<PAGE>

                                                                  EXHIBIT 10.1.8

                             VILLAGE OF MUNDELEIN

                 CABLE TELEVISION FRANCHISE RENEWAL AGREEMENT

     THIS AGREEMENT is made as of this 22nd day of September 1997 by and
                                       ----        ---------           
between the Village of Mundelein, Illinois, an Illinois municipal corporation
(the "Village"), and Cable TV Fund 12-A, Ltd., a Colorado limited partnership
(the "Grantee"),

                                  WITNESSETH:
                                  ----------

     WHEREAS, the Village granted a cable television franchise to Cox Cable
Communications, Inc., and Cox Cable of Lake County, Inc., (the "Franchise")
pursuant to Village Ordinance No. 81-2-3 adopted on February 23, 1981; and

     WHEREAS, pursuant to Resolution No. 84-12-26, dated December 22, 1984, the
Village approved transfer of the Franchise to Jones Intercable, Inc.; and

     WHEREAS, pursuant to Resolution No. 85-5-9, dated May 6, 1985, the Village
approved transfer of the Franchise to the Grantee; and

     WHEREAS, the Franchise was due to expire on March 15, 1996; and

     WHEREAS, the Village and the Grantee executed a series of agreements
extending the term of the Franchise until September 30, 1997, and

     WHEREAS, the Grantee has asked the Village to renew the Franchise, so that
the Grantee can continue to provide cable television service in the Village; and

     WHEREAS, the Village has reviewed the Grantee's performance under the
Franchise; has identified the future cable-related needs and interests of the
community; has considered the financial, technical, and legal qualifications of
the Grantee; has determined that the Grantee's plans for construction and
operation of its cable system are reasonable to meet the future cable-related
needs of the community; and has determined that the Grantee has the financial,
technical, and legal

                                  Page 1 of 9
<PAGE>
 
qualifications to provide the services, facilities, and equipment as set forth
in the Grantee's proposal; and

     WHEREAS, the Village has determined that, subject to compliance with the
terms and conditions set forth in this Agreement and with the provisions of the
Village's Cable Television Franchise Ordinance approved by Mundelein Ordinance
No. 97-9-39  (the "Cable Ordinance"), the renewal of a nonexclusive franchise to
    --------                                                                    
the Grantee is consistent with the public interest; and

     WHEREAS, the Village and the Grantee have reached agreement on the terms
and conditions for renewal of the Franchise;

     NOW, THEREFORE, in consideration of the faithful performance and strict
observance by the Grantee of all the terms set forth herein and those provided
for in the Cable Ordinance, pursuant to which this Agreement is executed, and in
consideration of the grant to the Grantee of renewal of the Franchise by the
Village, the parties agree as follows:

     Section 1. Recitals. The foregoing recitals are by this reference
     ---------  --------
incorporated into this Agreement as substantive provisions of this Agreement.

     Section 2. Franchise Renewal.
     ---------  -----------------

     A. Grant of Renewal. The Village hereby grants to the Grantee renewal of
        ----------------                                                   
its nonexclusive Franchise to construct, operate, and maintain a cable
television communication system within the public ways of the Village in
accordance with the terms and conditions of this Agreement and the Cable
Ordinance.

     B. Effective Date; Term. The Franchise shall become effective on the date
        --------------------                                                
of the execution of this Agreement by the Village (the "Effective Date") and
shall remain in effect until September 30, 2009, and shall expire at the end of
that day; provided, however, that said term may be extended pursuant to Section
3 of this Agreement. The Village shall execute this Agreement only after it has
been fully and properly executed by the Grantee.

                                  Page 2 of 9
<PAGE>
 
     C. Acceptance and Compliance by Grantee. The Grantee hereby accepts the
        ------------------------------------                              
Franchise and agrees to abide by all the provisions of this Agreement, the Cable
Ordinance, and all other applicable regulations of the Village.

     D. This Agreement Controls. In the event of a conflict between the
        -----------------------                                      
provisions of this Agreement and the provisions of the Cable Ordinance, the
provisions of this Agreement shall apply and control.

