)  Neither the Grantee nor any affiliate shall have or make any
                claim for any deduction or other credit of all or any part of
                the franchise fee from or against any of said Village taxes or
                other fees or charges that the Grantee or any affiliate is
                required to pay to the Village except as may be identified and
                authorized by federal law; and

           (4)  Neither the Grantee nor any affiliate shall apply or seek to
                apply all or any part of the franchise fee as a deduction or
                other credit from or against any of said Village taxes or other
                fees or charges, each of which shall be deemed to be separate
                and distinct obligations of the Grantee and its affiliates.

           (5)  Except as authorized by law, if the Grantee or any affiliate
                applies or seeks to apply all or any part of the amount of the
                franchise fee as a deduction or other credit from or against any
                Village tax or other fee or charge, or if the Grantee or any
                affiliate applies or seeks to apply all or any part of any such
                tax or other fee or charge as a deduction or other credit from
                or against the franchise fee, then, in any such event, the
                Village may revoke the franchise pursuant to the applicable
                provisions of this chapter without any liability to the Grantee
                or any affiliate.

       (h) The Village may increase the franchise fee if and to the extent that
the maximum allowable franchise fee is increased by the FCC. If the Village
desires to increase the franchise fee in that event, then the Village shall
provide at least 30 days written notice to the Grantee. If, within 30 days after
the Village's notice, the Grantee so requests, the Village shall conduct a
public hearing on the franchise fee increase. The effective date of the proposed
franchise fee increase shall be delayed until the expiration of the 30-day
notice period, if within that period the Grantee does not request a hearing, or
if a hearing is requested, until the conclusion of the public hearing conducted
pursuant to this Subsection.

SEC.30. TRANSFER OF OWNERSHIP OR CONTROL.

       (a) Except as provided in Subsection (f) of this section below, a
franchise shall not be assigned, transferred, pledged, leased, sublet,
hypothecated, or mortgaged, either in whole or in part, in any manner, nor shall
title thereto, either legal or equitable or any right, interest or property
therein, pass to or vest in any person without the prior written approval of the
Village. The Grantee may, however, transfer or assign the franchise to a wholly
owned subsidiary of the Grantee and such subsidiary may transfer or assign the
franchise back to the Grantee without such consent, providing that such
assignment is without any release of liability of the Grantee. Any proposed
assignee must show legal, technical and financial responsibility as determined
by the Village and must agree to


                                     -28-
<PAGE>
 
comply with all provisions of the franchise. The Grantee shall submit a petition
to the Village requesting the Village's approval at least 90 days before the
Grantee takes any action in furtherance of accomplishing any such assignment,
transfer, pledge, lease, sublet, hypothecation, or mortgage, containing or
accompanied by such information as is required in accordance with FCC
regulations and by the Village. The Village shall have 120 days to act upon any
request for approval of any such assignment, transfer, pledge, lease, sublet,
hypothecation, or mortgage. The Village shall be deemed to have consented to a
proposed assignment, transfer, pledge, lease, sublet, hypothecation, or mortgage
if its refusal to consent is not communicated in writing to the Grantee within
120 days following receipt of said petition and receipt of all necessary
information as to the effect of the proposed assignment, transfer, pledge,
lease, sublet, hypothecation, or mortgage upon the public, unless the requesting
party and the Village agree to an extension of time. The Village shall not
unreasonably withhold consent to a proposed transfer.

       (b) The Grantee shall promptly notify the Village of any actual or
proposed change in, or transfer of, or acquisition by any other party of,
control of the Grantee. The word "control" as used herein is not limited to
major stockholders but also includes actual working control in whatever manner
exercised. A rebuttable presumption that a transfer of control has occurred
shall arise upon the acquisition or accumulation by any person or group of
persons of five percent of the voting shares of the Grantee. Change, transfer or
acquisition of control of the Grantee without the Village's consent shall make
the franchise subject to cancellation unless and until the Village shall have
consented thereto, which consent shall not be unreasonably withheld. For the
purpose of determining whether it shall consent to such change, transfer or
acquisition of control, the Village may inquire into the qualifications of the
prospective controlling party, and the Grantee shall assist the Village in such
inquiry.