     E. Good Faith of Grantee. The Grantee hereby agrees that it has negotiated
        ---------------------                                                  
this Agreement in good faith and with due knowledge of its rights and
responsibilities under relevant local, State of Illinois, and federal laws.

     Section 3. Increased Channel Capacity and Extended Term.
     ---------  --------------------------------------------

     A. Increased Capacity by September 1999: Eight-Year Extension. If the
        ----------------------------------------------------------
Grantee shall make available to all users of its cable system in the Village the
option to receive 85 channels by no later than September 30, 1999, in accordance
with Subsection 35(a) of the Cable Ordinance, then the term of the Franchise
shall he extended from September 30, 2009, to September 30, 2017, and shall
expire at the end of that day.

     B. Increased Capacity by September 2000; Six-Year Extension. If the Grantee
        --------------------------------------------------------              
shall make available to all users of its cable system in the Village the option
to receive 85 channels by no later than September 30, 2000, in accordance with
Subsection 35(a) of the Cable Ordinance, then the term of the Franchise shall be
extended from September 30, 2009, to September 30, 2015, and shall expire at the
end of that day.

     C. Increased Capacity by September 2001; Three-Year Extension. If the
        ----------------------------------------------------------      
Grantee shall make available to all users of its cable system in the Village the
option to receive 85 channels by no later than September 30, 2001, in accordance
with Subsection 35(a) of the Cable Ordinance, then

                                  Page 3 of 9
<PAGE>
 
the term of the Franchise shall be extended from September 30, 2009, to
September 30, 2012, and shall expire at the end of that day.

     D. Village Determination. The determination whether the Grantee has
        ---------------------                                         
satisfied the standard set forth in Subsection A, B, or C above shall be made by
the Village. The Village shall have the right to have an independent engineer or
consultant audit the Grantee's cable system to determine satisfaction of such
standard.

     Section 4. Immediate Revocation if No 85-Channel Capacity by September 30,
     ---------  ---------------------------------------------------------------
2002. In addition to any forfeiture and termination provisions of the Cable
----                                                                     
Ordinance and notwithstanding any procedural requirements of any such provision,
the Village may terminate this Agreement and revoke the Franchise immediately,
and the Grantee shall have no right to any procedures related to forfeiture or
termination set forth in Section 39 or any other section of the Cable Ordinance,
if the, Grantee has not made available to all users of its cable system in the
Village the option to receive 85 channels by September 30, 2002.

     Section 5. Emergency Alert System. The Grantee shall make all required
     ---------  ----------------------                                    
improvements to its Emergency Alert System required by federal law or regulation
or required pursuant to Section 35(d) of the Cable Ordinance within the time
frames established by the Federal Communications Commission (the "FCC"). Neither
the Grantee nor any successor to the Grantee shall request extensions to any
such FCC time frame to make said improvements without the prior written approval
of the Village. Prior to making said improvements, the Grantee shall hold a
meeting with Village representatives to provide information concerning the
changes to be implemented to the Emergency Alert System and to solicit
recommendations from the Village regarding said improvements. At all times
during the term of this Agreement, the Grantee shall make its representatives
available to the Village at all reasonable times to discuss the configurations
of the Emergency Alert System.

                                  Page 4 of 9
<PAGE>
 
     Section 6.  Interactive Video Bulletin Board Channel; Mobile Van.
     ---------   ----------------------------------------------------

     A. Interactive Video Bulletin Board Channel. Within 120 days after receipt
        ----------------------------------------                             
of a request from the Village, the Grantee shall make available to the Village
the Interactive Video Bulletin Board ("IVBB"). The IVBB will turn one or more
local public, educational, and governmental access channels into an interactive
information display system and will be designed and operated at least to the
minimum standards and specifications set forth in Exhibit A to this Agreement,
which Exhibit A is by this reference specifically incorporated into this
Agreement and made a substantive part of this Agreement. In between responding
to the telephone requests for information, the IVBB will show menus of available
topics. The Grantee shall be responsible for system data entry, entering
information supplied by the Village; provided, however, that in the event of
urgency when the Grantee cannot immediately enter such system data, the Grantee
shall, at the request of the Village, allow a duly designated representative of
the Village access to the Grantee's facilities and equipment to undertake such
system data entry. It shall generally be the responsibility of the Village to
send information to the Grantee for such entry via a floppy disk by regular mail
or hand delivery, or via electronic mail.

     B. Mobile Production Van. The Village and other public or educational users
        ---------------------
shall have access to the Grantee's mobile production van to be used for public,
educational, or governmental production in accordance with the terms and
conditions established by the Grantee for use of such van; provided, however,
that the Grantee shall ensure that such van is reasonably available to the
Village and such other users. If a problem arises regarding the availability of
such van to the Village and such other users, then the Grantee and the Village
shall meet to discuss a resolution to such problem and the Grantee shall take
such steps as are necessary to assure that mobile production equipment is
reasonably available to the Village and such other users.

                                  Page 5 of 9
<PAGE>
 
     Section 7. Institutional Network. Except as provided through negotiations
     ---------  ---------------------
undertaken pursuant to this section, the Grantee shall not be required to
provide an institutional network. Either the Grantee or the Village can,
however, initiate discussions concerning the provision of an institutional
network in the Village during the term of this Agreement. Such discussions shall
include, but shall not be limited to, proposed configurations for the
construction and operation of the institutional network, a cost-sharing formula
between the Grantee and the Village for the construction and installation of
the institutional network, and appropriate use limitations that the Grantee may
wish to impose on the Village use of the institutional network. If the Village
provides the Grantee with a written request to initiate such discussions, then
the Grantee shall make itself available to meet with Village representatives
within 30 days after receipt of such request.

     Section 8. Certain Additional Installations; Free Monthly Basic Cable
     ---------  ----------------------------------------------------------
Service; Modems.
---------------

     A. Installations and Service. The Grantee, within six months after the
        -------------------------                                         
Effective Date of this Agreement, shall install, at its expense, cable drops to,
and shall provide free monthly basic cable service for, each existing
qualifying educational facility ("QEF") and each existing municipal location
("ML") within the Village designated on Exhibit B to this Agreement, which
Exhibit B is by this reference specifically incorporated into this Agreement and
made a substantive part of this Agreement, so that each QEF and ML is served by
not fewer than three cable drops. The Grantee shall not reduce the number of
cable drops that may currently serve any QEF or ML. The Grantee also shall
install, at its expense, up to three cable drops in, and provide free monthly
basic cable for, any newly constructed or relocated educational or municipal
facility; provided, however, that if any such newly constructed or relocated
educational or municipal facility is located more than 250 feet away from the
then-current limit of the Grantee's existing system, then such educational or

                                  Page 6 of 9
<PAGE>
 
municipal user shall be required to contribute the actual cost of material and
labor for that portion of construction of the system extension that is beyond
said 250 feet.

     B. Modems. Within three months after the Grantee begins to offer, on a
        ------                                                           
commercial basis, cable modems and related service to any subscribers within
Lake County, the Grantee shall provide, at the Grantee's expense, one such cable
modem to each QEF and ML.

     Section 9. Public, Educational, and Governmental Channels. Until the
     ---------  ----------------------------------------------
Grantee makes available to its users the option to receive 85 channels, the
Grantee shall maintain no fewer than the two public, educational, and
governmental channels existing as of the date of this Agreement. Immediately
upon making available 85 channels, the Grantee shall provide no fewer than the
five public, educational, and governmental channels set forth in Subsection
35(c) of the Cable Ordinance, for the use of the Cable Consortium including the
Villages of Grayslake, Libertyville, Mundelein, and Wauconda and the County of
Lake.

     Section 10. Entire Agreement, Amendments to Cable Ordinance. This 
     ----------  -----------------------------------------------               
Agreement constitutes the entire understanding and agreement between the parties
and supersedes any and all previous agreements between the parties with respect
to the subject matter. This Agreement shall not be changed, amended, or
supplemented except by an agreement in writing signed by both parties. The
Village may from time to time amend the Cable Ordinance pursuant to its lawful
police powers; provided, however, such amendments shall not serve to impair the
rights nor increase the obligations of the Grantee specifically described in
this Agreement.