       (c) The consent or approval of the Village to any transfer of the Grantee
shall not constitute a waiver or release of the rights of the Village in and to
any Public Way, and any transfer shall by its terms, be expressly subordinate to
the terms and conditions of the franchise.

       (d) In the absence of extraordinary circumstances, the Village shall not
be required to approve any transfer or assignment of a new franchise prior to
substantial completion of construction of the proposed system.

       (e) In no event shall a transfer of ownership or control be approved
without the successor(s) in interest becoming a signatory to the franchise
agreement.

       (f) Nothing in this section shall be deemed to prohibit any assignment,
pledge, lease, sublease, mortgage, or other transfer of all or any part of the
Grantee's cable system, or any right or interest therein, solely for financing
purposes, provided that each such assignment, pledge, lease, sublease, mortgage,
or other transfer shall be subject and subordinate to the rights of the Village
pursuant to this chapter, the franchise agreement, and applicable law.

SEC.31. AVAILABILITY OF BOOKS AND RECORDS.

       (a) The Grantee shall fully cooperate in making available at reasonable
times, and the Village shall have the right to inspect, where reasonably
necessary for the enforcement of the


                                     -29-
<PAGE>
 
franchise, books, records, maps, plans and other like materials of the Grantee
applicable to the cable television system, at any time during normal business
hours; provided where volume and convenience necessitate, the Grantee may
require inspection to take place on the Grantee premises.

       (b) The following records and/or reports shall be sent to the Village,
but no more frequently than on a quarterly basis if so mutually agreed upon by
the Grantee and the Village:

           (1)  a quarterly review and resolution or progress report submitted
                by the Grantee to the Village; and

           (2)  periodic preventive maintenance reports; and

           (3)  any copies of FCC Form 395-A (or successor form) or any
                supplemental forms related to equal opportunity or fair
                contracting policies; and

           (4)  subscriber inquiry/complaint resolution data and the right to
                review documentation concerning these inquiries and/or
                complaints periodically; and

           (5)  periodic construction update reports including, where
                appropriate, the submission of as-built maps.

SEC.32. OTHER PETITIONS AND APPLICATIONS.

       Upon request, copies of all petitions, applications, communications and
reports submitted by the Grantee to the Federal Communications Commission, to
the Securities and Exchange Commission, or to any other federal or state
regulatory commission or agency having jurisdiction in respect to any matters
affecting cable television operations authorized pursuant to the franchise or
received from such agencies shall be provided to the Village within 10 days of
the Village's request.

SEC.33. FISCAL REPORTS.

       The Grantee shall, annually within 90 days after the close of the
Grantee's fiscal year, prepare in accordance with generally accepted accounting
principles, and submit to the Village, a statement of gross revenues audited by
a certified public accountant and covering the Grantee's operations in and
relating to the Village and the Grantee's cable system as well as such
additional financial statements and records as may be required by the Village.

SEC.34. REMOVAL OF CABLE SYSTEM.

       At the expiration of the term for which the franchise is granted or when
any renewal is denied, or upon its termination as provided herein, the Grantee
shall forthwith, upon notice by the Village, remove at its own expense all
portions of the cable television system designated by the Village from all
streets and public property within the Village. If the Grantee fails to do so,
the Village may perform the work at the Grantee's expense. Upon such notice of
removal, a bond shall


                                     -30-
<PAGE>
 
be furnished by the Grantee in an amount sufficient to cover this expense as
determined by the Village.

SEC.35. REQUIRED SERVICES AND FACILITIES.

       (a) The Grantee shall make available to all subscribers the option to
receive not fewer than 85 channels.

       (b) If the Grantee serves the Village pursuant to an agreement only with
the Village and not by agreement negotiated as part of a collective process with
other franchising authorities, then the Grantee shall maintain not fewer than
one specially designated noncommercial channel for the exclusive use of the
Village and other public, educational, and governmental authorities in the
Village. The Grantee shall not make use of any channel reserved for use pursuant
to this Subsection (b).

       (c) If the Grantee receives its franchise within the Village pursuant to
an agreement negotiated as part of a collective process among, and the Grantee's
System thus serves, the Village and other franchising authorities including the
Villages of Grayslake, Mundelein, and Wauconda and the County of Lake
(collectively the "Authorities"), then the Grantee shall maintain at least five
channels of its system exclusively available as follows:

           (1)  At least one specially designated noncommercial channel for use
                by all local library authorities within the corporate limits of
                the Authorities; and

           (2)  At least one specially designated noncommercial channel for use
                by all local educational authorities within the corporate limits
                of the Authorities; and

           (3)  At least one specially designated noncommercial channel for use
                by all local governmental agencies within the corporate limits
                of the Authorities; and

           (4)  At least one specially designated noncommercial channel for use
                by all local park and recreation districts, departments, and
                agencies within the corporate limits of the Authorities; and

           (5)  At least one specially designated noncommercial channel for use
                by the Authorities as an Interactive Video Bulletin Board.

The Authorities may allocate the use of such channels among the entities listed
above in such manner as the Authorities determine is appropriate.

For any System that serves the Village and other franchising authorities as
described in this Subsection (c) and that has the capacity for any number of
channels greater than 85, the Grantee shall provide, in addition to the channels
otherwise required pursuant to this Subsection (c), two specially designated
noncommercial channels for the exclusive use of the Village and other local
governmental, educational, and public authorities, subject to the conditions set
forth in the next two sentences. Such two additional channels shall be provided
immediately upon notice from the Village


                                     -31-
<PAGE>
 
of sufficient demand therefor. For purposes of this requirement, the phrase
"sufficient demand" shall mean that four of the five specially designated
noncommercial channels otherwise required pursuant to this Subsection (c) are
used for original, noncommercial public, educational, and governmental access
video programming not less than an average of six hours per day, five days each
week, over a period of 45 days.

The Grantee shall not make use of any channel reserved for use pursuant to this
Subsection (c); provided, however, that the Grantee may use the two channels
described in the immediately preceding paragraph but only until receipt of
notice from the Village pursuant to the second sentence of the preceding
paragraph.

       (d) Studios and associated production equipment will be located in a
mutually agreed upon site to meet the public's need for public access, and to
accommodate the specially designated channels described in this Paragraph.
Financial and technical support and replacement and maintenance of equipment for
such facilities shall be separately incorporated into the franchise by
agreement.

       (e) The Grantee shall incorporate into its cable television system the
capacity to permit the Village, in times of emergency, to override by remote
control the audio, video and/or text of all channels, simultaneously, which the
Grantee may lawfully override. The Grantee shall provide emergency broadcast
capacity pursuant to FCC rules. The Grantee shall cooperate with the Village in
the use and operation of the emergency alert system.

       (f) Interconnection.

           (1)  The Grantee shall, on request by the Village, connect its cable
                system within the Village to any cable system that is owned or
                operated by the Grantee or any affiliate or subsidiary of the
                Grantee in any contiguous municipality.

           (2)  The Village also may request that the Grantee interconnect its
                system with other communication facilities within or contiguous
                to the Village. Such interconnection shall be negotiated by the
                Village and the Grantee. Upon receiving a request from the
                Village to so interconnect, the Grantee shall immediately
                initiate negotiations with the other affected system or systems
                in order that all costs may be shared equally among cable
                companies for both construction and operation of the
                interconnection link.