     Section 11. No Recourse.
     ----------  -----------

     A. Recourse Limited. Except for an action seeking specific performance, the
        ----------------                                                      
Grantee shall have no recourse whatsoever against the Village for any loss,
cost, expense, or damage arising out of any provisions or requirements of this
Agreement or because of the enforcement thereof by

                                  Page 7 of 9
<PAGE>
 
the Village, or for the failure of the Village to perform pursuant to this
Agreement, or for the failure of the Village to have authority to enter into all
or any part of this Agreement.

     B. Grantee's Own Investigation. The Grantee expressly acknowledges that in
        ---------------------------                                          
accepting a Franchise it does so relying on its own investigation and
understanding of the power and authority of the Village to enter into this
Agreement and not in any way on any representation of the Village.

     C. No Inducement.  The Grantee acknowledges that it has not been induced to
        -------------                                                      
enter into this Agreement by any understanding or promise or other statement,
whether oral or written, by or on behalf of the Village or by any third person
concerning any term or condition of the Franchise not expressed herein.

     Section 12. Acceptance by Grantee. The Grantee shall have until September
     ----------  ---------------------
30, 1997, to accept and execute this Agreement. Such acceptance and execution by
the Grantee, and subsequent execution by the Village, shall be deemed the grant
of the Franchise for all purposes. If the Grantee has not accepted and executed
this Agreement by said date or such additional time as the Village might allow
specifically and in writing, then this Agreement and any Franchise shall be
deemed to be, and shall be, null and void.

     Section 13. Notice. Unless expressly or otherwise agreed between the
     ----------  ------                                                
parties, every notice or response to be served on the Village or Grantee shall
be in writing, and shall be deemed to have been duly given to the required party
five business days after having been posted in a properly sealed and correctly
addressed envelope by certified or registered mail, postage prepaid, at a Post
Office or branch thereof regularly maintained by the U.S. Postal Service.

                                  Page 8 of 9
<PAGE>
 
     Notices or responses to the Village shall be addressed as follows:

        Village of Mundelein
        440 East Hawley Street
        Mundelein, Illinois 60060
        Attention: Village Administrator

     Notices or responses to the Grantee shall be addressed as follows:

        Jones Intercable
        1901 Industrial Drive
        Libertyville, IL 60048
        Attention: General Manager

     IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date first stated above.

 
VILLAGE OF MUNDELEIN                 CABLE FUND 12-A, LTD.

By:  [SIGNATURE ILLEGIBLE]           By:  Its General Partner
     -----------------------              Jones Intercable, Inc.
     Village President                                    
                                     By:  [SIGNATURE ILLEGIBLE]
                                          ------------------------- 
                                     Its: Group Vice President/Operations
 

ATTEST:                              ATTEST:

By:  [SIGNATURE ILLEGIBLE]           By:  [SIGNATURE ILLEGIBLE]
     -----------------------              -------------------------
     Village Clerk                   Its: Assistant Secretary
 

                                  Page 9 of 9
<PAGE>
 
               LETTER AGREEMENT BETWEEN CABLE TV FUND 12-A, LTD.
                          AND THE VILLAGE OF MUNDELEIN

        The undersigned, who represent themselves to be the duly authorized
agents of the Village of Mundelein, Illinois (the "Village") and Cable TV Fund
12-A, Ltd. (doing business as Jones Intercable) ("Jones"), having the authority
to make the representations and agreements contained herein, do hereby stipulate
and agree as of September 22, 1997, as follows:

     1. Jones shall pay to the Village, on or before October 31, 1997, the sum
of $24,000. In consideration of such payment the Village releases Jones from any
obligation that may have existed to provide institutional network facilities
and/or services except only by agreement pursuant to that certain Cable
Television Franchise Renewal Agreement between Jones and the Village dated
September 22, 1997.
     