                The Grantee may be granted reasonable extensions of time to
                interconnect, or the Village shall rescind its request to
                interconnect, upon petition by the Grantee to the Village, if
                the Grantee has negotiated in good faith and has arrived at
                impasse with the operator or franchising authority of the
                system to be interconnected, or that the cost of the
                interconnection would cause an unreasonable or unacceptable
                increase in subscriber rates, or that the interconnection is
                technically infeasible.



                                     -32-
<PAGE>
 
           (3)  The Grantee shall cooperate with any interconnection
                corporation, regional interconnection authority, municipality,
                or county, state, or federal regulatory agency that may be
                hereafter established for the purpose of regulating, financing,
                or otherwise providing for the interconnection of cable systems
                beyond the boundaries of the Village.

       (g) The Grantee shall provide such additional services and facilities as
are contained in its application.

SEC.36. RULES AND REGULATIONS.

       (a) In addition to the inherent powers of the Village to regulate and
control any cable television franchise, and those powers expressly reserved by
the Village, or agreed to and provided for herein, the right and power is hereby
reserved by the Village to promulgate such additional regulations as it shall
find necessary in the exercise of its lawful powers and furtherance of the
terms and conditions of the franchise; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.

       (b) The Village may also adopt such regulations at the request of Grantee
upon application.

SEC.37. PERFORMANCE EVALUATION SESSIONS.

       (a) The Village and the Grantee may hold scheduled yearly performance
evaluation sessions within 30 days of each anniversary date of the Grantee's
award or renewal of the franchise and as may be required by federal and state
law.

       (b) Special evaluation sessions may be held at any time during the term
of the franchise at the request of the Village or the Grantee.

       (c) All evaluation sessions shall be open to the public and announced in
a newspaper of general circulation in accordance with legal notice. The Grantee
shall notify its subscribers of all evaluation sessions by announcements on at
least one channel of its system between the hours of 7:00 p.m. and 9:00 p.m. for
five consecutive days preceding each session.

       (d) Topics which may be discussed at any scheduled or special evaluation
session may include, but are not limited to: service rate structures; franchise
fee, penalties, free or discounted services; application of new technologies;
system performance; services provided; programming offered; customer complaints;
privacy; amendments to this chapter; judicial and FCC rulings; line extension
policies; and Grantee or Village rules.

       (e) Members of the general public may add topics either by working
through the negotiating parties or by presenting a petition. If such a petition
bears the valid signatures of 50 or more residents of the Village, the proposed
topic or topics shall be added to the list of topics to be discussed at the
evaluation session.


                                     -33-
<PAGE>
 
SEC.38. RATE CHANGE PROCEDURES.

       Pursuant to the Cable Television Consumer Protection and Competition Act
of 1992, the Village is currently certified to regulate the Basic Service rates
charged by Grantee. Under these rules, the Grantee is required to obtain
approval from the Village for a rate increase for any change to the rates for
Basic Service. Should Federal or State law permit further rate regulation beyond
Basic Service, the Village may assume such rate regulation and adopt appropriate
procedures for such regulation.

SEC.39. FORFEITURE AND TERMINATION.

       (a) In addition to all other rights and powers retained by the Village
under this chapter or otherwise, the Village reserves the right to terminate the
franchise and all rights and privileges of the Grantee hereunder in the event of
a breach of its terms and conditions. A breach by the Grantee shall include, but
shall not be limited to the following:

           (1)  Violation of any material provision of the franchise or any
                material rule, order, regulation or determination of the Village
                made pursuant to the franchise; or

           (2)  Attempt to evade any provision of the franchise or to practice
                any fraud or deceit upon the Village or its subscribers or
                customers; or

           (3)  Failure to begin or complete system construction or system
                extension as provided under Section 21; or

           (4)  Failure to provide the services promised in the Grantee's
                initial application; or

           (5)  Failure to restore service after 96 consecutive hours of
                interrupted service, except when approval of such interruption
                is obtained from the Village; or

           (6)  Material misrepresentation of fact in the application for or
                negotiation of the franchise; or

           (7)  Failure to pay any fees or other consideration when due pursuant
                to the franchise or this chapter.

       (b) The Village may make a written demand that the Grantee comply with
any such provision, rule, order or determination under or pursuant to the
franchise. If the violation by the Grantee continues for a period of 30 days
following such written demand without written proof satisfactory to the Village
that the corrective action was initiated immediately and thereafter has been
completed or has been continuously, actively, and expeditiously pursued, the
Village may place the issue of termination of the franchise before the Village
Board. The Village shall cause to be served upon the Grantee, at least 20 days
prior to the date of such meeting, a written notice of intent to request such
termination and the time and place of the meeting.


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<PAGE>
 
       (c) The Village Board shall hear and consider the issues and shall hear
any person interested therein and shall determine in its discretion whether any
violation by the Grantee has occurred. The Grantee shall be afforded an
opportunity to be heard at the hearing, including an opportunity to present all
relevant evidence and witnesses and to question witnesses presented against the
Grantee. The Grantee may, at its own expense, make a transcript of any such
hearing.

       (d) If the Village Board determines that the violation by the Grantee was
the fault of the Grantee and within its control, then the Board may, by
resolution stating the violation or violations on which the decision is based,
declare that the franchise of the Grantee shall be forfeited and terminated
immediately or within such period as the Board in its sole discretion may fix,
unless there is compliance.

SEC.40. FORCE MAJEURE.

       Whenever a period of time is provided for in the franchise for either the
Village or the Grantee to do or perform any act or obligation, neither party
shall be liable for any delays or inability to perform due to causes beyond the
control of said party such as war, riot, insurrection, rebellion, strike,
lockout, unavoidable casualty or damage to personnel, materials or equipment,
fire, flood, storm, earthquake, tornado, or any act of God; provided, however,
that said time period shall be extended for only the actual amount of time said
party is so delayed. An act or omission shall not be deemed to be "beyond the
Grantee's control" if committed, omitted, or caused by the Grantee, the
Grantee's employees, officers, or agents or a subsidiary, affiliate, or parent
of the Grantee, or by any corporation or other business entity that holds a
controlling interest in the Grantee, whether held directly or indirectly.
Further, the failure of the Grantee to obtain financing or to pay any money due
from it to any Person, including the Village, for whatever reason, shall not be
an act or omission "beyond the Grantee's control." The failure of the Grantee to
obtain necessary permits from applicable governmental or utility agencies shall
be deemed "beyond the Grantee's control" only if the Grantee has made a timely
and complete request and application for said permit and is diligently pursuing
the issuance of said permit.

SEC.41. FORECLOSURE.

       Upon the foreclosure or other judicial sale of all or a substantial part
of the system, or upon the termination of any lease covering all or a
substantial part of the system, the Grantee shall notify the Village of such
fact, and such notification shall be treated as a notification that a change in
control of the Grantee has taken place, and the provisions of the franchise
governing the consent of the Village to such change in control of the Grantee
shall apply.

SEC.42. RECEIVERSHIP.

       The Village shall have the right to cancel a franchise 120 days after the
appointment of a receiver, or trustee, to take over and conduct the business of
the Grantee, whether in receivership, reorganization, bankruptcy or other action
or proceeding, unless such receivership or trusteeship shall have been vacated
prior to the expiration of 120 days, or unless:



                                     -35-
<PAGE>
 
       (1)  Within 120 days after his/her election or appointment, such receiver
            or trustee shall have fully complied with all the provisions of this
            chapter and remedied all defaults thereunder; and

       (2)  Such receiver or trustee, within the 120 days, shall have executed
            an agreement, duly approved by the court having jurisdiction in the
            premises, whereby such receiver or trustee assumes and agrees to be
            bound by each and every provision of this chapter and the franchise
            granted to the Grantee.

SEC.43. COMPLIANCE WITH STATE AND FEDERAL LAWS.