     2. In addition to the payment provided in Paragraph 1 above, Jones shall
pay to the Villages of Grayslake, Libertyville, Mundelein, and Wauconda, and the
County of Lake (the "Consortium"), on or before October 31, 1997, the sum of
$40,000, to be used by the Consortium to offset the costs incurred by the
Consortium in renewing Jones' cable television franchise. Such payment to the
Consortium shall be the total payment received by the Village and other
Consortium members from Jones for expenses incurred in renewing Jones' cable
television franchise in the Village. Such payment shall not be construed or
applied as a concession by Jones of the validity of such payment under the Cable
Act; provided, however, that Jones hereby waives and releases any and all rights
and claims it has or may have to challenge payment of or to recover all or any
portion of such payment from the Village or any other Consortium member.

     3. Jones has paid to the Village $28,318.61 which represents an amount
equal to a five percent (5%) franchise fee on advertising and home shopping
revenues for the period January 1, 1990 - March 31, 1993, and an interest
payment of 1 1/2 percent per month. This amount is deemed payment in full for
any and all such fees for said revenues owed to the Village pursuant to Cable TV
Franchise Ordinance, Ordinance No. 81-2-3, an Ordinance Granting a Franchise
Concerning the Establishment, Construction, Operation and Maintenance of a Cable
Television System in the Village of Mundelein, Illinois.

     4. Except as expressly set forth herein, nothing contained in this
Agreement shall amend, modify or alter any provision in the franchise renewal
agreement entered into by Jones and the Village or the Village of Mundelein
Cable Television Franchise Ordinance, Ordinance No. 97-9-39. If there is any
conflict between this Agreement and the Franchise Agreement and Ordinance, then
the terms of this Agreement shall prevail.

        Upon execution of this Letter Agreement by Jones and the Village, this
letter shall constitute a fully binding and enforceable agreement between the
parties hereto.
<PAGE>
 
        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

VILLAGE OF MUNDELEIN               CABLE TV FUND 12-A, LTD.

By:  [SIGNATURE ILLEGIBLE]         By:  Its General Partner
     -----------------------            Jones Intercable, Inc.
Its:                               
     -----------------------
                                   By:  /s/ Ruth E. Warren
                                        --------------------------
                                        Ruth E. Warren, Group Vice 
                                        President/Operations


ATTEST:                            ATTEST:

/s/ [SIGNATURE ILLEGIBLE]          /s/ Lorri Ellis
----------------------------       -------------------------------
                                   Lorri Ellis, Asst. Secretary
<PAGE>
 
                             ORDINANCE NO. 97-9-39
                                           -------


                             VILLAGE OF MUNDELEIN
                     CABLE TELEVISION FRANCHISE ORDINANCE



                    Published in pamphlet form by authority
                    of the President and Board of Trustees
                     of the Village of Mundelein, Illinois



                     Date of Publication: October 3, 1997
                                          ---------------
<PAGE>
 
                              VILLAGE OF MUNDELEIN
                      CABLE TELEVISION FRANCHISE ORDINANCE

SEC. 1. SHORT TITLE.

     This chapter shall be known and may be cited as the "Village of Mundelein
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 governmental 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 Mundelein 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 construed 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 Mundelein, 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)  S2,000,000.00 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 Mundelein
                                                                       ---------
                    Municipal Code.

               c.   Notwithstanding Paragraph b above, pedestals or similar
                    above ground appurtenances may be installed within certain
                    utility casements 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, furnish 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.

                                     -34-
<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 or 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 the 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.



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       (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.

SEC. 52. This Ordinance shall be in full force and effect from and after its
passage, approval and publication in pamphlet form, as required by law.

The foregoing ordinance was adopted by a roll call vote as follows:

  AYES                NAYS               ABSENT AND/OR NOT VOTING
  ----                ----               ------------------------
  Trustees Campbell   None               Trustee Powell
           Nutschnig
           Dudek
           Kosova
           Semple
   
                                         [SIGNATURE ILLEGIBLE] 
                                         --------------------
                                               President

PASSED: September 22, 1997
        -------------------        

APPROVED: September 22, 1997
          ------------------        

PUBLISHED in pamphlet form: October 3, 1997
                           ----------
ATTEST: [SIGNATURE ILLEGIBLE]
       -----------------------
        Village Clerk


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