       (a) Notwithstanding any other provisions of the franchise to the
contrary, the Grantee shall at all times comply with all laws and regulations of
the state and federal government or any administrative agencies thereof;
provided, however, if any such state or federal law or regulation shall require
the Grantee to perform any service, or shall permit the Grantee to perform any
service, or shall prohibit the Grantee from performing any service, in conflict
with the terms of the franchise or of any law or regulation of the Village,
then as soon as possible following knowledge thereof, the Grantee shall notify
the Village of the point of conflict believed to exist between such regulation
or law and the laws or regulations of the Village or the franchise.

       (b) If the Village determines that a material provision of this chapter
is affected by any subsequent action of the state or federal government, the
Village and the Grantee shall negotiate to modify any of the provisions herein
to such reasonable extent as may be necessary to carry out the full intent and
purpose of this agreement.

SEC.44. LANDLORD AND TENANT.

       (a) Neither the owner of any multiple unit residential dwelling nor his
agent or representative shall interfere with the right of any tenant or lawful
resident thereof to receive cable television service, cable installation or
maintenance from a cable television Grantee regulated by and lawfully operating
under a valid and existing franchise issued by the Village.

       (b) Neither the owner of any multiple unit residential dwelling nor his
agent or representative shall penalize, charge or surcharge a tenant or resident
or forfeit or threaten to forfeit any right of such tenant or resident, or
discriminate in any way against such tenant or resident who requests or receives
cable television service from a Grantee operating under a valid and existing
cable television franchise issued by the Village.

       (c) No person shall resell, without the expressed, written consent of
both the Grantee and the Village, any cable service, program or signal
transmitted by a cable television Grantee under a franchise issued by the
Village.

       (d) Nothing in this chapter shall prohibit a person from requiring that
cable television system facilities conform to laws and regulations and
reasonable conditions necessary to protect safety, functioning, appearance and
value of premises or the convenience and safety of persons or property


                                     -36-
<PAGE>
 
       (e) Nothing in this chapter shall prohibit a person from requiring a
Grantee to agree to indemnify the owner, or his agents or representatives for
damages or from liability for damages caused by the installation, operation,
maintenance or removal of cable television facilities.

SEC.45. APPLICANTS' BIDS FOR INITIAL FRANCHISE.

       (a) All bids received by the Village from the applicants for an initial
franchise will become the sole property of the Village.

       (b) The Village reserves the right to reject any and all bids and waive
informalities and/or technicalities where the best interest of the Village may
be served.

       (c) All questions regarding the meaning or intent of this chapter or
application documents shall be submitted to the Village in writing. Replies will
be issued by addenda mailed or delivered to all parties recorded by the Village
as having received the application documents. The Village reserves the right to
make extensions of time for receiving bids as it deems necessary. Questions
received less than 14 days prior to the date for the opening of bids will not be
answered. Only replies to questions by written addenda will be binding. All bids
must contain an acknowledgment of receipt of all addenda.

       (d) Bids must be sealed, and submitted at the time and place indicated in
the application documents for the public opening. Bids may be modified at any
time prior to the opening of the bids, provided that any modifications must be
duly executed in the manner that the applicant's bid must be executed. No bid
shall be opened or inspected before the public opening.

       (e) Before submitting a bid, each applicant shall:

           (1)  Examine this chapter and the application documents thoroughly;
                and

           (2)  Familiarize himself/herself with local conditions that may in
                any manner affect performance under the franchise; and

           (3)  Familiarize himself/herself with federal, state and local laws,
                ordinances, rules and regulations affecting performance under
                the franchise; and

           (4)  Carefully correlate the bid with the requirements of this
                chapter and the application documents.

       (f) The Village may make such investigations as it deems necessary to
determine the ability of an applicant to perform under the franchise, and the
applicant shall furnish to the Village all such information and data for this
purpose as the Village may request. The Village reserves the right to reject any
bid if the evidence submitted by, or investigation of, such applicant fails to
satisfy the Village that such applicant is properly qualified to carry out the
obligations of the franchise and to complete the work contemplated therein.
Conditional bids will not be accepted.


                                     -37-
<PAGE>
 
       (g) All bids received shall be placed in a secure depository approved by
the Village and shall not be opened nor inspected prior to the public opening.

SEC.46. FINANCIAL, CONTRACTUAL, SHAREHOLDER, AND SYSTEM DISCLOSURE FOR
FRANCHISES.

       (a) No franchise will be granted to any applicant unless all requirements
and demands of the Village regarding financial, contractual, shareholder and
system disclosure have been met.

       (b) Applicants, including all shareholders and parties with any interest
in the applicant, shall fully disclose all agreements and undertakings, whether
written or oral, or implied with any person, firm, group, association or
corporation with respect to the franchise and the proposed cable television
system. The Grantee of a franchise shall disclose all other contracts to the
Village as the contracts are made. This section shall include, but not be
limited to, any agreements between local applicants and national companies.

       (c) Applicants, including all shareholders and parties with any interest
in the applicant, shall submit all requested information as provided by the
terms of this chapter or the application documents, which are incorporated
herein by reference. The requested information must be complete and verified as
true by the applicant.

       (d) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose the numbers of shares of stock, and the holders
thereof, and shall include the amount of consideration for each share of stock
and the nature of the consideration.

       (e) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose any information required by the application
documents regarding other cable systems in which they hold an interest of any
nature, including, but not limited to, the following:

           (1)  Locations of all other franchises and the dates of award for
                each location; and

           (2)  Estimated construction costs and estimated completion dates for
                each system; and

           (3)  Estimated number of miles of construction and number of miles
                completed in each system as of the date of this application; and

           (4)  Date for completion of construction as promised in the
                application for each system.

       (f)  Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose any information required by the application
documents regarding pending applications for other cable systems, including, but
not limited to, the following:

           (1)  Location of other franchise applications and date of application
                for each system; and


                                     -38-
<PAGE>
 
           (2)  Estimated dates of franchise awards; and

           (3)  Estimated number of miles of construction; and

           (4)  Estimated construction costs.

SEC.47. PENALTIES.

       For the violation of any of the following provisions of this chapter or
the franchise agreement, penalties may be levied against the Grantee and shall
be paid by the Grantee and, if not so paid, shall be chargeable to the letter of
credit or cash security deposit, as follows, and the Village Board of Trustees
may determine the amount of the penalty for other violations which are not
specified in a sum not to exceed $750.00 for each violation, with each day
constituting a separate violation:

       (a) Failure to furnish, maintain, or offer all cable services to any
potential Subscriber within the Village upon order of the Village: $250.00 per
day, per violation, for each day such failure occurs or continues;

       (b) Failure to obtain or file evidence of required insurance,
construction bond, performance bond, or other required financial security:
$200.00 per day, per violation, for each day such failure occurs or continues;

       (c) Failure to provide access to data, documents, records, or reports to
the Village as required by this chapter, including without limitation Sections
20, 30, 31, and 32: $150.00 per day, per violation, for each day such failure
occurs or continues;

       (d) Failure to comply with applicable construction, operation, or
maintenance standards: $200.00 per day, per violation, for each day such failure
occurs or continues;

       (e) Failure to comply with a rate decision or refund order: $300.00 per
day, per violation, for each day such a violation occurs or continues;

       (f) Any violations for non-compliance with the customer service standards
of Sections 24, 25, or 26: $250.00 per day, per violation, for each day that
such noncompliance continues;

       (g) Any other violations of this chapter or the franchise agreement:
up to $500.00 per day, per violation, for each day such violation occurs or
continues;

       (h) Grantor may impose any or all of the above enumerated measures
against the Grantee, which shall be in addition to any and all other legal or
equitable remedies it has under this chapter, the franchise agreement, or any
other applicable law.



                                     -39-
<PAGE>
 
SEC.48. PROCEDURES.

       (a) Whenever the Village believes that the Grantee has violated any term,
condition or provision of this chapter or the franchise agreement, and wishes to
impose monetary penalties, a written notice shall be given to the Grantee
informing it of such alleged violation or liability. The written notice shall
describe in reasonable detail the specific violation so as to afford the Grantee
an opportunity to remedy the violation. The Grantee shall have 30 days
subsequent to the date of such notice in which to correct the violation before
the Village may impose penalties unless the violation is, in the opinion of the
Village, of such a nature so as to require more than 30 days and the Grantee
proceeds, immediately upon receipt of such notice, and continuously, and
diligently, to correct the violation. In any case where the violation is not
cured within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.

       (b) The Grantee may, within 10 days of receipt of notice, notify the
Village that there is a dispute as to whether a violation or failure has, in
fact, occurred. Such notice by the Grantee to the Village shall specify with
particularity the matters disputed by the Grantee and shall stay the running of
the 30-day cure period pending Board decision as required below. The Board shall
hear the Grantee's dispute. The Grantee must be given at least five days notice
of the hearing. At the hearing, the Grantee shall be entitled to the right to
present evidence and the right to be represented by counsel. In the event the
Village upholds the finding of a violation, the Grantee shall have 15 days
thereafter or the remaining time period set in Subsection (a) above, whichever
is longer, or such other time period as the Grantee and the Village mutually
agree, to correct the violation. In any case where the violation is not cured
within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.

       (c) The rights reserved to the Village under this section are in addition
to all other rights of the Village whether reserved by this chapter or
authorized by law or equity, and no action, proceeding or exercise of a right
with respect to penalties shall affect any other right the Village may have.

SEC.49. LIMITS ON GRANTEE RECOURSE.

       (a) The Grantee may seek enforcement of the terms of its franchise in
equity, but shall have no recourse against the Village for money damages or for
any loss, expense, or damage resulting from the terms and conditions of the
franchise nor because of the Village's enforcement thereof. The Grantee shall be
deemed to expressly agree that it accepts the franchise relying solely on its
own investigation and understanding of the power and authority of the Village to
grant said franchise and that, in partial consideration of the grant of the
franchise, the Grantee waives and releases all claims of damages of any kind
whatsoever, either known or unknown, existing or future, that it may have in
connection with any matter specified in this Subsection.


                                     -40-
<PAGE>
 
       (b) The Grantee shall acknowledge that it has not been induced to accept
the franchise by any promise, verbal or written, by or on behalf of the Village
or by any third Person regarding any term or condition of the franchise not
otherwise expressed herein. The Grantee shall further be deemed to warrant that
no promise or inducement, oral or written, has been made to any Village employee
or official regarding receipt of the franchise, other than as contained in the
franchise.

SEC.50. NONENFORCEMENT BY VILLAGE.

       The Grantee shall not be excused from complying with any of the terms and
conditions of the franchise by any failure of the Village, on any one or more
occasions, to insist on the Grantee's performance of, or to seek the Grantee's
compliance with, any one or more of said terms or conditions.

SEC.51. RIGHTS AND REMEDIES.

       In the event of a violation or an alleged violation of the franchise by
the Grantee, the Village, by suit, action, mandamus, or other proceeding, in law
or in equity, may enforce or compel the performance of the terms of the
franchise to the full allowable extent. In the event of a judicial proceeding,
the prevailing party shall be entitled to reimbursement of all costs and
expenses, including reasonable attorneys fees, incurred in connection with such
judicial proceeding.



                                     -41-
<PAGE>
 
                                   EXHIBIT A



                                CABLE ORDINANCE

                               [to be inserted]

<PAGE>
 
                                   EXHIBIT B



                       CABLE FRANCHISE RENEWAL AGREEMENT

                               [to be inserted]